Assignment Guidelines: Conduct a stakeholder analysis. Stakeholders should include participants in the packaging supply chain, but other parties as well, such as industry groups, government agencies,
Assignment Guidelines: Conduct a stakeholder analysis. Stakeholders should include participants in the packaging supply chain, but other parties as well, such as industry groups, government agencies, and NGOs. Create a chart similar to the example below and identify the key interests or desired outcomes of each stakeholder. Provide answers to the following questions in a paper no longer than 2 single-spaced pages. You may use up to 2 pages of supporting material in addition to the stakeholder chart. Use Step 1 to identify areas of importance across stakeholders and areas in the supply chain where improvements might be possible. What should Patagonia’s goal be for 2025, regarding achieving environmentally friendly packaging? Should they focus on developing new materials, improving recycling, etc.? What role can circularity play? What specific actions should they take? The rubric below will be used as a grading guideline. The following is an example stakeholder chart: (expand on this for stakeholders and key interests and desired outcomes): Stakeholder Group Maintain product quality Affordability to consumer Ease of supply chain implementation Environmental impact metrics Patagonia consumers Raw material suppliers EPA Package manufacturers  
Assignment Guidelines: Conduct a stakeholder analysis. Stakeholders should include participants in the packaging supply chain, but other parties as well, such as industry groups, government agencies,
Date: April 1, 2019 SARA BECKMAN KATE O’NEILL SEREN PENDLETON-KNOLL WILLIAM ROSENZWEIG ROBERT STRAND Patagonia: Closing the Loop on Packaging Pollution Plastic takes centuries to biodegrade in the environment and is a major disruptor in our planet’s ecosystems. If left unchecked, plastic will have a dire impact on the future of humanity. —DOUG FREEMAN, CHIEF OPERATING OFFICER, PATAGONIA Between San Francisco and Hawaii swirls the Great Pacific Garbage Patch, a vortex of floating plastic debris, just one example of the trash polluting our world’s oceans. In Yellowstone National Park, a dormant geyser awoke for the first time in decades, spewing forth trash.1 China recently stopped admitting most plastic waste into its country resulting in tons of “displaced” plastic now found in ditches and landfills.2 Today, single-use packaging waste is invading all corners of the world. Wholesale change is urgently needed to create packaging that does not wreak havoc on our planet. Due to complicated and global packaging supply chains, the quest for viable and sustainable improvements requires collaboration, innovative technologies, forward-thinking companies, consumer demand, and new government incentives and laws. 1 https://www.npr.org/2018/10/10/656079696/yellowstones-ear-spring-geyser-erupts-spewing-decades-old-trash 2 https://www.smithsonianmag.com/smart-news/chinas-plastic-ban-will-flood-us-trash-180969423/ Haas Operations and Information Technology Management Group Senior Lecturer, Earl F. Cheit Faculty Fellow, Project Scientist in Teaming, Design and Innovation, Sara Beckman, Faculty Director, Sustainable Food Initiative, William Rosenzweig, Associate Professor in the Department of Environmental Science, Policy and Management at UC Berkeley Kate O’Neill, Berkeley-Haas Center for Responsible Business Executive Director Robert Strand, and Berkeley-Haas Center for Responsible Business Associate Director Seren Pendleton-Knoll prepared this case with assistance from Case Writer Susan Thomas Springer, as the basis for both student competition and class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 2019 by The Regents of the University of California. All rights reserved. No part of this publication may be reproduced, stored, or transmitted in any form or by any means without the express written permission of the Berkeley-Haas Case Series. PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 2 Single-use packaging is integral to the apparel and food industries. Patagonia believes a call-to- action is needed throughout the broader business community to not only innovate more environmentally responsible packaging solutions, but to share those solutions to solve a near irreversible crisis. Patagonia has been a responsible business pioneer since its founding in 1973. Patagonia creates apparel, outdoor gear, and food products consistent with its mission: “We are in business to save our home planet.” It is a philosophy evident throughout Patagonia’s apparel business, Provisions food business, and corporate venture capital fund, Tin Shed Ventures. From creating outerwear with recycled soda bottles to organic buckwheat breakfast grains, Patagonia has been a successful business by staying true to its core values.3 Patagonia is searching for solutions to mitigate its own contributions to the single-use packaging crisis. However, it is critical to keep in mind the purpose and application of packaging when seeking solutions. The primary job of a package is to protect what is inside. Packaging exists for health and hygiene reasons—to keep products separate, to block moisture from leaking out, and to prevent bacteria from contaminating food. It also exists to transport goods safely without damage and to look appealing for marketing reasons. Questions which Doug Freeman, Patagonia’s Chief Operating Officer, is actively seeking answers to include: Why aren’t there more biodegradable, recyclable, or reusable packaging options for manufacturers and consumers? Are there non-extractive feedstocks which could be scaled into new responsible packaging solutions? How can composting be expanded through industrial facilities and backyards that will allow packaging to have a smaller environmental impact? Who is going to collect, recycle, and reuse new packaging materials? Is it reasonable to expect the consumer to know how to properly dispose of single-use packaging? To tackle this, “Patagonia is leveraging the power of open innovation because the likelihood of the solution existing inside the R&D department of one company is extremely low. The chances that we can meet our greatest sustainability challenges through collaboration is much greater. A collaborative systems approach is what is required,” said Robert Strand, Executive Director, Berkeley-Haas Center for Responsible Business. Patagonia: A History of Innovation and Sharing Patagonia began with ideas still core to the company today—reusability and quality. In the 1960s, young rock climber Yvon Chouinard learned blacksmithing to create reusable steel pitons for climbs in places like Yosemite without littering rock faces with permanent rope supports. The demand and reputation of Chouinard’s gear grew as he produced hardware of the highest quality for him and his friends to tackle countless first ascents. By 1970, Chouinard Equipment became the largest supplier of climbing hardware in the U.S.4 As climbing grew in popularity, the hardware he created was damaging the rock faces as the reusable steel pitons were hammered in and pulled out of heavily trafficked routes, causing ever growing cracks and fissures. One great environmental solution led to another problem. Thankfully, Chouinard did not stop there. After recognizing the damage of his reusable steel pitons, he developed aluminum pitons that could be inserted by hand, instead of by hammer. The new pitons could still be reused for another climb, PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 3 but unlike their steel predecessors, they left little