To close the loop on its drinks packaging, Carlsberg has had to get a lot closer to its suppliers – a complex and time-consuming task that has had a “positive spiral”, says Simon Hoffmeyer Boas, director for group sustainability.
Under the Carlsberg Circular Community initiative, you are working with select suppliers to close the loop on drinks packaging. What benefits will this integrated approach bring to your business?
Nobody knows the products we purchase better than the suppliers themselves so co-operating with them to improve the sustainability credentials of our major types of packaging makes a lot of sense. By co-operating instead of just having a purely commercial relationship, we can create more trust and a common purpose for delivering more circular solutions.
Did you decide which suppliers to reach out to?
We went with suppliers that had a strategic purpose for the Carlsberg Group or those that had a product that was interesting from a circularity or sustainability perspective. We decided to focus on the main types of primary packaging to begin with, given the fact that 45% of the total CO2 footprint of our end-to-end value chain comes from packaging, and 40% of that from primary packaging.
What have you learned so far?
It’s a huge task to involve all of the different links in the supply chain. It is not only direct partners we have to work with, but our partners’ partners and their partners, and so on. The amount of time that we needed to spend on analysing our products from a cradle-to-cradle perspective was a bit of a surprise, it took 30-40% more time than we expected.
But it also showed us that it’s necessary to do this in order to optimise the sustainability credentials of our products.
Where might this process deliver supply chain value first?
To begin with, I think the relationship with our suppliers and the understanding that if the two of us can create a more sustainable product, we will all be better off in the future. Also, gaining new partners; we get a lot of contact from people with ideas or products that can help us make our supply chain more circular. It’s a positive spiral.
This type of collective collaboration is not without its challenges. How have you handled concerns around information sharing?
We have used the neutrality of the EPEA (Environmental Protection Encouragement Agency) to ensure that sub-suppliers feel confident about giving the very detailed data we need for the cradle-to-cradle analysis. We couldn’t do it without this knowledge trust function because there will always be concerns around commercial interest.
What level of cost savings do you hope the Circular Community work will deliver?
It’s clear that our refillable glass bottle when returned at a lower price than the cost of a new bottle presents a strong business case for the circular economy. By developing an innovation that can attract a new consumer group, such as our Green Fiber bottle, we have the potential to make a real difference in terms of top and bottom line growth.
And what is the risk to Carlsberg of not taking this approach?
We will face a future of more volatile raw material prices, increasing costs and consumer rejection. We believe that in the future, unsustainable products will be more expensive than sustainable ones.
Did you have to set any ground rules regarding dialogue?
The ground rule was, “listen guys – we’re all interested in optimising packaging from a sustainability perspective, let’s try to do this together”. We’ve actually seen cooperation rise between partners; new types of linkages have been created that don’t necessarily involve us, and that’s exactly what we were hoping for.
Once we have optimised one packaging type, our suppliers will be able to commercialise these achievements by selling the products to other customers as well. We want to have the benefit of being the first, but the work shouldn’t be held exclusive to us – it needs to be disseminated to other players as well to achieve true scope and scale.
Looking ahead, how might this work at scale?
We have a target of involving 17 partners in the Carlsberg Circular Community by 2017. This is only the tip of the iceberg, the work going on will affect many more partners and sub-suppliers than the primary ones we are working with. We believe it’s better to select a few strategic suppliers and optimise products with them than having a lot of partners where we might not make as big an impact.