Mister Beacon Episode #161
IFCO Sees All - How ESG and the IoT Are Joined at the HipSeptember 20, 2022
Sustainability and ESG are becoming major drivers of IoT projects. As entrepreneurs and solutions designers, we need to understand what ESG is and the people responsible for it, why they do what they do, and how they do it.
On this week’s show we talk with Iñigo Canalejo, IFCO’s VP of ESG, and a veteran of sustainability. We also hear about IFCO’s market leadership and expansion of the use of Returnable Transport items/reusable crates used in the food supply chain and how this is changing the way food supply chains operate. Join us to learn about the world of ESG and arm yourself with the information you need to understand the ESG function and to embrace it as a part of your strategy.
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Steve Statler 00:00
Welcome to the Mr. Beacon podcast. This week we're talking to Iñigo Canalejo who is the vice president of ESG at IFCO. So why focus on ESG? Why have a whole episode on this subject? environment, social and governance function is one of the hottest positions in any company, if you're selling IoT, or designing IoT solutions, you really need to be thinking about the impact of sustainability on the opportunities that face you. As we bring digital and physical convergence together, then our ability to understand what's happening in an enterprise and give data to this function, which is, in this case, reporting directly to the CEO, in other cases, to the CFO, it's a very important part of any entrepreneurs calculus, as they map out the opportunities, they think about their sales strategies. So I think you'll enjoy the conversation within ago I certainly did, is a really smart, globe trotting guy and a lot to learn from here. And I hope you enjoy it as much as I did. The Mr. Beacon podcast is sponsored by Wiliot, intelligence for everyday things, powered by IoT pixels. So, indigo, thanks so much for joining us on the Mr. Beacon podcast.
Iñigo Canalejo 01:41
Good morning, it's a pleasure to be here.
Steve Statler 01:42
So you hit up ESG at IFCO. And ESG, is gone from being kind of an artifact sideline of a business. And it's become, you know, a central driver. Super important this podcast is, you know, we're focused on arming entrepreneurs, solution designers. And, you know, I personally believe that we need to design with sustainability in mind. So I thought you would be a great person to have on to explain what ESG is, what the implications are, and what the the opportunities and the threat so if people don't, don't think about it. So thanks for coming on the show to talk about all of that.
Iñigo Canalejo 02:33
My pleasure. So yeah, a lot of people ask me actually, what does the What does ESG actually mean? So environmental, social, and governance. And, and again, now, what's the difference with other previous topics or words that were used the product for similar purposes like CSR initially, and of course, sustainability as well, for me, it's that they will sort of mean the same, in reality, maybe is a bit broader, which I think is good, because at the end, what this is, is, you know, looking at business, and what we do from from a different lens, right, so a very, let's say, white lens, looking at it from from an environmental point of view, a lot of people associate sustainability only with the environmental piece. But of course, you know, the social piece, the part of the, of the supply chain, the part around health and safety, the part around diversity, there are so many they areas that that are part of what we do, that wouldn't be, let's say, part of the definition of sustainability that say the environmental piece, so it's definitely a broader term, and of course, the governance which is around okay, how, how are you running your business now, and all of the, let's say, structures, but also, I would say, all of the ethics behind what what you're doing so, to me, what's great about ESG, and why it is so important for businesses nowadays is that, again, know that the concept of the triple bottom line is you can no longer evaluate a company just by its returns to investors, you need to look at the whole broad picture of what it's doing for the environment, what it's doing for society, what it's doing for its employees, and its communities. And that's the beauty of it, because we're basically companies are sort of questioning what they do, you know, within, let's say, the purpose and, and what the what the ultimate goal of the of the businesses, but most importantly, how they do it. And I think that's, that's the really interesting part. Because, you know, the people that work at ESG, like ourselves, basically, we have an opportunity to influence how we do things almost in you know, every every single thing that the company does, now it touches so many different elements, it touches everything that the company is involved in, and therefore, it's it's really inspiring to be able to influence that as well. And very good. And when we talk about threats and opportunities, look, every company has its own threats and opportunities related to SEO. Of course, it very much depends on the industry that you're in and the type of business that you have. But overall I the way I see this is many opportunities. Of course, you know, for us, we're blessed because of what we do we work in reusable packaging, we are certainly a pioneer in the concept of the circular economy if God started 30 years ago, sharing, and we're using packaging, applying the principles of the circular economy when almost nobody knew what the circular economy was, right, so we are fortunate to have a business model that is actually intrinsically sustainable. As one of my previous jobs, managers always said, We wake up in the morning, and we work for a sustainable company, right. So that's fantastic. But of course, you know, that you can do a lot more, right. So there are tons of opportunities to actually run your business in a more efficient way. And the part that I that I love about these these opportunities is that it goes hand in hand with what we do, right. So trying to make our business better for the environment better for our employees better for our partners and the communities also brings opportunities to reduce costs to optimize our processes, which is of course, you know, what we have been focusing on for years and years as well. So there isn't a real conflict between for us, you know, what we want to do ESG, and how we want to drive the business. And that's why it's so important that sustainability and ESG is integrated into the strategy now that the more we do to do better as a business from a financial point of view, the more sustainable we're going to be. And the same way now the more sustainable, we'll want to be, actually the better of patients with better returns.
