Climate change: the risk for business and the need for action
Global supply chains mean climate change affects everyone, including your business.
The world is in a climate crisis, but greenhouse gases continue to be pumped into the atmosphere in record quantities. Amplified by recovering economies from the pandemic, carbon emissions this year are predicted to increase by the second largest rise in history.
As the world heats up from these emissions, the effects are all too clear. In 2020, the northern hemisphere had its hottest summer on record, and Europe suffered its hottest year since records began. The consequences of such temperatures ranged from record numbers of hurricanes sweeping the Atlantic to monsoon flooding in China that cost $32 billion.
Here’s how climate change affects your business and what you can do about it.
What are the risks for businesses?
Climate change doesn’t just affect the planet but businesses too. Volatile weather events can create unpredictable disruptions in your supply chain; interrupting production and transportation, severing connections to suppliers and ultimately hurting revenues. And because supply chains and markets today are truly global, the impact of a climate event in one place is likely to be felt by businesses across the world.
What’s being done to reduce global warming?
Countries have set targets to limit the impact of global warming. The most well-known of these is The Paris Agreement, established in 2015 to limit global warming to 2°C above pre-industrial levels. The United Nations Framework Convention on Climate Change believes this is the minimum amount required to substantially reduce the risks and impacts of climate change.
To date, 195 countries have ratified the legally binding agreement. This means regulations will tighten as countries aim to meet emission targets. And businesses need to ensure they adapt and comply as these changes happen.
What can businesses do?
To understand how your business can take action on climate, we need to first identify what the planet needs:
- It needs businesses to radically start reducing carbon emissions. This includes methods like using lower impact freight, leveraging new production methods that create less material waste, using spare transport capacity or finding business models that can accommodate circular economies. Whichever it is, reducing carbon emissions is critical.
- It needs carbon dioxide removed from the atmosphere. Planting trees is one approach, but it can’t scale globally, and neither is it a long-term option. What the planet needs is permanent carbon removal, and businesses supporting this solution can make a difference.
With increasing pressure from conscious consumers, organisations and legislation, businesses are being called to commit to becoming net zero by 2050. And momentum is growing. We recently saw the launch of Race To Zero, a global campaign aiming to accelerate the shift towards a decarbonised economy. Over 2,000 businesses are currently involved.
Whilst this is encouraging, we’re not yet on track to meet The Paris Agreement. Only 6% of consumer goods companies have set themselves targets rigorous enough to comply with the Paris Agreement. We need radical action. And we need carbon removal.
This is why we created Sourceful; to help businesses source smarter and more sustainably whilst reducing carbon emissions. And that’s why we also set up Sourceful Climate, an initiative giving businesses the chance to support pioneering carbon removal projects. We understood that carbon removal was critical to the fight against climate change but didn’t yet have the scale needed to address the problem. So, we wanted to play our part and help other brands to do the same.
Why is action needed now?
Besides the planet urgently needing us to take action, there are physical and transitional risks from society’s response to climate change. For example, regulation changes, like the UK’s recent Plastic Packaging Tax, may increase business costs or undermine the viability of existing products and services or affect asset values.
So, tackling climate change isn’t just about creating value for your brand, it’s about addressing fundamental risks that your business is likely to face in the near future and in turn, building a resilient supply chain to help with this.
In case that wasn’t sufficient, a study from Harvard researchers in 2016 found that businesses taking outstanding action on sustainability performed better on public markets than those with poor performance on sustainability indicators. Whilst past data isn’t a perfect predictor of the future, it does show that capital markets care about your actions on sustainability.
It’s crucial for every business to know what their impact is on the planet, and to take steps to ensure their both reducing carbon emissions and taking action on climate change. Doing so not only creates positive brand perception but also mitigates the risk for your business and helps secure the future of our planet.
We want to help brands do exactly that: source more sustainable products, deliver smarter and more affordable supply chains, and make it easy to take stand-out action on the climate.
Start sourcing smarter today!
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Why the full life cycle matters
Data is the foundation of sustainability. It shows us the extent that our climate is changing. It’s the vital information that combats greenwashing, which nearly half of all green claims in the EU are guilty of . It’s the backbone of the IPCC’s (Intergovernmental Panel on Climate Change) reports (e.g. ). And it’s the foundation of every Life Cycle Assessment.
