For forest products, paper, and packaging manufacturers, sustainability has become an increasingly complex challenge. On the one hand, sustainability is woven into the industry’s DNA. It can’t exist without a steady supply of sustainable raw materials, so it’s in every producer’s best interest to treat forests as a resource to be nurtured, not exploited. And over the past several decades, the industry has made impressive strides in creating a more sustainable approach to their entire business, from improving forest health to optimizing production for lower energy consumption and less scrap.
However, other factors are putting sustainability at the top of the industry’s to-do list. Across the globe, governments are enacting standards and regulations that will put new demands on paper and packaging producers. France’s anti-waste legislation aims to eliminate waste and pollution from the design stage and transform the system of production, distribution, and consumption from a linear to a circular economic model. Even with a clear commitment to sustainability, producers will face mounting pressures for accountability and compliance. Investors are also insisting on changes. Nearly 60% of respondents to a recent survey indicated an increase in interest in environmental, social, and governance (ESG) investments, and 19% reported incorporating ESG standards into their portfolios.
Expanding regulatory mandates
In addition to insisting that paper and packaging suppliers adhere to stricter sustainability mandates, regulators and investors are moving toward more intensive scrutiny of a producer’s supply chain. For example, beginning in 2023, LkSG, the German supply chain due diligence law, requires large companies to adhere to human rights and environmental due diligence obligations in their supply chains. Under LkSG, companies will assume responsibility for their entire supply chain, but with a gradually reduced liability for lower tiers. This means that companies are initially responsible only for oversight of their direct suppliers, not for lower-tier suppliers. However, if a company becomes aware of a grievance in the supply chain, it will be required to take remedial action.
A surge in “green” demand
While a push toward greater sustainability increases accountability pressures and drives fundamental changes in operations, it also presents opportunities. According to Accenture, 80% of consumers plan to buy more eco-friendly products over the next five years, and 55% believe paper-based packaging to be the most environmentally friendly option. Also, given the pandemic-driven change in consumer buying behaviors, eCommerce volume is expected to grow nearly 18% year-over-year in 2021—which will also drive demand for packaging.
Creating the best of both worlds
So, the question is: how can producers balance the growing pressure for greater sustainability and growing demand for their products? The good news is that it’s not an either/or choice. Many of the tools and best practices that help paper and forest product producers streamline their internal operations and supply chain relationships can help them achieve their sustainability imperatives.
It all starts with harnessing and integrating a complex mix of heterogeneous data sources for mandatory and voluntary sustainability reporting. As companies embark on their digital transformations, one of the top priorities is breaking down the data silos that inhibit frictionless collaboration across the enterprise. The same capabilities can help improve visibility and access to sustainability-related data such as greenhouse gas footprint, and provide the auditability needed to demonstrate compliance to regulatory bodies, investors, and end customers.
In terms of production, manufacturers can drive a more sustainable approach across plants using standardized and customized KPIs to improve insights and decisions. They can also use advanced analytics and IoT technology to optimize production and better predict quality. By integrating business and manufacturing systems, companies can closely monitor and control manufacturing processes and operations for a more efficient shop floor—and deliver products with more recycled content, less packaging, greater recyclability.
Paper manufacturer Steinbeis is a prime example. The company uses sensor data and state-of-the-art machine learning to automatically monitor its production lines. Real-time data analysis allows plant managers to respond to incidents such as unusual machine behavior, excessive energy or raw material consumption, and product quality issues before they affect production or trigger downtime.
Finally, improved visibility and accountability in sustainability will support producers’ efforts to secure and maintain a social license to operate in their communities. Detailed, auditable ESG and sustainability data can help demonstrate that producers do more than simply comply with the law—it can show the degree to which they make sustainability a priority and guiding factor in their long-term strategy.
Each day, more packaging producers and forest products suppliers are discovering that doing the right thing for the planet and doing the right thing for the business aren’t competing priorities. In fact, the same solutions and practices that make the business successful and efficient can support its sustainability and ESG initiatives. You can find examples of how innovative producers are powering sustainable growth here.