DMA Education Services Critical Issues in Direct Marketing: What Direct Marketers Can’t Afford To...

DMA Education Services

CriticalCritical Issues in Direct Marketing: Issues in Direct Marketing:What Direct Marketers Can’t Afford To Ignore What Direct Marketers Can’t Afford To Ignore About Improving Their Environmental ImpactAbout Improving Their Environmental Impact

Wednesday, March 21, 20071:00 p.m. – 2:30 p.m. EDT


Webinar Panelists

Speakers • Meta Brophy, Director, Publishing Operations, Consumers Union

• Oliver Clode, Vice President, Catalog Manufacturing & Marketing Finance, Williams-Sonoma, Inc.

• Chet Dalzell, Director, Public Relations, Harte-Hanks, Inc.

• Phil Riebel, Environmental Director - North America, UPM-Kymmene Inc.

Moderator• Patricia Kachura, Senior Vice President, Ethics & Consumer Affairs, DMA


Webinar Outline

Instructions to Participants, Kristen Cunningham (DMA)

Introduction of Speakers, Patricia Kachura (DMA)

Overview of DMA Environmental Planning Tool, Chet Dalzell (Harte-Hanks)

A Walk-Through of the Planning Tool• Design, Production & Printing, Meta Brophy (Consumers Union)• Paper Procurement & Use – Suppliers’ Perspective, Phil Riebel (UPM)• Paper Procurement & Use – Buyers’ Perspective, Oliver Clode (Williams-

Sonoma)• Recycling & Pollution Reduction, Phil Riebel (UPM)• List Hygiene & Data Management, Chet Dalzell (Harte-Hanks)

A Demo of the Planning Tool, Chet Dalzell (Harte-Hanks)

Question & Answer Session, Patricia Kachura (DMA)


Overview of DMA Planning Tool & Optional Policy Generator

www.the-dma.org/envgen/

Chet DalzellDirector, Public Relations

Harte-Hanks, Inc.

http://www.the-dma.org/envgen/






A Vision for Success

"America's Most Admired Companies: What gives GE such a glow? Fresh ideas and being green distinguishes the winners in our 25th annual rankings. How to get a great reputation…

These days 'green' means something more. The three Most Admired Companies this year – General Electric, Starbucks, and Toyota – are building their growth at least partly on strategies and products aimed at helping preserve the planet."

-- Fortune (March 19, 2007, pp. 88, 90)


Direct Marketers Take on Environmental Planning

• DMA Board-Level Task Force on Environmental Issues, 1989

• DMA Environmental Resource for Direct Marketers (First, Second & Third Editions), 1990 – 2004

• DMA Robert Rodale Environmental Achievement Awards,Initiated 1991

• DMA Committee on the Environment and Social Responsibility, 2005

• DMA Environmental Planning Tool and Optional Policy or Vision Statement Generator, 2007


DMA Committee on the Environment & Social Responsibility

Established by Board in March 2005 • Identify challenges germane to direct marketers

• Encourage members to make progress on these challenges over time

• Manage environmental performance of our membership

• Appoint members to facilitate these goals: subcommittee and working group

Environment Record• Designed and executed survey to benchmark DMA members’ business

practices

• Selected benchmark project to inform and improve environmental performance


Purposes of the DMA Environmental Planning Tool

Educate and suggest practices to consider in five general areas related to the direct marketing process

-- Design & printing-- Paper procurement & use-- Packaging-- Recycling & pollution reduction-- List hygiene & data management

Enable benchmarking in three areas of focus-- Improve list hygiene & targeting of print communications-- Increase recovery and recycling of post-consumer material used in catalogs

and direct mail-- Support well-managed forests


Why Does Environmental Performance Matter?

