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MIT Sloan Management Review

Domtar: How the paper industry overcame the 'sins of its past'

Montréal-based Domtar Corp. brands itself "The Sustainable Paper Company."

It is fast becoming a wood fiber innovation engine using sustainability as the foundation of its business transformation. David Struhs, Domtar's vice president of sustainability, explains how co-generation, new manufacturing and attention to market niches are some of the ways the company is pursuing this vision.

David Kiron: You use the phrase "virtuous circle of sustainability" in talking about your strategy. That's a good phrase. Do you see giving younger workers something interesting to do as contributing to their wellbeing?

David Struhs: I think so. I know it's the case with me. I'm 53 and I've done lots of different things in my life, and I still love going to work in the morning. I think one of the reasons is that, at the end of the day, I feel like I've actually done something that might make a real positive difference, whether it's something as simple as collaborating with NGOs and customers to coming up with a way of getting more landowners to certify their fiber supply and adhere to certain good practices for forest management. It can be something even bolder, like reimagining what value we might extract out of something like a tree. I think lots of folks feel the same way.

One of the things that might be unique to our industry -- because it's such an old industry -- is we're able to overcome some of the sins of the past. Let's be honest, in our lifetime the pulp and paper industry was not a good environmental actor. It did not have the ethos of manufacturing efficiency, and if you look at what they did to rivers and streams, and in some cases forests, it was reprehensible.

But if you look at how the industry has been transformed and the transparency it now exhibits, there's a positive story to tell. I think people who have spent a long time in this industry feel like they have a new lease on life. Almost as important, they have a new reputation.

Kiron: So, let's talk about this new lease on life and how long this life is going to go for. Domtar has a sustainability strategy that goes out to 2020, which is a substantial amount of time.

Struhs: Well, any number that you put out there as a planning horizon is by definition arbitrary, and we recognize that. There is a certain ring to 2020. But at a more practical level, we felt that it was a reasonable timeframe, given the capital intensity of our industry. We have harvest cycles that extend 40 or more years in some cases. Because of the investments required to build and the operating costs to maintain this very capital-intensive industry, there's no room for decisions that lack a view of the long horizon.

That doesn't mean that we aren't going to hold ourselves accountable on a routine annual basis, reporting progress where it's good and where it's bad, but we think it's important to view it in that longer-term context.

In some ways, what sustainability is serving as a counterweight to the quarterly nature of American capitalism, where everything's about what's happened this quarter or what's going to happen next quarter. If you believe sustainability is a natural counterweight to that phenomenon, then I think it's actually appropriate to have a 2020 horizon out there.

Kiron: Give us an idea of some of the big goals of this 2020 strategy.

Struhs: It starts with the fiber, in our case. When people think about our industry, most often they think first about the responsible utilization of fiber resources. This is also where Domtar began as it started along its sustainability path. So, that's almost foundational.

Beyond that, it's looking at the environmental footprint of our operations. This includes the efficiency with which we use energy, water, chemicals and wood. It also includes recovering and recycling what once was considered waste and putting those materials to productive use. And when we've run out of those options, the goal is to minimize our footprint as much as we possibly can, and to do it in a way that is somewhat aspirational. It's more than a lot of lay-ups; we set markers that require us to actually rethink our progress.

Beyond the environmental footprint, it's the products. We need to ask whether we can really integrate sustainability into the development of new fiber-based solutions that take advantage of a renewable resource. Can we make products that are lighter, cheaper, faster, better and ultimately renewable -- whether they're fuels, whether they're plastics, whether they're substitutes for carbon fiber?

And then finally -- and equally as important -- we need to consider the communities in which we find ourselves. Ultimately, sustainability is about fitting in, and doing so in a way that creates a net positive benefit in the community in which we operate, whether it's water, air, employment, taxes, health, or safety. And it's really just the basics of good corporate citizenship and recognizing that part of what we have to maintain for our sustainability is our license to operate.

This article is adapted from David Kiron's "Old Industry, New Tech: Domtar's Focus on Sustainability," which was originally published by MIT Sloan Management Review.

Log cross-section image by Sanit Fuangnakhon via Shutterstock.

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