containers & packaging - sustainability accounting...

CONTAINERS & PACKAGINGResearch Brief

Sustainable Industry Classification System™ (SICS™) #RT0204

Research Briefing Prepared by the

Sustainability Accounting Standards Board®

MARCH 2015

www.sasb.org© 2015 SASB™

™

I N D U S T RY B R I E F | C O N TA I N E R S & PA C K A G I N G

SASB’s Industry Brief provides evidence for the material sustainability issues in the Containers &

Packaging industry. The brief opens with a summary of the industry, including relevant legislative

and regulatory trends and sustainability risks and opportunities. Following this, evidence for each

material sustainability issue (in the categories of Environment, Social Capital, Human Capital,

Business Model and Innovation, and Leadership and Governance) is presented. SASB’s Industry

Brief can be used to understand the data underlying SASB Sustainability Accounting Standards.

For accounting metrics and disclosure guidance, please see SASB’s Sustainability Accounting

Standards. For information about the legal basis for SASB and SASB’s standards development

process, please see the Conceptual Framework.

SASB identifies the minimum set of sustainability issues likely to be material for companies

within a given industry. However, the final determination of materiality is the onus of the

company.

Related Documents

• Containers & Packaging Sustainability Accounting Standard

• Industry Working Group Participants

• SASB Conceptual Framework

INDUSTRY LEAD

Darcie Renn

CONTRIBUTORS

Andrew Collins

Henrik Cotran

Stephanie Glazer

Anton Gorodniuk

Jerome Lavigne-Delville

Himani Phadke

CONTAINERS & PACKAGINGResearch Brief

SASB, Sustainability Accounting Standards Board, the SASB logo, SICS, Sustainable Industry Classification System, Accounting for a Sustainable Future, and Materiality Map are trademarks and service marks of the Sustainability Accounting Standards Board.

Darcie Renn

Arturo Rodriguez

Jean Rogers

Levi Stewart

Evan Tylenda

http://www.sasb.org/sectors/resource-transformation/

http://www.sasb.org/approach/conceptual-framework/

http://www.sasb.org/sectors/resource-transformation/

Table of Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Industry Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Legislative and Regulatory Trends in the Containers & Packaging Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Sustainability-Related Risks and Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Greenhouse Gas Emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Air Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Energy Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Water Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Waste Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Social Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Product Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Business Model and Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Product Lifecycle Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Leadership and Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Materials Sourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Appendix

Representative Companies : Appendix I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

Evidence for Sustainability Disclosure Topics : Appendix IIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

Evidence of Financial Impact for Sustainability Disclosure : Appendix IIB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Sustainability Accounting Metrics : Appendix III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv

Analysis of SEC Disclosures : Appendix IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

References

I N D U S T RY B R I E F | C O N TA I N E R S & PA C K A G I N G

INTRODUCTION

Containers and packaging products are

essential for the storage, transportation, and

protection of goods across industrial and

consumer applications. Containers and

packaging innovations have enabled the long-

term preservation of foods and perishable

goods and the safe and efficient transportation

of countless products throughout the economy.

Regulatory and social trends suggest a rising

concern for the human health and

environmental externalities of containers and

packaging products throughout their lifecycle.

During manufacturing, environmental impacts

can arise from greenhouse gas (GHG) and other

air emissions, water pollution, and waste

generation. In the use phase and at end-of-life,

containers and packaging come into contact

with people and consumables, raising the

prospect of adverse human health impacts. At

end-of-life, the persistence of some packaging

products in the environment, and increasing

resource scarcity, elevate the importance of

product reuse and reduced environmental

impact. These trends are driving innovation in

the industry, with a focus on alternative, safer

materials, enhanced recyclability, and

sustainably sourced raw materials.

Management (or mismanagement) of material

sustainability issues, therefore, has the

potential to affect company valuation through

impacts on profits, assets, liabilities, and cost of

capital.

Investors would obtain a more holistic and

comparable view of performance with

Containers & Packaging companies reporting

metrics on the material sustainability risks and

opportunities that could affect value in the

near- and long-term in their regulatory filings.

This would include both positive and negative

externalities, and the non-financial forms of

capital that the industry relies on for value

creation.

Specifically, performance on the following

sustainability issues will drive competitiveness

within the Containers & Packaging industry:

SUSTAINABILITY DISCLOSURE TOPICS

ENVIRONMENT

• Greenhouse Gas Emissions

• Air Quality

• Energy Management

• Water Management

• Waste Management

SOCIAL CAPITAL

• Product Safety

BUSINESS MODEL AND INNOVATION

• Product Lifecycle Management

LEADERSHIP AND GOVERNANCE

• Materials Sourcing

I N D U S T R Y B R I E F | C O N T A I N E R S & P A C K A G I N G |1

• Reducing greenhouse gas emissions,

particularly carbon dioxide emissions;

• Reducing non-GHG air pollution, which

can create hazards for public health

and the environment;

• Managing energy use to reduce the

cost of inputs and indirect GHG

emissions;

• Preventing water contamination and

securing water supplies without

exacerbating local water stress;

• Managing waste streams, which can be

harmful to the environment;

• Ensuring that products do not contain

harmful chemicals or present other

physical dangers;

• Improving the environmental

characteristics throughout the product

lifecycle through product innovation;

and

• Implementing sourcing initiatives to

mitigate risks from social and

environmental issues in the supply

chain.

INDUSTRY SUMMARY

The Containers & Packaging industry includes

companies that manufacture a wide range of

containers and packaging products made of

metal, plastic, paper, and glass materials. These

products include food and beverage containers,

household product bottles, aluminum cans,

I Industry composition is based on the mapping of the Sustainable Industry Classification System (SICSTM) to the

glass containers, metal containers and

packaging, corrugated paper containers and

packaging, paper and plastic bags, plastic

bottles and packaging, and wood containers

and pallets. Some companies also provide

packaging services, where a business can

outsource the packaging of its products to third

parties.I

Financial Drivers

The Containers & Packaging industry generates

annual sales of approximately $314 billion

globally. Paper containers and packaging make

up the largest segment of the industry, with

approximately 40 percent of revenues, followed

by plastic at 23 percent, metal at 17 percent,

and glass containers and packaging s at about

7 percent of total industry sales. The remainder

is represented by wood containers

manufacturing and packaging services.1 The

majority of the industry’s listed companies are

domiciled in the U.S. However, most companies

have some operations outside the U.S., and the

industry sells internationally as well.2

The glass, metal, plastic, and paper segments

of the Containers & Packaging industry share

similar characteristics that influence

sustainability issues across the industry.

Although the production processes between

different types of packaging vary, all are

relatively resource and energy intensive,

resulting in comparable environmental

Bloomberg Industry Classification System (BICS). A list of representative companies appears in Appendix I.


externalities. Additionally, raw materials costs

are typically the largest cost of manufacturing;

material prices are thus a key driver of

profitability in the industry. Companies operate

primarily as business-to-business

establishments, as packaging products are used

to ship and store a wide variety of finished

goods produced by other industries. Ultimately,

though, the industry’s products are also often

consumer facing, underscoring the importance

of product safety.

Due to the substantial equipment and energy

requirements necessary to transform raw

materials into finished products, the industry is

characterized by high barriers to entry and

capital intensity.3; 4; 5 Raw material inputs

represent a significant and volatile cost to

manufacturers, particularly because those costs

are tied to commodity prices, which can exhibit

price volatility. Raw material costs as a

percentage of revenue range from 44 percent

for glass bottle manufacturers to 63 percent for

metal container manufacturers.6; 7 As a result of

these high costs of inputs, profit margins are

typically low for containers and packaging

companies. Furthermore, industry margins are

generally correlated with commodity prices;

that correlation can lead to high levels of profit

volatility if producers cannot pass on higher

costs to customers.8; 9; 10 As of February 2015,

the median gross and net income margins of

the Containers & Packaging industry were 13.2

and 4.8 percent, respectively.11

Competition

The Containers & Packaging industry is

characterized by ongoing consolidation. Recent

acquisitions and mergers have created larger,

more competitive companies. For example,

RockTenn, a major paper container

manufacturer, acquired Smurfit-Stone, raising

RockTenn’s market share from 2.8 percent in

2008 to more than 8.5 percent in 2013.12 In

January 2015, RockTenn and MeadWestvaco

announced that they would merge to form the

second-largest U.S. packaging company.13

The competitive landscape between glass,

plastic, metal, and paper container and

packaging companies largely depends on

consumer preferences and raw material costs.14

Due to the nature of their products, domestic

container and packaging manufacturers face

little competition from imports, as it is not

typically economical to ship inexpensive or

empty containers. As a result, most operations

are located relatively close to end markets.15; 16

The specific business drivers and structure of

the industry’s primary segments are discussed

below.

Industry Segments

The Containers & Packaging industry’s largest

segment, paper container manufacturing,

transforms paper pulp from virgin and recycled

sources into various packaging forms including

paperboard, corrugated paper (cardboard),

linerboard, and beverage containers.17;18 The

paper segment’s revenue is driven in large part

by the food and beverage industry, demand


from retail and industrial customers, and

consumer spending. Paper packaging is one of

the most widely used forms of containers for

food and beverage products. The chief end-

markets for corrugated paper packaging, a

commonly used variant of paper packaging,

include plastic and rubber products

manufacturers, general retailers, shipping and

logistics firms, and textile companies.19

Companies typically purchase paper pulp or

unfinished paper from paper and pulp

producers, then convert it into paper containers

and packaging. U.S.-based International Paper,

Inc. is the largest company in this segment.20

The metal container-manufacturing segment

converts raw materials like aluminum, tin, and

steel into various forms of packaging, including

lightweight aluminum beverage cans, shipping

containers, steel drums, and other metal

boxes.21 Demand for metal containers is driven

mainly by beverage companies, makers of both

non-alcoholic and alcoholic beverages, which

represent 60 percent of the total market in the

U.S.22 The segment’s drivers include demand

from beverage and canned food companies.

Aluminum and steel prices are key

determinants of profitability, as materials costs

are the single greatest manufacturing expense

for the industry.23 Companies producing metal

containers compete directly with other

packaging segments, especially cheaper, more

versatile paper and plastic alternatives.24

In 2012, the global beverage can industry

shipped 290 billion units, and shipments are

expected to grow to 400 billion units by 2020,

with growth largely driven by emerging

markets.25 In 2014, the U.S.-based Can

In developing this briefing and

determining disclosure topics and

accounting metrics for Containers &

Packaging companies, SASB used a

“pure-play” definition of the industry,

which assumes that Containers &

Packaging companies do not conduct

forestry and paper pulp production

operations.

SASB treats separately the following

industries: Forestry & Paper and

Containers & Packaging. While this

approach is necessary to ensure a

coherent understanding of industry

drivers and challenges, it does not always

reflect the current structure of the

industry; some Containers & Packaging

companies are vertically integrated,

operating both forestry and paper pulp

facilities as well as paper product

manufacturing facilities.

Therefore, depending on the specific

activities and operations of Containers &

Packaging companies, disclosure topics

and accounting metrics associated with

the Forestry & Paper industry may also be

relevant for them.

NOTE ON INDUSTRY STRUCTURE


Manufacturers Institute, a trade association

whose members include many U.S. metal can

manufacturing companies, reported that the

segment shipped more than 126 billion metal

containers of all types within the U.S. in

2013.26 U.S.-based Crown Holdings, Inc. is the

largest company in this segment by revenue.27

The plastic container-manufacturing segment

includes companies that transform plastics and

resins into a wide variety of plastic bottles and

containers. These products are used in a broad

variety of applications across industries,

including beverage, food, and household

products.28 In the U.S. market, this segment’s

revenue comes primarily from the following

sources: 55 percent from beverage bottles, 18

percent from household products, 12 percent

from automotive and industrial products, 8

percent from food bottles, and 7 percent from

other products.29 The versatility of plastic and

its low manufacturing costs have made it

desirable for application in multiple industries

and the primary competitive alternative to glass

and metal containers.30 Consolidated Container

Company, a large private company, acquired

Roffe Container and Madras Packaging in

2012, adding to the company’s capacity for

milk, water and juice containers.31 U.S.-based

Sealed Air Corp. is the largest company in this

segment.32

The U.S. domestic glass container segment

represents a $5.5 billion market.33 Glass

container manufacturers convert raw materials,

sand and cullet (recycled glass), into glass

containers and bottles. The largest company in

this segment is Owens-Illinois, which had $6.9

billion in global sales in 2013.34 The glass

container market is facing headwinds, as

consumers increasingly demand substitute

products, such as paper and plastic.35

Trends and Valuation Factors

Innovation in the Containers & Packaging

industry is driven by traditional operational

efficiencies created by reduced material and

energy consumption. Additionally, consumer

and regulatory concern about the lifecycle

environmental and human health impacts of

products is of growing importance. Industry

associations have launched comprehensive

plans to increase industry competitiveness by

driving down costs in manufacturing. The

Agenda 2020 Technology Alliance partnered

with the U.S. Department of Energy to reduce

energy consumption in the paper and pulp

industry, including paper container

manufacturers, by 25 percent from a 2002

baseline by 2020.36 In the U.S., other corporate

and industry association initiatives have been

developed to increase the availability of

recycling programs for all forms of

containers.37; 38; 39 Some major beverage

companies are developing new bio-plastic

materials made from renewable resources, such

as plants.40; 41

Financial analysis of containers and packaging

companies focuses on prices of commodity

inputs, including wood fiber, aluminum, steel,


and plastics. The drivers of product shipment

volumes will help determine expected

profitability, depending on the margins typically

earned on each major product line. These

drivers include consumer spending, the activity

of major customers, and demand in major

markets, factors that may not correlate with

each other. Due to the industry’s global

exposure, foreign exchange fluctuations will

also impact profits.42

LEGISLATIVE AND REGULATORY TRENDS IN THE CONTAINERS & PACKAGING INDUSTRY

Regulations in the U.S. and abroad represent

the formal boundaries of companies’

operations, and are often designed to address

the social and environmental externalities that

businesses can create. Beyond formal

regulation, industry practices and self-

regulatory efforts act as quasi-regulation and

also form part of the social contract between

business and society. In this section, SASB

provides a brief summary of key regulations

and legislative efforts related to this industry,

focusing on social and environmental factors.

SASB also describes self-regulatory efforts on

the part of the industry.

The Containers & Packaging industry is subject

to regulation by various agencies at the federal,

state, and local levels. Generally, regulations

address the industry’s environmental

externalities and product safety issues.

Furthermore, voluntary efforts by companies

are driving shifts in production and product

design.

The U.S. Environmental Protection Agency

(EPA) regulates air and water pollution in the

industry. Air emissions are regulated under the

Clean Air Act (CAA) of 1970. The National

Emission Standards for Hazardous Air Pollutants

(NESHAP), issued under the CAA, established

specific hazardous air emissions thresholds for

industrial facilities, including specific thresholds

for furnaces and boilers used to produce

containers and packaging products. Key groups

of regulated air pollutants include Criteria Air

Pollutants (CAPS), Hazardous Air Pollutants

(HAPS), and Volatile Organic Compounds

(VOCS). Companies that emit pollutants above

threshold levels must apply for state permits,

and may be required to install Maximum

Achievable Control Technology (MACT).43

Additionally, under the EPA’s Greenhouse Gas

Reporting Program (GHGRP), facilities emitting

more than 25,000 metric tons of carbon

dioxide equivalent (CO2e) must report total

greenhouse gas (GHG) emissions. The GHGRP is

designed to collect data to inform future policy

decisions, including programs to reduce

emissions.44 Although there are currently no

federal carbon emissions reduction regulations

in the U.S., certain states and regions have

implemented carbon cap-and-trade programs

to reduce emissions. The most prominent

example is California’s GHG reduction law,

commonly known as AB 32, which took effect


in January 2012. The program introduced an

emissions cap for industrial and other major

emitters, which will be reduced by

approximately three percent annually. Facilities

must reduce emissions or offset them by

obtaining emissions credits.45 International

GHG regulation may also affect the industry. In

Canada, Quebec Province maintains a cap-and-

trade program for industrial entities that emit

25,000 metric tons or more of CO2e annually.46

The Clean Water Act (CWA) of 1972 set water

discharge quality requirements for industrial

sources, including paper, plastic, metal, and

glass container manufacturing facilities. The

Resource Conservation and Recovery Act

(RCRA) directs the EPA to track hazardous

wastes from “cradle to grave,” and included

solid waste in its definition of hazardous

wastes. The Comprehensive Environmental

Response, Compensation, and Liability Act

(CERCLA, or “Superfund”) established

regulations for funding the remediation of

current and past discharges of CERCLA-listed

hazardous wastes, as well as measures to

mitigate hazardous waste disposal. The EPA has

the authority to levy fines against entities that

do not comply with the above regulations, and

the agency may also require violators to make

necessary adjustments to processes or

equipment in order to achieve compliance.47

Regulations directed at product safety are

designed to protect human health. The U.S

Food and Drug Administration (FDA) regulates

and sets standards for food packaging and

labeling.48 The FDA monitors the health impact

of chemicals used in containers, and can set

limitations or ban chemicals with demonstrated

negative health impacts. Bisphenol-A (BPA) is

one substance that has been banned at high

levels in some, but not all, forms of beverage

containers.49; 50 In the European Union (E.U.),

legislation has established migration limits for

materials that come into contact with food; for

example, that the material cannot transfer its

components into the food in unacceptable

quantities. For plastic materials, rules set

specific migration limits for individual

substances, which are determined through a

toxicological evaluation.51

Post-consumer containers and packaging

contribute a significant portion of waste to

landfills every year. Companies that operate in

many E.U. countries are regulated by recycling

directives related to Extended Producer

Responsibility (EPR).52 These directives make

container and packaging companies financially

responsible for ensuring that their products are

properly recycled and disposed of at the end of

life. These directives are credited with

improving the recycling rates of various forms

of post-consumer packaging, although they

have been found to lead to higher costs for the

producing companies, as EPR shifts a portion of

the financial burden of recycling from

municipalities to packaging producers.53

While no direct EPR laws for containers and

packaging currently exist in the U.S., there has

been proposed legislation around the topic,


and container deposit laws in eight of the ten

states that have them are similar to EPR

programs.54 Furthermore, there have been

multiple voluntary industry-led initiatives to

improve the recycling rates of various materials.

