When we launched our new sustainable packaging innovation fund a few weeks ago, we knew the time had come for a fresh approach. Packaging is a huge sector that faces many challenges, including reducing greenhouse gas emissions and waste and enabling greater circularity. We need to look in new directions for solutions to these problems.
As the fund ramps up its hunt for the most exciting young companies in this field, we’re pleased to share the first of a three-part interview with Neil Cameron and Fredric Petit, the fund’s leaders. These packaging experts are both passionate about sustainability and helping the industry transform.
Part one addresses Neil and Fredric’s interest in packaging, the biggest current opportunities, and what successful transformation looks like.
What initially sparked your interest in sustainable packaging?
Fredric: I was sustainability director for a large multinational for many years and realized that corporates have a responsibility to reach all stakeholders. Companies have a lot of innovation, power and competences and should leverage them to come up with more sustainable solutions. My passion is sustainability as a business growth driver because the world faces serious challenges, and corporates have a role to play.
Packaging is a huge issue and solutions are available, but need to be supported and scaled. Today, many large corporates have the willingness to change, but not the capacity or the competence. They need startups to seed their next wave of growth. For us, it’s very exciting to be that connective tissue between the startup and the conglomerate, building bridges to drive more sustainable packaging solutions. That’s what gets me out of bed every day.
Neil: For the first 10 or 12 years of my time at Emerald, packaging was kind of a curiosity, rather than a focus area. Over the last five years, it has grown in importance, so much so that we now have a fund to tackle it. There are a few reasons for this. There were regulatory signals from Europe earlier, but around 2017-18 we saw major change in the way waste plastic is handled, when China forbade import of foreign garbage unless the bales were 99% pure and clean. Certain classes of plastics had to be pre-approved, which in practice meant they said no to everything. All of a sudden, there was nowhere for waste plastic to go, which changed the behavior of the waste handlers, which in turn changed the behavior of the plastic packaging producers and users.
The second massive change came as producers and consumer-facing brand owners made commitments to reduce their packaging footprint. In parallel, users around the world said, “we’re not interested in single-use plastic anymore. We don’t want it—we don’t want plastic bags; we don’t want straws.” All of that created a huge pull for innovation into a space where we have big problems that will require big solutions and will deliver big rewards.
As the fund takes shape, what are you most excited about right now?
Fredric: I’m most excited that the industry has shifted from talking about the issue towards acting upon the issue, due to pressure from regulators, shareholders, consumers and NGOs. That has created momentum for corporates to step up to new forms of innovation, because they need to know what solutions are out there. In tandem, this creates a huge opportunity for startups to know that there is interest and capital available to grow their solutions. The willingness of the industry to adopt new solutions has never been larger than it is today.
Neil: The primary rule of packaging is to contain, protect and inform—that is, packaging has to contain whatever it’s supposed to contain, it has to protect whatever you’re buying, and it has to tell you about what’s inside. If it doesn’t do that, then it’s not packaging. But if it only does that, it’s a hugely missed opportunity. The meteoric growth in innovation that turns packages into more than just something that contains, protects and informs is significant. The appetite for those technologies has grown very strongly, and that’s extremely exciting right now.
If you want some numbers to speak to the momentum, think about PET. This is the plastic that gets used in water bottles, among many other things. The total amount of PET produced per year is extremely high—something in the area of 80 million metric tons. The actual availability of mechanically recycled PET was about half a million metric tons as of 2019. By 2030, we can project that will hit about 1 million metric tons, including the chemically recycled stuff. But if you look at the big groups, like PepsiCo, Coca-Cola, Nestle and Danone, who produce bottled water, they’ve made commitments to use more than 3 million metric tons of recycled material by 2030. This means there’s a huge gap. We have no idea today who’s going to be providing all that missing recycled PET. And that gap—that pull—is what creates the opportunity for the technical push, for entrepreneurs to say, “I can fix that problem with technical solutions to bottlenecks around the value circle—and I expect to be rewarded for it.”
What would you say successful transformation looks like for the industry at this point?
Fredric: On the highest level, it is related to climate change and reducing greenhouse gas emissions. That’s not only a story of improving packaging, but also reducing waste. So that’s one success. The second success is increasing the amount of collected, sorted and recycled packaging—not only for plastics, but also for glass, aluminum and paper. You don’t want these things to end up in nature or landfill or become litter. And the third element would be to reduce the use of fossil resources in creating packaging.
Neil: We measure success on two axes. On one axis, we have financial return, where success means adoption at a price point which delivers profit. That’s obviously a key one for us as venture capitalists, but that in and of itself is not sufficient. We also require impact. And impact can be measured in two ways: in CO2 abatement and in waste avoidance. Those are the two ways in which our fund will have primary impact, not only financial and enabling adoption of technology, but also measurably reducing the CO2 and waste load on our planet.
Join us on parts 2 & 3 of these interviews, as Neil and Fredric talk about the core drivers of change in packaging, the technologies that they see as making a big difference, and what successful transformation really looks like.