Examination of Witnesses (Questions 480-499)
Ms Jane Bickerstaffe, Mr Stephen Carter, Dr Robert Chilton and Dr Forbes McDougall
4 MARCH 2008
Q480 Baroness Platt of Writtle: But, of course, with aluminium, which is infinitely recyclable, certainly our local authority does it on a magnetic basis, the steel from the aluminium.
Dr Chilton: You can get it out if you have got the technology.
Mr Carter: In terms of material choice, as a packaging technologist there is one golden rule and that is: choose a material that does the job. Certain materials are not suitable for packaging certain kinds of products and in many cases we have quite a limited number of optimal choices of material. It would be crazy to choose the wrong material because it was more recyclable.
Q481 Chairman: But, Mr Carter, that may be, with respect, okay for your industry and perhaps I have to ask the others, but where there are global supply chains, where you do not control the packaging of some of the items that go into the ultimate box, as it were, that must be a problem. The other one is, to what extent are you sensitive to consumer demands? Does the "40 to 30" on the washing machine, which is something that some of us have stumbled over and now know it saves us money, come from you or does it come from the consumer, do you think? Where do these sorts of pressures come from, the one you cannot control and the other who is setting the agenda?
Mr Carter: Ultimately we are a consumer-led business, so we will make products for the consumer to meet their wishes. One of the challenges we have, and I think it will be shared by my colleague from Proctor & Gamble, is that we need to educate the consumer in some ways because the general perception of packaging does not always match the technical reality.
Q482 Lord May of Oxford: In some ways this is a comment. The notion that being a consumer industry means you serve the wishes of the consumer is a bit tendentious, because you are trying to shape the consumer's wishes more often than not. SUVs would be a perfect example. Nobody wanted SUVs; they were shaped to evade the legislation on better fuel efficiency in the States, but the industry shaped consumer demand for a ludicrous car. What do you say to that?
Mr Carter: I agree that there is a risk that that can happen.
Q483 Lord May of Oxford: Risk of that happening? It is part of the business.
Mr Carter: Yes, but not in every instance in every business is that the case. Certainly the "Turn to 30" campaign that Proctor & Gamble have introduced is both designed by the consumer and meets Proctor & Gamble's sustainability objectives, just like Unilever's concentration of laundry detergent. Halving the size almost halves the amount of packaging, takes lorries off the road, and again there is a consumer desire for that to happen but also it meets our sustainability objectives because we want to reduce our footprint.
Q484 Chairman: Just on this point, the laudable "40 to 30" in my mind is somewhat undermined by the fact that the little cubes of detergent that you then put in the washing come in packaging which seems to me horrendously overdone. I just wonder if my "40 to 30" move is merely compensating for the cost of the packaging that the damn bits of soap powder come in.
Dr McDougall: I will respond to that. Again, with this lifecycle approach, we took what we used to call the fluffy powders, which was when our laundry boxes were this size and concentrated them, and what we found across the industry was that consumers do not dose according to how dirty the clothes are, so that drove the move to the tablets. The reason the tablets are wrapped is to prevent, when you open your box, moisture getting into the tablet and breaking it down. The data that we have shows that the very tiny amount of foil wrap that goes round it is still beneficial when you compare it to the wastage that you would have with uncontrolled powder dosing.
Q485 Chairman: And the cardboard box?
Dr McDougall: The cardboard is recycled cardboard.
Q486 Chairman: If you can get the consumer to recycle it.
Dr McDougall: No, no. I mean a lot of the cardboard in the UK market contains a high percentage of recycled material.
Chairman: Sorry—that is one of my hobby-horses!
Q487 Lord Haskel: Having said all of this and having learnt what you have told us about CAD engineering and lifecycle assessment, how much weight does this carry in the final decision about whether you are going to market a product or not?
Dr McDougall: It is definitely involved in the decision. What you often see with this element of design is that certainly the computer-aided design helps optimise the amount of material that goes into that packaging or the product. If you optimise that you optimise the cost, so you are designing out excess material, and the same for the lifecycle: you understand where to focus. Although we are a big company we have limited resources on where to focus energy and R&D money, so these studies allow us to identify where we should put the focus or energy.
Q488 Lord Haskel: There are many other aspects that go into the final decision. How much weight does eliminating waste carry when the company makes the final decision about whether it is going to make and market a product or not?
Dr McDougall: With the rise of sustainability up the agenda globally, waste is higher up the agenda in the big multinational companies now than it has ever been.
