Saif Hameed [00:00:07]:<br>Have you ever wondered how a global snacking giant like Mondelz balances its iconic brand image with bold sustainability packaging goals? Well, we're going to find out in this episode. I'm really excited to introduce you. This is the state of sustainability brought to you by Altruistiq. We're going to dive into Mondelz's packaging strategy. For those that don't know, Mondelz. Mondelz is the global snacking giant behind iconic brands. Cadbry's Milka. My personal favorite is the iconic Oreo cookie.<br><br>Saif Hameed [00:00:38]:<br>I'm sure there are other brands that you'll be buying literally every day or every week, and we're going to deep dive specifically into their packaging agenda. So, with a 2025 goal of cutting virgin plastic by 5% and ensuring 98% of all packaging is designed to be recyclable, Mondelz and our guest Patrick in particular, are on a mission to ensure that sustainability doesn't come at the expense of the brand experience that we all know and love, and, of course, the taste of the product. I'm really excited to unpack these challenges. I'm going to be teaming up with Patrick Shewell, the global director of packaging at Mondelez, leading their sustainability agenda on this topic. So, Patrick, big welcome to you. Thanks for being on the show.<br><br>Patrick Shewell [00:01:21]:<br>Thanks. It's great to join you.<br><br>Saif Hameed [00:01:23]:<br>Fantastic. Well, Patrick, I'm going to start with a high level question, and then we're going to dive into the meat of some exciting topics. So, high level, what is your approach to rolling out a sustainable packaging strategy across a portfolio of brands? You have over 150 different markets. Where do you begin and what does the role look like? Could you take us into that a bit?<br><br>Patrick Shewell [00:01:46]:<br>Yes, it's a great question. Unfortunately, it doesn't have a simple answer. We're quite a complicated and decentralized company. We sell in about 150 markets. We have operations in over 50 markets around the world. We are divided into 17 geographical business units. So I have the pleasure of working as a global center of excellence. And there are very few people in our company that work on sustainable packaging as a day job and exclusively.<br><br>Patrick Shewell [00:02:14]:<br>So really, the way I like to describe my job is I am often an influencer without authority. And so what we need to do is make sure, as we develop strategies, as we set goals for the company, we're really strong in our stakeholder management and communicate effectively with the business units and the brands who really aren't making the project decisions. On where do we drive investment to convert our packaging portfolio to ensure that we're meeting design requirements of our packaging is ready to be recycled and that we're removing virgin plastic from our packaging as well, either through the introduction of alternative materials, including recycled plastic content or through minimization projects where we look to transform packaging and remove unnecessary or problematic materials, while also keeping an eye on the future and looking at alternative delivery systems like reuse and refill. So what we've tried to do is be very simple and consistent in how we set and talk about our vision and our strategy, and then connecting with sustainability colleagues within the business units to make sure that they are educated on what we're doing, why we're doing it, the purpose behind our packaging sustainability strategy, what the goals are, our progress against those goals, and then helping them to build those local business cases with the brands to make those investments to transform our packaging portfolio to be more sustainable.<br><br>Saif Hameed [00:03:40]:<br>Patrick I really want to dive into some of the content there. At the same time, there's another topic that we've discussed on this show quite a bit, which is the setup of a sustainability team. And we often talk about these kind of centralized teams where you have sustainability acting as an enabler for other parts of the business, versus embedded teams where you have sustainability embedded within different parts of the business. And so I actually wanted to sidestep a bit and maybe just ask you, you've probably seen counterparts of yours in other organizations. Do you have any thoughts on what works best? Like the center of Excellence model where you're using influence and soft leverage, or the model where you're actually deep in a business unit or deep in a p and l? Almost like any thoughts on that?<br><br>Patrick Shewell [00:04:25]:<br>I guess it depends on how the business is structured and where decisions are made and where budget resides. So as a company, we don't make decisions globally. We don't mandate requirements onto our business units. We localize decision making and budget holding, because what that allows us to do is make decisions that really respond to local customer and consumer needs and really optimize our p and l at a local and regional level, which then accelerates our ability to grow as a global business. So I think for us, the COE model works really well. It creates challenges. It's quite difficult when you're in a sustainability role and you don't have authority to make certain decisions or you don't hold a budget centrally that you can then deploy across the different business units. It means you've got to be very savvy when it comes to your business case, when it comes to your stakeholder management, because you've got to convince others to be as passionate about the topic as you are.