by Rob Kaszubowski, Senior Manager, Chainalytics
With a population of only 5.5 million on a land mass smaller than that of New York city, traditional size metrics underestimate the importance of Singapore to the global economy. Serving as the business and technological gateway to Southeast Asia, this tiny island nation often sets the tone for how trade is conducted among its neighbors.
Since introducing the Singapore Packaging Agreement in 2007, the country has been getting serious about sustainability — and any manufacturer that does business in or around Singapore is wise to pay close attention. Its push to become a Zero Waste Nation has been ongoing, but was largely voluntary until last year when the Singapore Exchange (SGX) said it will mandate all listed companies to disclose their economic, environmental and social impacts in sustainability reports.
An even larger step came just this July. Singapore’s National Environment Agency (NEA) announced that it is developing requirements for more sustainable packaging. Unlike the SGX rule, which does not affect multinationals conducting business in Singapore, these new packaging requirements will impact any company that imports into or exports out of the country.
Packaging its way out of landfills
The entire nation of Singapore relies on a single landfill for waste. Located south of the main island of Singapore, the offshore Semakau Landfill is expected to be filled to capacity by 2045. It is clear that the country must move proactively to extend the life of this landfill, and that ticking time bomb is fueling its Zero Waste Nation initiatives. The biggest challenge is that at this point, nobody knows exactly what the new packaging regulations are going to look like — but since we know the goal, some inferences can be drawn to forecast what they will likely entail.
Because Singapore faces a looming deadline with its landfill, expect an emphasis on requirements for using more recyclable packaging. Restrictions on non-recyclable materials like laminated films, PVC and expanded polystyrene foam are almost guaranteed, and efforts could be made to shift back to materials like aluminum and glass, as well as corrugated, hexacomb and molded pulp for protective packaging alternatives. Which recyclable materials the country decides to move toward will depend on what type of streams for dealing with them can be set up most efficiently.
The end-game of zero waste is quite different from one of waste reduction, and that goal suggests aggressive recyclable packaging material requirements — but that does not mean reduction will not also be a factor. The Singapore Packaging Agreement has shown an interest in tracking and reducing packaging weight and shares category benchmarks, so mandates on packaging weight are also likely to complement materials rules. For fresh food product and others that are manufactured and consumed within Singapore, reusable containers are another option. Either way, the core functionalities of packaging optimisation (using the right type and amount of material, right size, right volume) will continue to grow as a focal point for product manufacturers.
Push and pull of enforcement
Singapore has two choices on how to go about enforcing its regulations: It can either push them through the supply chain through manufacturers, or pull them through via consumers. The tried and true way to achieve compliance is by requiring manufacturers to provide bills of materials on all packaging. Then, excise taxes are applied and collected on any material used that is not recyclable. Packages containing banned substances can be refused entry into the country. This push method has a track record of success and is used by the European Union.
Another option that Singapore could opt for is to place the burden of fines on consumers that discard non-recyclable items. This push methodology filters up the supply chain to force manufacturers to use materials that will not lead to an increase to the cost of buying their goods for customers. This option is less likely because it does not have an established track record of efficacy elsewhere and it relies on consumer behaviour to institute change, which can take longer than placing immediate impact on manufacturers. The most likely course of action for Singapore is to push rules down the supply chain. Leaders know that buying their way out of a waste problem would be difficult, so expect very high excise taxes or flat refusal of non-compliant packaging in the years ahead.
Options for manufacturers
Once the new regulations are revealed and implemented, multinational manufacturers will have to decide whether it is worth it for them to comply. A thorough analysis of the cost of compliance measured against the value of the market can be performed, but for many companies it will not be that simple. For many consumer goods, the opinion leadership of the Singapore market can dictate sentiment among other nations in Southeastern Asia — that makes the value of the market difficult to quantify. These new regulations also may not be any more restrictive than what large multinationals already face in Europe and other progressive regions. For them, instituting practices already learned and perfected in these areas may be all that is required.
For others, it may make sense to use Singapore’s regulation as a catalyst to develop more sustainable supply chains in anticipation of more widespread restrictions in the future from additional nations. One thing that we know for certain is that no markets are going to become less restrictive on packaging materials than they are today.
A third option is to develop specialty packaging for Singapore that meet its requirements while leaving the processes for other regions as they are. This makes sense for manufacturers with very robust processes that are difficult to disrupt that do not serve other regions likely to make significant changes in the near future. This is what many automotive manufacturers opted to do in the 1980s to comply with California’s strict emissions standards. Cars destined for other states were not manufactured to meet this standard until many years later.
Singapore has business savvy leadership that knows supply chain processes take time to implement, so packaging requirements should be announced with more than enough lead time for manufacturers to comply. Still, it is worth beginning to think about how restrictions in Singapore and other nations will shape packaging design and material selection in the next decade and beyond.
About the Author
Rob Kaszubowski is a senior manager in Chainalytics Packaging Optimization competency, where he is focused on reducing product damage and implementing packaging cost savings initiatives.