The American Forest & Paper Association

launched its Better Practices, Better Planet 2020

initiative in part to increase the recycling rate of

paper products, which may lower raw materials

costs for producers.55

Companies in the industry may have to

navigate municipal packaging bans that could

have a substantial impact on operations. Bans

have arisen due to consumer concerns over

chemical leaching, environmental pollution by

plastic packaging, and use of fossil

hydrocarbon feedstocks. Cities including San

Francisco and Portland have entirely banned

the use and sale of plastic bags.56; 57 San

Francisco also banned the sale of plastic

disposable water bottles on city-owned

property.58 If more cities follow, these bans may

have detrimental effects for plastic packaging

and present opportunities for other materials.

Voluntary third-party raw materials sourcing

certification standards for materials used to

manufacture containers and packaging have

gained acceptance in recent years, as demand

for environmentally and socially sustainable

products has grown. The most common

certifications address wood and wood fiber

sourcing, while aluminum certification has also

gained acceptance at major companies.

Certification is undertaken throughout the

entire paper supply chain, from timber

harvesting to paper product manufacturing.

The Programme for the Endorsement of Forest

Certification (PEFC)59 is the world’s largest

timber certification organization by total

certified forest area. Other standards of note

include the Forest Stewardship Council (FSC) 60

and Sustainable Forestry Initiative (FSI).61

The Aluminum Stewardship Initiative (ASI) is a

voluntary standard that promotes responsible

and transparent practices throughout the

aluminum supply chain, including addressing

environmental externalities such as biodiversity

loss.62

Lastly, companies in this industry are subject to

the conflict minerals disclosure rule of the

Dodd-Frank Act of 2010 and subsequent rules

adopted by the U.S. Securities and Exchange

Commission (SEC). Companies are required to

publicly disclose their use of “conflict minerals”

if they are “necessary to the functionality or

production of a product” that the company

manufactures or contracts to be manufactured.

These minerals include tantalum, tin, gold, or

tungsten originating in the Democratic Republic

of the Congo (DRC) or adjoining countries.63


SUSTAINABILITY-RELATED RISKS AND OPPORTUNITIES

Industry trends and recent regulations suggest

that traditional value drivers will continue to

impact financial performance. However,

intangible assets such as social, human, and

environmental capitals, company leadership

and governance, and a company’s ability to

innovate to address these issues are likely to

increasingly contribute to financial and business

value.

Broad industry trends and characteristics are

driving the importance of sustainability

performance in the Containers & Packaging

industry:

• Use of common capitals: Containers

and packaging companies use natural

capital inputs including energy and raw

materials. Raw material extraction and

energy production generate

environmental and social externalities,

while environmental pressures such as

climate change and corresponding

increased regulatory pressure could

lead to higher costs or an unstable

supply of these resources.

• Negative environmental

externalities: Externalities of

containers and packaging

manufacturing include GHG emissions,

air and water pollution, and waste

generation. Increasingly stringent

environmental regulation could

increase operating costs.

• Social license to operate: Increasing

consumer awareness of potential

adverse long-term health effects from

chemicals in containers and packaging

can affect the industry’s social license

to operate.

As described above, the regulatory and

legislative environment surrounding the

Containers & Packaging industry emphasizes

the importance of sustainability management

and performance. Specifically, recent trends

suggest a regulatory emphasis on

environmental protection, product safety, and

product lifecycle management, which will serve

to align the interests of society with those of

investors.

The following section provides a brief

description of each sustainability issue that is

likely to have material implications for

companies in the Containers & Packaging

industry. This includes an explanation of how

the issue could impact valuation and evidence

of actual financial impact. Further information

on the nature of the value impact, based on

SASB’s research and analysis, is provided in

Appendix IIA and IIB.

Appendix IIA also provides a summary of the

evidence of investor interest in the issues. This

is based on a systematic analysis of companies’

10-K and 20-F filings, shareholder resolutions,

and other public documents, which highlights


the frequency with which each topic is

discussed in these documents. The evidence of

interest is also based on the results of

consultation with experts participating in an

industry working group (IWG) convened by

SASB. The IWG results represent the

perspective of a balanced group of

stakeholders, including corporations, investors

or market participants, and public interest

intermediaries.

The industry-specific sustainability disclosure

topics identified in this brief are the result of a

year-long standards development process,

which takes into account the aforementioned

evidence of interest, evidence of financial

impact discussed in detail in this brief, inputs

from a 90-day public comment period, and

additional inputs from conversations with

industry or issue experts.

A summary of the recommended disclosure

framework and accounting metrics appears in

Appendix III. The complete SASB standards for

the industry, including technical protocols, can

be downloaded from www.sasb.org. Finally,

Appendix IV provides an analysis of the quality

of current disclosure on these issues in SEC

filings by the leading companies in the industry.

ENVIRONMENT

The environmental dimension of sustainability

includes corporate impacts on the environment.

These impacts could stem from the use of

natural resources as inputs to the factors of

production (e.g., water, minerals, ecosystems,

and biodiversity) or environmental externalities

and harmful releases in the environment, such

as air and water pollution, waste disposal, and

GHG emissions.

Containers and packaging manufacturing

generates environmental externalities through

energy consumption and materials processing.

These processes generate GHG and other air

emissions, which contribute to global climate

change and can be harmful to human health

and the environment. Furthermore, the industry

faces water management issues related to the

quantity used and quality of effluents. Lastly,

companies in this industry produce wastes from

manufacturing that are potentially harmful to

the environment and can result in pollution

abatement costs or regulatory penalties.

Overall, these environmental externalities can

cause concern among local communities and

regulators, possibly leading to more stringent

regulations or reputational harm.

Greenhouse Gas Emissions


relatively high GHG emissions within its

manufacturing sector. Fossil fuels comprise a

significant share of energy use in the

Containers & Packaging industry.64 Common

fuel types include natural gas, coal, and fuel

oil.65 Emissions intensity will vary based on the

type of fuel used and the type of product

produced.


http://www.sasb.org/

Containers and packaging companies generate

significant direct greenhouse gas emissions,

which contribute to climate change. These

emissions create regulatory compliance costs

and risks for the industry, as large industrial

emitters face greater likelihood of targeted

emissions regulation. Greenhouse gas emissions

stem from both materials transformation and

direct process energy consumption.II The

emissions profile of a company will vary based

upon product and fuel type. In general, the

manufacture of paper, plastic, glass, and metal

products from raw materials will be more

emissions-intensive than assembly of pre-

manufactured components. As GHG

regulations become more stringent worldwide,

the industry is likely to face increasing costs

and risks related to regulatory compliance.

On the contrary, GHG reduction through

improved energy efficiency, use of cleaner-

burning fuels or alternative energy, and other

process advances can lead to lower costs and

reduced operating risks. Company performance

in this area can be analyzed in a cost-beneficial

way internally and externally through the

following direct or indirect performance metrics

(see Appendix III for metrics with their full

detail):

• Gross global Scope 1 emissions,

percentage covered under a regulatory

program; and

II Indirect GHG emissions resulting from purchased electricity consumption are addressed through the following Energy

• Description of long-term and short-

term strategy or plan to manage Scope

1 emissions and emissions reduction

targets, and an analysis of performance

against those targets.

Evidence

According to the GHGRP’s emissions data by

North American Industry Classification System

(NAICS) code,66 the Containers & Packaging

industry emitted more than 4.5 million tons of

CO2e in 2013. However, the industry’s

emissions reported to the EPA GHGRP give an

incomplete picture of total emissions, as

facilities emitting less than 25,000 tons of

GHGs are not required to report, and many of

the paper container segment’s emissions are

reported together with the vastly higher pulp

and paper industry’s emissions, addressed in

SASB’s Forestry & Paper industry.67

The glass manufacturing segment is a

significant emitter of GHGs, especially CO2.68

Glass container manufacturing requires

volatilization of raw materials to produce glass,

requiring intense energy, primarily in the form

of natural gas. The volatilization of materials

also produces non-energy process emissions in

addition to energy-related emissions.69 By one

estimate, the emissions from the production of

one kilogram of glass in a natural gas-fired

furnace produces nearly 0.6 kg of CO2.

Approximately 0.45 kg of this figure comes

Management issue, due to the differing channels of impacts on company value.


from fuel combustion, while the remainder

comes from the dissociation of carbonate raw

material.70 Furthermore, the use of recycled

glass, or cullet, and the type of glass can affect

the quantity of GHGs emitted. For each

percentage increase in cullet as a share of raw

material, energy use may be lowered by

between 0.15 and 0.3 percent. However, some

products require high quality glass thus cullet

cannot not be used.71

In the U.S. and abroad, regulations directed at

curbing GHG emissions from point sources may

increase costs for container and packaging

manufacturers. These include cap-and-trade or

other carbon emissions reduction programs

implemented in the E.U., Australia, New

Zealand, Brazil, California, and Quebec, as well

as proposals to implement similar federal

programs in the U.S. Company financial

disclosure alludes to the potential for material

risks from these regulations: Owens-Illinois, a

major glass container producer, states in

reference to the E.U. ETS and proposed U.S.

federal cap-and-trade programs that,

“…should the regulators significantly restrict

the number of emissions allowances available,

it could have a material effect in the

future…The EPA regulations, if preserved as

proposed, could have a significant long-term

impact on the Company's U.S. operations.”72

Further, RockTenn warns in its FY 2014 Form

10-K that “Enactment of the Quebec cap-and-

trade program may require expenditures to

meet required GHG emission reduction

requirements in future years. Such

requirements also may increase energy costs

above the level of general inflation and result in

direct compliance and other costs.”73

Value Impact

Managing GHG emissions can directly affect

the cost structure of companies in the industry.

Specifically, mandated regulatory emissions

reductions can increase operational costs and

capital expenditures and may result in fines for

non-compliance. At the same time, reducing

emissions through improved energy efficiency,

the use of renewable energy, or other process

improvements can create operational efficiency,

reduce costs, and protect companies from

further regulations that limit or put a price on

emissions. These measures can also reduce

business uncertainty and, therefore, lower the

cost of capital.

As international and national climate change

mitigation efforts continue, the probability and

magnitude of these impacts are likely to

increase in the near to medium term.

The magnitude of regulatory impacts can be

estimated using companies’ Global Scope 1

GHG emissions and the ratio of those covered

by regulatory programs. GHG mitigation

strategies and targets constitute forward

looking indicators of a company risk exposure

to stringent emissions reduction schemes,

which could significant impact high emitters in

the form of taxes or cap-and-trade.


Air Quality

In addition to GHGs, container and packaging

manufacturing facilities may release regulated

air emissions, which are closely linked with

local human health impacts. These emissions

include SOx NOx, carbon monoxide, PM10 and

PM2.5, chlorine dioxide, and others. Exposure to

some of these substances has been linked to

decreased pulmonary function and fatal

diseases.74; 75 The sources of emissions from

containers and packaging manufacturing

facilities include, among others, cogeneration

fuel boilers, raw material volatilization, and

process engines.76 Glass container

manufacturers are large producers of

hazardous nitrogen oxides and sulfur dioxide

emissions, which are emitted from glass

furnaces.77 The manufacturing of paper

products also releases air emissions, particularly

if facilities are vertically integrated and include

paper pulp processing.

Such air emissions generate regulatory risk,

particularly for companies with intensive

manufacturing operations, though that risk

may vary depending on local air regulation,

Companies must ensure that facility emissions

at least comply with standards. Non-compliance

can result in fines and may require the

installation of emissions-reduction equipment.

Additionally, the industry may face future risks

from currently unregulated air emissions, or

emissions below regulatory thresholds, as

public and regulatory concern over air quality

drive more stringent legislation or regulatory

action.

Company performance in this area can be

analyzed in a cost-beneficial way internally and

externally through the following direct or

indirect performance metrics (see Appendix III

for metrics with their full detail):

• Air emissions for the following

pollutants: NOx (excluding N2O), SOx,

particulate matter (PM), and volatile

organic compounds (VOCs).

Evidence

According to the EPA 2014 National Emissions

Inventory, the Containers & Packaging industry

accounts for relatively substantial emissions of

certain compounds. According to EPA data, the

industry in 2013 accounted for approximately

four percent of all VOC emissions and two

percent of total chromium emissions from all

industrial processes.78 Emissions of other

hazardous substances, although at lower

quantities, present similar operational risks.

Air pollution mitigation measures require

operating costs as well as capital expenditures.

According to data from the EPA’s 2005

Pollution Abatement Costs and Expenditures

(PACE) survey, the Containers & Packaging

industry had air pollution abatement operating

costs of $320 million, accounting for nearly 3.7

percent of the total for all manufacturing

industries. The PACE data further shows that

air pollution abatement capital expenditures hit


$55 million, approximately 1.4 percent of the

manufacturing sector total.79; 80

Air emissions regulations are becoming more

stringent over time, increasing the industry’s air

pollution mitigation costs. The EPA recently

issued a new rule setting limits on emissions

from industrial and commercial power boilers,

traditionally used in industries that use

cogeneration techniques to generate their own

power. The new rule, labeled the Boiler MACT,

is aimed at reducing the amount of hazardous

air pollutants from industrial and commercial

boilers and process heaters. The rule impacts all

industrial manufacturers, including

manufacturers of containers and packaging.81

Pursuant to the new regulation, RockTenn

anticipates that it will spend $55 million in total

capital expenditures due to Boiler MACT

compliance over several years.82

Companies warn investors of potential financial

impacts from pending air emissions regulation

in financial disclosure. In its 2014 Form 10-K,

International Paper states, “Regulations

addressing specific implementation issues

related to the SO2 NAAQS are being developed

by the EPA and are expected to be finalized

during the next two years. Potentially material

capital investment might be required in

response to these emerging requirements.”83

Companies can face regulatory penalties and

required equipment upgrades as a result of

violation of air pollution regulation. In 2010,

the U.S. Department of Justice fined Saint-

Gobain, a large French multinational glassware

producer, $2.25 million and required the

company to install $112 million worth of new

air pollution control equipment that will reduce

the company’s NOx and SOx emissions by 38

and 201 tons per year, respectively.84

Furthermore, in December 2012, a U.S. glass

container manufacturer agreed to pay a $1.45

million fine and install $37.5 million of air

pollution control equipment for violations of

the CAA. The new equipment will target NOx,

SOx, and PM emissions, reducing emissions by

an estimated 2,500 tons per year.85

Manufacturing methods that lower air

emissions can mitigate regulatory risks. For

example, in glass manufacturing, increased use

of cullet, lower furnace temperatures, and use

of low sulfur fuels can lower PM emissions.

Similarly, sulfur dioxide emissions can be

reduced by using low sulfur fuels, such as

natural gas, and reducing sodium and calcium

sulfate levels in raw material batches.

Additionally, pollution control equipment

including emissions scrubbers can likewise

reduce emissions. Such equipment is commonly

required at industrial facilities in order to

comply with air emissions regulation.86

Value Impact

Management of air emissions can have an

ongoing impact on the operational efficiency

and cost structure of companies, as well as

one-time effects on cash flows from regulatory

fines and litigation.


Harmful air emissions from operations may

result in regulatory penalties, higher regulatory

compliance costs, or new capital expenditures

to install the best-in-class control technology.

Companies may also face legal challenges from

the local population or other businesses,

resulting in one-time costs and increased

contingent liabilities. Financial impacts of air

pollution will vary depending on the specific

location of companies’ operations and the

prevailing air emissions regulations, which may

be less developed in some regions and

countries than others.

As concerns about the health effects of air

emissions grow around the world, the

probability and magnitude of impacts from this

issue are likely to increase.

The quantity of key pollutants emitted is an

indicator of a company’s operational efficiency

and its success in mitigating regulatory risk and

one-time costs associated with harmful

emissions.

Energy Management

Containers and packaging companies are

reliant on energy as a primary input for value

creation, due to their energy intensive

operations. Energy is derived primarily from the

direct combustion of fossil fuels and the

electrical grid. Purchased electricity is used to

power manufacturing machinery in the

industry. The paper and metal container

segments are particularly reliant on electrical

energy, while glass container manufacturing

requires relatively more energy in the form of

heat, but also consumes electrical power.87 This

energy-intense production has regulatory

implications due to Scope 1 GHG emissions

from direct fossil fuel use. These financial risks

were discussed earlier under the topic of

“Greenhouse Gas Emissions.” However, Scope

2 emissions from purchased electricity can

result in indirect risks, as regulations limiting

the emissions of electrical utilities may result in

higher costs for electricity customers. The

Containers & Packaging industry’s high

electricity consumption thus creates possible

impacts on company value through increased

operating costs. The tradeoff between on-site

versus grid-sourced electricity and the use of

alternative energy can play an important role in

influencing both the costs and reliability of the

energy supply. The use of cogeneration to

produce electrical energy onsite presents the

industry with an additional tradeoff: Increased

cogeneration will typically raise direct GHG

emissions, but reduce indirect emissions

through lowered grid electricity purchases.

