The Australian Packaging Covenant (APC) came into effect in July 2010 and supersedes two earlier packaging covenants. In essence, it is a combined government and industry initiative that aims to reduce the environmental impacts of packaging via three ways: better packaging design, higher recycling rates and greater leadership within supply chains. The APC is supported by national and state legislation that imposes obligations and penalties on non-signatories to the covenant to ensure signatories are not disadvantaged in the marketplace.
Who’s involved?
While the covenant was drawn up by government and industry, companies, government agencies and industry associations can all become signatories to the initiative. In the textile, clothing and footwear (TCF) sector these can be brand owners, raw material suppliers, manufacturers, wholesalers and retailers. The list of signatories is publicly available on the APC website and currently includes David Jones, Country Road, Pacific Brands, Oroton, Bata Shoes, Florsheim Australia and Spend-Less Shoes.
What do you have to do?
If you want to sign on, as a signatory it is compulsory to develop and submit an action plan to the APC on how you will achieve the goals of the covenant. The first goal is ‘to use resources efficiently and reduce environmental impact without compromising product quality and safety’. The second is to ensure the ‘efficient collection and recycling of packaging’. Finally, the third is to demonstrate greater leadership in sustainable packaging via encouraging reduction in litter and greater collaboration throughout the supply chain. The APC provides templates and tools such as workshops and manuals to help signatories develop their action plans.
What if you don’t want to take part?
While participation in the Australian Packaging Covenant is voluntary, brand owners with a turnover of over $5 million per annum who choose not to become signatories or who fail to comply with the APC requirements will be regulated under the National Environmental Protection (Used Packaging Materials) Measure (NEPM) in each of the states and territories within which the company sells its wares.
The APC, meanwhile, is valid from 2010 to 2015, at which point it will be reviewed.
To demonstrate how a TCF brand can meet the covenant’s goals, Ragtrader presents an edited case study provided by the APC on Nike. The sportswear behemoth is one of 10 companies from different industries that has agreed to a public comparison of its packaging standards against the sustainable packaging guidelines developed by the covenant.
Nike: A Case Study
“Our North Star is grounded in addressing sustainability at the very core of our business, beginning with design … For instance, through innovative design, we can design out waste, chemicals and energy, and design in new materials and new approaches. We call this concept ‘considered design’ … When we integrate this elevated consciousness into the design process, we maximise the value of our products and minimise the impact of their production. We reduce waste and CO2 emissions across the entire supply chain.” – Nike Corporate Responsibility Report FY07/09
Nike’s operations in Australia are headquartered in Abbotsford, Victoria. The company employs approximately 250 people locally and most product arrives in Australia pre-packaged.
Globally, Nike’s environmental specifications for packaging are outlined in its ‘packaging restricted substances and design requirements’. These specifications support the company’s commitment to ‘healthy chemistry’ by restricting use of potentially toxic substances; and to ‘closing the loop’ through the use of recyclable materials.
Waste minimisation is also important – in 2007 Nike set a target of reducing point-of-purchase packaging by 30 per cent. A waste audit had found that 32 per cent of solid waste generated by the company is from retail packaging and another 32 per cent from shipping and associated packaging.
Assessing compliance with the APC’s sustainable packaging guidelines
A gap analysis was undertaken to find out how closely Nike’s sustainability objectives and packaging strategies align with the sustainable packaging guidelines (see the table on page 18).
It is clear from this review that Nike systems and strategies meet or exceed most of the SPG requirements. Environmental design requirements are being integrated in product design and procurement processes, including those for packaging.
Only two of the SPG strategies are currently not reflected in Nike’s packaging requirements:
• design for litter reduction
• design for consumer accessibility
Neither of these are considered a high priority for Nike at this stage. Nike products are unlikely to be opened in public places and therefore unlikely to end up as litter. In general, the products would be unpacked at home and the packaging either recycled or disposed of in general rubbish.
Consumer accessibility is also unlikely to be an issue, for two reasons. Nike products are generally sold to athletes, who are less likely than some other consumers to have difficulty opening packaging. The most common form of packaging – the corrugated shoebox – is also very easy to open.
Profile of the shoebox
Primary (sales) packaging
Corrugated cardboard is Nike’s single largest material purchase. The shoebox and its shipping carton account for half of Nike’s packaging, so to reduce packaging waste Nike’s head office took a fresh look at the shoebox. A number of alternatives to the shoebox were identified to reduce material weight and cost in shipping. However, these alternatives would not be recyclable (unlike the shoebox, which is recycled in all markets) and would therefore not meet Nike’s objective of ‘closing the loop’.
The focus then shifted to reducing the amount of material in the box. Through innovative engineering, Nike developed a shoebox that is stronger and expected to use 30 per cent less material than a conventional box. Like the conventional box, it is manufactured with 100 per cent recycled material and is fully recyclable. The weight reductions translate into reduced embodied energy and greenhouse gas emissions. The new box was launched on Earth Day 2009 with the introduction of the Nike Zoom MVP Trash Talk hoop shoe, which is manufactured from scrap materials.
