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A powerful tool in the fight against climate change, trees have a natural ability to take in carbon dioxide from the atmosphere and transform it into biomass through a process of photosynthesis.
This biomass can be used to create chemicals and materials known as ‘bioproducts’ as well as used to generate energy that can be harnessed in a number of innovative ways.
These are exciting possibilities that Vancouver-based Mercer International, one of the world’s largest producers of market pulp, is keenly exploring.
Over the last three decades, the company has been looking more closely at forestry and a broader range of forest products, explains the company’s Berlin-based President and CEO, Juan Carlos Bueno.
“The vision that we have set for ourselves is transforming biomass into bioproducts for a more sustainable world,” Bueno tells The CEO Magazine.
“That’s what defines us, that’s what drives our behavior, our strategy, our values. It’s about how we make sure that we take advantage of the unique position that we’re in of having access to natural resources such as forests, which gives us the responsibility of making sure that we make the best use possible of such precious natural resources.”
While the environmental benefits of transforming woody biomass into a source of bioproducts and renewable energy are significant, it’s crucial to know where the biomass comes from.
For Mercer International, the biomass sourcing comes from sustainably managed forests, allowing natural forest renewal and also replanting as necessary to ensure the carbon storage in the forests remains or increases. The harvested wood product also provides additional carbon storage. This climate-smart forestry plays a critical role in mitigating climate change through nature-based, low-carbon solutions for society.
The company works carefully with its partners to ensure the sustainability of its wood. As an example, earlier this year, its wood purchasing arm, Mercer Holz, launched a program called ‘Growing forests – Growing a future’ to support forest owners in Germany in sustaining the longevity of their forests.
Under the initiative, Mercer International will supply carefully selected seedlings to participating forest owners across Germany to help replenish their forests, which are under threat from climate change, natural disasters, wildfires, soil degradation and more.
Indeed, with these challenges in mind, and with the low-carbon energy transition gathering pace, Mercer International’s work has never been more important.
“It’s undeniable that there’s a clear need to mitigate global warming, making sure that we reduce fossil-based products. We must replace them as much as we can and in order to do that we must be very efficient in the use of our natural resources,” Bueno says.
He points to shifting populations, the growing middle class in emerging markets, digitalization and changing consumer demands as areas where the company can participate. “There’s so much we can contribute to all of those trends,” he says.
“That is just a huge motivation seeing how our work at Mercer is meaningful and can make a difference globally.”
It’s a huge responsibility, and one which the company takes very seriously with Bueno at its helm. “It motivates us to go further, to make sure that we keep innovating and looking for better ways of doing things,” he says.
“There’s just so much that we can do for the planet.”
Already, the company has made a significant commitment to sustainable harvesting, while also adopting the latest technology to reduce energy use and greenhouse gas emissions.
Sustainably managed working forests are also an important part of its approach to the issue, contributing to a healthier climate through the sequestration of carbon and the reduction of fire risks.
But the company’s sustainability efforts go far beyond these initiatives, Bueno points out, extending into its social and financial responsibilities. “We need to be sustainable in all aspects,” he stresses.
“We need to make our mark in the communities that we work around, being attentive to their needs, just as we are to our shareholders and the returns they expect.
Developing products that serve its customers better and contribute positively to the environment is all part of the equation when it comes to sustainability, he adds. This also involves partnering with companies with a similar ethos, among them Valmet, Hitachi Systems Security, Salzburger Eisenbahn TransportLogistik and Vaagen Brothers Lumber.
Accountability and transparency are also crucial, particularly in a world where greenwashing is becoming more common.
“We’re very proud that, at least within North America, Mercer was one of the first forest products companies to have our greenhouse gas [GHG] emissions reduction targets validated by the science-based target initiative that supports our commitment to reduce our GHG emissions by 35 percent by 2030,” he explains.
“We’re also a signatory to the United Nations Global Compact, which again, from a North American perspective, makes us one of the first companies to do so in our industry. This commitment helps ensure our sustainability pathway is aligned with the UN Sustainable Development Goals.”
The information Mercer International shares around its sustainability progress and performance is thoroughly audited to ensure it delivers on its promises.
“We have already set up very clear commitments publicly of how much we want to reduce our CO2 emissions by 2030. We want to have a 35 percent reduction,” Bueno says.
“Having these targets set, transparent and communicated is important for us.”
Further demonstration of its commitment to action rather than empty promises is its holding of a significant ESG-linked loan.
“We know the interest rate of that loan will be subject to us achieving several targets when it comes to sustainability. So again, it’s ensuring our actions are aligned with what we say that we’re doing.”
The pulp industry has historically been a crucial pillar for Mercer International over the years, but its strongly cyclical nature brings with it challenges, Bueno admits.
“It’s a commodity-based business and that means that prices swing, and while we enjoy the highs, the lows can prove to be painful,” he says.
He is therefore keen to prevent Mercer International being dependent on one sector of the industry, which would leave it vulnerable to such pulp market swings. “That’s why we’ve made the conscious decision to diversify our company, while improving our profitability,” he says.
“We have invested in lumber in recent years, with the expectation to grow that business further. We have also made important investments in mass timber, and are very excited about the growth potential of this business.”
Expanding into higher value products like mass timber is key to this diversification strategy. “It allows us to grow in spaces that are not cyclical or seasonal,” Bueno says.
“Our strategies are very much focused on how we diversify, increase our profitability and at the same time – and this is very important – how does that diversification contribute positively to the circular economy?
“We’re going back into the sustainability discussion, and we use this term of circular economy because we believe that it’s so important that we find ways in which our products can remain sequestering carbon for the longest period of time possible.”