Steve Statler 06:32
So you've touched on a lot of things I want to drill down in, but I also have to confess to an ulterior motive i So with a much smaller company than IFCO, and we're relatively young, but we decided, we believe our business skills, so help make supply chains more sustainable, maybe in a slightly different way, but very related to I think what you guys do as well. So we decided we got to walk the talk. So we're looking for, I'm hoping some young, enterprising ESG professional will be tuning in to hear what you have to say. And we'll be interested in joining Willie up because we're looking to hire our very first kind of sustainability ESG person, so I'm just gonna put that out there. It's very self serving, but my job is to hire that person. So not actually why I invited you on to this podcast. But certainly is that coincidence that I'm very happy about? Having got that little advert out of the way? I think we should spell out for people that are not familiar with iffco. Just in a little bit more detail. What what is it that you guys do?
Iñigo Canalejo 07:52
Certainly, we are in quite a unique business. As I mentioned, we operate in the circular economy. And when people ask me, you know, what, what does your business do? I say, well, we provide packaging as a service. That's exactly what we do. And, and the way that I explain our businesses, we don't produce anything. We don't manufacture anything, and we don't sell anything, either. And then most people say, well, then what do you do? You know, what is it that you actually actually we provide packaging unnecessarily, so we rent packaging, so our customers share and reuse our packages in the supply chain. So we work mainly in the fresh produce supply chain. So the growers of potatoes, cucumbers, and tomatoes, rent our great reusable packaging, great RPCs, we call them, they fill them with their with their goods, they send them to a retailer, their customer, the retailer uses those crates to put them on display at the supermarket. So I'm sure many of our listeners would have been some of our crates at the supermarket. And then once they're empty, we collect them, we fold them, which is really important because you optimize your logistics flow, your reverse logistics slows, we we send them to what we call our service centers where we inspect the crates, we repair them, if they need to be repaired, we wash them, we sanitize them, and then we ship them back to the next user. So and then that's when they start, you know the next cycle. So it's all around our customers and their supply chain sharing and reusing our packaging in their supply chain.
Steve Statler 09:28
And so what are the core competencies that you need to operate that you don't actually manufacture the crates that you're pulling? Do you or do you?
Iñigo Canalejo 09:38
No, no, we don't. I said we don't produce anything you
Steve Statler 09:41
design. You specify them you say the crates need
Iñigo Canalejo 09:46
correct. And And again, we've been doing that for many years now. So we have a lot of expertise in the design, optimal design. There's a big element now around optimization for example, at the warehouses and there For the design of the crate is more important than ever. Because of that there are a lot of advantages from from an operational point of view versus single use packaging around the capacity of optimization as well. So we design them, we don't produce them. And the core competence for us, again, is having that network and operating this in an efficient way, it ends up being quite complex, because of the size of the of the business that we have. So we have, we own over 370 million of these RPCs. And we operate a pool of these are PCs at a global scale. So we operate in Europe, we operate in in America, in Latin North America, Latin America, in Asia as well. So imagine that the toughest thing is actually to have all of these crates, let's say, like, under control, making sure that we know where they are, that we can deliver them what they need to be at the right place at the right time. And of course, getting them back, sanitizing them and issue them again now. So the essence of our businesses around keeping this packaging in circulation as much as possible. And to me, I think that's the that's probably the toughest part.
Steve Statler 11:12
And so is your competition, the cardboard box, single use cardboard box? So
Iñigo Canalejo 11:16
mainly, yes, mainly. So the most, let's say, implemented solution in the market is single use packaging is cardboard. I mean, there are other, you know, solutions, like single use plastic as well. But let's say the majority is a cardboard box. And then there are obviously other beers that do a similar operation like if God does around reusable packaging. But there aren't any that do it in a in a such a global, large scale.
