The drinks packaging industry and a tsunami of ESG rules and regulations

The drinks packaging industry is facing a tsunami of rules and regulations. In Spain, the important sustainability rules approved over the past two years with a direct effect on the industry will be taken up a notch by the forthcoming European packaging regulation.

In our Garrigues Sustainable dialogs, we wanted to find out first-hand how the industry is tackling this huge challenge and the measures being adopted in its search for more sustainable and more environmentally sound manufacturing. For that reason, we invited Beatriz Blasco Marzal, general manager of ANFABRA, the Spanish soft drinks industry association — which since 1977 has brought together and been the voice of practically all the members of this industry —, to talk to Javier Fernández Rivaya, partner in the Garrigues administrative and Constitutional law practice area, and Juan Muguerza Odriozola, counsel in the same department. This exchange gave the speakers the opportunity to discuss the main challenges for the industry and the progress they are making with their circularity and sustainability goals.

New rules and regulations

In Spain, the Law on waste and contaminated land (Ley 7/2022) and the Packaging Regulations (Royal Decree 1055/2022) were approved in short succession. These two pieces of legislation, as Javier Fernández Rivaya reminded us, have greatly changed the legal regime and rules on packaging obligations: “Among other measures, they have set very high goals in packaging waste prevention, for reducing the weight of all created packaging, or to achieve the aim for all packaging in circulation to be recyclable by 2030. These goals also touch on reuse and separate collection”. The new legislation, this expert reminded us, “has also expanded the scope of manufacturers’ liability, they will have to fund and cover the cost of all activities related to managing packaging after it has become waste, although their financial contributions are scalable based on the application of eco-design methodologies or reuse or recycling policies”.

Beatriz Blasco reminded us here that “10 years ago the soft drinks industry decided it wanted the challenge to be confronted by the industry as a whole and to try to achieve a highly cross-functional impact: today we are contributing in 11 of the 17 sustainable development goals”. She noted that this implies the need for ongoing assessment to see what works and what doesn’t: “The result has been positive for us”. One of the main focuses in our work is packaging, and this is where a considerable transformation has taken place, although it is not the only area. Their measures also target electricity use, for example: “All the electricity supplied to the soft drinks industry now comes from renewable sources.”

Valuing of packaging

Blasco also highlighted how necessary packaging is and the importance of “valuing packaging on account of its essential role in food safety, transportation, and in other areas”. She explained on this topic that the soft drinks industry and others have been working for years on finding optimal packaging solutions for a sustainable economy and model: “It is one of the industries making the highest investment in R&D and that includes how to make our packaging more circular. Today, for example, soft drinks packaging is 40% lighter than it was a few years ago; a soft drink can is made of a material finer than a strand of human hair. She also underlined this industry’s long-standing experience in reuse: “We were frontrunners in this area”.

Beyond recycling: towards a circular economy

Participant Juan Muguerza noted that “these rules are a solid attempt to transform that recycling society and guide it towards a circular economy”. He explained that “recycling is still seen as very important, as is the need to include recycled materials in packaging design, but the overarching goal comes before that: to try, right from the start, to reduce waste generation in the first place, with the emphasis on single-use plastics. In his opinion, “the difficulty lies in how to ensure that the general strategy lands and is turned into specific measures, while taking into account any potentially counterproductive effects that could stand in the way of achieving the sought aim”. He recalled a few specific measures that are being approved along these lines. In Spain, for example, a special tax on plastic single-use plastic packaging came into effect in 2023. And, in Europe, the new packaging regulation that will soon come into being, seeks to approve more complete substantive rules for which it defines very specific goals, relating to reusable packaging, for example. How does all of this affect the industry?

Blasco took up the baton to reply to Muguerza and reflected on the importance of harmonizing the legislation to ensure an even playing field. On the plastics tax, she said “just think that our neighboring countries decided either not to introduce it or to introduce it later (as Germany did, for example). In Spain, however, the choice was made to implement the tax immediately, we were the first country to do so. You cannot make a country play by a different rulebook, especially in their fiscal policies, at such a critical and sensitive time, in the midst of an energy crisis, for a manufacturing industry that largely consists of small and medium sized businesses. These measures strangle the business community as a whole, and especially these types of businesses”. She also stressed that companies in the industry have amply shown that they are taking specific measures involving investment and commitment: “We should therefore be making their work easier. I believe that tax measures have the opposite effect, they do not encourage, they do not make things easier, they do not help, and they are having an adverse impact”.

Returning to Europe, the problem with these policies, in Beatriz Blasco’s opinion, is that they give hard-and-fast solutions or impose. She recalled that steps have already been taken voluntarily in relation to reuse, because they believe it may be a good solution. But, as she added, “the issue with this is seeing reuse as a valid solution in all cases, for all packaging and for all options … It may be an excellent solution, although it also has environmental consequences which have to be assessed. We would be making a strategic error in Europe if our rules and regulations closed off the options rather than open them up and make them more flexible. We also need to think that today we may be devising or seeking solutions that are not, or do not exist, yet on the market. We should not be creating closed concepts. Why can we not, for example, be thinking about an open-ended type of reuse that includes other elements such as refilling? It is important to make room and provide options for innovation”.

Soft drinks packaging, a bar of gold for recyclers

On the subject of recycling, she explained that 32% of packaging is already made of recycled materials and the legislation puts them under considerable pressure. “The soft drinks industry wants to move forward and help with that transition towards circularity, but we need to be helped along that path with very specific solutions such as providing access to recycled materials: in a context where everyone wants to move forward along these lines there is greater demand.

Blasco underlined that, for the recycler, “soft drinks packaging is a bar of gold because we have invested so much in transforming it, and made fully recyclable packaging possible. But what we need is for our packaging, in which we have invested so much effort, to be able to return to our industry for that circularity to continue”. What the industry needs, in her view, is “to open up options, rather than hard-and-fast solutions, and for our industry to be seen as an ally in this entire transformation process”.

Beyond packaging: less sugar

The sustainable measures being put into practice by the soft drinks industry are not confined to packaging. Beatriz Blasco explained that they are trying to respond to consumers who are increasingly concerned about health and more inclined to seek healthy options. “Our main contribution along these lines is to reduce sugar content. Our aim is clear and we have make a huge amount of progress. Over the past 18 years we have reduced the sugar we place on the market by 45% and today 60% of all sold soft drinks are sugar free or low in sugar, something that has taken time, commitment, and a great deal of investment to achieve”. She emphasized something not widely known about soft drinks, namely that “today it is essentially a sugar free drink, and in Spain, consumer buying patterns for soft drinks grows are also rising every year. This means that soft drinks have a very small calorie contribution in our diets, below 2.1%”.

She also spoke about the industry's other commitments, such as not targeting advertising at children and not being at secondary or primary schools. This is how they are building their sustainable transformation, “in a very cross-functional way, which is how great transformations are built”, she concluded.