The long-term prospects of increased demand

from the developing world, as well as concerns

about energy security, climate change, and the

use of nuclear energy, suggest increasing

upward pressure on price and availability of

conventional sources of electricity. As a result,

the way in which a containers and packaging

company manages its overall energy efficiency,

its reliance on different types of energy and

associated sustainability risks, and its ability to


access alternative sources of energy, can have

long-term financial implications that affect

value creation.






• Total energy consumed, percentage

grid electricity, percentage renewable.

Evidence

Overall energy costs are a key component of

manufacturing costs for companies in the

Containers & Packaging industry. According to

data from the 2011 U.S. Census Bureau Annual

Survey of Manufacturers (ASM), the facilities

representing the Containers & Packaging

industry accounted for approximately four

percent of the manufacturing sector’s total

purchased electricity consumption. The cost of

purchased electricity accounted for three

percent of the total cost of materials and value

added for the industry.88 Purchased electricity

accounted for approximately 2.6 percent of the

total cost of materials and 3.6 percent of value

added. The industry’s purchased electricity

costs of nearly $2.3 billion are greater than its

purchased fuel costs.89 As net income margins

tend to be low in the industry, cost savings

from effective energy management, particularly

in terms of purchased electricity, can be a key

competitive factor.

For many packaging companies, energy costs

are addressed in financial disclosure as a key

risk and a possible material financial concern.

For example, Owens-Illinois, a major glassware

manufacturer, reports that energy accounts for

between 10 and 25 percent of its total

manufacturing costs.90 Sonoco Products, a

diversified manufacturer, states in its 2013

Form 10-K that “Some of our manufacturing

operations require the use of substantial

amounts of electricity and natural gas, which

may be subject to significant price increases as

the result of changes in overall supply and

demand and the impacts of legislation and

regulatory action,” and, “we could suffer

adverse effects to net income and cash flow

should we be unable to either offset or pass

higher energy costs through to our customers

in a timely manner or at all.”91 International

Paper similarly discusses the link between

regulatory action and energy prices, stating

that “Other sites that we operate in the EU

experience indirect impacts of the EU ETS

through purchased power pricing…”92 This

disclosure highlights the importance of

effective energy management and explains why

some companies are implementing strategies to

improve their energy efficiency.

Companies can implement energy-efficient

technologies in order to reduce electricity-

related energy expenses. Companies in the

containers and packaging industry are

implementing various techniques to improve

their overall energy efficiency, including

cogeneration. It is important to note that


cogeneration can increase emissions of GHGs

and other air pollutants; thus there are

tradeoffs between energy management and

other important environmental issues. In 2013,

RockTenn invested more than $68 million in a

new biomass boiler at an Alabama plant that

will use facility waste to generate electricity and

steam. The project will allow the plant to

produce as much as 87 percent of its own

energy and comply with the new EPA Boiler

MACT rule.93 Additionally, MeadWestvaco

invested $285 million in a biomass boiler

upgrade at its Virginia plant, allowing the plant

to become self-sufficient in electrical and steam

power, lowering operating and maintenance

costs.94 A capital investment of $44,000 to

modify a fan system at a Louisiana-Pacific

board mill resulted in annual savings of roughly

2.5 million kWh, or $85,000 in electricity

costs.95 Companies are also lowering energy

costs by using waste process materials as a

source of energy, a concept which is discussed

in further detail below.

Value Impact

Management of energy efficiency, energy

independence and energy-mix (including

renewable energy) is key to the profitability and

risk profile of containers and packaging

companies.

Cost savings can be achieved through energy

efficiency as well as energy source

optimization. At the same time, efforts to

improve energy efficiency or reduce

dependence on specific types of energy can

require additional capital expenditures. While

the cost of energy consumption is already

captured in financial results, overall energy

consumption levels provide a sense of firms’

exposure to possible future increases in energy

prices, resulting from energy providers

internalizing the growing environmental and

social impacts of energy generation and

consumption.

As a portion of operating costs for containers

and packaging companies come from

purchased electricity, decisions about on-site

versus sourced electricity and diversification of

energy sources can also influence the volatility

and price of energy costs. This can have an

impact on long-term profitability and ultimately

the risk profile and cost of capital.

Increasingly stringent environmental regulation

is likely to increase the probability and

magnitude of these impacts in the medium

term.

The more purchased fuels and electricity a

company uses from traditional sources of

energy, the more vulnerable it is to rising prices

of specific energy sources and the indirect

impact of costs from internalization of carbon

prices by utilities. The use of independent

energy sources (non-grid) also indicates a

degree of control and a company’s ability to

provide continuous energy for its facilities. The

percentage energy from renewables indicates a

firm’s ability to mitigate its environmental


footprint, its exposure to energy costs increase,

as well as its energy independence.

Water Management

Containers and packaging production is water-

intensive. Water is consumed during raw

materials preparation, cooling, and product

cleaning.96 As a result, companies both require

ample stable water supplies and produce

wastewater, which is reused, treated and

discharged into the environment, or lost

through evaporation. Process water may

accumulate contaminants. Contaminated water

effluent can result in oxygen depletion of

receiving waters, aquatic pH fluctuations,

accumulation of persistent organic chemicals in

the ecosystem, eutrophication from nutrient

loading, and contamination with suspended

solids, including heavy metals.97; 98 Water

contamination can generate regulatory risk,

including penalties for violations, higher

treatment and permitting costs, capital

requirement for alternative water supplies, and

tension with other local water users.

In addition to water contamination, the

industry faces possible issues surrounding water

availability. Water is becoming a scarce

resource around the world, due to increasing

consumption from population growth and

rapid urbanization, as well as climate change.

Furthermore, water pollution in developing

countries makes available water supplies

unusable or expensive to treat. Based on recent

trends, it is estimated that by 2025 important

river basins in the U.S., Mexico, Western

Europe, China, India, and Africa will face severe

water problems as demand overtakes

renewable supplies. Many important river

basins can already be considered “stressed.”

Water scarcity can result in higher supply costs,

supply disruptions, and social tensions, which

companies across different industries,

particularly water-intensive ones, will need to

contend with.99

Companies can adopt various strategies to

address water supply and treatment issues,

such as recycling process water, improving

production techniques to lower water intensity,

and managing water effluent.






• Total water withdrawn, percentage in

regions with High or Extremely High

Baseline Water Stress and percentage

recycled water usage; and

• Number of incidents of non-compliance

with water quality permits, standards,

and regulations.

Evidence


relatively water intensive. A 2013 ranking of

130 Global Industry Classification System sub-

industries by water value-added, placed the


paper packaging industry in the top 15

industries, with nearly six cubic meters of water

per dollar of output. Water value-added was

measured by cubic meters of water

consumption per dollar of output. Together,

glass and metal container manufacturing are

among the top 50 sub-industries, using

approximately 4.5 cubic meters per dollar of

output.100

The contamination of process water can require

treatment-related operating costs and capital

expenditures, as well as potentially cause

tension with other local water users. According

to data from the EPA’s 2005 Pollution

Abatement and Capital Expenditures survey,

the water pollution abatement operating cost

of the Containers & Packaging industry was

approximately $161 million.101 This represents

approximately 2.4 percent of the U.S.

manufacturing sector’s total water pollution

abatement operating costs.102 Individual

companies have achieved cost savings by

implementing technologies to improve

wastewater treatment. At one facility,

RockTenn implemented a microorganism water

treatment system that allowed the company to

avoid municipal water treatment fees of

$500,000 a year; the system also creates

methane gas that is later resold, resulting in

total savings in excess of $1 million a year for

their Solvay, NY containerboard mill.103

Operations that rely heavily on water and are

located in water scarce regions are at particular

risk as concerns over water scarcity mount. For

example, operations located in California may

face hurdles associated with water

consumption due to drought concerns.104

California alone accounts for 10.2 percent of

paper and cardboard box production in the

U.S.105 Much of the state’s water supply is

considered to be at very high risk, and cities

like Los Angeles and San Francisco are

concerned about sustaining long-term water

demand.106; 107

Companies have implemented water efficiency

and reduction goals to reduce their total

exposure to water risks. Companies have also

started to disclose operations located in water

scarce regions to contextualize this issue in

their sustainability reports. Amcor Australia, a

producer of rigid plastic and paper products,

used the World Business Council for

Sustainable Development Global Water Tool to

determine that the company operated 34 sites

in water stressed and water scarce regions

around the world. Eleven of the sites were

covered under the company’s water

consumption targets, and the remaining 23

were under further evaluation to determine

appropriate consumption targets.108 Ball Corp.

recognizes that some facilities are located in

water scarce regions in China, South America,

the United States, and Europe. The company

has committed to improving water use

efficiency throughout its can operations by 7.2

percent a year.109 Similarly, RockTenn has set a

goal of reducing its water discharge by 12

percent from 2009 levels by 2020.110


Value Impact

Managing water consumption and wastewater

can influence companies’ operational risks,

with potentially acute impacts on value from

disruptions to production. Water use and

contamination can also affect ongoing

operating costs and impact cash flows through

one-time capital expenditures or regulatory

penalties.

More efficient use of water over time could

generate cost savings and lower operating

expenses. Large water withdrawals create

operational risks related to price and

availability. Water shortages could create

additional permitting requirements, thereby

increasing operating costs. In water stressed

regions, water-intensive production could have

an impact on the long-term revenue growth

and risk profile of a company, and therefore its

cost of capital.

Water treatment may require capital

expenditures on treatment equipment or

facilities, as well as increased operating costs to

run and maintain them. Third-party water

treatment costs could rise if it is outsourced.

Community tension arising from water

contamination or excessive use of local water

resources could adversely affect a company’s

reputation or license to operate, potentially

affecting revenues or operating costs.

As regulations become more stringent over

time, and water resources become increasingly

stressed due to climate change and other

pressures, the probability and magnitude of

future financial impacts due to water effluents

and withdrawals are likely to increase.

Total water withdrawn in water stressed

regions shows a company’s exposure to cost

and supply risks. Fines and instances of non-

compliance with water standards and

regulations indicate a company’s management

of water quality, which is suggestive of

regulatory risk over the medium term.

Waste Management

Containers and packaging companies face

regulatory and operational challenges in

managing processing waste. These substances

can be hazardous to human health and the

environment, leading to carcinogenic effects

and adverse environmental impacts like harm to

animal species through accumulation of

substances in tissues. Containers and

packaging production can generate a variety of

wastes, including those categorized as

hazardous. The majority of wastes are by-

products from raw material conversion and

processing. Hazardous wastes include

acetaldehyde, lead, glycol ethers,

formaldehyde, and chromium.111; 112 If not

properly managed, waste generation can

increase the risk of accidental release to the

environment, which may result in regulatory

penalties. In addition, wastes can cause long-

term liability in the form of environmental

cleanup and mitigation expenses, including

those required under the U.S. EPA’s RCRA and


CERCLA programs. Although many of these

current liabilities stem from a decades long

legacy of poor waste management practices,

continued waste production results in ongoing

costs and the possibility of future mitigation

requirements.

Companies in the industry can also benefit

from recycling best practices and using

byproduct materials in production. Companies

are implementing retreatment techniques to

reduce costs and reuse raw materials, as well as

using byproducts to generate their own power.

By addressing or exceeding regulatory

requirements and implementing waste

management best practices and recycling

throughout their operations, companies can

reduce regulatory and operational expenses

and mitigate potential risk of community

tension due to localized pollution.






• Amount of total waste from

manufacturing, percentage hazardous,

percentage recycled.

Evidence


processing waste, including waste classified as

hazardous under U.S. environmental

regulations. The 2011 Biennial RCRA Hazardous

Waste Report shows that together, the

converted paper manufacturing (NAICS 3222)

and plastic products (NAICS 3261) industries

generated more than 61,000 tons of hazardous

waste in 2011. These industries were both

ranked in the top 50 industries for hazardous

solid waste generated.113

Waste disposal, especially for hazardous

materials, can represent significant operating

costs. According to data from the 2005 PACE

survey, the paper, glass, and metal container

manufacturing segments of the industry had

combined solid waste pollution abatement

operating costs of $175 million; that figure

accounts for nearly 3.3 percent of the total for

all manufacturing industries. Solid waste

pollution abatement capital expenditures were

$16.4 million.114; 115

On the contrary, waste can be used as raw

materials or for energy production, improving

operational efficiency. For example, materials

including wood fiber and other byproducts

from the paper making process may be used as

a source of biomass energy.116 Other internally

generated byproducts or postindustrial

materials like glass cullet and plastic resins can

be reused in the manufacturing process to

reduce costs and energy needs of the

packaging company.117

Company financial disclosure discusses the risks

presented by waste generation. For example, Sealed Air Corp mentions, “We generate, use

and dispose of hazardous materials in our


manufacturing processes. In the event our

operations result in the release of hazardous

materials into the environment, we may

become responsible for the costs associated

with the investigation and remediation of sites

at which we have released pollutants, or sites

where we have disposed or arranged for the

disposal of hazardous wastes, even if we fully

complied with environmental laws at the time

of disposal.”118

Value Impact

The generation of waste impacts operational

efficiency and regulatory risks for containers

and packaging companies. Waste treatment or

disposal results in ongoing operating expenses

related to waste handling. Mishandling of

highly-regulated hazardous wastes can lead to

fines and contingent liabilities from legal

actions, while regulatory agencies may require

additional capital expenditures to reach

compliance.

Conversely, waste management can create

operational efficiencies for companies,

improving long-term cost structure and

profitability.

The quantity of waste generated, including

hazardous, and the percent recycled gives

insight into a company’s operational efficiency

and the potential for regulatory fines and

remedial action, and capital expenditures

related to solid waste pollution abatement.

Past performance on waste management can

be a proxy for future risk, looking at the

number and aggregate quantity of releases and

spills and percent recovered.

SOCIAL CAPITAL

Social capital relates to the perceived role of

business in society, or the expectation of

business contribution to society in return for its

license to operate. It addresses the

management of relationships with key outside

stakeholders, such as customers, local

communities, the public, and the government.


dependent on a social license to operate, given

the frequent contact between its products and

consumers, either directly or through

consumables. Increasing government and

consumer concerns surrounding the potential

human health impacts of substances in

containers and packaging can have financial

implications for the industry. Harmful

substances in containers and packaging

products, as well as the quality of products, can

have acute and chronic impacts on human

health. These factors can result in product

recalls, litigation, and adverse reputational

impacts for containers and packaging

companies.


Product Safety

Product safety is likely a material financial

concern for the Containers & Packaging

industry due to potential impacts on revenue,

regulatory risks, and product recalls and related

litigation. Consumer and regulatory concerns

over human health impacts from substances in

containers and packaging can affect product

demand, as well as result in product recalls and

litigation. Many of the industry’s products

come into frequent contact with consumers,

primarily through food, beverage, and

pharmaceutical packaging. Some packaging

and containers have been found to leach trace

amounts of chemicals into their contents.119

Products made of or containing plastics have

garnered particular attention from consumers

and regulators due to concerns over chemical

leaching.120 These concerns have led to a shift

in consumer preferences and increased

regulatory scrutiny, resulting in shifting product

demand and regulatory bans on certain

chemical substances in regions like the U.S. and

the E.U.121; 122 Furthermore, product safety is

not limited to concerns over chemical

substances – functionality is also a factor; for

example, faulty packaging can allow contents

to spoil. Such instances can result in lost

revenues or litigation brought by the industry’s

customers.

As the Containers & Packaging industry is

primarily a business-to-business industry,

consumer and regulatory concerns over product

safety are manifested indirectly through

demand for the industry’s products and recalls

and litigation. Company performance in this

area can be analyzed in a cost-beneficial way

internally and externally through the following

direct or indirect performance metrics (see

Appendix III for metrics with their full detail):

• Number of recalls and total units

recalled; and

• Discussion of process to identify and

manage emerging materials and

chemicals of concern.

Evidence

Potentially hazardous chemicals can leach from

the packaging into consumables, although

scientific evidence about health impacts in

many cases has been conflicting. Low levels of

formaldehyde, bisphenol-A (BPA), tributyltin,

triclosan, and phthalates and have been found

in food containers and packaging.123 One study

found more than 24,000 chemicals in bottled

water that are considered harmful to human

health, including known carcinogens and

human endocrine disruptors.124 BPA, a

plasticizer used in a number of containers,

including plastic and metal containers, has

garnered much attention due its potential

effects on health. At high levels, BPA has been

shown to cause a number of human health

issues later on in life, including cancer.

However, U.S. regulators have deemed BPA

safe for adults at the current low levels found

in consumables.125


In many cases, the health impacts of substances

used in containers and packaging products are

unclear, however consumer safety concerns can

be sufficient to shift demand. For example, due

to consumer pressure, the infant formula

industry had already ceased using BPA in its

packaging in 2013, when the FDA officially

banned it. The FDA implemented the ban due

to the industry’s “abandonment” of BPA

packaging. The decision was not based on

safety.126 This case illustrates the power of

consumer preferences as a determinant of

product demand and regulatory action.