Other improvements that are being explored include changing shoebox sizes to better fit the shoes they hold, reducing wrapping tissue and reducing other packaging such as polybags for samples.
Distribution packaging
The shipping carton has also been redesigned to be 20 per cent lighter. The new shoebox and shipper will be rolled out throughout the Nike brand in 2011, saving an estimated 12,000 tonnes of corrugated board annually.
Packaging waste in the Australian distribution chain is minimised through reuse and recycling at Nike’s distribution centres (DCs), which are operated by contract partners. Shippers are reused to pack stock for distribution to retail stores, and those that are too damaged for reuse are recycled.
Business systems
The ‘considered design’ packaging project encouraged Nike to rethink its shoebox. The company also applied this new thinking to its business systems, in particular to the way it buys corrugated cardboard. Purchasing of corrugated packaging has always been undertaken separately in each product category, which means that developments in design and waste reduction are not necessarily shared across the business. The company is now investigating the opportunity to purchase corrugated as a commodity, which will allow it to achieve scale and influence its supply chain to use new materials and a lighter- weight construction.
Lessons for other signatories
This case study demonstrates how a company can demonstrate alignment between the sustainable packaging guidelines and its existing processes. A gap analysis is useful to determine how the strategies are being implemented internally, and to identify any strategies that are currently not included. Where there are gaps, the company should either justify its exclusion or take steps to ensure that its existing processes are amended to address the shortfall. In this case Nike concluded that litter and consumer accessibility are not significant issues for its product range at this stage.
Next steps for the company
Nike Australia will prepare an action plan under the Australian Packaging Covenant. An important element of this will be a description of current processes for sustainable packaging design and a table that demonstrates alignment with the sustainable packaging guidelines (Goal 1). The action plan will also outline how Nike Australia will meet the other two covenant goals, i.e.:
• Recycling (Goal 2) — in-house recycling systems for packaging and policies that encourage procurement of recycled products (e.g. office paper)
• Product stewardship (Goal 3) — working with suppliers and other organisations to achieve product stewardship outcomes for packaging.
“We were very pleased to be able to demonstrate that our design and procurement processes for packaging meet or exceed those in the sustainable packaging guidelines,” Nike Australia’s managing director Paul Faulkner says. “Hopefully other signatories can learn from Nike’s experiences.”
SPG strategy/Nike requirement
3.1 Maximise water and energy efficiency
Nike is working with manufacturing and logistics suppliers to improve energy efficiency and has purchased carbon offsets and renewable energy credits (RECs). Embodied energy in materials is also being considered during the design process.
The Nike water program collects data on water use throughout the supply chain. It
is working with suppliers to reduce water consumption and improve wastewater quality.
3.2 Minimise materials
In 2007 Nike set a target to reduce point-of-purchase packaging by 30 per cent. Sales packaging of apparel and socks must have less than 10 per cent empty space and the package is not to exceed one layer of packaging. All other sales packaging should not exceed 25 per cent empty space and cologne, perfume, wallet and belt sales packaging should not exceed two layers.
3.3 Use recycled materials
Rigid plastic components must contain a minimum 25 per cent post-consumer material. Nike will give purchasing preference (where price and availability allow) to paper and paperboard containing at least 25 per cent post-consumer and 50 per cent total recycled content.
3.4 Use renewable and/or recyclable materials
All suppliers must be able to certify that their packaging components meet at least one of three recovery routes: material recovery, energy recovery or organic recovery. Most of Nike’s retail and distribution packaging is manufactured from a renewable material – wood fibre.
3.5 Minimise risks associated with potentially toxic and hazardous materials
Cadmium, mercury, lead and hexavalent chromium metals cannot be intentionally introduced at any level. The sum of the combined incidental concentration levels for
each component shall not exceed 100ppm.
3.6 Use materials from responsible suppliers
Nike suppliers are prohibited from using materials derived from wood or pulp originating in native old growth or frontier forests. Nike will give purchasing preference (where price and availability allow) to wood and paper products that originate in forests that have been independently certified by the Forests Stewardship Council as being well managed. In future all suppliers will also be required to meet a minimum corporate responsibility standard.
3.7 Minimise transport impacts
Nike has improved container utilisation for inbound logistics and reduced use of air freight. New tools are being developed to measure and report on energy and greenhouse emissions from outbound logistics. These will help identify opportunities for further improvement.
3.8 Design for reuse
For packaging components that are claimed to be reusable, the supplier must provide written confirmation that the packaging is capable of reuse and meets the nine-point verification procedure for reuse in EN 13429.
3.12 Provide consumer information on sustainability
Environmental claims on packaging require mandatory review and approval in accordance with the US Federal Trade Commission guides for the use of environmental claims.