Remember those sustainability measures you created last year?
If you think sustainability is just a buzzword, think again. If you are considering selling your print business in the next few years, now is time to dust off and enact those sustainability measures you shelved in 2020, especially if you are hoping to attract better customers and potential investors in your future.
In a sustainability panel discussion at the 2021 FuturePrint Leaders Summit in March, corporate executives emphasized that sustainability strategies matter now more than ever. They contend that print-service providers who don’t take proactive actions on sustainability may miss out on major opportunities with brand customers. They might also steadily lose business to print shops better aligned with shifts in consumer attitudes.
Why Print Businesses Should Get Serious About Sustainability Improvements Share on XSustainability Investing Impacts M&A Activity
Private equity groups traditionally evaluated sustainability in terms of risks such as non-compliance or the presence and handling of hazardous materials. Now some acquirers are exploring how the sustainability practices at a target company can build value over the long term.
At the AWAVirtual™ Mergers & Acquisitions Executive Forum on June 7, 2021 investment professionals will talk about the impact of sustainability on M&A analysis in the resin and fiber-based packaging, coating, and converting sector
Keep in mind that the definition of sustainability has expanded in response to concerns about climate change. The UN World Commission on Environment and Development defines sustainability as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Some universities define sustainability as “the integration of environmental health, social equity and economic vitality in order to create thriving, healthy, diverse and resilient communities for this generation and generations to come.”
The CFA Institute teaches investment professionals that “Sustainability investing balances traditional investing with environmental, social, and governance-related (ESG) insights to improve long-term outcomes. Sustainable investing considers diverse stakeholders, consistent with how companies are developing.”
Sustainability metrics have been developed and are being used by leading investment groups such as Black Rock Capital. In a letter to CEOs, BlackRock Capital stated their commitment to make sustainability their new standard. The firm believes that sustainability risk – and climate risk in particular – is investment risk.
The FuturePrint Sustainability Panel
When FuturePrint Co-Director Marcus Timson moderated the sustainability discussion at the FuturePrint Leaders Summit, he raised provocative questions about the myth that profitability goes hand-in-hand with environmental damage and why print-service providers lag behind big corporations and brands in adopting sustainability measures.
Panelists included:
- Graham Kennedy, Director of Industrial Printing, Ricoh Europe
- Anthony Carignano, Director of Marketing, Actega North America Technologies (sustainable packaging films, coatings, and adhesives)
- Steve Lister, Sustainability Consultant to Retailers and Brands and Director of Sustainability for POPAI (in-store marketing association)
- Brendan Perring, General Manager, British Association for Print and Communications (BPAC) and Independent Print Industries Association (IPIA)
- Nova Abbott, CMO, Taya Canvas Group (maker of Kavalan printable PVC-free banner materials)
The panelists agreed that sustainable practices started gaining traction in the printing business around the year 2000. But when the Great Recession of 2008-09 hit, most companies put profitability first and foremost.
Since then, there have been profound changes in attitudes. Sustainability today is less about feeling good about incremental actions and more about making lasting change.
New generations of investors, shareholders, and employees have learned about the importance of saving the planet from elementary school through college. They are insisting on meaningful change and are quick to spread the word on social media about bad experiences with products that are over-packaged or difficult to recycle.
Some panelists believe that the same cultural forces that made it socially unacceptable to smoke in public will eventually make it socially unacceptable for manufacturers, suppliers (and print-service providers to ignore sustainability),
The cessation of economic activity during COVID demonstrated the impact traditional lifestyles have on the environment.The shutdowns strengthened the case for a more intense focus on sustainability in post-COVID economies.
Print Industry Suppliers Are Innovating
Manufacturing companies (including manufacturers of inks, materials, coatings, and equipment) are now trying to address environmental problems at the root.
Instead of waiting for government regulations that restrict what they can do, manufacturers of printing equipment are investing R&D funds to create innovative inks, materials, and process technologies that will minimize the environmental damage caused by the manufacturing, delivery, and disposal of printed products.
Companies such as Ricoh, Canon, Xerox, and HP have developed long-term agendas driven from high up in the corporate infrastructure. They are encouraging employees (including print buyers) throughout their divisions to support sustainability initiatives.
In February 3M’s CEO announced the company expects to invest approximately $1 billion over the next 20 years to accelerate new environmental goals: achieve carbon neutrality by 2050, reduce water use by 25% at its facilities, and return higher quality water to the environment after use in manufacturing operations.
According to Nova Abbott, brands and retailers have been asking for quantifiable sustainability benefits during the entire lifecycle of the printed materials. So, the Taya Canvas Group has developed a method of documenting the environmental benefits that can be achieved when brands ask for the KAVALAN brand of recyclable PVC-free printable banner materials. The materials have been specifically engineered for responsible end-of-life disposal.
Some of the biggest sustainability gains are occurring in the textile and packaging segments.
For example, Actega is developing environmentally friendly options for the coatings, adhesives,and inks used for flexible packaging, metal packaging, and paper and board packaging.
Print Businesses Lag Behind
While big corporations have made long-term commitments to more sustainable operations, a recent survey by the British Association for Print and Communications showed that many print-service providers didn’t yet feel the urgency to change their current practices.
37% of the print-service providers who responded to BPAC’s Environmental Sustainability Action Survey said don’t have an environmental strategy yet. Of the 62% who said they did have a sustainability strategy, only 24% had fully implemented it and 49% had partially implemented it.
More than half (51%) of the respondents without an environmental strategy reported that their customers rarely asked them about sustainability. The remainder reported that only some of their customers asked about sustainability credentials.
Print-business owners shouldn’t wait for brands to ask about sustainable options. As a solutions provider and supply-chain partner to growing brands, printing companies should educate themselves, raise awareness of sustainable options, and help refute the myth that a commitment to sustainability means higher costs and lower profits.
If print shops help drive buyer demand for sustainable materials, the materials can be manufactured in higher volumes and prices can come down.
Marcus Timson suggested the print shops should stop considering sustainability as a means of “differentiation” for competitive advantage. In the long run, it will be in every print shop’s best interest to be more supportive and collaborative with other print businesses on sustainability actions:. “Yes, competition is a factor,” said Timson.“But as a species, we need to help one another.”
Private Equity Groups Are Watching
If you plan to sell your company during the next two years and want to optimize the business value, you need to be aware of changes in sustainability investing and how it impacts M&A activity.
RESOURCES
Deal Flow Guy Blog Post: 6 Reasons Why Sustainability is Impacting M&A Activity: