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Sustainability Takes Center Stage
March 1, 2008 By: Brian Albright Paperboard PackagingIs recycled or virgin board really better for the big box store's packaging scorecard?
When Wal-Mart unveiled its plans to reduce its packaging by 5 percent by 2013, and to measure the environmental impact of packaging material using a packaging scorecard, sustainability immediately became a top-of-mind issue for the company's suppliers and the packaging industry at large.
 M. Mathes |
The scorecard went live on Feb.1, and although the rate of uptake has been slow (somewhere between 10 percent to 20 percent of SKUs have been loaded into the scorecard so far), paperboard packaging suppliers are fielding a barrage of questions from their CPG customers about the content of their packaging, and how to further reduce the size and weight of their packaging.
Customer are increasingly asking about the amount of recycled content in their packaging, and whether increasing it (or even switching to 100 percent recycled board) can improve their environmental performance.
There is significant confusion among customers about the relative merits and costs of virgin board and recycled board, as well as plenty of debate within the packaging industry. While recycled board reduces reliance on tree fiber and prevents packaging material from entering landfill, there can be a greater cost in terms of emissions or energy use depending on the mill, the efficiency of the material collection network, and the equipment being used.
 B. O'Banion, Fibre Box Association |
There's been some research that does give an edge to recycled board, but most studies are difficult to compare because they don't use the same metrics. The Fibre Box Association (FBA) and the American Forest and Paper Association (AF&PA), through their sponsorship of the Corrugated Packaging Alliance, are conducting a life cycle assessment (LCA) for corrugated packaging that will help the industry answer some of these questions.
"The short answer is that we don't have enough data to answer that, and that's why we're doing a life cycle analysis study," says FBA Vice President Brian O'Banion. "That will be completed in the middle of this year."
"The whole virgin-versus-recycled content debate has all kinds of traps and snares, and we're already seeing those start to capture people in the industry," says Mark Mathes, ceo of Vanguard Packaging, Kansas City, Mo., and chairman of the Association of Independent Corrugated Converters' (AICC) sustainability committee. "Wal-Mart is not pushing vendors in one direction or another. They realize there has always got to be some percentage of virgin always in the stream."
This focus on recycled material stems, in part, from the consumer perception that recycled board is a better choice for packaging, and CPG companies have responded by asking for more recycled content from their own suppliers.
"Customers perceive recycled material as more environmentally friendly," says Mike Heldman, brand manager for coated paperboard at International Paper (IP). "Perception isn't always reality. The CPGs understand that, but they don't have the time to educate consumers on all the right environmental inputs that go into that decision."
In the context of the Wal-Mart scorecard, the point is largely moot because the recycled material component is based on industry averages.
"The scorecard helps people understand the impact of various substrates," O'Banion says. "Once you pick corrugated, the scorecard doesn't really reflect any differentiation between suppliers, unless they have some sort of innovation in their manufacturing technology that would allow them to claim extra credit."
There are practical elements to take into account, as well. There are a plenty of good applications for recycled containerboard, but there are also strength issues that can impact the overall weight of the package, as well as printability considerations.
There are also capacity issues in the recycling industry that could significantly drive up costs, not to mention the fact that most "virgin" containerboard already contains some percentage of recycled material.
"Each type of board serves its own purpose, and each has its own distinct advantage," says Chet Rutledge, senior manager of private brand packaging at Wal-Mart. "There has to be a certain amount of virgin material coming back into the pipeline to keep the stream going. The good thing about paper-based packaging is that it's renewable."
The virgin-versus-recycled debate is really the wrong conversation for the industry to have at this point, says Ralph Young, an industry consultant with Alternative Paper Solutions who works with the AICC. The paperboard industry should instead be promoting the fact that its products, regardless of the fiber source, have a better sustainability story than other substrates.
"Our industry is well-positioned to look like the good guy, but we still have work to do," Young says. "We've been working on sustainability for a long time, but we haven't really gone out and touted that."
Need for Education
More importantly, the paperboard industry as a whole needs to do a better job of educating its own employees (including designers, marketers and salespeople) about corrugated packaging's environmental advantages, as well as educating customers about recycling and the recyclability of paperboard products. According to the AICC, 76.4 percent of all corrugated was recovered for recycling in 2006 — that's a powerful environmental story that isn't being told often enough, Mathes says.
"We have an advantage, but we haven't capitalized on that yet," Mathes says. "We have to have a unified voice and present corrugated as an optimal solution compared to other substrates like plastic. There's hardly been any marketing on our sustainability advantage."
