Gunjan Prasad
Aug 22, 2019

Sea change: What FMCG brands are doing about plastic pollution

The government in Indonesia is pushing sustainability, and brands are talking about it more than ever. But environmental critics aren't yet impressed.

View of a beach in Bali (Shutterstock)
View of a beach in Bali (Shutterstock)

Less than a decade ago, sustainability was a rather unknown concept in Asia (outside of Japan, Korea and Australia), and Indonesia was no different. Climate change and global warming were considered the banes of the Western world, and consumers, the government and the private sector in Indonesia didn’t consider themselves part of the problem.

Cut to 2019, and Indonesia is believed to be the world's second-largest contributor of plastic ocean pollutants. The country, home to about 267 million people, uses up to 9.8 billion plastic bags each year — 95% of which end up as waste.

Many factors contribute to these staggering numbers. Besides the population and the geographical span of the nation, the biggest issue is the behaviour and education of consumers about waste management and clean healthy living. Added to that has been a lack of clear and enforced government policy, not to mention a lack of integrated waste-management infrastructure.

On the manufacturers’ side, a contributing factor is the slow pace of industries to innovate sustainable packaging to support a fully circular economy and a scalable commercial model.

"Unless we embed sustainability as part of the business plan right now and take care of our impact on the planet, it will backfire on us and we will have to face the consumers sooner than later."
Sinta Kaniawati, Yayasan Unilever Indonesia

“The problem is not solely on plastic but how we use it, and where it ends up,” says Corine Tap, president director of Tirta Investama (Danone-AQUA). “The magnitude of the problem is so enormous that we need action on multiple fronts.”

The silver lining in this giant problem is the explosion of attention surrounding it, thus prodding the Indonesian government to take a measured approach towards reducing plastic waste.

It has announced its intention of reducing marine waste by 70% by 2025, earmarking a budget of US$1 billion for this purpose. Given Joko Widodo’s re-initiation as the president for the next five years, the vision of making Indonesia a ‘circular economy’ is expected to gain momentum. If implemented correctly, Indonesia’s approach to tackling plastic pollution could become an example for other developing nations in the region.

FMCG firms making moves to be more responsible

The spotlight is now on private-sector companies to demonstrate how much they value sustainability and how much of their core businesses they are willing to tweak so that they can both accelerate their own growth and contribute to the long-term health of the community they operate in.

Danone’s Aqua brand is Indonesia’s largest bottled mineral water company. While it provides safe drinking water to millions of people across the archipelago, it is also aware of the environmental challenge plastic bottles pose given the country’s dependence on bottled water. “As an iconic heritage brand of Indonesia and Indonesians, Danone-Aqua has a special responsibility to act, as well as the opportunity to drive change at scale, by engaging our millions of consumers,” says Tap.

Danone's Corine Tap

The company has committed to a 'bijakberplastik' (wise plastic use) movement, which has three pillars: collection, education and innovation. It has committed itself to recovering more plastic from the environment than it uses by 2025; leading a nationwide campaign of recycling education in schools and the public domain; collaborating with government and retailers to pilot and activate consumer recycling culture in major cities; making all of its packaging 100% recyclable by 2025; and increasing the proportion of recycled plastic in its bottles to 50% by 2025.

Unilever, too, has understood that while it has traditionally built its businesses around selling products in cheap plastic packaging, it now has a major responsibility to resolve some of the resulting environmental issues.

“That Unilever has ambitions of growing its business in Indonesia is a given. But we understand that our shift to a sustainable growth model cannot be gradual,” says Sinta Kaniawati, general manager of Yayasan Unilever Indonesia. “Unless we embed sustainability as part of the business plan right now and take care of our impact on the planet, it will backfire on us and we will have to face the consumers sooner rather than later.”

Besides the recyclability and recovery of its rigid and solid plastic bottles, Unilever Indonesia is working on reducing the use of single use flexibles like sachets and pouches. “Single-use plastic sachets allow low-income consumers in Indonesia to buy small amounts of quality products that would otherwise be unaffordable to them. However, these cannot be recycled and leak into the environment,” explains Kaniawati. “We are working with a research agency in Germany to introduce CreaSolv technology, which is designed to recover polyethylene (PE) from the sachets that can then be reused for new packaging.”

Unilever's Sinta Kaniawati

Coca-Cola, meanwhile, is tackling its sustainability problem by implementing the global CEO’s ‘World Without Waste’ vision in Indonesia. It has broken down this goal into three actionable pillars: design, collect and partner.

In Indonesia specifically, the cola major is one of the founders of the PRAISE (Packaging and Recycling Association for Indonesia Sustainable Environment) industry coalition, which looks to implement an industry-led plastic packaging waste collection system. Asked if this drive to reduce plastic is commercially viable and scalable for businesses like Coca-Cola, Triyono Prijosoesilo, director-PAC, Coca-Cola Indonesia says, “It is a work in progress, but we believe our circular economy vision can be viable for the business as has been demonstrated in other parts of the world such as Mexico, South Africa and many other countries.”

