Sustainability vs. affordability dilemma for the packaging industry

Climate change concerns and the need for protecting our planet’s fragile environment have been on the business agenda for many years. But the heat has been turned up both literally and figuratively in the last few years, with the greater and more visible impact of global warming, loss of green cover, depleting water resources etc. In response, companies are looking more seriously for ways to balance “ecology” with “economy”. This has led to small and big changes across value chains- from product design to manufacturing to distribution to disposal of waste and recycling.

While the above scenario applies to all businesses, the packaging industry faces some unique challenges and thus finds itself caught between a rock and a hard place. On the one hand, the biggest consumers of printing and packaging products (FMCG businesses, pharmaceutical companies etc.) are looking to reduce packaging costs; on the other, they too are looking to meet their own group/corporate sustainability goals to demonstrate their environmental consciousness. Additionally, such consumer-facing companies are now faced with customer segments that are increasingly conscious of the need to reduce, recycle and reuse. In fact, many customers even shift loyalties based on how committed brand owners are in terms of fulfilling their socioeconomic and environmental duties and responsibilities.

The pandemic has further exacerbated this already complex situation due to the various systemic uncertainties that have been introduced into the operating environment. On the supply side, these include restrictions on how manufacturing plants are allowed to operate, availability of raw materials, higher price fluctuations associated with raw materials, rising fuel and energy costs etc. Similarly, restrictions on the free movement of consumers have thrown demand forecasts out of whack. Also, eCommerce and the tendency to hoard supplies impact demand. All this impacts production planning and scheduling; it also causes more frequent price increases.

But whining about challenges is of no use. Leadership is all about finding new ways to overcome challenges effectively.

What’s the way forward?

It is fair to say that environment-friendly packaging and lower prices don’t always go hand in hand. But it is also clear that solutions must be found to make it easier for both packaging companies and their customers to find a balance.

Organizations collaborating with customers are also driving shifts in their choice of packaging materials and labeling towards sustainable options. For example, cartons with the metalized film are harmful to the environment, although they offer certain advantages in terms of printing. There is also a price impact of labeling on non-film cartons. But many believe that moving away from metalized cartons can play an important role in protecting the environment. To accelerate this shift, various industry players offer their customers innovative alternatives that still meet their needs around brand visibility, package sizes/shapes etc.

Many companies are constantly upgrading technology and equipment to manage energy consumption and reduce heat and waste generated. Some also follow well-defined and constantly upgraded SOPs, ensuring environmentally safe handling of waste materials. Adoption of water conservation practices is also a major step, along with maximum use of natural lighting in facilities. All these steps cumulatively contribute to reducing carbon footprint and enhancing environmental sustainability in the community.

Author - Janardhan Damodaran, Vice President and SBU Head—Packaging & Labels.