to no trace of a climber, protecting the environment Chouinard and his friends revered. The company’s transition to apparel was unintentional and simply began to support the marginally profitable hardware business.6 Chouinard quickly recognized that the apparel industry was an even greater contributor to the environmental crisis than his pitons, and he made it his mission to use his newly-founded business, Patagonia, to find solutions. Today, Patagonia’s clothing and apparel are ranked among the highest performing gear on the market. The company’s consideration for the environment has steered every part of the business. Patagonia has looked deeply into the origins of its products to determine the environmental impact of each product’s supply chain. In the 1990s, Patagonia switched to 100% organic cotton after realizing that 10% of all agriculture chemicals in the United States were used to grow cotton on just 1% of all major agriculture land.5 In 1993, Patagonia became the first outdoor clothing manufacturer to use 100% recycled polyester for fleece, allowing the company to reduce its fossil fuel consumption while also mitigating waste.6 Each year, while Patagonia’s materials innovation team has continued to replace virgin materials with recycled materials, polybags have been a pain point for the business. Plastic polybags are used to package Patagonia’s individual apparel products. Their function is to protect products during transit from manufacturers to distribution centers, as they move through Patagonia’s distribution centers, and as they travel to stores and customers. A polybag—or some form of packaging—is crucial for a product traveling through the supply chain to prevent damage. Patagonia currently recycles all the polybags collected in Patagonia’s retail stores and distribution centers, but some leave the Patagonia system so they are not recycled. Patagonia has investigated the possibility of eliminating polybags but found that 30% of garments that went through its Reno, Nevada, distribution center without packaging were damaged beyond the point of being sellable. Since determining that polybags are essential to Patagonia’s logistics system, the company has identified two important ways to reduce polybags’ environmental impact: 1) changing how products are folded can result in a 50% reduction in plastic packaging per product and 2) using more recycled content in polybag manufacturing. Near term, Patagonia will continue its polybag recycling efforts and will work towards using 100% recycled content polybags. Long term, Patagonia is exploring reusable and biodegradable polybags. This is a good start, yet not enough for Freeman and Patagonia employees. Patagonia is still using plastic packaging for apparel and Freeman is wondering why the industry has become so dependent on polybags and has not found a better alternative. “We rely on a network of raw material suppliers and sewing factories to bring us options that are environmentally responsible,” said Freeman. “So, in the example of polybags used to package our apparel products, we don’t have a supply chain option that can make a post-consumer recyclable or 100% recycled polybag, and that’s an issue. Why aren’t supply chains doing that and how can we leverage our business to help develop more responsible solutions?” PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 4 As Patagonia’s apparel business continued to seek alternative packaging solutions, Chouinard looked towards new frontiers. His work with organic cotton shed light on environmental challenges in the agriculture industry and he saw the food industry as a space desperately needing more responsible business approaches. Patagonia Provisions, led by Managing Director Birgit Cameron, is Patagonia’s in-house food business that reexamines best practices in food sourcing, utilizes organic regenerative growing methods, and works with like-minded advocates and producers to find solutions to the important environmental issues facing the food industry.7 Patagonia Provisions purchased 80,000 pounds of wild salmon in 2014 and officially launched its wild sockeye smoked salmon. From salmon caught using reef nets, an ancient selective harvesting technique, to Long Root Ale®, the first beer made from Kernza®, a perennial grain with a root system that grows up to ten feet long and thrives without tilling,8 Provisions engages with all aspects of the food’s supply chain, building relationships with farmers, fisherman, and ranchers. For food to reach Provisions’ customers with the same quality and assurance, the food needs to be protected. Yet again, Patagonia stumbled on a packaging problem. Evaluating Single-Use Packaging Solutions How can Patagonia Provisions produce a package as green as the product inside? Although there isn’t one equation to rank which single-use packaging options are better on the environmental scale than others, an ideal solution would consist of the following features: 1) made from renewable raw materials, 2) performs acceptably on current packaging and processing equipment, 3) provides adequate shelf life, 4) available at a reasonable cost achieved through scaling volume over time, and 5) is either easily reusable, biodegradable, renewable or recyclable using current technology or newly proposed technology. At present, a solution covering all these features is not readily available and Patagonia recognizes that successful solutions will be ones that can scale over time on costs. At the current status of the single-use packaging industry, the company needs to thoroughly investigate every solution that appears to have merit (see Exhibit 1: Patagonia Provisions’ single-use packaging for products). Paper or Plastic? This common question at the checkout counter points out the difficulty of evaluating the environmental impacts of various types of packaging. In 2018, Trader Joe’s introduced new produce bags with the message, “100% compostable and will biodegrade in 180 days” which sounds like a good green option. Biodegradable and compostable implies a material that breaks down in a natural environment at a reasonable rate. What permits these bags to have the biodegradable label is that they include additives designed to make them decay faster than traditional bags.9 However, if consumers read the small print on the bag, they’ll see “ASTM D6400” which refers to the American Society for Testing Materials which specifies this type of bag is “designed to be composted in municipal and industrial aerobic composting facilities.”10 There are a limited number of facilities across the U.S. which accept biodegradable materials. And, even if this bag was designed to compost in the lower temperature of a backyard bin, it’s estimated that 72% of Americans do not compost at home.12 These limitations may leave people thinking that returning to paper bags is the answer. However, paper bags are also problematic because the materials require deforestation and producing paper bags emits greater greenhouse gases than producing plastic bags. Remove Chemicals of Concern One way to rank different packaging options is if they involve fewer potentially harmful chemicals such as phthalates and Bisphenol A (BPA), both used in the production of plastics. Marty Mulvihill, PhD, General Partner with materials-focused investment group, Safer Made, said that there are potentially toxic chemicals found in can liners, paperboard and plastic. He adds that government bodies, including the EPA and FDA, do not all agree on defining chemicals of concern and the food industry should set a high bar. Mulvihill relies on the Food Packaging Forum, an organization based in