Can Sustainability ROI Boost the Bottom Line?

By giving economic value to forests, we can enhance our sustainability efforts as well as our business. That was Domtar CEO John D. Williams’ message at a New York University Stern School of Business event in March. NYU’s Center for Sustainable Business hosted leading academics, investors, corporate sustainability executives and nonprofit leaders to discuss how companies assess sustainability ROI (return on investment).

“If we don’t have sustainable forests, we have no business,” Williams says. Domtar recognized this years ago, and we were early adopters of sustainability standards and third-party certification.

At the event, Emily Chasan, sustainable finance editor at Bloomberg News, asked Williams several questions about how companies can identify, track and monetize sustainability returns driven by innovation, operational efficiency, employee engagement, brand enhancement and risk mitigation, and how those efforts can lead to better decision-making by the C-suite and investors.

Williams emphasized the importance of senior leaders making sustainability ROI a priority.

“There’s often a disconnect between the senior management of a business and the sustainability organization,” he says. “That’s deeply unhealthy. In my view, the whole thing should be integrated. The whole enterprise should be concerned about sustainability, and that has to be driven from the senior management.”

He pointed to Domtar’s board of directors, which has an environmental, health and safety committee that drives accountability in those areas. Like many companies, we report on these issues and more in our biennial sustainability report.

In terms of sustainability ROI, Williams said it is a challenge to quantify, but he believes it is there.

For example, sustainability ROI is evident in our employee recruitment and retention. “It’s not just the young people who care about this,” Williams says. “When I talk to people who’ve just joined our business, [sustainability is] one of the key reasons they join us.”

Another important area is in the continued development of biomaterials. In the past, companies like ours have focused on making pulp and paper and then carefully disposing of waste material. But in recent years, we’ve seen ways to make better use of lignin and other materials that are byproducts of our manufacturing processes. This not only reduces what goes to landfill, but the biomaterials business also has the potential to generate significant revenue over time.

While sustainability ROI has not yet become a prominent feature on our quarterly earnings calls, Williams says, he does hear about it from large investors, such as BlackRock, which is Domtar’s largest investor.

With advancements in forestry, water conservation, biomaterials and more, Williams sees the value in a long-term strategy that incorporates sustainability principles to drive financial success.

“We bring an economic reason for forests to be,” he says. “I think that’s a very compelling story. [Forests are] not just places we’re going to take the dog for a walk or go hunting, but they have an economic reason.”

See more of Williams’ interview on sustainability ROI:

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Categories:  Environmental Responsibility, Industry Insights

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