“Embracing the UN SDGs is not just our commitment to a better world, it’s our strategic investment in a future where social responsibility and business success converge thereby securing a sustainable legacy for generations to come.”
Tracy Wessels
Sappi Limited Group Head Investor Relations and Sustainability
Q&A with Dr Tracy Wessels, Group Head Investor Relations and Sustainability
Dr Tracy Wessels previously headed up the Centre of Excellence for DP at Saiccor Mill for several years and is now Group Head Investor Relations and Sustainability.
There has been a proliferation of sustainability standards and compliance requirements in recent years. These have been issued by bodies like the International Sustainability Standards Board (ISSB), the JSE, the European Financial Reporting Advisory Group (EFRAG) and are embedded in the German Supply Chain Act. Are these hindering or helping the achievement of the SDGs?
On the one hand, the reporting obligations being placed on companies through these standards look set to become increasingly onerous. On the other hand, it appears that reporting bodies are looking to synchronise and align with pre-existing standards like the GRI. This clearly stands Sappi in good stead, as we have been reporting against the GRI since 2008.
One of the key common denominators of the new reporting standards is the concept of double materiality which acknowledges that a company should report simultaneously on sustainability matters that are firstly, financially material in influencing business value and secondly, material to the market, the environment and people. Sappi welcomes this approach and we are increasingly using it to drive our strategic sustainability work. Assessing the broader impacts of our operations enhances our reporting on both internal and external issues to various stakeholders. It also deepens our understanding of the risks and opportunities that amplify or detract from value in the broadest sense. This in turn means we can better plan strategic direction, develop tangible, measurable key performance indicators and link these to operational development.
The UN recently released its first Global Stocktake, an assessment of progress made toward mitigating global warming since the Paris Agreement in 2015. The key takeaway message is that we are not on track to meet the target of the Paris Agreement. What is your view on this?
The global economic crisis has meant that many countries, particularly in Europe, are scaling back on climate ambitions. While understandable, in the face of devastating climate events, the world should not lose sight of the urgent need to reduce GHG emissions. The report highlights the need to reduce GHG emissions from 2019 levels by 43%, 60% and 84% by 2030, 2035 and 2050, respectively, to limit global warming to 1.5°C.
Sappi’s key countries of operation appear committed to their long-term GHG reduction goals. With reference to the 84% reduction in GHG emissions by 2050 outlined by the Global Stocktake, Canada and the European Union have committed to net zero by the same date, as has South Africa in its Nationally Determined Contribution (NDC) submission (updated in 2021). The US has set an economy-wide goal of net zero emissions by no later than 20501.
Unfortunately, in our own operations, production curtailments significantly impeded our operational efficiency in FY2023, causing us to fall short of several of our energy-related targets which are intensity based. We remain committed to meeting our science-based decarbonisation targets and intend reducing our emission intensity by 41.5% by 2030. We have developed a robust transition plan with associated capital allocation. Our view is that decarbonisation is not a choice, but an essential component of our long-term success and viability as a business.
Among the actions proposed to achieve these targets, the Stocktake recommends preserving forests and addressing non-CO2 emissions: Agriculture, Forestry and Other Land Uses were responsible for 22% of global GHG emissions in 2019. About half of these emissions are attributable to deforestation. This means we can expect greater global focus on deforestation, which gives us a competitive advantage, as our woodfibre supply chains are deforestation-free.
Sappi reports transparently against SDG-related 2025 targets in the Group Sustainability Report, disclosing whether targets are on track or not. Has there been any fallout from stakeholders when targets are not met?
One of Sappi’s strategic fundamentals is ‘enhance trust’. Reporting as we do strengthens our relationship with our stakeholders. Our customers in particular need to know they can rely on the information we provide as they look to meet the needs of eco-conscious consumers around the world and promote sustainability in their own supply chains. This is particularly important because consumers are faced with a wealth of claims on the ‘green’ nature of products. This has become such a problem that there are regulations pending around the world – like the European Commission’s directive on green claims – aimed at counteracting ‘greenwashing’.
In FY2023, while we made significant strides in achieving our People targets and attained our best ever safety performance, we fell behind in our planet targets. We acknowledge that sustainability is a journey and that unexpected external and internal challenges will impede our progress. Through our focus on innovation and agility we will adapt where necessary to ensure continuous improvement. Our firm view is that transparency heightens engagement and builds loyalty and that our stakeholders understand that we are steadfast in our commitment to meet or exceed all our Thrive (2025) sustainability goals.
Which of the Planet targets have been the most difficult to meet?
As discussed above, production curtailments during the year have severely impacted our planet targets which are based on an intensity metric (performance per mass unit of product produced). These include energy intensity, GHG emission intensity and solid waste intensity. Notwithstanding the fact that our performance against these targets was poor, our absolute GHG emissions and solid waste sent to landfill were in fact lower than the prior year with emissions substantially lower. This is of course due to our low operating rates which had an adverse impact on our profitability and is not at all sustainable for our business. This clearly demonstrates the interconnectivity and trade-offs between Prosperity and Planet. Absolute and intensity targets represent two different approaches to setting goals for environmental sustainability. Each approach has its trade-offs, and the choice between them depends on various factors, including the nature of the business, the industry and the desired environmental outcomes. Ultimately, the choice between absolute and intensity sustainability targets depends on the specific goals of the organisation, the industry context and the desired balance between overall impact reduction and efficiency improvements. Our underlying ambition is to reduce our impact on nature while maintaining a sustainable balance between People, Prosperity and Planet by doing more with less. We have therefore selected intensity metrics as the appropriate measure for some of our Planet indicators which drives us to grow our circular and renewable product solutions with an unrelenting focus on operational efficiencies.
Has aligning with the SDGs amplified enterprise value?
The SDGs can be difficult to grasp and not everyone realises there are many sub-indicators underpinning each SDG. For example, the indicators under SDG8: Decent Work and Economic Growth are broad, ranging from the promotion of a safe working environment; to equal pay for equal work and annual growth rates of gross domestic product (GDP) per capita; among others. Before aligning with priority SDGs and establishing our related targets, we established a global working group which analysed each SDG and associated sub-indicators.
Following this approach has helped to shape our response to key material issues and made the concept of sustainability more tangible for our own people and our external stakeholders.
It has also helped to build our brand and enhance our reputation. A recent study by Deloitte indicates that one in four consumers (26%) are prepared to pay more to protect biodiversity or for sustainable products and packaging (24%) or for products or services of suppliers that respect human rights or commit to ethical working practices (25%).1
In a changing talent landscape, articulating our sustainability journey through the SDGs is important for attracting millennials (those born between the early 1980s and the late 1990s) and Gen-Zs (those born from 1997 onwards) to the workforce. This is highlighted by another Deloitte study which found that Gen-Zs and millennials continue to demand greater climate action from their employers and believe some have deprioritised sustainability strategies in recent years. They also see a critical role for employers to provide the necessary skills training to prepare the workforce for the transition to a low-carbon economy.2 Overall, aligning with the SDGs has helped to mature our sustainability strategy as we have transitioned from compliance and reactive measures to protect our licence to operate to a more purpose-driven position. This has anchored the Sappi culture and business model in sustainable thinking.
Taking a broader view, our world today is battling with the lingering effects of Covid-19, a high cost of living, geopolitical instability and extreme weather events. This means it is more important than ever before to be united by a common framework and universal set of goals if we are to achieve a thriving world.