Setting goals that create value for manufacturers
In Part 1, I covered the people-centric aspect of sustainability and the importance of building relationships with your suppliers. Now, we look at how you can create your sustainability goals that are relevant to your business.
First, describe your business model
Are you a:
- Toll (or contract) manufacturer only?
- A manufacturer and brand?
- Or a manufacturer and developer?
Product can be formulation, packaging or a mix of both.
The way you describe your business will help you design your sustainability priorities and align everything you do with your financial processes, which will make reporting much easier.
In Figure 1 below, the opportunities to create impact through working on targets aligned with your business model increase with the complexity of your business. But of course, this will most likely mean an increase in the number of enquires and questionnaires you will receive on the subjects aligned to your business!
Ask procurement to identify your biggest purchase and in parallel ask your risk team to look at your main risks
Ask them to do this whilst wearing their Environment Sustainability and Governance (ESG) hats. Wherever you sit in Figure 1, this exercise will help you to set sustainability standards and / or policies to support your target or goal setting.
For example, if you are a plastics moulding manufacturer then your main purchase will be plastic pellets. These are usually commodity purchases and it is hard to define the technical standard because batches can be combined in the supply chain either by the commodity supplier or further downstream.
Ask your procurement team questions appropriate to your supply chains
Be curious and ask for example, what do they record for the acceptance criteria of the material? What level of recycled material can be tolerated to ensure the product meets customer requirements on shelf and in the hands of the end users? Does the entire combined batch purchase meet certification standards?
This a process of achieving transparency. If you don’t own this, then others will and can use this against you on the marketplace. There is a lot of technology in the area of traceability. This is valuable information to acquire from a risk containment perspective and a differentiator for your business.
Use programs that support transparency
So in the plastics moulding example, those run by the Global Recycled Standard (GRS) assure the validity and quality of recycled plastic. Several common ingredients will be commodity purchases for which sustainable standards already exist for example, Forest Stewardship Council for wood and Marine Stewardship Council for fish and seafood.
While the risks do need to be managed, there are many great business opportunities that exist to balance them. For example,
Review the cost of your waste
You could reveal a compelling reason to transfer this at a reasonable price to a business for whom it may be a starting material. For example, a sugar manufacturer sells its waste sugar cane to a small company who makes compostable food containers used by take out food business. This way you can drive a circular economy, eliminate waste – and everyone wins, including the planet.
Remember your water and energy waste
By saving these precious resources you are not only helping the planet, you are saving utility costs. Something as simple as turning off all but necessary lights when the factory is not in use saves tons of CO2 every year.
Set goals and targets tailored to your business
This is much easier once you have the right standards in place and your risks understood - if necessary enshrined in policy.
By the way, I purposely have not mentioned Purpose. Why? I believe you should start by creating positive impact first, most easily though your suppliers whether asking them to adopt your material standards or your ethical code of conduct for example. This is where the S4RB webinar will really help you create an effective and efficient methodology to capture and process this data.
Circle back to create your purpose
which is about the service you give to others through the impact you make. This process helps to give your business confidence that sustainability can work for it. It is still an emerging science and is classified as a risk for many businesses, thus the need for quick wins as proof of value. If you are fortunate to have a business that is confident in pursing sustainability, then start with purpose and use this as your decision-making north star and get on with your supplier data.
Once your sustainability goals are in place, your data accurate, and your transparency solved, you can leverage working as one team to improve your performance.
Work as one team
This is most effectively done with technology that creates transparency with online dashboards and consolidates your source of data.
In this webinar we will also look at how to create a materiality map for your business, what matters and why, and how you can create targeted communications to all your stakeholders around the topic of your sustainability plan.