Q489 Lord May of Oxford: I should begin narcissistically by declaring my interest as a Fellow of the Institute of Chemical Engineers. They have produced a list of ways to assess the amount of material used as part of their sustainability guides, things like what are the total raw materials used per kilogram of end product or what is the fraction of raw materials recycled within a company and so on? I wonder how widely these sorts of things are used in Unilever, Proctor & Gamble and more generally. If they are not used, why not? If they are used, what are the typical figures which emerge?
Dr McDougall: We do use a wide range of metrics. We manufacture over 100 different product lines, so 100 different brands, for example. Each of those brands will have a range of different multiples, whether it is small bottles, medium sized bottles or big bottles. We compile and publish data to cover the whole of our business. We have what we call a sustainability report, which is a separate report from our financial report. You ask for figures. For 2006/2007 we converted 95.72% of all raw materials to final product, so it is more of a description of transition. Of that remaining piece 2.36% was recycled, so overall a relatively small amount goes to waste because waste is money.
Mr Carter: Manufacturers of branded goods have to use these measures to sell to retailers like Wal-Mart in the USA, for example, and it is coming to the UK. Wal-Mart/ASDA have a scorecard where the grams of packaging per millilitre of contents is one of the key indicators that you need to declare to them, so everyone who sells through ASDA in the UK will be collecting data on this measure. Having said that, from a Unilever perspective we have a concern about using simple measures. One of our concerns with using a grams of packaging per ml of content measure is that it encourages large packs because large packs are much more efficient on a gram per packaging per ml of product basis. That then clashes with some of the other issues. If we introduce larger and larger food packs we create more and more food waste. We may also cause an obesity problem and that is not what a responsible food manufacturer should be doing. The demographics of the western world at the moment are moving to smaller and smaller households, so we are being driven in a direction where potentially our grams of packaging per ml of content is likely to be moving the wrong way, not because we do not want to reduce the amount of packaging but because other factors are influencing that. The other thing I would say about grams of packaging per ml of product is that it gives no credit for concentration of a formula, like a liquid detergent. If instead you use grams of packaging per consumer usage then you get full benefit for concentrating down the formulation inside. Unilever chooses to use some different measures like grams of packaging per consumer usage or grams of packaging per portion for its food packaging.
Q490 Chairman: Do you use the same criteria or metrics across all of your plants internationally or are there variations caused by externally imposed legislation? I am not talking about emissions but the kinds of things we have been talking about. If you have got a plant in Malaysia and a plant in the US, say, in California, and one in the UK, would they be operating to the same standards, or seeking to achieve the same standards; let us put it like that?
Dr McDougall: All our plants operate to the same environmental standards wherever they are in the world irrespective of the legislation in the country they are operating in. We work to the highest environmental standard. Plants manufacturing the same products will use the same metrics so we can identify the good performing plants and share their best practice and we can also identify the not so good performing plants and do something about them.
Q491 Chairman: Is it the same for Unilever?
Mr Carter: Yes, the same for us.
Q492 Lord May of Oxford: Very often improving the efficiency of material used is a win-win because it saves you money and it is more sustainable, but are there examples where there is a tension between the two, where improving the efficiency of material use is an additional cost and you have to weigh the costs to you against the benefit to the environment?
Mr Carter: There are not many examples that spring to mind. Usually, if we use less material it is at lower cost. Perhaps the one example I can give is in terms of comparing a solid plastic bottle with a much lighter weight laminate pouch.
Q493 Lord May of Oxford: Exactly. It is a different material that is involved.
Mr Carter: Yes. The pouch is much cheaper to buy because there is less material in it but the filling technology to fill these packaging items on a production line is more limited and slower for a pouch. Typically that manufacturer can fill bottles and cans at very high speeds whereas pouches are slower, so you can get into a situation where the packaging cost is lower but the filling cost because you have to run your production lines at much lower speed is higher, so there are instances potentially where what you have just described can occur.
Dr McDougall: There is also an opportunity where country-specific legislation around packaging can push you in one direction and not be the same or not be pushing in the same direction in another country, and when the European packaging legislation was rolled out across Europe it was implemented differently in every single country. In some countries the prices for different types of packaging on the market are different, so you could theoretically, if you were a producer in Germany, choose to have your packaging in one format that would save you money perhaps in Germany but it would not be an optimum material in another country as far as how much you pay is concerned.
Q494 Lord Howie of Troon: So you use different methods of packaging in different countries, do you?
Dr McDougall: No. As a global producer we cannot because of the complexity. We have to pick the best packaging for the product and we have to pay the different tariffs for packaging recovery across Europe.
Q495 Lord Methuen: It has been suggested that a higher level of taxation should be applied to the use of virgin raw materials. Do you think this would be effective in incentivising businesses to use raw materials more conservatively and efficiently?
