Ethan is Director of Sustainability at Darling Ingredients, the world’s leading company turning food waste into sustainable products and renewable energy. Prior to joining Darling Ingredients in August 2022, he spent more than 10 years in the energy industry, working on environmental and sustainability issues related to oil and gas, and chemicals production. He holds a Bachelor of Science in Chemical Engineering from the University of Arkansas and an MBA in Sustainable Business from Marylhurst University.
John Shegerian: Do you have a suggestion for a rock star Impact Podcast guest? Go to impactpodcast.com and just click Be a Guest to recommend someone today. This edition of the Impact Podcast is brought to you by ERI. ERI has a mission to protect people, the planet, and your privacy and is the largest fully integrated IT and electronics asset disposition provider and cybersecurity-focused hardware destruction company in the United States and maybe even the world. For more information on how ERI can help your business properly dispose of outdated electronic hardware devices, please visit ERIDirect.com. This episode of the Impact Podcast is brought to you by Closed Loop Partners. Closed Loop Partners is a leading circular economy investor in the United States with an extensive network of Fortune 500 corporate investors, family offices, institutional investors, industry experts and Impact partners. Closed Loop’s platform spans the arc of capital from venture capital to private equity, bridging gaps and fostering synergies to scale the circular economy. To find Closed Loop Partners, please go to www.ClosedLoopPartners.com.
John: Welcome to another edition of the Impact Podcast. I’m John Shegerian and I’m so excited to have with us today, Ethan Carter. He’s the Director of Sustainability of Darling Ingredients. Welcome to the Impact Podcast, Ethan.
Ethan Carter: Thanks, John. It’s a real pleasure to be here. I’m really excited about it.
John: You know, before we get talking about all the important and great work that you and your colleagues are doing in Darling Ingredients, I’d love for you to share first the Ethan Carter story. Where did you grow up and how did you even got here?
Ethan: Yeah, and so, I grew up in the great state of Arkansas. So, I grew up in the Little Rock area, went to school there and then ended up at the University of Arkansas where I majored in chemical engineering. I had some really great opportunities there to really- That’s kind of where I really got first exposed to sustainability and the sustainability world, and it was really a big interest. It’s kind of the early days from a corporate sustainability perspective but a lots of things moving, [inaudible] sustainability but I found a way to get involved through the engineering department and some life cycle analysis work, in things like that as well as minoring in environmental science. So, really, it’s an interest in mind that I really pursued. Out of college, I got a job with an oil and gas company which was a little bit different than the journey that most sustainability professionals out there. It was a company called Southwestern Energy. So I was in Arkansas with them, working on environmental and safety and lots of different issues, air quality issues and then kind of started to move into sustainability role as they were really kind of leading on the leading edge of oil and gas companies and that was really exciting to be a part of. In their first sustainability report, building some of those programs, we had an initiative we’d be freshwater neutral. Well, before, that was going on in a lot of [inaudible] that was exciting to work on. Then, after a while, transitions to Houston and we’ve been living there for the past 8 years. I worked some more at that company, as well as Exxon Mobil where I worked on decarbonization and lots of the exciting work that’s going on in the energy industry. A lot of fascinating work going on in oil and gas to try and decarbonize and provide solutions for customers and so that it was a really, really exciting and really interesting way to shape a career. About five months ago now, I came to the Darling Ingredients in the Dallas area and so, I’m really excited to be here now. It’s been an interesting pathway coming through from an engineering education into this sustainability world, especially as more and more companies have had an increased focus on sustainability which I think is hugely important and that’s why I’m really glad to be a part of it and I’m really glad to come to a company like Darling.
John: You know, Ethan, how does your background in energy inform you and applicable to the role now that you have is director of sustainability at Darling Ingredients?