Switzerland that provides independent, science-based and balanced information about chemicals in food packaging for all stakeholders.13 There have been several occasions when harmful chemicals have been quickly replaced with a new chemical without time to ensure that the new chemical is benign or safe. In 2008, REI announced it would begin clearing its shelves of polycarbonate Nalgene bottles containing BPA.14 BPA is dangerous because it mimics estrogen and can seriously effect newborns and fetuses.15 When the danger of BPA was publicized, REI was quick to strip the bottles from its shelves and look for a replacement. REI partnered with SIGGS and sold aluminum water bottles, but in 2009 the CEO of SIGG sent out an apology saying that on the interior of the aluminum bottles was an epoxy liner containing BPA.16 REI took matters into its own hands and produced BPA-free bottles and containers with a chemical called Tritan, a copolyester made by Eastman Co. Unfortunately, Triton is a trade name for bisphenol S or BPS which was later discovered to be just as dangerous as BPA. REI eventually switched to Klean Kanteen, a stainless steel water bottle. This one example shows that while seeking alternatives with a smaller environmental footprint is urgent—it still requires time and research to weigh the pros and cons. For short-term adoption, it is important that materials used for packaging are recognized as a qualified Food Contact Substance (FCS). Section 409 of the Food Drug & Cosmetic Act defines an FCS as “any substance that is intended for use as a component of materials used in manufacturing, packing, packaging, transporting, or holding food if such use of the substance is not intended to have any technical effect in such food.”17 The FDA supplies an inventory of effective FCSs18 and “guidance” on considerations when making “significant process changes.”19 Packaging solutions tied to novel materials may take longer to be approved due to inherent risks and necessary FDA testing. PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 6 Novel Materials Aren’t Always Better What if a snack brand introduced a new biodegradable chip bag made with polylactic acid (PLA), a bio-based renewable material? It sounds better than nonrenewable, petroleum-based material. But what if the plant-based material was grown under chemically-intensive agricultural conditions or was made from genetically modified corn rather than organic corn? New materials and chemicals come on the market daily—and their potential for danger is not always obvious. Synthetic biology and genetic modification are budding industries; however, the benefits and consequences are controversial. Patagonia Provisions’ products do not contain any genetically modified organisms (GMO), and there are no plans to switch to GMO sources in the future. Patagonia is eager for biodegradable and bio-based materials to replace non-renewable, petroleum-based plastic, however, much of the research around biodegradable, bio-based materials involves GMOs. Patagonia recognizes the dangers of introducing GMOs into agriculture, an uncontained environment. The company is working to foresee and determine the risk of GMOs produced in a contained environment to provide a solution to the plastic pollution crisis without introducing a danger to the ecosystem. Is Glass “Good” or “Bad”? Many American families relied on the milk man to deliver milk from local creameries through the 1950s before reliable refrigeration replaced iceboxes. Glass milk bottles that were rinsed, put outside for pick up, and re-used, provided a functional example of a closed-loop system. In the United States this closed loop remains in some elite markets, but otherwise has become non- existent. Patagonia is searching for packaging with potential reuse markets. Recycled materials require processing, whereas reused materials are simply used for the same purpose or a new purpose rather than modified mechanically or chemically. While glass provides advantages, such as being an excellent food barrier and easy to reuse at home, it comes with several problems including fragility which could result in broken glass shards contaminating factories and food. Glass is heavier than traditional cans so transporting products packaged in glass requires more energy, producing more greenhouse gases than plastic and paper alternatives.20 Patagonia is a global brand with a customer base rooted in the outdoors. So, packaging must be easy to transport from manufacturer to distributor to customers, as well as easy for customers to take on their travels. Although glass is not ruled out by the company due to its promising reusability possibilities, it has yet to be a viable solution. A Wrapper is Complicated Patagonia Provisions has been working for several years to improve the environmental impact of its fruit bar wrapper. The bar is sourced with environmentally-friendly organic fruit, nuts, seeds, and juice. But the wrapper doesn’t meet the company’s sourcing expectations and can only be PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 7 disposed of in the trash. Patagonia Provisions experimented with biodegradable wrappers and found encouraging results but no acceptable alternatives. Patagonia Provisions is actively seeking improved packaging for its fruit bars and is also working towards better packaging solutions for its more unstable products too (see Exhibit 2: Qualities required for each Patagonia Provisions product). “The answer is that as soon as the science is available, we will move to better packaging,” said Cameron. She added that their food products themselves are “at the highest bar of what we can do in terms of people and planet considerations” but they are still seeking innovation to improve the packaging. While the consumer only sees a single wrapper, the construction of the current wrapper structure has multiple layers: one or more sealant layers to melt and seal the film together, a barrier layer to bar moisture and oxygen, a structure layer to provide rigidity and puncture resistance, and a printed layer to provide a substrate for marketing materials and FDA-required information. This multilayer system complicates traceability, recyclability, and the ability to integrate innovation. “Each layer has its own separate manufacturing step in the supply chain, and each step is conducive to the next,” said Bart Bromberger, Finance and Operations Manager, Patagonia Provisions. “Each layer must seal together properly and run through the plant smoothly without ripping or clogging machinery.” Patagonia Provisions has been running biodegradability trials with Elk Packaging, a southern California company committed to new environmentally-responsible packaging solutions.21 Trials have been focused on producing a biodegradable film structure with partner Futamura using its NatureFlex™ bio-film, which is biodegradable and cellulose-based.22 Trials include printing the logo on the wrapper to test the print quality on the new film. In the first trial, the film structure ran too slowly through the machines; the team identified the sealant layer as the problem and have been working to improve it. When biodegradable and bio-based solutions slow down machinery at the production facility it increases the cost of the package and makes the solutions difficult to adopt (See Exhibit 3: Patagonia Provisions team tests a new energy bar wrapper). Time to market is dependent on whether new solutions can run through existing packaging facilities or if entirely new packaging machinery needs to be designed, built, tested and integrated into the production line. “If you’re going to make a viable