• Recognize the formula: greater efficiency = less waste = less cost

• Understand heightened global concerns about environmental protection and how they influence our business

• Bolster and maintain consumer confidence and trust in our business, and the role environmental stewardship plays in this trust

• Recognize Fortune 1000 leadership and corporate citizenship – these firms are setting business trends in "green" activities

• Take responsibility for business matters that affect the planet – and find practical and innovative ways to manage these areas well


What Environmental Planning is Not

• A pursuit of environmentalism in our business without a recognition of where tradeoffs may exist

• A blueprint for being "green" – with higher profits as a guarantee

• The pursuit of an agenda set by a third-party organization which may or may not understand the direct marketing business

• A requirement that direct marketing businesses publish their environmental policies and practices publicly


Desired Outcomes in our Use of the Planner

• Make an understanding and consideration of environmentally helpful practices more easily accessible in their direct marketing operations

• Enable an internal assessment of present-day practices, one company at a time – currently 115 listed practices

• Enable a benchmark from which organizations can improve their environmental performance, with respect to direct marketing

• Deliver a Web interface that is easy to understand, easy to use, and easy to reuse over time

___________________

• OPTIONAL: Provide a draft public policy or vision statement regarding the environment, for those organizations which choose to do so


A Walk-Through of the Planning Tool


Section: Design, Production & Printing(17 practices)

Meta BrophyDirector, Publishing Operations

Consumers Union


Environmental Responsibility in Production

• Communicate with stakeholders — marketing and creative, the production team, outside vendors.

• Everyone has a part to play — make assignments

• Agree to what you are collectively trying to accomplish

• Research, query, investigate options and shop

• Don’t stop until you understand the options and can present them clearly to your colleagues. Are you at least as conversant in marketing as your marketing colleagues are about production?

• File away ancillary information for the next project. Pass along information to others


The Process

Analyze the cost

Enlist vendor input

Present the options

Get the specs and/or a comp

Decide on labeling

Review and revise for the

next time

Nail down the details

Cycle of Continuous

Improvement

Identify the package contents


Use the Planning Tool

• Reduce Waste– Can you change the size?– Can you eliminate a component?– Can you reduce the weight?– Can you cut the quantity?– Can you route electronically?

• Reduce Toxicity– Can you test out of the label?– Can you find another method of creating interest and/or involvement?

• Recyled/Recylable/Reusable Materials– Paper, poly, corn? BREs in inventory?– Labels and adhesives?


Suppliers

• Once they are on board, they stay engaged

• Vendors are a valuable source for new ideas

• They can gather information and spread the word within the industry

• They share in the accomplishment: We want our vendors to make good choices, too


Recent Successes

– Liftnotes on high-yield groundwood

– Letters on high-yield groundwood

– Postconsumer recycled content in self-mailers

– Biodegradable poly

– Die-cuts instead of labels

– Texture instead of adhesive or ink

– Geographic splits


Key Challenges (Or Are They Opportunities?)

• TIME

– To research– For the learning curve– For comparative analysis

• EXPENSE: Print, Paper, Postage, Fuel

– Source reduction can mean cost saving– Is there an upcharge?– The future of flats


What’s Coming Next?

• Stora Enso and Neste Oil to join forces in biofuel development

”…developing technology for producing new-generation biofuels from wood residues to replace fossil fuels in transportation and thus cut greenhouse gases.”

-- Stora Enso Press Release, March 16, 2007

• Management thinking — Starting to ‘get’ responsibility

“...a significant number of businesses have got past the ‘why’ of ethics and corporate responsibility—a critical breakthrough—and are now trying to wrap their brains around the ‘how.”

-- Ethical Corporation, March 11, 2007

• How Print Got Green

“…printers are taking the business of being green very seriously, following many paths to get there.”

-- Graphics Arts Monthly, March 2007


Design & Production In Summary

• Look at every campaign anew

• Make environmental impact part of the assessment along with cost, quality, and delivery

• Do your research

• Use the DMA Environment Tool and the Resource Handbook

• Bring others to the table — internal and external colleagues

• Make others aware of initiatives — communicate outside your department

• Ask about what others are doing


Suppliers’ Perspective Section: Paper Procurement & Use

(45 practices)

Phil RiebelDirector, Environmental Affairs – North America

UPM-Kymmene Inc.


