Sustainability in the market important to company success

The next few decades will be an incredible time of volatility, opportunity and risk for ethanol producers. This column appears in the September issue of Ethanol Producer Magazine.
By Donna Funk | August 12, 2016

The next few decades will be an incredible time of volatility, opportunity and risk for ethanol producers. Questions surrounding the renewable fuels standard and biofuels’ place in the overall energy picture remain, but increasing numbers of companies are looking to alternative fuels and byproducts as part of their supply chain to reduce their carbon footprint and put forth a positive public image. To do that successfully, they have to document and make transparent the data that supports their sustainability stories.

Food companies are facing significant challenges these days. They want to maintain the quality, safety and taste of their products that loyal customers have come to expect and love, while also connecting with a new generation of food consumers. They often need to focus more on explaining and defending how the ingredients were grown, providing some assurance that they and their suppliers are managing the environmental and social impacts of that process well. That can be a tall order when you don’t know exactly where all the ingredients you are using to make your products are originating—as in the case of commodities such as corn, wheat or rice.

While it is challenging, this increased interest by millennials about how things are produced and their desire to support products that contribute positively to the local community and the environment also provides a great opportunity for the entire food and agricultural supply chain. But it will take a coordinated effort between food companies and biofuels producers to bring the vision to life.

One way food companies can connect to this new consumer mindset is to expand the role of biofuels in their supply chain and to actively communicate the benefits of doing so to consumers. That can mean something as simple as using more biofuels as a mix in the transport of food and sharing the positive environmental and local economic benefits of that decision. It can also come from highlighting the less-known ways in which the production of ethanol is contributing to a positive overall environmental and social outcome.

Building and deepening engagement with these new consumers is critical. Ethanol and other biofuels can and should be thought of as part of that important process. In fact, biofuels companies should be reaching out to food companies to increase transparency and leverage the inherent social and environmental strengths the industry can bring to the table.

For biofuels producers, the key to minimizing the negatives, capturing new markets and mitigating higher costs is in having a deeper understanding and better risk management of their supply chain. This includes the ability to find and create new shared value streams with the most resilient, productive and sustainable companies in the chain. A critical enabler of this competitive advantage is the collection of data. This is good news for biofuels companies, if they can document their best practices.

The ultimate buyers of the products biofuels producers make are increasingly feeling the need to make informed decisions about their supply chain, focus on sustainability priorities and create more transparency. The only way to accomplish that is to gather data from the ground up, which means the push for sustainability assessments or audits is going to only increase.

The decision before the biofuels industry increasingly is becoming how and who will provide data about its performance, and not whether the data will be collected.

We speak often to biofuels companies and associations about the importance of capturing data and making sure it is working for them first, before reporting it to the greater supply chain. Taking a more systematic approach toward layering a wider array of sustainability and financial data into long-term business planning processes can help companies make better decisions and reduce long-term costs. It also will get these entities ready for the sustainability reporting onslaught coming their way.

As the retail industry continues to ask questions about the sustainability of the products they sell, fuel and shipping will be further impacted. Ethanol and other fuels will be viewed through the sustainability lens even more closely. This is a good thing, if producers can produce information that demonstrates environmental, social and financial consciousness.

Author: Donna Funk
Principal, K·Coe Isom