<br><br>Patrick Shewell [00:05:23]:<br>And you've then got to work with more commercially minded organizations at the local level that have significant challenges potentially around their p and lithe to make strategic investments, long term bets on sustainable packaging. Because we know today a lot of sustainable packaging decisions that may carry a significant material on cost don't necessarily bring immediate valorization opportunities. And so we really need to make sure that as we work with the different business units, we help them think creatively about those business cases and business case selling to then drive the interventions necessary to create a circular packaging economy. So I think it works well because we make decisions where decisions should be made and where budget is held. And so when we decide to execute, we execute really efficiently and effectively. From a personal point of view, it makes my job quite challenging because I have this very extensive network of people that I need to influence every single day in order to make sure that we don't just have goals and strategic objectives, but we actually have programs and project pipelines that are robust enough to allow us to actually make the progress, to deliver on our key milestones and ultimately achieve the goals that we've set.<br><br>Saif Hameed [00:06:40]:<br>Patrick one of the ways that I approach activities for decarbonization and generally for sustainability is I think of these on a spectrum where you have the stuff that is very easily within your ambit of control, and let's say that's on the left hand side of the spectrum, and renewable energy in the warehouse is a good example. Changing that up, replacing the existing power supply, can be a very quick decision. At the other end of the spectrum, you might have something that is much harder to control for the business, like changing practices at tier three, tier four suppliers. Maybe it's regenerative agriculture on a farm, you have to figure out implementation, accounting, etcetera. And I think of packaging as really nicely in the middle, where you have some degree of control over it. You're often dealing with tier one suppliers, and it has some elements of both ends of the spectra. Am I thinking about this the right way? Is that how you would see packaging within the context of a broader sustainability program?<br><br>Patrick Shewell [00:07:37]:<br>So when I think about projects, I think it sits on a spectrum. And the way I like to look at that spectrum is what's the cost of activity and what's the impact of that activity. So what we see today is you have low impact productivity projects, and those are your start points to build capability across the global business. So if we know that we're using avoidable plastics in our packaging, being able to remove those drives productivity for the company, and it's something that technically is not too challenging to do and certainly wouldn't be sensitive when it comes to consumer appeal. So those are very easy projects for us to be able to build the business case for and drive execution of. But then you start to move along to higher impact opportunities that carry a much higher on cost. And then building that business case becomes inherently much more challenging to do. And actually even sourcing the solutions, including the materials, can be quite difficult.<br><br>Patrick Shewell [00:08:39]:<br>So when I think about our portfolio, 70% of the plastic packaging we place on the market is flexible films. The only technology that collects recycles flexible film back into food contact packaging is chemical recycling. It's a very nascent technology, which means there's not much material on the market. But with many other brands setting goals for virgin plastic reduction and high use rates of recycled content, there's high demand. So you've got this imbalance, which means you have a high material on cost, and then how do you valorize that downstream as well? Because consumers aren't particularly motivated by the percentage of recycled content in their packaging. It's a bit too abstract for them to really understand. And so building that business case can be quite difficult to do. And that's where you have to also bring in a policy lens and understand kind of, you know, how are EPR fees and taxes embedded in markets today, and how will those evolve in the future? So you can start to then bring other metrics into play to help you build out that business case and really give the business units, the decision makers, the budget holders, the information they need to feel confident that they're making profitable long term decisions for the organization.<br><br>Patrick Shewell [00:09:52]:<br>So I think on that dimension, there's a spectrum between easy lower impact versus harder, higher cost, higher impact. And so what I think you do is you start with the low hanging fruit, you build confidence and capability, and then where it strategically makes sense because of geolocation, because of brand positioning, consumer customer care about, because of regulation, you then start to get much more ambitious, and then you build that muscle over time as well. But I don't think companies should resist the temptation to get started because they fixate on the purest solutions and they focus only on the high impact, the high cost stuff, which is technically more challenging to do, and it's nothing more difficult to build a compelling business case. So always start with what's in your control, start with the easier, low hanging fruit, and then build momentum from there. I think that's what's worked really well at Mondelez and there's significantly more opportunities through size reduction, through format changes, through new materials that allow you to achieve mechanical properties but use less weight per unit, that businesses can actually capture a lot of ground in terms of their virgin plastic reduction by pursuing those productivity opportunities for the business.