Suggestions for Purchasing Environmentally-Preferable Paper

Key points based on environmental footprint of paper


UPM In Brief

• Global leader in printing papers, among five largest producers in the paper sector

• Listed on DJSI for the fifth year in a row

– 2005 & 2006 industry group leader

– Top score in sustainable fiber sourcing & advanced environmental performance

• Ranked No.1 for sustainability by Time Inc.

• Second largest user of recycled fiber in the printing paper industry


Paper Product Life Cycle

ForestRecovered paper

Convertedpaperproducts

Paper

Wood products

Chemical pulp

Energy productionWood raw material to the mills and energy wood to the power plants.Energy to the millsChips and sawdust for energy productionBy-products for pulp and paper raw materialsPaper for convertingPulp for paper manufactureRecovered paper


"Environmental Footprint" View of Paper Production

UPM View: Companies are responsible for the environmental impacts caused during the entire life

cycle of their products from raw material and energy sourcing to production, distribution, recovery

and disposal

Papermaking – summary of activities and environmental impactsActivities

• Road construction / harvesting / transport to mill

• Other raw material acquisition and transport (clay, pulp…)

• Recovered paper collection / transportation / sorting

• Roundwood / chip storage / processing (debarking chipping)

• Pulping (Kraft, TMP, GWD, DIP)

• Paper-making

• Shipping

• Printing (energy, ink, waste)

• Distribution / Use and Disposal

• Paper recycling

Impacts

• Habitat

• Fossil fuel use / greenhouse gas

emissions

• Water / energy use

• Wastewater emissions

• Noise, dust

• Runoff, solid waste

• Air Emissions

• Solid waste to landfill


Environmental Guidelines for Purchasers1. Using a life-cycle approach (footprint of papermaking)

Evaluate the environmental performance of suppliers over the key steps in the life cycle of paper - forest to final re-use

• Commit to using a report card to evaluate annual environmental performance

• Address the key steps of papermaking:-- Forest management-- Mill operations-- Purchased power-- Certifications-- Paper composition

• Evaluate report cards currently in use: • Paper Profile• EPAT (Environmental Paper

Assessment Tool)• EPDS (Environmental

Profile Data Sheet)• Integrate into purchasing decision


Environmental Guidelines for Purchasers2. Promote sustainable forest management

• We will promote sustainable forest management by increasing the level of third-party certified fiber in our paper, using recognized credible forest certification schemes such as PEFC and FSC. Forest certification levels are to be supported by a verified chain-of-custody.

• There are two international systems (PEFC & FSC)• PEFC includes/recognizes SFI & CSA

• Based on several scientific / field assessments, all systems achieve sustainable forest management

• Three-country study done by UPM / DNV / WWF

• Only 7% of the world's forest are certified – focus on increasing this

• 72% of the certified fiber is under PEFC

• Verified chain of custody is important to show that the origin of wood is known and % is accurate

http://www.aboutsfb.org/


Certified Forests Globally by Scheme

National schemes:

SFI: Sustainable Forest Initiative (NA)

CSA: Canada's National Standard for Sustainable Forest Management

FFCS: Finnish Forest Certification System

MTCC: Malaysian Timber Certification Council

FSC Sweden, FSC Maritime etc: (accepted by FSC)

UKWAS: UK Woodland Assurance Standard (accepted by PEFC and FSC)Situation in January 2006

SFI

CSA

FFCS

PEFC Other

PEFC 71%

MTCC 2%

FSC 27%

FSCSFI

CSA

FFCS

PEFC Other


Environmental Guidelines for Purchasers3. Sustainable use of recycled fiber and promote the recovery of paper

• We will use recycled fiber in appropriate grades where its use is economically justified and brings environmental benefits

• We will promote the recycling of our paper products

• 45-50% of paper products in NA still end up in landfills: There is a global need to increase the recovery rates of paper so that the recovered fiber can be used to make other products


Environmental Guidelines for Purchasers4. Reduce consumption

• We will make efforts and set targets to reduce paper consumption

• This can mean using less paper and raw materials, lighter-weight papers, lower brightness, etc….