Steve Statler 11:42
So you're kind of a giant in this particular segment of the market?
Iñigo Canalejo 11:47
I would say so I think we have a industry leader.
Steve Statler 11:50
And where is the world in terms of progressing to reusable packaging? In your segment? What? What's the proportion of people that use this circular approach versus just building the stuff after they've used it?
Iñigo Canalejo 12:08
There's many different I mean, you asked me about the world, right? And that's, that's a tough one, because depending on where you are in the world, it's actually very different. Right? So I would say, for example, in Europe, for fresh produce is quite implemented, let's say. So the penetration of reusable packaging in in fresh produce is quite large. In other regions, maybe in North America, for example, even though where you would think I mean, one of the key, let's say facilitators of what we do is a modern supply chain, of course, you need a supply chain that has distribution centers, that has optimization that has reverse logistics in place, right. And that's where, you know, solutions like ours, standard solution actually make a real difference. If you go to other regions where are not so developed, like, for example, India, then it's very difficult to implement a solution like ours, but again, going back to my point around the North America, even in North America, where, you know, you have a very modern supply chain, of course, the penetration is not as large. And I have to say, you know, a big reason for that is that, you know, cardboard has been the standard solution for many, many years. Right. And whether it's in Europe, again, we've been working on on replacing single use packaging for the last 30 years, and it's well implemented over there is still it's still new, and I have a lot of conversations with, you know, potential customers or customers that still have some, some producing in packaging, understanding that the benefits also from a sustainability point of view, because, you know, to be honest, I mean, we started actually with a big sustainability background, because he was at a time when Germany had a legislation around waste. And actually, you know, our funders thought, Okay, well, if there is a focus on reducing waste, then the best way to do that is actually not to generate any waste in the first place. So why don't we reuse this, just wait, and they invented this this model. So there's a lot of debate around that. And there's still a lot of people that don't understand the differences or the improvements, or the benefits of reusable packaging. And, and they never looked at it from from a sustainability point of view. So in the in the, in the past, it was all around efficiencies. Now, we're finding efficiencies from an operational point of view. But of course, there are huge benefits of reusing packaging versus generating all that waste in the in the first place.
Steve Statler 14:24
So would you say that in terms of just a very crude level, Europe versus us is is the majority of packaging reusable in Europe, or has it got to that point yet?
Iñigo Canalejo 14:37
Well, this is the thing. It depends. It depends on the category right? So for a fruit and vegetable in that a lot a retail change. Yes, I would say the majority of packaging is reusable. Now of course, if you look at other categories, if you look, of course to durable goods, the majority of packaging, a single use, whether it's single use plastic or whether it's single use carbon, right? But within a fresh produce, I would say, yes, there is a high penetration rate.
Steve Statler 15:09
And sounds like we can't say that for the US market for fresh produce. It's
Iñigo Canalejo 15:14
not as much not as much, I think I mean, and it's growing very, very first time, and we are growing as a business as well there. Because, again, now the environmental sustainability element is becoming more and more relevant. So there are a lot of opportunities there. And there's a lot happening, let's say, but you know, if we take a picture today, yeah, the penetration is not as high in the US, but I'm sure it will be very soon, because there is there is a lot of inertia in this world.
Steve Statler 15:44
And, you know, we're an IoT podcast. So it's, you know, one of the reasons that I'm fascinated by this adoption is, you know, it's sustainability as a driver, there's also other drivers, but it means that we can actually start to apply Iot more to these packaging systems. You know, it's hard to justify putting a Bluetooth sensor on a cardboard box, but you can justify it on the on on a plastic crate, where would you say we are with, with the adoption of IoT in reusable packaging for produce, you know, my sense is, we're still early on in the market, it's got a little bit potential.
