The first-ever Europe-wide strategy on plastics, adopted today, is a part of the transition towards a more circular economy.
It will protect the environment from plastic pollution whilst fostering growth and innovation, turning a challenge into a positive agenda for the Future of Europe. There is a strong business case for transforming the way products are designed, produced, used, and recycled in the EU and by taking the lead in this transition, we will create new investment opportunities and jobs. Under the new plans, all plastic packaging on the EU market will be recyclable by 2030, the consumption of single-use plastics will be reduced and the intentional use of microplastics will be restricted.
First Vice-President Frans Timmermans, responsible for sustainable development, said: “If we don’t change the way we produce and use plastics, there will be more plastics than fish in our oceans by 2050. We must stop plastics getting into our water, our food, and even our bodies. The only long-term solution is to reduce plastic waste by recycling and reusing more. This is a challenge that citizens, industry and governments must tackle together. With the EU Plastics Strategy we are also driving a new and more circular business model. We need to invest in innovative new technologies that keep our citizens and our environment safe whilst keeping our industry competitive.“
Vice-President Jyrki Katainen, responsible for jobs, growth, investment and competitiveness, said: “With our plastic strategy we are laying the foundations for a new circular plastics economy, and driving investment towards it. This will help to reduce plastic litter in land, air and sea while also bringing new opportunities for innovation, competitiveness and high quality jobs. This is a great opportunity for European industry to develop global leadership in new technology and materials. Consumers are empowered to make conscious choices in favour of the environment. This is true win-win.“
Many CEOs want to make a difference beyond the bottom line. Convinced that companies should play a positive role in environmental stewardship and social development, they declare sustainability a top priority, launch a new program, hire a chief sustainability officer, and commit millions of dollars and hundreds of hours of management time to the effort. Then momentum fades and the grand plans for making a difference fizzle out.
It is a frustrating phenomenon—and all too common. Only 12 percent of corporate transformation programs achieve or exceed their aims. For sustainability programs, the results are far worse, just 2 percent. Why are sustainability transformations so difficult?
One of the main reasons they fail is because leadership teams often overlook the resistance of frontline employees when implementing new approaches. If employees feel forced to choose between sustainability targets and business targets, for example, most choose business targets. As a result, executive passion remains bottled up, rather than flowing through the company.
There are four guidelines to beat the odds and deliver impressive sustainability gains. First and most crucial, make clear public commitments with quantitative targets. Public targets send a ringing message throughout the ranks that helps overcome resistance to change. Second, CEOs must show the way, not just with words, but by becoming personally involved in the transformation. Third, leadership teams need to play a key role in making the business case for change throughout the organization. Fourth, leaders must reshape behaviors by changing frontline processes and incentives, and by ensuring that line managers incorporate sustainability into daily decision making. Though these conclusions may sound obvious, many companies overlook some or all of these steps and thereby fail to lay the foundation for success.
Let us start with the first rule. Bold public targets create a shared sense of mission throughout the organization and help companies stay the course during difficult phases. But many executives hesitate to make their goals public, fearing reprisal from NGOs and others if they fall short. Companies affirm that the benefits of public commitment significantly outweigh the risks.
Take Nestlé: In 2012, it announced sustainability commitments in the areas of nutrition, water, and the environment, including a pledge to reduce water withdrawals per ton of product by 40 percent, compared with 2005 levels. The process of setting public commitments prompted Nestlé to work even more closely with external stakeholders in forums such as its annual stakeholder meetings and other events. Instead of heightening NGO scrutiny, the target-setting process prompted more open feedback and a collaborative effort with stakeholders, which in turn helped the company meet its goals.
The CEO’s public commitments also galvanized the company’s management to create a new level of internal discipline to hit its ambitious targets. “The feedback loop of committing, acting, reporting, and then getting positive feedback from ratings agencies became a real driver for positive change,” says Janet Voûte, former head of public affairs at Nestlé. In 2015, Nestlé surpassed its water objective, reducing usage per ton of product by 41.2 percent from 2005 levels, and set a new target for 2020. Nestlé now ranks No. 1 in the food, beverage, and tobacco category of the Dow Jones Sustainability Index.
