Why your forestry organization should embrace the sustainability trend

The forestry industry is undergoing an interesting push and pull right now. Over the last year, there’s been a significant increase in the demand for wood. But society is also taking a more critical view of how we use our natural resources. Forestry is a large part of that conversation, and not always for positive reasons.

There are three sustainability trends impacting forestry over the coming years: consumer buying preferences, changing building codes and building materials, and a focus on environmental, social, and corporate governance (ESG) factors. Embracing the change can lead to new opportunities for you and your organization.

Consumer buying trends

Across our economy, consumers are looking critically at the brands they spend their money on. They’re discerning about their actions and consider the long-term impacts of their purchases.

Research in 2020 from IBM found that 57 percent of consumers are willing to change their purchasing habits to help reduce negative environmental impact and nearly 80 percent say sustainability is an important personal value.

While you may not be engaging directly with consumers, these trends matter to your business. Your clients will start adapting their products to meet the new consumer demand and if you don’t have a strong sustainability story to tell, they may need to find someone that fits what consumers are looking for.

Consumers say they are ready to spend more, with 72 percent willing to pay a premium for brands that offer sustainable and/or environmentally responsible products. This number will likely increase as younger generations are driving the sustainability demand trend and starting to earn more income. Now is the time for forestry organizations to create plans for how they’ll tell their story and meet the new demands.

Changing building codes and material costs

Multiple Canadian provinces have updated their building codes to allow for larger structures to be constructed with wood. In turn, the demand for lumber has increased and will likely hold at a higher floor than we’ve seen in the past.

We’re also seeing builders moving away from using steel. The carbon sequestering properties of building with wood have been seen as an advantage over steel and concrete by designers and builders looking for more sustainable building designs.

The rise in prices could bring increased scrutiny. Media has been covering the story of increased lumber prices over the last six months and the attention could turn negative. Forestry organizations need to be prepared and able to tell their story. The industry is committed to sustainability, but the narrative could get out of control if organizations cannot clearly explain their environmental impact.

New focus on ESG

We’re entering a new economic chapter, where investment is judged on more than just business model or bottom lines. People are considering the impacts of the businesses they work with — and this could mean big changes for Canadian forestry organizations.

In February 2021, the California state government introduced a bill that requires all state contracts involving forest-derived products to work with contractors that have policies in place to prevent deforestation, primary forest loss, and violations of Indigenous rights.

Consumer goods giant Proctor & Gamble is now reporting on actions they are taking to address deforestation after 67 percent of shareholders voted in favour of the resolution last October. BlackRock, a major asset management company with more than $8.6 trillion in assets, supported the resolution and pushes other organizations towards more ESG targets.

These anecdotes make it clear that there’s a shift happening. Forestry organizations can either adapt to change and turn sustainability into a competitive advantage, or risk getting left behind.

There’s an opportunity for forestry organizations to change the narrative and demonstrate that they are a part of a sustainable future. Canada is a leader in this area and forestry organizations already follow strict laws.

To learn more about sustainability trends in forestry and the road ahead, contact Chris Duncan, CPA, CA, National Leader, Forestry & Forest Products Services, at 250.856.2443 or [email protected].