For Sustainable Business, Collaboration is the New Competition

Consumer packaged goods (CPG) companies often find themselves boxed in by customer demand. On one hand, more shoppers say they want to purchase more sustainable products, but many are not willing to pay a premium. And although most consumers still base their purchases largely on price and performance, the trends are clear: Environmental sustainability is expected. This applies to not only products, but also packaging.

To make things even more complicated, the pulp and paper supply chain in the U.S. is far different than other countries. The vast majority of forests, especially in the U.S. South, are privately owned. Of the 87 percent of southern forests in private hands, the World Resources Institute estimates that two-thirds are owned by individuals and families – and many of whom held the land for generations. So any progress on sustainable forest stewardship involves far more than holding talks with huge landowners or government forestry officials – a lot of people have to be involved in the conversation.

This challenge led CPG giant Procter and Gamble and pulp and paper company Domtar to establish a mutually beneficial working relationship.

Domtar, which manufacturers private-label paper products for brands and supplies pulp and fiber to customers like P&G, was on a mission to increase the acreage of certified American forestry lands. P&G is on a quest to attain some level of certification for 100 percent of its paper products. The brand also hopes to certify all of its brands' packaging through the Forest Stewardship Council (FSC).

Domtar had the relationship with landowners; P&G had the reputation with its brands such as Puffs and Charmin. With that synergy, the two companies were able to achieve much on the sustainable forestry front in just a few years.

In early talks with landowners, making the case for FSC certification was a challenge, Dan Persica, senior manager of sustainability communications for Domtar, told TriplePundit.

“Landowners often see themselves as having a day job; for them, the lands they own are thought of as a space for recreation or hunting,” he explained. “They usually don’t go into these meetings seeing themselves as ‘landowners.’ In fact, they may harvest some wood only once in their lifetime, for a big expense such as helping to pay for school tuition.”

Domtar’s challenge was to convince these families that FSC certification was worth the trouble. The company was under pressure to increase its sourcing of certified pulp and paper – and had already taken steps with its supply chain sustainability and transparency tool, The Paper Trail. Domtar now has a team on the ground that is responsible for developing relationships with landowners across much of the Southeastern U.S., and had been supportive of efforts including the Four States Timber Owners Association (FSTOA).

But the Montreal-based company needed to make a stronger business case for expanding its FSC-certified supply, and that is where P&G came in. “If we went at it alone, persuading landowners would have been more difficult, even though Domtar has the reputation and relationship with the landowners, Persica told us. “But we don’t have the 'why,' and that is where P&G came in.”

P&G's brand reputation helped cement Domtar’s case for recruiting certified FSC growers in the American Southeast. Some of the first landowners who participated in the program also served as testimonials, and many spoke directly to other landowners about FSC and its benefits. Those landowners who were on the fence could listen to their peers’ experiences, visit a mill, learn more about certification and then decide whether or not to move forward. “This interaction was invaluable, as landowners could learn from that word of mouth,” Persica told us. “They could see this in practice, and then the light bulb would go off as they would understand how the process works.”

But it’s important to reiterate that Domtar does not own these forests, nor does it lease them. There must be additional incentives for landowners to participate in FSC’s certification programs. To that end, Domtar supports these landowners both logistically and financially. “If they pursue FSC certification, our forest procurement team will help them with that process, starting with breaking down what the actual standards mean to them."

The numbers alone show that this close partnership has paid off for P&G, Domtar, the landowners and the local environment.

Over the course of three years, Domtar said it has increased the acreage of FSC-certified forests from 70,000 acres in 2013 to 500,000 last year. The results include less land being converted into residential development, improved stewardship of local land and, most importantly, helping these families keep title to their forests. And for its part, Domtar can say it played a role in offering the market more sustainable products while securing the long-term health of forests across the U.S. South.

“It all ladders up to how we want to be seen as a responsible supplier that’s transparent about what’s happening on the ground, and also be trusted to support our customers’ brands,” Persica concluded. “As our customers now see, collaboration is key – we’re not just going to talk the talk, but we will walk it and show you how we can be a responsible and transparent supply chain partner.”

Image credit: Domtar