The business case for sustainability

Rachel Sankey

Past Staff

February 6, 2024

SHEBOYGAN — Comic strip fans may remember the daily comic “Pogo,” which began in the late 1940s, ending in 1975.

The main character — an opossum named Pogo — became well-known for one of his recurring sayings throughout the comic ñ”We have met the enemy and he is us.”

It’s a statement, John Rogers, business roundtables facilitator at the Sheboygan County Chamber of Commerce, said could describe the topic of sustainability in today’s business world.

Rogers started the chamber’s first manufacturing roundtable of the year with the words of Pogo — “I think that, to some extent, emphasizes sustainability” — as representatives from various companies and organizations gathered to discuss sustainability and a businesses’ responsibility around it.

John Rogers

The roundtables, Rogers said, are meant to improve manufacturers through sharing best practices, strategies and tactics.

Presenters at last month’s roundtable included:

Christa Kananen, program manager at the Wisconsin Sustainable Business Council (WSBC)Julia Steffes, sustainability coordinator at Masters Gallery FoodsTony Palese, senior communications partner with Alliant EnergySteph Soendker, senior project leader of corporate sustainability with Kohler Co.
Other organizations present at the roundtable included Bemis, Sargento Foods, Sohn Manufacturing and Lakeshore Technical College.

Sustainability in the business sense, Kananen said, “is the pursuit of a business’s growth strategy that creates long-term stakeholder value by seizing opportunities and managing risks related to the company’s environmental and social impacts.”

“The way (WSBC) recommends companies engage in sustainability is as a core part of how you do business — integrated into your business strategies, integrated into the fabric of your organization,” she said. “A lot of times, we’re helping companies move from random acts of environmentalism, into a true strategic approach to sustainability.”

Integrating sustainability into a businesses’ fabric, Kananen said, helps companies “create value” and “be viable in the long run.”

Key sustainability trends in the manufacturing sector today, she said, are:

ESG (environment, social and governance) reporting and disclosureEnvironmental impactsMaterial use and sourcingThe workforce
The evolution of sustainability in business
Kananen said the way businesses have approached sustainability over the years has evolved — with the 1990s being the time when the word sustainability started to pop up.

“In the ’90s, that’s when we really started hearing a lot about sustainability,” she said. “The (three pillars) were people, planet and profit.”

The second wave, which Kananen said happened between 2005-2015, was all about ESG — which had more of a financial- and risk-based lens.

“Sustainability is a bit more broad than ESG,” she said. “Investors realized that companies engaged in sustainability consistently outperform (in) the market, so they started saying, ‘how do we get in on that and leverage that?’ So, they developed some quantifiable measures to evaluate a company’s engagement in sustainability, and that became ESG.”

ESG itself, Kananen said, has also evolved throughout the years.

“We saw- ESG driven by a financial perspective,” she said. “Investors were increasingly interested in a company’s ESG presence before they invested in that company, because it helps them decide if that company was a good investment or not.”

As ESG became the “norm,” Kananen said there’s been some developing regulatory changes that have “pushed sustainability and some of those ESG metrics down supply chains.”

This — coupled with reporting and disclosure requirements — Kananen said, has led to more small-to-midsize, privately held companies engaging in sustainability.

“There’s a relatively new regulation in Europe that (requires) companies more than a certain size who are doing business in Europe — not even necessarily having to be based in Europe — to disclose their supply chain impacts,” she said. “That means greenhouse gas emissions. That means labor and human rights issues. 2024 is the first year that they’re required to collect data for disclosure in 2025.”

Kananen said many supply chains are now feeling the pressure to document that data to be able to share by next year.

“We see that particularly in the automotive industry, that’s a big one,” she said. “Anyone who serves the automotive industry is getting pressure, not in small part due to that regulation.”

Christa Kananen

With greenhouse gas emissions being one of the larger environmental issues needing to be disclosed and regulated, Kananen said it’s important to note that there are three different types of categories, or “scopes,” that companies emit.