Iñigo Canalejo 16:33
I agree. That's, that's what I would say, I think, again, the potential is huge, as you said, Oh, what a single use packaging, it doesn't make a lot of sense, especially because of the cost. But you know, everything we do is around product life extension. So we design our products, so that they can last for a very long time, right as long as possible. So therefore, if you have a device that maybe you need to invest a bit, but you know, it's for a product that is going to last a very long time, then obviously, the cost equation, becomes becomes much better. I think we're still early on. But at Eco, we have a very strong program on digitalization of our business and of our asset base as well. And we really think there is a big opportunity for us to, to benefit from this. And I see three main advantages of IoT for what we do know, the first one is around making things easier for our customers. So the ease of doing business, as we call it, our customers currently declare where they're sending their packaging to, so that we know we need to go and collect it there. And we have our packaging under control. You know, in the future, if you think about, you know, packaging, with with sensors, there wouldn't be any sort of declarations, right, everything would happen automatically. So therefore, it would make their life easier as well, actually much closer to what single use packaging is, right. They, they it's basically like a hassle free service, you don't need to worry about it, you use it, and then everything else happens, let's say on its own. So that's one big advantage. The second advantage is for us as a business. Again, going back to the point that I made around, we're doing things to make our business better, and therefore, we're also making it more sustainable. So having more visibility of our assets in our supply chain will mean that we can operate our business in a more efficient way. And that means we can reduce cycle times, for example. So we will, let's say sweat our assets more, we can use them more times, and therefore that's more sustainable, you need less packaging for that, of course, you can lose less as well, because you know where they are. So you can go and pick them up, etc. So it will improve our operation. But also it will help us in our own sustainability objectives as well in in making our business more sustainable. And then the third, let's say advantage, that I see is, you know, additional services, I mean, in the same way that that visibility in the supply chain helps us operate our business better, more efficiently, it will also help our customers operate their business better, they will have visibility of their supply chain, both growers and retailers, you will have things like of course controlling damage, temperature, I mean, you know, we we work with fresh produce. So let's say supply chain tracking and traceability in the supply chain is super, super critical and important. More so if you think about topics like food waste, and therefore, you know, any opportunity that we have to provide that visibility to our customers I think will be very well received and will be an additional, let's say benefit of using reusable packaging you're working with.
Steve Statler 19:35
I think this is a huge opportunity. So we're kind of on one hand we can optimize the operations of the pallet ball we can lose less crates, we can run with a smaller pallet for but the real opportunity it seems to be is optimizing what's in the crates and here. You know, we're just starting to see the opportunity because of course until you can measure it you don't really know how big the problem is. And then you suddenly see, oh, my goodness, this is not a, this is not a three day supply chain from the farm to the store, it's actually a six day supply chain. And if you can, you know, every day you can really, you know, as you start to see where the crates are, you can solve those problems and save the day. And that's another day of shelf life and other day in the refrigerator, a better quality product, less, less waste. So I think there's a huge opportunity. So let's go back to ESG itself, though. So what does someone in your role? Do? You know, you arrived that? You know, in the second half of this show, we're going to talk a bit about how you got this job. And you know, you arrived for day one, a disco? What do you do set up an ESG function? Because I think there's going to be I don't, you know, we're higher trying to hire someone for ESG. My sense is, this is one of the most in demand job descriptions out there. And so there's going to be a lot of people who maybe they'll listen to this podcast, you know, what do I do? What's my agenda for my first 90 days? What was your agenda? What did you do?
Iñigo Canalejo 21:18
Yeah. Okay, I think that the first thing is understanding the business. And in fact, you know, a good example of that, because, you know, my background is in engineering, but I haven't, I don't have an environmental, let's say, sort of background, from from studies. But I, but I knew the business really well. Right. And, and I did it at my previous job. And also here, if God, I knew the business quite well. And I think that's the first most important thing to be honest. Because, again, as as I think, you know, every ESG program is going to be different than each company. And you need to focus on the topics that are material for the company. And there's something called materiality, which is very common for us that work at ESG, which is understanding, you know, what do I focus on? Because, you know, everybody talks about, for example, carbon emissions. And yes, carbon emissions are our, let's say, across the board important, but you know, they're going to be more relevant for one type of industry that they are for others, right? So it's really important to know your business and know what you do so that you can decide, which are the material topics that you need to focus on. Right? And what is your business all about? So So for us, you know, one of one of the things that I did when I when I joined, is also shape our program very much in line with what we do as a business. So understanding, okay, what does if God, do what is our purpose, and therefore, let's have a program that reflects that. And of course, let's try to continue doing that say that that good that I mentioned, we, we are a sustainable business, but we can do better. So the, let's say, you need to know the business really well, so that you know where to focus on. So that's one benefit. But the other big benefit of knowing the business is that you need to work with people. And I think, again, depending on how your structure is set up with your ESG program. In our case, we have a very small ESG team that sets the guidance, the objectives and the strategy, let's say, and then works with the rest of the business to actually put that strategy in place. Right. So you need to work with people every day. And look for some of them. ESG, or sustainability was already a priority, let's say and it was already embedded in what they do for others is not so it's very much about, you know, influencing and working with people so that they put the same priority to the ESG topics, as they would do with any other, let's say business KPI. So it's a lot about, first of all, you know, setting the setting the program and setting the direction. But most importantly, you know, getting people on board working with all of the areas in the business so that that program can actually, let's say, happen can actually be put in place.
