While the wood pallet market has a great environmental story to tell, customers want more than anecdotes. Due to reporting requirements being hoisted on major brands and companies, pallet companies are increasingly being asked about their environmental impact.
Some of the biggest companies in the pallet space are producing annual sustainability reports. But this isn’t a conversation just for the big players. Increasingly, pallet customers will be asking for data from even smaller suppliers. They will want to know about the carbon footprint of pallets, landfill avoidance, green energy and recycling initiatives, etc.
One very interesting new development is green certification. 48forty Solutions recently announced that it has become the first company producing recycled pallets to achieve certification to the Sustainable Forestry Initiative (SFI) Chain-of-Custody Standard.
SFI certification ensures that all recycled pallets provided by 48forty Solutions are manufactured from recycled materials. SFI’s Chain-of-Custody Standard tracks certified forest content, non-certified forest content, and recycled forest content to the end product.
Mike Hachtman, CEO at 48forty Solutions, explained in a press release, “With our SFI-certified recycled pallets, customers can trust that they are making an environmentally responsible choice without compromising on cost, quality, or reliability.”
Why seek this certification now? Jessica (Jess) Bonsall, director of ESG for 48forty Solutions, explained, “We have been seeing in RFPs/RFQ more customers asking 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) chain-of-custody certification really seemed like the right fit for us. It focuses on how the company manages materials.”
48forty Solutions went through an initial audit of many of its plants and will be reinspected on an annual basis. The recycler has instituted its own auditing process on a quarterly basis where senior management ensures that recycling and segregation standards are followed.
Now that 48forty has sought environmental certification. Who will be next? Certification is really about paperwork and systems to ensure that the chain of custody principles are upheld across a company. Other pallet companies can do something similar. For example, Commercial Lumber & Pallet (CLP), Inc. in California has offered the ability to produce pallets from SFI sourced lumber since 2012. This certification ensures that 100% sustainable forestry practices are used in SFI certified pallets. CLP achieved Chain-of-Custody Standard certification for new pallets in 2021.
These two companies were the first to seek green certification in the United States. They won’t be the last as some customers look for more green data and credentials.
A major driver has been financial firms, banks and investors looking for environmental impact reporting. In March, the Securities and Exchange Commission issued new standards for climate-related disclosures and claims by public companies. The rules require affected companies to disclose “Climate-related risks that have had or are reasonably likely to have a material impact on the registrant’s business strategy, results of operations, or financial condition.”
These reporting requirements begin in 2026 for the largest corporations. The rules only require disclosures not meeting specific carbon or energy targets. But the thought is that eventually the data and disclosures will lead to specific targets and potentially penalties. As soon as the SEC issued its rules, more than 20 states have filed seeking to challenge the requirements.
Even though the rules do not apply to private companies or small businesses, in the future, the SEC guidelines could be used by lenders, investors and customers to monitor a company’s environmental record. If you don’t share your data, you may lose out on funding or customers. Capturing energy consumption as well as recycling efforts or landfill impacts is something that pallet companies should monitor because customers may ask for these details as they begin to comply. A key place to start is to develop a green team that tackles sustainability and environmental considerations for your company. This could include management, sales/marketing as well as operations.
Even though Environmental, Social and Governance (ESG) initiatives have received some black eyes in the press and on social media, a focus on green initiatives helps pallet companies quantify and improve upon an already stellar story.