packaging solution, it probably has to be compatible with the current infrastructure. Theoretically, if you come up with something completely new that the world hasn’t ever thought about—to make it happen in the next five or ten years, it’s got to be able to go on a packaging line that exists,” said Jan Matsuno, Certified Food Scientist, who consults with Patagonia Provisions. (See Exhibit 6: Packaging life cycle considerations) Provisions knows that most grocers desire six months of shelf stability for packaged products, and that one or two months can be lost while bars sit in a warehouse and move through distribution, so the wrapper needs to provide a food safe barrier for a minimum of eight months. The company refuses to add stabilizers or preservatives to its food products to extend shelf life – so the wrapper must keep food safe. PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 8 To measure the shelf life, Patagonia Provisions puts new packaging through an accelerated shelf life study as part of the development process. The wrapped bars sit in a chamber where testing includes pressure testing to determine leaks in the film seal. The chamber provides a three-to-one timetable, so four months represents one year. After time in the chamber, Patagonia Provisions conducts sensory and microanalysis to determine how the bar survived. (See Exhibit 4: Patagonia Provisions wrappers go through extensive testing) Patagonia Provisions packaging costs range from three to ten percent of the total product cost depending on the category, such as soup, wild salmon or cereal. The company is willing to spend more for a scalable solution that is more environmentally sound and also offers a safe food barrier and sufficient shelf life. (See Exhibit 5: Barrier properties) Single-Use Packaging Supply Chain Challenges For Patagonia and all shelf-stable food producers, the single-use packaging supply chain is not only complicated, but the links vary depending on the type of packaging being created such as wrappers, boxes with liners, cartons, or pouches. Generally packaging begins as plastics, foils, and other complex chemical materials that are manufactured into containers and then printed or labeled. Then products are boxed and transported to stores or online warehouses for consumers to buy. The last step is key—the end-of-life of the package. Today, few food packages can be recycled because they are made of multiple layers to maintain freshness. But if a package is designed to biodegrade or be recycled, how often does that actually happen? Can it be disposed of through an existing waste stream or are new recycling infrastructures needed? Is the consumer educated to know how to dispose of packaging? One green chemistry expert said the main challenge to designing a more environmentally- responsible supply chain for single-use packaging revolves around traceability. As the packaging product is developed throughout the supply chain, information about the raw materials is easily lost, reducing the ability to reclaim the value of those materials. In short, the packaging supply chain lacks transparency. “At the very beginning you have valuable, complex materials combined or molded into a functional package and by the end of its life people don’t know what was used to make it in the first place—so it makes it very hard to reclaim those same valuable or functional materials,” said Mulvihill. For example, the common water bottle creates problems in recycling streams because bottles and caps are made from different polymers. Safer Made is tackling that problem by investing in Ecologic,23 a sustainable packaging company that has designed the “world’s only commercially viable paper bottles made from recycled materials.” The shell of these paper bottles is made from recycled cardboard and newspaper which can be recycled again, and its liner is made from recycled plastic. The paper bottles, used by Seventh Generation and L’Oréal, were designed to go through materials recovery facilities (MRFs) and break apart so the paper sorts with paper and the plastic sorts with plastic. Mulvihill calls it a great closed-loop story. Ecologic put a bunch of PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 9 these bottles randomly in curbside recycling bins and then went to the MRF to watch what happened through the lifecycle. This packaging wasn’t just designed for the consumer; it was designed to successfully run through the system, an improvement which took several years to achieve. Mulvihill thinks there are real opportunities for innovation in three areas: 1) design packaging to disassemble or degrade, 2) produce packaging out of single component materials, and 3) create packaging using materials that are easily separated and sorted into valuable streams. Technology aimed at greener solutions needs to be applied throughout the supply chain, from the front end through the back end, to ensure materials can be reclaimed. Patagonia is concerned about a lack of recycling infrastructure even after customers dispose responsibly. So the company has been collaborating with the Sustainable Packaging Coalition (SPC), whose mission is “to use thorough research and science-based approaches to help advance and communicate a positive, robust environmental vision for packaging and to support innovative, functional packaging materials and systems that promote economic and environmental health.”24 Patagonia is working toward developing labels for all of its apparel, polybags, and food packaging that educate customers on how to dispose of those items. Open (or Broken) Links Even if a package is manufactured to be recycled, there’s no guarantee it will be recycled at the end of its life. Of the seven Society of the Plastic Industry Resin Identification Coding System Symbols (SPI Symbols),25 community recycling centers typically accept only a few types of plastic. Many consumers toss recyclable packaging in the trash because recycling capacity is not available at their local recycling center or they may not be educated in what is and isn’t recyclable. Also, recycling facilities require consumers to sort and clean recyclables to avoid contamination. Many recyclable items are not recycled because one contaminated piece of plastic or cardboard can compromise the whole batch. Also, American recycling facilities must now find new markets after China stopped importing “foreign garbage.” The result is that only 9% of recyclable plastics are actually recycled.26 The 2017, End of Market Demand for Recycled Plastic by the research company More Recycling27 concluded that for recycling rates to increase, demand for recycled content will need to increase to absorb that supply. Without adequate end-use demand, there are fewer investments in maintaining collection, separation, and processing operations. To ensure the longevity of the plastic recycling sector in the United States, we must find ways to support the recycling system while the economics of recycling are stressed. It requires a collaborative effort by municipalities, manufacturers, packaging suppliers and consumers.28 Some recyclable material that could not be processed on the local level was shipped off to areas with a more robust recycling infrastructure, primarily in Asia. China had been the world’s largest importer and recycler of scrap metals, plastic and paper. In 2012, China received nearly half of PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 10 all the plastic waste that Americans sent abroad for recycling and about one-third of the European Union’s plastic waste exports. Chinese leaders became concerned about being viewed as the world’s dump