What does inflation mean for businesses and the environment?

Everywhere you look, there is a price squeeze going on. From the cost-of-living crisis we hear about on the news, to businesses shipping goods across the world, everything is costing a little bit more right now. 

For businesses in the UK, the costs of energy, labour and raw materials are all going up in every sector. And businesses of all shapes and sizes are looking to make savings wherever they can. 

Will Businesses Continue to Invest in Environmentally Friendly Initiatives?

UK businesses have made great strides in recent years to use less plastic packaging. From coffee shops using Vegware cups to supermarkets such as Tesco making changes to their product packaging, there’s something every business has been doing to reduce plastic. 

But will businesses look to cut back on investing in eco-friendly packaging for their products to save money? 

If so, that would be a mistake. As of 2022, the UK government brought in a new plastic packaging tax that will result in businesses being charged at a rate of £200 per tonne of plastic that contains less than 30% of recycled plastic. 

Not only that, but 61% of consumers would switch brands to products using more eco-friendly packaging. So, if businesses are considering using cheaper plastic packaging, they may be wise to reconsider. 

But does that still hold true in an inflationary world? As we have touched on at the start of this article, with the cost-of-living crisis, will consumers still be happy to pay more for environmentally friendly alternatives? 

The answer is not so straightforward. According to a recent GWI report, for most consumers, even though sustainable materials are important, the cost is the biggest challenger by far. What we say and what we do might be two different things. 

Consumers May Not Have a Choice

When it comes to eco-friendly packaging, the tide is already well and truly changing. Open up your deliveries these days and you’re far less likely to see bubble wrap or Styrofoam that you were five years ago. Instead, innovative packaging such as honeycomb wraps and eco pillow films are much more likely to be protecting your products. 

It’s unlikely that this trend will reverse. Indeed, with the Plastic Packaging Tax coming into play this year, that is just one more factor that will help push UK businesses towards achieving a net-zero carbon footprint.  

And the more innovation in the packaging sector we see, the more environmentally friendly packaging will become affordable. 

For some small business owners, it’s a matter of principal too. Steph Gray, owner of Bakeswell, said: “For my products, I need to deliver them in eco-friendly packaging to ensure my customers get the best experience. I know I wouldn’t like to receive brownies wrapped in plastic. So my customers won’t do either.”

Businesses Will Continue to Invest in Environmentally Friendly Initiatives

From reducing their reliance on single use plastic to partnering with tree planting companies to help off-set their carbon, businesses are doing a lot to help the environment. And fortunately, we don’t believe that rising inflation will negatively impact business investment in environmentally friendly initiatives. 

But there is still a long way to go. With rising inflation, businesses may need to think creatively about how they can reduce their carbon footprint further in ways that will also save them money. Now’s the time for business to take a look at supply chains and their entire operations in detail and take a look at the market to see if there are any new and more innovative environmentally friendly solutions available.