Sustainability in Packaging:

Recycling and Voluntary Regulation in Australia

FINAL PAPER

Packaging Administration
Professor Don Appleton
Rochester Institute of Technology

Fabiana Kotoriy
February 22, 2010
Sustainability in Packaging: Voluntary Regulation in Australia
F. Kotoriy

Sustainability in Packaging:
Recycling and Voluntary Regulation in Australia

BACKGROUND ON SUSTAINABILITY
The traditional definition of Sustainability as “the ability to meet the needs of the
present without compromising the ability of future generations to meet their own
needs” has a number of implications associated with it. This complex, multi-
faceted field deals with aspects such as responsible packaging design, material
choice and sourcing, government regulation, and economic trade offs, among
others. A truly sustainable approach to sustainability would include all of these
aspects as part of an integrated approach that looks at the whole lifecycle of
packaging materials, but because this is not always economically feasible,
companies choose to focus on the low-hanging fruit first and sometimes, never go
beyond this point. When there is legislation in place that is adequately enforced,
then this becomes the guiding principle for industry to follow.

In regards to sustainability, the average consumer will often think about

waste management and recycling. They will also identify packaging as being a
major source of this waste. This association is due to packaging’s visibility to
consumers – it’s the portion that needs to be discarded once the product has been
used. The irony is that packaging only accounts for about 25% of all municipal solid
waste (Beck, 2003). Another common misconception about packaging is that it is
unnecessary or that it adds no real value and only represents waste. Although this
may be the case for many products that are over packaged, most of the time the
packaging is necessary to deliver the product to the consumer free of damage or
spoilage. Any excess or poorly designed packaging results in misuse of resources
and needs to be addressed at the design level.

A key sustainability issue with packaging is the conservation of energy and

resources. Recycling is usually preferred over the option of landfilling but care
should be given not to choose recycling when the process has a higher
environmental burden than landfilling. Just like they have different uses, different
materials have varying levels of environmental impact. To improve packaging
sustainability, designers should follow the 3 Rs: reduce, reuse and recycle.

Rochester Institute of Technology – 2/22/2010

2
Sustainability in Packaging: Voluntary Regulation in Australia
F. Kotoriy

Because environmental impacts must be considered across the whole lifecycle of a

product, it is important not to reduce packaging to the extent that it results in
damage to the product.

This paper will review the importance of packaging regulation on sustainable

use and design with a special focus on the Australian National Packaging Covenant
(NPC).

TYPES OF POLICY INSTRUMENTS

In an effort to encourage environmental protection, the dominant type of strategy
used by government for policy and regulation has been the command and control
approach such as the Federal Food, Drug, and Cosmetic Act (FD&C Act) in the
United States that oversees the safety of food, drugs, and cosmetics and all
surfaces that come in contact with them. The Packaging & Packaging Waste
Directive (94/62/EC) of the European Union is also considered a command and
control approach but it relies less on a centralized enforcement scheme. Recent
trends show that more and more incentive-based approaches like emission taxes
and cap & trade programs are being adopted with increasing levels of
effectiveness (Burritt, 2005).

On the other side of the spectrum and with a reduced amount of government
involvement and greater market influence is self-regulation (see figure 1) where an
industry association regulates the behavior of their members or more generally, a
corporation outlines a strong environmental policy for itself. An approach that
exists somewhere in the middle is a voluntary agreement whereby a government
institution proposes a set of goals and best practices related to environmental
responsibility and individual corporations choose to align themselves with these
commitments. The National Packaging Covenant (NPC) was introduced by the
Australian government as a voluntary agreement to change the behavior of
corporations in a collaborative role rather than a strictly regulatory one.