• Less environmental impacts and raw materials per page

• Can save mailing costs as well

Example:

ENVIRONMENTAL SAVINGS PER PAGE

(OF CATALOG / MAGAZINE)

40 LB TO 28 LB BASIS WEIGHT PAPER

• 20% less water used• 10% cleaner wastewater• 15 to 25% lower air emissions (SO2, CO2…)• 15% less solid waste to landfill• 28% less purchased electricity


Environmental Guidelines for Purchasers5. Energy and global warming. Carbon footprint.

• Energy and climate change: We value suppliers who have switched to less greenhouse gas (GHG) intensive energy sources such as carbon-neutral biomass, and are committed to continual energy-efficiency improvements

• We consider the impact of our paper on global warming

• Supply chain carbon (CO2) footprint – Raw materials to mill

– Manufacturing

– Purchased power

– Transportation to printer, distribution


Environmental Guidelines for Purchasers6. Other items

• Illegal logging

• Biodiversity

• Corporate social responsibility– Health and safety

– Stakeholder engagement


What is Environmentally-Preferable Paper?

• Sustainable use of wood fiber and recycled fiber in appropriate grades/locations

• Third-party certification of mills and forests

• Steadily increasing share of certified fiber supported by a certified chain-of-custody

• No illegal wood or wood from designated protected or conservation forest areas

• Increasing energy efficiency and biofuel usage – lower carbon footprint

• Meet best-available-technology levels for environmental indicators

• Continuous improvement in minimizing loading per ton of paper: air, water, effluent, solid waste

• Open, transparent and third-party verified sustainability / environmental reporting


Buyers’ Perspective Section: Paper Procurement & Use

(45 practices)

Oliver ClodeVice President, Catalog Manufacturing & Marketing Finance

Williams-Sonoma, Inc.


Environmental Responsibility as a Paper Buyer

• Environmental stewardship is not just a fad – it has become main-stream and is now a business reality

• Everyone can make an impact, regardless of how much paper you buy

• One size does NOT fit all – every organization’s circumstances and approach will be different

• Educate yourself – understand the facts

• Be proactive – strategic and proactive solutions are always far better than reactive solutions

• Incorporate environmental thought leadership into your everyday language and practices


Steps All Paper Buyers Should Take

Determine current

state/baseline

Develop a policy in line with Vision

Communicate policy to all

stakeholders

Secure stakeholder involvement

Address gaps; move towards

compliance

Regularly review and report on

progress

Develop action plan and set

targets

Cycle of Continuous

Improvement

Establish a Corporate Vision


How The Planning Tool Can Help

• Strategic Road Map– Menu of specific principles and initiatives that all Direct Marketers can

choose to adopt and implement

– Checklist for developing a baseline assessment

– Provides insights on key impact areas for continuous improvement

• Educational Tool – to assist Direct Marketers in better understanding environmental issues and options

• Policy Guide and Generator – easily helps establish a strong foundation right out of the gate

• Ongoing Evaluation Tool – provides a benchmark against which to gauge your progress and with which you can reset your baseline


Motivators for Williams-Sonoma, Inc.

• Corporate Responsibility– It’s part of our culture

• Cost Savings $$$– Reducing waste and inefficiencies

– Increasing efficiencies

• Customer Awareness and Loyalty– Increasingly important to our customer base

• Changing Values of the Workforce– Attract candidates

– Retain employees

• Risk Mitigation– Business interruptions from negative publicity/activist campaigns

– Legal actions/forced regulation


WSI’s Environmental Journey – 2003-2006

• Educated ourselves on the key issues and established a Vision

• Audited catalog paper supply chain and set priorities/targets/goals

• Developed a Responsible Catalog Paper Procurement Policy

• Reached out and partnered with key external stakeholders

– Paper suppliers – ForestEthics – Peer Companies

– Printers – FSC – Other NGOs

• Reduced waste/increased efficiencies – saved significant $$$

– Continued to streamline and improve our List Hygiene and Modeling techniques

– Tested and rolled out lower basis weight paper in all catalogs

– Re-evaluated and reduced trim-size on virtually all catalogs

– Renegotiated and significantly reduced printers’ spoilage allowances

– Expanded use of “versioning”