Life Cycle Assessments (LCA) are a powerful, science-based tool for estimating the potential environmental impact of products, processes, or services throughout their life cycle . For a full LCA, teams will typically look at data from five life cycle stages:
- Raw materials extraction
- Secondary packaging & transport
- Product use
- Final disposal
Missing one or more life cycle stages, however, directly affects the quality of the assessment. Leading organisations are on the same page. For example, The Competition and Markets Authority (CMA) , the Advertising Standards Authority (ASA)  in the UK and the European Commission for the EU all underline the need for high-quality data across the full life cycle to avoid making misleading environmental claims.
To quantify the impact of not assessing the full life cycle, we ran our own tests using our proprietary LCA engine. Here’s what we found: focusing only on a product’s raw ingredients can conceal between 25-70% of the product’s emissions. Put another way, selective reporting on a product’s emissions will never lead to accurate claims. The full life cycle matters.
Third parties: an extra layer of security
We’ve seen how LCAs rely heavily on the quality and completeness of data. But to ensure the highest standards of accuracy and consistency, third parties offer an extra layer of security. These include standards like ISO 14040 and 14044 and methodologies like the Product Environmental Footprint created by the European Commission.
A proprietary methodology
To go one step further, we developed our own LCA methodology. This allowed us to go beyond the static nature of a normal LCA and instead build an engine that could assess billions of product variants from different suppliers, giving results in real time whilst not compromising on accuracy. After building our engine, we commissioned an external panel of LCA experts and academics to review it to verify that our model conformed to the leading ISO standards.
It’s this rigorous homegrown approach that’s allowed us to develop a catalogue of science-backed products that in turn empower brands to make measurable progress. And it’s allowed us to support those brands in communicating that progress confidently with their customers.
What does the data say?
Our approach to LCA allows us to pinpoint both a product’s carbon hotspots and the biggest opportunities to reduce its carbon footprint.
We’ve found that the production of packaging components, international transport and disposal represent the majority of a packaging product's footprint. Let's dive deeper:
1. Production of packaging components
This stage, which includes the extraction, transport, and refinement of materials, typically accounts for the majority of the life cycle impact (for example, c.70% of our Eco Mailer Box’s total carbon footprint). An example of how we’ve reduced these emissions is custom sizing. By making custom sizing available for our packaging boxes, we’ve empowered brands to remove the empty and wasteful space that has become standard in the packaging industry. We estimate that this can reduce the total carbon footprint of a mailer box by around 8%.
Freight is carbon intensive, especially international air shipping which can represent up to 90% of the life cycle of packaging. But opting for sea freight instead can lower that number by 60%, which is the case with our recycled mailer bag. Whilst this is the best situation, we know that time is a significant constraint for brands, making sea freight often unfeasible.
We launched split delivery as a solution; a freight option where brands can choose how much of their order to send via air and sea. This allows brands to meet short-term demand whilst benefiting from sea freight’s significantly lower emissions. If a brand ordered 20,000 units and sent 10% by air freight, they could reduce their carbon footprint by up to 50% compared to sending the entire shipment via air.
3. End of life
End of life (also known as disposal) is an often overlooked but significant life cycle stage. Even for a cardboard box that can be easily recycled (71%, 2021 UK data, ), disposal still accounts for c.15% of its total carbon footprint. Disposal also varies dramatically between materials, making it a crucial part of any comparison. For example, whilst cardboard’s recycling rate in the UK is 71%, flexible plastic’s is unfortunately only 6% . This pushes disposal to account for c.21% of our recycled LDPE mailer bag’s emissions.
Always consider the full life cycle
For an accurate account of a product’s emissions, the full life cycle is essential. This is why authorities like the CMA and ASA require businesses to be clear on which stages of the life cycle they’ve included when making claims about a product’s environmental impact. Gold standard claims will always look at the full life cycle and selectively reporting on emissions will result in unreliable and dubious claims. This will put you at risk in a world that is demanding action and clarity.
With the full life cycle in hand, however, you can measure and track real progress, identify the best opportunities and communicate confidently with customers.
- Abnett, K. (2023). EU proposes clampdown on companies using fake ‘green’ claims. Reuters. Available here [https://www.reuters.com/business/sustainable-business/eu-proposes-clampdown-companies-using-fake-green-claims-2023-03-22/#:~:text=EU proposes clampdown on companies using fake 'green' claims,-By Kate Abnett&text=To use such labels%2C a,under an environmental labelling scheme]. (Accessed: 21 Aug. 2023).