The regulatory environment is dynamic,

introducing uncertainty into the Container &

Packaging industry. In October 2014, the

National Resources Defense Council, the Breast

Cancer Fund, and a number of other consumer

and environmental health groups petitioned the

FDA for a ban on perfluorocarboxylates (PFCs)

used in paper and paperboard food containers,

including pizza boxes. According to the

petition, these chemicals can affect fetal

development, male reproductive systems, pre

and post-natal brain development, as well as

cause cancer.127

Product innovation is an important factor for

addressing uncertainty and staying abreast of

regulatory change. Regarding the use of epoxy

resins containing BPA, Ball Corp. states in its

FY2013 Form 10-K that, “A significant change

in these regulatory agency statements or other

adverse information concerning BPA could have

a material adverse effect on our business…Ball

recognizes that significant interest exists in non

epoxy-based coatings, and we have been

proactively working with coatings suppliers and

our customers to evaluate alternatives to

current coatings.”128

Internationally, regulations concerning BPA are

more stringent. For example, in 2013, France

banned BPA in all packaging and containers

that come into contact with food. The ban is

divided into two phases; the first, which

banned the chemical in all materials coming

into contact with food intended for use by

children ages three years or younger, took

effect on January 1, 2013; the second, for all

food contact materials, took effect on January

1, 2015. The bans may have adversely affected

U.S. exports of packaging products to

France.129 While consumers and companies may

demand new products that do not contain

known hazardous chemicals, there is a risk that

such new products introduced to the market

could contain new, untested, chemicals that do

not solve the underlying issue of potential harm

to human health.130 Therefore, containers and

packaging companies must consider the risks

from the use of known hazardous substances,

but also verify the safety of new chemicals and

materials used in their products. The health

impacts from long-term chronic exposure to

chemicals is largely unknown. Trace amounts of

substances known to be harmful are legal in

low doses – for example, carcinogenic

formaldehyde is widely used in plastic soda

bottles and plastic tableware in low

concentrations. More than 400 other chemicals


known to disrupt hormone function are present

in low concentrations in food and drink

packaging, including chemicals like triclosan,

tributyltin, and phthalates. These substances

may not even be included in routine toxicology

analysis.131

Product liabilities related to safety have been

recognized as a key risk to financial operations

in the SEC filings of many containers and

packaging companies. Greif Inc. states in its

2013 Form 10-K, “Our customers in the food

industry are subject to increasing laws, rules

and regulations relating to food safety. As a

result, customers may demand that changes be

made to our products or facilities, as well as

other aspects of our production processes,

which may require the investment of capital.

The failure to comply with these requests could

adversely affect our relationships with some

customers…”132

Regulators may also penalize manufacturers for

producing unsafe packaging. Berry Plastics,

which manufactures pharmaceutical and other

type of packaging, warned in its FY 2014 Form

10-K that U.S. regulators “can require the

manufacturer of defective products to

repurchase or recall such products and may

also impose fines or penalties on the

manufacturer…In addition, laws exist in certain

states restricting the sale of packaging with

certain levels of heavy metals, imposing fines

and penalties for noncompliance.”133

The use of chemical substances in packaging

can result in product recalls—regardless of

merit—due to concerns over impacts on human

health. The costs of recalls by consumer-facing

companies can be passed on to container and

packaging manufacturers through lawsuits and

lost revenue. Canadian packaging

manufacturer Flexible Packaging Corp. (FPC),

wax manufacturer The International Group, and

the Kellogg Company have been engaged in a

multi-year legal case stemming from a 2010

recall of thousands of cereal boxes. The recall,

executed by Kellogg after customer complaints

of offensive odors emanating from the

packaging, as well as cases of nausea and

diarrhea, allegedly cost the company millions.

Kellogg filed suit against FPC, alleging that the

plastic liners it provided contained high

amounts of hydrocarbons that caused the

health impacts. FPC in turn filed a suit against

The International Group, claiming that the

company’s wax used to manufacture cereal box

liners was the source of the hydrocarbons.

Kellogg is seeking more than $75 million in

damages from FPC for recovery of lost

inventory and sales, and reputational

impacts.134

Concern over chemical substances in packaging

is not the only possible factor affecting safety.

Functionally defective products that endanger

human health can likewise result in recalls and

financial impacts. For example, in 2008,

Owens-Illinois produced faulty glass bottles that

led to the recall of some Samuel Adams 12-

ounce beer bottles. The glass bottles had a


defect that allowed for small pieces of sand

and glass to break off and fall into the bottle,

which could present a potential hazard for

consumers.135 Boston Beer Co., the producer of

Samuel Adams, eventually agreed to a $20.5

million settlement with Owens-Illinois over the

recall and associated costs, which caused an

estimated $12 million reduction in Boston Beer

Co.’s profits.136

Ultimately, recalls can have an effect on

demand for products. As Sealed Air Corp.

stated in its FY2013 Form 10-K, “We could also

be required to recall possibly defective

products, or voluntarily do so, which could

result in adverse publicity and significant

expenses.”137

Value Impact

Product safety issues can affect containers and

packaging companies financially through

reduced demand for products, damage to

reputation, regulatory action that bans the use

of certain substances in products, and litigation

brought by customers in the event of a product

recall or safety incidents. Potentially harmful

substances in products or product defects can

impact human health and lead to lower

revenues and market share. Legal actions by

customers can result in one-time charges and

contingent liabilities.

Companies may incur research and

development in order to develop safer

products, lowering operating income in the

short term but reducing long term risks from

recalls and potential bans on the use of certain

substances in products. Additionally, companies

that fail to obtain CoC or other certification

could face a higher cost of capital due to the

increased risk of acute adverse impacts from

supply chain disruption or reputational issues.

As consumer safety regulations become more

stringent over time, and awareness of possible

health impacts from chemical substances

grows, the probability and likelihood of

financial impacts is likely to grow.

Past performance on product safety can be

indicative of future performance, looking at the

number of recalls and quantity products

recalled.

A description of existing and emerging

materials of concern contained within products

is a forward-looking indicator of a company’s

risk exposure to possible bans of certain

chemical substances.

BUSINESS MODEL AND INNOVATION

This dimension of sustainability is concerned

with the impact of environmental and social

factors on innovation and business models. It

addresses the integration of environmental and

social factors in the value-creation process of

companies, including resource efficiency and

other innovation in the production process. It

also includes product innovation and efficiency

and responsibility in the design, use-phase, and


disposal of products. It includes management

of environmental and social impacts on

tangible and financial assets—either a

company’s own or those it manages as the

fiduciary for others.

Rising public awareness of the environmental

externalities of packaging, including dangers to

wildlife and marine pollution, is driving demand

for more sustainable packaging materials. The

industry’s customers are increasingly

demanding products with improved lifecycle

performance through recyclability, reduced

material use, and the use of more durable or

lighter materials.

Product Lifecycle Management

Containers and packaging material comprises a

significant amount of post-consumer waste,

which is recycled, sent to landfills, or disposed

of into the environment.138 This waste, if sent

to landfills, consumes landfill space and can

generate GHG emissions, while some

packaging materials that end up in the

environment can persist for lengthy periods of

time and cause harm to wild life.139 These

factors have resulted in bans on certain types of

plastic packaging in the U.S. and abroad.140

Additionally, rising global demand for

packaging materials is placing increasing strain

on limited global natural resources, and

contributing to, biodiversity impacts and

environmental pollution. Product end-of-life

management is an important factor

contributing to resource security and the long-

term sustainability of the industry.141

In the U.S., packaging manufacturers do not

typically bear the financial costs of recycling or

the environmental externalities that their

products may create. However, regulatory and

consumer trends suggest that the use of

recycled materials and extended producer

responsibility (EPR) may become more

prevalent, as it is in other markets like the E.U.

Future EPR laws may hold manufacturers

financially liable for product take-back and

recycling. Additionally, customers can garner

financial and sustainability benefits from

innovations such as packaging lightweighting,

which can reduce transportation costs.142 These

benefits can translate into increased demand.

Furthermore, the design of a product can make

it easier or harder to recycle. The addition of

adhesives and metal foils to paperboard

packaging, for example, can make recycling

more difficult.143

Innovation is an important business opportunity

for containers and packaging manufacturers.

Product design for improved recyclability and

reduced environmental impact can have

financial benefits, as recycled materials may be

cheaper than virgin materials, and may also

require less energy and fewer resources to

convert to finished products. Additionally,

increasing demand for environmentally friendly

packaging may present growth opportunities

for the industry.


Contrarily, companies may face diminished

demand for products that do not meet

customer needs or regulatory requirements for

recyclability or reduced environmental impacts.

Although containers and packaging companies

may not bear direct financial responsibility for

product waste in some markets, potential bans

on products or shifting consumer preferences

could jeopardize market share and lead to

increased costs.

While the sustainability performance of

products depends largely on the type, use, and

ultimate disposal of materials, companies that

effectively manage the end-of-life

environmental impacts of their products

through some of the innovations discussed

above may be better positioned to capture

shifting customer demand and meet regulatory

trends.






• Percentage of raw materials from (1)

recycled content (2) renewable

resources;

• Revenue from products that are

reusable, recyclable, and/or

compostable; and

• Description of strategies to reduce the

environmental impact of packaging

throughout its lifecycle.

Evidence

Innovation in product design and access to

recycled materials can help address customer

demand for more environmentally sustainable

products and drive growth in the industry. As

concerns about generated waste and use of

landfill space rise, recycling and recyclability of

containers and packaging materials will play an

important role in the industry’s long-term

development.144 In 2012, containers and

packaging materials represented 30 percent of

total municipal solid waste, or more than 75

million tons of waste. In 2005, total municipal

solid waste generation peaked at more than

250 million tons, while recycling rates have

steadily risen since the 1960s.145 Recycling rates

vary widely for different types of material.

According to EPA figures, 91 percent of

corrugated boxes, 70.8 percent of steel cans,

70 percent of newspaper and mechanical

paper, 54.5 percent of aluminum cans, 34.1

percent of glass containers, 30.8 percent of

polyethylene terephthalate plastic (PET) bottles

and jars, and 28.2 percent of high density

polyethylene plastic bottles were recycled in

2012.146 In the U.S., the amount of recoverable

plastic, steel, glass, aluminum, and paper waste

sent to landfills annually is estimated to be

valued at more than $11 billion, representing a

significant loss of potential feedstock for new

containers and packaging.147

A 2014 report estimated the size of the 2013

global packaging market was $797 billion, a

figure that is expected to rise to $975 billion by


2018.148 Of this total, the 2013 sustainable

packaging market, comprised of recyclable,

degradable, and reusable packaging, and

packaging using recycled content and

lightweighting, hit $190 billion in 2013, or

nearly 24 percent of the total. The share of

sustainable packaging is expected to rise to 26

percent by 2018.149 However, the size of the

recycled, degradable, and reusable container

and packaging market was estimated at just

$27 billion in 2014, reflecting a narrower

scope. This smaller market is also expected to

grow four percent annually.150

As there are various hurdles for improving the

recyclability of containers and packaging

materials, including the use of various labels,

inks, and coatings, there may be a disconnect

between packaging designers and current

recycling systems, preventing materials from

being recovered and leading to their disposal in

landfills.151 For example, aseptic cartons, which

are recycled at a 6.5 percent rate, use layers of

paper, plastic and aluminum that require

specific processes to separate. Packaging

designers play a critical role in how a package

is ultimately recycled, which is essential for

developing a closed-loop system for the

packaging material, and can influence

consumers’ understanding of a material’s

sustainability.152,153 Motivated by potential

financial benefits and a desire to improve the

sustainability of their businesses, containers

and packaging companies are partaking in

voluntary efforts to improve the recycling rates

of their products through integrated recycling

efforts and stakeholder outreach. In several of

its markets worldwide, Ball Corp. helps

establish and financially supports recycling

initiatives, including programs to educate

consumers about the benefits of recycling and

collaborate with industry partners to create

collection systems.154 The American Forest and

Paper Association, an industry association with

several large paper container company

members, launched its “Better Practices, Better

Planet 2020” initiative to accelerate recycling

rates of paper packaging by more than 70

percent by the year 2020.155

Container and packaging materials recycling

can lead to financial and environmental

benefits by reducing energy use and resource

intensity.156 Using recycled materials to produce

aluminum cans reduces the embodied energy

of such cans by about 95 percent compared

with products made of virgin materials.157 In

theory, there is no limit to the number of times

materials such as glass and aluminum can be

recycled.158; 159 Similarly, recycling of other

materials such as plastic can reduce embodied

energy by 84 percent, and subsequently reduce

GHG emissions by about 72 percent, compared

to products made with virgin materials.160 The

use of recycled input materials can have

significant benefits for producers. Because

cullet melts at a lower temperature than virgin

materials, manufacturers can use cullet in glass

production to reduce the energy costs

necessary to produce new bottles. Lower

energy costs can translate into improved

profitability.161 As Crown Holdings states in its


FY2013 Form 10-K, “By reducing the per-unit

amount of raw materials used in manufacturing

its products, the Company can significantly

reduce the amount of energy, water and other

resources and associated emissions necessary to

manufacture metal containers.”162

In 1994, the European Union launched a

packaging waste directive aimed at improving

recycling rates. The directive called for an EPR

process that makes producers of packaging

materials financially responsible for the end-of-

life management of their products. This

legislation shifted some of the financial burden

off of the taxpayers and internalized the costs

with manufacturers. These EPR programs are

largely credited with helping E.U. countries

reduce the total packaging sent to landfills by

43 percent over an 11-year period.163 In the

U.S., EPR programs would likely increase costs

for manufacturers. A 2014 cost-benefit study

of EPR in Minnesota found that total estimated

costs to producers, including administrative,

educational, and infrastructural costs, would hit

nearly $75 million statewide.164 Companies may

face uncertainty regarding the financial

implications of EPR legislation. In its 2014 Form

10-K, Berry Plastics states that “there can be no

assurance that future legislation or regulation

would not have a material adverse effect on us.

Furthermore, a decline in consumer preference

for plastic products due to environmental

considerations could have a negative effect on

our business.”165

One of the key barriers to improving recycling

rates is a lack of recycling infrastructure for

many forms of packaging.166 Some container

and packaging companies have begun

improving the amount of recycled content in

their products, and have invested in new

infrastructure to secure a steady supply of

recycled materials. As some companies use up

to 90 percent recycled content in new

products, they have a vested interest in

ensuring that raw materials can be recovered

and are not sent to landfills.167

RockTenn, the largest paper recycler in North

America, currently uses 45 percent recycled

fiber in its new paperboard packaging

products. The company sources more than four

out of the nine million tons of recycled fiber it

uses in manufacturing paper products from its

own recycling operations.168 The company also

partners with municipalities to increase

recycling efforts in communities that do not

currently have curbside recycling.169 Owens-

Illinois, the largest glass bottle producer, hopes

to eventually increase its recycled content

average to 60 percent, up from current levels

of 37 percent.170 In 2013, the company

launched a new “Glass to Glass” recycling

joint-venture with eCullet to supply its

Portland, Oregon bottle plant with recycled

materials.171

Beyond legislation, business customers of C&P

companies are demanding that the products

they purchase contain recycled content and

packaging, due to their own customers


concerns and preferences. These factors put

more pressure on container and packaging

manufacturers to design recyclable products

and products with higher recycled content.

Colgate-Palmolive, a large consumer products

company and customer of the packaging

industry, recently announced that it would

commit to 100 percent recyclable packaging

and increase-recycled content from 40 percent

to 50 percent by 2020.172 This initiative may put

pressure on Colgate’s largest supplier of

packaging, Nampak, which generates more

than 8 percent of its revenue from Colgate

alone.173 Companies further down the value

stream are also demanding more recycled

content in the products they sell. Walmart,

Colgate’s largest customer, announced a goal

of boosting post-consumer recycled content in

plastic packaging by 3 billion pounds by 2020.

While Walmart does not produce plastic

packaging itself, it hopes to leverage its buying

power to increase demand for more post-

consumer recycled content in the products it

sells to consumers, as well as mitigate affects

from the cost and volatility of packaging

materials.174

Consumer perception of the recyclability and

recycling of containers and packaging products

can shape public perception of the

environmental friendliness of such products,

which can lead to shifts in consumer demand.

For example, the environmental impacts of

plastic water bottles have led to a negative

perception about disposable plastic bottles.175

Such concerns have been a key driver of

regulatory action. More than 100 U.S. cities

have banned polystyrene foam food packaging,

and 28 California municipalities have banned

plastic take-out bags.176 Cities including

Concord, Massachusetts and more than 24

national parks have enacted similar bans.177; 178

These bans may have significant impacts on

containers and packaging sales, especially if

more cities and establishments follow suit. As

Crown Holdings stated in its FY2013 Form 10-

K, “A number of governmental authorities both

in the U.S. and abroad also have enacted, or

are considering, legal requirements relating to

product stewardship, including mandating

recycling, the use of recycled materials and/or

limitations on certain kinds of packaging

materials such as plastics. In addition, some

companies with packaging needs have

responded to such developments, and/or to

perceived environmental concerns of

consumers, by using containers made in whole

or in part of recycled materials. Such

developments may reduce the demand for

some of the Company's products, and/or

increase its costs.”179

New initiatives such as the Bioplastic Feedstock

Alliance, backed by large corporations, are

looking to make progress on creating plastics

out of renewable sources like plants rather than

traditional fossil fuels, helping to lower the

potential negative environmental impact.180

Coca-Cola and PepsiCo have internally

developed PET plastic bottles made from plant-

based polymers as an alternative to plastics.181

Coca-Cola claims to have delivered more than


25 billion plant-based plastic bottles, saving

more than 525,000 barrels of oil.182 Innovations

such as these are expected to drive the

sustainable packaging market to $244 billion

by 2018.183 Innovative containers and

packaging manufacturers have the opportunity

to capture this growing market.