Ethan: Yeah. So, Darling Ingredients is a really fascinating company and not a lot of people know us or know what we do. I didn’t really know the company much prior to finding out about this role. Our primary business is we take the rest of the animal that’s left over after the food ends up on your plate and we render that. So, you separate out the proteins and the fats and then we use the protein in animal feed and pet food and lots of different applications. A lot of the waste fats, actually, we make into renewable diesel. So we have a joint venture with Valero in the Houston area where we make renewable diesel fuel. We just started up our third unit. We’re really proud that that’s up and going now. So, there’s a lot of parallels between the things that Darling does in the energy space and what I was working on in my previous life at oil and gas companies because we are partnered in the space, we work in some of the same markets. That’s really an exciting parallel and I’m excited to bring that here. The other big piece of it for me is that we use a lot of energy in our process and, you know, the lessons from that technical background and the trying to solve those really hard, deep industrial decarbonization questions that are out there. You know, electricity switching feels like the easy thing when you’re trying to decarbonize chemical production or steel production or cement production, or steam generation like we do a lot of here and so that’s where I’m really open to bringing some of that technical background into this role with Darling Ingredients, and really help that long-term journey that we’re on toward getting to net zero emissions.
John: Let’s go back to what Darling does, explain that to me because, again, like you I never have heard of Darling Ingredients until the deal. Until recently when I was prepping for this interview, but it sounds fascinating and it sounds also very important as what you do. So, explain it again. This is the post-consumer proteins and fats, or is this pre-consumer, or is it a mix there of all?
Ethan: It’s a mixture of that. We operate in kind of three main sections, we think of it as food, as feed, and as fuel.
Ethan: So, our food segment is things like collagen, peptides. We take leftover animal skins after the animals are slaughtered and we reform that into collagen, and that’s actually a product that you can buy in the store. It’s great for lots of health benefits that I’m not the expert in so I won’t try to enumerate them and, you know, but there’s that piece of it. The feed part of our business is that coming from that rendering process. The main material that we take is when an animal comes from the farm and then there’s the meat production part of the value chain where the companies, they take and they sell. It’s what you buy on the store, the chicken or the beef. There’s a lot of the animal, about 50% of the animal, that’s left over at the end of that process and so, rather than that going to landfill or just to incineration, we take that animal and we run it through a process where you essentially cook it. So, you can render fat in your kitchen, right? I’ve heard people say that if you, you know, if you’ve cooked bacon in your kitchen, you’ve done rendering, right? You separated fat from protein.
Ethan: Essentially, that’s what the process is and then we take those proteins and apply it back. A lot of it goes into animal feed. Some goes into pet food. It really is kind of that pre-consumer waste that we’re taking for the majority. We also have some facilities that take food waste as well from grocery stores if it goes past its expiration date. We can run that through our process as well to repurpose that. So, it’s really fundamentally repurposing that material, and then the fats from that really leads into our fuel segment. Our fuel kind of has two separate entities. One is our facility in the Gulf Coast that really processes those fats from the rendering process as well as used cooking oil that will be gathered from stores like Chick-fil-A where they fry the chicken and then when the cooking oil is used, it has to go somewhere. It can’t just go in down the drain and so we collect that and we take it to our facility and make renewable diesel out of it.
John: So you’re recycling a lot of these materials. That’s fascinating. Chick-fil-A I understand, the supermarkets I understand, long expired food. Where do you get your feed stock for the other fats and proteins? Is it from composting companies or other types of relationships that you have?
Ethan: Yeah, it comes from slaughterhouses. When they’re making the meat, what’s leftover comes to us. So, that’s a big part of it.
John: Oh, great.
Ethan: We get animals directly from farm sometimes as well. There are certain parts of the market or certain parts of the world where if an animal just dies at the farm, we take that animal as well. The primary supply comes from what’s left over after the meat production process.
John: Historically, where was that? Before Darling existed, where was that material going before?
Ethan: Rendering is a really old process. I mean, Darling Ingredients has been around for more than 100 years.
Ethan: Yeah, it dates back a long time. People have been doing this, but the alternative is really either landfill or incineration and so, really, we think that there’s a really good story to tell in terms of the avoided carbon from all of the what’s left over. If you just sent the rest of this animal to the landfill, it’s going to decompose, you’re going to have methane emissions related to that. Instead, we’re able to take it and make it into really useful products that we’re going to be able to sell back into our marketplace.