CEOs create the vital liftoff energy for sustainability efforts and keep momentum throughout the journey. Our research shows that senior leadership support is the most important factor contributing to success, and that concrete actions—not words—make the difference. A CEO may be the only one capable of pushing through tough choices that break with long-standing practices, such as changing suppliers or customer conditions. At global food retailer Delhaize Group, for example, midlevel managers were initially reluctant to implement tough new sustainability requirements for suppliers, including fair working conditions in the supply chain and sourcing of sustainable seafood, palm oil, and wood fibers. Then CEO Frans Muller intervened in 2014 to mandate the requirements, demonstrating that sustainability was a top management priority. His action empowered managers to make similar decisions.
Broader executive-level actions also can play a critical role in supporting change. Take Novozymes, a Danish company that produces enzymes that help reduce the consumption of energy, raw materials, and chemicals. In 2008, it created an executive sustainability board, including vice presidents of each business function, to develop a sustainability strategy and targets. In 2010, the board decided to explore how it could incorporate biodiversity, socioeconomic impact assessment, and water conservation into the company’s sustainability strategy. As part of a company-wide effort to address water scarcity, for example, Novozymes established a hand-wash lab in Bangalore, India, that replicates local washing conditions to help local customers develop better-performing detergents that enable consumers to do their laundry with less water. Overall, Novozymes estimates that in 2015, its customers reduced their carbon emissions by 60 million tons through the use of its products.
Even when a CEO publicly supports sustainability goals, many employees assume that sustainable products or processes increase cost and undermine a company’s performance. In our survey, 62 percent of respondents cited public reputation as the primary business rationale for sustainability programs—nice to have, but not essential to the business.
Such attitudes are risky for leaders seeking to achieve breakthrough sustainability targets. Frontline managers and employees juggling multiple business targets may regard sustainability efforts as nonessential or nonurgent. When that happens, sustainability goals fall to the bottom of their priority list and do not receive funding.
Leaders can overcome employees’ negative attitudes by helping them understand the business case that links sustainability with success. By doubling the fuel efficiency of its vehicle fleet, for example, Walmart saved nearly $1 billion while significantly reducing greenhouse gas emissions. Growth for brands with a demonstrated commitment to sustainability was four times faster than that of nonsustainable brands in 2015, according to the Nielsen Global Corporate Sustainability Report.
The most effective approach is to start with something quick and simple to achieve. In 2004, Walmart decided to accelerate its sustainability efforts by adopting a trial initiative to reduce packaging for toy trucks—an easy step that saved trees, money, and fuel. Since then, the company has deepened its commitment and now embraces projects in which the business case is harder to quantify. For example, in 2009 it launched a sustainability index, which scores suppliers based on responses to critical sustainability questions. Walmart buyers incorporate these scores in supplier selection decisions, and this has helped lead to index score improvements in all major business units.
Setting sustainability objectives has become part of the annual corporate reporting exercise. But few companies hardwire sustainability into their organizations’ processes, accountability systems, and incentives. For instance, our survey revealed that only 24 percent of employees are held accountable for sustainability in a meaningful way.
Companies that achieve ambitious sustainability goals embed suitable behaviors and processes throughout the business and make line managers responsible for delivering results. For example, some companies change their capital-approval process to include sustainability factors, or increase time horizons in business case assessments, allowing more sustainability initiatives to qualify for investment. Danish pharmaceutical company Novo Nordisk, for example, established an internal price on carbon, so business units that reduce carbon emissions receive cash back.
“We proved early on the kinds of sustainability initiatives that had an attractive return on investment, so we developed a methodology to remove barriers to these projects being approved,” says Novo Nordisk’s vice president of corporate sustainability, Susanne Stormer. In 2012, media company Corporate Knights named Novo Nordisk the world’s most sustainable company.