– Increased the use of the internet as a customer contact vehicle and ordering channel

• Tested and incorporated PCW recycled content into Flagship catalog

• Shifted virtually all (95%+) catalog paper to FSC-certified paper


Words of Wisdom

• Don’t ignore environmental stewardship – take responsible purchasing seriously and be proactive about it

• Educate yourself and your organization, and develop a point of view

• Don’t be afraid to reach out to NGOs: Many are well-intentioned, have subject expertise and understand the need for finding market-based solutions

• Establish a responsible purchasing policy and communicate it to your stakeholders – move towards compliance

• Continually challenge yourself and your supply chain partners, and collaborate with them to find and develop new solutions, including addressing cost concerns – it doesn’t need to cost more

• Regularly review your progress, report on it, and reset the bar


Section: Recycling & Pollution Reduction(32 practices)

Phil RiebelDirector, Environmental Affairs – North America

UPM-Kymmene Inc.


Sustainable Use of Recycled Fiber


1120

1195

1340

1430

1545

1655

1880

2015

2520

3280

0 500 1.000 1.500 2.000 2.500 3.000 3.500

Bowater

Myllykoski Corporation

Oji

SCA

Georgia-Pacific

Abitibi-Consolidated

Stora Enso

Nippon Paper Group, Inc.

UPM

Norske Skog

1000 tonnes

Top 10 Printing Paper Producers Using Recycled Paper

Source: Jaakko Pöyry 23.11.05

Enough to fill the

Empire State

Building 6 times


Benefits of Wood and Recycled Fiber

• Sustainable managed forests and recycled fiber complement each other as important raw materials for papermaking

• Benefits of using wood:– Renewable natural resource– Recyclable and re-usable material– Climate protection (forests are a carbon sink)– Carbon-neutral fuel (biomass)

• Benefits of using recovered paper:– Efficient use of raw material– Decrease landfill waste– Save energy– Creating responsibility and awareness for

recycling


Net Annual Change in Forest Area, 1990-2000

Annual change,%/a

+ 0.1

+ 0.5

+ 0.7

0.0

+ 0.1

- 0.5

- 0.0

+ 1.2

- 0.6

- 0.2

- 0.8

Total average annual change - 9.4 million ha

Nordic countries

Western Europe

Eastern Europe

Russia

North America

Latin America

Japan

China

Rest of Asia

Oceania

Africa

Deforestation continues in tropical/subtropical forests in Latin America, Africa and Southeast Asia

-6 -5 -4 -3 -2 -1 0 1 2 3

- Annual change, million ha -


Key Factors for Sustainable Use of Recovered Paper

• Economic and environmental benefits must be considered

• Paper is a valuable resource and should not go to landfills

Key conditions:• Minimal transportation• Modern mills using B-A-T / reduced

environmental load• De-inked sludge used for energy generation,

or re-used• Paper mills integrated to DIP• Paper grades adapted to pulp quality • Lower end up to newsprint can be 100% RCF• Recycled paper needs to be affordable and

available• Input of virgin fiber is essential to make the

paper cycle work

News62%

MFS18%

SC16%

LWC4%


Fiber Resource & Demographics

UK : •high population density•small forest resource•small paper industry

Recovered fiber resource predominates

Finland and NA : •low population density•large forest resource•large paper industry

Virgin fiber resource predominates

Germany and France: •high population density•medium forest resource•medium paper industry

Both virgin and recovered fiber

net Virgin Fiber / Paper Exports

DMA Education ServicesSource: RISI


0

50

100

150

200

250

1980 1985 1990 1995 2000 2005 2010 2015

Million tons

Consumption of Recovered Paper by Region

Rest of Asia

North America

Western Europe

Japan

Eastern Europe

China

Latin AmericaForecast

World consumption of recycled paper is expected to grow from 153 million tons in 2000 to 243 million tons in 2015 (average growth 3.1% per year).