Scope one and scope two, she said, are emissions from the company.

“Scope one is direct emissions,” she said. “Scope two is emissions related to electricity usage.”

Kananen said scope three emissions are related to a company, but are not under its direct control.

“That could be sourcing, it could be waste disposal, it could be transportation of goods to their facility, it could be the use of their goods by end users,” she said. “The automotive industry’s biggest source of emissions is the use of the car.”

Kananen said this is one of the reasons why more companies are specifically looking for greenhouse gas emissions information from their suppliers.

“Because you’re part of their emissions inventory, and in some cases, they’re required to disclose that,” she said. “Supply chain engagement is really bringing sustainability into smaller and smaller companies, even those who aren’t coming to it from a values-driven perspective.”

In addition to energy usage, Kananen said larger companies are also looking at water and waste impacts — which altogether are considered the “big three” for environmental impacts.

Regardless of whether a company is becoming more involved in sustainability efforts due to its own values or is in a position where they have to provide data to larger companies, Kananen said the outcome is more transparency.

“It’s a shift in what we expect from businesses, what we expect from leaders socially and then it’s also a regulatory shift in many cases when it comes to sustainability,” she said. “Companies are required to be more transparent about their social and environmental impacts.”

Material use, responsible sourcing
Another key sustainability trend in the manufacturing sector currently, Kananen said, is how companies source and use their material — which again has both environmental and social impacts.

She said it’s important for companies to be cognizant of where they source their materials from and the impact that can have.

Along the lines of material usage, Kananen said companies are also feeling more social pressure to take responsibility for the lifetime impact of the goods they manufacture.

“If you’re producing something that has a hazardous element or is really hard to dispose of- that ends up being the responsibility of the company that manufactured it,” she said. “In some cases historically, it’s been whoever bought it — it’s been their problem. There’s a bit of a shift toward pushing that back to companies that are producing it.”

Product circularity, or more commonly known as recyclability and reusability, Kananen said, is another part of that puzzle.

“More and more, both socially as a culture and then also larger companies responding to that cultural or social pressure, are looking to create packaging or products that are very readily reclaimable or reusable.”

The automotive industry Kananen said is again a great example, as many companies are making parts that are readily recyclable.

One of the main reasons why manufacturing companies are starting to look more into product circularity is due to the dwindling availability of virgin materials.

“Materials aren’t going to be available indefinitely,” she said. “We’ve skated for a really long time as (a) world, but overusing a lot of our resources. That works great for a long time — until it doesn’t anymore. We’re getting to the point where it doesn’t anymore.”

Sustainability within the workforce
As Kananen mentioned, it’s important to keep in mind that sustainability doesn’t just have an environmental impact — it has a social one as well.

“How are you impacting your communities?” she said. “How are your workers experiencing their lives at work? And then also ethical governance — how the leaders of an organization behave and set the stage for that organization.”

Workforce-related impacts, she said, have especially resonated in Wisconsin recently, as businesses have been struggling with employee shortages.

And, what companies are seeing in hiring trends, Kananen said, is that the younger workers are drawn to companies who share their values.

“Often in younger generations, one of their values is sustainability,” she said. “A lot of companies find a lot of benefit in engaging their workforce in their sustainability efforts, as you get a lot of really great ideas. The people doing the work often know the best way to do it, and more efficiently.”

Alec Bartoli, sustainability manager for Sargento Foods, said the company has been actively working on meeting this trend.

“We’ve found that newer employees, particularly Gen Z, really want to work for organizations that are active in the community — and we can define community to be local or global,” he said. “We’re doing quite a bit of work and community involvement.”

Sustainability in the workforce,Kananen said, also happens through taking care of employees.

“Employees are increasingly looking for companies who are going to emphasize their wellness, physical and mental health, work-life balance and (who) engage them in real decision making for the business,” she said. “They want to contribute to the long-term well-being of the company, they don’t necessarily just want to show up into a job — they want to be a part of something bigger than themselves.”