Beyond the MNCs, one local company that has also made ‘sustainability’ a part of its blueprint is Mitra Adiperkasa (MAP), the largest lifestyle retailer in Indonesia. It has a retail network of over 2,300 stores in the country that see over 100 million transactions yearly. MAP provides a ‘planet-positive’ alternative for shopping bags across its retail network including recycled paper bags, biodegradable plastic bags and plastic bags with recyclable additives. “MAP levies a minimum cost of Rp 200 [around 100th of one US dollar] per plastic bag in our SOGO, Fashion and Active (sports & lifestyle) stores to help reduce plastic usage and wastage,” says V.P. Sharma, group CEO, MAP.

The 'system failures' preventing things from improving

It is clear that urgent action is needed on multiple fronts. To protect these resources for Indonesians today and in the future, all stakeholders need to come together.

Sumangali Krishnan, head of research and strategy for GA Circular, a Singapore-based advisory firm, says that leading FMCGs have actively pursued different efforts to stem the flow of plastics making their way into the environment. These range from Danone changing design specifications and using recycled content in packaging, to Unilever efforts investing in recycling technologies.

But Krishnan says such efforts have so far been limited in their impact due to "system failures", which she says include limited infrastructure for waste segregation, collection and sorting; market challenges (including) the export and import prices of recycled materials), which reduce the incentive to collect plastics locally; and the cost and intensity of the efforts that limit the scalability of such measures beyond the pilots or city level activities.

“There is a lack of transparency in the sector and few FMCG companies are willing to disclose important data about their plastic use. For now there is no improvement and the companies keep feeding us false solutions like switching from plastic to another throwaway material, which is not the solution."
Muharram Atha Rasyadi, Greenpeace 

Environmental watchdogs such as Greenpeace go further, and see corporations' initiatives thus far as a “white-washing” effort.

Last year, Greenpeace US tried to survey 11 leading global companies in the FMCG sector (Coca-Cola, PepsiCo, Nestlé, J&J, Kraft Heinz, Danone, Mondelez International, Procter & Gamble, Unilever, Mars Incorporated and Colgate-Palmolive) about their commitment and strategy to solve the plastic problem worldwide.

According to the findings, collated in a report titled “Crisis of Convenience”, there are no signs that large consumer brands plan to move away from single-use packaging as the main delivery system for their products, relying instead on recycling. The current business model is based on the assumption that ultimately all plastic packaging can (and will) be collected and recycled into new packaging or products. However, a great deal of plastic packaging is not even designed to
 be recycled at the moment.

In any case, concludes Greenpeace, recycling alone can never be a solution for the over-production of single-use plastic packaging.

Brands are currently pushing to expand their sales to markets in East and Southeast Asia, a mission that includes promoting single portions of their products in unrecyclable sachets, therefore only adding to the flood of plastics that is overwhelming local communities. These brands are effectively using the recycling-will-solve-it ‘myth’ to perpetuate business as usual, according to Greenpeace.

“There is a lack of transparency in the sector and few FMCG companies are willing to disclose important data about their plastic use," says Muharram Atha Rasyadi, urban people-power campaigner with Greenpeace SEA-Indonesia, speaking specifically about Indonesia. "For now there is no improvement, and the companies keep feeding us false solutions like switching from plastic to another throwaway material, which is not the solution. What we want is reduction, transparency and for them to invest into refill and reuse alternative delivery systems.”

Flicking the switch on the future 

Given that most MNC’s are claiming ‘recovery’ as one of three pillars of their sustainable development strategies, they should be looking into "engaged programs across the country for material recovery, not just a bunch of new recycling bins," says Douglas Woodring, founder, Ocean Recovery Alliance and Plasticity Forum. "They should have reward or bring-back programs for their materials to improve volume collection, purity, consumer engagement and new business with customers going to them, and not their competitors.”

Unlike in the West, where clients have started asking questions about the abilities of their agencies to provide strategic solutions around sustainability, it is not yet a pitch-critical topic in Indonesia. “Some of our Japanese automotive clients are moving towards communication strategies that incorporate sustainable elements, particularly in the areas of safety and environment," says Maya Watono, CEO of Dentsu Aegis Network Indonesia. "But other than that, not too many.”

More needs to be done by producers, industries, associations and the government to establish community-outreach campaigns and ensure that consumers are educated on waste management and prevention, which will enrich their knowledge to choose a product that is healthier for the body and the planet.

According to Suresh Subramanian, CEO of Kantar Indonesia, consumers here are highly price-sensitive. But nationalistic pride also runs deep. If the right message is sent to consumers and they believe in it, they may be willing to shell out money for green products.

And if the price is competitive for two products, sustainability could be the deciding purchase factor for Indonesians.

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