John: For our audience out there, if you’ve just joined us, we’ve got Ethan Carter with us today. He’s the Director of Sustainability of Darling Ingredients. To find Ethan and his colleagues, you can go to www.darlingii.com. and I’m on your website now and it’s a beautiful website, honestly. It’s very green by the way and [inaudible] but it’s impressive. All the information and all the transparency that you have with regards to what you’re doing and how you’re doing it. I mean, this is a big role here that you’ve taken. I mean, because director of sustainability is one thing, but you have over 270 facilities in 5 continents. That’s a lot of sustainability coverage to look over, huh?
Ethan: It is, absolutely. We have over 14,000 employees around the world. We’re growing even now. We’ve recently announced two more acquisitions. One in Poland and one in Brazil that we plan to close on next year. So, we’ve been expanding a lot which brings its own challenges from a sustainability management perspective, and that’s part of why I was brought in, to help kind of manage the growth of Darling Ingredients as we look to these new areas. We also think it’s really important because, you know, when you think about population growth, there’s going to be a need for more protein. There’s a need for more food in the world. Part of the reason that we’ve expanded so much into Brazil is that we see Brazil as a big part of that. Brazil raise its own sustainability challenges. Especially, when you talk about meat production, deforestation comes out a lot and we think we can be a big part of ensuring that as Brazil grows, and Brazil really looks to be kind of the area that can be the next area to feed the world, we need to make sure that happens sustainably and so we’re looking forward to that.
John: You know, Darling has a rich history and a long history as you pointed out, 100 plus years, we’re you the first director of sustainability or are you filling somebody’s shoes that had moved to a different position or left the company?
Ethan: Yeah, that’s a great question. So, I’m the first full-time sustainability director. The title has been passed around a little bit, but from an organizational standpoint, you know, we’ve kind of viewed here that what we do, our CEO loves to say that we were green before green was cool.
Ethan: He quoted a few times, saying that because of what we do is inherently, really taking waste products and making it into something beneficial.
John: Sure. Yeah.
Ethan: And I think, you know, the realization has been organizationally, we need a more robust focus on sustainability and as we look at meeting some of the longer term commitments that we put out there in terms of reducing our own emissions footprint, trying to help our customers and our suppliers, understand how our process fits in their sustainability stories as well, there was a need for more focus. So, yeah, this is a new position at Darling Ingredients and I’m really excited to kind of take that on as a challenge and really build up more of a sustainability organization here.
John: You know, that’s really fascinating because like your CEO said, you were green before green was cool and you were doing already the sustainability [inaudible] thing before those words became part of our vernacular lexicon, but now, bringing on someone like you, young and ambitious and a great speaker and a great organizer with already history in sustainability, now you get to actually not only codify that within your company but you also get to message that to the rest of the world because what use is it really besides the subset of used to the business model if people don’t understand that you’re really leading the way as we shift from a linear to a circular economy.
Ethan: Yeah, absolutely, and I think that’s a very important part and part of why my boss here runs sustainability as well as investor relations and communications is because there’s so much of that that is interrelated. Our investors and stakeholders are really interested in what we’re doing. We’re trying to tell the story in a better way and get the information out there in terms of what we do and why it is so beneficial and why it’s so important in the animal agriculture value chain and what value we bring and in terms of kind of how we’re approaching that. I kind of view my challenges as being three things. One, you have that challenge of telling the Darling Ingredients story and how we add value. The second part is really getting the focus away from how we’ve thought about things like decarbonization historically where it’s been a focus on energy efficiency. Lots of companies are going through this journey now where you think of it as energy efficiency and cost reduction and things like that to really, “Okay, we have to fundamentally think differently about how we run our process.” and that’s a bit of a paradigm shift and that’s hard for any organization to do.
Ethan: So that’s kind of the second piece, and then the third piece is just how do we enable the new business pathways? I think that’s one really interesting or that’s one lens I really try to bring, is always trying to think about sustainability from that business opportunity standpoint and where do you find new markets? Where do you create? You know, like we’ve done with renewable diesel where there wasn’t much of a market but we’ve grown that business and created a new use for these waste cooking oils and waste fats and really created that business and really be able to kind of shape those markets as they get going.
