While pallet recycling is naturally a green activity, customers still want data and processes to ensure that suppliers are good corporate citizens.
Providing third-party verification and developing a comprehensive sustainability strategy is part of the game plan moving forward for 48forty Solutions, one of the country’s largest pallet companies.
The national pallet company recently became the first North American pallet recycler in the United States to achieve certification for pallet recycling activities under the Sustainable Forestry Initiative (SFI) Chain-of-Custody (COC) Standard.
The SFI certification ensures that all recycled pallets provided by 48forty Solutions are manufactured from recycled materials. SFI’s COC Standard tracks certified forest content, non-certified forest content, and recycled forest content to the end product. 48forty clarified that this certification only applies to recycled pallets manufactured in company-owned pallet plants.
The Pallet Enterprise recently sat down with Jessica (Jess) Bonsall, director of ESG for 48forty Solutions, to understand the process behind this certification achievement and what it means for the company and possibly the industry as a whole.
Pallet Enterprise: Why seek this certification now with SFI?
Jess Bonsall: We have been receiving more and more customer requests about material sourcing. Do you source from SFI or PFC certified sources? Do you understand where your wood is coming from? Do you have a traceability program in place? And a lot of those questions are difficult for a pallet recycler to answer. And we did a bit of research, and the Sustainable Forestry Initiatives (SFI) COC certification really seemed like the right fit for us. It focuses on how the company manages materials.
Pallet Enterprise: Are there other factors leading to this decision?
Jess Bonsall: Yes, another major driver is transparency in reporting. There are a number of regulations in Europe that have come in force. We’re seeing some of that movement here in the United States, particularly in California. The Securities & Exchange Commission (SEC) is also developing regulations that will impact a lot of our customers when it comes to sustainability claims. Usually, those regulations require some kind of third-party verification on sustainability data that’s reported to an agency. So, undergoing the SFI COC process gave us the opportunity to develop answers to questions being asked by customers as well as provide a third-party certification for our processes.
Pallet Enterprise: What exactly is SFI certifying?
Jess Bonsall: The SFI certification verifies that when we say a pallet is a recycled pallet that it is in fact made completely of recycled (not new) components. Our new or combo pallets are not included because some may contain new wood. Remanufactured pallets are only included if they are constructed completely of recycled lumber.
Pallet Enterprise: What is this audit process like with SFI?
Jess Bonsall: 48forty went through an initial audit of many of its plants and will be reinspected on an annual basis against the COC standard. We have instituted our own auditing process on a quarterly basis, where senior management ensures that recycling and segregation standards are followed. Our audit certificate is good for five years, contingent on passing our annual verification audit. Over the next four years, SFI will come out annually and conduct pre-planned inspections at a different subset of facilities. SFI will likely visit eight to ten 48forty Solutions facilities per year.
Pallet Enterprise: What was harder than you expected in the process?
Jess Bonsall: Mapping out everything was more cumbersome than I had anticipated, given the different approaches taken at various plants. But the auditing process itself was less cumbersome than I had initially anticipated.
Pallet Enterprise: How are you hoping to lead the industry in this process?
Jess Bonsall: By obtaining this SFI certification, we are trying to elevate wood pallets as a really critical packaging material. Unfortunately, nobody thinks about pallets until you start talking about pallets. But that is starting to change when it comes to sustainability, recycling, and sourcing initiatives being instituted by major pallet buyers.
Initially, we are hoping the SFI certification will be a market differentiator for us. Over time, we are hoping to elevate how customers look at recycled pallets broadly as more recyclers engage with the SFI process. We believe our example will open the door for the industry, in a larger sense, to engage with recycling verification. Others will see that this process isn’t as cumbersome as they initially think.
Pallet Enterprise: How has this certification impacted your paperwork, plant segregation and other internal processes? What role has your ERP system played in providing information to SFI?
Jess Bonsall: Having confidence in our ERP system was pretty critical to our success. We had talked about undergoing a certification when I first joined the team. But we wanted to first make sure that our internal accounting process would be able to stand up to a third-party audit. We did test audits to identify areas we needed to improve. We looked at how our plants are managing materials and segregating areas. We also did housekeeping to ensure proper record-keeping because the SFI process is designed around traceability.
SFI isn’t looking for whizzbang accounting processes. They’re not looking for the greatest electronic management system to be put in place. They’re just simply looking to make sure that you have a strong process in place to be able to understand the source of material and segregation of new and used lumber.
Pallet Enterprise: What did the auditor do?
Jess Bonsall: The SFI auditors visited 14 plants within our network to conduct site assessments. SFI staff talked to the plant managers and assistant plant managers. They followed our teams through receiving, through repair, and through shipping and loading. The auditor really dug in to understand exactly what was going on at each location. This was great because there was a worry that the auditing team might approach this process with this one-size-fits-all approach. But they took a lot of care to understand each facility and ensure integrity in the audit process.
Pallet Enterprise: What type of training was required for managers and even production workers?
Jess Bonsall: A big focus for SFI is education and training. Part of our certification required that we train our plant managers very thoroughly on the COC process. All of this training was documented. We conducted a broad workforce awareness campaign, which can be tough when you’re looking at the communication diversity within our workforce. We have tackled this requirement by embedding SFI training into our safety training. We have also created information sharing resources that are posted at all the plants.
All new hires receive this safety onboarding training. SFI is also covered in our safety tailgate meetings that are held once a month.
Pallet Enterprise: Why did you select SFI?
