How packaging plays in the circular economy

A circular economy business model revolution is underway in a number of industry sectors — apparel, building products, durable goods and electronics, to name a few.  

One driving factor is cost savings. Another driver, of course, is the increasing recognition that economic growth must be decoupled from resource consumption or our planet's resources simply will run out.

In a circular economy business model, value is found in new uses of materials; it is about continuous material valorization. By design, circular economy business models enable companies to retain more of the value of the materials, energy and labor inputs that go into producing goods and services.

One of the earliest crusaders for a circular economy approach, circa 1992-1993, was Xerox Corp.'s Jack Azar, associate director of environmental products and technology at that time. Azar developed what he called Asset Recovery Management (ARM) programs or “managing products and inventory to minimize their environmental impact at all stages of the life cycle [which] entails reusing an asset either by remanufacturing to its original state, converting to a different state, or dismantling to retrieve the original components.”

He implemented the program by limiting production materials to recyclable and recycled thermoplastics and metals. When Xerox applied ARM, they got out of the business of selling copiers and went into the business of selling copies. Customers leased the machines and when the lease period expired, they got upgraded models and Xerox reclaimed the original resources for use in next generation machines.  

The commercial carpet industry has a more recent implementation of circular economy practices. Three industry leaders  — Interface, Shaw and Desso — all provide the service of floor covering by leasing carpet, which they take back when worn, during a building renovation or when customers desire to change their floor covering. After recovering their material asset, old carpeting, they separate the backing material from the carpet fibers, reprocess both and use them to manufacture new carpet tiles. 

These companies reduce their reliance on virgin resources and leverage existing material investments to produce new carpeting via take-back programs. By rethinking their linear model of material consumption and product delivery, they divert used carpet away from landfill and extend the utility and value of the materials. As a bonus, their customers avoid carpet disposal fees.

With both Xerox and carpet manufacturers, it's easy to visualize how the traditional business model of take, make, use and dispose is transformed from a one-way linear system into a resilient and restorative cycle.  

Try it in packaging

Packaging is much more ephemeral than durable goods. By virtue of its intended role in the product system, most packaging is intended to have a short life span and is rarely considered by the manufacturer, retailer, brand owner or consumer-goods company as a recoverable asset. In fact, packaging exemplifies a linear system of production and waste, even as companies ramp up efforts to increase the recyclability and actual recycling of packaging materials.

A 2010 study estimates the market value of packaging materials discarded just that year was $11.4 billion. Clearly it is time for the packaging industry to explore how circular economy business strategies can keep those billions of dollars in the profit vs. the loss column.

Illustration by Katherine O'Dea, Circular Economy Strategists

It is tempting to equate post-use package recycling with a circular business model, yet the truth is, recycling is the least valuable loop in a circular economic system because the waste already has occurred. Recycling represents another raw material flow but ignores embodied energy and quality and remains an end-of-pipe solution. As Ken Webster, head of innovation at the Ellen MacArthur Foundation, wrote, “Recycling legitimizes a linear economy by promising what it cannot possibly achieve — a closed loop on short-cycle, low-value materials.”

What, then, constitutes a circular economy business strategy for packaging? Transitioning from a linear system to a circular business model for packaging starts with the recognition of the lost market value; then depends on deliberately designing for revalorization of the package and its material. This calls for changes at every phase of the life cycle.

Specifically, practicing life cycle design for packaging material circularity requires:

● Rethinking not only the package, but all of its production processes as well.

 ● Identifying opportunities for material recovery and by-product synergies (industrial symbioses) at each stage of the life cycle from resource extraction through conversion and product shipment.

 ● Making well considered material selections that both minimize impacts and support material recovery across the entire life cycle.

 ● Considering material health with the goal of using no or minimal additives that could preclude material recovery or make it more difficult, resource-intensive or expensive.

 ● Working with supply chain partners to institute smarter sourcing strategies, use cleaner production practices that eliminate the use of chemicals of concern and minimize emissions.

● Forming symbiotic partnerships not only within a traditional packaging supply chain but across industries to keep production waste and by-products in continuous flow.

● Educating consumers and more effectively engaging them in the revalorization process.

● Building a smart, robust and collaborative reverse logistics system for asset recovery and to facilitate the by-product synergies.

● Adopting a new and expanded recovery hierarchy, which from most preferable to least would be:

         — reuse

        — revalue as in closed-loop recycling — bottle to bottle, can to can, etc.

        — repurpose as in up-cycling into a product with potential for additional life cycles, such as PET into jeans

        — recycling as in down-cycling such as using recovered office paper in the production of toilet paper, giving material just one more usage.

 Illustration by Katherine O'Dea, Circular Economy Strategists

The new and expanded recovery hierarchy considers incineration for energy recovery and composting as system leakages only slightly preferable to landfilling as neither option keeps resources in play. While composting is a legitimate cycling process for bio-materials because they are returned to the natural ecosystem from which they were derived, moving a biomaterial-based packaging material into a multi-cycle technical loop will add more value from both an economic and a resource management perspective.

Energy recovery is not the same as reuse because it is a one-way linear process for waste management, not material management.

McKinsey and Company and the Ellen MacArthur Foudation estimates that $1 trillion could be found in annual financial returns from circular economy practices by 2025.