Circular Economy, Sustainable Materials Management, and the Importance of KPIs

The circular economy has undeniably become the trendiest business buzzword in the conversation on packaging sustainability. Building on established themes like zero waste, cradle-to-cradle design, and closed loop systems, the philosophical framework is simple: in a circular economy, we don’t extract virgin non-renewable resources and we don’t generate waste. Instead, industrial outputs become new inputs, and thus some of the environmental burdens of resource extraction and solid waste disposal are averted.

In the world of packaging, circular economy thinking owes much of its popularity to the visual and visceral presence of packaging waste. Companies are doubling down on innovations to alter or improve the recyclability of their packaging. Consumers want to able to recycle, reuse, or compost packaging, and the circular economy model fits with consumer expectations of corporate responsibility.

Circular economy thinking focuses most heavily on material sourcing at the beginning of the life cycle and recovery at the end of life, and although this focus is proving to be an effective catalyst for industry action, it’s important not to lose sight of the overarching considerations for the whole life cycle – including the middle. Circular economy thinking should be paired with life cycle thinking and the “sister” philosophical framework of sustainable materials management. Doing so gives more context to the net environmental impacts resulting from the life cycle of a package, placing emphasis on the outcome of the life cycle in addition to its shape. Together, these approaches promote pragmatic, meaningful gains in impact reduction along with the long-term vision of a materials economy devoid of packaging waste.

At SustPack 2017, our panel discussion on Demystifying Packaging Metrics and KPIs explored ways of benchmarking and measuring progress toward both circular economy and sustainable materials management ideals at the beginning and middle of the life cycle. A key takeaway from the session is the necessity of a suite of key performance indicators (KPIs) working in concert to help guide progress.

Jason Pelz, vice president of environment at Tetra Pak, a food processing and packaging solutions company, shared the set of indicators being used by the aseptic and gable top carton producer. To address circular economy thinking on the feedstock side, Tetra Pak tracks the percentage of renewable feedstock materials used to make a package and the level of assurance that those materials were responsibly grown and harvested. On the recovery side, Tetra Pak measures the percentage of consumers that could recycle their product, i.e., those with a municipal program that can process their cartons, as well as the percentage of cartons that are recycled. On the sustainable materials management side, Tetra Pak places emphasis on greenhouse gas emissions incurred by both their operations, toward the beginning of the packaging life cycle, and greenhouse gas emissions incurred across the value chain, appropriately addressing the full packaging life cycle and the carbon footprint of the holistic system of using Tetra Pak’s cartons.

When companies are advised to craft and use a set of KPIs to measure sustainability, a common refrain is “Why so many? Isn’t there such a thing as a single unified metric?” The answer is always no.

We’re all tempted to pursue a mythical singular metric that distills all the numerous sustainability considerations and gives one bottom line measure of success, but a suite of KPIs such as those used by Tetra Pak gives a robust view of progress in the multiple dimensions of sustainability. Furthermore, attention will continue to shift across impact areas, and using a suite of KPIs grants flexibility that can keep industry nimble as the understanding of sustainable packaging evolves. Today, resource management and greenhouse gas emissions are the foremost life cycle indicators. In a few years, it may be water consumption, aquatic toxicity, particulate emissions, solid waste to landfill, or something not at all on our radar today. That shouldn’t be intimidating or prohibitive of establishing metrics. The most important action a company can take to improve packaging sustainability is to create KPIs and use them, like Tetra Pak is doing, to ingrain a system of measurement and management around their processes. Change will come and go, but the idea of a systemic approach to gauge success and progress is here to stay.

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