Our current take-make-waste system harms nature through excessive materials extraction, and, at the end, through crude waste disposal and pollution. Sustainable packaging is a growing industry that can help address the threat this poses to natural capital.
The situation of continued destruction of nature's value has prompted a shift in attitude among policymakers and consumers. One of the consequent responses is a growing consensus that excessive wasteful habits need to be curbed in order to protect and preserve natural capital. The previous linear ‘take-make-waste' model is evolving into a circular economy that is harnessing the power of nature on the one hand, and preserving it on the other. Recent investments merged with improved technology and innovation have allowed for a new economy to gain traction.
Rethinking packaging
Sustainable packaging can help embed sustainability in the distribution of goods. It can reduce the amount of virgin material extracted from non-renewable sources, as well as substantially lessen waste and pollution volumes, thus protecting nature from abuse, damage and destruction. Along the way, better packaging solutions can also curb carbon emissions generated by virgin plastic production, can lessen deforestation and can improve the efficiency of use of natural resources. Effective packaging is further essential in preserving the quality of transported goods, especially in the food distribution systems.
Excessive extraction, accumulating waste
Biodiversity has risen to the top of the global agenda as the planet faces its sixth mass extinction, with projections of the loss of more than a million species in the coming decade. More than 90% of this biodiversity loss is due to the extractive, polluting, and wasteful way we use resources in the economy.
The pulp and paper industry, which makes products such as paper-based packaging, and office and glossy paper stock, accounts for 13-15% of total wood consumption and uses between 33-40% of all industrial wood traded globally. More than two billion trees are now logged every year for packaging alone. Greater wood demand, when coupled with unsustainable and mismanaged forestry practices, can lead to deforestation and habitat destruction, which cause nature and biodiversity loss.
Packaging is the largest sector of the plastics industry, too, representing almost 40% of total plastic consumption. The global plastic packaging market size was valued at US 348 billion in 2020 and is expected to grow at a compound annual growth rate of 4.2% from 2021 to 2028. In 2017, packaging waste reached a record 173 kg per capita. If the production and use of plastics increase in line with projections, the plastic industry will account for 20% of global oil use by 2050, an increase from 7% today. Similar to increased deforestation, greater raw-material extraction disrupts or destroys ecosystems and their inherent biodiversity - not only at drilling sites, but in areas where ancillary infrastructure is developed and sites of accidental spillage.
At the same time, only 14% of plastic packaging is collected for recycling, with the rest ending up burned, landfilled, or disposed into the environment. Plastic pollution is overwhelming our soils, oceans, and wildlife. 11 million metric tons of plastic waste enter the oceans every year, and if no action is taken, by 2050 there could be more plastic than fish in the ocean. The annual economic cost of marine plastic pollution is estimated to be at least USD 4.7 billion to the consumer goods industry alone, enhanced by the significant risk of reputational damage. It is estimated that between USD 80-120 billion in annual economic value is lost to the global economy because single-use plastic packaging is not captured after use for recycling.
Sustainable packaging
There is a growing international consensus on the need to phase out plastic packaging. The European Union (EU) has introduced a "plastic tax" as part of the recovery package necessitated by EU spending as a result of Covid. The EU aims for all plastic packaging to be reusable or recyclable by 2030. The UK aims to eliminate avoidable plastic waste by 2042: any domestically manufactured or imported plastic packaging that contains less than 30% recycled plastic will have a levy applied.
In the US - where citizens produce more plastic waste, per person, than any other nation on earth - 16 states have enacted state-wide regulations on packaging waste, which tend to target single-use plastics, shopping bags, and ever-increasing recycling targets. China plans to forbid all production and sales of plastic packaging for delivery, plastic shopping bags and disposable plastic tableware by 2025 through the gradual implementation of the "Plastic Ban Order".
Growth opportunities
At LOIM, we look at companies that are developing or providing goods that require minimal or no extraction of new materials, including innovative approach to packaging solutions. They are appealing to rapidly increasing consumer demand while removing pressure on the environment, supporting the regeneration of nature.
This post is funded by Lombard Odier IM
