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What Does Biodegradable Really Mean

And why it matters for your business

What Does Biodegradable Really Mean

If you’re interested in starting an environmentally sustainable business, you’ll have to think about whether your products or packaging are biodegradable. For such a common term, though, there is plenty of confusion about what it actually means.

So, what does it mean for something to be biodegradable? In basic terms, the definition is simple: If something is biodegradable, then, given the right conditions and presence of microorganisms, fungi, or bacteria, it will eventually break down to its basic components and blend back in with the earth. Ideally, but not always, these substances degrade without leaving any toxins behind.

For example, when a plant-based product might break down into carbon dioxide, water, and other naturally occurring minerals, the substance seamlessly mixes back into the earth, leaving no toxins behind. Unfortunately, many materials—even ones with a biodegradable label—do break down in a more harmful manner, leaving chemicals or other damaging substances in the soil.

In terms of environmental benefits, the best biodegradable material will break down quickly rather than taking years. It leaves nothing harmful behind and saves landfill space. Unfortunately, not everything that’s advertised as “biodegradable” meets these criteria. If you’re going to run a green business, you should know how to make sure the materials you use are safely and efficiently biodegradable, as well as accurately labelled.

What Materials Are Biodegradable?

Some items are obviously biodegradable. Examples include food scraps and wood that hasn’t been treated with chemicals to resist bugs and rot. Many other items, such as paper, also biodegrade relatively easily. Some products will biodegrade eventually, but it may take years. This includes steel products, which eventually will rust through and disintegrate, and some plastics.

However, conditions are important to encourage biodegradability. Products that will biodegrade in nature or in home compost heaps may not biodegrade in landfills, where there’s not enough bacteria, light, and water to move the process along.

Biodegradable ≠ Compostable

Many organic companies use biodegradable packaging for products or produce organic biodegradable products, but the items may not be as biodegradable as customers think. To make matters more confusing, many items are labelled as “compostable.”

Compostable products are all biodegradable, but they are specifically intended for a composting environment. In the right setting, these products break down even more quickly, usually within 90 days, and they leave behind a nutrient-rich organic material called humus, which creates a healthy soil environment for new plant growth.

Whether an item is compostable or simply biodegradable, it needs to be placed in an environment that facilitates its breakdown. Compostable products require composting environments. But, even some biodegradable items need to be degraded in a controlled composting environment or facility—and very few of these facilities exist in the United States. These large facilities are designed to keep materials at 140 degrees Fahrenheit for 10 consecutive days.

For example, PLA, a popular biodegradable material for green companies, will only decompose into carbon dioxide and water in a controlled composting environment, not in a backyard composting arrangement, according to standards developed by the Biodegradable Products Institute.

With all of these variables, business owners need to communicate clearly with their customers about what they mean when they say “biodegradable.” Even better are those businesses that take it a step further and educate their customers about how to properly dispose of their products.

Biodegradable Claims on Plastic in California

Businesses operating or selling to customers in California will have an extra impetus to be careful with these terms. California tends to have more stringent regulations involving food and product environmental claims (hence the warning labels stating items have been “found by the State of California to cause cancer, birth defects or other reproductive harm”).

When it comes to biodegradable claims, the state is also out in front with regulations limiting the use of certain terms. For example, in Calfornia, it’s illegal to sell any plastic item, or any item with plastic packaging, that includes a label stating it’s “biodegradable,” “degradable,” “decomposable,” “compostable” or “marine degradable” (or any alternate form of those terms).

It’s also illegal in the state to sell a plastic product labeled “home compostable” (or some equivalent claim) unless the manufacturer holds a Vincotte OK Compost HOME certificate. Vincotte is a Belgium-based inspection and certification organization. Finally, the state bans the use of potentially misleading marketing terms, such as “environmentally friendly,” when they’re applied to plastic products and packaging.

Use Terms Carefully

Whether you’re doing business in California or not, it’s wise to be thorough in planning your sustainable business. After all, terms like “biodegradable” are only meaningful if using them actually helps the environment. And that’s the goal for more and more business owners today.