- IPCC (2023). Climate Change 2023: Synthesis Report. doi: 10.59327/IPCC/AR6-9789291691647.
- PRé Sustainability (2020). Life Cycle Assessment (LCA) explained. Available here [https://pre-sustainability.com/articles/life-cycle-assessment-lca-basics/] (Accessed: 21 Aug. 2023).
- Competition & Markets Authority (2021). CMA guidance on environmental claims on goods and services. Available here [https://www.gov.uk/government/publications/green-claims-code-making-environmental-claims] (Accessed: 21 Aug. 2023).
- Committee of Advertising Practice (2021). The CAP Code. Available here [https://www.asa.org.uk/static/47eb51e7-028d-4509-ab3c0f4822c9a3c4/The-Cap-code.pdf] (Accessed: 21 Aug. 2023).
- DEFRA (2023). UK statistics on waste. Available here [https://www.gov.uk/government/statistics/uk-waste-data/uk-statistics-on-waste]
- WRAP (2021). Recycling your customers’ plastic bags and wrapping. Available here [https://wrap.org.uk/resources/guide/recycling-your-customers-plastic-bags-and-wrapping]
To achieve net zero and limit the worst of climate change, we have to rethink our reliance on plastic.
This statement is more urgent than ever, but the problem with plastics is unfortunately much bigger than just climate change. In reality, plastics also directly threaten human health and endanger habitats when leaked into the natural environment. Paradoxically, one of the main culprits of this damage is also claimed by some as the next green solution — compostable plastics.
To unpack this new material, we conducted a study on the environmental impact of compostable plastic bags, to find out if they truly offer a more sustainable alternative to traditional materials like paper, fossil plastics and recycled plastic. In this article, we’ll focus on one part of the study: the damage that leaked compostable plastics have on our ecosystems.
The consensus on compostable packaging is unclear
The biodegradable plastics market is projected to expand 2-3x between 2021 and 2026 . And at Sourceful, we’ve seen firsthand the escalating demand for compostable packaging. But whilst many brands are running towards compostable plastics, the consensus is still murky, with other companies (like Tesco and Abel & Cole) publicly distancing themselves from them. We wanted to use our research to help fill the vital knowledge gap and build consensus.
Compostable plastics are often considered a green alternative because they degrade and so are often (incorrectly) assumed to effectively disappear in the natural environment. The theory is that this reduces the amount of plastic in the ocean and the risk of microplastics. But as with most things — it’s not that simple. Life cycle assessments (LCAs) have historically struggled to account for leaked waste and microplastics because of a lack of data, even though both play a major part in a material’s overall environmental impact.
To tackle this, we partnered with the Sustainable Materials Innovation Hub at the University of Manchester. This gave us access to the latest labs, data on new and innovative materials and their in-house expertise — all invaluable to our study. Together, we investigated how traditional fossil fuels and compostable plastics behave when leaked. Here’s what we found.
The impact of leaked waste is twofold
One of the major environmental impacts of plastics (fossil and compostable), besides their carbon footprint, is their effect on the natural environment when leaked.
Leaked plastic waste generates both physical (e.g. animals ingesting microplastics or being entangled in larger pieces) and chemical risks (e.g. the leaching of toxic additives like plasticisers and flame retardants) to wildlife from the breakdown of plastic into microplastics and nano-plastics. Not only does the breakdown of plastics directly leach toxic elements but they can also act as a magnet for other environmentally harmful pollutants.
To make matters worse, leaked plastic waste has also been found to be directly connected to climate change. Researchers at the Ocean University of China found that microplastics reduced the growth of microalgae and the efficiency of photosynthesis, in turn degrading plankton’s ability to remove carbon dioxide from the atmosphere . The knock-on effect is that the ocean itself cannot capture carbon as efficiently; an essential resource in our fight against climate change, given that it sequesters 30-50% of total CO2 emissions from human activity.
Compostable plastics and leaked waste
The longer a plastic takes to break down, the more likely it will be ingested or cause entanglement. Put another way, the risk of adverse effects increases the longer a plastic persists. To account for this, we assessed each material for its degradation time in freshwater, marine, and soil environments, and used that data to identify a leaked waste impact rating for each material.