Steve Statler 23:55
So you're letting the business building the relationships, presumably you're understanding the problems you look for, where you know, where am I exposed as a, as an organization, and you're trying to orchestrate visibility of that. And I'm assuming one of the tools you have is also one of your responsibilities, which is like reporting, right? I'm assuming that's a big part of what you have to do. And it's those metrics that you know, unless you measure it, things probably aren't going to improve. So it's probably a good thing that you are measuring it. Talk a little bit about that if you
Iñigo Canalejo 24:31
report anything an interesting one, right? Because it's sort of like something you have to do. But it's not the most exciting thing. And usually, as you say, no is where you start. I mean, you need to measure everything to make sure that you can actually understand what is happening and therefore influence it and improve it. The challenge with reporting is that in complex organizations like ours operate across, you know, many different countries with with many different businesses that say, the level of reporting or that delivery of integration sometimes is not where it needs to be. So you need to work hard in trying to set that up in making sure that the quality of the data that you have is, is at a certain standard. And that means that you need to, you know, work with the people in getting it done. So, and it's usually, you know, the kind of thing that people don't like too much to be honest. Therefore, you know, you need to, you need to manage that in a in a proper way as well, because, you know, you don't want to be the reporting people, right, you need to be inspiring, I think, you know, a big responsibility that we have at the ESG team, is to be inspiring, I mean, a lot of people join our company, because we are a sustainable business, right? So we want to make sure that they leave that that is part of our culture, it cannot be part of reporting, I mean, reporting is the necessary evil and and you need it as well, of course, to improve your business. But it cannot all be about reporting.
Steve Statler 25:52
Right? So it's you have to it's about being authentic, we say we're sustainable, but let's, let's really walk the talk and, and I think you're right with this, your function can be a real asset for bringing some of the most smartest people into your, your company, if you're doing a good job, people will really want to be part of that. Certainly, the people that commit their lives to their business, for me, work is more than just a way of earning money. It's an if you're in that class of person, and you want to be doing something that makes the world a better place. So you can be part of that, I'm sure. So how can you get people to change what they do? So you lift up the lid? And you see if this is not good? How do you how do you get people to change what they do?
Iñigo Canalejo 26:46
For me, it's all about the win win. Right? So again, we are fortunate because of what we do. And as I mentioned before, the vast majority of the initiatives that we drive, or that we want the business to drive around ESG and achieving our our goals are in line with the objectives of the business to actually do things better, to do them more efficiently to reduce costs to optimize throughput. They're very much aligned. So you know, in most of the cases, people don't need to, you know, completely think outside of what they were doing already is about doing more of what they're doing or looking at things in a slightly different ways. So the Win Win is critical right there, there needs to be opportunities for them to improve in their own, let's say KPIs in their own priorities, but also contributing to the ESG program. And as I mentioned, I think in our company, we're fortunate because that happens, almost, you know, on its own, let's say, so if I'll give you an example. Now, obviously, part of our footprint is around transport, right, we move grades around, we actually turn our grades. Last year, we turned them 2 billion times, right. So these are grades moving around, let's say the supply chain, in trucks in most cases, but we also do a rail and vote to actually reduce the emissions. And therefore, that's a big source of emissions. Now, of course, it's a big source of cost, as well, right. So if you look at your network, if you look at the type of vehicles that you're using, if you look at things like your fill rate at the truck, you're trying to optimize your cost, right, so you're going to do less kilometres, for example, optimize your route, and therefore you're going to be able to reduce your costs. And guess what, you're also going to reduce your co2 emissions. So for the most part, there are initiatives that are directed towards doing that, right towards improving our business, from a cost point of view, but also from a sustainability point of view. So there's not a lot of convincing that needs to happen, because, you know, it's part of what they're here to do as well. And that's one element. And then the other element is that, again, it's in the culture now. So, you know, probably 10 years ago, it was a lot of convention, that look, this is the right thing to do reducing emissions or reducing waste, etc. Now, everybody knows that everybody understands that, and they know that they have to do it. Right. That is that is part of what we do. Just as, you know, everybody understands that we need to reduce cost and, and optimize our processes. So I think it's very much part of our culture, maybe there are other companies that are more old fashioned, where they still don't have that culture. And maybe it's a bit more of convincing. But our company, like if go with what we do, and let's say the essence of our business model, I think that's very much understood. And there is a there is a passion there is there is also a lot of drive to further drive sustainability in the business.