<br><br>Saif Hameed [00:11:05]:<br>Yes. And Patrick, I love the very structured way in which you're laying this out, where you kind of see this on a, I'm almost visualizing a marginal abatement cost curve if you've seen or use those, where you think about cost as a combination of the actual dollars going out the door, but just also, how hard is this to implement, like internal costs, time cost, energy resources, etcetera. And then you say, well, what are the cheapest things I can get for the maximum impact today versus something that might be huge impact, but is going to cost a whole lot more? You and I were at this event that we hosted in Chicago a couple of months ago, and one of the great examples I remember from the meat world that we heard on stage was that the sort of the methane inhibitor that you could feed the cow might be cool and fancy, but it's like $170 per ton on an abatement curve. And actually that's many times more than many cheaper interventions that you might get in yield optimization. And I think that there's probably a lot of those in the packaging world as well.<br><br>Patrick Shewell [00:12:04]:<br>Great analogy. There's lots of simple opportunities to be able to deliver low cost interventions that then build a platform to do more progressive things as the business builds confidence and as we learn how to valorize a lot of these interventions downstream with consumers. And the other dimension I look at this through is there are certain things when you think about circular pack economy that are in our control. So we can design our packaging based on externally validated requirements to make sure that it's recycle ready. We can reduce our use of virgin plastic. We don't necessarily control how that material gets collected, sorted and recycled, but we influence that. So I think it's also knowing kind of what's in your control and what's outside of your control, but always thinking end to end systems, because you don't want to make a design decision that's completely disconnected to the reality of a geography and what sorting or recycling solutions will likely exist in practice and at scale. So I think it's recognizing end to end what needs to be true, but then also knowing what's in your control and you can do.<br><br>Patrick Shewell [00:13:22]:<br>But what do you need to influence to make sure that those systems are established on the same principles and that over time what you're moving towards is a circular pack economy where our packaging doesn't become waste, but it gets circulated and we can then use that kind of circulated material to use more recycled content in our packaging and ultimately reduce the risk of plastics pollution.<br><br>Saif Hameed [00:13:47]:<br>Yeah, I totally agree Patrick. I remember in a past life I did a strategy for the plastic packaging industry consortium in the US, the ACC, and something very similar in Europe for CP on the pulp and paper side. And in both of those universes you ended up with waste management systems as the main kind of node that you needed to figure out and change, which is obviously super difficult. As you know better than me, I want to maybe go back a step towards three of the big buckets of interventions that you talked about recycling, reuse and refill as kind of one bucket, and then let's say minimization and light weighting as a third bucket, and maybe there's a fourth out there. But I think these three are themselves fairly distinct. How do you approach these three and think about trade offs or prioritization? Could you tell us a little more about what each of these is in simple terms that would be easily understandable for anyone, but then also just how you would approach trade offs?<br><br>Patrick Shewell [00:14:50]:<br>Yeah, reduction activities are a great place to start, but it's one of those activities that has diminishing rates of return. You can only down gauge material so far until you lose the functional properties of that packaging. There's only so much packaging that you can remove until that has a detrimental impact, either on the transportability, the freshness, the integrity of the product that that packaging is designed to protect. So we think about that as really the first lever to pull, if that is an available opportunity, pursue it, because it's just good business sense, it drives our sustainability metrics, it adds commercial benefit for the company. Recycled content is a challenging but really exciting space. So because we have this high ratio of soft plastics or flexible plastics, we know that one of the biggest constraints to using more recycled content is the scaling of chemical recycling as the technology that can take that food packaging, that soft plastic, and convert it back into recycled content that can be used to wrap food. And so that's where we played a much more direct role and we see our role as being more than just sourcing material, but actually being a catalyst for sector transformation. And so last year we announced an investment with Amcor, one of our direct packaging suppliers, in a technology innovation company called Lysella.<br><br>Patrick Shewell [00:16:27]:<br>And they operate out of Australia. And Australia. Australia was an interesting case because they had a system where they were doing in store collections of flexible plastics, but because of end markets not existing, they couldn't valorize that material. And so the system collapsed. And we said, okay, well, we're placing predominantly flexible films on the market. The system of collection collapsed. How can we make sure that we create more downstream value so that you can start to circulate these materials? And the reason we care about that is if you don't circulate materials, you continue to have this risk of leakage of plastics pollution. But also you have a policy risk that those materials may be banned, or when they introduce EPR schemes, those materials may carry very significant fees.