With regulatory bodies around the world clamping down on carbon emissions, mill products companies have an opportunity to lead the way for sustainability in manufacturing.
The global regulatory push for a more sustainable, producer-centric approach to managing paper and packaging waste aligns with customer preferences. Pulp and paper companies that take a leadership position on carbon reduction stand to gain competitive edge.
The regulatory push for sustainability in manufacturing
Despite the war in Ukraine distracting the world from climate change, regulatory bodies around the world continue to work on curbing carbon emissions. Initiatives include:
- The US Security and Exchange Commission’s proposal to require corporations to disclose how they manage climate-related risks and how those risks could impact their business. It also would require them to provide information about GHG emissions produced directly from their own operations as well as indirect emissions from the energy they purchase, and from upstream and downstream activities.
- Europe could see similar standards as part of the EU Taxonomy, a policy designed to establish uniform sustainability and GHG reporting standards across the European Union. The EU also is set to implement a plan to tax imports of certain materials and goods based on the greenhouse gases emitted to manufacture them.
- The Carbon Border Adjustment Mechanism (CBAM) policy initially will apply to goods considered at highest risk of carbon leakage, including steel, cement and aluminum (but not pulp or paper). However, these kind of policies indicate that regulatory requirements for all carbon-intensive industries are likely to mount in the future.
- Extended producer responsibility (EPR) policies are in effect in many US states, and more are considering them. EPR policies shift responsibility for end-of-life management of products upstream to producers/manufacturers, and are in place in five Canadian provinces and throughout Europe.
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5 ways manufacturers can lead the sustainability charge
As customer preferences line up with the regulatory push for more sustainability in business, the opportunity for paper and pulp companies is growing.
To capitalize on that opportunity and set the pace for sustainability in manufacturing, companies need to focus on five key areas:
- Integrate sustainability into organizational DNA
- Boost supply chain visibility
- Improve reporting
- Collaborate with other companies
- Monitor regulatory developments
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Prioritize sustainable practices across the business
Paper and pulp companies have begun to make sustainability part of their organizational DNA, integrating carbon footprint and other sustainability-related KPIs across their business, from sourcing to product design to manufacturing operations to transportation/logistics.
In order to reach these goals and design products responsibly, manufacturers need the ability centrally monitor, manage and optimize business/operational processes. That way, they can have a clear line of sight into the relationship between sustainability investments and business success.
By starting with responsible product design, a company can determine if a simple adjustment in the type of ink used for a paper product will impact that product’s recyclability. Or, if switching from virgin material to recycled material impact the performance and profitability of a product.
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Regain control with a view into the supply chain
With new carbon-reduction rules looming, manufacturers need tools to track and analyze the make-up (and prove the origin) of the materials and equipment they use.
Periodically, they need to be able to calculate product footprints at scale across the entire product lifecycle. A continuous feedback loop enables them to optimize their products and processes, and evaluate their supply chain partners based on sustainability performance.
For example, in addition to supplier price and quality, companies can see how one wood or fibers supplier or pulp mill performs against another in terms of emissions.
In a world where one broken link in the value chain can undermine a company’s sustainability goals and initiatives, manufacturers must be able to evaluate suppliers beyond just price and reliability through track-and-trace capabilities.
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Step up reporting via a central cloud platform
Compliance with new sustainability rules from the SEC and the EU goes beyond track-and-trace. Manufacturers need to be able to collect data from disparate, sometimes unstructured sources, both internally and from other sources in the value chain, and standardize it.
Then, they need to put the data together and package it in various formats to meet reporting requirements that may differ, depending on the jurisdiction.
A standard cloud platform can help by providing a single reservoir to collect trusted data and tailor it for multiple reporting formats.
Moreover, a platform that’s supported with AI and machine learning tools can make reporting much easier by detecting patterns across locations and units. It also simplifies the work of measuring progress toward internal sustainability goals.
Strive towards sustainability, together
Achieving carbon reduction goals requires communication and cooperation with other companies. Complying with EPR policies and evaluating supply chain partners based on their sustainability performance can’t be done without others.
Manufacturers can turn to digitally connected business networks to facilitate data sharing and cooperation. These networks also can help companies collaborate on new environmentally conscious business models, services and revenue streams.
As part of a network, companies are aligned and sharing risk in working toward their sustainability goals.
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Keep an eye on what’s next
Staying on top of new government policies, requirements and rules is no small task, especially for companies that operate in multiple countries, regions and markets.
ML and AI-based tools can help by scanning a huge array of documents, websites and other relevant sources to identify — and alert organizations to — any legal, regulatory or policy developments that could impact the business. For instance, if there’s a new tariff requirement in Asia or another US state passes an EPR law, they’ll know about it.
According to the European Commission, the pulp and paper industry has an excellent rack record in resource efficiency and innovation. Manufacturers shouldn’t miss out on the opportunity to build on that legacy.
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