John: Well, as you pointed out and our listeners have got to know over the years, at the end of the day, you’re a commercial enterprise, your business is to make money, but at the same time, you’re doing a lot of good along the way. So we’re merging those two, you know, interest and continue to evolve them both. So you continue to maintain or grow your profits while you also grow the positive impacts that you’re having, planet-positive impacts, carbon-neutral impacts that you’re having. It’s a fascinating balancing act but journey as well. You are doing this yourself, you’re still very young, and as your CEO said, you were green before it was cool to be green at Darling. Well, you were doing sustainability for the energy companies before it was cool to be green as well or sustainable as well. Now though, it seems as though the times have caught up with everybody in a positive way, and sustainability and circular economy and ESG are now terms that are all becoming very socializing, ubiquitous to us vis-à-vis the media and leaders, business leaders, institutional leaders like Larry Fink, etc. So how does that play? ESG into your role of director of sustainability as Darling Ingredients evolves, your sustainability and ESG and impacts that you’re making.
Ethan: Yeah, you know, ESG as kind of the talking point and what we’re all looking at. I mean, you look at Europe and the recent passage of the corporate sustainability reporting directive. I think what we’re seeing now, from my lens, is a little more structure in that space, right? Whereas it’s kind of been, you know, we all are trying to get on the same frameworks and I’m sure that many of your guests have joked about the alphabet soup of ESG where you have all the different standards and kind of competing interests out there. So, you know, I’m hopeful that we’re getting to a place where we can all get a little more standardized in how we talk about these things which will really help people that are looking in from the outside to help understand what we do and what our impacts are. That’s a huge part of my job, it’s understanding the regulatory landscape and how that is going to impact us and our going forward. I view ESG, personally, in my view, I like the term sustainability much more because we’re all trying to get to a place where we’re sustainable, we’re looking at things like circular economy. ESG, I think, is the way that we, as a corporate entity, report on that to the outside world. It’s incredibly important because we need that transparency, we need that disclosure, we need that engagement with stakeholders and it’s going to be a huge part of our sustainability journey but we also can’t report our way to decarbonizing, right?
John: That’s right.
Ethan: So we have to be able to apply those things. The other interesting thing I think that I got from what you just mentioned there, in addition to the ESG [inaudible], I am a little bit young for folks in these kind of roles. It’s been interesting to me over the years, especially in the oil and gas industry. It’s really easy to commit to something that’s going to happen 30 years after you retire, right? And, you know, I started looking at my retirement timeline and I still plan to be around when some of these longer term goals hit, and so we started thinking about 2050 as maybe, you know, my index fund retirement date [inaudible] 2055. I may still be here, right? And so how do we make sure we’re actually getting on a credible path way?
Ethan: Something we worked really hard on in the oil and gas industry was let’s not just throw out numbers that we can’t hit or don’t know how to hit, let’s really find that credible pathway and that’s what now at Darling Ingredients we’re really getting laser focused on. How are we going to execute these plans, going forward? We recently committed to the science-based targets initiative which I’m sure most of your listeners are well aware is a very intensive process. We’re looking forward to going through that and kind of guiding our strategy setting on that. I’m just really excited to get on that journey here.
John: Hey, you know what, [inaudible] and please take this the right way, I said you’re really young. It’s a term of endearment because I think it’s wonderful that chief sustainability officers, whether it’s the first chiefs of sustainability officer in a company or your the third one, it’s wonderful to bring in youth because it gives me [inaudible] 60 years old now, Ethan, and I’ve been doing this for years and my dad was one of the first guys to bring- He was the first guy to bring windmills to America, into windmill farms back in the late 70s. So to me, that we’re passing the torch to the next generation of talent like you with youth and energy and already great experience behind you and an engineering background, that makes me feel really hopeful that the future is in good hands. The future is in good hands, but I get what you mean. You’re going to have to live with the decisions you make now and you’re going to have to hear about it, like you said, from your colleagues, 20 years from now. So, that is also a part. I didn’t think of that part of the equation. On your website, which I love, it’s so great, you’re what I call radical transparency. Your website is radically transparent in so many ways, and one of the ways is you had your ESG Report September 2022 Audit which could be downloaded and I highly recommend to listeners or viewers who are more interested in learning more about what they Darling Ingredients is doing, you can download this report. How does your experience, and I know you’re only five months into your new position, how is that report going to evolve do you believe in the months and years [inaudible] got to do 2023’s, 2024’s, and beyond?
