The Green Report: Print’s Carbon Disclosure Conundrum

Until recently, comprehensive environmental management and carbon disclosure have not been a significant priority among the major companies that buy printing. But that may be about to change.

The printing industry is a part of the overall media industry, and the media industry is too big and too important to escape scrutiny for the environmental impacts and greenhouse gas emissions associated with its supply chains. A growing array of media choices combined with pressure for supply chain environmental risk disclosure is likely to make the printing business a much more a complex game than it is today—a game in which key factors in selecting print service provides will be capacity for media integration, environmental risk management and carbon disclosure.

Big Business=Big Carbon Footprint

According to the 2009 Deloitte Media and Entertainment Industry Outlook about $950 billion was spent on products and services provided by media and entertainment companies in 2006. That spending is expected to grow by 38 percent to $1.3 trillion by 2011. The U.S. Department of Energy reports that approximately 360,000 tons of CO2 equivalent greenhouse gas emissions are associated with each billion dollars of economic activity, which would mean the carbon footprint of the media industry could be as much as 500 million metric tons of greenhouse gas. That would be equivalent to the annual greenhouse gas emissions of 130 coal-fired power plants burning 2.6 million railcars of coal; or the annual greenhouse gas emissions from 95 million four passenger vehicles burning 56 billion gallons of gasoline.

With so much environmental impact and carbon risk hanging in the balance sentiment is growing that there is no longer a business case for the status quo when it comes to supply chains that depend on fossil fuels or the unsustainable use of resources. In addition to managing for quality, cost and delivery, print service providers will increasingly be expected to integrate their offerings with digital media an report on the environmental impacts and greenhouse gas emissions associated with the products and services they sell. 

Recognition of the risks posed by activities like coal mining, oil extraction, industrial production, electricity use, transportation and deforestation is on the rise and dramatically changing the way supply chain decisions in other industry sectors are being made.

Action Amid Uncertainty

In a recent Ernst & Young survey of global organizations with greater than $25 billion in market capitalization, 73 percent had made commitments to reducing greenhouse gas (GHG) emissions. Interestingly, 43 percent of respondents believe that equity analysts are including climate change factors in their valuations and 30 percent anticipate climate change factors will find their way into these analyses in the next five years. 

The report, Action Amid Uncertainty—The business response to climate change, probed 300 global executives from corporations with annual revenue of $1 billion or more on how they are responding to climate challenges. According to Mark Foster, group chief executive of management consulting and global markets at Accenture, "Effective carbon disclosure helps corporations mitigate investment risk and achieve more sustainable performance."

As a result there is growing pressure for major brands to call upon companies in their supply chains to disclose environmental lifecycle impact data. They are also called upon to work with suppliers to innovate the carbon and climate-change risk out of their product and packaging supply chains. A growing number of Fortune 1000 companies are calling product and service providers in their supply chains to disclose the environmental lifecycle impacts, climate change risks and "carbon footprints" associated with the goods and services they sell.

Is Size All That Matters?

In addition to calls for supply chain carbon disclosure by members of the Carbon Disclosure Project Supply Chain Leadership Coalition, several large investor groups representing more than $8 trillion in assets under management recently requested the U.S. Securities and Exchange Commission to issue guidance on the disclosure of climate-related information on the basis that it is material to their investment decisions even to companies whose carbon footprints are relatively small—and thus whose climate change risks are not likely to be material.

On the heels of calls for supply chain disclosure by Procter & Gamble, Puma and week the Ford Motor Company, one of the world's largest advertisers, announced plans to survey 35 of top global suppliers on their energy use and estimated greenhouse gas emissions. And while it does not currently address the carbon footprint of advertising or media suppliers, it may in the future.

John Viera, Ford Motor Company's VP of Sustainability and Environmental Policy responded to my call for insight about this trend with a statement that suggests a broader set of requests which might include advertising and media suppliers is a possibility: "Currently advertising suppliers are not explicitly included in our supplier survey associated with Ford's efforts to better understand the carbon footprint of its supply chain. At this time Ford's initial efforts are focused on direct first tier suppliers providing higher carbon intensity commodities for vehicle production. However, beyond resources required for supplier engagement, we are not presently aware of any particular or unique barriers to measuring and reducing the greenhouse gas emissions of advertising suppliers".

One of the key obstacles to making effective comparisons and informed choices is the lack of standardized media product descriptions and category rules for the myriad of different media devices and media products that advertisers and consumers have to choose from. Media category definitions and product rules for lifecycle inventory data accounting and disclosure of carbon footprint data are needed… developments that are currently being addressed by the ISO TC130 Workgroup for the development of standards for the carbon foot printing of print media.

Confront The Carbon Disclosure Conundrum

The recent BP Deepwater Horizon oil spill in the Gulf of Mexico has spurred a game-changing shift in Americans' environmental attitudes. For the last few years, Americans' environmental concerns declined as the public placed a higher priority on pocketbook concerns like the economy and energy, likely due to the poor U.S. economy.

A recent USA Today/Gallup Poll indicates that trend has reversed in just two months' time and the pro-environment position has regained the strength it showed for most of the last decade. Given the sensitivity of marketers to public opinion, it is highly likely that this change in public opinion will change the priorities of advertisers and media companies about environmental risks and carbon disclosure.

If there is anything to be learned from the oil spill disaster in the Gulf of Mexico it is that BP underestimated the risks associated with their business practices and/or failed to disclose those risks to investors, insurers, regulators and the public.  The printing industry cannot afford to ignore or underestimate the growing demand for carbon footprint disclosure and environmental risk management in the supply chains of major corporations and government agencies. Until recently, the question about whether or not printers and their supply chain partners should be concerned about carbon disclosure has been a conundrum, but there is mounting evidence to suggest that calls for carbon disclosure from print and digital media supply chains are likely to increase in the not to distant future. Familiarize yourself with the carbon disclosure requests being made by the Carbon Disclosure Project, The Ford Motor Company, P&G, The Sustainability Consortium, and the WRI/WBCSD GHG Protocol Supply Chain Initiative. Now is the time for you to begin identifying and quantifying the greenhouse gas emissions associated with your operations and your supply chain so that you will be prepared when asked to disclose and verify the carbon footprint of the products and services you provide.