The word “crisis” has the potential to become the word of the decade. Beyond Corona and the Ukraine war, it is primarily climate events such as droughts and floods that threaten not only our lives, but also our supply chains. Much too late, but now at full speed, politicians are reacting and trying to transform our society towards an environmentally friendly and socially acceptable way of living and doing business. Most entrepreneurs are also aware that something has to be done. But how can small and medium-sized enterprises position themselves to be future-proof for generations to come? We will show you three steps in which a critical review is particularly worthwhile.
Recently, companies have been confronted with a plethora of regulatory measures, especially in the environmental and climate areas. They affect business in the short, medium and long term. For medium-sized and owner-managed companies in particular, this raises the question of how they can position their business in a market economy in a way that is future-proof or eco-compatible under these conditions.
The term “grandfathering” comes from the economic philosopher Anders Indset. He defines it as follows: “Being grandfathered means living in a value-oriented way and reconciling that with economic thinking. It is economic sustainability over time rather than on time, where ecology and economy are not contradictory.”
In other words: Sustainability becomes a prerequisite for economic success that is not just aimed at short-term returns, but creates values and business models that endure and also provide successors with a viable basis for market success.
To ensure that this succeeds, we recommend that our customers in the packaging industry critically review their current business model, particularly over three steps.
Step #1: Analysis of regulatory measures and risk assessment
The regulatory requirements for products and companies resulting from the EU’s Green Deal are increasingly entering the implementation phase.
The following list of measures from the last two years is only a small selection, but it already clearly shows the range of regulatory interventions.
Regulations as drivers at the product level:
- Revision of the packaging directive (PPWD).
- Farm to Fork Strategy
- Food Contact Materials Framework
- Single-Use Plastic Directive (SUPD)
- Green Claim Legislation
- Extended Producer Responsibility (EPR Schemes)
- Sustainable Products Policy (ECO Design)
- Waste Shipment Regulation
- EU Waste Directive
- Deforestation-free supply chain regulation
Regulations as drivers at the corporate level
- German Supply Chain Act
- Human Rights Supply Chain Due Diligence Regulation
- Whistleblower Directive
- Industry Emission Directive
- EU Taxonomy Directive
- Corporate Sustainability Directive
Against this backdrop, companies need to conduct a well-founded regulatory analysis to ensure that not only today’s compliance requirements are met, but also that the regulations currently being implemented are already “on the radar” and are taken into account.
In addition, a sustainability risk analysis for the areas of climate and supply chain with subsequent materiality analysis should ensure that the most significant risks can not only be identified and communicated transparently, but also form the basis for continuous risk management.
Step #2: Defining the sustainability requirements of customers and markets
When it comes to the sustainability requirements of customers and markets, the packaging industry must face two key challenges in particular.
- packaging design strategies: The requirements of brand owners and retailers for sustainable packaging design strategies must be concretely analyzed and identified at the product and product portfolio level. Large customer companies are often already further ahead here than small customer companies due to the time lag in implementation. In terms of industries and regions, there are also those that are further along than others. This situation should be clearly analyzed and priorities set accordingly.
- ESG criteria: Customer requirements in terms of “Environment, Social, Governance” (ESG) criteria must also be analyzed and defined at the corporate level. The most common frameworks and guidelines in this regard include, for example, the Global Reporting Initiative (GRI), the German Sustainability Code (DNK), EcoVadis or Sedex (ESG ratings), UN Global Compact, UN Sustainable Development Goals (SDGs) and the Carbon Disclosure Project (CDP). Again, the first step is to assess and prioritize the most essential requirements in terms of approaches. Implementation should also be summarized in a roadmap.
Step #3: Adjusting the sustainability of the product and service portfolio
Based on the findings and requirements from action areas one and two, the product and service portfolio should be adapted.
Specifically, it is necessary to examine the extent to which the requirements prioritized in this regard have already been met and are underpinned by appropriate service offerings. Among other things, this concerns recyclability, the use of recycled materials, the reduction of the packaging carbon footprint of the packaging materials used, and the energy and material efficiency of packaging machines.
The goal must be a clear prioritization of the development pipeline for products and services.
Conclusion: Continuous business model renewal
Finally, the findings from all three actions must be incorporated into the current business model. It is essential that this is not just done once.
The renewal must be continuous and, to this end, it is imperative that it be systematically anchored in management and in the corporate DNA with a sustainability strategy, sustainability management, a sustainability program and a sustainability roadmap.
Only then will the increase in value of the company and its grandchildren’s ability be the result of a systematic process and not a coincidence. Only then will they be sustainable and lasting in the traditional sense of the word.
We support our customers from the packaging industry with full conviction in critically reviewing their current business model and thus increasing the company’s value and setting up the company in a future-proof manner for subsequent generations. Please do not hesitate to contact us.