“Even though customers focus more and more on cost reduction in their inflation contingency plans, we’re still seeing good demand for plastic replacement to more sustainable fibre-based alternatives in all industries. We have a significant investment plan to support long-term customer focused growth, especially in R&D topics such as alternative fibers, barriers, and coatings, and the latest solutions proposed to our customers reflect this shift,” Christian Schmidt, Cluster Director DS Smith Packaging Romania told Sustainability Today.
“Consumer behaviours are changing rapidly, and this change is accelerating the project development phase in the business world. The new generation of more conscious consumers is challenging the status quo, as it is more focused on sustainability. Companies strive to be as sustainable as possible and develop complex strategies to address their targets, but when it comes to packaging, in many cases they do not have measurable results to include in their reports.”
How would you describe the evolution of DS Smith in Romania in the past years from a sustainability perspective?
DS Smith launched its Now & Next sustainability strategy in 2020 with a focus on Circular Economy, being inspired by the Ellen MacArthur Foundation, of which we are a strategic partner. Our sustainability strategy is designed in response to the changing environment in which we operate, and we aim to achieve an impact beyond our own organization. As we transition to a Circular Economy, DS Smith is committed to designing out waste and pollution, keeping products and materials in use for longer through our circular business model, and regenerating natural systems.
Through our goal of “Redefining packaging for a changing world”, we have built a business to benefit from key growth drivers of the changing consumer and retail environment, continuing growth in e-commerce, sustainability, and digital.The broader underlying structural shifts in consumer behaviour have accelerated, particularly in the demand for more sustainable fiber-based packaging.DS Smith Romania provides its customers and the public with green solutions – replacing problematic plastics, eliminating the carbon footprint from the supply chain, and providing innovative recycling solutions. Under the program, the company replaced 8 million pieces of problematic plastics with cardboard solutions.
On a corporate level, we are assessing on an ongoing basis how we will reduce energy consumption across our business, and work is underway to define what these measures will be.The company has committed itself to net-zero emissions by 2050, a state in which its actions and related CO2 emissions have no impact on the climate. By 2023, we will only produce packaging that is 100 percent reusable or recyclable.
What challenges have you faced during 2022?
The macro-economic outlook for the past year was challenging and it continues to be, but we have an excellent customer base spanning all segments of business, including automotive & industrial, electronics, FMCG food and non-food, and many more. We have a very good fidelity rate and we support our customers through efficient high-quality assets, dedicated colleagues, and a strong balance sheet that allows continued organic investment. Even though customers focus more and more on cost reduction in their inflation contingency plans, we’re still seeing good demand for plastic replacement to more sustainable fibre-based alternatives in all industries. I dare to say that our differentiators were our cost-optimization processes, tools, and capabilities, offered proactively many times to our customers.
What solutions and sustainability programs are most targeted by your company in 2023? What do you anticipate in terms of sustainability aspects to be tackled in the future?
We have a significant investment plan to support long-term customer focused growth, especially in R&D topics such as alternative fibers, barriers, and coatings, and the latest solutions proposed to our customers reflect this shift. For example, we are proactively developing solutions in consumer packaging, meant to replace plastic primary packaging from the shelves, which is now one of our top 5 areas of innovation focus. Romania is a focus market for DS Smith Packaging, new technologies are currently being installed to that end, and we look forward to sharing more with our customers in the coming months of 2023.
More than that, we are training our designers on Circular Economy, Circular Design Principles, and Circular Design Metrics allowing them to use to the maximum our state-of-the-art optimization tools and technical capabilities so that each of them can offer the customer a broader view of how we can adjust designs to become more efficient and sustainable throughout the supply chain. The Circular Design Metrics enable our customers to drive sustainability performance through packaging by reducing waste and pollution, keeping materials and products in use for longer as well as regenerating natural systems. With this pioneering tool, we can rate and compare the circularity of packaging designs across 8 different indicators. The Circular Design Metrics – an industry first – gives a clear identification of a packaging design’s sustainability performance, and where to focus attention. We aim for designs that are optimized for transportation, which combat shipping empty space or air, with the best metrics possible in palletization and warehousing, and all those measures result in significant CO2 reduction for both us and the customer.
What do you believe is the best way of replacing plastics in packaging? What are the sustainable alternatives?
We are ambitious in using innovation to tackle some of the world’s most complex sustainability challenges. The DS Smith Packaging design is based on data and analyses, collected regarding the supply chain and expectations. We create a complex matrix of questions in several steps to map the conditions.
The factor influencing the decision to transition from plastic to corrugated cardboard is understanding the process of which the packaging solution is a part, and how the material interacts with the supply chain.