Successful companies also embed sustainability priorities in their incentive structures alongside other key performance indicators. Food retailer Delhaize Group linked remuneration to sustainability in all areas of the business. Until it did so, only 20 percent of leadership had their annual bonus linked to the company’s sustainability efforts, says Megan Hellstedt, vice president of sustainability at Delhaize Group. By 2014, all Delhaize officers had annual incentive bonuses tied to sustainability goals, and sustainability performance made up 10 to 30 percent of bonuses.
Even the most passionate sustainability executives realize that there are limits for publicly owned companies. For example, if a specific sustainability initiative erodes the long-term economics of a brand, it becomes hard to make a business case to support it. It can also be difficult to change consumer behavior. Companies that set ambitious sustainability goals often need to launch more than one effort to see what will stick. Organizational change is challenging and takes time and management commitment, but companies that succeed say it is worth the investment.
A pragmatic new business model for sustainability must extend beyond the traditional framework of the triple bottom line, describing steps that range from exploring a vision and establishing a strategy to implementing the strategy and promoting innovation.
Businesses and organizations need to move away from the business case for sustainability toward a sustainable business model. That is, businesses should go beyond the usual short-term focus on minimizing harm while maximizing profits. Instead, businesses on the path to sustainability should, from the start, focus on addressing a societal need and view profitability not as an end but as a means to support the sustainable organization. Leaders who question the status quo, inspire others, and take risks are essential for achieving sustainable business practices.
Every year, Europeans generate 25 million tonnes of plastic waste, but less than 30% is collected for recycling. Across the world, plastics make up 85% of beach litter. And plastics are even reaching citizens’ lungs and dinner tables, with microplastics in air, water and food having an unknown impact on their health. Building on the Commission’s past work, the new EU-wide strategy on plastics will tackle the issue head on.
Today’s plastic strategy will transform the way products are designed, produced, used, and recycled in the EU. Too often the way plastics are currently produced, used and discarded fail to capture the economic benefits of a more circular approach. It harms the environment. The goal is to protect the environment whilst at the same time lay foundations to a new plastic economy, where the design and production fully respect reuse, repair and recycling needs and more sustainable materials are developed.
Europe is best placed to lead this transition. This approach will bring new opportunities for innovation, competitiveness and job creation. With the plastic strategy, the Commission has adopted a Monitoring Framework, composed of a set of ten key indicators which cover each phase of the cycle, which will measure progress towards the transition to a circular economy at EU and national level.
Under the new strategy, the European Union will:
- Make recycling profitable for business: New rules on packaging will be developed to improve the recyclability of plastics used on the market and increase the demand for recycled plastic content. With more plastic being collected, improved and scaled up recycling facilities should be set up, alongside a better and standardised system for the separate collection and sorting of waste across the EU. This will save around a hundred euros per tonne collected. It will also deliver greater added value for a more competitive, resilient plastics industry.
- Curb plastic waste: European legislation has already led to a significant reduction in plastic bag use in several Member States. The new plans will now turn to other single-use plastics and fishing gear, supporting national awareness campaigns and determining the scope of new EU-wide rules to be proposed in 2018 based on stakeholder consultation and evidence. The Commission will also take measures to restrict the use of microplastics in products, and fix labels for biodegradable and compostable plastics.
- Stop littering at sea: New rules on port reception facilities will tackle sea-based marine litter, with measures to ensure that waste generated on ships or gathered at sea is not left behind but returned to land and adequately managed there. Also included are measures to reduce the administrative burden on ports, ships and competent authorities.
- Drive investment and innovation: The Commission will provide guidance for national authorities and European businesses on how to minimise plastic waste at source. Support for innovation will be scaled up, with an additional €100 million financing the development of smarter and more recyclable plastics materials, making recycling processes more efficient, and tracing and removing hazardous substances and contaminants from recycled plastics.
