United they stand
Packaging and retailing leaders embrace shared sustainability goals and vision
November 12, 2010
by George Guidoni
It takes much more than words to make meaningful genuine progress on environmental sustainability, but there is a lot to be said for sharing individual success stories and achievements with other like-minded industry stakeholders for the sake of greater good—as several high-profile packaging, food manufacturing, retailing and other executives did last month at the inaugural Packaging Summit conference in Niagara-on-the-Lake, Ont.
Jointly organized by PAC-The Packaging Association and the Canadian Council of Grocery Distributors (CCGD), the timely event—organized under the umbrella theme of Innovating Packaging for People, Planet and Profit—delivered a comprehensive status update on what leading Canadian businesses are doing to lessen the respective environmental footprints of their operations, while also providing a fitting setting for the Toronto-based PAC to mark its 60th anniversary as the leading national voice of Canada’s packaging industry.
With packaging sustainability finally becoming more of a quantifiable objective rather than an abstract altruistic notion—given the increasingly widespread use of LCA (life-cycle analysis) methodologies and global initiatives such as the ongoing Global Packaging Project (GPP) of the Paris-based group The Consumer Goods Forum—the consumer public has never been in better position to pass informed judgement on which retailers and brand-owners are truly backing up their environmental claims with concrete actions.
“The whole idea of life-cycle analysis is finally beginning to influence regulators, shareholders, consumers, academics and environmental groups, and it needs to influence us in a big way,” David Smith, national vice-president of retail strategy and sustainability for Canada’s second-largest grocer Sobeys Inc., told the summit audience of about 200 packaging, retail and CPG (consumer packaged goods) industry professionals.
“It is critical, because in the business world, what gets measured gets done,” Smith stated. “Sustainability has tended to get neglected in the past because there was no way to measure it, so we couldn’t improve on it.
“But now that we have some numbers to work with,” he said, “we need to be ruthless in attacking those numbers and making them better,” said Smith, citing water conservation, carbon emissions and other global environmental issues as serious roadblocks for a globally-sourcing retailer like Sobeys to maintain a truly sustainable supply chain.
“We really have to address the issue of ‘externalities,’ or external costs becoming our internal costs,” he said, citing both food safety and carbon footprint as a new breed of internalized externally-imposed costs that “get magnified and compounded throughout the supply chain.”
For CPG brand-owners in particular, Smith pointed out, any new internal costs implied by the probability of tougher EPR (extended producer responsibility) regulations in Canada down the road will be especially difficult to absorb in the current economic climate.
“It will significantly challenge your internal cost structure,” he warned.
At the same time, Smith noted, Canadian retailers and grocers still must do a better job of educating consumers on the virtues of making more ecologically responsible purchasing decisions through more “radical transparency,” or availability of key product data and information in terms of the products’ environmental impact.
Said Smith: “Consumers want to do the right thing, they keep telling us this repeatedly, but we are not making it easy enough for them at the moment in terms of price, convenience and availability.”
Citing the Packaging Scorecard metrics launched by Walmart Canada Corp. four years ago, as well as the newly-developed GPP definitions for what constitutes sustainable packaging, Smith called for a more widespread and harmonized use of electronic product codes (EPCs) applied onto consumer packaging to carry more product data and “indicators” on the environmental impact of that packaging.
For its part, Smith related, Sobeys is currently engaged in carrying out two ambitious and far-reaching environmental objectives: reducing its carbon emissions by 15 per cent, and cutting down its packaging waste by 30 per cent by the year 2013.
“From the waste diversion perspective, we are now at about 50 per cent of achieving our landfill diversion goals; we are working on reducing the packaging weight of our private-label products by five per cent; and we have reduced the use of plastic takeout bags at our stores by 61 per cent,” Smith related.
In terms of future developments in the sustainability field, Smith urged summit attendees to pay close attention to the work being carried out by GPP, where Sobeys is an active participant, calling it “a critically important enabler for helping move things forward.”
But because some of the GPP recommendations and prescriptions exceed the capacity of smaller-sized companies to carry them out—especially in the more science-based aspects of LCA calculations—there is an urgent need for the various supply chain partners to cooperate in sharing their databases and information amongst each other, along with utilizing more harmonized software and other measuring tools for putting the obtained data to optimal use.
“If we can all measure it,” Smith asserted, “we can fix it.”