Steve Statler 29:40
And would you say carbon is a proxy for costs? The two can you know, we're trying to drive down the carbon footprint, are we essentially driving cost out of the business?
Iñigo Canalejo 29:52
For the most part, yes. I mean, again, it depends on what you do, but I'll give you two examples. You know, a transport is one right So if you're able to reduce your distances, then you can reduce your cost. So, and you can reduce your co2 emissions. So in that case, yes, we think about plastic, for example, one of the ways to reduce the current the carbon footprint of plastic is to use recycled plastic instead of virgin plastic. And okay, it depends on the market and the time. But recycled plastic can be cheaper than virgin plastic. So therefore, it will reduce costs. There are other elements where, for example, you think about offsetting your emissions, right, offsetting your residual emissions, where you need to invest in carbon credits. Well, obviously, that comes at a cost. So in that case, you know that that formula wouldn't wouldn't work. But for the most part, I would think so. And I can tell you again, know what another another element is, for us heating the water that we use to wash the grades. And that obviously consumes energy, let's say, guys, for example, in some cases, well, you know, the less energy that we use to watch the credits and to make the process more efficient, then we reduce our costs, but we also reduce our carbon emissions
Steve Statler 31:07
and change tack, but it is actually related. Where does Where do you report to? Who's your boss? Where does ESG fit in the corporate structure?
Iñigo Canalejo 31:19
Yep. Well, I think in our case, that was very clear from the beginning, I report to the CEO. And of course, it's not by coincidence. Now, this is a super important topic for the company, for us, because, you know, it touches again, all of our business, but it touches all of our stakeholders as well, it touches, you know, our customers, of course, our employees, but also even our investors, right? So I report directly to the CEO because of, of where ESG needs to be an echo. And also, I think from from from my boss's own perception of where he is, he needs to be as well. So he's a true advocate of this. He's the first one that is, that is very ambitious, actually, about what we should do and how it goes should lead the industry in sustainability and ESG. And therefore, that's why, you know, he wants to make sure that he has, you know, inside direct overseeing, and visibility of what is happening at the ESC program directly from the leadership
Steve Statler 32:16
team. So, any go I would love to hear a bit about your career, I was spying on you on LinkedIn. And it seems like you've done a fair bit of time in academia, where, where did you do all your degrees? And seems like it was, you've been around the world a little bit.
Iñigo Canalejo 32:40
I need a bit. Yeah. So I'm Spanish, based in Spain. I grew up in Spain, actually. But I spent my last year of high school in the states to learn English to spend a year there and English
Steve Statler 32:51
abroad. whereabouts were you in high school
Iñigo Canalejo 32:55
in, in Long Island in New York, okay. Boarding School in a very small town called St. James school called Knox, that was a very different experience for me in small, small boarding school, very traditional. And as I was growing up in Spain, now, when you're 1516 years old, in Spain, you know, the world starts to open, you started going out and spending time with friends, etc. This was a bit different for me, because basically, at a boarding school, you know, you're in school all day.
Steve Statler 33:26
Well, it was a huge shock. The the kind of the American culture and the Spanish culture are very different. And either age of majority over in the States, you know, it's effectively 21. and in Europe, you are already an adult when you were in high school.
