Steps to cut plastics in products and packaging

Practical steps to turn taxes on plastic into circular design leadership

A promise is a powerful thing. Four years ago, I made a promise to my daughters to do something about the plastic cluttering the world’s oceans. (Watch this SAP TV video to learn more.)

Since then, I’ve dedicated my career at SAP to helping solve the overuse of plastics in products and packaging. I have worked with industry, non-governmental organizations and regulatory stakeholders to address this issue.

There’s a lot to do. The “plastics problem” is complex, multi-faceted and global.

A staggering 8 million tons of plastic enter the ocean every year.¹ Widespread reliance on single-use materials during the pandemic didn’t help. Recycling is essential but currently insufficient. Globally, only 9% of plastic materials produced each year are recycled.² What’s more, scientists have counted 1.9 million pieces of microplastics per square meter of ocean.³ These are plastics in the form of synthetic fibers from clothing and fragments from larger objects.

Shockingly, people are ingesting almost a credit card's worth of these microplastics every week through what they eat and drink.⁴ Plastics are building up in your body, mine and in our children’s, too!

So, yes, I'm working hard to deliver on my promise. Which means I think every day about global, local and circular solutions that cover the whole supply chain or design cycle.

And it’s clear that companies in every sector must be part of this solution through committed action. Especially the world’s biggest producers and related businesses.

Governments and other stakeholder groups have a critical role to play, too. Whether it is through regulation or building user-friendly recycling facilities, they need to act.

Focused on circular solutions

To drive systemic change, the world needs to solve how industrial businesses use oil and chemicals to produce plastics. We must also ask:

• How are producers and consumer-facing businesses using plastics in product design and packaging?
• How do logistics companies transport plastics to retailers?
• Are people incentivized to recycle plastics after they’ve consumed the contents?

Reducing plastic usage and developing leading circular solutions is a goal that SAP has in lockstep with Accenture. It’s one aspect of our longstanding partnership with a deep emphasis on sustainability. And it’s a key reason we worked together to co-innovate, co-design and co-develop the SAP Responsible Design and Production (RDP) solution.

Our companies understand that businesses are grappling with a number of converging and complex issues, such as the energy crisis, market fluctuations and changing stakeholder demands. Some would say these are more urgent than the plastics issue.

I’d argue they are related. Both are parts of the bigger dilemma that can be addressed by improving circularity of materials. This, in turn, will help to lower dependence in complex supply chains with inherent challenges of energy consumption and disruption. Which will lead to lower costs and that is better for people overall while helping the planet.

There’s no time to waste. Luckily, some countries are taking important steps with new plastic taxation laws.

Regulating plastic usage

As I mentioned, governments are stepping up with regulations that affect how businesses design and produce products. It started this year with the UK Plastic Packaging Tax. Spain will apply its own version of this law in early 2023.

These laws aim to:

• Bring down the use of virgin plastic materials.
• Tax the use of individual polymers in plastic materials.
• Reinvest the collected funds into solutions (e.g., building recycling centers).

The most promising signal of all is the upcoming UN Plastics Treaty. The treaty is due for release by the end of 2024. This legally binding agreement was signed by 175 nations at the last UN meeting in Nairobi, Africa. It should set the framework for a truly global solution, led by policy.

How will this treaty play into solutions for the Global South versus the Global North? I think of it as one strategy to achieve circularity with two different global personas. SAP’s Responsible Design and Production solution can act as a bridge to address both sides.

In the Global South, including India and Africa, there is a huge social aspect to removing plastics. According to a World Economic Forum survey, 4.9 billion people don’t have access to proper waste management. Plus, waste picking (sorting plastics and other materials for resale) is a gainful job opportunity.

In response, governments will need to develop policy measures and inclusive interventions, such as waste and recycling infrastructure, to support an emerging system. Data from our product can support these efforts.

At the same time, businesses in the Global North can work to improve recycling while developing new and innovative technological solutions. The SAP RDP product helps businesses understand what materials are being used where in products/services and day-to-day operations. This becomes the basis for circular product redesign.

Practical steps to start today

I know it’s difficult for businesses to respond to plastic tax regulations. Reducing plastic waste in the supply chain is an even bigger challenge than taxation.

I believe it helps to take a practical approach. One step leads to the next and then we start the journey toward innovation and true leadership.

That’s where the Accenture and SAP sustainability partnership makes an impactful difference. We act in unison to help clients efficiently and sustainably tackle a complex, global topic.

Together, we’re engaging with businesses and supply chains globally. We’re bringing the best of our thought leadership and working with stakeholder groups across the Global South and Global North. And we’re executing locally in individual markets.

It all comes down to technology—and a healthy dose of human ingenuity.

Fifty years ago, SAP invented the building blocks of enterprise resource planning (ERP). SAP formalized these processes to support businesses in tracking things like product costs and materials used.

Thanks to digital technology and unlimited access to data, we can now apply an ERP approach to the plastic challenge. This allows us to look at the atomic-level details of every polymer used when designing, developing and transporting a single product.

To reduce plastics in the supply chain, I advise my clients to do the following:

#1– Get your data in order and fulfill obligations accurately. First, businesses need to get a grip on what materials they’re using. At any given time, they should be able to know what materials are in which products and in which market. I call this “taking stock.” It’s a fundamental part of SAP’s Responsible Design and Production solution. Data lets businesses help ensure materiality across the products they’re producing.

Standardization is a big part of this process, too. With the baseline data, your business still needs to interpret the complex world of 450+ extended producer responsibility (EPR) schemes around the world. Fortunately, our SAP product is regularly updated to keep pace with evolving EPR laws.

Overall, the insights from this first step provide deep transparency. This lets your business pay the right amount of taxes based on what it actually produces (instead of an average-based industry approach calculated by a third-party).

#2– Seize opportunities to optimize materials. This step is exciting because your business can start innovating with product redesign.

With product data in your ERP system, you can pinpoint where and how to get rid of plastic waste from your product portfolio. I suggest starting with one product category, then scaling the solution across the portfolio.

To support this step, SAP and Accenture are working to add new design capabilities into the Responsible Design and Production solution. For example, businesses will be able to model existing products and packaging; better understand embedded carbon of products and materials; and appraise different recyclability of materials in different markets and measure improvement.

Ultimately, the goal is to transform your product portfolio into one that is circular by design. Truly innovative businesses will develop solutions that deliver the lowest carbon products, with the most recyclable materials and the highest level of supply chain assurance. All while maintaining product standards and minimizing chemical use.

#3—Collaborate across the ecosystem. The third step can be done at the same time as the first two. It involves partnering with other like-minded businesses (both within your sector and beyond) to take steps collectively. Forming an ecosystem of producers, providers and resellers, for instance, will make it easier to share information and improve faster.

Taking a “group effort” mentality makes it easier to address policy intervention and business execution in a harmonious cycle where members operate in each region.

By following these steps, your company can take meaningful action to be part of the plastics solution. To fulfill the promise, it will take a concerted effort across business, government and society.

Please contact me at SAP or Wesley Spindler at Accenture to discuss how your company can start rethinking its approach to plastic. We can help you contribute to and benefit from more sustainable production, packaging, transport and consumption.