Biodiversity emerges as an ESG priority in

packaging, but measurement could be a challenge

As international standards evolve, fiber-based packaging companies are in the
spotlight. Smurfit Kappa, WestRock, the Sustainable Forestry Initiative and Canopy
Planet weigh in.
Published Feb. 20, 2024

By April Reese

Pollinators are among many types of nature that are increasingly being measured by corporate
policies in an effort to protect biodiversity. Nigel Harris via Getty Images

Amid new efforts to slow biodiversity loss, companies in the packaging sector have
begun to consider addressing the issue in their sustainability plans. But
measurement challenges mean that broad adoption of such measures is unlikely —
at least for now.

The rising interest is driven in large part by new international agreements to

address the biodiversity crisis. Those actions were prompted by studies
documenting staggering global declines in biological diversity: the variety of
animals, plants, fungi and microorganisms on Earth. About 1 million species are at
risk of extinction, according to a 2019 UN report.

To stanch the loss of the world’s animals and plants, last year more than 190
countries signed the Global Biodiversity Framework, which calls for restoring or
conserving 30% of terrestrial and marine ecosystems by 2030. One of its four goals
is to increase financial resources for biodiversity protection from both the private
and public sector. The European Union’s deforestation regulation, which takes effect
later this year, is also driving corporate interest in biodiversity conservation.

A 2023 analysis by PwC found that 55% of global GDP — about $58 trillion — is
“moderately or highly dependent” on nature. In five industries, including forestry,
the economic value of their direct operations is highly reliant on nature.

“Businesses are recognizing the risk of biodiversity decline,” said Healy Hamilton,
chief scientist for the Sustainable Forestry Initiative, which certifies forests
managed with the environment in mind. “The science is abundantly clear,” she said,
adding that business leaders are also recognizing that “nature’s decline is an
economic risk.” Through ESG reporting, companies can assess and plan to mitigate
risks.

Within the paper packaging sector, scrutiny of the industry’s impacts on biodiversity
will only intensify as demand for its products increases, said Nicole Rycroft, founder
and executive director of Canopy Planet, an environmental organization that works
with companies on sustainability challenges. About 400 million metric tons of paper
and cardboard are produced globally each year — and demand is rising, she noted.

“When you have such a large existing footprint, that means that’s a significant
growth annually in terms of impact on carbon-rich forest ecosystems,” which affects
both the climate and biological diversity. The demand is driven primarily by e-
commerce, which in some cases requires seven times the packaging of an in-store
purchase, she said, as well as the shift away from plastic.

Rycroft said her organization has seen increased interest in its Pack4Good program,
in which companies pledge to eliminate the use of fiber from “ancient and
endangered forests.” More than 400 brands, including Ben & Jerry’s, Seaman Paper
and Stitch Fix have signed onto the program so far.

“By reducing the reliance on forests to provide the fiber for making packaging —
high-quality packaging — be it consumer-facing or more B2B in nature, companies
can significantly reduce both their carbon footprint as well as their biodiversity
footprint associated with packaging,” said Rycroft.

An emerging ESG focus

While still far less common than greenhouse gas emissions in ESG reporting,
biodiversity is poised to become a key part of these strategies in the months and
years ahead as companies come to understand both the risks and opportunities. In
January, during the World Economic Forum in Davos, Switzerland, 320 packaging
companies, including Smurfit Kappa and International Paper announced a
commitment to start making nature-related disclosures.

Stemming the loss in the variety and abundance of species is in many companies’
best interest, numerous reports have found.