Since 2018, the global economy has consumed over half a trillion metric tons of materials— natural resources and manufactured goods—which is almost as much as we consumed in the entire 20th century (Circularity Gap Report 2024. Circularity Gap Reporting Initiative, 2024).
This data point demonstrates that our current linear economic system is unsustainable. The critical challenge of the 21st century is to transition to a circular economy that conserves natural resources and reduces the damage caused by how we make, package, distribute, and consume products and services.
Governments worldwide have responded to this challenge by enacting laws to advance the transition to a circular economy. As a result, business leaders in many industries now face an increasingly complex regulatory landscape where the cost of noncompliance can be substantial.
Several nongovernmental organizations (NGOs) have also promulgated standards relating to sustainability and circularity. While these standards are voluntary, some have the potential to become influential with customers, making them important for competitive success.
To help business leaders navigate this evolving circularity labyrinth, this article will review some of the environmental laws, regulations, and standards that are particularly relevant for companies producing or using packaging. We’ll also offer some practical steps business leaders can take to keep current on legal requirements and use standards to gain competitive advantage.
The Circularity Imperative in Packaging
The Ellen MacArthur Foundation defines circular economy as “. . . a system where materials never become waste and nature is regenerated. In a circular economy, products and materials are kept in circulation through processes like maintenance, reuse, refurbishment, recycling, and composting.”
Transitioning to a circular economy is essential to end the depletion of the Earth’s natural resources and reduce the environmental damage caused by our current “take-make-waste” linear economy.
Packaging is involved in the life cycle of every commercially-produced food item and manufactured product. Therefore, packaging must become more sustainable for the full benefits of a circular economy to be realized.
Circularity in Packaging – Past and Present
The core components of a circular economy are often described with the popular slogan “Reduce-Reuse-Recycle,” and recycling has historically been the primary strategy for increasing the circularity of packaging.
Recycling in various forms has existed throughout human history, and it expanded rapidly beginning in the 1970s. Data from the U.S. Environmental Protection Agency shows that the recycling rate of municipal solid waste in the United States increased from less than 7% in 1960 to 32% in 2018 (the last year for which EPA data is available).
Today, companies across the entire packaging value chain are intensely focused on applying the full gamut of circularity tactics to make packaging more sustainable. These efforts are motivated by two major factors.
First, businesses are facing the need to comply with a bevy of governmental regulations specifically designed to advance the transition to a circular economy.
Second, numerous studies have shown that sustainability is an important factor in consumer buying decisions, which makes sustainable packaging a potent source of competitive advantage. For example, in a 2023 survey by McKinsey & Company, 39% of consumers said that the environmental impact of packaging is extremely or very important to their purchase decisions.
Key Circularity Laws and Standards
This article discusses certain U.S. federal and state laws, regulations, and certain Directives of the European Union. The content of this article is for general educational purposes only. It does not constitute, nor should it be construed as, legal advice. If you or your company has questions regarding the applicability or interpretation of any law, regulation, or court decision, you should seek the advice of a qualified attorney.
Growing environmental concerns have led many governments to enact laws designed to enhance sustainability and advance the transition to a circular economy. Several NGOs have also developed standards intended to support sustainability and circularity objectives. The result is a complex tapestry of mandatory requirements and voluntary standards that can be daunting for business leaders to understand and navigate.
Most of the newer laws and standards can be placed into one of two broad categories based on their primary objective or purpose.
Reporting, Disclosure, and Measurement
This category includes laws and standards that require or relate to the reporting or other disclosure of environment-related information.
The Corporate Sustainability Reporting Directive (CSRD) is the primary sustainability reporting law in the European Union. When fully implemented, the CSRD will require some EU-based companies and some companies doing business in the EU to include environmental information in their annual reports.
Separate EU legislation – the European Sustainability Reporting Standards (ESRS) - specifies what environmental information companies subject to the CSRD must report. One part of the ESRS (ESRS-E5) specifically requires companies to report information about circularity.
In the United States, California has enacted two significant climate-related disclosure laws.
- The Climate Corporate Data Accountability Act requires some companies “doing business” in California to disclose greenhouse gas (GHG) emission data on an annual basis.
- The Greenhouse Gases: Climate-Related Financial Risk law requires some companies “doing business” in California to prepare and disclose a climate-related financial risk report on a biennial basis.
Several NGOs have also produced standards that directly or indirectly address the measurement or disclosure of environmental impacts. For more information about some of the notable standards in this space, see the sidebar, "Notable Circular Economy Standards.”