Underpinning the Mercer International culture is the company’s commitment to safety, which has seen it implement an initiative entitled ‘Road to Zero’, targeting zero lost-time accidents.
“We’re very committed to it. We do it across the board whenever we incorporate new businesses,” Bueno says.
As the company has recently acquired businesses such as Structurlam and Holzindustrie Torgau, it has had to maintain this laser focus on safety.
“We bring new people into our company for whom the safety culture may have not been the same as in Mercer. That means a different culture. We work hard to have them embrace our Mercer safety culture; that’s priority number one,” he continues.
“It’s ever more challenging as you grow by acquiring businesses as you bring other cultures in, so you have to start over for each acquisition. But it just gives us that confidence that we’re on the right path.”
This comes into its plans around both mass timber and lumber for construction. “We know that those harvest wood products will hold that carbon sequestrated for many years to come,” he says.
“It is both an amazing and attractive opportunity, seeing that we can diversify, be more profitable and still be an even stronger contributor to the circular economy.”
Crucial to Mercer International’s sustainability efforts is a commitment to innovation, which is essential to understand how to better use key resources.
“That’s the whole end game,” Bueno says with a smile. Already, it has found clever uses for the ‘black liquor’ that is a residue of the pulping process.
“We transform that black liquor into green energy,” he says. “We produce almost twice as much energy than we need for our operations, so the surplus renewable energy we sell to the grid. So in that sense, it’s a positive cycle.”
Now its innovation arm is focused on finding greener ways to utilize black liquor to convert to biomaterials rather than converting directly into renewable energy. “When we burn it, then the circular economy cycle benefits just finish. The moment you burn it, that carbon is released,” he explains.
“What we want to do is keep sequestering that carbon that is within the black liquor.”
This mission has led Mercer International to explore uses of a component called lignin, which is extracted from black liquor and consists of various aromatic building blocks called phenylpropanoids, which are usually obtained from petroleum.
Phenylpropanoids can be used in the manufacturing of a number of materials and products including plastics, medicines and paints, among many others.
The company also recently unveiled the Mercer Lignin Center in Rosenthal, Germany. The fully integrated pilot plant has a capacity of 1,000 kilograms of high-quality lignin per day.
The opening is a significant step for Mercer International. “We will be able to then produce quantities of lignin that can be tested in many pathways to reduce the carbon footprint and play an important role in the circular economy. The new lignin plant is not at commercial capacity yet, but enough for us to develop the proper uses and markets for that lignin.”
Bueno sees great potential for lignin across a wide variety of uses. “It replaces fossil-based products, so you can use it in glues that go into the wood business replacing formaldehyde in resins, you can use it to replace the graphite in the anodes of batteries or as carbon black for tires and rubber components,” he says, just to name a few examples.
“So there are a lot of different applications of lignin, and we’re definitely committed to expanding that further.”
He anticipates the opening of a commercial facility within a couple of years, with plans already to expand its production beyond its Rosenthal plant.
“We see lignin as the next frontier of profitable products that would replace fossil-based materials and extend the sequestration of carbon even further beyond that, so we don’t burn it to produce energy.”
In addition, Mercer International has a joint venture with Resolute Forest Products entitled ‘Performance BioFilaments’ that specializes in nanofibrillated cellulose, a promising biomaterial with potential uses in reinforcing plastics, concrete and non-woven materials.
Its commitment to playing a pivotal role in the solutions to today’s problems is shared by its people.
This sense of a common purpose is an immense source of pride for Bueno. “We have a fantastic team of people,” he says.
“We have teams that are really working toward the same goal, that are fully committed, and it is a pleasure to work with such a group of talented individuals who are absolutely aligned with what we want to do and what we want to contribute.”
The caliber of the people Mercer International employs was a large part of the reason Bueno decided to come on board in May 2022.
“I think reputation precedes Mercer. Before I joined the company, Mercer’s reputation attracted me tremendously,” he reflects.
“Now that I’m here and I see the people and I know the businesses we’re investing in, the opportunities and potential that it has to contribute to some of those megatrends is incredibly motivating.”
Strong leadership is a crucial part of keeping a team motivated, and Bueno ensures he does this by being truly present. “I think leadership begins with listening and being there for people. The presence in making sure that you understand what is really going on in all aspects of the business is important,” he says.
“That means being present with our customers, our suppliers, with our people and with our employees.”
The other priority for Bueno as a leader is to ensure that he isn’t simply imposing his own ideas on his team, instead involving them throughout the strategic process.
“For example, we recently went through our long-term strategy process. And we did not do that with a handful of people, but with tens of people from different parts of the organization to ensure we don’t miss different viewpoints as we build our strategy together,” he says.
“That gives us a big advantage, as we already have the commitment of several people in the organization, which plays a key role in our ability to execute.”
Engaging people around that strategy is the next step, with communication critical to invite people along on the journey and to continue contributing, even once the plan has been finalized.
“If there are ideas that people want to bring up, just make sure that you’re open to them, to listen and improve them,” Bueno explains.
“And I think if we have that culture, when you create a strategy from within and then you have massive communication efforts that people really rally around, the chance for success in the execution of that strategy is much higher.”
There is no question that the stakes are high. According to scientists, the world is already 1.1 degrees Celsius warmer than it was in the pre-industrial era between 1850 and 1900, and the temperature continues to rise.
But if we can limit warming to 1.5 degrees Celsius, we can avoid some of the more serious effects of climate change, according to experts at the United Nations.
Although a tough ask, with the right technology, will and leadership, it is possible. And Mercer International has all three. Even better, on top of possessing the right resources to make a tangible difference, it also has an extra bonus ingredient – a solid determination to be a part of the solution.