 | It’s interesting how onebuzzword or phrase canmean so many differentthings to so manydifferent people. |
Earlier this year, my son, Chaille, wrote on the business concept of Environmental, Social and Governance (ESG) principles being incorporated into procurement processes and policies.
ESG, which started as a business philosophy in the investing world, is starting to gain traction in how companies view vendors and purchase products. It may not be the most important thing when companies really need a pallet. But it certainly will impact larger companies and their strategic relationships as corporate compensation packages get increasingly tied to goals beyond merely making a profit.
Chaille and many others in the pallet industry have been focusing on the environmental aspect of ESG given the positive benefits that pallets provide to global supply chains. The reality is that the pallet sector has a positive message to share. Pallets not only move the world; they make supply chains more efficient and reduce waste by protecting products every day.
Pallets made from wood are widely recycled and may be among the most recycled products in the supply chain. According to Nature’s Packaging, the latest figures suggest that 341 million pallets were recovered in 2016, out of which only 25.39 million wooden pallets were landfilled. This results in a 95% recycling rate. That is amazing! These pallets aren’t recycled to be ignored. Recycled pallets are actively turned into other pallets, mulch, animal bedding and other wood products.
For some people, words like sustainability or ESG are merely about being a responsible corporate citizen, reducing waste and limiting environmental impact where possible. Having discussed this issue with some others in the pallet industry, ESG is being hijacked to mean a lot of other things. Conservative media outlets have identified how ESG is being used by some for radical social and business transformations. Some of these policy prescriptions have nothing to do with saving the planet or really making the world better… at least in my opinion. Many of these policies may not be popular with the overall forest products industry given its more libertarian or conservative bent. I know a number of things I have heard about seem like the kind of things that I couldn’t support.
I am all for sound, responsible environmental policy. As a Christian, I believe that we are all called to steward the earth well. That means different things to different people. And that’s where environmental goals and even green marketing can run into challenges.
When a phrase like ESG becomes popular, it isn’t surprising to see some people try to manipulate it for their own financial or political ends. That’s where you have to ask deep questions and get beyond the buzzwords. My staff is all for understanding the environmental benefits and impacts of wood packaging. Overall, we believe the industry has done and is doing a lot of good things when it comes to greening the supply chain. But we are really weighing whether or not we are going to use the phrase ESG anymore because it has become politically charged. For some, it brings up the notion of socialism or woke political objectives. To avoid the stigma associated with ESG, we are considering using the words/phrases – sustainability, sustainable packaging, green supply chain, environment stewardship, environmentally responsible purchasing, green packaging and other terms.
We are tempted to go the other way and make ESG mean “Environmental and sustainable goals.” I don’t like giving ground to people who take advantage of others’ desire to be good neighbors. But I think it may be too hard to reclaim that phrase. I am curious about what you think. I welcome you to write to me at edb@ireporting.com.
One difficult aspect of the ESG terms is that it deals with social policy and government regulations as well. So, it goes well beyond environmental issues. You man think, ‘Why does the term matter?’ Well, the side that defines the terms tends to win the debate.
When referring to green packaging or environmentally friendly packaging, we are talking about practices such as optimizing the pallet to reduce product waste, recycling pallets, upcycling old pallets, creating mulch and other byproducts, using software to improve pallet design, building pallet pools, manufacturing pallets stronger initially to last more trips, optimizing backhauls and transportation routes, throwing less damaged products in the landfill, utilizing fuel-efficient trucks and forklifts, planting trees and working with sustainably sourced timber suppliers, tracking loads and improving planning with enterprise software, reducing plant waste and becoming more efficient.
Greening a supply chain could even mean just more palletization in places where many products are transported in small loads and manually transported.
Even if we don’t use the term ESG, the pallet industry needs to tell its story. We shouldn’t let others define our story. A good example of a proactive approach is the Environmental Responsibility Report released recently by Kamps Pallets (https://www.kampspallets.com/kamps-releases-2021-environmental-sustainability-report/) or CHEP’s Zero Waste World initiative and its annual reports (https://www.chep.com/us/en/sustainability).
Beyond just telling our story, the industry should work to improve our story by reducing waste and innovation. In the future, our publications and the industry (that’s up to you) may decide not to use the term ESG anymore, but we are still as committed as ever to being responsible citizens. We have a good story to tell and can make it better. Let’s not let some crazy actors keep us from a sustainable future just because one term has gone off the rails in some situations.