heap, especially after a movie titled Plastic China highlighted an 11-year old girl and her family sweating through the dirty work of sorting mountains of recycling.29 In July 2017, following the media spotlight and the globe’s growing plastic consumption, China announced it would ban 24 types of scrap, or “foreign garbage,” to reduce the country’s environmental pollution.30 “Global recycling markets are easily prone to disruption, and developed countries have underinvested in recycling infrastructure for years,” said Kate O’Neill, Associate Professor, Global Environmental Politics, University of California, Berkeley. O’Neill is the author of Waste, a forthcoming book about the global politics of waste. O’Neill added that China’s actions are forcing industrialized nations to reconsider overseas disposal. Americans and Europeans recycle a small percentage of their own plastic waste, the majority ending up in landfills and oceans. Supply Chain Links May Become Obsolete A retort pouch is a laminate of flexible plastic and metal foils which offers an alternative to traditional canning. First used in the U.S. military, today popularity is growing rapidly around the world to package a variety of food and drink. The pouches are convenient and have a long shelf life, however the multi-layer construction prevents them from being recyclable.31 It is the current package Patagonia Provisions uses for salmon while the company searches for a recyclable option. Provisions is interested in finding a cannery to work with on designing a can with a new shape fitting the branding of its salmon filet. However, a lot of U.S. canneries have closed as the pouches replace cans. Ironically, the old-school steel can with tin or enamel coating, which was a pioneer in food packaging more than 200 years ago, is still easily recycled today.32 Innovation Opportunity and Challenges Innovators have roadblocks to overcome on the journey to sustainable food packaging solutions through the entire life-cycle. Since single-use packaging is a low-margin business, it is a challenge and an opportunity. The challenge is that any kind of change to the system needs to be cost competitive quickly. The opportunity is that if you have an innovation that is cost competitive and provides differentiation, there’s a real hunger for adoption on the manufacturing end and some interesting opportunities for growing packaging businesses. Startups, capitalizing on consumer anxiety about climate change and plastic pollution, are re-thinking alternatives to everyday packaging and trying to compete with industry giants with household names such as Saran wrap.33 PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 11 Small-Scale and Startup Advantages While the food packaging supply chain is often global, opportunity still exists on a smaller scale. Local solutions may be better positioned to answer these two packaging questions: Can we build it? Can we capture and recycle the materials? “Most packaging is produced domestically where the ability to pilot within regions and within small, family-owned producers is possible. The packaging supply chain can be more accessible, especially domestically,” said Mulvihill. With packaging infrastructure on a small-scale, startup businesses may have a greater capability to manage the entire life cycle of a product or package. For example, Plum Organics (owned by Campbell’s Soup Company) devised a recycling stream on a small scale where none existed for the caps on its retort baby food pouches. The innovation was born from its mission to “leave a baby-sized footprint on the planet.” Plum Organics is currently using non-recyclable retort pouches because they believe it leaves a smaller overall environmental footprint with less energy and less greenhouse gases generated during its lifecycle than a glass jar.34 When Plum realized that its colorful #5 plastic recyclable caps were not accepted at many recycling centers, it partnered with Preserve35 to start a cap recycling program where parents, schools, and daycare centers can collect caps and drop them at participating stores such as Whole Foods.36 Meanwhile, the company is collaborating with industry experts to find fully recyclable packaging. Stronger Together One Step Closer to an Organic Sustainability Community (OSC2) is a coalition of companies working together to have a positive effect on the natural products industry and environment. Founded in 2012, one of the key initiatives is to secure a compostable flexible packaging solution. 37 Many of OSC2’s collaborators are often too small to get big packaging players to notice them. Numi Organic Tea cofounded the coalition because they felt they didn’t have the clout in the packaging materials industry to bring about the kind of change they needed in trying to reengineer its teabag over-wrap. “The holy grail we’re working towards is a compostable, over-wrap and we knew we weren’t going to get there without industry clout because the upstream supply chain is very focused on conventional plastics and this market for biodegradable plastic that Patagonia, Numi, Alter Eco chocolates and Dr. Bronner’s soaps inhabits—in the grand scheme of things—is a microscopic market. So, it was impossible for us to get their attention and convince them that this was a true market opportunity unless we had a bigger pull than Numi alone,” said Jane Franch, Director of Strategic Sourcing and Sustainability, Numi Organic Tea. Today, packagers are at the table innovating with OSC2 companies and the group has taken on a support role to new companies traveling the path of sustainable packaging. One project is funding cradle-to-grave studies to compare different types of structures such as comparing a biodegradable petroleum structure to a plant-based structure and examining the tradeoffs and benefits. Also, OSC2 helped fund shelf-life studies for some of the first-generation biodegradable, PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 12 bio-based materials. Recently, OSC2 funded research on marine degradation and the performance of different bioplastics in a marine aquatic environment. Funding Emerging Technologies Patagonia is a catalyst for solutions through its investment arm, Tin Shed Ventures,38 that funds environmentally and socially responsible startup companies. Tin Shed Ventures seeks to find and fund the next generation of responsible business by investing in companies such as Bureo, creating skateboards and sunglasses from recycled fishing nets, and Wild Idea Buffalo, raising bison with a model that restores grasslands within the Great Plains. Tin Shed Ventures is collaborating with two startup companies tackling single-use packaging, Mango Materials and Full Cycle Bioplastics. Both tackle plastic pollution and climate change by transforming organic matter into biodegradable alternatives for nonrenewable, petroleum-based plastics.39 Mango Materials captures waste methane from water treatment facilities and Full Cycle Bioplastics captures organic waste such as spent grains from breweries and vegetable peelings from residential curbside bins. Both companies convert the waste streams into a biodegradable polymer called polyhydroxyalkanoates (PHAs). PHA is a material that excites Patagonia as it is bio-based, converts waste into something of value, is biodegradable even in marine environments, and has similar characteristics to polyethylene terephthalate (PET), the most commonly used plastic in the world. “Tin Shed scouts out solutions that meet or beat industry performance standards and are biodegradable, renewable, or derived from waste,” said Phil Graves, Senior Director of Corporate