Steven Stoffer, Group VP Development and Chief Sustainability Officer at Smurfit Kappa, has led the packaging company’s sustainability initiatives since 2008. Here, he explains why the days of greenwashing are numbered and how his company will deliver on more ambitious climate targets.
You’ve been involved in Smurfit Kappa’s sustainability transformation for almost 15 years. Do you think the events of the past 12 months have increased the urgency for businesses to move faster on climate action?
The short answer is, I don't think so, because I think the pressure has been building from different stakeholders over a longer timeframe. When we started our journey around 15 years ago, we realised for ourselves that big changes were needed on climate action and that this wasn’t going away.
What has changed in recent years is the pressures from outside stakeholders, as the climate signals get more intense and there is greater awareness.
We see younger generations – our future customers – speaking out more loudly about the environment and showing willingness to pay more for sustainable products. I think they are having an influence on asset managers too, as those generations are a driver behind increased flows into ESG funds.
Investors are also making different choices about where they direct their capital, so if you can’t demonstrate credible signs of change as a company, the money will simply flow elsewhere.
Do you think investors are becoming more discerning when it comes to companies’ credibility on sustainability?
I believe that the period where some companies could get away with greenwashing by telling the market a nice story is coming to an end. The EU Taxonomy is clearly going to make that much more difficult. It’s not a silver bullet, because investors really need perfect information to make all of the right decisions, but it’s a start and there are other initiatives that will build on this.
As a company, we hope the market gets to a position where transparent information is widely available as quickly as possible, because it will show who is really doing the right thing and who is not — which will benefit us.
The financial incentive to do the right thing should also become bigger over time, but again, that can only be done on the basis of good information.
Smurfit Kappa announced it is increasing the ambition of its emission reduction targets at the end of last year. What prompted you to accelerate the move to net zero?
We want to move as quickly as we can, but as a company in general, we are very careful when we set targets that they are credible. We work under the assumption that if you make ten statements about where you plan to get to, you have to get it right ten times. So, the business case and the investment have to be there to back it up.
In 2011, we said we would reduce emissions by 20% by 2020, which was in line with the European ambition at the time. We actually achieved that by the end of 2015, so we pushed for 25% by 2020, and again met that early.
We then upped the ambition to 40% by 2030, and now to 55% by 2030. Things get more stretched as the targets go higher, but we also realised that moving step by step will not grab the attention of your employees and your customers, and we felt we needed to take this bigger step at some stage — so why not do it now?
What changes will be required to deliver on those targets?
As an energy intensive industry, we’re in a much more difficult position than other sectors that have only light energy use in their own operations.
We need to use every single opportunity to lower emissions. In our industry, making paper is the most energy-intensive activity and it has been for 100 years, but we have been able to make the process much more energy efficient. I would say the process is gaining around 1% in energy efficiency every year which gives quite a good result over time, but that won't be enough to get to net zero.
We will look at opportunities to use more renewable fuels, which we’re well positioned for. We also use combined heat and power systems in our manufacturing plants, which is the most efficient way of generating energy.
Then we have hydrogen development: we are participating in a pilot project in France to see how that can help us. We’re also conducting R&D to see if we can reduce the water usage in the production process and exploring new approaches to fibre treatment that would decrease the demand for energy. There are a whole range of possibilities in those processes, and we continue to invest in developing new insights, so we’ll see more and more smart solutions emerging over the next decade.