US-based labelling giant Avery Dennison has big environmental dreams.
The company is pursuing three broad sustainability goals: to deliver innovations that advance the circular economy; reduce the environmental impact in its operations and supply chain; and make a positive impact by improving the livelihood of people and communities.
Its 2030 goals include targets for gender diversity, employee engagement and inclusion, and safety among other things. Its ultimate ambition is to achieve net zero emissions by 2050.
“We are a values-driven organisation, and this is clearly aligned with our values, while ultimately driving long-term success for all our stakeholders including employees, communities, customers, suppliers and shareholders,” CFO Greg Lovins tells the CFO.
“I view this as a key part of my role as the CFO. I am a steward of a company that started nearly 90 years ago, and my role is focused on ensuring our success not just in the near term, but for many, many years into the future.”
Avery Dennison is a global materials science and digital identification solutions company, headquartered in Ohio; it employs approximately 36,000 people in more than 50 countries.
It designs and manufactures labelling and materials that enhance branded packaging. The company operates in industries that include home and personal care, apparel, e-commerce, logistics, food and grocery, pharmaceuticals, and the automotive sector.
Sustainability, including sustainable supply chains, is an integral part of Avery Dennison’s core strategy and culture. Lovins points out that the company is focused on the “long-term health of its business, communities and the planet”.
Emissions in focus
Lovins explains that Avery Dennison is taking a holistic view of its emissions sources – both upstream (everything needed to produce its products including inputs from suppliers) and downstream (everything involved in the sale of a product, including end-of-life treatment).
“We employ a range of strategic practices in our approach to sustainability, determining how our products affect the environment, and how we can mitigate the impact of our operational footprint,” he says.
Lovins notes the company has set itself robust 2025 sustainability goals, and “even more ambitious” goals for 2030.
“Within our long-term sustainability goal framework, we aim to deliver innovations that advance the circular economy and reduce our environmental impact in our operations and supply chain,” he says.
This includes sourcing, along with reducing its scope 1 and 2 greenhouse gas (GHG) emissions by 70% from its baseline.
“We are also working with our supply chain to reduce our scope 3 GHG emissions by 30%, with an ambition of achieving net zero by 2050,” Lovins says.
Green supply chain finance
In line with this, the company has also made supply chain finance programs available to its suppliers.
“To move towards a more circular economy, collaboration is imperative. We cannot meet our goals for, say, Scope 3 GHG emissions, without strong partnerships across our supply chain, including with our suppliers,” says Lovins.
“These programs provide further incentive for companies to operate in a sustainable manner in-line with our values – and receive financial benefit for doing so.”
Lovins notes that while the benefits of programs like this may be relatively small by themselves, Avery Dennison look at them as part of its broader effort to drive sustainability throughout its supply chains and our own operations.
“To achieve our goals it will take many different initiatives and innovative thinking across all aspects of the business,” Lovins says.
Role of the CFO in driving sustainability
Lovins points out that both he as the CFO, and the finance team more broadly, are driving sustainability in several ways.
“As with any other set of business metrics, strong reporting and tracking processes are key to ensure we stay on track, and to drive corrective actions where necessary,” he says, pointing out that finance is an integral part of Avery Dennison’s sustainability council.
It also plays a big role in driving much of the overall environmental, social and governance (ESG) reporting for the company. “The landscape of ESG reporting is evolving quickly, so this will continue to be a big area of focus for our finance team,” Lovins explains.
In addition to reporting, capital allocation is a key part of Lovins’ role as CFO. A says key questions he needs to consider are how much, and where, Avery Dennison is investing in sustainable innovation, sustainable capital expenditures, and venture investments, among others.
“The payback on sustainability initiatives may not always be as straightforward as traditional investments in the business, but we are leaning forward in order to find more sustainable ways of doing things and bring more sustainable solutions to our markets,” he sats.
Lovins believes that both the company’s customers and suppliers value the essential role that labels, materials and information play in advancing a more sustainable and circular economy.
“Ultimately, we target long-term value for all our stakeholders, which means innovating and operating in ways that have a positive impact on people and the planet. This leads to more resilient supply chains, a reduced carbon footprint and decreased costs,” he says.
“Given the disruptions so many industries have seen over the last few years, resiliency is now more important than ever. Driving sustainability throughout the supply chain will help us build a more resilient business for the long-term.”