9th Apr 2020
Packaging has long-suffered from a legacy issue of commoditisation yet to improve environmental performance, attitudes towards packaging procurement must evolve beyond being so cost-centric and instead adopt a cost-neutral approach. If change doesn’t happen we risk limiting advances in sustainability and widening the Green Gap, which has been identified by our Future of Packaging report.
Paying the price of legacy issues
Although many forms of business procurement are heavily influenced by cost, purchasing decisions will also typically consider value. This hasn’t always been the case when it comes to packaging. It’s typically viewed as a direct expense that erodes margins, meaning the lowest price will outweigh performance when it comes to purchasing.
This commoditised approach has limited the opportunity for the wider adoption of sustainable packaging solutions. The past few years have seen a gradual shift in this attitude, with forward-thinking companies looking at the far reaching efficiencies and benefits of sustainable packaging.
Some businesses have realised a small investment in renewable materials such as GreenPE and recycled materials can be marginal in terms of outlay, and yet prove hugely positive for the environment, brand reputation, customer loyalty and sales.
Our research suggests the gradual move away from commoditised thinking will gain increasing momentum in the next decade.
Over half (53%) of companies believe reducing environmental impact will be the most important factor in defining packaging strategies in the next ten years. Just 11% think that operating costs will be the most important factor.
On first review, this implies a major step forward. However, further analysis of the research shows that sustainable packaging optimism may well continue to pay the price of commoditisation.
Continued influence of cost
When asked which factors will influence packaging design and development in the next decade, 59% of companies stated ‘cost’. It ranked in the top three most influential factors and there’s very little difference between how influential cost is today, compared to its perceived influence in ten years’ time.
The continued high ranking of cost highlights a disconnect between the ambition for packaging to become more sustainable and the prohibitive constraints of expenditure.
Putting sustainability first
This disconnect or Green Gap exists because, despite there often being a general agreement within an organisation that sustainability is important, there isn’t a cohesive approach to putting actions into practice.
Taking a cost neutral approach makes price a secondary consideration, enabling the proper review and trial of different sustainable packaging solutions.
Cost neutral thinking allows businesses to build a case for change, which can make their packaging strategies both environmentally and cost-friendly. This form of thinking will also stop the Green Gap from widening in the next decade and help end a legacy of damaging commoditisation in packaging.
To overcome this challenge, companies need a general consensus that packaging strategies will be approached with a cost neutral mindset. If a company is to succeed in truly achieving its environmental goals with new packaging strategies (or any new strategy), they must be communicated throughout the business with a clear, joined-up approach to succeed. Brands with understood, meaningful environmental and CSR policies are progressing faster than those that are not working cohesively.
Download your free copy of our Future of Packaging report here to read how premium lifestyle brand Joules overcame the bias of price during packaging procurement.