In the face of burgeoning landfills and oceans besieged by plastic waste, packaging enterprises find themselves under intensifying scrutiny from both regulatory bodies and consumers. This pressure compels them to craft circular and sustainable products.

Bain & Company's inaugural "Global Paper & Packaging Report" reveals that a considerable 71% of European consumers express a desire to purchase sustainable goods. Similarly, 71% of US consumers emphasize their preference for products with minimal packaging. Despite this mounting concern, many consumers grapple with identifying genuinely sustainable packaging. A Bain survey involving nearly 4,000 US consumers disclosed that 70% erroneously believe single-use glass possesses a lower carbon footprint than single-use plastic, with only 12% identifying plastic as the correct answer.

The retail sector is undergoing a transformation in response to these dynamics. Most consumer product companies have publicly declared their commitments to sustainability. However, brand owners remain in a state of flux regarding their favored packaging materials across various applications.

Ilkka Leppävuori, the Global Head of Bain & Company's Packaging group, remarked, "Gone are the days when paper and packaging decisions were made based solely on cost, functionality, and consumer experience. Sustainability is now top of mind for everyone. However, when it comes to picking a packaging material—from paper to plastic to metal to glass—there's no clear winner. Paper may have an edge, but the most sustainable option can vary greatly by application and geography. Leading companies are assessing the environmental impact of different materials and taking the full life cycle into account—from resource extraction and production to transportation and products' end of life."

Bain's comprehensive study delves into the intricate choices packaging sectors must navigate when selecting materials, each with its own sustainability merits and drawbacks. For instance, the analysis highlights that while flexible plastics fare well in terms of production and transport-related carbon emissions, they rank the lowest in circularity and biodegradability.

Amidst this industry expansion, the packaging sector is forecasted to grow by 21%, reaching a value of $1.2 trillion over the next three years. The most substantial growth is expected within the rigid paper category, potentially surpassing plastic growth rates by 2026.

Despite the industry's upward trajectory, challenges persist in terms of decarbonization. Although a growing number of companies within the industry have committed to or verified science-based targets, over 30% have fallen short of their near-term Scope 1 and Scope 2 targets, and 41% have missed their Scope 3 targets.

Bain's research emphasizes two paths to unlock value through sustainability: cost savings and commercial growth. Leading companies can achieve a 4% to 6% EBITDA increase through the effective utilization of these levers. A sustainable strategy can curtail energy expenses, enhance access to cost-competitive recycled or renewable raw materials, and foster organic growth and price realization.

However, the paper and packaging industry grapples with its impact on biodiversity, especially regarding forestry management and water consumption. A mere 22% of surveyed companies assess their value chain's biodiversity impact, while only 31% are currently taking action to address biodiversity loss.

The report delves into other facets of the industry's challenges and prospects, such as the robust M&A activity, the transition to net-zero strategies, the design of the "mill of the future," and avenues to drive profitability.

Supply and demand fluctuations, energy and raw material price volatility, and geopolitical uncertainties are increasingly prevalent in the industry. The report advises embracing uncertainty through scenario planning and future-proofing strategies to navigate these complex dynamics.

Source:prnewswire.com

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