2022: The Year of Sustainability and ESG Mandates
The effects of 2020 are unquantifiable today. The implications on our health physically, mentally, emotionally, financially, and socially will unfold over the coming years. The world has fundamentally shifted, and many of our business leaders are left asking one question. What’s next?
As we dive into 2021, executives at corporations across the world are trying to figure out how to gain a competitive advantage.
As consumer demand shifts, the leadership at companies has to look at the world and wonder, “How can our business shift its offerings to satisfy changing customer demands?“
Fortunately, the answer is simple and data-driven.
People across the world are calling for the adoption of more sustainable business practices. This ranges from how energy is produced to the materials used across manufacturing.
In some industries, the change in purchasing power is being driven by sustainability, and the analytics prove it.
In recent years we saw an inflection point in the energy sector. This happened when solar power and electric vehicles hit price parity with their petroleum-based competition. Today, it is no longer more expensive to utilize clean energy than it is to use traditional forms of energy like gas and coal.
We are seeing the same inflection point for sustainable materials compared to materials synthesized from petroleum or mined from the earth. This inflection point will help materials like hemp to work their way into board rooms and manufacturing facilities across the world.
The adoption of hemp-based materials will be driven by two key variables:
- Improvements in the scale of farming and processing technology.
- The yields per acre of hemp.
These two factors have significantly reduced the cost per pound of hemp when compared against both competing categories:
- Petroleum-based reinforcements like fiberglass.
- Other competing natural fibers like flax, jute, bamboo, and kenaf.
These improvements in technology have created an environment where the cost of growing and harvesting industrial hemp is at an all-time low.
As Heartland begins to break down these barriers, we see a few specific markets that will benefit from sustainable materials before others. Consumer demand has helped Heartland clearly differentiate its market penetration strategy, from its market growth strategy.
Markets that can immediately benefit from hemp include:
- Automotive – Consumers are driving demand toward sustainable transportation. This started with clean energy (like hybrids and electric vehicles) and evolved into green materials. From the manufacturer’s side, a reduction in weight and cost have driven the adoption of sustainable materials across dozens of use cases in each vehicle. Studies have proven that a reduction in weight has significant implications on performance. This will be seen across mobility, first in automotive, then in industries like marine and aerospace. Fortunately, Heartland is able to meet the demands of both the customers and the manufacturers. Sustainable materials that reduce the weight and cost of vehicles allows everyone to win in the competitive world of mobility.
- Packaging – Traditionally, this has been the most cost-prohibitive market for sustainable materials. I mean, who wants to increase their costs on packaging? The short answer is no one. In the past, sustainable materials have traditionally carried a 30-150% premium over traditional materials. Heartland’s ability to process hemp fibers and hurds at scale have helped the industry reach cost parity. This means that our hemp-based materials are less expensive than existing petroleum-based and mineral additives. This inflection point will open the door for organizations looking to package their products with sustainable materials.
- Construction – Consumers have always wanted to make the shift toward more sustainable infrastructure. This started with solar rooftops, but much like the automotive industry, has shifted toward removing toxic materials from the walls, floors & ceilings of residential homes and commercial buildings. Right now, because there is no industrial hemp supply chain, there are not enough materials to meet the demand of the construction market. The other bottleneck that has prevented the adoption of hemp-based materials in American construction is the lack of ASTM standards that are necessary for structural components. Heartland intends to change this through a well designed market penetration strategy that will integrate sustainable materials into the construction supply chain through standardization and education.
With this in mind, we can now see how hemp will impact the manufacturing of many of the things that are seen around us. Today, hemp can be used to replace many of the materials used across the plastics and construction industries. This is only the starting point of hemps impact on the global supply chain.
Sustainable Investing Accounted For Over 33% of Assets Under Management (AUM) in America
Investors have taken notice of the demand for sustainable materials. They see that the buying power from millennials and Gen Z have created a foundation of demand for sustainability that is not going anywhere. According to CNBC, 33% of assets under management at investment firms are earmarked for ESG mandates. This trend toward more sustainable business outcomes is only going to continue over the coming decades.
Over the past 30 years, we have seen a major shift in materials used across every industry.
During the beginning of the industrial age, metals were king.
But, over the past 100 years, plastic has begun to overtake the market share of materials across the globe. This stemmed from the cost and weight benefits of using a material synthesized from petroleum. Because the oil companies were producing so much plastic, supply went up, and price went down. This was the beginning of the end for the metals industry.
The only problem with this transition was the fact that petroleum-based plastics were horrible for our environment. Everyone has seen the horrifying images of turtles with straws stuck up their nose, or a marine life tangled in fishing lines or a piece of packaging.
The timelines for the decomposition of plastics make them unsustainable solutions unless something changes.
It is unrealistic to expect that we’re going to remove plastic from the global supply chain tomorrow. The implications of this would be detrimental to economies around the world.
One of the most difficult parts of transitioning away from plastics are the massive investments into retooling existing manufacturing facilities.
This has lead manufacturers to investigate a new trend, bioplastics. These materials show up in one of two forms:
- Biopolymers that are converted into plastics.
- Bio-based additives that are used alongside traditional plastics.
Unfortunately, today, biopolymers can not compete with traditional plastics in terms of price and scale. This has left us with one realistic solution.
If we’re able to successfully supply bio-based additives to the plastics market, we can help manufacturers make the plastics they’re already using stronger, lighter, cheaper, and more sustainable. This is a dream come true for petroleum companies, manufacturers, and customers alike.
- Petroleum companies can now market their plastics as more environmentally friendly.
- Manufacturers can use the same equipment while reducing their cost of goods sold.
- Customers can now utilize products that have carbon-negative materials embedded into them.
In the past, bio-based materials were extremely expensive. But, with a reliable supply chain of hemp-based materials, prices have started to come down in a way that allows large corporations to transition to sustainable alternatives that benefit all their stakeholders.
The stage has been set for increased investments into sustainable products and manufacturing. This shift is being driven by companies, customers, employees, and investors.
For the first time ever, we are at an inflection point where sustainable materials are at price parity with traditional materials used across manufacturing.
We see the future for sustainable materials being lead by the adoption of industrial hemp. We know this is true because industrial hemp is stronger, lighter, cheaper, and more sustainable than the materials it replaces.
Heartland is blazing the trail for the adoption of industrial hemp by leaders across the manufacturing industry.
Today, sustainable materials are the exception, not the rule. A decade from now, all industries will be utilizing sustainable materials within the products they’re manufacturing, and the offices their employees work in.
The adoption of sustainable materials is what will separate the leaders from the followers over the next ten years.
Heartland is just providing manufacturers what they’ve always wanted and needed; a reliable supply chain of bio-based materials.
Because hemp is now the same price as competing products, there is no excuse to continue to use the toxic materials that have defined industries for decades. We now have the opportunity to make the shift that will positively benefit the stakeholders in our organizations for generations to come.
Join us on the journey as we build a world out of hemp.
– Heartland Team