How Companies Can Advance Environmental Goals – No Matter the Industry
By Robert Gerber and Sonia Menon, of Neal Gerber Eisenberg
Plastics. Electronics. Packaging. Not exactly what comes to mind when we think about sustainability. But as societies and governments continue grappling with climate change, companies in these industries will have to assess their environmental footprint and develop a sustainable plan to reduce it.
We recently hosted a panel with Lisa Kaplan, Executive Vice President, Marketing and Strategic Planning of plastics distributor M. Holland; Althea Ricketts, Associate Vice President, Corporate Initiatives of audio equipment manufacturer Shure; and David Schmidt, CEO and President of packaging company TPH Global Solutions. Together, they discussed their companies’ paths to achieving sustainability, and the industry-specific obstacles they encountered along the way. For businesses embarking on a similar journey, here are several key takeaways from our conversation.
Start by Understanding and Analyzing Scope 1, 2 and 3 Emissions
Before companies chart a course toward sustainability, they must first assess how they generate emissions to recognize the full extent of their environmental impact. That starts with evaluating the following emission types:
- Scope 1 emissions: Direct greenhouse (GHG) emissions that an organization produces.
- Scope 2 emissions: Indirect GHG emissions associated with the required purchase of an energy source, e.g., electric cars powered by electricity generated in a natural gas power plant.
- Scope 3 emissions: Indirect emissions produced from assets not controlled by the company, which manifest through its underlying value chain. These often represent the majority of companies’ GHG emissions.
Ricketts said Shure’s global compliance department is already implementing European rules on Scope 1 and 2 emissions at its facilities—not just in Germany, but in the U.S. as well.
For many companies, Scope 3 emissions come from transporting products to and from facilities. According to Kaplan, M. Holland conducted an internal assessment in 2022 on the company’s U.S. fleet emissions to understand the full extent of their ecological impact, and in turn, set realistic goals to mitigate the fleet’s carbon footprint. But Kaplan believes that emissions reduction goals must also address the environmental consequences of employee air travel, overseas shipping and global warehousing.
Companies’ bottom-lines stand to benefit from emission reduction, too. As businesses work toward meeting climate targets, their supply chains are often forced to become more efficient, reducing production and freight costs.
All panelists agreed that sustainability organizations can help companies looking to bolster eco-friendly initiatives. For example, Shure partners with B Corp to measure its emission levels and asses its progress toward B Corp certification, while M. Holland works with another organization, EcoVadis, that rates close to 90,000 companies on sustainability metrics. These assessments help M. Holland benchmark progress and set goals each year.
Levels of air pollution rose during the Industrial Revolution, sparking the first modern environmental laws to be passed in the mid-19th century.
Image Credit: David Octavius Hill (Q722792) – https://theglasgowstory.com/image/?inum=TGSA01140&t=1
Don’t Underestimate the Small Wins
The complex challenges of reaching large sustainability milestones can overwhelm companies. But they need to start somewhere.
Schmidt, CEO of TPH Global Solutions, realized his clients had to start small. He recommended his clients follow “right size” thinking, which refers to using the appropriate amount of material for products and branding without sacrificing packaging quality.
Companies should also eliminate as many unnecessary logistics and handling steps within their supply chain as possible. If a product has less distance to travel, fewer packaging and supporting materials will be needed for safe shipment.
Companies should realize that even one small change can have a big impact. For instance, one of Schmidt’s clients requested product packaging an eighth-inch larger than necessary. He convinced the client to re-size the product to fit the packaging—a move that saved them a half million dollars in supply chain costs.
“People need to understand that every incremental element of your programming—your product, your packaging, your supply chain, wherever you can make a difference—can have an environmental or financial impact,” Schmidt said.
Changing Company Culture
Sometimes the most difficult aspect of creating sustainable changes within a company involves aligning company culture around new policies and procedures.
At M. Holland, Kaplan and her team conducted a materiality study to learn about the sustainability issues that employees and external stakeholders cared about, and then used the results to develop a plan based on what mattered most to them.
When asked about balancing business performance with long-term sustainability goals, Ricketts said, “it’s a triple-action bottom line: how are we maximizing our people, minimizing the negative impacts on our community and environment, and optimizing return on investment?”
This requires a deep level of involvement across an organization. Ricketts, Kaplan and Schmidt recommended joining organizations that help companies implement measurement and benchmarking of sustainability goals, such as the Packaging Coalition, Operation Clean Sweep and Women in Manufacturing.
Kaplan and Ricketts have also shared resources and ideas centered on sustainability with competitors and suppliers. They said environmental conservation is not a competitive area—companies should want everyone to reduce their carbon footprint.
Meeting Client Demands
The panelists also discussed how clients’ sustainability goals have impacted the actions of their organizations. Schmidt talked about Walmart’s goal of removing a gigaton of waste from the company’s supply chain in 2023. The company’s suppliers will have to reduce their own packaging before it can reach that goal.
“Maybe 20 years ago, our main focus was developing the most creative packaging, with the most creative packaging elements, and so on. But today, it’s all about finding the best way to standardize packages for sustainability,” Schmidt said.
Ricketts agreed, pointing to the improvements Shure has made in its packaging. This year, all new products will be packaged with 75% recycled and/or renewable materials.
Similarly, Kaplan has observed an encouraging new development—a growing number of clients in the plastics industry are willing to pay for sustainable materials. Over the last few years, original equipment manufacturers (OEMs) have largely avoided working with suppliers lacking a consistent supply of sustainable materials. That’s why it’s important for suppliers to lay the groundwork for a distribution chain based on sustainable materials, rather than virgin materials.
Reputational Impacts relating to Environmental Goals
Every company—especially those in unsustainable industries—faces reputational risk for staying silent on its environmental policies.
“You can be easily maligned if some think you’re not doing enough to help the environment,” Ricketts said.
Kaplan agreed and said, “Absolutely it has a big impact on your brand…When people think about your company, do they think about a company that’s doing good? That’s where people want to work, where people want to do business.”
About the Authors
Robert “Bobby” G. Gerber is the managing partner of Neal Gerber Eisenberg (NGE), a member of its Executive Committee and a co-chair of its Diversity & Inclusion Committee. He works closely with NGE’s Sustainability Committee to implement initiatives that reduce the firm’s environmental footprint. Outside of his firm management roles, Bobby counsels private companies on a range of transactional and governance matters, including M&A, join ventures, divestitures, private equity investments, succession planning and corporate restructuring.
Sonia Menon is Chief Operating Officer at NGE, where she oversees human resources, facilities, information technology and marketing. She leads NGE’s Sustainability Committee and designs programs that raise awareness of the firm’s environmental impact and improve its energy performance. Heavily involved in other areas of the firm, Sonia is a founding member of NGE’s Diversity & Inclusion Committee and leads the firm’s wellness efforts.