Development & Tin Shed Ventures, Patagonia. It is incredibly difficult for some of these innovations to succeed without funding due to the high upfront capital costs of building the infrastructure and supply chain. Patagonia understands environmentally-friendly innovations may initially come at a steeper price; however, time and scale should bring prices down as more companies adopt. Patagonia encourages other companies to adopt best-for-Earth materials and technologies that it helped bring to market. When the company finds high-performing, environmentally responsible solutions, it shares them openly as part of its mission to make a far-reaching and positive environmental impact. A good example is found in its apparel business. Wetsuits have typically used synthetic rubbers made with petrochemicals, which leave limited options for recycling the old suits. In 2008, Patagonia began working with Yulex, a company making plant-based rubber, to create a renewable, natural rubber, neoprene-free wetsuit.40 The result was the first Fair Trade Certified™ wetsuit. Because the natural latex is refined in a water-based process, the creation of Yulex wetsuits release 80% less CO2 into the atmosphere compared to a conventionally made wetsuit. Patagonia declined long-term exclusivity and encouraged Yulex to sell its neoprene-free rubber to Patagonia’s competitors because it was best for the planet. Patagonia was the first apparel company to convert to 100% organic cotton and the first to use recycled polyester in its fleece garments. In both cases, Patagonia was willing to pay the extra PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 13 upfront costs to bring the innovations to market knowing that with scale, organic and recycled materials will reach a cost parity to nonorganic and unrecycled alternatives. However, today, only 3% of cotton is organic, while recycled polyester holds only 14% of the polyester market.41 Patagonia has shared innovations such as these, including information about its suppliers and partnerships, online at The Footprint Chronicles42 and to industry groups. This allows other companies to make greener products without investing the years of research and development required to solve supply chain challenges such as the best source of natural rubber. The same will happen with any single-use packaging innovation because Patagonia plans to continue sharing innovations, like PHA from waste streams, with its competitors. Funding can bring innovations to market faster and move the meter on climate change. Patagonia has learned that investing in science at an earlier stage is important but the ultimate goal is encouraging larger companies to adopt innovations to scale the environmental benefits. A major challenge is building a plan that includes the necessary infrastructure to bring packaging innovations to scale and encourage other businesses to adopt new technologies. Is Consumer Demand Strong Enough to Motivate Companies? The 2015 Nielsen Global Corporate Sustainability Report43 showed that, increasingly, consumers are willing to pay more for sustainability. The study, which polled 30,000 consumers in 60 countries, showed 66% of global consumers say they are willing to pay more for environmentally responsible brands. That’s up by 55% from 2014. Also, 73% of global millennials are willing to pay extra compared with half of millennials saying that in 2014. However, there is a large “attitude vs. behavior” gap in which more people state a preference to buy green than is proven in their buying habits. Surveys show only 1% to 5% buy greener products.44 The consumer plays a big role. There is a continuous dance between businesses and consumers. Consumer demand drives business decisions, while business marketing influences consumer demands. However, the more the environmental crisis impacts daily life with consumers becoming aware of the Great Pacific Garbage Patch and recognizing the connection between chemicals in their food to cancer and other diseases, there is greater possibility the balance will shift to consumers seeking more environmentally and socially responsible solutions. After all, it is the Patagonia customers’ loyalty and aligned values that have allowed the company to run a profitable business which funds new solutions to daunting environmental problems. Due to its environmentally conscious mission, Patagonia is held to a higher standard by its customers. Its customer service team receives calls asking why a package is not recyclable. One customer emailed the Provisions team stating they were disappointed Patagonia Provisions is “buying into the single-use way of the world and adding plastic to the planet.” Patagonia is steadfast in its mission and hopes to provide better answers to its customers. (See Exhibit 6: Patagonia Provisions customer service log). PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 14 “To understand the nuances and find solutions for a system, it is best to be fully immersed in the system. We often start in the middle of an imperfect system to find, invest, and apply the best solution as quickly as possible,” said Cameron. Examples of Innovation Bright spots in the single-use packaging industry illustrate principles which can be applied to future innovations. PrAna Cuts Polybags in its Garment Process One apparel company has found a way to decrease polybag usage from its distribution centers. An athletic apparel company with an environmentally and socially responsible mission, prAna started a polybag reduction initiative which included examining warehouse practices to question if clothing truly required a protective polybag. One simple solution was for employees to carry products by hand. From 2011 through 2016, prAna saved more than 10.6 million polybags from landfills.45 Patagonia is at a much larger scale and uses conveyer belts. Because distribution processes vary between apparel companies, when Patagonia tried to eliminate polybags and tie the garments, 30% of garments were damaged. Patagonia is looking to learn from companies like prAna on how it can replicate solutions at Patagonia’s scale.46 USDA Pioneers Edible Food Wrap The USDA’s Agricultural Research Service has been working to perfect an edible clear food wrap made from casein, a milk protein. It could replace nonrenewable, petroleum-based plastic wrap which doesn’t decompose easily. This biodegradable wrap is 500 times better at sealing off food from oxygen than traditional wrap, so it keeps foods fresher longer. The milk-based film has a variety of potential uses including being made into pouches that dissolve in hot water to release instant coffee or soup. Lipton Soup Co. is testing its use in various food products.47 Breweries Ditch the Ubiquitous Six-Pack Ring Plastic six-pack rings have been used for decades and have caused thousands of deaths of seabirds and marine mammals.48 Danish brewer Carlsberg claims to be the first to ditch plastic rings by replacing them with dots of glue that hold the six cans together until a consumer snaps off a can. Saltwater Brewery in Florida was the first to use the Eco Six-Pack Ring, an alternative to traditional rings made from by-product waste and other biodegradable materials.49 Also, Cascade Brewery, a brand of Carlton & United Breweries (CUB), announced in August 2018 that it is replacing the traditional plastic ring with recyclable cardboard packaging. Cascade calls the PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 15 change significant because they estimate more than one million plastic rings left its Australian facility each year. Next, CUB, will roll out its new packaging to its other beer