Extended Producer Responsibility
The second category of laws and standards includes Extended Producer Responsibility, or EPR, is the term for environmental policies that make producers responsible for the entire life cycle of their products, including end-of-life costs. Packaging has become a primary focus of recent EPR laws because of growing concerns about the environmental and health hazards of packaging waste.
Most recent EPR packaging laws have been enacted at the state level in the United States. To date, five U.S. states have adopted EPR packaging laws, and legislation has been introduced in several additional states.
The primary objectives of EPR packaging laws are to reduce packaging waste, increase the recycling rates of packaging materials, expand and improve municipal recycling systems, and encourage businesses to design and develop more eco-friendly packaging. These objectives demonstrate that EPR packaging laws support the transition to a circular economy.
To learn more about EPR packaging laws in U.S. states, see our recent article, “The Landscape of U.S. State EPR Packaging Laws.”
How International Paper Supports Circularity
In our recent white paper, “The Circular Life of a Cardboard Box,” we spelled out our commitment to circularity in unequivocal terms.
We state that: “At International Paper we believe in circularity – recapturing and reusing as much of the raw materials of our business as possible...We use virgin pulp from sustainably managed forests, but we also source millions of tons of used cardboard from department stores, large retailers, grocery stores, and others. We then transport and process that recycled material into new boxes. It is this end-to-end circular model that sets our approach apart from almost every other cardboard recycler. We call it Sustainability in Motion®.”
International Paper’s scale and vertically integrated business structure inherently support circularity and also provide value for our customers.
Scale
For one customer, International Paper Recycling manages several hundred stores nationwide, recycling roughly 400,000 tons of old corrugated containers (OCC) or used cardboard every year. Because of our nationwide network of recycling plants and our national transportation infrastructure, we are able to collect 100 percent of the customer's OCC from all of these stores on a regular and timely basis
Vertical Integration
At International Paper, we are working hard to make the idea of Closed Loop Circularity (CLC) a reality in the design, manufacturing and recycling of our products. Our packaging solutions team is involved as early as the product design phase, as 80% of a products waste is generated in this phase. Understanding your supply chain and touch points of the packaging solution helps minimize waste, reduce risks, lower costs and ensure your product is recyclable at end of life. However, simply "designing for recycling" has little relevance if there is no recycling infrastructure, but with International Paper's end-to-end business structure and vertically integrated paper mills, box manufacturing and recycling plant facilities, we support the circular economy and guarantee that any cardboard collected from customers is responsibly processed and recycled into new packaging, demonstrating that IP's Sustainability in Motion® recycling program is a closed-loop system."
International Paper Recycling ensures that all collected materials are weighed at our facilities, and we provide our customers with certified waste reporting that detail the amount and types of materials collected and what percentage of that recovered cardboard is recycled. Customers can use those verified volumes to substantiate their sustainability efforts.
Practical Suggestions for Getting Started
The number and breadth of environmental laws, regulations, and standards can easily feel overwhelming. This is particularly true when the topic is circularity because the “circular economy” is an all-inclusive paradigm that encompasses most aspects of sustainability.
At International Paper, we’ve been on the path to circularity for years, and our large and diverse customer base has enabled us to observe many companies on their sustainability journey.
While no one approach is right for every company, we’ve found from our experience and observations that a sound way to begin dealing with the proliferation of environmental laws, regulations, and standards is to focus on three basic questions. Here’s the “checklist” version of our suggestions for the steps you can take to answer those three questions.
What are we required to do now?
Prepare your company to comply with existing laws and regulations.
- Determine which laws and regulations apply to your business and when compliance will be required
- Identify what data will be needed to comply
- Implement systems and processes to collect necessary data
What will we be required to do in the near future?
Regularly scan the horizon to keep on top of new legislative and regulatory developments.
- Monitor the development of proposed regulations relating to existing laws and, when appropriate, provide comments to regulators
- Monitor pending legislation that would enact new environmental laws impacting your company and participate in the legislative process
How can we leverage environmental laws, regulations, and standards to achieve competitive advantage?
Use voluntary environmental standards as catalysts to improve current business operations and build new sources of competitive advantage
- Determine which standards are most relevant to your business and which will provide the most value to your company
- Determine which standard to adopt and make that standard an integral part of your business strategy
- Gain support for the chosen standard from internal stakeholders, and incorporate the standard into your performance management system
- Collaborate with suppliers and customers to implement the standard and increase circularity. (For more about value chain collaboration, see the sidebar “The Power of Collaboration.”)
- Monitor progress on standard performance and strive for continuous improvement
To Learn More...