Innovations in packaging design and advances

in types of materials used are enabling

containers and packaging companies to address

risks and opportunities related to product

lifecycle environmental impacts. Processes such

as light-weighting or making products more

durable are helping customers save on

transportation and disposal costs, with

associated environmental benefits. Apple Inc.

found that reducing iPhone packaging by 28

percent helped the company ship 60 percent

more boxes in airline containers, reducing the

number of necessary flights.184 By reducing the

amount of material needed in its plastic, glass,

and aluminum cans and bottles, Coca-Cola

estimated cost savings of more than $180

million over a two year period,185 Such savings

and environmental benefits for customers can

make innovative containers and packaging

attractive, increasing demand. Top containers

and packaging companies have innovated in

response to regulation and shifting consumer

demand. In its FY2013 Form 10-K, Sealed Air

states, “Our new venture activities…include the

development of packaging products from

renewable resources. We maintain programs

designed to comply with these laws and

regulations, to monitor their evolution, and to

meet this customer demand.”186

The value of different innovations varies. With

limited resources, companies could benefit

from assessing the types of innovation that

would have the greatest positive environmental

impacts and highest cost savings for their

particular products. Product lifecycle

evaluations can help with such determinations.

For example, Greif Inc., a manufacturer of large

reusable industrial drums and containers,

conducted a lifecycle assessment and found

that instead of lightweighting its containers to

save on transportation and improve

environmental impacts, it saved more money

and improved the product’s environmental

impact by making the containers more durable,

prolonging their useful life.187

Value Impact

Innovations and advances in business models

that address the recyclability and environmental

impacts of containers and packaging can affect

demand for products, operating costs and

increase risk profile.

Demand for recyclable or reusable products is

likely to rise due to consumer preferences and

regulatory requirements. This represents an

opportunity for manufacturers to serve new

markets, expand their share of existing

markets, and charge a premium for their

products.


The development of products with sustainable

characteristics, such as lightweight materials or

improved recyclability, will require research and

development expenditures, with short-term

impact on operating income. However, new

products with reduced externalities can result in

increased market share and revenues over the

medium to long term.

At the same time, containers and packaging

companies can benefit from increasing the use

of recycled materials in production, which can

lower their purchase and operating costs. This

could also mitigate potential supply chain

disruption of virgin materials.

Regulations that require manufacturers to

finance the collection, recycling, or reuse of

packaging materials could increase operating

costs. Regulations could also include provisions

for penalties against companies that do not

adhere to EPR laws, resulting in reduced short

term profitability. Additionally, regulations

might require capital expenditures or other

investments to support EPR programs.

As EPR laws and conservation efforts around

recycling are likely to intensify, the probability

and magnitude of financial impacts are likely to

increase in the medium term.

The percentage of products that are recyclable

or reusable indicates a company’s positioning

to meet increased demand and potential future

regulatory requirements. A description of

products’ lifecycle environmental impacts can

give insight into a company’s positioning to

address increasing demand for more

sustainable products. The percentage of

recycled materials used in manufacturing is an

indication of potential future cost savings and

exposure to the risk of supply chain disruption.

LEADERSHIP AND GOVERNANCE

As applied to sustainability, governance

involves the management of issues that are

inherent to the business model or common

practice in the industry and are in potential

conflict with the interest of broader stakeholder

groups (government, community, customers,

and employees). They therefore create a

potential liability, or worse, a limitation or

removal of license to operate. This includes

regulatory compliance, lobbying, and political

contributions. It also includes risk management,

safety management, supply chain and resource

management, conflict of interest, anti-

competitive behavior, and corruption and

bribery.

Containers and packaging companies source

vast amounts of materials, both virgin and

recycled, from thousands of suppliers

worldwide. Environmental or social externalities

from raw material production can manifest

themselves financially in the Containers &

Packaging industry through reduced revenues,

potential supply disruptions, and materials price

increases. Conversely, the market for


sustainably-sourced packaging materials

presents a growth opportunity for the industry.

Materials Sourcing

The production of containers and packaging

requires large quantities of raw materials,

including wood fiber, metals, glass, and

plastics. Wood fiber is derived from forests,

metals and glass precursors are sourced from

mines, and plastics are created largely from

petroleum products. Natural resource extraction

activities can result in environmental

externalities such as habitat loss and water and

land pollution, as well as negative social

impacts including labor abuses and adverse

community impacts. The industry also faces

supply chain challenges in the use of conflict

minerals. Companies can face pressure from

legislation, actions by non-governmental

organizations (NGOs), input price risks, and

leadership from peers to track and eliminate

the use of minerals responsible for conflict in

the DRC. To the extent that a manufacturer

uses these minerals in its production processes,

the company is required to provide disclosures

around the origin of the minerals in accordance

with the Conflict Minerals provision of the

Dodd-Frank Act (see the Regulatory Trends

section above). This requires an active

monitoring of the supply chain. Additionally,

the use of tin that may originate from zones of

conflict also exposes companies to regulatory

risks associated with the Dodd-Frank Act.

Due to increasing consumer concern

surrounding these issues, containers and

packaging manufacturers’ customers may not

wish to purchase products from suppliers that

may be associated with negative supply chain

externalities. These associations could reduce

demand for a company’s packaging products.

Furthermore, supply disruptions due to

environmental or social issues in the supply

chain could increase materials purchasing costs

for containers and packaging companies.

In order to mitigate these risks, containers and

packaging companies are implementing

responsible sourcing practices internally and

through the use of third-party supplier

certification. Certification has been most

common for wood fiber—and to a lesser extent

aluminum—substrates that have garnered

particular attention for externalities

surrounding their extraction. Common

certification programs include the Programme

for the Endorsement of Forest Certification

(PEFC)188, the Sustainable Forestry Initiative

(SFI)189, the Forest Stewardship Council (FSC)190,

and the Aluminum Stewardship Initiative.191, All

of these programs aim to verify that materials,

both virgin and recycled, are from suppliers

that consider and manage social and

environmental issues and externalities during

raw material production. Such third-party

certifications are becoming increasingly

important, as customers seek greater chain-of-

custody (CoC) certification of a product. In

addition to supply chain risk management, the

certification of the raw material supply presents


revenue and market share opportunities, as

companies can meet growing demand for

sustainably-sourced packaging products.

Supplier engagement and verification of

materials sourcing and chain of custody thus

presents risks and opportunities to container

and packaging manufacturers. Company

performance in this area can be analyzed in a

cost-beneficial way internally and externally

through the following direct or indirect

performance metrics (see Appendix III for

metrics with their full detail):

• Total wood fiber purchased,

percentage from certified sources; and

• Total aluminum purchased, percentage

from certified sources.

Evidence

Raw materials extraction can result in adverse

environmental and social externalities, leading

to financial impacts for the Containers &

Packaging industry.

Nearly 30 percent of forests are used for the

production of forest products. The area of the

world covered by forests is shrinking by an

average of 15,000 hectares per day, due to

conversion to agricultural lands, logging, and

climate change.192 According to the United

Nations Food and Agriculture Organization

(FAO), approximately 57 percent of global

III Primary forests are forests of native tree species that have previously not been disturbed by human activity or have attained significant age without significant disturbance.

forests are naturally regenerated, 36 percent

are primary growth, and 7 percent are planted

forest. Primary forestsIII are especially important

for biodiversity; about 66 percent of terrestrial

species originate from primary forests. Thus,

logging of such forests threatens the existence

of thousands of species, many of which are

endangered.193

The Programme for Endorsement of Forest

Certification (PEFC), one of the largest forest

certification programs in the world, estimates

that forests contribute to the livelihoods of

about 1.6 billion people worldwide, and that

60 million indigenous peoples are fully

dependent upon forests, and a further 350

million people depend on forests for income

and food. Thus, wood harvesting can directly

affect the lives of millions of people,

underscoring the importance of community

inclusion and social issues in all aspects of

operations.194

Through chain of custody certification,

companies in the paper packaging segment can

mitigate the risk for reputational harm while

addressing customer concerns over the

environmental and social impacts of their

supply chains and products. This can lead to an

expansion of revenues for containers and

packaging companies. For wood fiber-based

paper products, CoC certification includes

third-party certifications like the FSC, the SFI,


and the Programme for the Endorsement of

Forest Certification (PEFC). In order to achieve

CoC certification, every organization in a

company’s supply chain must independently

obtain third party verification.195 Certification

programs typically set standards for the

protection of biodiversity and ecosystems,

worker’s rights, indigenous peoples’ rights,

local employment, and legal logging

practices.196

Rising consumer demand for sustainably-

sourced packaging is an important industry

driver. A 2012-2013 survey conducted by

TetraPak, a major European paper packaging

company, on a sample of more than 7,000

consumers across 13 countries, found that

consumer demand for sustainably sourced

packaging is on the rise. In the survey, more

than half of consumers trusted environmental

logos, up from 37 percent from the year

before, while 37 percent of consumers reported

searching for environmental certification logos

on packaging. One in five people recognized

the FSC logo.197

McDonald’s notes in its 2013 Responsibility &

Sustainability report that it has a target of

sourcing 100 percent of its consumer-facing

paper fiber-based packaging from third-party

certified or recycled sources by 2020. The

company grew this share from 9.3 percent in

2012 to 13.9 percent in 2013. The company

uses FSC, PEFC, or verified post-industrial or

post-consumer recycled fiber as the acceptable

standards for its internal target.198 International

Paper is a major supplier to McDonald’s; the

company accounted for 1.25 percent of

International Paper’s revenues in 2014.199

According to the American Forest and Paper

Association, in 2012 the association’s

members, which include top containers and

packaging companies, procured 29 percent of

their fiber from certified forestlands, while they

sourced 95 percent of their fiber through

certified fiber sourcing programs All AF&P

members that source wood and fiber must

comply with sustainable procurement

principles, which support reforestation, control

of invasive plants and animals, conservation of

critical habitats, control of illegal logging,

worker safety issues, fair labor practices, and

indigenous people’s rights, or obtain SFI

certification.200 Companies in the paper

containers and packaging segment have goals

and practices in place for responsible sourcing

of virgin and recycled fiber. By 2020, RockTenn,

a founding member of the FSI, is committed to

having all of its wholly owned facilities CoC

certified by third parties. The company holds

that maintaining healthy, productive, and

sustainable forests is beneficial to the

environment, communities, and the company’s

business. In addition to using certified

suppliers, the company also directly encourages

forest landowners to practice sustainable

forestry.201 TetraPak aims to achieve similar

goals of sourcing 100 percent of its fiber from

certified sources.202

Aluminum and tin mining can have particularly

significant adverse social and environmental


impacts, with possible effects on the Container

& Packaging industry’s reputation or supplies.

The majority of aluminum ore is mined in

tropical regions, which are areas with high

biodiversity and ecological sensitivity.203

Aluminum mining in such regions can result in

ecological harm due to land clearing,

hazardous waste generation, and air emissions.

Furthermore, many of the aluminum mining

regions are located in developing nations,

where socioeconomic development may be less

advanced, and legal protection of indigenous

and community rights can be weaker. Extractive

metals mining can adversely impact local

peoples’ culture, self-determination, and

health.204 Due to the potential for large

environmental and social impacts from

aluminum extraction, voluntary standards such

as the Aluminum Stewardship Initiative (ASI)

have arisen to promote responsible and

transparent practices throughout the aluminum

supply chain.205 The ASI, which is under

development, applies to all aluminum value

chain stages, from bauxite ore mining to

recycling. In 2013, Ball Corporation joined the

ASI in order to help drive adoption of the

standard and foster sustainability within its

supply chain.206

In certain regions of the world, such as the

DRC, the mining and sale of conflict minerals

like tin provide funding for armed conflicts and

thus may result in human rights abuses.

Companies are exposed not only to regulatory

risk associated with the Conflict Minerals rule

of the Dodd-Frank Act, but also to input price

volatility and reputational risks. Tin is of

particular concern for the Containers &

Packaging industry. It is used to manufacture

coated steel plating, called tinplate, and metal

alloys commonly used to manufacture

containers and can seals. Approximately 40

percent of the world’s tin is used to make

tinplate.207 The DRC accounts for 6 to 8 percent

of global tin production, and prices have shown

high volatility, sometimes related to conflicts

there. In 2008, a 31 percent increase in tin

prices coincided with a rebel offensive against

the DRC’s primary tin-trading center.208

Company SEC filings describe possible impacts

from materials sourcing. Ball Corp. states in its

FY2013 Form 10-K that “regulatory

developments regarding the reporting and use

of “conflict minerals” mined from the

Democratic Republic of the Congo and

adjoining countries could affect the sourcing

and availability of minerals used in the

manufacture of certain of our products…Also,

because our supply chain is complex, we may

face reputational challenges with our

customers and other stakeholders...”209 Supply

chain engagement can be a risk mitigation tool;

in Ball Corp.’s FY2014 Sustainability Report, it

states that, “…our supply chain sustainability

efforts help us to…Create shared value and

reduce risk for our business and relevant

stakeholders, including customers, suppliers

and shareholders…”210


Value Impact

The environmental and social performance of

suppliers can have a substantial impact on

containers and packaging companies,

impacting demand or products and sourcing

costs, and creating operational and

reputational risks.

Product certifications may be demanded by

downstream customers to prove the

responsible forestry or mining credentials of

suppliers. Increasing demand for certified

products could allow companies that obtain

such certifications for their products to improve

market share, charge a price premium, and

increase revenues over the long term.

As regulation and public awareness of negative

externalities from raw material production

grow, the probability and likelihood of financial

impacts are likely to rise in the medium term.

The percentage of wood fiber and aluminum

from certified sources is a proxy for the

environmental and social performance of

suppliers, and the risk of supply disruption and

reputational damage faced by containers and

packaging companies. The metrics are also

suggestive of competitive positioning to

capture the growing market opportunity for

certified products.


REFERENCES

1 Bloomberg Professional service, accessed January 15, 2015, using the BICS <GO> command. The data represents global revenues of companies listed on global exchanges and traded over-the-counter (OTC) from the Containers & Packaging industry, using Levels 3 and 4 of the Bloomberg Industry Classification System.

2 Bloomberg Professional service, accessed March 16, 2015, using the <EQS> command.

3 Stephen Hoopes, “IBISWorld Industry Report 32221: Cardboard Box & Container Manufacturing in the US,” IBISWorld, December 2013, p. 6.

4 Kerry Coughlin, “IBISWorld Industry Report 33243: Metal Can & Container Manufacturing in the US,” IBISWorld, December 2013, p. 7.

5 Neville, Antal, “IBISWorld Industry Report 32616: Plastic Bottle Manufacturing in the US” IBISWorld, November 2013, p.3.

6 Kerry Coughlin, “IBISWorld Industry Report 33243: Metal Can & Container Manufacturing in the US,” p. 21.

7 Stephen Morea, “IBISWorld Industry Report 32721: Glass Product Manufacturing in the US” IBISWorld, September 2013, p. 3.

8 Stephen Hoopes, “IBISWorld Industry Report 32221: Cardboard Box & Container Manufacturing in the US.”

9 Kerry Coughlin, “IBISWorld Industry Report 33243: Metal Can & Container Manufacturing in the US.”

10 Antal Neville, “IBISWorld Industry Report 32616: Plastic Bottle Manufacturing in the US.”

11 Author’s calculation based on data from Bloomberg Professional service, accessed on January 13, 2015, using Equity Screen (EQS) for U.S.-listed companies (including those traded primarily OTC) that generate at least 20 percent of revenue from their Containers & Packaging segment and for which Containers & Packaging is a primary SICS industry.


13 Sagarika Jaisinghani, “Rock-Tenn, MeadWestvaco to merge, create packaging giant,” Reuters, January 26, 2015, accessed February 3, 2015, http://www.reuters.com/article/2015/01/26/us-rocktenn-m-a-meadwestvaco-idUSKBN0KZ13P20150126.

14 Ibid., p. 11.



17 RockTenn, Inc., FY2014 Form 10-K for the period ending September 30, 2014 (filed November 24, 2014.), p.4


19 Ibid.



22 Ibid.

23 Ibid., p. 5.

24 Tyler Langston, "Packaging," J.P. Morgan Analyst Report (2014), p.10.

25 Ibid.

26 Can Manufacturers Institute, 2013-2014 Annual Report, 2014, accessed February 24, 2015, http://www.cancentral.com/sites/cancentral.com/files/public-documents/CMI%202014%20Annual%20Report%202013_14%20WEB%20single%20page.pdf.

I N D U S T R Y B R I E F | C O N T A I N E R S & P A C K A G I N G

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http://www.reuters.com/article/2015/01/26/us-rocktenn-m-a-meadwestvaco-idUSKBN0KZ13P20150126

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http://www.cancentral.com/sites/cancentral.com/files/public-documents/CMI%202014%20Annual%20Report%202013_14%20WEB%20single%20page.pdf


28 Antal Neville, “IBISWorld Industry Report 32616: Plastic Bottle Manufacturing in the US.”

29 Ibid, p. 3.


31 "Consolidated Container buys Roffe Container assets," Plastics News, last modified August 14, 2012, accessed May 2, 2014, http://www.plasticsnews.com/article/20121113/NEWS/311139969/consolidated-container-buying-madras-packaging.


33 "Glass Container Manufacturing Industry Overview," Glass Packaging Institute, 2014, accessed February 5, 2015, http://www.gpi.org/sites/default/files/Glass Container Industry Overview.pdf.

34 Owens-Illinois, Inc., FY13 Form 10-K for the period ending December 31, 2013, (filed February 14, 2014), p. 1.

35 Stephen Morea, “IBISWorld Industry Report 32721: Glass Product Manufacturing in the US.”

36 "Forest Products Industry Technology Roadmap," Agenda 2020 Technology Alliance, last modified April 2010, p. 21.

37 "Environment," Berry Plastics Corporation, 2014, accessed February 24, 2015, http://www.berryplastics.com/about-us/our-responsibilities/environment.

38 "Curbside Value Partnership," Can Manufacturing Institute, 2015, accessed February 24, 2015, http://cancentral.com/recycling-sustainability/programs-initiatives/curbside-value-partnership.