<br><br>Patrick Shewell [00:17:13]:<br>So what we felt we needed to do was to help to scale circularity of flexible plastics. And so this investment in Lysella is helping to build out one of the first chemical recycling facilities in the country. And that facility will be able to accept soft plastic waste, be able to process that back into crude oil that can then be purified and ultimately cracked into a polymer that can be used to make new plastic packaging. So I think that's a really exciting example of where your role may have to go beyond just sourcing available material and actually recognizing that sometimes there's a constraint to scale. It could be that these are capital intensive, and so there's a need to be able to raise capital to be able to scale out these technologies, or it might be that there's unsurety around the true demand in the market. And so you need to do more to demonstrate that there's downstream brand demand, that we're actually looking to use these materials, that we're willing to pay a premium for these materials. So then the upstream companies feel more bullish, and they can help their investors feel more confident that there is less risk associated with those investments. So I think for chemical recycling is an area where we've really tried to not just use more of the material, but really understand the constraints that could prevent that technology from scaling, and then playing a really direct role in helping to overcome those challenges with other industry players.<br><br>Saif Hameed [00:18:39]:<br>And Patrick, I want to go deeper into how you help build a market, but I also want to maybe just again, beef up the trade off between reuse and recycling. Because in my mind, there's like two big discrepancies in the consumer mindset. One is that I don't think people actually understand the difference between recycling and reuse. If they think about it, I think it becomes a bit more clear. But I think right now they're kind of lumped together in this circularity bucket. The other thing is that I think people confuse and conflate recycled content with recyclability because I actually think the two things are completely different. You could make something out of 60, 70, 80%, 100% recycled content and it's not recyclable in practice ever. And you could have the reverse.<br><br>Patrick Shewell [00:19:26]:<br>Correct.<br><br>Saif Hameed [00:19:26]:<br>And so how do you think about prioritization of your efforts across, let's say, getting more recycled content into the product, making sure the product is more recyclable in end of use or end of life, and making sure the product is reusable. All of which I imagine would require very different sets of initiatives and action plans.<br><br>Patrick Shewell [00:19:47]:<br>Yeah. No, and it's a good prompt because they didn't talk about reuse refill and it's a really critical lever to pull to work towards a circular pattern economy. So we talk about innovative new delivery systems for our categories. There are significant challenges because we really have to think about food safety, food quality concerns. So how do we make sure that we deliver packaging and product to the consumer in the way that they want to receive it, so it's safe to consume and actually it meets their quality expectations. And at the same time, we don't have unintended negative consequences. That is, increased carbon emissions from the packaging that we use or the systems to actually be able to reuse that packaging. So to collect it, clean it and provide it back to the consumer so that it can be refilled.<br><br>Patrick Shewell [00:20:42]:<br>So we do as an independent company, work to really investigate these solutions and where we're seeing profitable outcomes is then working as part of consortia or coalitions. So within the Consumer Goods Forum, there is a reuse refill working group that we participate in, which is looking at kind of scaled programs, geographically located, where they can start to prove out how these systems will work in practice and at scale, to then build momentum that will enable other companies to feel confident about participating in those systems and help retailers feel more confident in enabling those systems as well. So while I don't think this is solved for today, I think this is a really exciting area of innovation and I do think this is something that the industry is going to work really hard to solve for over the next six to eight years. Because if we continue to use more plastic packaging and rely on recycling alone, that's not going to get us to where we need to be to meet this ambition of zero plastic waste by 2040, which is the principle against which the UN Global Plastics treaty is being negotiated. And that may become the pervasive view and goal and mission of the different member states that are negotiating that treaty around the world. And when it comes to trade offs. So it's a really great point that you can't always guarantee that because you're using recycled content, that packaging is recyclable. So you have to do both at the same time.<br><br>Patrick Shewell [00:22:11]:<br>You need to have clear guidelines and following external standards that are universally accepted by industry and other critical external stakeholders. So the CGF Consumer Goods forum, Golden design rules is a good example. Forever Green CEPI for paper packaging is another example of universal standards used to design packaging to meet recyclability requirements. You need to make sure that you design to those principles so that your packaging can be recycled and then at the same time work toward increasing your use of recycled content. But if you do one without the other, absolutely, you could end up misdesigning systems wide and then just relocating the problem. So, yes, you use less virgin plastic, you increase your use of recycled content. But if that material, that packaging format, is not going through collection and recycling, what have you really solved for? Because ultimately, you still have that pervasive risk that that waste gets mismanaged and ends up leaking into nature. So you always have to be thinking, and this is the challenge I often face, right, is people come to me with simple questions, and I'm the one that goes back with complicated answers.