- Spur change across the world: As the European Union does its own homework, we will also work with partners from around the world to come up with global solutions and develop international standards. We will also continue to support others, as we have done with the clean-up of the Ganga River in India.
There’s literally nothing you can do that’s better for the environment than to not produce another resource-sucking, waste-making human being. Without nature, humans could be neither healthy nor happy. And yet the natural world can be completely ransacked without causing even a tiny blip on our usual measures of economic progress or poverty.
A major UN environmental meeting recently looked at launching an assessment of the different values that people attribute to nature, and what nature contributes to human societies. However, these high level discussions will be futile unless our measures of societal progress expand to explicitly include what nature does for human well-being and prosperity, especially for poor people.
Nature matters to people’s well-being in many different ways. It obviously provides us with basic needs such as food, clean air and water, as well as protection from environmental hazards. There is also a clear relationship with both physical and mental well-being, especially for those who are fortunate enough to have access to green spaces.
Beyond these instrumental roles, there is also evidence from around the world that nature is a more fundamental contributor to people’s sense of self. It is an integral part of what constitutes well-being, captured for some in the awe-inspiring moments when standing on top of a mountain, the breath-taking view of a beautiful river, or in the feeling of freedom associated with traversing a wide open landscape.
Despite the value we get from nature, our measures of progress and well-being remain much narrower, focused on what is visible and measurable. Gross Domestic Product (GDP) has been the most prominent approach since the end of World War II, with GDP seen as a useful snapshot of the state of the economy and people’s well-being. What these figures often hide are those things, like the role of nature, that are not measured in the monetary economy, but are an important part of daily life and can be crucial for sustaining future prosperity.
There are alternatives. One that has gained some momentum is the Inclusive Wealth Index, which takes into account broader measures of human and natural well-being – its most recent assessment suggested that conventional GDP figures had greatly exaggerated growth over the period 1992-2010. In international development, the UN’s Human Development Index and the “multidimensional poverty index” both recognize a larger set of issues, combining material standards with measures of health and education. But they still do not adequately incorporate the role of nature.
Ignoring nature creates some perverse paradoxes. Measured GDP might actually increase as a consequence of a major environmental disaster, because of the economic activity created by the clean up and repair. Meanwhile, the environmental losses themselves don’t show up in economic measures. A country could get rich by cutting down all its primary forests (and many have), but the associated loss of habitat and wild species would not feature in national accounts.
Governments continue to make decisions based on a key set of headline figures. These include GDP and per capita income, which reflect economic prosperity, and, in poorer countries, the extent and incidence of poverty. But we can do better: our ongoing research focuses on developing environmentally-adjusted measures of multidimensional poverty, based on the insight that people are typically poorer when they do not have access to nature.
Our research suggests that failing to consider these missing environmental aspects can result in an incomplete assessment of the multiple dimensions and underlying drivers of poverty. Consequently, the identification of the poor, as well as an understanding of what makes them poor, risks being partial, thereby posing a challenge to addressing poverty adequately.
The current status quo fails people, especially the poor, and also threatens future prosperity by undervaluing nature. Those who benefit from the current approaches are typically global elites who profit from environmental destruction (which goes unrecognized).
The losers are those most dependent on nature for their livelihoods and those especially vulnerable to environmental change. Even if nature is valued, it is typically converted into money equivalents, which favors those who are able and willing to parcel out nature into small commoditized bundles, which can then be sold to the highest bidder. This fails to take into account the views of those who believe that nature matters in other ways or in its own right, who care about the beauty of nature and the sheer joy that it provides to many.
The consequences of neglecting people’s varied views and aspirations have become apparent from recent political events in Europe and the US. Nature matters to our well-being, and people see their relationship with nature in many different ways. Recognizing this is a crucial step towards building a more inclusive, equitable and sustainable society.