Advanced Electronics Practice

Sustainability in
packaging: Five key levers
for significant impact
Our survey reveals a strong commitment to sustainability in
packaging, but few organizations are on track to meet these goals.
We suggest five levers to get companies back on track.
This article is a collaborative effort by David Feber, Yogesh Malik, Lucas Menanix, Daniel Nordigaarden,
Mukund Prasad, and Chris Vasta, representing views from McKinsey’s Sustainability Practice.

© Istetiana/Getty Images

September 2022
 Sustainability remains the number-one topic
across the packaging value chain, with corporations
setting ambitious targets to improve their perfor­
mance. This is demonstrated by our recent global
survey of packaging purchasers across industries,
which shows that approximately 75 percent of
organizations have made clear sustainable-
packaging commitments—but fewer than 30 percent
are well prepared to meet regional requirements,
much less internal aspirations. And fewer than
30 percent of organizations have clear metrics
surrounding recyclability, sustainability, or recycled
content. Additionally, there are several organi­
zational hurdles: fewer than a fifth of organizations
have upskilled employees to incorporate sustain­
ability themes or have implemented meaningful
incentives to achieve sustainability goals. To turn
this around and increase the focus on sustainability—
without making trade-offs among cost, sustain­
ability, and brand value—we suggest a holistic
approach to driving impact by applying five critical
levers across the organization.
A growing focus on sustainability
Sustainability efforts are increasingly becoming
a focus, with many end-user segments in the
consumer spotlight.1 Consumers value sustainably
sourced and manufactured products—so much
so that this has led to 2.7 times faster growth for
sustainable products versus traditional goods,
despite price premiums over their conventional
counterparts.2 Meanwhile, policy makers and
regulatory bodies are responding to public sentiment
by implementing regulations related to single-use
packaging while also placing extended producer
responsibility (EPR) on consumer-facing products
and a new focus on Scope 3 emissions. Currently,
Europe is leading the way on most of these regula­
tions; however, governments in Asia–Pacific and
North America are developing similar legislation.3 All
1
“Sustainability in packaging: Inside the minds of global consumers,” McKinsey, December 16, 2020.
2
2021 Sustainable Market Share Index report, NYU Stern Center for Sustainable Business, updated April 2022.
3
“Sustainability in packaging: Global regulatory development across 30 countries,” McKinsey, February 7, 2022.
4
“The drive toward sustainability in packaging—beyond the quick wins,” McKinsey, January 30, 2020.
5
“Consumer price index summary – June 2022,” US Bureau of Labor Statistics, July 13, 2022.
2 Sustainability in packaging: Five key levers for significant impact
trends in consumer preferences, regulations, and
government actions point toward sustainable pack­
ag­ing becoming a key focus for sustainability efforts.
Against this backdrop of increasing scrutiny, global
corporations (as buyers of packaging) have been
making ambitious sustainability commitments. There
are two principal areas of focus, depending on the
market stance of the company: most of product
manufacturers’ overall emissions come from
Scope 3, while consumer goods companies have a
higher proportion of upstream emissions. Nearly
90 percent of emissions from food-and-beverage
companies fall under Scope 3, with more than
60 percent from upstream activities.
Importantly, such sustainability commitments are
equally applicable to packaging, which accounts for
$1 trillion of annual global spending. Research
shows that these commitments focus on three areas
of activity: emphasis on full recyclability and
a significantly higher degree of recycled content
(60 percent of commitments), a reduction of
total usage of plastics (26 percent), and innovation
and the promotion of change in the use of packaging
(14 percent).4
What is the postpandemic status of these sustain­
ability commitments, especially as product
companies face new challenges and continued
uncertainty? For example, pandemic-related
supply chain disruptions and recent geopolitical
upheavals have caused supply chain constraints
across numerous commodity categories (such as
pulp, recycled plastics, and virgin resin). Additionally,
companies and consumers are more sensitive to
cost as inflation continues to rise globally, hitting
a 40-year high in the United States.5 To better
understand the current situation, we launched a
global survey of product companies across
end users and industries, exploring how corporations
 are working toward their commitments. This was
complemented by a series of interviews with
industry participants to further understand develop­
ments around sustainability in packaging.
Progress on packaging
sustainability commitments
Our global survey found that 75 percent of companies
have already made sustainable-packaging commit­
ments. The survey also found that for B2B and
industrial companies, packaging sustainability has
been given less attention, with about 66 percent
of such companies having sustainable-packaging
commitments compared with 80 percent of
consumer goods companies. At the same time,
however, our survey showed that fewer than
30 percent or organizations overall are well prepared
to meet their commitments (Exhibit 1).
One often-noted factor challenging firms’ ability to
achieve their stated sustainability ambitions seems
to be the underlying complexity of their product
portfolios. For example, in consumer companies,
packaging design can often be determined by out-
of-date technical requirements6: it is not uncommon
for companies to have product specifications
carried over from earlier-generation products. These
frequently go unchallenged because no one in the
organization has meaningful incentives to revise the
specifications from a sustainability perspective.
Indeed, our survey found that 75 percent of

6
“Creating good packaging for packaged goods,” McKinsey, February 17, 2022.

