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Pollution and Government Pressures
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Pollution and Government Pressures

GLOBAL POLLUTION REACHING A CRISIS POINT

Why are consumers in markets big and small increasingly challenged to be more environmentally conscious and to exercise their power and voice through the products they buy? Why do these shifts feel so urgent? There is mounting evidence to support that in many parts of the world, sustainability has become a life and death matter. Health issues like asthma and typhoid have been linked to deteriorating air and water quality, and in extreme cases, decreased brain function and death. The World Health Organization (WHO) estimates that 12.6 million people die from environmental health risks annually, and that environmental factors in developing countries carry roughly 25% of the disease burden.

Nine-in-ten people around the world are currently breathing in highly polluted air according to the WHO. In fact, outdoor air pollution is believed to contribute to 4.2 million deaths every year, with people in emerging countries from South-East Asia and Eastern Mediterranean regions bearing the brunt of the impact.

Air Pollution Deaths
Air Pollution Deaths

Water pollution levels tell a similar story. The UN World Water Assessment Programme estimates that 80% of global wastewater goes untreated, carrying pollutants that range from animal waste and toxic chemicals to plastic. Again, residents in low- and lower-middle income countries carry the greatest risk to exposure, due to faster population and economic growth, and the lack of wastewater management systems.

While there are many sources of water pollution — industrial agriculture and single-use plastics are the two most notable pollutants driving today’s consumer sustainability trends, particularly in the fast-moving consumer goods industry. Consumers are becoming more aware of the extent that agro-pollutants such as livestock waste, pesticides and nitrates, and antibiotics are contaminating their water sources, the associated health impacts, and the challenges with managing these pollutants once they get into waterways.

GOVERNMENT REGULATIONS IN PLAY

Governments are waking up to the impact of environmental pollution, motivated by the real costs to its citizens and economic burden it places on healthcare systems, basic infrastructure, and agricultural output and economic development. The World Bank estimates that air pollution alone cost the global economy $5.7 trillion USD in 2016.

Environmental protection initiatives aren’t new, but they are capturing more global attention than ever, specifically when it comes to plastics. Countries around the world have decided to tackle plastic pollution by either banning or taxing single-use plastics. Common initiatives range from proactive (investing in better waste management, mobilizing citizen clean-up days, and creating alliances with corporations) to reactive (publishing industry pollution ratings, fines, jail time). While the upside is big, companies with industrial-based economies must weigh the economic productivity that comes from their heaviest polluting industries with their pollution discharge.

For some countries, the initiatives on plastic bags have been particularly effective. Australia was able to reduce their reducing plastic waste by a third and China saw a two-thirds drop in plastic bag usage. Taxes have also proved successful for some countries, such as the UK which saw an 80% reduction in plastic bag consumption.

But the success story isn’t always straightforward. When a ban went into effect in the Indian state of Maharashtra, where Mumbai is located, it reportedly caused more than 300 plastic bag manufacturers to close. Public and industry support, buy-back incentives, sufficient warning and money for effective enforcement are all necessary for initiatives like this to succeed. Companies that are able to maintain an open dialogue with governments around sustainability can help shape policies in ways that benefit everyone.

Plastic Bans
Plastic Bans

While plastic isn’t the largest contributor to water pollution, it has high levels of consumer support, and many alternative solutions. Among plastics, packaging is the largest overall contributor at 36% of the 400 million tons of plastics produced each year, according to research published by the American Association for the Advancement of Science.

A growing number of countries are implementing bans and taxes, and while they may prove effective in reducing waste, how does it impact the retail landscape? And who pays?

Many plastic bans focus on reducing or eliminating plastic bags or at least non-recyclable “thin” bags, putting the responsibility on retailers. In regions with a large percentage of traditional trade such as kiosks and small mom-and-pop run stores it can be difficult and expensive for governments to enforce the bans and penalties. When these measures are rolled out too quickly, especially without retailer buy-in, it can cause make impacted companies to feel uneasy that they’ll see a drop in customers.

Broader plastic bans impact more than retailers, as manufacturers are required to invest in new suppliers and packaging reformulations. Sometimes, these added costs are passed down to the consumer. Similarly, when manufacturers are taxed, those costs are typically passed on to the consumer, either directly or indirectly.

Who Pays? Taxes Partial and Broad Bans
Who Pays? Taxes Partial and Broad Bans

Whichever strategy governments choose to adopt, it’s clear the path towards less reliance on plastic requires investment in new alternatives, packaging design for manufacturers and new business models and standards for retailers. Sometimes government initiatives come swiftly, other times there’s a long runway to plan. Either way, change is sweeping in and companies should plan now to avoid being caught off guard. Smaller companies will have an advantage here due to their smaller supply chain, agility, and fewer number of markets. But large companies have the benefit of larger research and development budgets and can achieve greater economies of scale with alternative solutions.