Shifting Responsibility

Consumers today are concerned with sustainability. As the end-user of a product, the consumer has historically born the burden of figuring out what to do with product waste. Do they just throw it out? Do they recycle it? And when they do does it even get recycled? Up until recently, brand’s haven’t had to be accountable to the greater good. But thats about to change.

As a CPG brand, how much do you think about the end of life of your packaging? What happens to it when your consumers are done with your product? If your packaging is recyclable or compostable, have you confirmed that it is actually recycled or composted, or is the majority of it landfill bound? Did you know that only around 185 cities have municipal curbside compost pickup? And less than half of those actually accept packaging. When your recyclable packaging doesn’t get recycled, you’ve actually created waste.

How would you be affected if you had to pay a tax or fee on your packaging based on how sustainable it is? As a CPG brand, these are questions you should be considering and questions that may actually require verifiable answers to comply with legislation being proposed across the US.

There was a lot of talk recently about what is commonly referred to as The Fashion Act. The Fashion Sustainability and Social Accountability Act is legislation that has been introduced in New York state that would shift the responsibility of sustainability away from the consumer and back onto the retailers and manufacturers who do business in the state. Brands would be required to map out and disclose the environmental and social impacts of their supply chains, setting binding (environmental) targets. This means that consumers and governments are beginning to hold brands accountable, requiring them to make more sustainable decisions along the entire supply chain that affect the life cycle of their products. When clothing is too worn to wear or donate, the consumer is left with the decision of what to do with it. With few options available at the end of the supply chain, making a sustainable decision can be difficult. Rather than stick the onus on consumers to figure it out, this legislation works those considerations back up the manufacturing supply chain to where it starts, the producer.

While New York may be making history with this legislation, shifting responsibility from the consumer to the producer isn’t entirely new, and isn’t unique to fashion. Historically, local governments and municipalities have been responsible for subsidizing recycling programs and then passing that cost onto consumers. With producer responsibility legislation, similar to this bill that just passed in Colorado, the status quo may be changing.

This could affect you, CPG brands! Recycling is not as easy for your consumers as just tossing your packaging in the bin. Different materials have different success rates when it comes to recycling. Food grade glass is always recyclable provided it’s bigger than 2” and isn’t broken. Aluminum is infinitely recyclable but sourcing it has become increasingly difficult. Because of its value, recycling aluminum is cost effective. But what about plastic? Many types of plastic are very recyclable, but are not actually recycled. It is less cost effective to recycle plastic than it is to send it to the landfill. Unlike aluminum, plastic is a low value material with little market demand. Packaging can also be created with a mix of materials (think about stand up pouches) and more often than not, the materials can not be separated to be recycled. Some of them (Tetrapak) can be dropped off at a store location, but how many consumers are actually doing that? As of 2018, only 26% of tetra paks were recycled. Oftentimes, with the low recycling rates of plastic, we can find a more sustainable material in using post consumer recycled plastic (PCR). Unfortunately, it is often cheaper for producers to use virgin plastic as opposed to PCR. Outdated and overwhelmed recycling systems combined with broader consumer knowledge about the problematic nature of plastic, has led states across the country to introduce various forms of legislation targeting plastic waste, particularly from packaging. Extended Producer Responsibility (EPR) laws have the potential to make packaging more sustainable while also creating disruptions in business – through supply chain analysis and potential fees – for CPG brands.

EPR laws will go into effect in Colorado, Oregon and Maine in the next few years, and there is proposed legislation in California, Hawaii, Maryland, Massachusetts, and New York. The goal of these laws is not only to hold producers responsible for the waste associated with their packaging, but also outline and enforce fees makers will have to pay. These laws will directly benefit recycling initiatives in each state by funding improvements to recycling facilities and municipal collection. Currently, manufacturers have no requirements to take into consideration the end of life of their products. The process of recycling, composting, and landfilling is the responsibility of consumers and their local municipalities to figure out and pay for. The EPR laws will address issues that have plagued the recycling industry for decades, including the toxicity of materials, varied materials that are difficult to sort, the enormous amount of waste that exists, and the burden this all places on local communities. Producer fees will vary based on how easy a package is to recycle, how much post consumer recycled content it contains, and how toxic it is. If there is a cost incentive to use PCR content and more producers turn to it as a preferred material, the increased demand for it will drive up the recycling rate and bring down the overall cost. This is a sustainability win on multiple fronts.

While the details of the EPR legislation in Colorado, Maine, and Oregon are still materializing, there won’t be tangible results of this new approach to recycling for several years. The bottom line is that waste is beginning to be addressed at the source. Sustainable packaging will be incentivized. So what does this mean for CPG brands? As a brand, if sustainability is a driver of your stakeholders and customers, it’s time to start thinking about what you can do to get ahead of this. Consumer preferences and the regulatory ecosystem are shifting. Now is the time for brands to future proof their stance on sustainability and open up opportunities that will help them to mitigate risk. Where can you start? Understand your packaging’s end of life. It may be recyclable, but is it actually recycled? How much of your compostable packaging actually gets composted? Hint: look into how many commercial compost facilities actually accept compostable packaging where the majority of your consumers live. And lastly, check in with your consumers on what they want out of your packaging with regards to sustainability. Analyze your supply chain and decide if there are optimizations you can make to your packaging that will benefit your triple bottom line – your brands social, environmental, and financial goals.