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Finding the Environmental Sweet Spot


May 1, 2008
By Pulp & Paper Canada

To survive and thrive in the current business climate, resource companies need to adopt the Triple Bottom Line (TBL) as a new operating framework that brings environmental and social concerns into har…

To survive and thrive in the current business climate, resource companies need to adopt the Triple Bottom Line (TBL) as a new operating framework that brings environmental and social concerns into harmony with financial performance.

As the world continues to focus on global warming and aggressive and excessive resource exploitation, such as the destruction of old-growth forests in North America and elsewhere, many consumers and businesses are using their purchasing power to support companies that place sustainability at the forefront.

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Companies that adopt the TBL can avoid the false conflict between superior business and environmental performance and put themselves in the “environmental sweet spot.” The sweet spot is where environmental and business interests overlap, as with energy efficiency or other wastesaving processes, or with the creation of products and services that protect or restore the environment.

The sweet spot is where your organization wants to be for many reasons. It is particularly important for companies that want to maintain and strengthen the good name of their brands. When your activities enhance the brand, you maintain or grow market share, improve relationships with customers and other stakeholders, and create positive images for your products or services.

At the moment, consumers and businesses want to see less paper used in packaging and assurance that the paper used is harvested responsibly and not taken from critical eco-systems. Wal-Mart, for example, recently ordered its 60,000 suppliers to reduce their primary and secondary packaging and take other environmentally protective actions, a move that is expected to save Wal-Mart and its suppliers almost $11 billion over the next five years.

For the pulp and paper industry, this means reduced sales. Although reduced demand is a concern and rightly so, the P&P industry is now in a position to charge a premium based on the environmental actions it is taking to respond to the concerns of its customers, as other industries are doing. Consumers accept the need to pay more for quality and environmental responsibility is increasingly seen as an aspect of quality.

The P&P industry has already taken steps to attain its environmental sweet spot. That sweet spot could be enlarged in two important ways: (1) agree on adopting a single certification program and (2) take effective measures to protect old-growth and rainforests whether or not the P&P industry is logging in them. Fair or not, consumers link deforestation to the actions and performance of P&P companies, and they increasingly expect steps will be taken to stop the ruin and exonerate their purchases.

Charging higher prices that reflect the costs of environmental protection efforts has the additional benefit of reminding consumers that they have a role to play as well. As with many products, consumers must do more in terms of reuse and recycling, a campaign that resource industries should support to the maximum extent possible.

As the entire pulp and paper value chain – from resource extraction companies to consumers to the solid waste industry – accepts its collective responsibility for environmental impacts, P&P companies will gain by following the principle of fair disclosure. This “truth telling” enables companies to explain successes and admit shortfalls and say what they plan to do to improve. At the same time, companies can fairly point to what consumers can do to help achieve shared environmental goals. With each link in the chain doing its part, environmental sustainability can be advanced and become a shared passion and collective effort, which will be to the advantage of the P&P industry and the companies in it.

A packaging company I know well adopted this approach and has taken to talking about its environmental efforts in terms of the entire packaging value chain, outlining the packaging process from resource extraction to production, use and disposal. Along with gaining the trust of its stakeholders, the company’s balanced disclosures and solid efforts to achieve sustainability are already translating into stronger relationships with demonstrable business benefits.

Fair disclosure means telling the whole story – good and bad – but companies needn’t beat themselves over the head with past failings. Looking candidly at and reporting out strengths and weaknesses, success and failures, is critical to achieving improvement and developing trust. The industry and society face difficult challenges in the future and while it will take hard work and additional resources to protect our remaining old-growth forests, for example, it must be done and it starts with the truth.

As a P&P company, you must make a strong effort individually and within your industry, and you must walk the talk, but no one expects perfection and you needn’t take all the responsibility onto your shoulders if responsibility lies elsewhere.

Although environmentalists have goals the P&P industry may not be able to satisfy, it is critical for the industry (and individual companies within it) to talk openly and candidly with environmental advocates to identify and reach for an environmental sweet spot that all can accept. Business and advocates are getting better at this: it is now much easier to sit down with Greenpeace than it was 20 years ago.

If all of this sounds like a gigantic burden with uncertain payoff, take heart. The oil industry is even less beloved by environmentalists than yours and yet companies like Shell and BP have found ways to work with advocates by adopting the Triple Bottom Line and the principle of fair disclosure. If they can do it, so can you. If you willingly disclose real information about your company, and negotiate on the basis of this honesty, i. e. from a position of trust, chances are you and the other parties will find some sort of common ground or at least ways of moving towards it.

Climate change and other related global issues are uniting what otherwise would be competing concerns and have already started to force accommodations, with many more to come and it is important that the P&P industry recognize and address these societal concerns. Finding and achieving environmental sweet spots won’t be easy, especially with the North American P&P sector and its many other challenges, but the potential rewards are more than worth the effort.

PPC

Andrew Savitz is the author of The Triple Bottom Line and a senior consultant with Sustainable Business Strategies.


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