"Retailers and end consumers have a lot of misconceptions about packaging and corrugated, and we've been struggling to address that because of the scale of communications required to affect change in that area," O'Banion says.
For packaging companies, sales and design teams should be brought together and educated about the company's sustainability initiatives, as well as the types of raw materials used in their products. Companies also should strive to achieve ISO 14001 certification, so that they can show their customers that they are operating in an environmentally conscious manner.
Susan Hurt, vice president of marketing for FiberMark, says that customers in this industry have a lot of questions about sustainability, but are generally confused as to what all the terms and certifications mean.
She approaches educating staff and customers by breaking down the process into three general buckets of information: what comes into the company (the amount of recycled content in the raw materials, and sourcing fiber from sustainably managed forests); what's done with the material during processing (energy and water use, for example); and what happens to the packaging when it leaves the facility (re-use and recycling of the packaging).
"The level of interest has intensified over the last six months to the extent that, as a marketing professional, I've been surprised at how much of my day is spent addressing these questions," Hurt says. "The industry knows that we have a good story to tell, but I think there's some confusion as to how to tell it."
Innovation
Because most of the metrics in the Wal-Mart scorecard are pre-populated, there are only a few areas where companies can differentiate themselves: product/package ratio, cube utilization, transportation and "extra credit" or innovation component.
There are some gains to be made in the transportation category, but the paperboard supply chain is largely configured regionally. Packaging typically isn't traveling very far from point to point.
Most of Wal-Mart's early success stories have involved making packaging smaller, lighter, or both. This not only helps CPG suppliers meet Wal-Mart's goals, but can also provide potential savings by reducing transportation and fuel costs. Here, packaging suppliers have an opportunity to work hand-in-hand with their customers to provide innovative solutions.
"Once we understand, as an industry, how much weight is in the package, and find better ways to combine liners and medium, that's an easy target for us," Young says. "I think we're still over-packaging in the U.S."
It's still unclear exactly how Wal-Mart will measure the innovation category.
"Most corrugated suppliers will be hard-pressed to validate the extra-credit portion," O'Banion says. "There's still a question of how much value there will be in that. You have to invest some money to certify that your operations are different than the industry average."
That said, operational improvements can still be a good idea, not only because of the environmental impact, but also because reducing energy and fossil fuel consumption can cut costs. The paperboard industry has been a leader in using alternative fuels (like biomass and hydro-electric), although most consumers don't know that.
FiberMark, for example, fuels the boilers at its Brattleboro, Vt., facility using recycled vegetable oil, which has improved air quality in the plant and reduced its overall emissions.
Mathes emphasizes that even small steps can be important.
"We estimate that we've saved about 9,000 gallons in diesel fuel in '07 by better cubing out our trailers for delivery," he says. "What if every company in the industry did that?"
Profitable Partnerships
From a sales standpoint, the packaging industry is now in a position to play a key role in enabling retail and CPG customers' environmental initiatives, by providing guidance on packaging design, supply chain operations, and recycling.
"We're seeing more transparency throughout the supply chain, and more willingness to collaborate early on in the process to get at the best package, instead of just providing a spec product," says Carl Bumgardner, IP's director of marketing–coated paperboard business.
The Shorewood Packaging division of IP developed a program called greenchoice to help customers determine the best, most sustainable packaging choice for their needs. Shorewood, which provides a mix of virgin and recycled products, provides information on how each substrate performs, as well as the impact of other factors like ink, coatings, and weight reduction. The company also helps its customers educate consumers so that the packaging can be properly recycled.
"There's no one right or wrong answer," says Robert Anstine, vice president of marketing and business development at Shorewood. "There is sometimes a little emotion involved in these decisions, but none of these corrugated products are inherently bad for the environment. It depends on how they are manufactured and how they are disposed of. We're trying to educate our customers and provide the facts."
At Vanguard, Mathes says his company landed one of its biggest contracts based on its consulting services in this area.
"If you think about it, Wal-Mart is basically asking us to shrink our industry by taking 5 percent of the packaging out of their system, while at the same time quantifying it for them," Mathes says. "I don't know that that's necessarily a bad thing. We view it as a profit opportunity."
There is still a significant amount of research and education needed within the industry, however.
"People are asking a lot of questions, and we're under the microscope right now," Young says. "We have to have our act together, and we have to be able to answer those questions."
"The scorecard should be seen as a way to spark innovation and new ideas," Rutledge adds. "This is a tool to help make an educated buying decision, and get people thinking about whether there are ways to make that package better."