Jess Bonsall: 48forty Solutions evaluated both SFI and FSC agencies.
For SFI, recordkeeping is all based on your own internal material management processes. So, for us, our recordkeeping process is looking at our customer pickup orders and the purchase requests and auditing against those two pieces of information so that we can understand where material is coming from and then where is it being shipped out to or sold to, and what is it being sold as. The material segregation component that typically comes in these types of certification schemes really comes down to how much of what kind of material are you managing.
For FSC, the process would likely require marking component products to ensure compliance within the supply chain.
Pallet Enterprise: This interview isn’t about energy and carbon per se, but how are customer expectations changing with the new SEC and other rules? What environmental related data are customers seeking when it comes to energy use and landfill avoidance? Are you getting more requests for this type of information than in the past?
Jess Bonsall: So, with the SEC, the proposed regulations are related to emissions reporting. We do have more customers asking about our carbon footprint and the impact of wood pallets on climate change. Also, the State of California already has its anti-green washing regulations in place that target claims around sustainability. If you’re making any sort of sustainability claim in a public document, you are required to have methodology that backs up that claim. California has a fine and fee system in place, although exactly how the state will manage those rules has yet to be determined.
Pallet Enterprise: Do you think 48forty Solutions is getting more ESG and sustainability questions due to your size, or do you think those questions are coming for everyone?
Jess Bonsall: Probably a mixture of both. The larger RFPs and RFQs that we’ve been responding to they’re doing open source bids. And the sustainability questions are being embedded in those bid documents. When I first joined the company, it was simply, do you have a sustainability program? Yes, or no? Now we’re seeing that evolve to, if answered, yes, can you provide a copy of the report and if answered, yes, can you share your emissions data? Do you have third party certification for your carbon accounting? So, the questions are becoming more and more granular and both out and inside the RFP/RFQ process as well as in our daily working with our customers. We started off with only a handful, maybe two or three customers, that were requesting things like waste diversion metrics. Now we’ve got a list of close to 50 customers that have sustainability data as part of their required reporting every quarter.
Pallet Enterprise: What is 48forty doing as far as carbon accounting?
Jess Bonsall: We work with a company called Greenly as our third-party partner for carbon accounting work. Greenly conducts audit verification on our company carbon footprint data. Greenly has also supported us in developing a pallet carbon footprint calculator based on the pallet design. You can go in and modify everything from the material input to the type of nail to the type of repair that you’re doing, distance that those pallets are being shipped, amount that’s going in the truck, etc.
Understanding our carbon footprint has helped us to start developing our carbon emission reduction goals. This information has been really insightful for our team because it’s pushed conversations on wood sourcing, for example, to consider climate impact and not just raw material cost.
Pallet Enterprise: What other state environmental regulations are you watching?
Jess Bonsall: Extended producer responsibility (EPR) regulations are starting to come in force in a number of different states. Maine has EPR regulations in place now, as does Oregon, Washington, New Jersey, California and a handful of other states. So that particular set of regulations seems to be matriculating across the country. Similarly, in the carbon reporting requirements, we’re seeing some other states start to onboard state-driven carbon emission reporting requirements as part of your financial data reporting. So, they are taking the SEC’s regulation and putting their own twist on it.
California’s EPR regulations are in development and are really intended to target plastic packaging and go back to manufacturers and shippers of goods. It could be the plastic wrapper that’s around a candy bar. Or it could be the plastic pallet that’s supporting a load. These regulations are far reaching. They don’t directly impact wood pallets per se, but the way that the industry is starting to respond, particularly in the plastic pallet world, has been really interesting.
Pallet Enterprise: Are those just being pushed on bigger companies and publicly reported companies, or would it affect mom and pops too?
Jess Bonsall: No, California affects just about everyone. Regulators tiered the requirements so that the reporting burden is the most stringent for bigger companies. There are other states that are considering tiering lower revenue thresholds in their proposed regulations. So, I think across the board, the intent is to drive companies to start thinking about this information.
Pallet Enterprise: As far as moving forward, what’s the next step for 48forty Solutions when it comes to SFI certification?
Jess Bonsall: We’re looking at undertaking SFI chain-of-custody certification for our new build pallets. It would be the new build and then combo pallets, anything that has new materials incorporated into the pallet. Is the material sourced from sustainably managed forests?
And then we will likely start to pursue some sort of certification scheme for our sawmill locations. It’ll likely be very similar to the chain-of-custody certification that we do for new pallets, but that’ll be the work that we start to undertake over the course of the next year or two.
Pallet Enterprise: How is 48forty Solutions looking at using wood energy as a component of its environmental strategy?
Jess Bonsall: We do have a handful of sites that manufacture pellets from wood waste. They’re predominantly located up in the Northeast, where pellet fuel is readily utilized by the local community. We also work to secure partnerships with biomass energy producers to take any wood waste not used for mulch. Internally, we’re starting to evaluate the feasibility of AirBurners that produce electricity. And so, evaluating new technology and thinking about innovative ways to be more environmentally responsible, I wouldn’t say it’s necessarily about being supportive of one type of industry or another in terms of green energy. It’s really about how we look across our network and how we work to reduce the amount of waste that could be going to a landfill.
Editor’s Note: The Sustainability Forestry Initiative (SFI) is a non-profit organization dedicated to sustainability through forest-focused collaboration. As the issuer of internationally recognized standards and rules for forest management and wood sourcing, SFI certification signifies a commitment to environmental stewardship and ethical practices. For more information on SFI certification, visit https://forests.org/standards/