<br><br>Patrick Shewell [00:23:20]:<br>Because something might, on the surface, seem like an absolute no brainer. We should absolutely do this. But then when you really unpick it, you realize that there's all of these unintended consequences. So it's always taking that lifecycle assessment approach, that end to end systems approach, to make sure that these solutions really stack up along the lifecycle of plastics versus, yes, they make sense because they appeal to consumers. But you know what? You actually have to use so much additive in that packaging to make sure it meets the functional requirements of your product that it would never be recyclable in practice and at scale. So we're really cautious not to make short term decisions that then lead to long term problems because you never, as a company, want to have to invest in bringing new novel solutions to markethouse and then invest in pulling them out five years later, because then you suddenly learn that these things actually don't work systems wide.<br><br>Saif Hameed [00:24:14]:<br>Yeah, I totally agree. And Patrick, I was a small part of creating the forever green principles that you mentioned, and it was very difficult creating that alignment just partially because there are so many adverse incentives you could create by solving for one aspect of the puzzle.<br><br>Patrick Shewell [00:24:30]:<br>And it's such an interesting topic. I mean, moving from plastic to paper, I think there's this misconception that that's always the right thing to do. And in some cases, it absolutely is the right thing to do. And I love the innovative programs being delivered at Mondelez and other snacking companies. I think there's been real progress. But you know what? Some of the time, it's absolutely not the right thing to do because you might need to barrier properties that mean you have to put so much plastic into that paper that that paper then becomes non recyclable. So what if you really sold for. If the paper pulpers aren't going to accept it, they're not going to transform that back into material that can be reused.<br><br>Patrick Shewell [00:25:07]:<br>You still got single life material. So should you have ever made that switch in the first place? The answer is likely no. And then you've got to look at some of the upstream feedstock risks. Are you making sure that that fiber is sustainably sourced? Are you looking at the carbon emissions along that value chain? What are the comparative emissions? Is this better for worse for the climate? So, yeah, there's a lot of these complex, myriad things that we need to always have as considerations. And paper is a good example where you could be really arbitrary and make it because of consumer perception alone and actually end up putting solutions into market that really long term, we look back on and say, well, why did we do that? That was totally the wrong thing to do.<br><br>Saif Hameed [00:25:51]:<br>Yeah, I mean, I think paper is quite interesting for exactly those reasons, Patrick, when I think about companies that have made that work well in paper, I think of Tetrapack. And the reason is because they can actually collect the package back at their own mill and you can only give it to a tetrapack millise and they basically make their own little loop. And it works if everyone is separating their tetrapacks and getting into a separate tetrapack stream at the same time. I do think that now that strategy does look like a nice advantage for Tetrapack. Do you think they're actually these kind of power positions that packaging players can create for themselves if they manage to get circularity right, where they almost create like a lock in for the brand or the big customers? Are you seeing some of these sorts of innovations play out that way in the market?<br><br>Patrick Shewell [00:26:38]:<br>Definitely. We try to tap into that right through our procurement teams, make sure that we source innovation from the outside. So we do lean on our big strategic suppliers regionally and globally, and ask them to bring those ideas to the table. I think this is a huge strategic advantage and I think it's untapped today because there is still too much demand for conventional formats and conventional materials. And I think a lot of these companies, they either wait for sustainability to become more pervasive or they create green channels. So they create premium products that if you're a company that's committed to goals, that needs to achieve those goals to maintain positive brand equity and reputation. Hey, we've got something for you. And it looks like this.<br><br>Patrick Shewell [00:27:18]:<br>What I look for suppliers to do is really, as we've done, build sustainability into the core of your business and think about everything through a sustainability lens. And I think they can then create really powerful material solutions, material innovations, downstream solutions with us. I think value chain partnership, really aggressive, radical value chain partnership moving forward is such a critical opportunity to unlock as well. And I think that we are starting to lean into cooperation, well as an industry and working along the value chain to improve collaboration. But we need to continue to build trust and we need to be willing to have open conversations around what's working, what's not working and then really lean into collective ways of working to really imagine these future solutions. And I think if suppliers are willing to do that for us, it positions them incredibly for success moving forward. And you know what? Demand is right around the corner. It may still be somewhat limited to those progressive companies that on a voluntary basis have said we're going to do certain things because we really care about this problem and we really want to be part of the solution, but with the policy environment the way it is.