39 "Increase Paper Recovery for Recycling," American Forest & Paper Association, accessed May 2, 2014, http://afandpa.org/sustainability/increase-paper-recovery.

40 "Coke investing millions in firms to accelerate development of plant-based plastics," Plastics News, last modified December 15, 2011, accessed May 2, 2014, http://www.plasticsnews.com/article/20111215/NEWS/312159996/coke-investing-millions-in-firms-to-accelerate-development-of-plant-based-plastics.

41 "Battle of the bioplastic bottle," ICIS Green Chemicals, last modified March 21, 2011, accessed May 2, 2014, http://www.icis.com/blogs/green-chemicals/2011/03/battle-of-the-bioplastic-bottl/.

42 Brian Bogart, “Ball Corporation (BLL) – ½ KDP Ranking,” KDP Research, June 23, 2014, p. 1-3.

43 “Boiler Compliance at Area Sources,” United States Environmental Protection Agency, last updated December 22, 2014, accessed on February 24, 2015, http://www.epa.gov/boilercompliance/.

44 “Greenhouse Gas Reporting Program Basic Information,” United States Environmental Protection Agency, July 31, 2014, accessed December 10, 2014, http://www.epa.gov/ghgreporting/basic-info/index.html.

45 “Cap-and Trade Program,” California Environmental Protection Agency Air Resources Board, 2014, accessed December 28, 2014, http://www.arb.ca.gov/cc/capandtrade/capandtrade.htm.

46 “A Brief Look at the Quebec Cap and Trade System for Emissions Allowances," Province of Quebec Canada, 2015, accessed February 10, 2015, http://www.mddelcc.gouv.qc.ca/changements/carbone/documents-spede/in-brief.pdf

47 “RCRA Orientation Manual 2011: Resource Conservation and Recovery Act Section VI,” United States Environmental Protection Agency, last updated November 4, 2012, accessed on February 24, 2015, http://www.epa.gov/osw/inforesources/pubs/orientat/.

48 "Ingredients, Packaging & Labeling," U.S. Food and Drug Administration, last modified March 24, 2014, accessed April 14, 2014, http://www.fda.gov/food/ingredientspackaginglabeling/default.htm.

49 Sabrina Tavernise, "F.D.A. Makes It Official: BPA Can’t Be Used in Baby Bottles and Cups," The New York Times, last modified July 17, 2012, accessed May 4, 2014, http://www.nytimes.com/2012/07/18/science/fda-bans-bpa-from-baby-bottles-and-sippy-cups.html?_r=0.

50 Ball Corp., FY13 Form 10-K for the period ending December 31, 2013 (filed on March 3, 2014), p.11.


http://www.plasticsnews.com/article/20121113/NEWS/311139969/consolidated-container-buying-madras-packaging

http://www.plasticsnews.com/article/20121113/NEWS/311139969/consolidated-container-buying-madras-packaging

http://www.gpi.org/sites/default/files/Glass%20Container%20Industry%20Overview.pdf

http://www.berryplastics.com/about-us/our-responsibilities/environment

http://www.berryplastics.com/about-us/our-responsibilities/environment

http://cancentral.com/recycling-sustainability/programs-initiatives/curbside-value-partnership

http://afandpa.org/sustainability/increase-paper-recovery

http://www.plasticsnews.com/article/20111215/NEWS/312159996/coke-investing-millions-in-firms-to-accelerate-development-of-plant-based-plastics

http://www.plasticsnews.com/article/20111215/NEWS/312159996/coke-investing-millions-in-firms-to-accelerate-development-of-plant-based-plastics

http://www.icis.com/blogs/green-chemicals/2011/03/battle-of-the-bioplastic-bottl/

http://www.epa.gov/boilercompliance/

http://www.epa.gov/ghgreporting/basic-info/index.html

http://www.arb.ca.gov/cc/capandtrade/capandtrade.htm

http://www.mddelcc.gouv.qc.ca/changements/carbone/documents-spede/in-brief.pdf

http://www.epa.gov/osw/inforesources/pubs/orientat/

http://www.fda.gov/food/ingredientspackaginglabeling/default.htm

http://www.nytimes.com/2012/07/18/science/fda-bans-bpa-from-baby-bottles-and-sippy-cups.html?_r=0

http://www.nytimes.com/2012/07/18/science/fda-bans-bpa-from-baby-bottles-and-sippy-cups.html?_r=0

51 “Food Contact Materials – EU Legislation,” European Commission, last updated September 29, 2012, accessed February 24, 2015, http://ec.europa.eu/food/food/chemicalsafety/foodcontact/eu_legisl_en.htm.

52 "EPR (Extended Producer Responsibility)," American Forest & Paper Association, accessed May 4, 2014, http://afandpa.org/issues/epr.

53 Conrad MacKerron, "Unfinished Business: The Case for Extended Producer Responsibility for Post-Consumer Packaging," As You Sow, 2012, p. 3-4, http://www.asyousow.org/wp-content/uploads/2013/08/REPORT-2012-UnfinishedBusiness_TheCaseforEPR.pdf.

54 “Product Stewardship and Extended Producer Responsibility (EPR) Policy and Law,” CalRecycle, last updated March 20, 2014, accessed February 10, 2015, http://www.calrecycle.ca.gov/epr/PolicyLaw/default.htm#World.

55 "EPR (Extended Producer Responsibility)," American Forest & Paper Association,

56 Beth Slovic, "Portland expands plastic-bag ban to 5,000 businesses," Oregon Live, last modified November 16, 2012, http://www.oregonlive.com/portland/index.ssf/2012/11/portland_expands_plastic-bag_b.html.

57 Save The Bay, "Plastic Bags are History in San Francisco," 2014, accessed May 4, 2014, http://www.savesfbay.org/plastic-bags-are-history-san-francisco.

58 Jane Timm, "San Francisco bans sale of plastic water bottles on city property," MSNBC, last modified March 14, 2014, http://www.msnbc.com/msnbc/san-francisco-bans-sale-plastic-water-bottles-climate-change.

59 “Homepage,” Programme for the Endorsement of Forest Certification, 2014, http://www.pefc.org/.

60 Forest Stewardship Council, “Mission and Vision,” 2014, accessed on March 16, 2015, https://us.fsc.org/mission-and-vision.187.htm.

61 “Basics of SFI,” Sustainable Forestry Initiative, 2014, accessed on March 16, 2015, http://www.sfiprogram.org/about-us/basics-of-sfi/.

62 “ASI Overview,” Aluminum Stewardship Initiative, 2015, accessed February 13, 2015, http://aluminium-stewardship.org/about-asi/asi-overview/.

63 “SEC Adopts Rule for Disclosing Use of Conflict Minerals,” U.S. Securities and Exchange Commission, 2012,

accessed April 8, 2013, http://www.sec.gov/news/press/2012/2012-163.htm.

64 Author’s calculation based on data from “Annual Survey of Manufactures: General Statistics: Statistics for Industry Groups and Industries: 2011,” U.S. Census Bureau, released December 17, 2013. Accessed January 29, 2015. http://www.census.gov/manufacturing/asm/.

65 RockTenn, Inc., FY 14 Form 10-K for the period ending September 30, 2014, (filed November 24), 2014, p. 7, accessed February 5, 2015, http://files.shareholder.com/downloads/AMDA-1OZYBO/3934532386x0xS230498-14-117/230498/filing.pdf.

66 The NAICS codes, and the related industries activities, applicable to the Containers & Packaging industry are as follows:

32619 Other plastics product manufacturing

32622 Rubber and plastics hoses and belting manufacturing

32629 Other rubber product manufacturing

3321 Forging and stamping

3323 Architectural and structural metals manufacturing

3325 Hardware manufacturing

3326 Spring and wire product manufacturing

3327 Machine shops; turned product; and screw, nut, and bolt manufacturing

3328 Coating, engraving, heat treating, and allied activities

3329 Other fabricated metal product manufacturing

333 Machinery manufacturing

33612 Heavy duty truck manufacturing


http://ec.europa.eu/food/food/chemicalsafety/foodcontact/eu_legisl_en.htm

http://afandpa.org/issues/epr

http://www.asyousow.org/wp-content/uploads/2013/08/REPORT-2012-UnfinishedBusiness_TheCaseforEPR.pdf


http://www.calrecycle.ca.gov/epr/PolicyLaw/default.htm%23World

http://www.oregonlive.com/portland/index.ssf/2012/11/portland_expands_plastic-bag_b.html

http://www.savesfbay.org/plastic-bags-are-history-san-francisco

http://www.msnbc.com/msnbc/san-francisco-bans-sale-plastic-water-bottles-climate-change

http://www.pefc.org/

https://us.fsc.org/mission-and-vision.187.htm


http://www.sfiprogram.org/about-us/basics-of-sfi/

http://aluminium-stewardship.org/about-asi/asi-overview/


http://www.sec.gov/news/press/2012/2012-163.htm

http://www.census.gov/manufacturing/asm/

http://files.shareholder.com/downloads/AMDA-1OZYBO/3934532386x0xS230498-14-117/230498/filing.pdf


336212 Truck trailer manufacturing

3365 Railroad rolling stock manufacturing

3366 Ship and boat building

3369 Other transportation equipment manufacturing

67 Author’s calculation using data from the United States Environmental Protection Agency GHGRP reporting program 2013 data titled, “GHG Reporting Program Data Sets 2013 Data Summary Spreadsheets (XLS),” last modified January 23, 2015. The following NAICS codes were used in the calculation: 322130, 322222, 326113, 326121, 326140, 327212, 327213. Accessed on February 24, 2015. http://www.epa.gov/ghgreporting/ghgdata/reportingdatasets.html.

68 Author’s calculation using data from the United States Environmental Protection Agency GHGRP reporting program 2013 data titled, “GHG Reporting Program Data Sets 2013 Data Summary Spreadsheets (XLS),” last modified January 23, 2015. Accessed on February 24, 2015. http://www.epa.gov/ghgreporting/ghgdata/reportingdatasets.html.

69 “Technical Support Document for the Glass Manufacturing Sector: Proposed Rule for Mandatory Reporting of Greenhouse Gases,” United States Environmental Protection Agency Office of Air and Radiation, January 22, 2009, p. 1-2, http://www.epa.gov/ghgreporting/documents/pdf/archived/tsd/TSD%20Glass__EPA%201-22-09.pdf.

70 “Environmental, Health, and Safety Guidelines for Glass Manufacturing,” International Finance Corporation, World Bank Group, April 30, 2007, p. 5-6, accessed February 3, 2015, http://www.ifc.org/wps/wcm/connect/384e20804885574ebc0cfe6a6515bb18/Final%2B-%2BGlass%2BManufacturing.pdf?MOD=AJPERES&id=1323152002618.

71 “Environmental, Health, and Safety Guidelines for Glass Manufacturing,” International Finance Corporation, World Bank Group, April 30, 2007, p. 5-6, accessed February 3, 2015, http://www.ifc.org/wps/wcm/connect/384e20804885574ebc0cfe6a6515bb18/Final%2B-%2BGlass%2BManufacturing.pdf?MOD=AJPERES&id=1323152002618.

72 Owens-Illinois, Inc., FY14 Form 10-K for the period ending December 31, 2014 (filed on February 11, 2015), p. 4-5.

73 RockTenn, Inc., FY14 Form 10-K for the period ending September 30, 2014, (filed November 24, 2014) p. 9,

http://files.shareholder.com/downloads/AMDA-1OZYBO/3934532386x0xS230498-14-117/230498/filing.pdf.

74 “2008 Sector Performance Report,” United States Environmental Protection Agency, Forest Products, p. 58.

75 “Glass Container Manufacturer Agrees to Install Pollution Controls and Pay $1.45 Million to Settle Clean Air Act Violations / Settlement to reduce emissions at facilities in Georgia, Oklahoma, Pennsylvania, and Texas,” United States Environmental Protection Agency, December 3, 2012, accessed February 3, 2015, http://yosemite.epa.gov/opa/admpress.nsf/d0cf6618525a9efb85257359003fb69d/b78d6e5db98c2bf185257ac6005a4368!OpenDocument.

76 “Environmental, Health, and Safety Guidelines for Glass Manufacturing,” International Finance Corporation.

77 Ibid.

78 “2014 National Emissions Inventory information Priority Facility Point Sources”, United States Environmental Protection Agency, last updated January 23, 2015, http://www.epa.gov/ttn/chief/net/2014inventory.html.

79 Author’s calculation based on data from the U.S. Department of Commerce Economics and Statistics Administration, “Pollution Abatement Costs and Expenditures: 2005, Current Industrial Reports,” Tables 5 and 7, 2005, accessed March 27, 2014, http://yosemite.epa.gov/ee/epa/eed.nsf/cbd494e04061784d85256a2b006c1945/b5d7ef9f701ad0d6852573f4005e5ad9/$FILE/2005%20PACE%20Report-REV-7-1-08.pdf.

80 Author’s calculation based on data from the U.S. Department of Commerce Economics and Statistics Administration, “Pollution Abatement Costs and Expenditures: 2005, Current Industrial Reports,” Tables 5 and 7, 2005, accessed March 27, 2014, based on the following NAICS codes:

321920 Wood Container and Pallet Manufacturing

3222 Converted paper product Manufacturing

327213 Glass Container Manufacturing

332431 Metal Can Manufacturing

332439 Other Metal Container Manufacturing


http://www.epa.gov/ghgreporting/ghgdata/reportingdatasets.html.

http://www.epa.gov/ghgreporting/ghgdata/reportingdatasets.html

http://www.epa.gov/ghgreporting/documents/pdf/archived/tsd/TSD%20Glass__EPA%201-22-09.pdf.

http://www.ifc.org/wps/wcm/connect/384e20804885574ebc0cfe6a6515bb18/Final%2B-%2BGlass%2BManufacturing.pdf?MOD=AJPERES&id=1323152002618





http://yosemite.epa.gov/opa/admpress.nsf/d0cf6618525a9efb85257359003fb69d/b78d6e5db98c2bf185257ac6005a4368!OpenDocument

http://yosemite.epa.gov/opa/admpress.nsf/d0cf6618525a9efb85257359003fb69d/b78d6e5db98c2bf185257ac6005a4368!OpenDocument

http://www.epa.gov/ttn/chief/net/2014inventory.html

http://yosemite.epa.gov/ee/epa/eed.nsf/cbd494e04061784d85256a2b006c1945/b5d7ef9f701ad0d6852573f4005e5ad9/$FILE/2005%20PACE%20Report-REV-7-1-08.pdf


326111 Plastics Bag and Pouch Manufacturing

326112 Plastics Packaging Film and Sheet (including Laminated) Manufacturing

326160 Plastics Bottle Manufacturing

331315 Aluminum Sheet, Plate, and Foil Manufacturing

3324 Boiler, Tank, & Shipping Container Manufacturing

32615 & 32614 Polystyrene, urethane, other foam packaging

81 "Boiler MACT Regulations," National Association of Manufacturers, accessed April 26, 2014, http://www.nam.org/Special/Media-Campaign/EPA-Overregulation/Boiler-MACT-Regulations.aspx.

82 RockTenn Co., FY13 Form 10-K for the period ending December 31, 2014, (filed November 18, 2013) p. 8.

83 International Paper, Co., FY14 Form 10-K for the period ending December 31, 2014 (filed February 27, 2015), p. 4-5.

84 “United States Announces Two Major Clean Air Act New Source Review Settlements at 28 Industrial Plants Nationwide,” United States Department of Justice, January 21, 2010, accessed February 10, 2015, http://www.justice.gov/opa/pr/united-states-announces-two-major-clean-air-act-new-source-review-settlements-28-industrial.

85 “Glass Container Manufacturer Agrees to Install Pollution Controls and Pay $1.45 Million to Settle Clean Air Act Violations / Settlement to reduce emissions at facilities in Georgia, Oklahoma, Pennsylvania, and Texas,” United States Environmental Protection Agency.


87 “Glass manufacturing is an energy-intensive industry mainly fueled by natural gas,” Energy Information Administration, August 21, 2013, accessed February 25, 2015, http://www.eia.gov/todayinenergy/detail.cfm?id=12631.

88 Author’s calculation based on data from the United States Census Bureau, Annual Survey of Manufacturers, 2011. The following NAICS codes were used in the calculation: 32192, 3222, 326111, 326112, 32616, 327213, 33243, 3324.

89 Ibid.

90 Owens-Illinois, FY14 Form 10-K for the period ending December 31, 2014 (filed February 11, 2015), p. 3-5.

91 Sonoco Products, FY13 Form 10-K for the period ending December 31, 2013 (filed on March 1, 2014), p.9.

92 International Paper, Co., FY14 Form 10-K for the period ending December 31, 2014 (filed February 27, 2015), p. 3-4.

93 RockTenn Co., FY2013 Annual Report for the period ending December 31, 2013 (filed November 18, 2013), p. 12, http://files.shareholder.com/downloads/AMDA-1OZYBO/0x0x714727/F2CD5D44-DFE9-478F-B4D9-C7578E13EEFB/RKT2013_Complete.pdf.

94 "MeadWestvaco to Invest $285 Million to Construct Biomass Boiler at Covington Mill," PaperAge, last modified June 27, 2011, http://www.paperage.com/2011news/06_28_2011mwv_covington.html.

95Howard Andres, Sabine Brueske, Ridah Sabouni, and Chris Zach, “U.S. Manufacturing Energy Use and Greenhouse Gas Emissions Analysis,” Oak Ridge National Laboratory, November 2012, p. 74.


97 “Water Use and Treatment in the Pulp and Paper Industry,” Sappi Fine Paper North America, eQ Insights, Volume 5/August 2012, p. 3-4.


99 “Watching water. A guide to evaluating corporate risks in a thirsty world,” JPMorgan Global Equity Research, 31 March 2008, p. 4.

