A tide of consumer activism on plastic packaging has resulted in increased scrutiny and changing preferences for circular, zero-waste business models, said CDP.
Despite innovations such as advanced biodegradable plastic and recycling infrastructure, 60% of the top 10 revenue-generating brands have failed to deliver low-carbon innovation in the last 10 years.
“Given most companies (88%) generate over 50% of their revenues from these key brands, including Nescafé and Budweiser, they must up their game or risk falling foul of changing consumer demands,” the group claimed.
Mergers and Acquisitions
To help drive innovation, big businesses have begun acquiring smaller, sustainable brands. Up to 75% of companies directed mergers and acquisitions activity towards niche ‘eco-friendly’ brands, driven by the alignment between health and environmental trends.
However, CDP warned that this approach was unsustainable if their fundamental business models, based on driving more consumption, remained unchanged.
Another key driver was the introduction of regulation and more robust rules on packaging and waste, sparked by initiatives such as the EU 94/62 directive’s 2018 amendment to set measures for reducing packaging waste at source, as well as improving recycling and recovery.
The sector was also exposed to the physical risks associated with climate change. CDP head of investor research Carole Ferguson said: “As consumer-facing brands, at risk not just from climate change but water scarcity and deforestation too, these companies have a unique role to play in driving forward the sustainable economic transition.
“Ongoing activism around plastics and packaging is just the tip of the iceberg and we expect to see more environmental issues come to the fore as consumers start to question what goes into the products they buy, use and dispose of.”
Actions to innovate product lines and working with consumers to drive behaviour changes on climate change and packaging waste were necessary, Ferguson added.
“And these efforts need to be replicated by others in the sector, if they are to justify their role in a society that can no longer be based on fast-paced, rising consumption and linear business models.”