Rochester Institute of Technology – 2/22/2010

3
Sustainability in Packaging: Voluntary Regulation in Australia
F. Kotoriy

Figure 1. Range of Policy Instruments

Rochester Institute of Technology – 2/22/2010

4
Sustainability in Packaging: Voluntary Regulation in Australia
F. Kotoriy

REGULATIONS IN THE U.S. AND EUROPE

Currently, the only packaging regulation in effect in the United States is the
Federal Drug Administration’s regulations about packaging for food. The FDA’s
Center for Food Safety and Applied Nutrition is responsible for ensuring the safety
of any food contact substances. They regulate all manner of packaging materials:
coatings, plastics, papers, adhesives, food colorants, etc. The FDA must also
ensure proper packaging for foods that have been irradiated (Shanklin, 2005). This
regulation however, has no specific considerations for sustainable packaging and
only addresses the issue of safety regarding food contact surfaces.

The European Union passed a Directive in 1994 related to Packaging and

Waste where it establishes quotas for refillable packaging, sustainable
consumption and production, packaging marking, material identification and
conformity assessment procedures. The directive has been amended in 2004 and
translated into national law in the majority of European countries where it is
implemented through a program called Green Dot® that shows the manufacturer’s
agreement with a packaging recovery organization in their country and the
appropriate fees are being paid. By doing so, they are absolved of their
responsibility to recover their own packaging. European government authorities do
regular audits to ensure compliance with Green Dot and the directive but they rely
mostly on companies’ moral responsibility to comply with the regulations.
Recovery and recycling is widely embraced in Europe and those who choose not to
participate may feel pressure from retailers or distributors who refuse to carry their
products or end-users who choose another brand based on their perception of the
company's dedication to sustainability.

PACKAGING AND RECYCLING IN AUSTRALIA

Packaging is a necessary component of a product, performing functions such as
protection, preservation, communication, and transportation. As mentioned before,
the valuable contribution that packaging makes is often overshadowed by the
negative image that it carries at the end-of-life phase where it is considered waste.
Because of the negative image associated with packaging, it is often the focus of
efforts intended to reduce environmental impacts.

Rochester Institute of Technology – 2/22/2010

5
Sustainability in Packaging: Voluntary Regulation in Australia
F. Kotoriy

Long before the National Packaging Covenant (NPC) was introduced in

Australia, consumers and industry were actively participating in recycling of
packaging thanks to legislation established by the government. In 1975, South
Australia introduced container deposit legislation (CDL) to encourage the return of
beverage containers for re-use or recycling (Lewis, 2005) and by 1992, a
ministerial council known as the Australian and New Zealand Environment and
Conservation Council (ANZECC) implemented two strategies to deal with post-
consumer packaging waste: the National Waste Minimization and Recycling
Strategy and the National Kerbside Recycling Strategy included a range of
voluntary recycling targets for the major packaging industries and extended the
availability of kerbside for households in Australia (Lewis and Sonneveld, 2004).

DEFINITION AND BACKGROUND OF NPC

Australia’s National Packaging Covenant is a collaborative agreement between
local, state, federal government and industry to “address the question of
distribution of responsibilities and costs, and aim to secure the kerbside recycling
system” (National Packaging Covenant, 2005). The Australian government through
ANZECC – later renamed the Environment Protection and Heritage Council (EPHC) –
began negotiations on this agreement in 1996 with representatives from all phases
of the packaging supply chain. In a way, the NPC was a natural development
based on earlier efforts to improve recycling rates while focusing on a more
encompassing product stewardship approach.

The covenant is the voluntary component and umbrella document of a two-

part arrangement that aims to manage Australian consumer packaging and its
environmental impacts, based on product stewardship and shared responsibility
among all parties of the packaging supply chain. It became effective in 1999 with
an initial duration of 5 years, after which it was reviewed, revised and renewed
with a new expiration date of June 2010. By October of 2000, there were 131
signatories and the current number of participants exceeds 790 from industry and
trade associations.

Signatories to the covenant agree to fulfill a number of requirements such

as: create public Action Plans that outline their major commitments to improve
environmental outcomes within their sphere of control; report annually to the

Rochester Institute of Technology – 2/22/2010

6
Sustainability in Packaging: Voluntary Regulation in Australia
F. Kotoriy

Covenant Council on their performance with respect to their action plan

commitments and the overall goals and targets of the covenant; implement best
practices based on "product stewardship" policies and contribute to the effective
environmental management of packaging; contribute to research and
development into product design to achieve waste reduction; support the
development of markets for the use of recovered and recycled material; contribute
to the industry funding mechanism to promote recycling.