Ms Bickerstaffe: I think that is a single issue approach again because though you use materials you also use energy to process and convert them, and just putting a tax on one part of an equation is always going to have unintended side effects. For example, corrugated boxes, and we all know they contain a very high proportion of recycled material already, in order to be sustainable need to include virgin fibres each time; otherwise they just turn into pulp and fall apart. If you impose a tax just on one part of that it does not seem like an efficient way of incentivising it. There are other things that push the choice rather than a tax.
Q496 Baroness Sharp of Guildford: Moving on to the Courtauld Commitment, this seems to have proved quite successful at reducing unnecessary packaging because it has encouraged retailers to work with the Government on a voluntary basis. What do you see as being the major achievements or limitations of that commitment and what further work needs to be done either with the Government or with retailers and consumers to reduce packaging waste further?
Ms Bickerstaffe: What the Courtauld Commitment has done is bring together a number of initiatives which were happening to some extent anyway. Lightweighting, because of all the commercial drivers, let alone the environmental ones, has been going on for years and years. It has been successful in pulling those together and probably has given a high profile to it because there has been a lot of publicity to support that. It has probably not though addressed the areas of consumer concerns about excessive packaging. We would argue that 97% of stuff on the market is not excessively packaged. Sometimes it is not obvious to us as shoppers why it is packaged the way it is. To get goods through the supply chain we think the majority of packaging is there for a good purpose and is doing a good job, but all of us know things that irritate us. We pick up something that has more layers of material or is a huge box with a tiny product in it, and the Courtauld Commitment has not really addressed those concerns. Those are the things that we would like to see addressed because the consumer needs just one example of excessive packaging to jump from the particular and say all packaging is a waste of resources. It is a very bad image for the industry as a whole. How we tackle that is more difficult. You do not need something that is going to address 100% of packaging. You need something that just identifies that 3%, if you like, those exceptions, and does something about those, we think some sort of multi-stakeholder group that could do some work, see where those areas are—we could probably decide them in the room now; we know where these irritating areas are—and then help provide technical advice to the companies who are doing it so that they can make improvements.
Q497 Baroness Sharp of Guildford: It has been suggested that this has been relatively successful because in a sense the Government has got closer to you. It has become a facilitator rather than just a more distant regulator, so do you feel that the Government can provide a more positive role here in terms of getting you together—as you say, something like polystyrene peas or something like that are an incredibly irritating form of packaging when you get them—so that you can identify which are the things that irritate the consumers and work with that?
Ms Bickerstaffe: I think we do know but we need to make some careful decisions over what is packaging for luxury products, for example, and what is truly excessive. Luxury is always a subjective judgment. It would be silly to outlaw things that are gifts, but things that are genuinely excessive we do need to tackle. As I say, they are a tiny per cent; they are the exception. We do not need a sledgehammer to approach them. We need something that is much more simple. We already have a legal requirement that companies must not excessively package their products. It is called the Essential Requirements Regulation and it is enforced by trading standards officers. We think that some sort of stakeholder body could help support them and act as a sounding board for them in this area.
Q498 Baroness Sharp of Guildford: How about laminate materials? There is now a way of recycling Tetrapaks but it is quite an expensive process, but there are other laminates which are more difficult, I gather, to recycle. Should the Government and industry address the potential conflict here between waste reduction and recyclability?
Ms Bickerstaffe: No, because I think companies sort that out for themselves. People do not make packaging just for itself. They are using the packaging, as Steph was saying, to get their goods from A to B in the most effective way and then get the materials that come out as waste at the end recovered in the most effective way. Sometimes laminates are the most effective, sometimes they will allow you to have far fewer lorries on the road delivering goods because they are such a tiny amount of material, so you have got your plus environmental points at that part of the supply chain. I know the public do not see that, but that is good for the environment. The fact that it cannot be recycled but you can recover energy from it does not detract from being able to use it.
Q499 Baroness Sharp of Guildford: What proportion of collected waste do you think now goes to energy recovery?
Ms Bickerstaffe: In the UK 11% of municipal solid waste but the target is for 25% of municipal solid waste by 2020, and it looks like we are on target for that.
Dr McDougall: I would like to add to and support Ms Bickerstaffe's point there. I think that we need to have a balance between recycling where it is economically and environmentally beneficial and not focus on all packaging material having to be recycled. There will be a balance in the spectrum of materials where at some point we will have to say, "No, these very small yoghurt pots", for example, "to collect and recycle them is really just not worth the effort. We will be much better burning them and taking the energy back". Again, it is this big picture piece, to make that decision.
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