100 Cyrus Lotfipour and Véronique Menou, “Executive Summary: Water Upstream and Downstream Impacts from a Well Running Dry,” MSCI ESG Research, September 2013, p. 2.


http://www.nam.org/Special/Media-Campaign/EPA-Overregulation/Boiler-MACT-Regulations.aspx

http://www.justice.gov/opa/pr/united-states-announces-two-major-clean-air-act-new-source-review-settlements-28-industrial

http://www.justice.gov/opa/pr/united-states-announces-two-major-clean-air-act-new-source-review-settlements-28-industrial

http://www.eia.gov/todayinenergy/detail.cfm?id=12631

http://files.shareholder.com/downloads/AMDA-1OZYBO/0x0x714727/F2CD5D44-DFE9-478F-B4D9-C7578E13EEFB/RKT2013_Complete.pdf

http://files.shareholder.com/downloads/AMDA-1OZYBO/0x0x714727/F2CD5D44-DFE9-478F-B4D9-C7578E13EEFB/RKT2013_Complete.pdf

http://www.paperage.com/2011news/06_28_2011mwv_covington.html

101 Author’s calculation based on “Pollution Abatement Costs and Expenditures: 2005, Current Industrial Reports,” U.S. Department of Commerce Economics and Statistics Administration, 2005, accessed March 27, 2014, tables 5 & 7, using the following NAICS codes:












102 “Pollution Abatement Costs and Expenditures: 2005, Current Industrial Reports,” U.S. Department of Commerce Economics and Statistics Administration, 2005, accessed March 27, 2014, tables 5 and 7, http://yosemite.epa.gov/ee/epa/eed.nsf/cbd494e04061784d85256a2b006c1945/b5d7ef9f701ad0d6852573f4005e5ad9/$FILE/2005%20PACE%20Report-REV-7-1-08.pdf.

103 RockTenn Co., FY13 Sustainability Report, p. 24.

104 "California Enacts Emergency Drought Legislation," Legal Planet, last modified March 04, 2014, accessed April 5, 2014, http://legal-planet.org/2014/03/04/california-enacts-emergency-drought-legislation/.


106 Matt Ferner, "These 11 Cities May Completely Run Out Of Water Sooner Than You Think," Huffington Post, December 4, 2014, accessed on March 16, 2015, http://www.huffingtonpost.com/2013/12/04/water-shortage_n_4378418.html.

107 "Will Your City Run Dry?" Growing Blue, May 2013, accessed April 22, 2014, http://growingblue.com/wp-content/uploads/2013/05/GRAPHIC_WaterRisk-Columbia VeoliaWater.pdf.

108 Amcor, Inc., FY12 Sustainability Report, p. 15.

109 Ball Corporation, FY10 and FY11 Sustainability Report, p. 12.

110 Rock Tenn Co., FY13 Sustainability Report, p. 24.

111 "International Paper Co. – Chemicals," PERI, last modified February 13, 2013, accessed May 5, 2014, http://grconnect.com/tox100/2013/index.php?search=yes&sortp=&company1=12388&chemfac=chem&advbasic=bas.

112 "Chemical Profile Regulatory Coverage - Lead Compounds," Good Guide, accessed April 24, 2014, http://scorecard.goodguide.com/chemical-profiles/regulation.tcl?edf_substance_id=LCT000.

113 Author’s calculation based on United States Environmental Protection Agency National Biennial RCRA Hazardous Waste Report, Exhibit 1.4, last updated 1/12/2015, accessed February 5, 2015, http://www.epa.gov/epawaste/inforesources/data/biennialreport/.

114 “Pollution Abatement Costs and Expenditures: 2005, Current Industrial Reports,” U.S. Department of Commerce Economics and Statistics Administration, tables 5 and 7. 2005, accessed March 27, 2014, http://yosemite.epa.gov/ee/epa/eed.nsf/cbd494e04061784d85256a2b006c1945/b5d7ef9f701ad0d6852573f4005e5ad9/$FILE/2005%20PACE%20Report-REV-7-1-08.pdf.

115 Author’s calculation based on the “Pollution Abatement Costs and Expenditures: 2005, Current Industrial Reports,” U.S. Department of Commerce Economics and Statistics Administration, 2005, accessed March 27, 2014, tables 5 and 7. The following NAICS codes were used to calculate waste pollution abatement costs per the PACE report:





http://legal-planet.org/2014/03/04/california-enacts-emergency-drought-legislation/

http://www.huffingtonpost.com/2013/12/04/water-shortage_n_4378418.html.

http://www.huffingtonpost.com/2013/12/04/water-shortage_n_4378418.html.

http://growingblue.com/wp-content/uploads/2013/05/GRAPHIC_WaterRisk-Columbia%20VeoliaWater.pdf

http://growingblue.com/wp-content/uploads/2013/05/GRAPHIC_WaterRisk-Columbia%20VeoliaWater.pdf

http://grconnect.com/tox100/2013/index.php?search=yes&sortp=&company1=12388&chemfac=chem&advbasic=bas

http://scorecard.goodguide.com/chemical-profiles/regulation.tcl?edf_substance_id=LCT000

http://www.epa.gov/epawaste/inforesources/data/biennialreport/

http://yosemite.epa.gov/ee/epa/eed.nsf/cbd494e04061784d85256a2b006c1945/b5d7ef9f701ad0d6852573f4005e5ad9/$FILE/2005%20PACE%20Report-REV-7-1-08.pdf.

http://yosemite.epa.gov/ee/epa/eed.nsf/cbd494e04061784d85256a2b006c1945/b5d7ef9f701ad0d6852573f4005e5ad9/$FILE/2005%20PACE%20Report-REV-7-1-08.pdf.











116 "Biomass," American Forest & Paper Association, 2014, accessed April 23, 2014, http://afandpa.org/issues/biomass.

117 "Glass Facts," Glass Packaging Institute.

118 Sealed Air Corp., FY13 Form 10-K for the period ending December 31, 2013 (filed on February 28, 2014), p. 25.

119 "Food packaging chemicals may be harmful to human health over long term," Science Daily, last modified February 19, 2014, accessed on March 16, 2015, http://www.sciencedaily.com/releases/2014/02/140219205215.htm.

120 “Bisphenol A (BPA): Use in Food Contact Application,” United States Food and Drug Administration, last updated November 2014, accessed February 26, 2015, http://www.fda.gov/NewsEvents/PublicHealthFocus/ucm064437.htm.

121 "Ingredients, Packaging & Labeling," United States Food and Drug Administration, last modified March 24, 2014, accessed May 5, 2014, http://www.fda.gov/food/ingredientspackaginglabeling/default.htm.

122 Wendy Koch, “European Union bans chemical BPA in baby bottles,” USA Today, November 27, 2010, accessed February 26, 2015, http://content.usatoday.com/communities/greenhouse/post/2010/11/europe-ban-bpa/1#.VO-oOPnF98E.


124 "Identification of Putative Steroid Receptor Antagonists in Bottled Water: Combining Bioassays and High-Resolution Mass Spectrometry," PLOS One, last modified August 28, 2013, accessed April 4, 2014, http://www.plosone.org/article/info:doi/10.1371/journal.pone.0072472.


126 "Baby Step Toward Full Ban on BPA in Food Packaging," Breast Cancer Fund, last modified July 11, 2013, http://www.breastcancerfund.org/media/press-releases/fda-bpa-ban-july-2013.html.

127 “Groups Petition FDA to Ban Toxic Chemicals Used in Pizza Boxes and Other Food Packaging,” National Resources Defense Council, October 16, 2014, accessed on February 28, 2015, http://www.nrdc.org/media/2014/141016a.asp.

128 Ball Corp., FY13 Form 10-K for the period ending December 31, 2013 (filed February 24, 2014), p, 10.

129 “France bans BPA,” Food Packaging Forum, January 6, 2015, accessed on February 10, 2015, http://www.foodpackagingforum.org/news/france-bans-bpa.

130 Stephen Ritter, "BPA Is Indispensable For Making Plastics," C&EN, last modified June 6, 2011, https://pubs.acs.org/cen/coverstory/89/8923cover4.html.

131 Sarah Boseley, “Chemicals leaching into food from packaging raise safety concerns,” The Guardian, February 18, 2014, accessed March 3, 2015, http://www.theguardian.com/world/2014/feb/19/chemicals-leaching-food-packaging-safety-bmj.

132 Greif, Inc., FY14 Form 10-K for the period ending October 31, 2014 (filed January 9, 2015), p. 9.

133 Berry Plastics, FY14 Form 10-K for the period ending September 27, 2014 (filed November 24, 2014), p. 7.


http://afandpa.org/issues/biomass

http://www.sciencedaily.com/releases/2014/02/140219205215.htm

http://www.fda.gov/NewsEvents/PublicHealthFocus/ucm064437.htm

http://www.fda.gov/food/ingredientspackaginglabeling/default.htm

http://content.usatoday.com/communities/greenhouse/post/2010/11/europe-ban-bpa/1%23.VO-oOPnF98E

http://content.usatoday.com/communities/greenhouse/post/2010/11/europe-ban-bpa/1%23.VO-oOPnF98E


http://www.plosone.org/article/info:doi/10.1371/journal.pone.0072472


http://www.breastcancerfund.org/media/press-releases/fda-bpa-ban-july-2013.html

http://www.nrdc.org/media/2014/141016a.asp

http://www.foodpackagingforum.org/news/france-bans-bpa

https://pubs.acs.org/cen/coverstory/89/8923cover4.html

134 Jenny Eagle, “Canadian wax supplier denied early exit from Kellogg v. Flexible Packaging Corp. court case,” last updated October 7, 2014, accessed February 26, 2015, http://www.foodproductiondaily.com/Packaging/IGI-denied-exit-from-Kellogg-v.-Flexible-Packaging-Corp.-court-case.

135 "Samuel Adams Recall: Brewer Issues Recall Due To Defective Glass Bottles," The Huffington Post, last modified March 25, 2011, accessed on March 16, 2015, http://www.huffingtonpost.com/2008/04/09/sam-adams-recall-brewer-i_n_95891.html.

136 Bibeka Shrestha, “Boston Beer Gets $20.5M To Settle Recall Claims,” Law360, May 10, 2011, accessed February 10, 2015, http://www.law360.com/articles/244390/boston-beer-gets-20-5m-to-settle-recall-claims.

137 Sealed Air Corp., FY13 Form 10-K for the period ending December 31, 2013 (filed February 28, 2014), p. 23.

138 "Municipal Solid Waste Generation, Recycling, and Disposal in the United States: Facts and Figures for 2012," United States Environmental Protection Agency, last modified February 28, 2014, p. 2-11, accessed February 10, 2015, http://www.epa.gov/solidwaste/nonhaz/municipal/pubs/2012_msw_fs.pdf.

139 "Sustainable Packing ‘Essential Part of Business’,” Environmental Leader, last modified December 30, 2013, accessed on March 16, 2015, http://www.environmentalleader.com/2013/12/30/sustainable-packing-essential-part-of-business/.

140 Conrad MacKerron, "Unfinished Business: The Case for Extended Producer Responsibility for Post-Consumer Packaging," As You Sow, 2012, accessed March 16, 2015, p. 3-4, http://www.asyousow.org/wp-content/uploads/2013/08/REPORT-2012-UnfinishedBusiness_TheCaseforEPR.pdf.

141 “The State of Play on Extended Producer Responsibility (EPR): Opportunities and Challenges,” Organization of Economic Development and Cooperation Global Forum on Environment, June 17-19, 2014, p. 3, accessed February 27, 2015, http://www.oecd.org/environment/waste/Global%20Forum%20Tokyo%20Issues%20Paper%2030-5-2014.pdf.

142 "Packaging Innovations Weekly Wrap - Sonoco Looks to Lightweight Packaging," Packaging Gateway, last modified July 30, 2008, accessed on March 16, 2015, http://www.packaging-gateway.com/news/news6058.html.

143 "Design for Recovery Guidelines: Paper Packaging," Green Blue Institute, 2014, p. 5, accessed May 5, 2014, http://www.sustainablepackaging.org/Uploads/Resources/recycled-content-paper-packaging.pdf.

144 Brian Palmer, "Go West, Garbage Can!" Slate, last modified February 15, 2011, accessed March 16, 2015, http://www.slate.com/articles/health_and_science/the_green_lantern/2011/02/go_west_garbage_can.html.

145 "Municipal Solid Waste Generation, Recycling, and Disposal in the United States: Facts and Figures for 2012.”

146 Ibid.

147 Ibid.

148 “Global packaging market to reach $975 billion by 2018,” Smithers Pira, last updated February 24, 2015, accessed March 2, 2015, http://www.smitherspira.com/news/2013/december/global-packaging-industry-market-growth-to-2018.

149 “Sustainable packaging market to reach $244 billion by 2018,” Smithers Pira, last updated February 24, 2015, accessed March 2, 2015, http://www.smitherspira.com/news/2013/august/sustainable-packaging-trends-to-2018.

150 LEK Consulting, Executive Insights Volume XVI, Volume 27, p.1, accessed on March 2, 2015, http://www.lek.com/sites/default/files/LEK_1627_Sustainable%20Packaging_Web.pdf.

151 “Design for Recovery Guidelines: Paper Packaging,” p. 5.

152 Ibid pg. 6.

153 Ian Andrew, "We can increase recycling rates by changing perception of packaging," Greener Ideal, last modified August 27, 2013, http://www.greenerideal.com/lifestyle/0827-increase-recycling-rates-by-changing-our-perceptions-with-packaging/.

154 Ball Corp., FY13 Form 10-K for the period ending December 31, 2013 (filed February 24, 2014), p. 4-5.

155 “Better Practices, Better Planet 2020 Recovery Goal,” Paper Recycles, 2013, accessed February 22, 2015, http://www.paperrecycles.org/sustainability/better-practices-better-planet-2020-recovery-goal.

156 "RECYCLING FACTS & STATS," Keep America Beautiful, 2014, accessed April 24, 2014, http://www.kab.org/site/PageServer?pagename=recycling_facts_and_stats.


http://www.foodproductiondaily.com/Packaging/IGI-denied-exit-from-Kellogg-v.-Flexible-Packaging-Corp.-court-case

http://www.foodproductiondaily.com/Packaging/IGI-denied-exit-from-Kellogg-v.-Flexible-Packaging-Corp.-court-case

http://www.huffingtonpost.com/2008/04/09/sam-adams-recall-brewer-i_n_95891.html

http://www.huffingtonpost.com/2008/04/09/sam-adams-recall-brewer-i_n_95891.html

http://www.law360.com/articles/244390/boston-beer-gets-20-5m-to-settle-recall-claims

http://www.epa.gov/solidwaste/nonhaz/municipal/pubs/2012_msw_fs.pdf

http://www.environmentalleader.com/2013/12/30/sustainable-packing-essential-part-of-business/

http://www.environmentalleader.com/2013/12/30/sustainable-packing-essential-part-of-business/



http://www.oecd.org/environment/waste/Global%20Forum%20Tokyo%20Issues%20Paper%2030-5-2014.pdf.

http://www.oecd.org/environment/waste/Global%20Forum%20Tokyo%20Issues%20Paper%2030-5-2014.pdf.

http://www.packaging-gateway.com/news/news6058.html

http://www.sustainablepackaging.org/Uploads/Resources/recycled-content-paper-packaging.pdf.

http://www.slate.com/articles/health_and_science/the_green_lantern/2011/02/go_west_garbage_can.html

http://www.smitherspira.com/news/2013/december/global-packaging-industry-market-growth-to-2018

http://www.smitherspira.com/news/2013/december/global-packaging-industry-market-growth-to-2018

http://www.smitherspira.com/news/2013/august/sustainable-packaging-trends-to-2018

http://www.lek.com/sites/default/files/LEK_1627_Sustainable%20Packaging_Web.pdf

http://www.greenerideal.com/lifestyle/0827-increase-recycling-rates-by-changing-our-perceptions-with-packaging/

http://www.greenerideal.com/lifestyle/0827-increase-recycling-rates-by-changing-our-perceptions-with-packaging/

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157 "Compelling Recycling Facts from Earth 911," Earth 911, 2013, accessed May 5, 2014, http://ssi.ucsd.edu/index.php?option=com_content&view=article&id=216:compelling-recycling-facts-from-earth-911&catid=8:newsflash&Itemid=20.

158 "Glass Facts," Glass Packaging Institute, 2014, accessed April 20, 2014, http://www.gpi.org/recycling/glass-recycling-facts.

159 "Recycling Facts," Can Manufacturers Institute, 2014, accessed April 26, 2014, http://cancentral.com/recycling-sustainability/facts.

160 "Recycling Facts & Stats,” Keep America Beautiful, 2014, accessed on March 16, 2015, http://www.kab.org/site/PageServer?pagename=recycling_facts_and_stats.

161 "Glass Facts," Glass Packaging Institute.

162 Crown Holdings, Inc., FY13 Form 10-K for the period ending December 31, 2013 (filed March 3, 2013), p. 15.

163 Conrad MacKerron, "Unfinished Business: The Case for Extended Producer Responsibility for Post-Consumer Packaging.”

164 “Extended Producer Responsibility Cost-Benefit Study,” Recycling Reinvented, March 2014, p. 6, accessed February 27, 2015, http://recycling-reinvented.org/wp-content/uploads/2012/03/Extended-Producer-Responsibility-Cost-Benefit-Study-Summary.pdf.