In volume terms, the growth will be fastest in Asia.

Rest of the World


Recycling in North America – General Points

• China / Asia’s fiber deficit will be the main driving force for recycled paper trade worldwide

• EU and NA are very different due to population density, mill locations, transportation distances, mill investments

North America:

• Larger distances• Older mill facilities / higher environmental load• RCP shortage• High cost compared to mechanical wood fiber – high demand / low supply• Landfill cost also drive recycling (NA are lower than in EU)• In NA, the use of RCF fiber in catalog and magazine grades has no clear measurable

economic or environmental benefit• Although the initial intention may be to "help the environment" , the end result of using

RCP in high end printing grades is currently driven by "eco-marketing" • This is causing the environmental footprint (load, impacts) of paper to increase instead

of decreasing• It does not make much economic or environmental sense to take recovered paper

away from one supply chain (i.e. board mills) and move it to another (i.e. catalogs and magazines) without ensuring growth of RCP availability


LWC grade mech. fiber no RCF vs Competing Grade with 10% RCF

Advantage of wood-fiber

based paper


If done sustainably and using best-available-technology, use of recycled paper can result in a lower environmental footprint of the paper (primarily less energy used compared to mechanical fiber)


Environmental Guidelines for PurchasersSustainable Use of Recycled Fiber and Promote the Recovery of Paper

• We will use recycled fiber in appropriate grades where its use is economically justified and brings environmental benefits

• We will promote the recycling of our paper products

• Due to global paper demand, there is a need to recover more paper….and grow more trees

• An approach that looks at the environmental footprint of our paper will ensure that we are doing the right thing for the environment

• There are other effective ways to reduce the environmental footprint of paper

• Lighter basis weights

• Lower carbon footprint


Section: List Hygiene & Data Management(17 Practices)

Chet DalzellDirector, Public Relations

Harte-Hanks, Inc.


List & Data Management: We 'Own' This Opportunity

• All direct marketing is data- based

• The list is more important than the offer and the creative

• Every aspect of a list can be tested

• The "supply chain management" for lists and data is completely in our control

• Our ethics guidelines for notice & choice span 35+ years

• The U.S. Postal Service is our ally in educating mailers

• Enterprise-wide data quality has gained c-level attention

• Responsibility rests with us


Steps All List Managers Should Take

Utilize data modeling and segmentation

Adhere to a data hygiene checklist on all third-party

data

Adhere to DMA Privacy Promise

Apply data quality at each collection point

Apply commercial and USPS data

tools

Test ahead of rollout; track &

refine

Ensure data security each

step of the way

Cycle of Continuous

Improvement

Develop a Data Quality Strategy


The Tool Serves to Help Increase Mail Efficiency

• We Maintain Suppression Lists

• We Offer Notice & Choice

• We Clean Our Lists Prior to Mailing

• We Merge/Purge Our Data

• We Test Market Offers Prior to Rollout


Key Observations in List & Data

• No rocket science here

• Test, track and document

• Verify suppression applications

• The database as a 'Center for Customer Truth'


Demo of the Tool on the DMA Web site:

www.the-dma.org/envgen


We've Downloaded the Tool – What’s Next?


Internal? Or External?

Use this as an internal planning tool – revisit as necessary-- Tackle all at once simultaneously

-- Section by section

-- Practice by practice

Consider adoption of language to share with external audiences:

-- Suppliers

-- Customers

-- Corporate Policy

-- Vision Statements

Give DMA suggestions on possible practices to add to the planner-- [email protected]

mailto:[email protected]


Questions?

Next year, will you represent a Most Admired Company?


Thank You!

To receive DMA’s free e-newsletter about corporate responsibility and environmental

issues, please e-mail your contact information to [email protected].

mailto:[email protected]

DMA Education Services Critical Issues in Direct Marketing: What Direct Marketers Can’t Afford To...

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