Sappi and the SDGs
Sappi Limited Group Head Investor Relations and Sustainability
“While we strongly subscribe to the principle of profit with purpose, we have a responsibility to our shareholders and our overarching purpose is to generate strong financial returns.”
Q&A with Tracy Wessels, Sappi Limited Group Head Investor Relations and Sustainability
Dr Tracy Wessels headed up the Centre of Excellence for dissolving pulp at the Sappi Saiccor Mill for several years and is now Sappi Group Head Investor Relations and Sustainability.
There are few people who understand the full potential of what trees have to offer better than Tracy, who has dedicated the majority of the last 20 years of her career at Sappi in progressively more senior roles in research and development (R&D).
What has made the biggest impression on you in your new role?
While my previous role focused on the entire value chain, from the beginning of the DP production process all the way through to the end user, my new role is more multi-faceted. That is because I have greater oversight over more functions within the various value streams across the business.
Within each of these value streams and functions, what has struck me is the manner in which sustainability is entrenched throughout the everyday aspects of our business. I’ve also realised the extent to which our commitment to the Sustainable Development Goals (SDGs) is taking traction. SDG17: Partnership for the Goals is evident at board level, with the Chairman of our SETS Committee having been appointed as the deputy chairperson of the Presidential Climate Commission, chaired by South African President Cyril Ramaphosa. It extends to SDG15: Life on Land, whereby we are steadily increasing the amount of certified fibre supplied to our mills (FY2021: 76%, FY2020: 73%) and in South Africa, in alignment with SDG1: No Poverty, with the work our ESD department is doing (described in further detail here of this report.)
Of course, there is much more evidence throughout Sappi, at every level.
How were Sappi’s priority SDGs selected?
We prioritised certain SDGs not because they were the easiest to align with, nor because they made for the best optics. We debated them, weighed up the business case for each SDG and selected those that had the most relevance for our business before establishing an agenda and targets for each priority SDG. We also looked at interdependencies. While these significant interdependencies between all the SDGs, some are more profound than others – for example SDG7: Renewable and Clean Energy and SDG13: Climate Action are very strongly linked.
So you are saying that there is a commercial case for implementing the UN SDGs, that doing so is not only about the optics?
There is definitely a commercial case! While we strongly subscribe to the principle of profit with purpose, we have a responsibility to our shareholders and our overarching purpose is to generate strong financial returns.
To give the most obvious example: Our Thrive25 strategy states that we exist to build a thriving world by unlocking the power of renewable resources: Clearly, we cannot achieve this if there are no renewable resources – primarily trees, in our case. We rely on healthy ecosystems to produce renewable woodfibre which is beneficiated into a range of products. That is why aligning with SDG15: Life on Land makes sound business sense and why we work so hard to enhance sound forestry management practices – both on our own landholdings and on those from which we source woodfibre.
The key is balancing short-term financial returns with longer-term viability. Let’s say we had the opportunity to buy cheap, non-renewable energy. We could decide to ignore the environmental consequences and just focus on the bottom line. As energy costs currently represent 8.2% of cost of sales, the financial impact could be very positive in the short term.
In the longer term, this move could have far-reaching repercussions, particularly as we are transparent about our energy and emissions profiles. Customers generally approach us for information about the fibre sourcing and production processes behind our brands, including carbon footprint. In response to these requests, in all regions we publish Paper Profiles and/or information sheets for our papers. We also respond to many questionnaires from our customers that collect data on our carbon reduction plans and performance. In SNA, we have developed our own GHG emissions calculator that quantifies the amount of emissions associated with a customer order and how those emissions compare against the industry average.
In the hypothetical situation where we would choose to focus only on the bottom line, not only would we experience loss of market share and suffer reputational damage, we would also incur the costs of trying to attract new customers, with research indicating that it costs five time as much to attract new customers as it does to retain existing ones(1).
Is implementing the SDGs only possible with large capital outlays?
The SDGs are transformative and disruptive, and these processes often involve significant financial investment. In Sappi’s case, we have a particular challenge in that our infrastructure is highly capital intensive and it is not possible to transform overnight.
We overcome this by being smart – in line with one of our core values. We are being smart in terms of our Saiccor Mill expansion project, which will not only add shareholder value by increasing DP capacity by 110,000 tpa, but also incorporates the installation of a new recovery boiler and converting the calcium line to magnesium. This will lead to a significant reduction in the fossil fuel energy requirements and increase our renewable energy usage in line with our commitment to SDG7: Affordable and Clean Energy and SDG13: Climate Action.
We are being smart by investing in best practice safety programmes in alignment with SDG8: Decent Work and Economic Growth: Not only do we have a duty of care to all those working at, or visiting, our operations, but safety also impacts profitability and reputation and can play a role in recruitment and retention.
We are also being smart in our shared-value approach to business, which means that communities close to our operations benefit from our extensive socio-economic development programmes.
Are you satisfied with Sappi’s progress towards your SDG-related Thrive25 targets on a regional and group level?
Progress towards our targets while uneven, has generally been positive. Targets are tracked and presented at our quarterly Group Sustainable Development Council meetings, so we have a good understanding throughout the year of how we are doing. I am confident that we will achieve these stretch targets within the time frame.
Even more important are the actions that have been put in place to achieve these targets and that they are helping to embed the SDGs into our DNA. These actions provide real, tangible evidence of our commitment to the SDGs and help us to identify problems and opportunities for future growth.
They are also an important framework in achieving our purpose of contributing to a thriving Sappi and a thriving world.