<br><br>Patrick Shewell [00:28:36]:<br>Know a UN global plastics treaty being negotiated, potentially ratified by the end of this year. EPR policy established or being established in nearly every single market that we operate in around the world, that is then going to create additional demand because it's going to level the playing field, it's going to harmonize rules and everybody's going to have to play by those same rules. So then you're going to see this kind of on mass transition to different formats that are designed to be recycled, increased demand for recycled content. So while this may be seen as novel, innovative, marginal today, this is going to become the norm in the next three to five years. And so I think those suppliers that aren't thinking about what are they bringing to the table? How are they investing in innovation collectively with the value chain? I think those decisions that they will regret in three to five years time when they're significantly behind the curve. And I think that's where you'll see these more progressive companies that are working on these innovations now really sweat the benefit from all of that voluntary investment and voluntary effort.<br><br>Saif Hameed [00:29:38]:<br>Patrick, I'm well aligned with the trend that you're laying out at the same time as altruistic. We obviously speak with companies across the value chain, and so we work and engage with brands like Mondelez, but we also work and engage with packaging companies like the Amcor kind of equivalents in many industries. And one of the things we hear from the packaging side is occasionally that they have made large investments. Let's say they've replaced furnaces with hybrids, they've put large amounts of money at play, and they find that they're not seeing any immediate commercial benefit. Quoting one conversation I had, I was told that the company expected to see customers lining up to buy this sort of green product at a green premium, and it didn't happen. And my response to that, Patrick, and you can tell me if I'm saying the wrong thing and it's actually totally different. My response is a combination of two things. One is timing, which is exactly what you're telling me as well, which is, look, it may or may not be a now thing.<br><br>Saif Hameed [00:30:37]:<br>It is definitely a three years from now thing. And that's kind of one part of my response. My second part is I often think that the packaging company teams are not speaking with the right people at the brands. And so I think that there is probably a Patrick shul in every big brand. But oftentimes the individual packaging supplier may be speaking with a procurement counterpart, and it might just not be top of mind for that individual in a particular conversation. And so until the packaging suppliers are able to elevate the level of their engagement, where they're able to have a peer to peer conversation with a counterpart who cares about solving this specific problem as part of their individual KPI's or goals or okrs, they're unlikely to see more money coming onto the table to sponsor this sort of innovation, whether it's in a green premium or co investment or otherwise. Would you say I'm right in my sort of two argument response to this challenge?<br><br>Patrick Shewell [00:31:29]:<br>Yeah, I think there's two issues at play. Well, three, I think sometimes businesses are guilty of saying they want something, but then they don't want it enough. And so in your sales process, are you really pressure testing the demand? Is it really there, or is it soft demand that when companies are forced into making a decision and partying with their hard earned cash, are they really willing to kind of walk the talk and we have to do better? Right, as downstream brand owners to be very clear in what we want, what we don't want, what we're willing to pay for and what we're not willing to pay for. Because I think then that actually enables more efficient innovation that then meets principles that we can get behind and then solve shared problems along the value chain. So that's probably homework for both the suppliers as well as for the consumers and the brands. I think working with the right people is super important. You don't want to get buried in a transactional conversation with procurement about innovation and sustainable innovation. I think procurement is a critical stakeholder.<br><br>Patrick Shewell [00:32:39]:<br>They do a wonderful job at our business of understanding the business agenda on productivity, understanding our specifications and our technical requirements, but also looking at our strategic value levers and blending that into the right solutions. And so they constantly bring new ideas to the table. But I think as a supplier, if you find yourself in the cycle of constantly negotiating year over year transactional contracts, you're likely not seeing the bigger picture. And if you've got something that you know has worked really well for other companies, you've been proactive in actually finding the right stakeholders through procurement within that consumer business and having the conversation with them. And I think the third challenge is like how are you then working with those brands to think about how could they valorize that downstream? Because if its an investment to drive goals, thats going to be really difficult for someone like me in a company like Mondelez to justify why would we make that investment? Whats the value return? So theyve got to help us build out that return on investment, that business case view, and then sell that into the company. Because oftentimes its not necessarily for a lack of resource, but its a lack of viable or tangible ROI. And you're often fighting for share of budget against other departments that are just much more sophisticated in being able to make that link and build that bridge. So I think that's where suppliers and brands could actually work more collaboratively.