The second component, and regulatory portion of the arrangement is the

National Environmental Protection (Used Packaging Materials) Measure (NEPM).
Designed as a safety net to cover institutions that choose not to sign the NPC as
well as those that sign but fail to comply with it. This portion will also expire in
June of 2010.

Incentives to sign the NPC include the desire to avoid legislation in the form
of the NEPM or other more stringent measures that could be implemented should
the NPC fail; a high level of self-regulation is a component of the NPC that makes it
attractive to industry. The active commitment of government in the form of
improved collection systems also reinforces the notion of ‘shared responsibility’
promoted by the NPC (Burritt, 2005). There is also a potential for good publicity in
the form of a plaque awarded to a signatory or a logo to be displayed in their
corporate website and on their products. Unfortunately, there is little exposure for
a company involved with the NPC other than its inclusion on the Environment
Australia web site list of signatories, which fails to mention any positive or negative
outcomes achieved by the company.

SCOPE, GOALS AND RECYCLING TARGETS

The NPC applies to the management of consumer packaging and consumer paper
while excluding paper used for magazines and newspapers (NPC, 2005).

The NPC aims to act not only as a regulatory instrument but also as a
promoter of producer responsibility and consumer awareness about proper
development and use of packaging, respectively. This is clearly stated in their
overarching performance goals:
1. Optimization of packaging to consider resource efficiency and maximum re-
utilization.

Rochester Institute of Technology – 2/22/2010

7
Sustainability in Packaging: Voluntary Regulation in Australia
F. Kotoriy

2. Efficient resource recovery systems for consumer packaging and paper.

3. Consumers able to make informed decisions about consumption, use and
disposal of materials.
4. Signatories demonstrating their contribution to goals 1 — 3.
5. Continuous improvement of signatories’ management systems
communicated through Actions Plans and Annual Reports.

Where the original NPC limited its goals to the ones stated above, the
revised NPC from 2005 set more specific targets related to increased recycling,
packaging not traditionally recycled, and overall amount of packaging in landfills.
The following are the targets established (adapted from West 2008):

Target 1: Increased recycling of post consumer packaging

Signatories will work to increase amount of post consumer packaging recycled
from rate of 48% (2003 baseline data) to 65% by 2010.

Packaging made from specific materials will contribute to the target as

follows:
• Paper & cardboard 70–80%
• Glass 50–60%
• Steel 60–65%
• Aluminum 70–75%
• Plastics 30–35%

Target 2: Non-Recyclable Packaging

Industry signatories will work to increase the recycling of some materials that are
either not recycled or have low recycling rates for various reasons. Plastics (4) to
(7) and non-recyclable paper & cardboard packaging fall into this category.

Recycling to be increased from existing 10% rate (2003 baseline data) to

25% by 2010. Composite packaging is to be increased by 25% (2006 baseline
data).

Target 3: Packaging to Landfill

The amount of packaging that is sent to landfill is to remain constant based on a
2003 baseline. This implies that any additional packaging needs to be recovered
or recycled.

Rochester Institute of Technology – 2/22/2010

8
Sustainability in Packaging: Voluntary Regulation in Australia
F. Kotoriy

Additionally, the revised NPC emphasized a greater focus on ‘away-from-

home’ recycling as more and more people consume products and discard their
packages while at work or on the go. This area is particularly challenging because
of contamination problems in collection systems and inadequate infrastructure.

EFFECTIVENESS OF NPC
The original NPC from 1999 was strongly criticized by environmental groups
(including Greenpeace Australia) for being an inequitable, ineffective, and an
irresponsible instrument for managing consumer packaging waste. This was based
on the fact that the initial objectives were vague and non-specific, with theoretical
goals such as establishing frameworks and forums rather than tangible ones based
on outcomes. Their disapproval of the NPC and the insufficient changes being
proposed for the revised version was evident when they stated that they were
“determined to ensure that the NPC MkII (revised NPC) is rejected and
renegotiated” (The Boomerang Alliance, 2004).

