ESG, Part Two

BY RALPH YOUNG

It has been almost two years since we alerted members and Associates to environmental, social, and governance (ESG) issues through a BoxScore article. While we will develop an update in this article, the main issues for financial investors and maybe your clients is the extended producer responsibility (EPR) initiative, which has been present longer and has more traction. Be on the lookout for producer responsibility organizations.

Although this unwieldy initiative is global, pushed forward by the United Nations Sustainable Development Goals, the United States and various states have adopted it in part as they attempt to implement recycling and diversion strategies.

This ESG program has a very large umbrella that may have started with sustainability but has grown into a much broader scope after the Paris Agreement, also known as the Paris Climate Accord, of 2015. It encompasses many issues not likely to apply to you, even though the carbon-neutral element may be an issue considering our consumption of electricity from various fuel sources.

Our joint response to the components must first be addressed for the whole industry: forest, mills, transportation, converting plants, and fiber recovery. I believe every box plant will need to focus on where its energy comes from—waste recovery such as office materials and metals and die boards, water consumption, dust usages, electrical consumption, and truck gallons consumed.

Terry Webber, vice president of industry affairs for the American Forest & Paper Association (AF&PA), has said stakeholder engagement on EPR bills could make or break legislation. AF&PA plans to be an “active participant” in EPR for packaging discussions because of the potential for such laws to affect packaging costs and material flows. See AF&PA’s letter to the State of Connecticut from February 27, available on the AICC website. We will keep you posted.

According to McKinsey & Co., the targeted industries are not forest products (i.e., containerboard and corrugated) but they concern banks; automotive, aerospace, defense, and technology; transportation, logistics, and infrastructure; telecommunications and media; energy and materials; resources; and consumer goods.

Your AICC is attempting to develop an updatable white paper or template to assist you in responding to client and community requests, along with access to a new Packaging University course. We are gathering relevant perspectives from several other larger trade organizations and a few investment firms.

Challenges remain. For example, Germany’s plan to be carbon neutral by 2045 had a major setback when it stopped buying Russian natural gas because of the latter’s invasion into Ukraine. Germany’s desire to use hydrogen as a fuel source will take many years to develop, even with government subsidies.

Focus on your waste. No materials should be leaving your plant to go to a landfill or for incineration. Recover plastic and metal drinking containers, food packaging, die boards to be chipped, rule to be recovered, and office papers to be separated as a start.

Right to repair legislation, if passed, states you will need to keep that old slow computer longer, since it can be usable. Batteries remain in question, although they are not toxic.

It should all be about value creation, but it will come at a cost! Consider the social aspect of the ESG movement, which includes better safety procedures, health and welfare, and community aspects such as charities and food drives.

Pfas

We get questions about corrugated and per- and polyfluoroalkyl substances (PFAS). It is found almost universally throughout the environment in water, air, soil, plants, printing inks, and animals. It is found in your phone, linings and coatings of ink buckets, plastic water and soda bottles, shampoo bottles, plastic agricultural chemical containers, and inside and outside your buildings.

The U.S. Environmental Protection Agency website has much to say about this issue but no solution because it is considered a “forever chemical.” On average, the levels are 30–50 parts per trillion, but no research can determine at what exposure levels a substance becomes an issue to human health and longevity.

This fluoride product has been around and is a major component of Teflon. While this product is not currently under the ESG umbrella, all that can change.

Ralph Young is the principal of Alternative Paper Solutions and is AICC’s technical advisor. Contact Ralph directly about technical issues that impact our industry at askralph@AICCbox.org