brands.50 Numi Organic Tea Soft-Launches Teabag Over-Wrap Numi Organic Tea,51 a Fair Trade sustainable company, has been working with its supply chain partners for several years to create a compostable over-wrap for individual tea bags. This packaging soft-launched at Expo West 2018,52 an annual natural products trade show, and is approaching a commercial launch. Numi’s flexible film structure consists of several layers. Together they must pass the ASTM D640053 test to be labeled compostable or biodegradable in the U.S. The European Union requires other certifications to make that claim.54 After successful plant trials, the Numi team tested for biodegradability and was surprised to learn it didn’t pass. Analysis at an electron microscope lab showed potential problems: microbes were not getting through the printed paper layer, and the recycled paper surface was uneven which meant the varnish (the top layer over the ink) was unevenly absorbed. “The whole supply chain needs to be engaged because these are totally novel materials being custom created for each application,” said Franch. “Each component might not be custom but the way in which it’s assembled together for the final film used for your product is a custom product. So, when you’re innovating you need to have all of those pieces of the supply chain working together so that you get fast response times if you need to go back and tweak something.” The team has tweaked elements of the structure for re-testing and is persevering on a wrap that they hope will pass the biodegradability test. “Our goal is to get this in commercial production by the time the 2019 Expo West rolls around. It has taken a little bit longer, but we want more than anything to be able to say we did it,” said Franch. Starbucks Innovates Strawless Beverage Lid In July 2018, Starbucks announced it would end single-use plastic straws from its more than 28,000 stores around the world. The company worked to create a container that would eliminate the need for any straw. Starbucks designed, developed and manufactured a strawless lid which will be standard for iced coffee, tea, and espresso beverages. For people who prefer or need a straw, they will offer an alternative-material straw. The company is rolling out its new packaging in the U.S. first and then will launch it in Canada, Europe, and the U.K. with the goal to eliminate plastic straws globally by 2020. Starbucks estimated this change would eliminate more than one billion plastic straws per year from its stores.55 PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 16 Government Impact on Food Packaging Waste Patagonia recognizes that it will take stronger consumer demand for companies to change, but policy can play a key role as well. Government policy applies pressure on industry leaders to change and fosters innovation. In 2014, California became the first state to enact legislation limiting single-use plastic bags at large retail stores. The bill required that certain large stores charge a 10-cent minimum fee for recycled paper bags, reusable plastic bags, and compostable bags. In the November 2016 election, the Plastic Bag Ban (Proposition 67) was voted into law with 52 percent of the vote. California recently passed a straw-on-demand law prohibiting full-service restaurants from providing straws unless customers request one.56 More than 73 bills were introduced into U.S. state legislatures during the 2017-2018 session regarding the use of plastic bags by retailers.57 Most of the bills propose a ban or fee on bags or seek to improve recycling programs. America’s overlapping governmental agencies aren’t always in sync. Some states have passed preemptive state laws to halt local plastic bag bans. The American Legislative Exchange Council (ALEC)58 has been a main driver of preemptive laws preventing local governments from any plastic bag regulations. For example, Austin, Texas, enacted a Single-Use Carryout Bag Ordinance in 2013 to encourage shoppers to carry reusable bags.59 It resulted in a 75% reduction in plastic bags in the city’s litter. Also, the Austin Park Foundation noticed a 90% reduction in plastic bag litter.60 However, in June 2018, the Texas Supreme Court ruled that bag bans violate state law. So, Austin announced it would no longer enforce its bag ordinance, yet hoped the community would continue its efforts to minimize waste. Globally, countries are enacting a variety of goals to reduce plastic waste. This year, the European Union announced a multi-pronged strategy to protect the planet against plastic pollution and make all plastic packaging on the EU market recyclable by 2030. Also, the plan reduces consumption of single-use plastics and restricts the use of microplastics.61 In the U.K., British Prime Minister Theresa May unveiled an environmental agenda in January 2018 with the goal to “eradicate avoidable plastic waste by 2042.”62 In Vancouver, B.C., residents voted to ban the distribution of plastic straws and foam take-out containers and cups by June 2019 as part of its zero-waste strategy.63 In April 2018, Australia announced its goal that all Australian packaging be recyclable, compostable or reusable by 2025.64 The government said that while recycling was well established, only 14 percent of plastic is recovered for recycling or energy recovery. PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 17 Corporations Pledge to Improve Packaging In addition to governmental efforts, corporations have announced goals to reduce plastic pollution. One driver of change is the Ellen MacArthur Foundation’s New Plastics Economy Initiative which announced in 2018 that 11 retailers and packaging companies had pledged to work towards 100% reusable, recyclable or compostable packaging by 2025 or earlier. Patagonia has set an internal goal to use 100% recycled and recyclable materials for all shipping and packaging materials, while moving towards biodegradability. Corporations have been under pressure from environmental activists; public backlash is causing makers of global food brands to improve pollutive packaging.65 For example, volunteers in several countries throughout Europe and Vietnam conducted “brand audits” of trash, they identified Coca-Cola, Pepsi-Co, and Nestlé as some of the greatest contributors to waste.66 In 2018, As You Sow,67 an Oakland, CA-based nonprofit, organized an international coalition of investors to work with companies to find solutions and make corporate commitments to less waste. As You Sow aimed its first efforts at four large consumer goods companies: Nestlé, Procter & Gamble, PepsiCo, and Unilever. In April 2018, Nestlé pledged that 100% of its packaging will be reusable or recyclable by 2025.68 Nestlé called it an “urgent need” and announced it is focusing on three core areas: eliminate non-recyclable plastics; encourage the use of plastics that allow better recycling rates; and eliminate or change complex combinations of packaging materials. PepsiCo has a similar pledge to achieve 100% recyclable, compostable, or biodegradable packaging by 2025. McDonalds rejected a proposal in 2018 by SumOfUs to ban plastic straws saying it was “redundant” because they already have a goal that by 2025 all “guest packaging (including straws) will come from renewable, recycled, or certified sources.”69 The Federal Trade Commission’s Green Guides are designed to ensure that the marketing claims such as these made by corporations are truthful and not misleading.70 Sustainable Solutions Needed for Future Generations Although adults are working on the challenge, the urgent need to find solutions is not lost among the youngest consumers. When Graves took his then 8-year old daughter out for a smoothie in Patagonia’s headquarter city of Ventura, California, the two enjoyed their beverages sipped from the typical single-use, environmentally harmful foam cups that could not be recycled in Ventura. After some happy conversation, his daughter said, “Dad, you need to find a plastic that a sea turtle can eat and it won’t hurt him.” “To see through a child’s eyes the importance of the work we do—that’s what keeps me motivated every day,” said Graves. For the exclusive use of B. Kanneh, 2023. PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 18 Case Discussion Questions 1. Patagonia desires research-driven and scalable solutions that lessen the environmental impact of single-use packaging. Solutions may include new materials, technologies, and supply chain-related innovations. 