Businesses that want to create lasting value with their products or services are moving towards the implementation of circular models, in which they optimally use and reuse raw materials and minimise the environmental impact. In a circular economy, material cycles are closed as much as possible, which means that raw materials can be optimally reused or recycled and waste generation and environmental impact are reduced to a minimum.
Business that are moving towards circularity with their packaging strategy often discover that their traditional business models are insufficient to fully close circles. The added costs of closing the cycle must be reduced or compensated for elsewhere and new value propositions have to be developed. Realising this requires close collaboration in the material chain. Businesses must share the responsibility of closing the cycle and preserving the value of raw materials. Traditional revenue models must be updated accordingly.
The circular business models that apply to products can also be applied to packaging materials. The following circular business models are identified in the book Products that Last and can be used to make packaging materials more sustainable:
- Classic Sustainable model: A packaging lasts longer and is not disposed of after a single use. The consumer pays more for an appealing packaging that can be used for an extended period of time. One example is the iconic Illy coffee can that can be reused to store coffee or other products in the kitchen.
- Hybrid model: A product or packaging consists of at least two parts. One part can be used for an extended period of time, e.g. a dispenser, while the other part is used only briefly or consumed. This applies to reusable packaging materials that are refilled with a refill packaging. Pepsico's Sodastream is a device that makes soda using packaged concentrate. The machine and the bottles are reusable, while the minimally packaged concentrate is bought again and again.
- Interim earner model: For this revenue model, one product or service's unused value streams are used to create a new product or service. One example is a third party that refills a large printer manufacturer's ink cartridges (which are basically a product-packaging combination for ink) for consumers, so these cartridges do not have to be disposed of when empty.
- Access model: A service where consumers pay to use a product, without actually owning it themselves. One example of this model is Repack, a reusable packaging for webshops. Business pay for the use of a packaging and the packaging materials are returned to Repack after use, which then reuses them for other businesses.
- Presentation model: Someone pays for a service without it being specified how this service will be provided. This gives the business the opportunity to set up an optimally efficient system in order to maximise its profits. With regard to packaging, this may mean that products have to be transported and the transporter gets to choose the packaging method.
The circular use of packaging materials also creates new opportunities for businesses to provide services in regard to the packaging. The following business opportunities are described in the book Products that Flow:
- Flow management; organising and managing a collective system of reusable packaging materials and means of transport, primarily in the business-to-business market, e.g. beer bottles or pallets.
- Return logistics; both reusable packaging materials and recycling systems require a logistical system that ensures packaging materials are returned to the original packager or a recycler. Setting up such a system and executing the logistics is a challenge in and of itself.
- Separation and sorting; facilitating the high-quality recycling of packaging materials requires businesses that work to separate the waste streams and sort packaging materials into different material streams.
- Recycling Services: closing material cycles requires businesses that recover valuable reusable materials from waste streams, so they can be reused as raw materials.
In general, sustainable packaging is primarily about reducing the use of raw materials and saving energy. Businesses that want to create lasting value with their products or services are moving towards the implementation of circular models, in which they optimally use and reuse raw materials and minimise the environmental impact. In a circular economy, material cycles are closed as much as possible, which means that raw materials can be optimally reused or recycled and waste generation and environmental impact are reduced to a minimum.
Scaling up recycling activities forms an important first step towards the realisation of a circular economy for packaging materials. However, this is not all that is required. For example, after closing the material cycle, businesses and sectors will have to focus on reducing and slowing down this cycle through reuse. Additionally, it is important to find and implement alternative, renewable resources and completely rethink existing packaging solutions. How can the same functions that a packaging has now, be performed in a completely different and circular manner? Are there any alternatives?
More information about the transition to a circular economy is available here.
Four future scenarios for sustainable packaging
What developments will determine the future of (sustainable) packaging? In four scenarios for the year 2030, the KIDV explored social developments and trends to help draw up policies and make strategic choices. These scenarios are not predictions, but they do illustrate possible futures for sustainable packaging and how these will impact chain parties, collaboration in the sector and revenue models.
Below, you will find a brief summary of the four scenarios and the opportunities each presents to producers and importers:
In this scenario, the growing world population, rising welfare and climate change result in drastic shortages of food and water. "Smart” packaging materials offer a solution, e.g. through more efficient usage, extending the shelf life of products and the ability to monitor product quality in real time. The dominance of the online economy has changed the function of packaging materials. Enticing consumers and providing product information all happen online. As a result, the aesthetic of the packaging is only a factor when a product is unpacked after delivery.
The local economy emphasises reuse. Waste is processed locally as much as possible, for example by composting it. Packaging materials are either reusable or biodegradable. Because packaging materials have a reputation of being wasteful, many producers avoid using them. Supermarkets have adopted a system of “self-dispensing,” and electronics are delivered in special cases that are then picked up by the producer. Innovation in materials is mainly directed towards using various raw materials for the production of biodegradable packaging materials. To a large extent, material usage depends on local availability, and the differences between regions are significant.
In a world of economic power blocks that are gradually drifting apart, the European Union has managed to realise a circular economy. As a result, packaging materials are subject to very strict rules regarding reuse and recyclability. However, the rise of the lease economy has drastically reduced the need for packaging materials. Furthermore, a shift towards renewable energy sources results in low electricity costs that make it appealing to freeze a large portion of the food until the moment of consumption. Protective packaging materials have therefore become largely unnecessary.
The rising popularity of the 3D printer has significantly changed production chains. Consumers have become prosumers. Production processes take place at a very small scale, either at home or locally. Transport is limited to that of raw materials for 3D printers. People either print their food or grow it themselves in climate-controlled miniature greenhouses. Technological developments have made households virtually self-sufficient. Packaging materials are hardly needed at all. In this scenario, the 3D printer is used as a metaphor for “disruptive technology,” which also includes “smart computers” and “self-driving cars.”
Policy and strategy
Businesses that develop effective and sustainable product-packaging combinations view sustainability as a strategic opportunity and as part of their value-creation process. It is important to integrate sustainable packaging into your organisation’s policies.
To do so, you must first of all know about the laws and regulations pertaining to the sustainability of packaging materials. Furthermore, it is good to be aware of the latest developments and opportunities concerning sustainable packaging solutions. This allows you to determine how your organisation can take advantage of these opportunities with suitable packaging strategies and/or new business models.
When developing new sustainable packaging materials, you must at the very least consider how it fits within the context of laws and regulations, organisational policies and sustainability, business models and future scenarios.