Ethan: The sustainability report is really exciting, right? Yeah, sustainability issue report. You know, I think we’ve done a lot and Darling Ingredients has done a great job prior to meeting here because I think I was here two months before we published [crosstalk]. We’ve done it and I think what we’ve tried to do is a lot of that transparency that you talked about. I think getting more and more information out there and that’s something we’re trying to do even more of going forward, bringing as much transparency as we can to how we’re approaching things, to what outcomes we’re seeing, what kind of trends we’re seeing in the business, how that fits into our strategy, how that looks from a climate risk perspective. We started to align with TCFD this year, a task force of climate-related financial disclosures, we’ll continue to evolve going forward. For me, I think one of the things I want to see, I want to shrink the number of pages so that when you download it, it’s not 85 pages or however many it is. If it’s hard for me to sit down and read, it’s definitely hard for someone to sit down and read that [crosstalk]. I think we’ll see a couple of trends with that. One is I think we’ll see us try to get on more of a digitally friendly, kind of maybe even more closer to real time in like the quarterly that you see with financials report in terms of what our progress is. I’d love to get that more frequent and not getting it out in September when the data is from last year. It would be a great step.
Ethan: I think the trend, generally, is going to be one, we’re going to have to align a regulation as that comes out. In a European regulation [inaudible], we have a massive footprint in Europe. We have over 50 facilities in Europe and so we’re going to need to align with sort of the global reporting standards in addition to what we’re trying to do here, but also I think that increased transparency. You know, we want to talk more about how we’re thinking about these sustainability issues that impact our business, that have the potential to impact our business, how we’re addressing those from a business standpoint and both from a risk perspective but also an opportunity perspective because I think that sometimes, we think about sustainability risk a lot of times and climate risk and that’s what you hear a lot of but not opportunities, and what opportunities are out there to build markets, to create partnerships that are going to really drive sustainability poured in value chains rather than just in what we report.
John: You know, you’re at an interesting role. When I talk to friends of the leaders of huge companies like yours, one of the greatest challenges that they have is it’s one thing to be in your role and to really hone your skills at communicating outward but since you’re doing such important work and you guys were cool before it was cool to be green, how do you then communicate and figure out how to best communicate inwardly to your 14,000 employees and get your colleagues all excited to become great ambassadors and evangelists of all the importance of sustainability and circular economy work that you’re doing? Do you leverage social media, traditional media? Do you leverage email? What’s your thoughts on that and and how do you want to improve that at Darling Ingredients?
Ethan: Well, that’s why we’re talking today, John. Right?
John: Okay, touche.
Ethan: And I’m sure you’ll see this appear on our LinkedIn page [crosstalk]. I think that is a huge challenge. The one thing I found in working in large organizations over the years is that people want to be involved when it comes to sustainability. They want to do good things for the planet. They want to help with all these big issues, but it doesn’t always clearly translate into, “How am I supposed to do this and also do the other 55,000 things I’m asked to do everyday in my day job?”
Ethan: And so I think what we can do from a messaging standpoint is to really provide that guidance in terms of here’s how we can be thinking about our jobs differently. Engineering department, here’s how you can think about what you’re doing. Environmental Department, here’s how you can be thinking about doing. Operators, here’s what you can be thinking about doing in your day-to-day job and how we’re operating things differently. As well as getting feedback from them because sometimes there’s great ideas out there that just haven’t bubbled their way up. I love getting out into the facilities and talking to folks about how they run their business, and, you know, one of our core values is entrepreneurship within the company and so we love to let the businesses do their thing, but we need to give them guidance in terms of how they can move that sustainability aboard. In terms of how we communicate that, I mean, that’s the big challenge, right? We do have a few hundred, a couple hundred facilities and 14,000 people, so that’s one of the things we’re working on now. How do we build that communication strategy internally in addition to how we talk about what we do externally, ensure we’re able to to leverage all the ideas out there and I think the best ways I’ve found in the past is you can leverage your budgeting process because everyone feeds into that one way or the other. You can leverage social media, we have an internal social media tool. A little bit here is most companies do nowadays and we’re looking forward to working with the communications experts, [inaudible] in my department as well to leverage that.
