What is sustainable packaging? A guide to making the right choice

Sustainable Packaging for CPG Brands

As a CPG brand, you're likely facing increasing pressure from consumers, retailers, and regulators to adopt more sustainable packaging practices. In Highlight's 2025 Sustainability Report, respondents said the #1 attribute that signals a sustainable product is "minimal packaging."

Sustainable packaging is an opportunity to reduce environmental impact while strengthening your brand equity and operational efficiency. However, navigating the different materials, certifications, and performance requirements requires a clear understanding of what truly constitutes sustainable packaging and how it can work for your business.

This guide breaks down everything you need to know about sustainable packaging from a brand perspective, helping you make informed decisions that align with your sustainability goals, budget constraints, and performance requirements.

What is sustainable packaging?

Sustainable packaging minimizes environmental impact throughout its entire lifecycle—from raw material sourcing to end-of-life disposal. Unlike conventional packaging that prioritizes cost and convenience above all else, sustainable packaging balances these factors with ecological responsibility.

For CPG brands, sustainable packaging addresses five areas that directly impact your operations:

1. Raw material sourcing: Selecting materials from renewable, recycled, or responsibly managed sources that align with your supply chain capabilities and sourcing standards.
2. Manufacturing efficiency: Partnering with suppliers who use energy-efficient production processes and can meet your volume requirements while minimizing emissions and waste.
3. Supply chain optimization: Designing packaging that maximizes transportation efficiency, reduces shipping costs, and fits within your distribution network constraints.
4. Product protection: Ensuring your sustainable packaging maintains product integrity, shelf life, and brand presentation standards throughout the supply chain.
5. End-of-life management: Choosing materials and designs that align with the waste management infrastructure available to your target consumers and retail partners.

The key takeaway for brands is that sustainable packaging isn't about finding a single "perfect" solution, but optimizing across these five areas based on your specific product requirements, market positioning, and operational constraints.

How sustainable materials impact your brand strategy

When selecting sustainable packaging materials, consider how each option aligns with your brand positioning and operational requirements:

Authentic Sustainable Packaging Solutions vs. Greenwashing

As a brand manager, distinguishing between legitimate sustainable packaging options and greenwashing is crucial for making sound business decisions and maintaining consumer trust.

With increasing scrutiny from both consumers and regulatory bodies, choosing packaging based on misleading sustainability claims can expose your brand to significant risks.

What authentic sustainable packaging looks like

When evaluating packaging suppliers and materials, look for these indicators of genuine sustainability:

Comprehensive Life Cycle Assessments (LCAs)

Suppliers should provide detailed environmental impact data covering raw material extraction, manufacturing, transportation, use phase, and end-of-life scenarios. This data should be specific to your product requirements and supply chain.

Third-Party Certifications

Look for recognized certifications that are relevant to your industry and market, such as:

• Forest Stewardship Council (FSC) for paper-based packaging
• Biodegradable Products Institute (BPI) for compostable materials
• Cradle to Cradle Certified for circular design principles
• Ocean Positive for ocean-bound plastic alternatives

Supply Chain Transparency

Legitimate sustainable packaging partners provide clear documentation of their sourcing practices, manufacturing locations, and environmental management systems. They should be able to trace materials back to their origin.

Performance Data

Authentic sustainable packaging maintains or improves upon the performance characteristics your products require, such as shelf life, barrier properties, durability, and brand presentation quality.

Scalability Considerations

Genuine solutions consider your volume requirements and growth projections, ensuring sustainable options remain viable as your business scales.

Red flags that signal potential greenwashing

Be cautious of packaging options that exhibit these warning signs:

• Vague environmental claims: Terms like "eco-friendly," "natural," or "green" without specific, measurable benefits or supporting documentation.
• Single-attribute focus: Emphasizing one environmental benefit (like being "biodegradable") while ignoring other impacts such as carbon footprint, water usage, or end-of-life infrastructure requirements.
• Lack of infrastructure consideration: Claiming biodegradability or compostability without acknowledging that most consumers lack access to appropriate disposal facilities.
• No supporting data: Making sustainability claims without providing LCA data, certifications, or transparent supply chain information.
• Misleading comparisons: Comparing sustainable options only to worst-case conventional alternatives rather than current industry standards.

Due diligence questions for packaging suppliers

When evaluating sustainable packaging options, ask your suppliers:

1. Can you provide LCA data specific to our product and supply chain requirements?
2. What third-party certifications does this material carry, and are they relevant to our target markets?
3. How does this packaging perform compared to our current solution across all required metrics?
4. What is the realistic end-of-life scenario for consumers in our primary markets?
5. How will this solution scale with our projected volume growth?
6. What is the total cost of ownership, including any supply chain modifications required?

The answers to these questions will help you distinguish between authentic sustainable solutions and marketing-driven alternatives that may not deliver on their environmental promises.

What are the benefits of sustainable packaging for CPG brands?

Implementing sustainable packaging allows you to drive business value across multiple dimensions of your operations:

Market positioning and consumer engagement

Sustainable packaging is a powerful differentiation tool in competitive markets because consumers are more likely to purchase products with legitimate environmental claims.

For premium brands, sustainable packaging reinforces quality positioning and justifies price premiums. Mass market brands can use sustainable packaging to elevate their market position and compete more effectively with premium alternatives.