Essentially,Kananen said, employees “expect that they’ll have a seat at the table,” which leads to another important focus in workforce sustainability — diversity and inclusion.

“The benefits of diversity in leadership are well-established, just in terms of how much that can help you grow your business (with) new ideas and fresh perspectives,” she said.

Business benefits
While being transparent about a company’s environmental impact is important for just that — the environment — Kananen said businesses also benefit from implementing sustainable efforts.

Some of those benefits include:

Reducing risk and operating costsEmployee attraction and retentionEnhancing visibility and reputationCreating an environment for innovationEnhancing relationships with customers and stakeholders
“I saw a study that said that through engaging in sustainability, companies — particularly manufacturers — can reduce operating risks by up to 60%,” Kananen said. “There’s a lot of opportunity, not just in reducing costs but also on the other side of things as well, such as- enhancing your reputation as a company.”

During the chamber’s manufacturing roundtable late last month, three different manufacturing companies throughout Northeast Wisconsin shared what sustainability efforts they’ve been implementing and how it’s affected their respective businesses.

Those who spoke, include:

Masters Gallery Foods — a cheese packager based in Oostburg and PlymouthAlliant Energy — an electric utility company with a location in SheboyganKohler Co. — a kitchen and bath manufacturer based in Kohler
Masters Food Gallery
Sustainability Coordinator Julia Steffes said in her role at Masters Gallery Foods focuses on the environmental side of ESG.

Much like Kananen had mentioned in regard to enhancing a business’s reputation, Steffes said Masters Gallery Foods established a set of guiding principles and a responsibility statement for the organization.

Julia Steffes

“We found that this is a great way to communicate our sustainability strategy to a lot of customers — (it) is a great conversation starter,” Steffes said.

Some of the key points within the organization’s environmental responsibility statement, Steffes said, are:

Adhere to all applicable environmental laws, regulations and standardsManage natural resources responsiblyMonitor and minimize greenhouse gas emissionsSource cheese, packaging and other materials from suppliers who adhere to sustainable practicesEducate and train employees to work in an environmentally responsible and socially equitable mannerIntegrate sustainability considerations into strategic business decisions
On top of the responsibility statement, Steffes said Masters Gallery Foods has three big sustainability projects that it’s working on that focus on its scope one and two emissions.

The first project is the EV Spotter.

In 2022, Steffes said Masters Gallery Foods became the first manufacturer in Wisconsin to deploy a 100% electric Class-8 truck, which reduces the company’s fleet emissions by 9%.

“It’s reducing our diesel emissions, reducing our carbon emissions,” she said. “But also, the people that are in that vehicle every day — there’s no noise, there’s no fumes — it’s a great experience all around for the worker as well.”

In 2022, Masters Gallery Foods became the first manufacturer in Wisconsin to deploy a 100% electric Class-8 truck, which reduces the company’s fleet emissions by 9%. Photo Courtesy of Master Gallery Foods

Project No. 2 is a geothermal pond, which provides heating and cooling Masters’ 20,000-square-feet Oostburg facility.

And project No. 3 is a biodigester that takes the company’s cheese waste and transforms it into biogas that can be used as a form of renewable energy and as a natural fertilizer.

“It fits right in with food manufacturing and being able to go back to the farm as well,” she said.

In addition to its three main sustainability projects, Steffes said Masters Food Gallery is also working toward being a zero-waste facility.

For 2022, she said both facilities had an 84% landfill diversion rate, with only 16% of waste going into the landfill.

“We’re bordering on a 90% (landfill diversion rate) this year,” she said.

Alliant Energy
Tony Palese, senior communications specialist at Alliant Energy, said the company has worked out its own clean energy vision, with goals to hit over the next few decades.