John: It’s just that you’re obviously a great communicator and that’s obvious to all of our audience that’s been listening today. Go back to something you just said, you said something just really important about you love to go into facilities and get out and see facilities and that’s a common theme I’ve heard over the last 16 years as I’ve interviewed and gotten to know many chief sustainability officers or impact officers across the whole planet. Now that we’re living in this post COVID world, and of course you’re doing the balancing act of managing the carbon footprint, helping to manage the carbon footprint of Darling Ingredients, but also knowing the need and also knowing the passion you have for what you’re doing, wanting to get out and see some of your 270 facilities and meet some of your 14,000 colleagues. How do you want that balance beam there to do enough of it but not too much of it and how does that scale weigh out for you and what’s your thoughts around travel and going out and getting on the road and seeing so many of the confidence and the facilities and the people that you get the pleasure of working with?
Ethan: Yeah. Well, the biggest challenge is that maybe having three kids at home as well. [crosstalk] My wife is a saint that she lets me go and travel when I can.
Ethan: But, no, I mean it’s usually important. The way I try to think about it is, you know, we do have to think about how much we’re out of the office, right? And getting out and so, yeah, I do think though that you can almost get more value sometimes by visiting a facility, seeing things in person, really talking with the people that operate things during the day, and I’m still early in that here but a lot of times, there may be something that looks really good on paper back at the headquarters that you then bring it out and they’re like, “No, that won’t work. We’ve tried it because of xyz,” or you take it out and they say, “Oh, yeah, that would be really easy. We could do that tomorrow.” and you’ve put it in the budget for 10 years from now because you’re like, “Oh, this is too hard.” So really bringing that kind of understanding in is important. I’m always working to strike that, what that balance looks like. The big challenge for us with this big of a global operation, we’re going to have to build our team out some around the world. Right now is myself and one other person in our sustainability team, full-time, which for a company as large as Darling Ingredients we’re going to need more support on that front. I think positioning those folks in different parts of the world will be really helpful for us as we look at it, to strategize there.
John: Ethan, before I let you go today, do you have any upcoming or big announcements that you want to make here? Or anything you want to tease us about that’s coming in 2023 or beyond for Darling Ingredients?
Ethan: Sure. I think the big thing we’ve done very recently, I think the press release will come out a couple hours after we tape this, is that we’ve committed officially to the Science Based Targets Initiative.
John: That’s good.
Ethan: We’re using that to set our strategy going forward and in really those challenges around emissions in particular, which, as we have talked about, is a huge part of sustainability although not the only thing. Coming from oil and gas, sometimes it feels like the ESG issues are climate, climate, climate and climate and there’s everything else is kind of [crosstalk]. I think that’s one thing that we’re looking forward to. Looking at our new businesses that we brought in to the Darling Ingredients family and how we integrate, there may be some areas that these businesses were bringing in have better sustainability processes than we have in other parts of Darling currently and so can we leverage some of those learnings as we look to integrate those companies and to how we operate in other places to improve sustainability? I think working with suppliers and customers is going to be huge. These are dealt with big, complex energy value chain challenges in previous roles and the agricultural value chain is maybe even more complex. You have everyone from individual small farmers to large farms and companies and how that integrates into the animal feed side of the business into the meat side of the business and then we operate in the fuel segment as well. So, how that all relates together and how we really approach is going to be something we’re really focused on in 2023.
John: Wonderful. Well, thank you for joining us today. For our listeners and viewers who want to learn more about what Ethan Carter and all of his colleagues are doing in sustainability or to download their 2022 ESG report, please go to www.darlingii.com. Ethan Carter, you’re the Director of Sustainability at Darling Ingredients, you’re making the world a better place, you’re making huge impacts, and you’re always welcome back on the Impact Podcast. Thank you for all that you do.
Ethan: Thank you, John. It’s been a real pleasure today and I really look forward to hearing from you again and hearing from all the other great folks that you have on this.
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