Smurfit Kappa rejects a bid from International Paper

Smurfit Kappa has received an unsolicited acquisition proposal from International Paper (IP), which it has rejected.Smurfit Kappa rejects a bid from International Paper

IP reportedly proposed to acquire Smurfit Kappa, and Smurfit Kappa shareholders would receive a combination of cash and a minority holding in the combined business.

Europe’s largest cardboard box maker Smurfit Kappa said the proposal “fails entirely to reflect the Group’s strong growth prospects and attractive industry outlook” – which could leave the door open to an improved offer being considered in the future.

Smurfit Kappa’s enterprise value is about €9.8bn, according to FactSet data.

The board of Smurfit Kappa said after considering the proposal it was in the best interests of the Group’s shareholders to pursue its future as an independent company.

Smurfit Kappa recently announced EBITDA for 2017 of €1.2bn and a full year ROCE of 15%.

Plcs are obliged to ensure there is not a false market in their shares. It also increases the pressure on the bidder to comply with relevant regulatory timelines. This may have contributed to SKs decision to make the approach public.

Such a deal would create a super-group paper company and would mean a review of the deal by numerous competition authorities given the scale of the transaction and the spread of the two companies’ footprints. However, it may be deemed that these are more complementary than overlapping or there may be approval conditional on a number of divestitures. The Ball-Rexam mega deal approval also stipulated certain divestitures.

Liam O’Mahony, chairman of Smurfit Kappa said: “The Board of Smurfit Kappa has unanimously rejected this unsolicited and highly opportunistic Proposal.

“The Board believes that it is in the best interests of all stakeholders for the Group to pursue its future as an independent company, headquartered in Ireland, operating as the European and Pan-American leader in paper-based packaging. We strongly advise shareholders to take no action.”

International Paper did not comment.

Nicholas Mockett, head of packaging M&A at Moorgate Capital, said: “It is a strong rebuttal of the approach which may ensure IP walks away at this stage. A plc has a duty to shareholders to give due consideration to a legitimate approach. If IP increased its offer Smurfit Kappa would therefore reassess. The approach is not surprising given Smurfit Kappa’s strong position in Europe and Latin America and IPs strengths in North America. IP has recently increased its core focus, with the recent Graphic Packaging transaction.”

Sealed Air Corporation sells New Diversey

Sealed Air Corporation is selling its Diversey Care division and the food hygiene and cleaning business within its Food Care division.

Sealed Air Corporation

Under the collective banner New Diversey, the division has been acquired by Bain Capital Private Equity for approximately $3.2bn (£2.57bn).

The sale will allow Sealed Air to focus more sharply on its provision of food, product and medical packaging solutions. Upon closing of the transaction, Sealed Air expects to use the proceeds to repay debt and maintain its net leverage ratio in the range of 3.5 to 4.0 times, repurchase shares to minimise earnings dilution, and fund core growth initiatives, including potential complementary acquisitions to its Food Care and Product Care divisions.

New Diversey integrates chemicals, floor care machines, tools and equipment, with a wide range of technology-based value-added services, food safety services and water and energy management. It will continue to employ approximately 8,600 people globally. Diversey Care and the related food hygiene businesses combined generated net sales of approximately $2.6bn (£2.09bn) in 2016.

The deal includes a formal offer to acquire certain of Diversey’s business in France and the Netherlands, which may be accepted following Works Council consultation. The results of operations of New Diversey will be reported as discontinued operations beginning in the first quarter of 2017. Sealed Air is tentatively scheduled to report its first quarter 2017 results on 9 May, 2017.

Speaking about the likely strategy behind the acquisition, Nicholas Mockett, head of packaging M&A, Moorgate Capital, said:“Sealed Air is a global market leader in food and healthcare flexible packaging markets. It is one of the few packaging companies with brands which are recognised by consumers, particularly Cryovac and Jiffy. There was a rationale behind the $4.3bn acquisition of Diversey in June 2011 but the markets did not like the deal and pushed Sealed Air’s share price down as a consequence. Selling the business on to Bain Capital for $3.2bn is drawing a line under that chapter.”