Another, less fervent, review commissioned by the National Packaging

Covenant Council in 2004 to get an assessment of the NPC’s effectiveness was the
one developed by environmental consultant group Nolan ITU. The report states
that “the operational elements of the existing Covenant/NEPM model should be
substantially improved” (Nolan ITU, 2004). Further recommendations state that
this model should focus on attaining measurable outcomes to manage the
environmental impact of consumer packaging.

The revised NPC has also been subject to a fair amount of criticism and
reviews. But because it has measurable targets, analysis of its effectiveness is
less subject to interpretation and more reliant on a comparison of actual outcomes
versus proposed outcomes. Two reviews conducted by Lewis (2008) and West
(2008) provide valuable insight into the outcomes obtained up to the year 2007, as
well as projections for the year 2010.

Both Lewis and West present the same data for the evaluation of Target 1.
The graph below shows recycling rates for packaging starting with the base year of
2003 and up to 2007 and how they compare to the targets for 2010 shown on the
right hand side. We can also see a couple of forecasts derived by two different

Rochester Institute of Technology – 2/22/2010

9
Sustainability in Packaging: Voluntary Regulation in Australia
F. Kotoriy

methods (see caption).

[a] NPCC October 2008 data

[b] Rates adjusted to reflect significant portion of consumer packaging that has been excluded from
initial calculations.

[c] Covee's forecast assumes that all future growth in recycling will come from successful
completion of Covenant-funded projects.

[d] Hyder's forecast is based on extrapolation of past recycling trends.

From the graph, it can be inferred that there has been a positive trend
towards the established target for 2010 and it will most likely be achieved. This
however, is a somewhat erroneous interpretation. A major source of criticism
arises from the estimation of the baseline for 2003. Consumption has been
understated and this in turn, has overstated the reported recycling rate (West,
2008). Some of the packaging excluded from the original estimate are: composite
and aseptic packaging (meal solutions), liquid paperboards (milk cartons),
aluminum foils for frozen foods, steel and plastic drums of 20 L (paint), tertiary
packaging (shrink wraps). Because of this, adjustments had to be made to show a
true representation. The problem arises from the fact that forecasts are made
based on claimed data and not adjusted figures, thus resulting in an overestimate

Rochester Institute of Technology – 2/22/2010

10
Sustainability in Packaging: Voluntary Regulation in Australia
F. Kotoriy

of the achievable recycling rates.

Target 2 has been harder to quantify due to the variety in packaging

materials being targeted and the difficulty obtaining accurate data for materials
not traditionally recycled. The baseline data was non-existent and assumed to be
0%. According to West (2008), for the year 2007, Liquid Paper Board (LPB) such as
milk cartons appear to have the highest recycling rate at 11%. Unfortunately,
most plastics still have recycling rates well below 3% with the exception of two
polymers – #5 Polypropylene and #6 Polystyrene – with rates around 10%. Lewis
(2008) however, puts the estimate of recycling of plastics #4 through #7 at 24%
for the year 2006 and proceeds to predict that their rates will increase due to
strong export market demands. The study fails to support this statement with any
substantial data.

For Target 3, West uses the adjustment method to revise the reported
amount of packaging sent to landfill. With the target amount not to exceed
2,350,891 tonnes, the reported amount for 2007 (1,880,406 tonnes) is adjusted to
2,518,652 tonnes to reflect an amount 7.1% over the cap. Lewis fails to make any
adjustments and uses 2.5 million tonnes as the base amount. Her estimate is
therefore a favorable one with 2007 levels representing a 24% decrease in the
amount of packaging disposed to landfill. She attributes this to a slight increase in
consumption (4%) but an even greater increase in recycling (46%) but fails to
consider materials that are excluded from the measure.

