Hot Button 2022 Summary and Analysis
The CanopyStyle initiative provides a path for brands, retailers, and MMCF producers to help address the dual crises of climate change and biodiversity loss, by reducing the sectors’ pressure on forests. This need to reduce our pressure on forests has never been clearer—forests are home to more than three-quarters of the world’s life on land. In 2022 new reports illuminated the fact that global animal populations have declined, on average, 69% in the past fifty years. We continued to witness the devastating impacts of extreme weather, including fires, floods and hurricanes, consistent with what has long been predicted to happen under climate change.
Since 2016, the Hot Button Report has provided an annual incentive for continual improvement towards sustainability, and a vehicle for engaging a supply chain that was previously not very well understood.
For those tracking the evolution of the Hot Button Report, this year was an exciting one! There was a great deal of upward movement, a tight race for the leading positions, and a wide variety of actions taken by global MMCF producers. This is all the more remarkable in the context of the significant supply chain disruptions and other challenges that the sector has experienced in the past year.
The percentage of global fibre production from producers earning green shirts has risen, from 50% in 2021 to 53% in 2022. However, we are seeing a widening in the gap between producers that are engaged and taking action to improve, and the few remaining red shirts.
Button Up That Shirt!
Eleven producers improved their ranking by at least one shirt colour this year, and three jumped a full two shirt colours ahead. Kara Fibers gets special mention as most improved by moving from 7.5 buttons in 2021 to 28 buttons in 2022. Mitsubishi Chemical Group earned 9.5 buttons more than in 2021 to earn a light green shirt, and Acegreen earned 8.5 more points than 2021, to earn themselves a partial dark green shirt.
This year we also saw a significant amount of activity from Japanese producers. Mitsubishi’s impressive gains mentioned above came about partially as a result of engaging their supplier, Daicel, and working with them to pursue their own audit. New to the Hot Button Report, Daiwabo has shown a strong start with a light green shirt and early leadership on Next Generation fibre integration.
A Deeper Shade of Green
In 2022, we had an unprecedented number of producers earn dark green shirts, increasing from two last year, to six this year: Lenzing (top score, at 32 buttons), Aditya Birla (31.5), and tied at 30 buttons each are Tangshan Sanyou, Eastman, Jilin, and Xinxiang Chemical Fiber Co., Ltd. (Bailu Group). These last four companies have been moving up the ladder quickly, and could soon be challenging the strong and consistent leadership we have seen since 2016 from Aditya Birla and Lenzing.
What caused this overall uptick in scores? Producers worked throughout the year to earn buttons by undertaking a variety of actions, as discussed below.
Audits and Sourcing
This year was a busy one for CanopyStyle Audits, with three producers publishing their audits and five currently undertaking audits and expected to publish in late 2022. Producers also earned points for creating an action plan to implement the recommendations resulting from their audits, and for publishing the results. Several producers have demonstrated their use of ForestMapper and other CanopyStyle tools to proactively avoid sourcing from Ancient and Endangered Forests. The global market share of production for MMCF companies with sourcing policies rose to nearly 93%, but more importantly, we are seeing producers uphold these in practice: in the past year, supplier engagement has resulted in a decreased demand for controversial sources. We’ve also seen an increase in FSC certified volume used, where use of virgin fibre is unavoidable.
This year was a big one for conservation, with several actions on offer for buttons.
First, at the international level, in the lead up to the Convention on Biodiversity Conference of the Parties (an agreement between 150 governments, established in 1992, to protect life on Earth), there is an excellent opportunity to support the Global Biodiversity Framework. Companies representing almost 75% of global MMCF production signed on to a letter to all member states, supporting adoption of a strong framework that aims to protect at least 30% of the world’s land area by 2030, with an emphasis on the protection of Ancient and Endangered Forests, and upholding the UN Declaration on the Rights of Indigenous Peoples.
To provide producers that are less integrated with pulp production with opportunities to earn to dark green shirts, we introduced a new strategy in 2022. Producers were encouraged to learn more about the Ancient and Endangered Forests in the countries from which they source by filling out a survey to assess their understanding of original forest cover, how much of this remains, and what efforts to protect remaining Ancient and Endangered Forests are underway. Producers were also encouraged to contribute to these efforts, either through in-kind support, or a donation to a related conservation organization. This activity is especially beneficial for the majority of producers that are not vertically integrated, and may not have had a strong connection to these sourcing countries and associated conservation efforts to date.
Next Generation Solutions
The key to removing pressure on the world’s Ancient and Endangered Forests is to continue to encourage the MMCF sector to be leaders in Next Generation Solutions. An increasing number of producers have demonstrated that there is no reason to put pressure on the world’s forests in order to produce MMCF, and that quality products can be made from materials that would otherwise go to waste and add to our landfills. But it can be difficult to match supply of fibre and brand demand. Canopy plays a facilitative role in this regard, encouraging both brands and producers to reach higher in their Next Gen aspirations, and make public commitments that send a signal that if Next Gen is produced, it will have a market.
Commitments made by more than 500 CanopyStyle brands continues to provide an incentive to for producers to generate Next Gen MMCF. In addition, the Hot Button Ranking offers significant numbers of buttons related to Next Gen, and this has enabled a lot of activity this year.
Some of the notable highlights include:
- Almost all participating producers reported Next Gen R&D activities and testing and trialing Next Gen inputs, and indicated an interest in eventually integrating more Next Gen pulp when it is available on the market, or manufacturing their own, once testing indicates that it is ready for production.
- There are now seven established commercial lines of Next Gen, three more than last year.
- Budgets for Next Gen R&D have increased for some of the producers, with an average of about 10% of companies’ budgets.
- However, goals for Next Gen production, expressed as a percentage of their total production, remain very low.
- A few producers are aiming to have approximately 10-15% Next Gen content by 2025 or 2030, while another few are aiming for 20-30% of production to be Next Gen by 2025 or 2030. One very large and one very small producer have intentions to reach 60 – 100%.
- Amounts of Next Gen viscose/lyocell staple fibre and filament yarn being made or trialed in 2022 are currently insignificant: <1% of production by any of the producers. This could change for next year’s Hot Button, with more market pulp from Renewcell now coming online.
- A couple of producers are ready to build 5000 – 15,000 T Next Gen fibre pilot lines in late 2022 early 2023.
- Two producers have maintained public commitments to greater production within four years (Birla to 100,000T of 50% Next Gen content by 2024 and Lenzing to 100,000 T of 100% Next Gen content by 2026), <10% current production volumes.
Producers also identified common ways to support Next Gen MMCF production, including:
- Ongoing R&D to increase the quality/performance of new inputs.
- Increased Next Gen market pulp available to buy.
- Increased market signals from brands.
In the coming year, we look forward to supporting red shirt producers in understanding and taking action to eliminate risk of sourcing from Ancient and Endangered Forests and controversial sources. Within the cadre of producers achieving or close to achieving green shirts, we can see there is still room for growth, with several producers poised to expand their Next Gen capacity, and also get more involved in taking conservation actions.
As we approach the third year of what must be a “turnaround decade” for the planet, we must all reach higher than we have before, and Canopy looks forward to supporting all global MMCF producers in doing so in 2023.