Flexible Packaging, the Circular Economy, and Supply Chain Sustainability

Companies Must Improve Their Environmental Credentials

Suppliers, manufacturers, retailers, and distributors have a strong interest in minimizing environmental damage. This is driven partly by stakeholder and consumer pressure, and partly by the introduction of government regulations and restrictions. Companies will strongly benefit from greater visibility and transparency in their environmental initiatives.

This is all playing out in the microcosm of packaging—moving to a circular economy approach, changing trends, the benefits and disadvantages of flexible packaging, and the importance of supply chain transparency. 

Understanding these changes is critical. Not just for businesses themselves, but also for environmentally aware consumers who are increasingly voting with their wallets.

An Overview of the Circular Economy in the Supply Chain

The Circular Economy is a framework that significantly reduces the environmental impact of how we produce, distribute, buy, and use products. Under a traditional, linear economic system, we extract natural resources, turn them into products, and sell them to consumers who then dispose of them at the end of their working life. This can be extremely wasteful.

In contrast, a circular economy considers the environmental impact at every step, and implements best practices that focus on reduction, reuse, recycling, and regeneration:

• Eliminating waste and pollution as much as possible.
• Using renewable energy and resources.
• Circulating and recycling materials and products.
• Aligning supply, manufacturing, and distribution in a nature-centric way.
• Supporting the easy and responsible disposal of products and packaging through a composting and biodegradable approach.

The overall idea is that a circular economy is “a resilient system that is good for business, people, and the environment.”

Flexible Packaging in the Circular Economy

Flexible packaging is designed to meet some of the needs of a circular economy. This type of packaging is designed to:

• Transport and protect products using fewer and less impactful raw materials.
• Make sideways recycling easier, allowing for the packaging to avoid being downcycled for as long as possible.
• Encourage consumers to reuse, return, and recycle the packaging.
• Enable easy composting for biodegradable packaging.

In practical terms, this leads to a reduction in environmental impacts. One circular packaging manufacturer, Circule, states that circular packaging will reduce the carbon footprint for packaging by 73 percent.

Differences Between Flexible and Circular Packaging

Flexible packaging is a great starting point for the circular economy, but it’s not quite enough by itself. That’s because truly circular packaging relies on big shifts in perspective and significant investment in collection, recycling, package return, infrastructure, and other innovations. 

True circular packaging doesn’t exist—yet. In the meantime, moving towards flexible packaging is a much more realistic option, with circular packaging as an eventual goal.

Why Businesses Want to Make their Flexible Packaging More Circular

Although circular packaging isn’t yet a reality, flexible packaging is an important step in the right direction. Businesses have several reasons for moving to more flexible and sustainable packaging solutions:

• Non-governmental organizations and other associations are encouraging businesses to make the switch.
• Corporations want to enhance brand perception, sustainability goals, and Environmental, Social, and Governance (ESG) requirements.
• Informed consumers are pressing for more ethical supply chains—one of the most visible parts of this is the packaging for their products.
• Governments are introducing regulations that will force businesses to adopt less environmentally damaging practices. 

This is driving significant growth in the flexible packaging market:

• In 2019, the flexible packaging industry had more than $30 billion in sales in the US. 
• The industry is growing by around four percent a year.
• Flexible packaging is the second-largest packaging segment in the US.
• The flexible packaging industry employs around 80,000 people.
• More than half of all flexible packaging is used for food products.

Technology trends are helping supply chain businesses to embrace flexible packaging.

Trends that Enable Fully Recyclable and Biodegradable Packaging

Several technological innovation trends are making it easier to introduce and use flexible packaging. These include:

• Advances in polyethylene (PE) and polypropylene (PP) plastics manufacture increase the ease of recycling.
• Movement towards mono-material packaging makes it much more efficient for recycling facilities to identify and process waste packaging.
• Recycling facilities create post-consumer recycled content that manufacturers can use to easily create recycled packages.
• Wash-off inks and labels allow for the recycling of used packaging without polluting the raw materials with printed designs.
• Digital printing lets manufacturers add essential information and design to recycled packaging products.
• Cardboard and bioplastic packaging are easily compostable and biodegradable.