Exhibit 1

Oursurvey
Our surveyofofpackaging
packagingexperts
experts found
foundthat
that organizations
organizations are
are falling
fallingbehind
behindon
on
sustainability commitments and are
commitments and are not
not on
on track
track to
to meet
meetregulations.
regulations.

Although 75% of organizations have
sustainable packaging commitments …
Does your organization currently have
a focus on sustainable packaging (eg, public
commitments or internal KPIs)?
% of respondents
… fewer than 30 percent are well prepared to meet regional
requirements, much less internal goals.
Is your organization on track to meet the sustainability imperatives set
by regulators in the regions in which you operate?
% of all respondents

1. Not on track to meet sustainability requirements 4

10 No
15 In some areas
2. Working toward a plan 12

3. The organization has a plan but has not made

22
any proactive changes to packaging designs

75 Yes
4. Working toward incorporating proactive changes 34

5. The organization is well prepared to reach

targets set by governments. Proactive changes 28
to packaging design have been incorporated

Source: Sustainable Packaging Center, Sustainable Packaging Survey results

Sustainability in packaging: Five key levers for significant impact 3

 companies consider packaging sustainability only (75 percent), and marketing and sales (67 percent).
after the product concept has been finalized. Holistic solutions that drive meaningful impact
require all company functions to work together.
While sustainability remains the number-one driver
for packaging design across all industries and 2. Meaningful incentives. Fewer than 20 percent
regions (Exhibit 2),7 our survey found that organiza­ of organizations surveyed have sufficient
tions face four critical challenges in meeting their incentives in place across all functions to drive
sustainable-packaging goals (Exhibit 3): implementation of sustainable solutions.
Linking goals and incentives is a key enabler in
1. Cross-functional collaboration. Our survey fostering the right sustainable mindsets and
found that awareness of sustainable-packaging behaviors across the organization.
commit­ments varies greatly between functions:
product development (92 percent), manufacturing 3. Clear sustainability metrics. Fewer than
30 percent of organizations have clear metrics
around recyclability, sustainability, or recycled
content in place.8 Well-defined metrics reinforce
the corporate vision and guide the organization
Exhibit 2 by bringing clarity to current performance, defin­
ing what success looks like, and increasing
Sustainability is
Sustainability is the
the key
key driver
driverfor
for
overall accountability by creating focus and
packaging design across
acrossall
all industries
industries alignment on the goal.
and regions.
4. Lack of upskilling. More than 80 percent
Most important driver of packaging design,
of companies do not have up-to-date training
% selected
programs to upskill employees or sufficient
5 E-commerce leadership to enable them to execute sustainable-
5 Resilience packaging solutions.
8 Regulations

12 Customer preference
Five levers to pull to get ahead
of the game
13 Performance
Sustainability in packaging does not necessarily
mean higher costs: in one example, we saw how a
17 Cost manufacturer reduced Scope 3 emissions by
eliminating one type of customized container that
needed to be returned and replacing it with a
collapsible container that could be dropped off
Sustainability is the largest driver and picked up at a local third-party vendor. This
40 of packaging design across all
regions and industries1 seemingly minor change cut emissions contributions
from packaging by almost 50 percent and also
reduced costs.

1
Note: Figures may not sum to 100%, because of rounding.
Sustainability was tied for 1st in North America and within
Based on our experience, most packaging solutions
healthcare organizations. can be implemented in six to 12 months with the
Source: Sustainable Packaging Center, Sustainable Packaging
Survey results right execution. To do so without making trade-offs

7
Dave Fedewa, Daniel Swan, Warren Teichner, and Bill Wiseman, “Skinny design: Smaller is better,” McKinsey, April 26, 2022.
8
Zhou Peng, Theo Jan Simons, Jeremy Wallach, and Adam Youngman, “Advanced recycling: Opportunities for growth,” McKinsey, May 16, 2022.

4 Sustainability in packaging: Five key levers for significant impact

Exhibit 3

Companies that
that have
have fallen
fallen behind often
often lack
lack clear
clear metrics
metricsfor
forsustainability
sustainability and
and
face face significant
significant organizational
organizational hurdles.
hurdles.

Cross-functional collaboration Meaningful incentives

Departments are not internally aligned on Fewer than 20% of organizations have sufficient
sustainability commitments incentives to drive progress
Does your organization currently have a focus on sustainable Incentives exist within your organization to achieve
packaging (eg, public commitments or internal KPIs)?, sustainability goals, % of total respondents
% of respondents within department1
2
4 4
12 12 No Meaningful incentives across all functions
13 17
and levels aligned with sustainability goals
12 In
22 some
areas

94 Insufficient incentives aligned

82 83
75 with sustainability goals
67 Yes

Product Procurement Manufacturing Marketing

development and supply and sales
chain

Clear sustainability metrics Upskilling

Fewer than 30% of organizations have clear Fewer than 20% of organizations have upskilled
metrics around sustainable materials employees to incorporate sustainability themes
There are internally committed goals for packaging Employees are upskilled to incorporate sustainability
recyclability, recycled content, and compostability,2 elements when selecting or designing product packaging,
% of total respondents % of total respondents

Up-to-date training programs to upskill

Organization has clearly defined and 16
25 employees and leadership 
tracked sustainability goals

Insufficient training programs to

84
75 Insufficient goals and tracking capabilities  upskill organization

Note: Figures may not sum to 100%, because of rounding.

