2021 Focus On The “E” In ESG

Few things are more recognizable than the Coca-Cola bottle, which debuted in 1916 with a sleek design that helped make it an icon. Over the years, its glass contours often gave way to plastic, but paper? In late December, Coca-Cola said it is partnering with Danish startup Paboco to develop a paper bottle that, one day, could provide new packaging.

While plastics blanket the planet, the food and beverage industry is looking at how to make sustainable packaging— recycling, reusing and (sometimes) replacing plastic. Companies are turning to renewable energy, investing in startups that make new packaging, tapping regenerative agriculture, planting millions of trees and eyeing a second bottom line: sustainability.

There are reasons ranging from reputation to the risks of a changing reality for an industry that could face huge costs due to climate change. Everyone from investors to executives looks at environmental, social and corporate governance or ESG. That’s clearly part of companies’ interest in the environment as well as economics – and it’s likely to increase.  

That doesn’t mean this recognition is new. Coca-Cola in1953 co-founded anti-litter organization Keep America Beautiful. Since then, plastic has proliferated. So have slogans. PepsiCo talks about “reducing, recycling and reinventing.” Coca-Cola has its “World Without Waste.” But there’s more than words. Big F&B companies are facing criticism and making investments and commitments regarding recycling and packaging.

Nestlé plans to invest $3.6 billion over five years to battle climate change and promote sustainability. Danone, which owns Evian, plans to invest $2.18 billion over three years to transform packaging, agriculture, energy and operations.

This comes amid some bad press and pressure on plastic. Break Free From Plastic in its annual audit late last year ranked Coca-Cola the biggest plastics polluter in the world, followed by Nestlé and PepsiCo. Its volunteers collected litter around the world and counted how much came from each company.

Big F&B, however, often relies on and pushes for recycling to come to the rescue. Coca-Cola in 18 markets offers beverages packaged in 100 percent recycled PET bottles, some with packaging saying, “Recycle me again. I am made of 100% recycled plastic.” Nestlé said it doubled the amount of recycled polyethylene terephthalate in its water business since 2019 to 16.5 percent. Nestlé also introduced Nespresso capsules made with 80 percent recycled aluminum. And Evian makes some “bottles made from bottles” using 100 percent recycled plastics, while relying on more renewable energy and shipping by train, not truck, when possible.

There’s also a push toward regenerative agriculture: If farming depletes resources and destroys soil, nobody benefits.

Nestlé said it is working with more than 500,000 farmers and 150,000 suppliers to support regenerative agriculture and expects to source 14 million tons of ingredients through this channel by 2030. Nestlé also plans to plant 200 million trees over the next decade. The company says it’s willing to pay more, buy bigger quantities and help with capital. Companies get publicity and more long-term security.

Will consumers pay more for environmental products? A National Retail Federation and IBM study of shopping habits in late 2020 makes it sound like they might. The survey found 80 percent believed sustainability is important and nearly 60 percent would change shopping habits to reduce environmental impact. Among those who say sustainability is very important, more than 70 percent would pay a premium of 35 percent on average for sustainable and environmentally responsible brands.

Nestlé, which in 2018 created the Institute of Packaging Sciences to develop sustainable packaging, also recently invested $30 million in an equity fund focusing on boosting recycling. In addition to looking at paper bottles, PepsiCo is testing smart packaging, making it easier to sort waste to improve recycling. Evian, which was certified as carbon neutral by Carbon Trust, last September said it would seek to be a “circular brand.”

There is reality and reputation and companies are taking measures to address both. What’s good for General Motors may or may not always be good for the country, but what’s good for the climate can be good for company and country. Will these companies “win” the war against waste? That’s unlikely, but there can be huge amounts of progress, benefiting the brands and the planet along the way.