<br><br>Patrick Shewell [00:34:13]:<br>So it's not just a transactional, hey, you have a goal, we've got a solution, here's how much it costs. But it's a much more strategic conversation around what could this look like? What are the brands in your portfolio where this would make sense? What are the markets where maybe there are certain factors where you could potentially premium itize based on these material solutions, or you have tax or EPR fee opportunities, you can reduce that exposure. I think that's got to be a much more collective discussion, bringing brand teams in, because once we understand how we could activate and the downstream customer and consumer benefits, then you can start to sell that business case into your organization and it's more likely then that they'll see that there is a tangible return on investment and they're much more likely to sponsor and support those types of programs.<br><br>Saif Hameed [00:35:04]:<br>Yeah, I think, Patrick, I find that the b, two b organizations that do this best think end to end about the problem their customers trying to solve and how do they position the innovation they're selling as a solution to the end problem that the brand is solving for the consumer.<br><br>Patrick Shewell [00:35:20]:<br>And you've got to get comfortable that companies are going to want to talk to you about long term strategic enablers and short term transactional agreements. So I think suppliers sometimes get a little bit caught up in the short term transactional and they lose sight of where they can help to create value over time. And I think often it's too much the role of the brand owners to set up governance in a way that they're inviting that conversation to happen. Are enough suppliers really pushing for that conversation to happen? Are they networking through their customer businesses, finding people that are passionate about this topic and using that as a way to then have a much more strategic, forward looking conversation? So it's a bit of a chicken and egg scenario, but I think if suppliers are out there, they're frustrated that there's not enough hard demand to support innovative business models or new solutions that they're bringing to market. Are they really trying hard enough to isolate the right people and work with them to build a compelling business case? Because again, what that sounds like to me is they've not really met an unmet need and created enough value where it's a logical business decision that procurement's empowered to make. It sounds like it's probably much more complicated, much more complex. The business case behind it is more sophisticated. So again, you probably need to be working with different people within the organization, and they usually always have those ins anyway.<br><br>Patrick Shewell [00:36:43]:<br>Are you asking the right questions? Are you trying to source the right people within that business that you should be talking to? Are you continuing to push this through the wrong people and kind of expecting somehow you're going to achieve different outcomes as a result? It likely means you're talking to the wrong people. You have the wrong governance in place.<br><br>Saif Hameed [00:37:00]:<br>Patrick, we're coming up on time, which is flown by, and I realize we haven't talked about EPR and I think no sustainable packaging conversation would be complete if we didn't touch on EPR. So would you be kind enough to maybe explain EPR the concept and maybe how you think about it, and it'd just be good to get your views as well on whether you think that's a trend that's here to last, how you're solving for it, how you're thinking about it.<br><br>Patrick Shewell [00:37:27]:<br>So, yeah, EPR is extended producer responsibility. So these are schemes that are set up where the producers pay a fee to ensure that their waste that's produced post consumption of their products is collected, is sorted, is recycled. So EPR schemes are an absolute critical part of solving for packaging circularity. So if I take it a click down, talk more simplistically, if we place a Cadbury dairy milk bar on the market, it's wrapped in a flexible film. Once that Cadbury dairy milk bar is consumed, we would be responsible for paying a fee, and then that fee would be ring fenced and used to build systems to collect that packaging material, to sort that packaging material into the right waste stream, and then to recycle that packaging material. So this does two things. It creates incentive to design products sustainably and reduce your use of certain problematic materials. But it also creates an investment vehicle to build out usually very capital intensive systems that then allow you to have infrastructure in place.<br><br>Patrick Shewell [00:38:43]:<br>That means that collection, sorting and recycling operates in practice at scale through voluntary efforts. I think industry has been really successful at demonstrating to governments that done right, EPR can be really effective. And from those efforts we've actually learned what good looks like and what bad looks like. And so we've translated those learnings into shared principles, which are actually published through the Consumer Goods Forum. And now we use those as an advocacy tool. So as national governments or state level governments in the US, where it's highly democratized and devolved, lawmakers can be educated on how to set up effective schemes to make sure that out the gate policy is designed based on the right principles. And then the follow through from there is that we very successfully start to move materials from low rates of collection, sortation and recycling to much higher rates of collection, sortation and recycling. What we do that's differentiated in developing markets where due to local economy, they may not have access to the capital required to scale these systems, or due to less progressive policy, they may be multiple years away from having effective EPR schemes in place that tackled the type of packaging in place on the market is we're a bit more proactive.