In conclusion, it may be incorrect to assume that there is a strong correlation

between the increasing recycling rates and the implementation of the NPC.
Signatories spend an estimated $18.6 million per year to participate in the
Covenant, with only about $4.4 being used to fund recycling projects since 2005
(Lewis, 2008). It appears that this amount funding is low considering the large
number of signatories (792) and the wide scope of the NPC. In reality, the increase
in recycling rates is a result of many factors including: the positive influence of the
NPC; the strong export markets for paper, cardboard and mixed plastics;
imposition of waste levies; local government planning strategies to locate
alternative waste treatment facilities (West, 2008).

Rochester Institute of Technology – 2/22/2010

11
Sustainability in Packaging: Voluntary Regulation in Australia
F. Kotoriy

REFERENCES

1. Beck, R.W. (2003). Final Report - Statewide Municipal Waste Composition

Study . Pennsylvania Department of Environmental Protection. Retrieved
February 2, 2010, from
http://www.dep.state.pa.us/dep/DEPUTATE/AIRWASTE/WM/Recycle/Waste_Co
mp/Study.htm
2. Boomerang Alliance, The. (2004). Critique: National Packaging Covenant 2005 –
2010. Inequitable, Ineffective and Irresponsible. Sydney, Australia. Retrieved
February 4, 2010, from
http://boomerangalliance.org/000_files/4_NPC_critique.pdf
3. Burritt, R., Lewis, H., & James, K. (2005). Analysing the Effectiveness of an
Environmental Voluntary Agreement: The Case of the Australian National
Packaging Covenant. The Handbook of Environmental Voluntary Agreements,
Environment & Policy, 43, 283-305.
4. Green Dot & Packaging Waste Directive Compliance in Europe. (n.d.). Retrieved
February 18, 2010, from http://www.emergogroup.com/articles/packaging-
waste-directive-compliance-europe
5. Lewis, H. (2005). Defining product stewardship and sustainability in the
Australian packaging industry. Environmental Science & Policy, 8(1), 45-55.
doi: doi: DOI: 10.1016/j.envsci.2004.09.002.
6. Lewis, H. (2008). National Packaging Covenant Mid-Term Review: Executive
Document. National Packaging Covenant Council. Retrieved February 3, 2010,
from
http://www.packagingcovenant.org.au/documents/File/Executive_document_Fi
nal.pdf.
7. Lewis, H. & Sonneveld, K. (2004). Unwrapping the Discourse:
Product Stewardship and Sustainability in the Australian Packaging Industry.
Presented at the 14th IAPRI World Conference on Packaging, Stockholm,
Sweden. Retrieved February 5, 2010, from http://eprints.vu.edu.au/50/.
8. National packaging Covenant Council. (2005, July 15). The National Packaging
Covenant. A Commitment to the Sustainable Manufacture, Use and Recovery
of Packaging. Retrieved February 3, 2010, from
http://www.packagingcovenant.org.au/documents/File/National_Packaging_Co
venant.pdf.
9. West, D. (2008). EPHC Mid-Term Review of the National Packaging Covenant:
Report 1: Recycling Performance and Data Integrity. Sydney, Australia: Total
Environment Centre. Retrieved February 3, 2010, from
http://www.tec.org.au/tec/component/docman/doc_download/326-npc-data-
review.
10. Nolan-ITU Pty Ltd. (2004). Evaluation of the Covenant Volume 1. Melbourne,
Australia: NATIONAL PACKAGING COVENANT COUNCIL. Retrieved February 4,

Rochester Institute of Technology – 2/22/2010

12
Sustainability in Packaging: Voluntary Regulation in Australia
F. Kotoriy

2010, from
http://www.environment.gov.au/settlements/publications/waste/covenant/eval
uation/index.html.
11. Shanklin, A. & Sanchez, E. (2005). Regulatory Report: FDA's Food Contact
Substance Notification Program. Food Safety Magazine, (October/November
2005). Retrieved February 18, 2010, from
http://www.fda.gov/Food/FoodIngredientsPackaging/
FoodContactSubstancesFCS/ucm064161.htm.

Rochester Institute of Technology – 2/22/2010

13