Pressure, both from environmental groups and local communities, has been instrumental in nudging multinational companies to become more environmentally responsible. Consumer preferences are shifting as well, though most have made it clear that they only want environmentally responsible products as long as there is no impact on their performance and price.
Furthermore, the numbers make their own business case. According to the United Nations, raw materials have become more difficult to procure; and with the world approaching a population of nine billion by 2050, companies have to be smarter and more conscious about the materials they source for their products. Hence growing concerns over environmental degradation, especially deforestation, have led to a meeting of the minds of the world’s leading companies and non-profits. These trends have long been underway with in the consumer packaged goods (CPG) industry, which is a massive consumer of wood products such as paper.
Procter & Gamble is one company that has been able to improve its sustainability performance due to its collaboration with its suppliers and some of the world’s most recognized NGOs. To learn more, TriplePundit recently spoke with Tonia Elrod, P&G’s associate director of sustainability and communications, to learn more about what it takes for a company that operates in 80 countries to ensure it has a reliable supply of responsibly sourced paper.
“The bottom line is that we can accomplish more with our partners, who all have the same goals,” said Elrod, “It’s just that we all have different points of view.”
CPG companies like P&G always face fierce competition, on both pricing and product quality. The company’s suppliers, such as Domtar, often operate on very thin margins. And NGOs focus on ensuring that ecosystems and local communities do not suffer due to the world’s growing demand for pulp and paper products. Together, these organizations are partnering with P&G on one overarching goal: to increase the global supply of Forest Stewardship Council (FSC)-certified paper available for the company’s line of paper products.
“Our goal was to have 100 percent certified fiber, and we’ve accomplished that,” explained Elrod. “But we’d like to get to 100 percent FSC certified paper.”
Currently, P&G estimates that about half of its entire supply of pulp and paper is FSC-certified. Ideally, the company would like to source far more, but there is a huge hurdle: concerns over deforestation and land rights overseas have nudged consumers to demand more responsible products. Many companies are responding in kind, but there is just not enough paper that can meet such certification standards. And that is where the NGOs come in – they understand the world of forestry, small landholders and the concern of local communities. To that end, organizations such as WWF and Rainforest Alliance can do the heavy lifting to ensure that these new sources of pulp and paper are, in fact, responsible.
Several years ago, Domtar realized the need in increase the supply of FSC-certified paper. The Montreal-based company saw an opportunity with small landowners that comprise much of the forestry sector across the southeastern U.S. The result was the formation of the Four States Timberland Owners Association (FSTOA), which works with forest managers and provides them the necessary tools so that they can attain FSC certification.
Meanwhile, P&G saw the changes in the CPG market and realized it had to show that it could become a responsible corporate citizen. A sustainable supply chain was not a luxury – it made sound business sense. Domtar and P&G agreed to become corporate partners in order to boost the amount of FSC-certified pulp fiber in this region. It was not an easy task, as 75 percent of the forests in the southeastern U.S. are owned by small landholders – and most have holdings less have 100 acres. But five years after the FSTOA was formed, an additional 500,000 acres of forests are now certified with the FSC. Once these landowners could see the business opportunities they could gain due to the P&G brand, they could see how this collaboration presented itself as a strong business case.
But according to Elrod, collaboration goes beyond a company’s supply chain and any public-private partnerships. As the saying goes, collaboration is the new competition, so P&G says it is working not only with its competitors, but also beyond the CPG industry.
In a recent campaign, P&G partnered with one of its fiercest competitors, Kimberly-Clark. P&G has long vied for shelf space and market share with that company’s brands, which include Kleenex and Cottonelle. “But it was important to us that we worked together on a campaign to raise consumer awareness about FSC,” said Elrod. “Both companies want to drive consumer demand, but awareness is key if we’re going to increase that supply of FSC-certified paper.”
The partnership went beyond the CPG sector, and also included brands such as Patagonia, Pottery Barn, HP and furniture maker West Elm. The “One Simple Action” campaign educated consumers about the benefits of managed forests, including wildlife protection, the guarantee of indigenous people’s rights, a reduction in the use of chemicals, water quality and of course, deforestation.
Yet there is another reason why certification programs such as FSC are important. As the majority of forests here in the U.S. are owned by small landholders, profit margins on these lands are often thin. So as is the case with any commodity, farmers need a guaranteed price if they will continue to be willing and able to keep their title to their lands. The promise of a steady price for pulp and paper, which in turn allows P&G and other companies to maintain a regular supply of this certified raw material, can prevent the loss of land to other purposes that will not be as environmentally friendly.
“It’s important to note that if landowners aren’t getting value out of their trees, they may sell their land for an alternative use,” added Elrod. “We don’t want that land to be lost for another purpose, as it’s a form of deforestation if those forests end up as strip malls or housing developments.”
To Elrod’s point, if a forest is managed well, then that land devoted to timber ends up providing a renewable resource. She also cited a statistic often given by the American paper industry, which claims that over four decades after the first Earth Day was commemorated in 1970, there are now more 20 percent more trees across the U.S. The end result is that these trees sequester more carbon; Elrod noted that American forests are responsible for offsetting 13 percent of America’s carbon emissions.
In order for these campaigns and collaboration to work, Elrod explained that expectations and goals have to be clear at the onset. Some companies have very clear goals, but struggle when it comes to executing them. And other companies have the capacity and knowledge, but articulating an exact vision can present an enormous challenge.
“What makes all of this collaboration possible is a very clear end game,” insisted Elrod. “There has to be a clarity of goals, and a clarity of vision.”
Image credit: Leon Kaye
ItemProp WP 3.5.201610051 by Rolands Umbrovskis https://umbrovskis.com/ ItemProp WP 3.5.201610051 by Rolands Umbrovskis https://umbrovskis.com/ end