Our study found that whilst compostable plastics do reduce the risk of some adverse effects (less risk of entanglement and a shorter period of microplastics), they are not a cure-all for plastic pollution. Compostable plastics can persist in the natural environment for over half a century, which puts into question the popular claim that these plastics are the next green solution. This matches up with the conclusions that Narancic et al. made in their study . Here’s an overview of degradation times for fossil plastics and common compostable plastics:
- Fossil plastics take around 4-5,500 years to degrade in soil (with some studies suggesting this is even higher, at around 10,000 years); the worst and longest degradation time amongst all plastics. This is made worse by the common use of harmful additives .
- Compostable plastics like PLA take on average 1-63 years in soil to degrade completely. In water, PLA does not degrade at all.
- Other compostable plastics like TPS and PHB take on average 4-6 months to degrade completely.
So compostable plastics do have a tighter degradation window than fossil plastics, and they also typically contain fewer toxic additives (such as flame retardants and stabilisers). But they still can have a significant degradation window, especially and unfortunately PLA, one of the most common materials used in compostable packaging (including coffee lids and bags).
Admittedly, it is still hard to know the exact time it takes for a plastic to decay; the field of estimating polymer lifetimes is still relatively new. But we do have enough comparative data to give us an indicative hierarchy of materials that we can use to assess performance and inform decisions.
Compostable plastics do slightly reduce the risk of microplastics because of their shorter degradation times. But our larger study showed that compostable bags emit 1.5-2x more greenhouse gas emissions over their full life cycle than virgin fossil plastics. In addition, given they are still relatively new, there are uncertainties about the unintended consequences that could come from their use. ****This begs the question: are the reduced risks from leaked waste enough to offset the increase in carbon footprint? For now, we don’t think so.
What does this mean for my packaging?
It’s clear that we need to move away from fossil plastics. And in their current state, compostable plastics are not the next green solution. So, what’s the answer?
First, brands should follow the waste hierarchy. Can this packaging component be removed? Can we use less materials without compromising function? How can I design this product so it’s easy to recycle?
Second, brands should prioritise responsibly sourced paper if possible, which typically has the lowest impact of any material. Its full life cycle emissions are low, and there’s no risk of microplastics if leaked. That’s not to say it’s perfect; forests are often mismanaged and producing and recycling paper still generates emissions, uses large amounts of water and potentially also harmful chemicals. This is why certifications like the Forest Stewardship Council (FSC) and Programme for the Endorsement of Forest Certification (PEFC) are so important.
Paper isn’t also appropriate for every use-case and product, like liquids. This is why we stress prioritising paper if possible. Packaging should always be carefully matched with the product, and blanket rules rarely result in success.
For more information about this study, email email@example.com
Thanks to Dr. Guilhem de Hoe and Dr. Chloe Loveless from the University of Manchester for leading the collaboration.
Our study focused on the typical compostable plastics currently seen on the market (PLA, PBAT, PHA and TPS). Our study did not include a nascent group of materials classed as unmodified natural polymers, which we’re interested in exploring in the future.
- MarketsandMarkets. (2021). Biodegradable Plastics Market - Global Forecast to 2026.
- Zhang, C., Chen, X., Wang, J., & Tan, L. (2017). Toxic effects of microplastic on marine microalgae Skeletonema costatum: Interactions between microplastic and algae. Environmental Pollution, 220(B), 1282-1288. [Link] https://doi.org/10.1016/j.envpol.2016.11.005
- Narancic, T., Verstichel, S., Chaganti, S. R., Morales-Gamez, L., Kenny, S. T., De Wilde, B., Padamati, R. B., & O’Connor, K. E. (2018). Biodegradable Plastic Blends Create New Possibilities for End-of-Life Management of Plastics but They Are Not a Panacea for Plastic Pollution. Environmental Science & Technology, 52(18), 10441-10452. [Link] https://doi.org/10.1021/acs.est.8b02963
- Chamas, A., Moon, H., Zheng, J., Qiu, Y., Tabassum, T., Jang, J. H., Abu-Omar, M., Scott, S. L., & Suh, S. (2020). Degradation Rates of Plastics in the Environment. ACS Sustainable Chemistry & Engineering, 8(9), 3494-3511. [Link] https://doi.org/10.1021/acssuschemeng.9b06635
Right-sized packaging is the opposite of shipping small products in big boxes. It’s packaging that minimises the empty space around your product — whilst not comprising its safety or your branding. Or put another way, right-sized packaging is the most effective, and most efficient, size packaging for your product.
