{"id":10298,"date":"2016-11-04T00:27:31","date_gmt":"2016-11-04T04:27:31","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/are-hang-tags-causing-global-warming\/"},"modified":"2016-11-04T00:27:31","modified_gmt":"2016-11-04T04:27:31","slug":"are-hang-tags-causing-global-warming","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/are-hang-tags-causing-global-warming\/","title":{"rendered":"Are hang tags causing global warming?"},"content":{"rendered":"

Avery Dennison Corporation is a Fortune 500 company with ~6 billion USD of sales annually. The company produces a great variety of products ranging from pressure-sensitive adhesive paper rolls to apparel branding labels (hang tags, woven labels, RFIDs, heat transfers, etc.). The main raw material utilized by the company for all of its products is paper and their current operation is completely dependent of it.<\/p>\n

As we all know paper comes from forests. An estimated 18 million acres of forest are lost each year, which equals to an impressive loss of 20 football fields every minute. Over 60% of the 17 billion cubic feet of timber harvested worldwide each year is used for paper and pulp. According to the Forrest Stewardship Council, \u201cdeforestation and forest destruction is the second leading cause of carbon pollution, causing 20% of total greenhouse gas emissions\u201d[5]. The Food and Agriculture Organization of the United Nations (FAO) explains that \u201cforests have the potential to absorb about one-tenth of global carbon emissions”.[1] From this we can clearly conclude that deforestation has a spiraling downward effect, given that the lack of forests increases carbon emissions and the possibility of absorbing them, thus affecting climate change, which then in turn increases the average temperature which will ultimately affect the growth of existing forests. It is said that if current deforestation continues, it will take less than 100 years to destroy all the rainforest on earth. For these and many other reasons, taking care of our forests has become imperative in the climate change challenge.<\/p>\n

This situation has deeply affected Avery Dennison\u2019s operating model because as the consumer market has become more conscious of climate change. Some conscious customers are questioning to a greater extent what they buy and where it was sourced. \u00a0It has become very important for companies in the industry to look for alternatives that satisfy the consumer and ultimately the planet. With this, organizations such as the Forrest Stewardship Council (FSC) sparked with the clear mission of promoting environmentally sound management of the world\u2019s forests.<\/p>\n

According to the Avery Dennison\u2019s latest sustainability report, in order to combat these challenges, the company has set very aggressive goals for 2025 for their paper which includes sourcing 100% certified paper, of which 70% should be FSC certified. [3]<\/p>\n

But not everything is that simple for Avery Dennison, as this certified paper is usually more expensive and demand is very limited. As of now, the demand that Avery Dennison has of paper would not be able to be satisfied by the current supply of FSC certified paper. Unfortunately, many of the customers downstream of the supply chain are not willing to pay more for these certified products. However Avery Dennison has been actively working with their customers to achieve price parity, primarily by sacrificing some of the weight or thickness of the paper, but not many are yet open to compromise on this.<\/p>\n

Another issue affecting Avery Dennison\u2019s operating model, same as in with other manufacturing companies, is how globalized their sourcing of raw materials is. For example, the paper of the hang tag label of a new shirt would be sourced from South Korea, this paper would then be coated in the US, printing inks would be bought from the UK, the printing process done in Honduras, the addition to the finished shirt in Nicaragua, and ultimately sold in Italy so that once the end customer buys the garment, it rips out hang tag and throws it to the trash. You could say that this hang tag label has traveled the whole globe emitting carbon emissions just to end up thrown in the trash.<\/p>\n

While globalization has introduced significant advantages to the world, you could also argue that it is also fueling global warming because of the transportation factor. This refers to all the carbon dioxide emitted from shipping and flying goods all over the globe. [4]<\/p>\n

I believe that the next steps for Avery Dennison given the two issues I have just described are:<\/p>\n