Operational efficiency and cost management

While sustainable materials may carry higher upfront costs, they often create operational efficiencies that improve the total cost of ownership:

• Logistics optimization: Lighter packaging materials reduce shipping costs, particularly important for e-commerce and direct-to-consumer channels. Compact designs maximize truck utilization and reduce transportation emissions.
• Material efficiency: Sustainable design principles often lead to material reduction through optimized structures and multi-functional designs, directly reducing packaging costs per unit.
• Supply chain resilience: Diversifying into renewable and recycled materials reduces dependence on petroleum-based materials, providing greater price stability and supply security.
• Inventory management: Standardized sustainable packaging across product lines can simplify inventory management and reduce complexity costs.

Regulatory compliance and risk mitigation

Packaging regulations are evolving rapidly worldwide. The European Union's Single-Use Plastics Directive, California's packaging reduction requirements, and similar legislation emerging globally make sustainable packaging increasingly mandatory rather than optional.

Proactive adoption of sustainable packaging allows you to:

• Avoid last-minute compliance scrambles
• Prevent potential fines and regulatory penalties
• Position your brand favorably with regulators and policymakers
• Reduce exposure to commodity price volatility

Retail partnership advantages

Major retailers are increasingly prioritizing suppliers with strong sustainability credentials. Walmart's Project Gigaton, Target's sustainability commitments, and Amazon's Climate Pledge all create preferences for brands with sustainable packaging.

Benefits include:

• Preferred supplier status with major retailers
• Access to sustainability-focused promotional opportunities
• Reduced risk of delisting due to packaging requirements
• Enhanced category management relationships

Innovation and building brand equity

Sustainable packaging often drives innovation that improves environmental performance and consumer experience. Examples include:

• Concentrated formulas that require less packaging while improving shipping efficiency
• Refillable packaging systems that increase customer lifetime value
• Smart packaging that reduces food waste and improves product freshness
• Multi-functional packaging that provides additional consumer utility

These innovations build brand equity by demonstrating your commitment to both environmental responsibility and consumer value creation.

How to make sustainable packaging work for your brand

To successfully implement sustainable packaging, you need to align the initiative with your brand positioning, operational capabilities, and market dynamics. Here’s a step-by-step breakdown:

Develop your sustainable packaging strategy

Start by conducting a comprehensive assessment of your current packaging:

• Environmental impact analysis: Evaluate your existing packaging's carbon footprint, recyclability, and resource usage. This baseline helps prioritize improvement opportunities and measure progress.
• Business impact assessment: Analyze how packaging changes might affect your cost structure, supply chain operations, and brand positioning. Consider both direct costs and indirect impacts like shipping efficiency and retail presentation.
• Consumer research integration: Understanding how your target consumers perceive, use, and dispose of packaging is crucial for selecting solutions that will resonate in the market.

Use Implementation Approaches That Minimize Risk

To keep risk to a minimum, follow these approaches:

• Pilot testing strategy: Begin with limited SKU rollouts or specific geographic markets to test sustainable packaging solutions before full-scale implementation.
• Phased material transitions: Rather than replacing all packaging simultaneously, implement changes systematically based on factors like packaging complexity, supply chain readiness, and consumer impact.
• Supply chain partnerships: Work closely with packaging suppliers, co-packers, and logistics providers to ensure sustainable solutions integrate smoothly with existing operations.

Measure success and improve continuously

Establish clear metrics that track both environmental and business performance, such as:

• Environmental metrics: Carbon footprint reduction, recyclability improvements, renewable content percentage, and waste reduction achievements.
• Business metrics: Cost per unit impact, consumer satisfaction scores, retailer feedback, and sales performance in sustainable packaging test markets.
• Operational metrics: Supply chain efficiency, inventory turnover, and packaging line productivity to ensure sustainable solutions maintain operational effectiveness.

Educate consumers

The success of sustainable packaging often depends on consumer understanding and proper disposal behavior. Develop clear communication strategies that:

• Explain the environmental benefits of your packaging choices
• Provide simple, actionable disposal instructions
• Connect packaging decisions to your broader brand sustainability story
• Address any performance or convenience changes transparently

Communication builds consumer confidence in your sustainable packaging choices while encouraging proper end-of-life behavior that maximizes environmental benefits.

Make sustainable packaging a strategic advantage

Sustainable packaging is an evolution in how CPG brands approach product design, consumer engagement, and operational efficiency.

The most successful sustainable packaging initiatives go beyond simple material substitution to reimagine how packaging can create value across the entire brand ecosystem. From strengthening consumer relationships to improving operational efficiency and preparing for regulatory changes, sustainable packaging offers multiple pathways to competitive advantage.

Success requires a comprehensive approach that considers your specific product requirements and market dynamics. This includes conducting thorough consumer research to understand how packaging changes will impact purchase behavior, disposal habits, and brand perception.

At Highlight, we recognize that implementing sustainable packaging effectively requires deep consumer insights throughout the development process. Our consumer insights platform helps CPG brands validate sustainable packaging decisions with targeted consumer research, ensuring your environmental initiatives align with market demands and consumer expectations.

By delivering reliable consumer insights in just three weeks—compared to months with traditional research methods—Highlight enables brands to make confident sustainable packaging decisions that drive both environmental impact and business results.