Financial benefits and sustainability initiatives go hand-in-hand with a circular economy

I've witnessed firsthand the transformative impact of embracing a circular economy as the Chief Sustainability Officer at Installed Building Products . Our strategic investment in Advanced Fiber Technology (AFT) and their pioneering AFT Carbon-Smart™ Loose-Fill Cellulose Insulation exemplifies how we demonstrate our commitment to sustainability. 

The circular economy represents a significant shift from traditional, linear economic models where products are made, used, and disposed of. It emphasizes the complete lifecycle of materials, focusing on reducing waste, continually using resources, and regenerating natural systems. Regarding the building products industry, a circular economy means innovating to reuse materials and products, which can lead to substantial environmental and economic benefits.

The Environmental Imperative

AFT's Carbon-Smart™ Loose-Fill Cellulose Insulation, made primarily from recycled newsprint and cardboard, can be seen as the pinnacle of environmental responsibility. This product boasts over 85% recycled content, as all the paper and cardboard are recycled materials. Using these resources instead of virgin ones prevents significant waste paper and cardboard from decomposing in landfills. By avoiding the final step in the traditional paper products journey, we sequester its carbon by converting it to cellulose insulation installed in residential and commercial structures. In fact, our AFT plant in Bucyrus, Ohio, recycles approximately 50,000 tons of waste paper for use in our products and has diverted 200,000 tons of waste paper and cardboard from landfills since we acquired AFT in October 2018.

By converting these resources to new products, like cellulose insulation and fiber used in certain road construction products, we also prevent paper and cardboard from decaying and releasing methane gas, one of the most environmentally harmful greenhouse gases, into the environment. Last year alone, we diverted over 120,000 metric tons of CO2 emissions from the atmosphere using recycled paper. 

The manufacturing process of our cellulose insulation relies heavily on electricity, with AFT representing approximately 30% of all kWh of electricity used by IBP facilities each year to process and prepare paper fibers.

In May 2021, we made these AFT-manufactured products even more sustainable by transitioning our manufacturing facility to a carbon-free electricity supply. While AFT-manufactured products are more energy-efficient and sustainable, their carbon-smart development aligns with our goals to make everything we do at IBP more sustainable and efficient. Additionally, we've transitioned to packaging film containing 30% recycled content and invested nearly $20,000 to install equipment to better recycle most of our raw materials, reducing what we send to the landfill by almost 50%.

Regarding a circular economy, our cellulose manufacturing processes and products at AFT are consistent with industry standards. The use of waste paper, and more recently cardboard, has been a standard industry practice, as waste paper has historically been abundant, readily available and offered at a lower cost than other alternatives.  

At Installed Building Products, AFT is an example of a circular economy practice we've successfully implemented, with principles that can be applied across other products and industries. Whether it's a product like AFT's Carbon-Smart™ Loose-Fill Cellulose Insulation or our dedication to sourcing local materials to reduce transmission emissions, we're dedicated to ensuring our business operations are good for business and the environment.

The Business Case for Circular Practices

Embracing the circular economy is not just an environmental strategy but a sound business model offering immediate and long-term benefits. In the short term, companies may see significant cost savings by utilizing recycled materials instead of virgin resources, which may often be costlier and susceptible to market fluctuations. This approach also aids in complying with increasingly stringent global regulations on waste and recycling, potentially avoiding fines and benefiting from government incentives. Additionally, circular practices allow for more adaptable manufacturing processes, which can accelerate product development and enable faster response to market demands.

In the long term, adopting circular economy principles enhances brand reputation and customer loyalty as consumers increasingly favor companies with strong sustainability credentials. This shift drives innovation and creates unique market differentiation as companies develop new products and services that reflect their commitment to resource efficiency. Moreover, using recycled materials can lead to greater supply chain stability and resource security, reducing the risks associated with natural resource extraction and scarcity. Companies that demonstrate such sustainable practices are also more attractive to investors, who are increasingly funneling capital into businesses and showing tangible commitments to sustainability. 

Lastly, while the initial investment in circular practices might be substantial, the long-term savings from reduced material and energy costs and lower waste management expenses provide significant financial benefits. By integrating these practices, companies position themselves as industry leaders in sustainability and ensure economic resilience and competitive advantage in a rapidly evolving marketplace.

Companies that integrate circular practices can fulfill their corporate responsibility goals toward sustainability and capitalize on financial gains from cost savings, regulatory compliance, and increased consumer and investor appeal. This approach positions these companies as forward-thinking leaders in sustainability and equips them with the resilience and adaptability needed to thrive in a competitive and resource-constrained world. 

As the business landscape continues to evolve, the principles of the circular economy offer a blueprint for sustainable growth and long-term success, proving that what is good for the planet can also be exceptionally beneficial for business.

Actionable Advice for Sustainability Officers

1. Audit and Optimize: Conduct a thorough audit of your current materials and processes. Identify areas where recycled materials can replace virgin resources without compromising quality. For example, cellulose insulation made from recycled newsprint performs comparably in terms of insulation and offers superior sustainability credentials.
2. Engage Stakeholders: Effective communication with stakeholders—including investors, customers, and your team—is crucial. Highlight the long-term cost savings, enhanced brand reputation, and alignment with global sustainability goals that a circular approach offers.
3. Innovate Aggressively: Push the boundaries of what's currently possible with recycled materials. Invest in research and development to discover new uses for typically discarded materials. Encourage a culture of innovation that looks beyond conventional recycling towards upcycling—creating higher-value products from waste materials.
4. Forge Strategic Partnerships: Collaborate with suppliers, industry peers, and non-profit organizations focusing on sustainability. These partnerships can lead to shared technology advancements, joint ventures in new types of recycled materials, and co-authored industry standards that promote circular economy practices.
5. Educate and Train: Equip your team with the knowledge and skills to implement sustainable practices effectively. Regular training sessions on sustainability and circular economy trends can empower employees to make better decisions and innovate.

The Way Forward

Embracing the circular economy is not just a trend but a necessary evolution in how we think about production, consumption, and waste. As sustainability officers, we must lead our companies through this transition, turning challenges into opportunities and setting new benchmarks for our industry.

The future of the building products industry lies in our ability to innovate sustainably. By investing in technologies and practices that enhance the circular economy, we contribute to a healthier planet and build a robust, resilient business prepared for the future.