The benefits of right-sized packaging are many. As a business, you reduce your material usage, which means fewer costs across procurement and production. And smaller, lighter packaging also means fewer costs across transport and storage. All of this means a smaller carbon footprint, less waste and a better, less frustrating customer experience.
Whilst right-sized packaging seems a logical choice, businesses are notorious for using oversized packaging. According to DHL, the average box is 40% too big for its contents. In part, this is because businesses often buy large volumes of stock packaging to reduce unit costs. As a result, they have just a few packaging options for all their products. Products are then shipped in the nearest fitting packaging, regardless of their size. In practice, this means companies end up shipping the product and all of the air around it, which is expensive and wasteful. To put the scale of this waste into context, eliminating the 40% excess volume DHL cite would mean 24 million fewer truckloads annually — in the USA alone.
Another catalyst of oversized packaging is e-commerce. Unlike traditional retail, e-commerce is more complex and more people are involved across fulfilment, freight and last mile delivery — with up to four times as many touch-points. And with more touch-points, the risk of damage increases. According to one study, the average package is dropped 17 times in transit. Businesses use oversized packaging and void fill to minimise this risk and avoid breakage costs. Reducing breakage is important, but many companies don’t realise that with right-sized packaging they can both minimise risk and reduce costs, all whilst being more sustainable.
Let’s dive deeper into why your business needs right-sized packaging.
1. Slash costs across your business
Right-sized packaging is an ideal strategy to reduce costs for any business. In fact, choosing right-sized packaging can have a fortunate snowball effect across your business. Smaller packaging means fewer material costs, which then means fewer production costs and handling fees. And it means fewer transport costs as more packages can fit on a pallet. Or if you’re sending single products via a courier or Royal Mail, your package may fit into a cheaper parcel bracket. And finally, you can store more products for less, which also increases your buffer stock — a useful way to build a more resilient supply chain.
One famous example of right-sized packaging is IKEA’s Ektorp sofa. IKEA’s engineers worked out that instead of shipping the sofa as one piece, they could break it down and ship it as parts. This allowed them to eliminate the air they were shipping (and paying for) and reduce the packaging size by 50%. For IKEA, the result was an annual saving of €1.2 million and 7,477 fewer trucks on the road every year.
2. Reduce your carbon footprint
Whilst IKEA reduced their packaging costs, they also reduced their carbon footprint. Fewer materials meant fewer resources and less energy used to produce those materials. And it meant significantly fewer transport emissions as well as less waste. Although there are exceptions, the rule of thumb is when you use less, your carbon footprint falls, and right-sized packaging is an opportunity to use less. It’s important to remember that right-sized packaging is about removing redundant materials and keeping those that serve a purpose. This makes it a simple way to create more sustainable packaging without jeopardising your product.
3. Create frustration-free packaging and empower your customers
Consumers are tired of bad packaging, so much so that they’ve started Reddit threads to showcase the worst examples. Youtube too is full of consumers venting their anger about oversized packaging.
Their irritation is twofold. First, oversized packaging is often frustrating to open, with unnecessary materials creating a more complex, sometimes overwhelming experience. And second, oversized packaging is wasteful. At a time when research is showing that consumers want to be more sustainable, using excessive packaging hinders their efforts and doesn’t reflect their values. Right-sized packaging, however, addresses both parts of their annoyance. By keeping material usage down, it creates a frustration-free packaging experience and empowers your customers to play a part in reducing waste. A win-win for them and you.
Managing right-sized packaging is hard, but Sourceful can help
As great as right-sized packaging is, it isn’t perfect. Problems often arise because right-sized packaging is only right for one product, which means you may end up with a lot of packaging SKUs. Managing this can be tricky, but with the right tools, it doesn’t have to be. With Sourceful, you can use smart tools like Auto-Stock to manage, track and replenish your packaging in one place. You can also store everything in Sourceful’s warehouse. Fast-growing brands like Zoe and Floom already use Auto-Stock to easily manage their packaging, no matter how much they have. Want to learn more? Contact us.
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