Sustainability is a buzzword that keeps on buzzing. As companies like Exxon have set net zero targets that encompass their supply chains and are expanding their low carbon fuel offerings, ethanol producers are feeling a greater sense of urgency to jump on board and incorporate ‘sustainability’ within their own business models. Yet, many biofuel businesses we talk to are struggling to engage. And the reason is fairly uncomplicated to address.
“The scenario for ethanol plants is no longer a concern about ‘if’ they should implement a sustainability plan, but rather, how to do it,” says Donna Funk, lead biofuels consultant at Pinion. “We’re fielding a lot of questions right now on how it applies at the plant level. There seems to be a roadblock on understanding what biofuel businesses can actually do and how to get started.”
So, what exactly is sustainability for the average ethanol plant, and how should a plan be implemented?
Sustainability 101: Defining Sustainability for Your Business
There is a lot of information swirling around regarding what on-farm carbon actually means for an ethanol business. At the most basic level, the ethanol industry understands that both growers and biofuel producers will soon be rewarded for climate-smart practices.
Industry members that include the American Coalition for Ethanol, the Great Plains Institute, Low Carbon Fuels Coalition, the National Biodiesel board, and Canadian Oilseed Processors Association have been working on ways to incorporate farm-level practices into the GREET (Greenhouse Gases, Regulated Emissions and Energy Use in Transportation) model for California’s Low Carbon Fuel Standard – a move that may trickle down into similar fuel standards in states such as Oregon and Washington.
In addition, a number of ag retailers and chemical companies are launching their own voluntary carbon markets to compensate growers for implementing stewardship practices tied to cover cropping, reduced or no-tillage, and nutrient efficiency gains. What this all means at the plant level: Take a good look at your supply chain. As larger companies enforce sustainability compliance, it will work its way to you at some point.
So, now what?
“When we speak about defining sustainability, we aren’t talking about any one, broad definition,” says Funk. “An effective sustainability plan for your business starts with one important factor: your business.”
Funk explains that biofuels businesses are often seeking out a formula for applying sustainability. For example, if a similar business adds x, y, and z practices, in theory other businesses should be able to apply the same with good results.
“It doesn’t work that way,” cautions Funk. “Sustainability isn’t a thing or a formula that you can apply to your business. And sustainability for an ethanol plant is far different than that of a meat packer. It encompasses many factors and variables that are unique to your business and to its stakeholders – and unfortunately, there is no ‘one-size-fits-all’ option.”
It’s important to think of sustainability as a position for your company to take. One that will have impact on your products, geographies, customers, employees, and communities. Funk compares it to the process of defining your company’s mission or vision statement. “Each ethanol plant will need to come up with their own unique definition that will inform their sustainability mission and measure their goals.”
Step One: Make it Measurable and Meaningful
This is where a materiality assessment – a process of identifying the most strategic sustainability focus areas of your business – comes into play. There are two critical stakeholder groups that are evaluated in a materiality assessment to define, develop, and measure a sustainability strategy:
- Internal stakeholders: employees, leadership, and investors
- External stakeholders: customers, community members, and the industry at large
Evaluating both of these groups enables your company to identify priorities and metrics that are unique to your business and its key stakeholders. “This ensures that your sustainability program is valuable, relevant, and impactful.
Benefits of a Materiality Assessment
- Outlines what your organization should focus on immediately, in the short term, and in the long term.
- Informs the development of industry-aligned metrics and policies that are relevant to your business.
- Lays the foundation for the development of organizational baselines, goals, projects, and investments.
- Creates a roadmap for the development of a program of meaningful metrics to empower your organization to measure and drive change over time.
Pinion provides materiality assessments for biofuel businesses, as well as benchmarking, metrics, policy development, analysis, and reporting. Reach out to our sustainability team to help you create a sustainability strategy for your business.
Related Read: What’s Ahead for Carbon Markets