165 Berry Plastics, FY14 Form 10-K for the period ending September 27, 2014 (filed November 24, 2014), p. 7.

166 Jenni Spinner, "EPA: 51.5% of US packaging gets recycled," Food Production Daily, last updated March 13, 2014, accessed April 25, 2014, http://www.foodproductiondaily.com/Packaging/EPA-51.5-of-US-packaging-gets-recycled.

167 “Sustainability,” Owens-Illinois, Inc., 2015, accessed February 27, 2015, http://www.o-i.com/sustainability/sustainability-goals/.

168 Rock Tenn, Co., FY13 Sustainability Report, p. 34.

169 Ibid., p. 35.

170 “Sustainability,” Owens-Illinois, Inc., 2015, accessed February 27, 2015, http://www.o-i.com/sustainability/sustainability-goals/.

171 “New Recycled Glass Processing Center Opens in Portland,” Owens-Illinois, December 16, 2013, accessed March 2, 2015, http://investors.o-i.com/phoenix.zhtml?c=88324&p=irol-newsArticle&ID=1884952&highlight.

172 “Colgate Commits to Recyclable Packaging,” Environmental Leader, April 17, 2014, accessed on February 24, 2015. http://www.environmentalleader.com/2014/04/17/colgate-commits-to-recyclable-packaging/.

173 Bloomberg Professional services, Supply Chain Analysis Function <SPLC> for NAMPAK equity. Accessed on April 29, 2014.

174 Jim Johnson, “Wal-Mart wants to boost recycled packaging content by 3 billion pounds,” Plastics News, March 12, 2014, accessed February 27, 2015, http://www.plasticsnews.com/article/20140312/NEWS/140319946/wal-mart-wants-to-boost-recycled-packaging-content-by-3-billion-pounds.

175 Ibid.

176 Conrad MacKerron, "Unfinished Business: The Case for Extended Producer Responsibility for Post-Consumer Packaging.”

177 Hannah Ellsbury, “Two Dozen Bottled Water-free National Parks and More to Come,” Ban the Bottle, March 26, 2014, accessed on March 16, 2015, http://www.banthebottle.net/articles/two-dozen-bottled-water-free-national-parks-and-more-to-come/.

178 “Concord, Mass., the first US city to ban sale of plastic water bottles,” NBC News, September 7, 2012, accessed on March 16, 2015, http://usnews.nbcnews.com/_news/2012/09/07/13710037-concord-mass-the-first-us-city-to-ban-sale-of-plastic-water-bottles?lite.

179 Crown Holdings, Inc., FY2013 Form 10-K for the period ending December 31, 2013 (filed on March 3, 2013), p. 15.

180 “Who We Are,” Bioplastic Feedstock Alliance,” 2015, accessed on March 16, 2015, http://www.bioplasticfeedstockalliance.org/who-we-are/.

181 “PepsiCo Develops World's First 100 Percent Plant-Based, Renewably Sourced PET Bottle,”


http://ssi.ucsd.edu/index.php?option=com_content&view=article&id=216:compelling-recycling-facts-from-earth-911&catid=8:newsflash&Itemid=20

http://ssi.ucsd.edu/index.php?option=com_content&view=article&id=216:compelling-recycling-facts-from-earth-911&catid=8:newsflash&Itemid=20

http://www.gpi.org/recycling/glass-recycling-facts

http://www.gpi.org/recycling/glass-recycling-facts

http://cancentral.com/recycling-sustainability/facts

http://cancentral.com/recycling-sustainability/facts

http://www.kab.org/site/PageServer?pagename=recycling_facts_and_stats

http://recycling-reinvented.org/wp-content/uploads/2012/03/Extended-Producer-Responsibility-Cost-Benefit-Study-Summary.pdf

http://recycling-reinvented.org/wp-content/uploads/2012/03/Extended-Producer-Responsibility-Cost-Benefit-Study-Summary.pdf

http://www.foodproductiondaily.com/Packaging/EPA-51.5-of-US-packaging-gets-recycled

http://investors.o-i.com/phoenix.zhtml?c=88324&p=irol-newsArticle&ID=1884952&highlight

http://www.environmentalleader.com/2014/04/17/colgate-commits-to-recyclable-packaging/

http://www.plasticsnews.com/article/20140312/NEWS/140319946/wal-mart-wants-to-boost-recycled-packaging-content-by-3-billion-pounds

http://www.plasticsnews.com/article/20140312/NEWS/140319946/wal-mart-wants-to-boost-recycled-packaging-content-by-3-billion-pounds

http://www.banthebottle.net/articles/two-dozen-bottled-water-free-national-parks-and-more-to-come/

http://www.banthebottle.net/articles/two-dozen-bottled-water-free-national-parks-and-more-to-come/

http://usnews.nbcnews.com/_news/2012/09/07/13710037-concord-mass-the-first-us-city-to-ban-sale-of-plastic-water-bottles?lite

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182 “Infographic: Our 2020 Environmental Goals,” The Coca-Cola Company, 2015. Accessed on February 10, 2015, http://www.coca-colacompany.com/stories/our-2020-environment-goals-infographic.

183 “Sustainable Packaging Market to Hit $244 Billion by 2018,” Environmental Leader, February 17, 2014, accessed on March 16, 2015, http://www.environmentalleader.com/2014/02/17/sustainable-packaging-market-to-hit-244-billion-by-2018/.

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185 “Sustainable Packaging,” Coca-Cola Company, last updated November 7, 2012, accessed on March 16, 2015, http://www.coca-colacompany.com/sustainabilityreport/world/sustainable-packaging.html#section-managing-packaging-to-manage-risk.

186 Sealed Air Corp., FY2013 Form 10-K for the period ending December 31, 2013 (filed on February 28, 2014), p. 12.

187 “Surprising Insights from Environmental Screenings,” MI Sloan Management Review, October 16, 2013, accessed on March 16, 2015, http://sloanreview.mit.edu/article/surprising-insights-from-environmental-screenings/.

188 “Homepage,” Programme for the Endorsement of Forest Certification, 2015, accessed on March 16, 2015, http://www.pefc.org/.

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190 “Mission and Vision,” Forest Stewardship Council, 2014, https://us.fsc.org/mission-and-vision.187.htm.

191 “Standard Overview,” Aluminum Stewardship Council, 2015. Accessed on February 10, 2015. http://aluminium-stewardship.org/asi-standard/standard-overview/.

192“Forestry & Timber,” Oekom Research Position Paper, November 2010. p. 1-5.

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194 “Indigenous People & Social Issues,” Programme for the Endorsement of Forest Certification.

195 RockTenn, Inc., FY2012 Sustainability Report, p. 29.

196 “Forest Certification.” PERFC. Accessed January 10th, 2015. http://www.pefc.org/certification-services/forest

197 “Tetra Pak research shows growing demand for renewable materials and environmental labelling,” Tetra Pak, September 16, 2013. Accessed on March 2, 2015. http://www.tetrapak.com/about-tetra-pak/press-room/news/growing-demand-renewable-materials.

198 McDonald’s, Inc., 2012-2013 Responsibility & Sustainability Report. P. 39-41. Accessed February 5, 2015. http://www.aboutmcdonalds.com/content/dam/AboutMcDonalds/2.0/pdfs/2012_2013_csr_report.pdf

199 Data obtained from Bloomberg Professional services using the <SPLC> function for McDonald’s Corporation. Accessed on March 2, 2015.

200 American Forest & Paper Association, 2014 Sustainability Report, appendix two, p 27, accessed March 16, 2015, http://www.afandpa.org/docs/default-source/one-pagers/2014_sustainabilityreport_final.pdf?sfvrsn=0.

201 RockTenn, Inc., FY2012 Sustainability Report, p. 29.

202 “Tetra Pak Closer to Sustainability Goals,” Environmental Leader, March 11, 2014, accessed on March 16, 2015, http://www.environmentalleader.com/2014/03/11/tetra-pak-closer-to-sustainability-goals/.

203 “ASI Overview,” Aluminum Stewardship Initiative, 2015. Accessed on February 13, 2015. http://aluminium-stewardship.org/about-asi/asi-overview/.

204 “Aluminium and Sustainability,” Aluminium Stewardship Initiative, 2015. Accessed on February 13, 2015. http://aluminium-stewardship.org/about-asi/aluminium-and-sustainability/#biodiversity.

205 “ASI Overview,” Aluminum Stewardship Initiative, 2015. Accessed on February 13, 2015. http://aluminium-stewardship.org/about-asi/asi-overview/.

206 Ball Corporation, FY2014 Sustainability Report, p. 10-12.


http://www.pepsico.com/PressRelease/PepsiCo-Develops-Worlds-First-100-Percent-Plant-Based-Renewably-Sourced-PET-Bott03152011.html

http://www.pepsico.com/PressRelease/PepsiCo-Develops-Worlds-First-100-Percent-Plant-Based-Renewably-Sourced-PET-Bott03152011.html

http://www.coca-colacompany.com/stories/our-2020-environment-goals-infographic

http://www.environmentalleader.com/2014/02/17/sustainable-packaging-market-to-hit-244-billion-by-2018/

http://www.environmentalleader.com/2014/02/17/sustainable-packaging-market-to-hit-244-billion-by-2018/

http://www.apple.com/environment/our-footprint/

http://www.coca-colacompany.com/sustainabilityreport/world/sustainable-packaging.html%23section-managing-packaging-to-manage-risk.

http://www.coca-colacompany.com/sustainabilityreport/world/sustainable-packaging.html%23section-managing-packaging-to-manage-risk.

http://sloanreview.mit.edu/article/surprising-insights-from-environmental-screenings/

http://www.pefc.org/

http://www.sfiprogram.org/about-us/basics-of-sfi/


http://aluminium-stewardship.org/asi-standard/standard-overview/

http://aluminium-stewardship.org/asi-standard/standard-overview/

http://www.fao.org/forestry/sfm/85292/en/

http://www.pefc.org/certification-services/forest

http://www.aboutmcdonalds.com/content/dam/AboutMcDonalds/2.0/pdfs/2012_2013_csr_report.pdf

http://www.afandpa.org/docs/default-source/one-pagers/2014_sustainabilityreport_final.pdf?sfvrsn=0

http://www.environmentalleader.com/2014/03/11/tetra-pak-closer-to-sustainability-goals/

http://aluminium-stewardship.org/about-asi/aluminium-and-sustainability/%23biodiversity.



207 “Tin and Tin Alloys,” Key to Metals, 2010. Accessed on March 2, 2015. http://www.keytometals.com/Article26.htm.

208 “Conflict Minerals and the Democratic Republic of Congo: Responsible Action in Supply Chains, Government

Engagement and Capacity Building,” BSR, May 2010. Accessed September 11, 2014.

209 Ball Corporation, FY2013 Form 10-K for the period ending December 31, 2013. Filed on February 24, 2014, p.5-7.

210 Ball Corporation, FY2013 Sustainability Report, p. 10.


http://www.keytometals.com/Article26.htm

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APPENDIX I: Five Representative Containers & Packaging CompaniesIV

COMPANY NAME (TICKER SYMBOL)

International Paper Co. (IP)

RockTenn (RKT)

Crown Holdings Inc. (CCK)

Sealed Air Corp. (SEE)

Owens-Illinois (OI)

IV This list includes five companies representative of the Containers & Packaging industry and its activities. This includes only companies for which the Containers & Packaging industry is the primary industry, companies that are U.S.-listed but are not primarily traded over the counter, and for which at least 20 percent of revenue is generated by activities in this industry, according to the latest information available on Bloomberg Professional Services. Retrieved on March 20, 2015.

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APPENDIX IIA: Evidence for Sustainability Disclosure Topics

Sustainability Disclosure Topics

EVIDENCE OF INTERESTEVIDENCE OF

FINANCIAL IMPACTFORWARD-LOOKING IMPACT

HM (1-100)

IWGsEI

Revenues & Cost

Asset & Liabilities

Cost of Capital

EFIProbability & Magnitude

Exter- nalities

FLI% Priority

Greenhouse Gas Emissions 67* 87/1 1t High • • High • • Yes

Air Quality 67* 78/2 6t Medium • • Medium • Yes

Energy Management 58* 87/1 1t High • • High • Yes

Water Management 50 83 5 Medium • • Medium • Yes

Waste Management 75* 78/2 6t High • • Medium No

Product Safety 89* 91 4 High • • • High • • Yes

Product Lifecycle Management 94* 70 2 High • • • High • • Yes

Materials Sourcing 33 83 3 Medium • • • Medium • Yes

HM: Heat Map, a score out of 100 indicating the relative importance of the topic among SASB’s initial list of 43 generic sustainability issues. Asterisks indicate “top issues.” The score is based on the frequency of relevant keywords in documents (i.e., 10-Ks, 20-Fs, shareholder resolutions, legal news, news articles, and corporate sustainability reports) that are available on the Bloomberg terminal for the industry’s publicly listed companies. Issues for which keyword frequency is in the top quartile are “top issues.”

IWGs: SASB Industry Working Groups

%: The percentage of IWG participants that found the disclosure topic to likely constitute material information for companies in the industry. (-) denotes that the issue was added after the IWG was convened.

Priority: Average ranking of the issue in terms of importance. One denotes the most important issue. (-) denotes that the issue was added after the IWG was convened.

EI: Evidence of Interest, a subjective assessment based on quantitative and qualitative findings.

EFI: Evidence of Financial Impact, a subjective assessment based on quantitative and qualitative findings.

FLI: Forward Looking Impact, a subjective assessment on the presence of a material forward-looking impact.

/1 : During the IWG phase, the topic was called “Waste Management” and its scope included both recycling of hazardous and non-hazardous waste. /2 : During the IWG phase, the topic was called “Air Emissions & Waste Management” and its scope included angles from both disclosure topics.

iiiI N D U S T RY B R I E F | C O N TA I N E R S & PA C K A G I N G

APPENDIX IIB: Evidence of Financial Impact for Sustainability Disclosure Topics

Evidence of

Financial Impact

REVENUE & EXPENSES ASSETS & LIABILITIES RISK PROFILE

Revenue Operating Expenses Non-operating Expenses Assets Liabilities

Cost of Capital

Industry Divestment

RiskMarket Share New Markets Pricing Power

Cost of Revenue

R&D CapExExtra-

ordinary Expenses

Tangible Assets

Intangible Assets

Contingent Liabilities & Provisions

Pension & Other

Liabilities

Greenhouse Gas Emissions • • •

•

Air Quality • • • •

Energy Management • • •

Water Management • • • • •

Waste Management • • • • •

Product Safety • • • • • •

Product Lifecycle Management • • • • • • • • •

Materials Sourcing • • • • • • •

HIGH IMPACTMEDIUM IMPACT

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APPENDIX III: Sustainability Accounting Metrics | Containers & Packaging

TOPIC ACCOUNTING METRIC CATEGORYUNIT OF MEASURE

CODE


Gross global Scope 1 emissions, percentage covered under a regulatory program

Quantitative Metric tons CO2e, Percentage (%)

RT0204-01

Description of long-term and short-term strategy or plan to manage Scope 1 emissions, including emission-reduction targets and an analysis of performance against those targets

Discussion and Analysis

n/a RT0204-02

Air QualityAir emissions for the following pollutants: NOx (excluding N2O), SOx, particulate matter (PM), and volatile organic compounds (VOCs)

Quantitative Metric tons (t) RT0204-03

Energy Management

Total energy consumed, percentage grid electricity, percentage renewable

Quantitative Gigajoules (GJ), Percentage (%)

RT0204-04

Water Management

(1) Total water withdrawn, percentage in regions with High or Extremely High Baseline Water Stress, (2) percentage recycled water usage.

Quantitative Cubic Meters (m3), Percentage (%)

RT0204-05

Number of incidents of non-compliance with water quality permits, standards, and regulations

Quantitative Number RT0204-06

Waste Management

Amount of total waste from manufacturing, percentage hazardous, percentage recycled

Quantitative Metric tons (t), Percentage (%)

RT0204-07

Product Safety

Number of recalls and total units recalled* Quantitative Number RT0204-08

Discussion of process to identify and manage emerging materials and chemicals of concern


n/a RT0204-09


Percentage of raw materials from (1) recycled content (2) renewable resources

Quantitative Percentage (%) by weight

RT0204-10

Revenue from products that are reusable, recyclable, and/or compostable

Quantitative U.S. Dollars ($) RT0204-11

Description of strategies to reduce the environmental impact of packaging throughout its lifecycle


n/a RT0204-12

Materials Sourcing

Total wood fiber purchased, percentage from certified sources

Quantitative Metric tons (t), Percentage (%) by weight

RT0204-13

Total aluminum purchased, percentage from certified sources

Quantitative Metric tons (t), Percentage (%) by weight

RT0204-14

*Note to RT0204-08 –The registrant shall discuss notable recalls, such as those that affected a significant number of products, a significant number of units of one product, or those related to serious injury or fatality

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APPENDIX IV: Analysis of SEC Disclosures | CONTAINERS & PACKAGING

The following graph demonstrates an aggregate assessment of how representative U.S.-listed Containers & Packaging companies are currently reporting on sustainability topics in their annual SEC filings.

Containers & Packaging


Air Quality

Energy Management

Water Management

Waste Management

Product Safety


Materials Sourcing

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

TYPE OF DISCLOSURE ON SUSTAINABILITY TOPICS

NO DISCLOSURE BOILERPLATE INDUSTRY-SPECIF IC METRICS

87%/1

78%/2

87%/1

83%

78%/2

91%

70%

83%

IWG Feedback*

*Percentage of IWG participants that agreed topic was likely to constitute material information for companies in the industry.

/1 During the IWG phase, the topic was called “GHG Emissions & Energy Management” and its scope included angles from both disclosure topics./2 During the IWG phase, the topic was called “Air Emissions & Waste Management” and its scope included angles from both disclosure topics.

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