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Skip to main contentIn corporate land, the front line of consumer environmentalism is packaging: 22 billion packages, mostly retail and commercial, were mailed in the US last year. Most of those packages—hopefully—included padding to protect their contents, often in the form of those little air-filled plastic pillows, which most recipients toss in the trash.
That is about to change. This year you will increasingly see fewer plastic pillows inside many shipped packages, as one of the nation’s largest retailers shifts to paper pillows. This will remove nearly 15 billion plastic pillows from the shipping ecosystem annually. “This is a pretty major operation,” says John Long, North America retail sector leader at Korn Ferry. Other manufacturers, wholesalers, distribution centers, and retailers are making similar upgrades, says Kate Shattuck, co-leader of the Impact Investing practice at Korn Ferry—though often quietly.
“Companies with fewer zeros aren’t going to garner headlines, but this is happening all over,” she says. Still, switching from plastic to paper is a risk for companies, which are already scrambling to expand their volume, with some projections expecting US packages to jump by 25% to 30% in the next four years, to 30 billion-plus. And any such change can disrupt factory lines and slow the movement of goods. “Slowing down the line costs a ton of money,” says Jorge Gomar, senior client partner in the Global Industrial Market practice at Korn Ferry. The differentiator, he explains, is the need to develop new technology; for decades, many companies have chosen machines that dispensed plastic.
Making the leap from plastic to paper pillows is more complicated than one would think, and requires the building of a new supply chain. Paper is a mix of softwood and hardwood, and trees for the latter can take two decades or more to mature. “It’s a very complex supply chain,” says Gomar. Twenty years ago, when environmentalists foresaw the coming surge in retail shipping, there wasn’t enough paper available.
Paper supply chains are doubly complex (and confusing) because recycling sits at both the beginning and the terminus of the supply chain. On one end, firms can use recycled materials to make the paper; on the other, paper products can be recycled. Two decades ago, options for paper packaging were insufficient at both ends of the chain. Recycling at the time was very expensive, says Gomar. These days, commercial recyclers can supply more of the chain.
For companies, these shifts to more environmentally friendly packaging are also a way to commit to firms' standards as citizens of a broader ecosystem and planet, which ultimately strengthens ties with stakeholders, employees, and customers alike. "They are living out their values," says Sidney Cooke, senior client partner in the CEO succession and coaching practices at Korn Ferry.
What's more, the uneasy marketplace is providing a post-pandemic catalyst for change. “There’s climate change, droughts, fires, and supply-chain disruptions—it’s easier said than done,” says Gomar. Wood prices tripled, then quintupled; they’re now double what they were before the pandemic. For most retailers and shippers, the economy is either soft or complex (or both), leading firms to pay close attention to details like packaging. “Smart organizations are looking for any advantage right now,” says Shattuck—ranging from customer approval to sustainability. “Everyone thinks ESG is dead, and it’s not.”
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