Tony Palese

Specifically, Alliant looks to:

Achieve a 50% reduction in CO2 emissions from 2005 levels by 2030Eliminate all coal from its generation fleet by 2040, which is 10 years faster than Alliant’s previous targetMeet an aspirational goal of net-zero CO2 emissions from the electricity the company generates by 2050
“Here in Wisconsin, we’re scheduled to retire our remaining coaling units by mid 2026,” he said. “So, we’re a bit ahead of schedule on that.”

Palese said Alliant Energy has also set goals to reduce its water usage, which has already been reduced by half since 2005.

“We’ve cut those numbers in half- so, from 462 billion gallons a year (to where we’re) currently at 230,” he said.

The use of solar panel technology, Palese said, has also helped Alliant provide cleaner energy to its customers.

“In Wisconsin, we announced plans to add more than 1,000 megawatts of solar energy at 12 sites across the state,” he said. “Last month, we announced we completed eight of those 12 sites. We are just about complete with that build out on our final site, and should be coming online here hopefully in the next month or two.”

With the solar sites part of the company’s clean energy vision, Palese said Alliant Energy estimated a savings of between $1.6 billion to $6 billion “over the 30-year life of those projects.”

“We’re seeing it pay off right now, in terms of fuel costs being the big one,” he said. “The solar sites have zero fuel costs, which is reflected in customer rates now and we expect to see that continue to benefit folks moving forward.”

Kohler Co.
CEO David Kohler said at Kohler Co., business success “doesn’t matter much if we can’t say we left the world a better place than we found it.”

Which is why, Steph Soendker — senior project leader of corporate sustainability at Kohler — said the company’s philosophy is to be better: for its communities, the planet and for business.

Steph Soendker

“Talking about a better planet is really (about) improving Kohler’s operational footprint first, creating more environmentally friendly products and- transparent reporting,” she said.

Soendker said the company has committed to three Sustainable Development Goals (SDG), which were created by the United Nations: clean water and sanitation; affordable and clean energy; and responsible consumption and production.

She said Kohler also uses its own sustainability strategy — Design for Environment (DfE) — while making efforts for a cleaner planet.

However, she said Kohler’s history of working toward a better environment dates back to 2008.

A brief history of the manufacturer’s sustainable efforts looks like this:

2008: Kohler announces it plans to be net-zero by 20352011: The company formalizes its DfE into new product development (NPD), which provides a sustainability lens to see how its making its products and what products will be put on the market2019: Kohler has its first procurement of off-site renewable electricity, which Soendker said made the company’s entire U.S. footprint covered under a wind farm in Kansas.2021: Kohler finalizes some of its NPD goals — which meant looking once again at its products and making sure they’re produced in a sustainable way2022: The company introduces its water stewardship goals and looking at its water risk around the globe2023: Kohler addresses the gaps to its 2035 goals
The plan for 2024, Soendker said, is for Kohler to continue its expansion of renewable electricity procurement.

“(We’re) looking at other regions outside of the U.S. and how we are building out a renewable energy strategy in places like Mexico and China,” she said. “(We’re also looking at) site-specific roadmaps- no two locations are the same, their footprint is going to be different and what matters to them is going to be a little bit different.”

Since Kohler is a global company, Soendker said it’s important to “think globally, act locally.”

“We need to think about overall footprint, but we need to make site specific targets; we need to know what’s most important for each of those facilities,” she said.

It is also crucial, she said, for Kohler to take responsibility for the products they manufacture, as Kananen had mentioned before.

“We have a lot of ownership on the products that we’ve produced and how the customers footprint is going to be impacted by the products we produce,” she said.

Rountables
The recent roundtable on sustainability is just one of the manufacturing roundtables the Sheboygan County Chamber hosts periodically throughout the year, each of which focus on a different topic.

The peer-to-peer roundtables, facilitated by Rogers, enables attendees to participate in a structured format to develop solutions to challenges and celebrate successes.

Rogers said he thinks the roundtables have also made a huge impact on area businesses.

“They learn a tremendous amount from each other,” he said. “And a lot of the people who come to the roundtables come almost every time.”

For more information on the roundtables, visit sheboygan.org/roundtables.