For example, we have helped customers reduce the weight of their packaging, switch to renewable materials, and optimize their supply chains to reduce waste and emissions. If we look at the opportunities in all market segments, be it E-commerce, FMCG, Industrial, Automotive, and others, we understand that the pool of potential replacement chances for plastics is huge and all we need is to want to make this transition to build a sustainable future. We have also engineered a raft of innovative designs to eliminate even the smallest amounts of plastic packaging and I can give you many examples: replacing plastic sealing tape with self-locking cardboard flaps, swapping plastic labels with print direct onto cardboard, replacing the protective foams and bubble wrap with corrugated inserts that provide protection to the product, corrugated buffers replacing polyethylene inserts, anti-scratch and anti-slip coatings that replace plastics in electronics packaging, paper-based punnets for fruits and vegetables instead of plastic punnets and trays, replacing the shrink foil in the FMCG segment with wrap-around paper-based solutions, using water based inks for all our products, and many more.
The key is the close DS Smith – Customer partnership, which we rely on in aggregating essential information, and understanding the existing needs, all to result in a new, sustainable product, but with the same characteristics in the end.
How do you help your customers achieve their sustainability goals regarding recycling, waste management, and CO2 emissions?
By 2025, we will optimize the use of fibers in individual supply chains in 100 percent of our new packaging solutions. By 2025, we will eliminate 1 billion problematic plastic packaging from store shelves. Together with our partners, we will look for solutions to replace ‘hard to recycle’ packaging.
Matching shipments to content in the e-commerce industry is of great importance to the ecology and carbon footprint that these shipments leave behind. We must keep in mind that the e-commerce industry is growing rapidly and is one of the channels that consumers are very keen on. At the same time, it generates huge amounts of carbon dioxide, which are emitted into the atmosphere during transportation. One study conducted by One Poll in Romania in 2022 revealed that e-commerce parcels generate 10.505 unnecessary tones of CO2 emissions, the equivalent of over 600.000 online deliveries. Consumers are increasingly aware when it comes to the negative impact on the environment. The use of oversized packaging, in addition to having a significant environmental impact, also has a negative impact on consumer perceptions of brands. The same study calculated over 25.218 tons of unnecessary cardboard, and 71 million m2 of adhesive tape, and those numbers reflect only the e-commerce packaging. Pressure from consumers today is just as effective as the regulations that are coming from the European Union or the need to want to reduce the cost of product operation throughout the supply chain.
What are your main concerns for the foreseeable future?
For everyone, the current economic situation including Inflation across a range of goods, has meant that we need to consider cost more recently, but at DS Smith we don’t believe that you have to make a choice between innovating your packaging, sustainably and cost. We have seen in the past that companies that pull back on investment during recessions face challenges in the long term, for example, damage to brand reputation, customer reaction, and increasing costs from tax and regulation, while those that take it as an opportunity can come out of recession well placed to grow. The study mentioned above revealed concerning statistics from the e-commerce segment in Romania: 93 percent of businesses selling goods online admit to using non-product sized packaging, just a half of them is focusing on the recyclability (55 percent) and just under a third on the reusability (30 percent) of packaging. This is such a pity in a challenging economic environment.
From my perspective, research and development are the two key factors to address those challenges.
Packaging has never been more important. Boxes get your products onto supermarket shelves, but expertly designed, sustainable packaging solutions help you to optimize your supply chain, manage stock, reduce cost, complexity, and risks, and ultimately support you to sell more to your customers.
In your perspective, which are the main challenges of circularity, waste management, recycling in your industry?
Consumer behaviours are changing rapidly, and this change is accelerating the project development phase in the business world. The new generation of more conscious consumers is challenging the status quo, as it is more focused on sustainability. Companies strive to be as sustainable as possible and develop complex strategies to address their targets, but when it comes to packaging, in many cases they do not have measurable results to include in their reports. This is an area where we use our expertise to help our partners on their journey to become circular-ready, using our Circular Design Metrics tool. We are using this tool for every project we develop, so that the customer knows exactly how recyclable a solution is, the material utilization, if the material used is coming from a renewable source, how safe it is for the planet, the carbon footprint, the level of recycled content, if it is designed for reuse and how optimized it is for its specific supply chain. All those metrics are provided in a transparent manner to each customer, on every product we develop. More than that, they can be used in sustainability reports and even marketing campaigns.
How do you engage employees and business communities in these actions?
We believe we are in a position to influence in a positive way and demonstrate a bigger contribution to society, as well as collaborate with our customers to achieve their own sustainability targets and ambitions. In addition, by 2025, we will engage 100 percent of our co-workers in a circular economy. By providing constant training to our employees, we enable them to become stakeholders in their families and social groups, and we are happy to see the result of those actions with every CSR project we develop. As a leader, the potential of our people is the greatest asset, and if we empower a creative environment for them to expand their knowledge and skills, they will initiate amazing ideas. As an example, we participate for 5 years now in the Make it! Race it! Recycle it! competition in Timisoara, a community event with great resonance with the public, which promotes sustainable business practices, innovation, and teamwork in a most entertaining way, educating the public towards recycling and care for the environment.