By Pedro Godinho Ramos Oct 27, 2021

There are no shortages of examples to illustrate how impactful the internet has been in our daily lives. Its coming of age was a big bang event, leading to an explosion of new companies, commercial opportunities, and irrevocable trends, which are still coalescing to form our new digital economy. No industry has arguably demonstrated the internet's transformative power more than e-commerce. Over the span of a decade, we witnessed a revolution in consumer behaviour: each year, people numbering in the billions are choosing to enjoy the ease, speed and convenience of shopping from home on their computers or smartphones.

But for all of the efficiencies e-commerce delivered, its rapid rise has come at a significant environmental cost. In 2017 alone, 63.9 million tons of cardboard waste from the United States and the European Union found itself in landfills rather than in recycling plants1. Producing these cardboard packages is also incredibly water and energy intensive: over 200 kg of water and nearly 1.2 kg of carbon emissions are needed to produce and continuously recycle just one cardboard container2. The scale of the waste and resource consumption is put into even sharper focus by the fact that much of it has been avoidable: The average standard-size box contains about 40% of unused, empty space3.

After over a decade of unprecedented growth, it’s clear that the 25 trillion dollar global e-commerce market4 is here to stay. Optimising the packaging process to reduce its inefficiencies has been, and will be, a critical step towards making the industry more sustainable.

Fortunately, as the packaging crisis continued to mount around the world, a family-owned business in Città di Castello, a small Italian town with a population of 40,000 and situated on the slopes of the Apennines, was developing a powerful, technology-based solution to tackle it.

When corporate evolution meets the consumer revolution

CMC Machinery (“CMC”) was founded in 1980 by Giuseppe Ponti as a mailing machine and packaging manufacturer. Although Giuseppe and his sons, Francesco and Lorenzo, successfully ran this business for nearly three decades, they recognised the days of a continued healthy mailing machine market were numbered.

Having spotted the sharp uptick in online sales, CMC used their prior packaging experience to set up a new packaging division specifically for e-commerce just as the global online retail market began to hit its stride, then valued at over one trillion dollars. At the heart of this new division was CMC’s automated 3-D right sizing, on-demand packaging technology that scans items and automatically produces bespoke cardboard boxes for them using 100% recyclable materials at a rate of 1,000 packages per hour. With each parcel fit to size, CMC’s boxes reduce packaging volume by approximately 40%, significantly improving the packaging’s environmental impact by reducing the consumption of materials needed to produce them and the materials needed to fill empty space. The volume efficiencies also enabled CMC’s system to cut the carbon emissions produced during the lifecycle of each box by approximately 1 kg5.

As word of the speed, reliability, and the positive impact of their system on the packaging crisis spread, CMC began to attract the interest of the world’s largest retail companies as the industry’s focus shifted towards making e-commerce more sustainable.

Scaling up for global impact

But despite its immediate success and market-leading position, the flood of demand was coming in faster than CMC had the capacity to meet. In order to take the business to the next level, CMC needed to look for a partner to invest and enhance their ability to provide the market with its sustainable package solution.

Last year, KKR’s Global Impact Fund invested in CMC, pledging our resources, network and global platform to support their expansion. It was clear from the beginning that there was a strong alignment between CMC and our mission to invest in and scale up companies, enabling them to provide solutions to critical challenges at a global level. This is already being recognised by the industry, with CMC winning the award for E-Commerce at The Sustainability Awards 2021.

But we’re even more excited to work with Giuseppe, Francesco and Lorenzo on the next phase of their journey as CMC is now poised to have an even greater impact on the sustainability of the e-commerce industry. CMC was recently chosen by Amazon as one of the latest companies to receive funding from The Climate Pledge Fund, Amazon’s $2 billion venture investment program that backs companies building technologies, products and services that will help Amazon and other companies accelerate the path toward net-zero carbon by 2040. CMC’s technology is supporting Amazon’s sustainable packaging efforts by creating right-sized packages that eliminate the need for single-use plastic padding. Amazon estimates the technology will eliminate the use of approximately 1 billion plastic air pillows by the end of 2022.

We launched our Global Impact Fund precisely to maximise the impact of businesses delivering solutions to significant societal challenges. Taking CMC’s technology to the heart of the operations of the world’s largest e-commerce retailer6 will have an enormous positive impact on the environment and we are proud to support them in their journey.

1. Eurostat, Packaging Waste Statistics.
2. The Corrugated Packaging Alliance, Life Cycle Assessment of US Average Corrugated Product.
3. DHL. Rethinking Packaging.
4. UNCTAD, Global e-Commerce hits $25.6 trillion – latest UNCTAD estimates.
5. CMC Machinery, Internal documents.
6. National Retail Federation, 2020 Top 50 Global Retailers.