A new report from Planet Ark’s Australian Circular Economy Hub (ACE Hub) and KPMG is making the case that Australia’s decarbonisation efforts will fall short unless businesses look beyond renewable energy and address the emissions embedded in materials, products and food systems.
The report, Thrive to 45, argues that while the transition to renewable energy can address around 55 per cent of global greenhouse gas emissions, the remaining 45 per cent stems from the way materials are extracted, products are manufactured and used, and food and goods are managed across their lifecycle. Circular economy strategies, the authors say, are essential to closing that gap.
Based on research involving FMCG and built environment stakeholders, the report explores how circularity can contribute to emissions reduction while also delivering business benefits such as material efficiency, cost savings, supply chain resilience and new revenue opportunities.
For the FMCG sector, the findings carry particular relevance for packaging value chains.
Packaging redesign emerges as a priority
Survey participants from the FMCG sector identified redesign, recycling, reuse and reduction strategies as having the strongest potential to reduce emissions. Among the respondents, 77 per cent rated redesign as having strong potential to reduce emissions, followed by recycling (69 per cent), reuse (62 per cent) and reduction (62 per cent).
The emphasis on redesign is significant for packaging, where material selection, format choices, lightweighting, recyclability, recycled content and reuse models are increasingly being used as levers to reduce both waste and carbon impacts.
The report also highlights the concept of the “ladder of circularity”, which ranks strategies according to their impact. Approaches higher up the ladder – such as refusing unnecessary materials, reducing consumption, redesigning products and enabling reuse – are considered more effective than lower-order activities such as recycling or energy recovery because they avoid virgin material consumption and retain more embodied carbon within products and materials.
For packaging professionals, this reinforces a trend already emerging across sustainability initiatives: recycling remains important, but upstream interventions such as material reduction, reusable systems and circular design are likely to deliver greater emissions benefits.
Moving beyond operational efficiency
The report notes that FMCG companies are already identifying emissions reduction opportunities through waste minimisation, energy efficiency and renewable energy adoption. All surveyed organisations reported opportunities to reduce emissions through energy efficiency measures and waste reduction, while 90 per cent identified renewable energy as an opportunity.
However, the authors caution that genuine circularity requires organisations to move beyond operational efficiencies and embrace higher-order strategies such as reducing material use, redesigning products and packaging, and developing reuse systems. Survey respondents also identified supply chain engagement and increased use of recycled materials as important pathways for reducing emissions.
Barriers remain
While the sector appears broadly supportive of circular approaches, the report identifies several barriers to implementation.
Among FMCG participants, the key challenges included a lack of knowledge and incentives to move away from business-as-usual practices, fragmented waste management policies across Australia, infrastructure and logistics constraints, high upfront costs, and difficulty accessing reliable emissions data.
Packaging-specific concerns featured prominently in the discussion around solutions. Participants called for more consistent regulation addressing the full lifecycle of products and packaging, greater investment in reuse trials, stronger consumer education, improved recycling and recovery infrastructure, and better collaboration across supply chains.
A call for action
Perhaps the report’s strongest message is that circularity should no longer be viewed as a waste management issue, but as a decarbonisation strategy.
According to the findings, 62 per cent of participants had already considered adopting circular strategies specifically to reduce emissions. FMCG stakeholders recognised that redesign, reuse, recycling and reduction strategies have an important role to play in tackling climate impacts alongside energy transition measures.
For packaging businesses facing growing pressure to reduce carbon footprints, meet recycled content targets and prepare for evolving regulation, Thrive to 45 suggests the next phase of sustainability action may depend less on energy and more on how materials are designed, sourced, circulated and recovered throughout the value chain.
You can download the Thrive to 45 report, produced by Planet Ark’s Australian Circular Economy Hub and KPMG Australia.