2. How can Patagonia distribute all apparel and food products71 in packaging that is reusable, biodegradable, renewable, or easily recyclable by 2025? 3. How can Patagonia and Patagonia Provisions scale these packaging solutions to the broader food and apparel industries? 4. How can any company take a proactive approach to creating a sustainable model which supports packaging that is reusable, biodegradable, renewable, or easily recyclable? 5. How could a traditional company that does not have sustainability embedded in its mission, take a proactive approach to creating a sustainable model which supports packaging that is reusable, biodegradable, renewable, or easily recyclable? 71 Salmon, bison jerky, fruit and nut bars, dry soups and grains, mussels, seeds, and beer PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 19 Exhibit 1 Patagonia Provisions’ single-use packaging and products Source: Patagonia. PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 20 Exhibit 2 Qualities required for each Patagonia Provisions product Product Qualities Salmon and • Products are filled into containers (can or pouch), sealed and cooked in Mussels steam under high pressure at 250 F for up to 60 minutes • Ability to withstand high heat and pressure (above) • Strong sealing ability to withstand high internal pressure (above) • Very high puncture and damage resistance to protect sterilized product inside (product will spoil and become toxic if punctured or seal is broken) Bison Jerky • Dry jerky filled into bags together with oxygen scavenger packet and sealed to create an oxygen-free atmosphere inside bag • Extremely high puncture resistance to prevent sharp corners of jerky from puncturing bags (product will become moldy if bag is damaged or leaks) • Strong sealing ability to prevent leaks (see above) • High oxygen barrier to maintain oxygen-free atmosphere in bag Fruit and Nut • Shelf-stable bars are filled into pouches and sealed Bars • Flexible film that will run easily through high-speed equipment • Oxygen barrier to prevent browning and moderate moisture barrier to prevent drying Dry soups and • Dry products are filled into pouches and sealed grains • Enough rigidity to “stand up” and have moderate puncture resistance. • Moisture barrier to prevent caking, and oxygen barrier to prevent color and flavor changes • Ability to easily tear for opening (but not so easily it tears during distribution) Seeds • Dry seeds are filled into pouches using a nitrogen flush and sealed • Clear film so product is visible through window • Moisture barrier to prevent staling and oxygen barrier to prevent oxidation and rancidity in seeds Beer • Sterilized, filtered, carbonated beer filled into cans and sealed • Ability to hold carbonation (and not explode) • Easy opening ability • Rigidity to hold liquid • Strong seals, gas and moisture barriers to prevent spoilage, leakage and loss of carbonation • Enamel lining inside can to prevent beer from corroding metal layer • Ability to connect beers to each other in a four pack Source: Patagonia. PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 21 Exhibit 3 Patagonia Provisions team tests a new energy bar wrapper Source: Patagonia. Exhibit 4 Patagonia Provisions wrappers go through extensive testing Source: Patagonia. PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 22 Exhibit 5 Patagonia Provisions packaging barrier properties Moisture barrier is tested using the F1249 ASTM method at 100 °F and 90% relative humidity. Oxygen barrier is tested using the D3985 ASTM method at 73°F at 0% relative humidity. To label a package as biodegradable or compostable, it needs to be substantiated by the D6400 ASTM method. Moisture Barrier Oxygen Barrier Product (g/100 in2/day) (cm3/100 in2/day) Salmon 0.00 0.00 Bison Jerky 0.23 0.04 Fruit and Nut Bar 0.02 0.01 Soups and Grains 0.05 0.10 Seeds 0.06 0.20 Source: Patagonia. Exhibit 6 Packaging life cycle considerations Step Consideration Packaging Raw Materials Manufacture Packaging Material • An environmentally and socially responsible source • Processing method and manufacturing equipment • Cost (materials, processing, shipping, and logistics etc.) • Additional inputs (sealant, barrier, lidding, etc.) • Printing or other labeling (inks/solvents, paper/plastic label) • Shelf life of packaging materials (especially if biodegradable) Fill with Food • Ease of filling and sealing, compatibility with current equipment • Compatibility with processing and product (moisture, acidity, heating, cooling, etc.) • Labeling Shipping Packaged Product • Secondary packaging needed (corrugated case, pallet wrap, etc.) • Resistance to damage (breakage, crushing, stress fractures, bursting etc.) • Resistance to environmental conditions (moisture, altitude, freezing, etc.) Consumer • Appearance and feel of packaging Usage • Ease of use (opening, handling, storage, etc.) • Food product quality (color, aroma, flavor, texture, nutrients) End of Life • Available options (recycle, reuse or biodegrade) • Consequences of package ending up in wrong waste stream • Methane and other chemical byproducts from degradation Source: Patagonia. This document is authorized for use only by Boubacar Kanneh in SCM 813 — Sustainable Supply Chains–Spring 2023 taught by EVELYN THOMCHICK, The Pennsylvania State University from Dec 2022 to Jun 2023. PATAGONIA: SINGLE-USE PACKAGING SOLUTIONS 23 Exhibit 7 Patagonia Provisions customer contact log Date Source Brief Description of Question/Comment 1/31/2018 Email Asking for a life cycle analysis of single-use packaging and decision making for current packaging over recyclable options 4/2/2018 Email Customer called to ask if salmon packaging was recyclable 4/13/2018 Email Disappointed Provisions is buying into the single-use way of the world and adding plastic to the planet 5/9/2018 Email Are the bar and grains packaging recyclable? 5/16/2018 Email I want to buy the 10-pack of jerky, but I wish it came in bulk packaging 6/5/2018 Email Is you packaging recyclable? 6/25/2018 Email Are your soup and breakfast pouches recyclable? I would like camping food that doesn’t contribute to landfills. 7/5/2018 Email I am hoping to go zero-waste; is the packaging for your food biodegradable or recyclable? 8/26/2018 Email Please make your food packaging with more sustainable materials. I am trying to stay away from single-use plastics. 9/21/2018 Email Can you guys do bridgeable packaging? Have you considered using Terra cycle? Sustainability is my number 1 concern when buying anything, especially food. 10/9/2018 Instagram #singleuseplastics is only good when it comes from @patagonia #foundyourtrashinthemountains #wesetoffourplasticwithadvertising 10/11/2018 Facebook Is your packaging compostable? Message 10/12/2018 Facebook Message Is your packaging compostable or recyclable? Source: Patagoni