If you’d like to learn more about International Paper’s approach to circularity, read our white paper, “The Circular Life of a Cardboard Box.” To explore how our Sustainability in Motion® closed-loop recycling solutions can help you achieve your circularity and sustainability goals, schedule a free, no-obligation consultation.
Notable Circular Economy Standards
The “circular economy” is the paradigm for a sustainable economic system. It encompasses the economic dimensions of sustainability, so many of the strategies designed to improve specific aspects of sustainability will also enhance circularity. As a result, many environmental standards can be called circular economy standards even though their primary focus is some other aspect of sustainability.
The following table contains basic information about several notable standards that explicitly focus on the circular economy model. This list isn’t exhaustive, but it shows that circularity has become a major topic of interest in the sustainability community.
Explicit Circular Economy Standards | ||
|---|---|---|
Standard | Developer | Website |
| Circular Transition Indicators V4.0 (CTI) | World Business Council for Sustainable Development | CTI v4.0 |
| ISO 59004 - Circular Economy-Terminology, Principles, and Guidance for Implementation | The International Organization for Standardization (ISO) | ISO 59004 |
| ISO 59010 - Circular Economy-Guidance for the Transition of Business Models and Value Networks | The International Organization for Standardization (ISO) | ISO 59010 |
| ISO 59020 - Circular Economy-Measuring and Assessing Circularity Performance | The International Organization for Standardization (ISO) | ISO 59020 |
| ISO/FDIS 59040 - Circular Economy-Product Circularity Data Sheet (Under Development) | The International Organization for Standardization (ISO) | ISO/FDIS 59040 |
| Global Circularity Protocol for Business (GCP) (Under Development) | World Business Council for Sustainable Development and One Planet Network | GCP |
| European Sustainability Reporting Standards (ESRS) | European Union | ESRS |
Several other notable standards support the efforts of business leaders to improve performance on specific aspects of sustainability which, in turn, helps advance the transition to a circular economy. Numerous NGOs have developed such standards, and several have produced multiple standards. Some of these NGOs include:
- CDP (formerly Carbon Disclosure Project)
- Circular Economy Indicators Coalition (CEIC)
- Cradle to Cradle Products Innovation Institute
- GHG Protocol
- Global Reporting Initiative (GRI)
- International Sustainability Standards Board (ISSB)
- Science Based Targets Initiative (SBTi)
- Science Based Targets Network (SBTN)
- Sustainability Accounting Standards Board (SASB)
- Taskforce on Nature-related Financial Disclosures (TNFD)
- Transition Plan Taskforce (TPT)
The Power of Collaboration
As we noted in the main article, the circular economy is a model or paradigm that describes a sustainable economic system. This means the circular economy concept encompasses every stage of a product’s life cycle, from raw materials extraction to ultimate disposal.
Most companies can make some improvements in circularity by improving their internal processes. However, business leaders increasingly recognize that even greater gains in circularity can be achieved by working collaboratively with their value chain partners, specifically their suppliers and customers.
Value Chain Collaboration at International Paper
International Paper frequently works with its customers and other value chain partners to design and implement customized solutions that enhance sustainability and circularity.
One example of a circular customer solution comes from Italy where IP collaborated with its long-time customer, Colgate-Palmolive, to design a circular supply chain solution to reduce waste and increase recycling.
A local transport company collects paper and cardboard packaging scraps from the Colgate-Palmolive plant and delivers them to a local paper mill, where they are used to produce recycled paper. IP's box plant in Pomezia, Italy then transforms it into the Circular Box, which is used for transporting personal care products. The result is a closed and sustainable supply chain.
Project Gigaton™ at Walmart
Walmart’s Project Gigaton™ provides a compelling example of what can be accomplished by collaborating with value chain partners. Walmart launched Project Gigaton™ in 2017 with the goal of reducing or avoiding one billion metric tons (a “gigaton”) of greenhouse gas emissions across its global supply chain by 2030.
Project Gigaton™ works by engaging Walmart suppliers to reduce their GHG emissions relating to several key areas including energy usage, waste reduction, sustainable packaging, agriculture practices, sustainable products, transportation emissions, and deforestation.
Once suppliers join Project Gigaton™, they are required to set emission reduction targets, develop and submit an action plan for hitting those targets, and regularly report their progress toward their emission reduction goals.
Walmart provides suppliers who join Project Gigaton™ with various easily accessible tools and resources to help them meet their program obligations and achieve their emission reduction goals.
By almost every measure, Project Gigaton™ has been a resounding success. As of 2024, over 5,900 suppliers were participating in Project Gigaton™, and during Walmart’s February 2024 earnings call, CEO Doug McMillon announced that Project Gigaton™ had reached its one gigaton emission reduction goal six years early.