All of these areas create small improvements for flexible packaging that together build strong benefits for supply chain companies.

Despite all of these enhancements, there are still some issues with moving to flexible packaging.

The Problems with Moving from Flexible to Circular Packaging

The main issues with moving from flexible to circular packaging are based on how difficult it can be to collect, return, and recycle packaging, specifically:

• Ink can cause degradation in the recycled material, leading to “grey” materials that can only be downcycled.
• Packaging that consists of multiple, different layers and materials is difficult to separate, and some materials may not be recyclable.
• Many recycling facilities are not yet sophisticated enough to automatically recognize different types of plastic, resulting in recyclable plastics being incorrectly diverted to landfills.
• Labels and sleeves that are not separated by the consumer or at the recycling facility can pollute recycling attempts.
• Many localities, regions, and countries do not have a strong enough recycling infrastructure to properly deal with flexible packaging.

These are issues that require regional- and national-level investment, policies, and solutions. While businesses are waiting on these larger initiatives, they can still make significant progress on their internal switch to flexible packaging.

Supply Chain Transparency, Circularity Assessments, and the Impact of Flexible Packaging

Transparency is essential for companies that want to introduce successful sustainability initiatives. This means using a centralized, digital supply chain platform to track, measure, and act on the circular economy and flexible packaging.

This will help with circularity assessments, including:

• A top-to-bottom holistic approach that determines the end-to-end ecological impact of products and packaging.
• Insight into where raw materials are coming from and the sustainability of material extraction.
• The individual components that go into products and the environmental impact of each.
• Opportunities for reuse and recycling in markets, places and countries that you’re selling into.

The right centralized, digital supply chain platform can enable this through several approaches:

• Track, measure, and calculate the ecological impact at a component, material, product, and supplier level.
• Mapping accountability and responsibility for recycling as part of a product and packaging portfolio. 
• Connect with all partners throughout the supply and value chain so that you can measure their carbon and sustainability footprint.
• Use data-driven analytics to identify inefficiencies and drive improvements to raw material extraction,  manufacture, distribution, and packaging.
• Collaborate throughout the supply chain to enable joint, sustainable solutions to packaging challenges.
• Create “one view of the truth” in an easy-to-use analytics platform, rather than relying on disparate data silos, formats, files, and retention.
• Centralize communications to speed up initiatives and enhance accountability.
• Store relevant ecological and sustainability documents, certificates, and similar information in a central repository.
• Integrate with information and systems through APIs.

Benefits to Businesses and Retailers

For those willing to embrace the circular economy and flexible packaging, there are some significant benefits. These start with an end-to-end oversight of the entire supply chain—this helps you protect your brand, mitigate risks, and demonstrate that sustainability is a central part of your business strategy.

You can show progress towards CO2 emissions reduction and plastic reuse targets, promises, and commitments. Greater efficiencies with supply chain partners will increase your speed to market for new and more sustainable flexible packaging solutions. This can drive greater cost efficiencies and create a competitive advantage.  

The TOPO Supply Chain Platform Provides the Insight and Sustainability Management You Need

Centralization of all sustainability data lets you eliminate misunderstandings and loss of data, so you can capture all of your sustainability information in one place. You can track the impact of every raw material, manufacturing decision, and logistics solution to get a complete understanding of environmental consequences. Reducing and removing these impacts supports your claims of zero emissions and strong sustainability.

Your entire supply chain will become more transparent, agile, and flexible, leading to happier consumers, greater alignment with regulations, and deeper engagement with supply chain partners.

Here at TOPO, our digital supply chain platform puts you in control of your sustainability needs:

• TOPO breaks down data silos, creating transparency and supporting data sharing and collaboration between different systems
• We help you collect and centralize sustainability data so you can analyze the data, create insights, and target ways to improve.
• Your business will become central to shaping the future of flexible packaging, supporting a circular economy and a sustainable future.

Get in touch with us today and learn how we can revolutionize your sustainability management.