The Process & Profitability of Sustainable Packaging

The Process & Profitability of Sustainable Packaging

With very little fanfare, McDonald’s Corporation announced that it was taking steps to eliminate the use of polystyrene drink containers from its entire system by the end of 2018. The plan is to replace these containers with sustainable packaging materials made from recycled or fiber-based materials or a combination of both.

“Our customers have told us that packaging waste is the top environmental issue they would like us to address,” says Francesca Debiase, a McDonald’s executive. “Our ambition is to use less packaging, sourced responsibly and designed to be taken care of [i.e., properly disposed of] after use. We are also working at and beyond our restaurants to increase recycling and help create cleaner communities.”

McDonald’s is just one of many companies that have gotten on board the sustainable packaging bandwagon. Others already taking part include Coca-Cola, PepsiCo, Nestlé, Unilever and many others based in the U.S. and abroad.

However, the McDonald’s announcement is being viewed as somewhat of a tipping point. As McDonald’s goes, so goes the packaging industry.

What constitutes as sustainable packaging?

Sustainable packaging is more than just using recycled paper materials or manufacturing packaging materials from renewable plant fibers. According to GreenBlue, an environmental nonprofit that founded the Sustainable Packaging Coalition, sustainable packaging:

  • Is made from materials deemed safe and healthy for individuals and communities throughout its lifecycle
  • Meets market criteria for performance and cost
  • Is sourced, manufactured, transported and recycled using renewable energy
  • Is constructed using clean production technologies and best practices
  • Has a minimal impact on the environment from cradle to grave
  • Is designed to optimize materials and energy use

In addition, sustainable packaging materials are recovered and used in biological and industrial closed-loop cycles, meaning the materials can be reclaimed and recycled one or several times.

Furthermore, GreenBlue and the Sustainability Packaging Coalition strongly believe sustainable packing materials must perform and be “cost comparable” to traditional products used for the same or similar purpose.

As with green cleaning products and other environmentally preferable items introduced in the past two decades, while it is important that these products have a reduced impact on people, the environment and natural resources, if they do not perform effectively or are cost prohibitive, companies such as McDonald’s and Coca-Cola are unlikely to transfer to them voluntarily.

Preventing the greenwashing of sustainable packaging

Green cleaning products offer a convenient segue to discussing another important topic, and that is the green-washing of sustainable packaging. When green cleaning products for commercial use were first introduced more than three decades ago, there were no guidelines as to what made a cleaning product “green.”

The result was that many chemical manufacturers made products they believed were green, based on the best science of the day, or decided to call their products green more for marketing opportunities than for any basis on the ingredients used to make the product.

These practices worked against the green cleaning movement because purchasers were never sure if a product they selected actually had the expected reduced impact on the environment. This ended in the late 1980s when green certification organizations were created and produced guidelines for manufacturers to follow and for consumers to understand their choices.

To avoid repeating this process, the Federal Trade Commission (FTC) released its Green Guides in 1998, with an updated version released toward the end of 2012. These guides focus primarily on marketing claims and apply to a wide range of products, including packaging materials. The goal is to help avoid deception and ensure environmental claims made about a product are truthful.

Some examples that apply to packaging include the following:

  • Packaging manufacturers and marketers cannot make broad claims, such as a product is “green” or “eco-friendly,” without substantiating those claims with specific details.
  • Labels indicating a packaging material is degradable “within a reasonable short term” need qualification. A “reasonable short term,” according to the FTC, means one year.
  • To just say a packaging material is made from recycled content is not sufficient. The label must state a specific amount, such as “30 percent recycled material.”
  • Claims that packaging material is made using “renewable energy” will not suffice unless renewable energy powered all or virtually all of the manufacturing process.
  • In some cases, comparisons are necessary. For instance, a packaging manufacturer cannot say that a material produces “10 percent less waste” without qualification. However, the manufacturer can say the product produces “10 percent less waste compared to our previous product.”

The sustainability drivers

Ever heard of a Sustainability Performance Index (SPI)? Walmart has one. Target has one. Procter & Gamble has one as well. In fact, an estimated 500 companies—some of the largest in the U.S.—now have some form of SPI.

These SPIs—often referred to as Supplier Performance Index—are one of the key drivers of sustainable packaging. View an SPI as a supplier scorecard. Companies such as Walmart and Target hold their vendors and suppliers to task regarding their products and their own company sustainability initiatives.

They then score these suppliers. This scoring system determines which suppliers the company will do business with and which they will not. For instance, one of the items a supplier must address on Target’s SPI scorecard about packaging is the following:

A product’s packaging should be made with recycled or sustainable content, and itself be fully recyclable. A product’s labeling should inform guests about how to recycle packaging and close the loop.

Why are these major firms asking their vendors about their products, packaging, and sustainability initiatives? There are many reasons, but for one, if a company like Target has incorporated its own sustainability initiatives, it wants its vendors on the same sustainability team.

What’s the point of Target using sustainable packaging materials for its customers if all its vendors are using traditional packaging materials? It’s defeating the company’s own initiatives.

But just being on the same team is not the most important reason for these SPIs. These mega firms and retailers are finding they save money when they adopt sustainability initiatives. About a decade ago, Walmart began packaging 300 products for children using sustainable packaging materials. The company later determined in one year it saved:

  • 3,425 tons of corrugated materials
  • 1,358 barrels of oil
  • 5,190 trees
  • A whopping $3.5 million in transportation costs

Not surprisingly, the company has expanded the program and likely will continue to do so.

What all of this adds up to is that sustainable packaging is a win-win for the environment, for the protection of natural resources, for people and for the bottom line. To secure their place in the future, packaging manufacturers will want to “go as McDonald’s goes” and join the sustainability movement.


Here are some of the steps necessary in the transition to sustainable packaging:

  • The concept is approved and directed from the top. This is a top-down decision.
  • Sustainable packaging is defined clearly and in accordance with FTC guidelines.
  • Current packaging products are evaluated as to their sustainability and a benchmark is set.
  • Sustainable packaging aligns with other sustainability priorities in the company; this helps create a “culture of sustainability” within the company.
  • An ongoing program is put in place to measure and monitor the program’s progress.
  • Quantifiable and time-bound targets and goals are established. For instance, “by the end of 2018, 25 percent of our packaging products can be considered sustainable packaging; by 2020, half of them will be in this category.”
  • The program is marketed and promoted to customers. Consumers are looking to companies to become more green and sustainable and will reward such companies with their business.

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