Such information sharing has been pivotal to the maintaining the momentum of Walmart’s Packaging Scorecard supplier evaluation system, added Walmart Canada’s vice-president of sustainable packaging Guy McGuffin, pointing out that more than 200,000 different products sold by Canada’s largest retailer have now been entered into the system, which was designed to allow companies to see how they stack up in packaging sustainability against their competitors, and where that performance could be improved further.
Earlier this year, McGuffin related, Walmart’s global headquarters in Little Rock, Ark., set the company’s global operations a target of removing 200 million tonnes of GHG (greenhouse gas) emissions out of its supply chain by 2015.
“This is really important,” McGuffin asserted, “because 92 per cent of the carbon footprint of Walmart’s operations is generated by activities taking place outside of our stores, so we will need to see even more collaboration between all our supply chain partners to meet these goals—collaboration on a level not seen before.
“Packaging is always going to be very important for the safety and the security of the products that we sell to the consumers,” McGuffin summed up, “and it will remain a core part of how we go about promoting further collaboration of efforts throughout our supply chain.”
But for all the efforts made by industry to improve the environmental profile of everyday consumer packaging, there remains a lot of weariness about the various provincial governments, particularly in Ontario, proceeding to place greater financial and regulatory burden on the industry by extending existing EPR for packaging collection and disposal to 100 per cent of program costs.
“The fact remains that product packaging still accounts for one of the largest portions of the municipal wastestreams across Canada,” pointed out Gordon Day, program director at the Toronto-based waste diversion services consultants StewardEdge Inc.
“Therefore you can expect governments to continue to legislate producer ownership of responsibility for the disposal of that packaging, either collectively or individually,” Day advised.
“This is an irreversible trend happening around the world, even in China, driven by legislators on the regulatory side and on the corporate side by companies like Walmart, and nowhere is this trend as pronounced as in Canada,” said Day, tracing the Canadian origins of EPR back to the early beverage container deposit-return systems introduced back in the late 1970s and early 1980s under the guise of anti-littering initiatives.
“The fact is that these programs have actually been pretty good at harmonizing the efforts by companies to achieve the common goals,” he noted, pointing out that the often-maligned Stewardship Ontario actually pioneered the municipal curbside recycling of printed paper products through its Blue Box collection program.
Too Many Chefs
The problem today, Day explained, is the existence of all the different provincial waste diversion programs and over 60 different agencies mandated with their supervision and implementation—resulting in a reporting “nightmare” for national retailers and brand-owners.
“I recently had one retailer complain to me about having to go through 10 different audits last year, while dealing with 15 different agencies,” Day remarked. “In some cases you have to report in terms of units sold, in some cases by the weight of packaging, in some cases you have to know if you’re obligated for that product or your suppliers are, and this poses tremendous challenges for retailers, as well as for their brand-owner partners.
“We have seen a tremendous increase in the amount of discussion and dialogue on the issue of packaging,” he said, “and while some companies have invested in updated systems to keep internal track of the vast amount of packaging information they must track, too many are still doing it in a haphazard way, with limited data and limited resources.
“And even though we now have a lot of programs out there, there is not a lot of coordination—either at the provincial levels or among the programs,” Day lamented.
“The fees change annually, the obligations may often change, new bag legislations coming in … it all changes the dynamics of what someone has to track,” he said, citing an example of a retailer selling a television set having to account to three different program administrators for the product packaging, electronic waste, and battery disposal.
“The programs are getting more complex all the time, and nowhere is it becoming more complex than here in Ontario,” Day stressed. “The administrative challenge of keeping up with all the required reporting is getting higher all the time, with retailers having more and more things to report.
“Before the end of the year,” Day predicted, “British Columbia is going to become the first province to announce 100-precent packaging obligation for the industry, while with Ontario having a new environment minister and an election coming up … we really believe that Ontario will soon move to 100-perccent Blue Box funding [by industry].
“We also believe that they will want to move to individual producer responsibility, so rather than being able to discharge those costs collectively, you may opt to cover those costs on your own as an individual retailer or brand-owner,” Day said.
“All in all, there are many new regulatory challenges coming up for retailers,” he concluded, “but there are also opportunities for them to reduce their provincial obligations and come up to speed on the reporting requirements they are now being asked to meet for their shareholders in terms of meeting their corporate social responsibility commitments, as well as make meaningful decision in terms of the controlled brands, private labels, product design … and to set the bar high for their vendors to help them become Canada’s corporate leaders in packaging sustainability.”