In this case study from ACG, Shivshankar S.R, CEO of ACG Films and Foils, delves into the ESG strategy that ACG is implementing to improve its organisational sustainability and the requirements needed to ensure its success: education, communication and innovation.
Key insights:
- Providing an outlet for communication, education and questions is vital in keeping all stakeholders informed to ensure a successfull rollout of ESG values.
- Diversity and inclusion are important elements of an ESG strategy and leaders need to take care to ensure that their day-to-day actions do not create or reinforce biases.
- A successful ESG strategy also helps manufacturers to view processes from a design perspective. Taking an innovation ‘value engineering’ approach to systemically analyse the elements of various functions can lower the cost of goods, products and services.
Underpinning business growth with ESG values
With an increased call for accountability from markets and stakeholders alike, companies need to be addressing environmental, social, and governance (ESG) in a strategic and integrated manner aligned with their business as a whole, rather than undertaking ad-hoc initiatives. It’s important to flag that an effective, holistic ESG strategy can actually help - as opposed to hinder - companies to focus on increasing competitiveness, growth and revenues.
When it comes to formalising environmental initiatives, it is helpful to consider every part of the manufacturing process. Initiatives like investing in R&D to reduce the carbon footprint of any proprietary materials can not only help meet regulatory requirements and ESG goals but can also prove advantageous to the business.
Committed to reducing our carbon footprint by 20% year on year ACG Films & Foils, we have adopted a number of initiatives, including:
- Investing in the development of sustainable products to reduce the carbon footprint of the pharma packaging itself.
- Implementing an energy management system and increasing the usage of renewable energy sources, including solar power.
- Reducing waste generation within our plant premises by eliminating and segregating it from the sources and upcycling the remaining waste into wood and plastic composite materials.
Creating mindset changes
Involving the wider stakeholder community is also an important element of any holistic ESG strategy. Including investors and suppliers through to employees and customers has a far-reaching impact across the entire supply chain. To ensure a successful rollout and cultural and mindset shift, it is vitally important for manufacturers to provide consistent and straightforward communication across their entire stakeholder community.
Keeping early initiatives simple and making them easy to follow can help with communications and instigate behavioural change. It can also help pave the way toward more strategic, cost-saving initiatives. For example, replacing the traditional motors (IE2) with energy efficient motors (IE3), using colour-coded bins for segregation of waste at the source and reducing the plastic consumption by changing plastic cores.
Transparency and clarity have a direct bearing on success, as well. It is all about being in harmony with your environment, which for some key stakeholders may be the plant they work in. At our own plants, we encourage openness and interaction with our clients – inviting them to see the operation, and specifically the sustainability measures being put into place, such as practices around zero usage of fresh water. We also work alongside our customers on product design, focusing on recycling and the operational elements required to manage this.
Diversity and inclusion are also important elements of an ESG strategy and leaders need to take care to ensure that their day-to-day actions do not create or reinforce biases. A uniform code of conduct and an agreed set of values should underpin ethical standards and exchanges, transcending all levels of the business.
Handling resistance
As with any change, businesses will encounter resistance, which is why keeping all stakeholders informed and providing an outlet for communication, education and questions is vital. This approach also helps to bust myths and demystify ESG and the change process as a whole.
Conducting workshops for employees to generate ideas for reusing, recycling and upcycling, as well as attending seminars and exhibitions on sustainable practices are two ways you can cut through multiple layers of organisational biases relating to areas such as increased costs or fears of cultural change. And working with suppliers who have a shared set of values for your business is essential.
Looking at the new Extended Producers Responsibility (EPR) packaging waste requirements as an example, it is clear that a firm commitment from all parties is required to meet these more stringent data and recycling regulations. As manufacturers get to grips with the new rules, we will likely see that many large multinationals have already bought in, but it isn’t unusual to hear of smaller players dealing with resistance from customers.
To help combat this, engage communication with customers, suppliers, Producers Responsibility Organisations (PROs), and Plastic Waste Processors (PWPs) early in the process to understand the current regulations and future obligations that we need to be met and fulfilled.
‘Contained, continuous and connected’ manufacturing
When it comes to becoming more sustainable, it can help manufacturers to view the process from a design perspective. Take a ‘value engineering’ approach and systemically analyse the elements of various functions to lower the cost of goods, products and services. Putting mechanisms in place to conserve resources like water and fuel helps to link growth with sustainability.
ACG’s PaperPod is an example of using design-led thinking, the initial idea was to introduce a completely compostable blister (base and lid) of new stream material: Cellulose Paper. So far, we have completed the lab scale and scale-up trials, and the next stage will be to connect with customers, start sampling and, ultimately, commercialise the product.
Conclusion
Implementing a people and planet-friendly ESG strategy across a global business requires joined-up thinking, clear processes and regular, straightforward communication. Being open to new ideas from across your stakeholder community helps not only to identify more sustainable materials but can also lead to reducing costs and better ways of working.