1
Product Development: n = 50, procurement: n = 45; manufacturing and supply chain: n = 64; marketing and sales, n = 92; other: n = 22.
2
Percentages represent an average of the results from the three categories: recyclability, recycled content, and compostability.
Source: Sustainable Packaging Center, Sustainable Packaging Survey results

Sustainability in packaging: Five key levers for significant impact 5

 among cost, sustainability, and brand value, we
suggest that product companies implement a holistic
approach that can yield significant performance
improvements (Exhibit 4).
The approach is built on five critical levers:
Use less. Reduce packaging, including both
overuse of a product company’s own packaging
and secondary and tertiary use. For example,
one white-goods organization successfully
removed secondary packaging by challenging
outdated specifications.
Refresh. Companies can leverage customer insights
and industry best practices to refresh their packaging
designs. For example, a consumer-electronics
company redesigned its product portfolio to optimize
its packaging and customer experience. As a
result of the redesign, the company was able to
reduce materials used and optimized transportation
while also improving the out-of-box experience
for customers.
Transport. Companies can make substantial progress
by improving pallet efficiency and the pack-to-
product ratio. For example, a food and beverage
company successfully reduced its transport
emissions footprint by reducing “empty-mile” trips
and increasing the fuel efficiency of its vehicles.
Similarly, a consumer brand with a large portfolio
of different-sized products reduced its CO₂
footprint by simplifying three sizes of master
cartons to optimize containerization and drive
transportation savings.
Materials. Sustainable materials, such as those
with lower life-cycle emissions, can have a
significant impact on packaging sustainability. For
instance, a food and beverage organization was
able to lower its life-cycle emissions by switching
to bio-based packaging.
Circularity. Optimize for waste management by
reusing materials and recycling and disposing of
them properly. One cosmetics company offered
free products to encourage customers to return
empty pots in an effort to manage packaging
that was difficult to recycle. An automotive supplier
reduced logistical spend and emissions through
route and packaging optimization by using
collapsible, third-party reusable containers and
optimizing shipping to and from local depots.
This reduced the frequency and distance of empty
outbound shipments.

Exhibit 4

Sustainable packaging
Sustainable packaging can
can drive
drive holistic impact
impact through
through application of
of
fivefive
keykey levers.
levers.

1 Use less
2 Refresh
3 Transport
4 Materials
5 Circularity
Reduce packaging Refresh design Pack and transport Choose Optimize for waste
use; eg, secondary or design to more efficiently— sustainable management—
and tertiary use value using latest improve pack-to- materials; eg, reuse, recycle,
and overuse customer and product ratio and those with dispose
industry insights pallet efficiency lower life-cycle
emissions

Source: McKinsey Sustainable Packaging Center

6 Sustainability in packaging: Five key levers for significant impact

The resulting impact of the five critical levers in
Exhibit 4 working together can be substantial
by combining sustainability benefits (such as lower
greenhouse-gas emissions, improved material
circularity, and reduced environmental waste),
decreasing packaging spending, and helping to
drive customer value through revenue uplift
and lower costs, which can either result in lower
end prices or a better bottom line. To succeed
in this approach, a few factors will be key:
— clear commitment and conviction
from leadership
— cross-functional adoption of this new
way of thinking
— well-defined metrics to monitor
performance, together with incentives
to reach aspirational targets
Every function within the organization needs to
adopt this way of thinking as part of a holistic
approach to derive maximum impact from product
development, sourcing, manufacturing, and
marketing. This is not always the case today.
Sustainability is a strategic issue for the packaging
value chain. With increased consumer awareness
and regulations on the rise, there is no time to lose in
ensuring that bold commit­ments can, in fact, be
fulfilled. Corporations that delay will face significant
uphill struggles, especially with capital increasingly
being allocated on the basis of sustainability and
performance. By contrast, companies that achieve
their sustainability commitments, simultaneously
driving cost efficiency and revenue growth, will prog­
ress to the next stage of the value creation journey.

David Feber is a senior partner in McKinsey’s Detroit office; Yogesh Malik is a senior partner in the Washington, DC, office;
Lucas Menanix is a consultant in the San Francisco office; Daniel Nordigaarden is a partner in the Toronto office; and Mukund
Prasad is a partner in the Chicago office, where Chris Vasta is an associate partner.

The authors wish to thank Sravani Korupolu, Purvil Patel, and Cole Weiler for their contributions for this article.

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Sustainability in packaging: Five key levers for significant impact 7