<br><br>Patrick Shewell [00:40:00]:<br>And so through the Ocean Fund and the LA Fund that are managed by circular capital, we've started to make direct investments in those markets. So what you can start to do is catalyze development of systems and infrastructure that will be required to increase rates of collection and recycling. While you then advocate for effective EPR. But know that that's maybe going to be a ten to 15 year journey before EPR is really driving meaningful impact on those rates of recycling and collection.<br><br>Saif Hameed [00:40:28]:<br>Super insightful, Patrick. Thank you. By the way, we'll try and include the CGF principles in the show notes for this. It was also great to see circular capital mentioned. Rob Kaplan was actually our first guest on this podcast, the first ever episode. We did like three or four.<br><br>Patrick Shewell [00:40:44]:<br>I definitely won't bob the following Rob.<br><br>Saif Hameed [00:40:46]:<br>Captain but no, I think it's nice bookends to a similar problem. Patrick, thank you so much. I wanted to briefly summarize a lot of the impressive ground we've covered. So I really like how we started with your very well structured approach to how you think about solving for impact, which is let's look at impact and let's look at the cost of achieving that impact. And that's almost like arrange it on a curve or a matrix or however you want to do it. Pick off the low hanging fruits first. Those are easier. Wins will get you further, and actually a lot of the later stuff might become cheaper anyway as you start to approach it.<br><br>Saif Hameed [00:41:24]:<br>Don't go for the hardest stuff, the chemical recycling for all your recycling needs. Figure out what you can do earlier on in the journey as well. We talked about three or potentially even four avenues of driving change in packaging. We talked about minimization and lightweighting as a first one. We talked about reuse and refilling as a second one. We talked about recycling as a third. And then I would almost think of recyclability as a fourth one as well. And then when I nudged you on how you think about trade offs, I think you elegantly sidestepped and said, actually, you need a combination of all of these, and you need them all in different ways at different places in different parts of your portfolio, which I think is really sensible.<br><br>Saif Hameed [00:42:05]:<br>We then moved on to talk about innovation and about how innovation can be a really amazing catalyst for change in a pre competitive way, where companies like Mondelz can almost create a platform for backing and de risking innovators by creating a demand signal that then cascades all the way through the value chain. At the same time, I think there was a really good piece of advice for innovators that are struggling to get their innovation to generate demand, which is either you're getting timing wrong or you're not speaking with the right people, or it's just not an urgent problem or you haven't positioned it in the right way to make it seem like an urgent problem. But it hasn't moved up the stack on priorities, which I think is advice that most b two b players will appreciate. Have I missed anything? Patrick? I think of EPR as part of my innovation bucket as well, and pre competitive collaboration. Have I missed anything else that we've covered? That is an important part of my summary?<br><br>Patrick Shewell [00:43:04]:<br>No, I mean, you made me sound smart. So thanks for doing a great job summarizing my scrambled thoughts.<br><br>Saif Hameed [00:43:10]:<br>You made it easy. You made it easy, Patrick. But I'm giving you one more opportunity, which is if you are parting words of wisdom to give to your colleagues in other brands, other companies. Bearing in mind a lot of our listeners are at smaller brands, startup brands, brands that are earlier on their stage and aren't yet at the size and scale of Mondelez. What is the one piece of advice you would give for those in your role at other companies?<br><br>Patrick Shewell [00:43:34]:<br>Yeah, and I'm jealous. I'd love to work for a smaller company that's more startup because you know what they can disrupt and they don't have the same bureaucratic systems of decision making as giants have. Get started. It's daunting. It's a really technically complex topic. I've worked in this area for just a year and I learn new things every single day and I often feel like the most stupid person in the room. So just get comfortable with being uncomfortable. Just know what you control, understand where you have material impact, focus on the small things, quick wins that make commercial good sense to your business, build that muscle.<br><br>Patrick Shewell [00:44:11]:<br>And then I think once you have started to develop confidence within the business, push to do more ambitious things. I would also finally say with goal setting, really think about being ambitious, but also practical and pragmatic. So it's about setting goals that stretch you, but at the same time making sure that you have roadmaps, that you understand the cost implications of those actions and that you have strong alignment right at the top of your business. Because then that drives really seamless execution. I think a lot of companies that committed early have learned that there's many things that are inside your control where you can really move the needle, but there's a lot within packaging, sustainability and circularity that happens outside of your business that you can only influence. And so be really mindful when you're setting goals to balance ambition with pragmatism.<br><br>Saif Hameed [00:44:59]:<br>Fantastic. Patrick, thank you so much. And thank you to all our listeners as well for tuning in. Really excited to have you on the show, Patrick.<br><br>Patrick Shewell [00:45:06]:<br>Thanks so much for having me.<br>