Iñigo Canalejo 33:42
Yeah, that's exactly. That's exactly how it felt. back then. But look, it was a great experience. I mean, you know, you grew up, you're used to having sort of everything done for you, and, you know, everything decided for you, and then you're there. And you need to really figure things out and adapt. And we had to, let's say, do a lot of stuff at school as well. So I mean, one one thing that I always talk about is, for example, ironing, no, I had to start ironing my clothes. And I remember I was used to, you know, somebody helping me out at home, ironing my clothes. And the first day I got there, I said, Okay, I'm going to do my laundry, I'm going to have to iron my clothes. And I have absolutely everything. So every piece of clothing I had that was only my first time of course, the second time, you know, I only iron whatever I had to iron really everything. But now overall really good experience. I would say you know, you mature that's the reality. You see you you see life in a different way. It was tough sometimes because of those differences. But overall, when you look back, you you you see it as a great experience because you basically grow up and and become you know the part of the person that you're going to be so anyway After I did that, you know, in senior in high school in the States, you know how it is, you know, you're already applying to universities during your SATs. My initial plan was not to stay in the States, actually, my initial plan was to come back to Spain and study. But as I got into that sort of, you know, environment of applications and interviews, and you have a college adviser at school, etc. I thought, of course, with my parents is when maybe it's not a bad idea for me to stay and study abroad study here. So I applied to several different schools. For engineering, I ended up going to Michigan, to the city of Flint, to a university called EMI General Motors Institute at the time, I was called Kettering University, which was a university founded by GM, actually,
Steve Statler 35:46
I see. So I saw your early career was in the automobile industry, this or anything since now. Okay,
Iñigo Canalejo 35:52
of course, yeah, I made all the sense. And I'm a college advisor was a super fan of the school. It's a really good engineering school. It's a very small school, we were like 2000 students. But it's very unique, because basically, every student has what they call a co sponsor. So students work and study at the same time, so half of the year, you're in school, and the other half of the year, you're actually working from year one. So already, you know, I started my first job I was I was I just turned 18, when I started working at an automotive factory, actually in Spain. So my co op sponsor was General Motors, Spain, our opening Spain,
Steve Statler 36:29
that is so good. I did something similar, not quite as extreme in England, I did a computer science then sandwich course. And it was one year in academia six months in industry year in academia, six months in industry, and then another year, and it was so good. Just you grow up pretty fast. Yeah.
Iñigo Canalejo 36:49
And it's really, I mean, it's so practical looking again, now coming from the Spanish background, where most of the careers are very theoretical, I had straight friends that I was studying, you know, engineering at the same time that I was, and there was so much theory for them, compared to what I was doing. I mean, my school already, I remember when I visited the school for the first time, I was there with my parents while I was still in New York. And, and my dad who is an engineer, we went around and they showed us the school and the facilities and the labs. And my dad loved the labs, because he was saying, Look, when I studied engineering, we had nothing like this now. And in the stage. Of course, it was all about, you know, the labs, the practical application of the things that you're studying in class.
Steve Statler 37:32
Oh, and again, I had a similar experience. My I grew up in England, but I had a brief stint in an American school. And I remember just the difference, the resources, the amount of hands on and practical stuff, because I went back to England, and they put me in the remedial class because we hadn't been doing the reading, writing arithmetic type stuff. But anyway, so I kind of yours is more advanced, but I get what
Iñigo Canalejo 38:00
you're saying. Yeah, so overall good experience. It was also tough because that meant that we basically we were working for three months, then we studied for three months. So every few months, I went back and forth to the states. And my my job was actually I already lived in Spain. I'm from Madrid, sorry, I'm from the north of Spain from Pamplona. But I moved to Madrid when I was eight with my family because my dad job but my my work with GM was actually in a city called ferrata, which is three hours away from Madrid. So I was already living abroad, then as well. It was tough because I was basically either studying or working, especially in the summertime, because a lot of my friends, of course, had long summers associated to university while I had to work, but the caller I thought it was it was a great experience, of course, learned a lot but it was funny. I remember the first day I went to work there. And I did like rotational program, right? So every three months that I spent there, I was doing something different. The objective I had like a mentor better who who's a fantastic person and basically took care of me and assigned me different assignments within the different departments throughout my, my five years of university plus my senior thesis. And my first assignment was in the in the communications department. And when I got there, guy, I was I was 17 at the time, no, I just turned 18 But I looked like I was 14 Probably. So So I got there and I was wearing a tie. Of course my mom said oh, you need to wear a tie and a jacket. And I got to the to the communications department, HR department. I introduced myself and they thought I was somebody's son that was looking for his or her mother, you know, what are you doing here? Now I'm here to work. So very, very, very interesting experience and I really enjoyed it. I learned so much you know with so many different things. And of course, you know, people really took care of me and taught me and I appreciate that even now, when I think about, you know, I have in my team, I have apprentices, I have working students. And I remember the time because when you spend these different times with different people, you know, again, throughout the career, of course, you're gonna find people that that are more devoted to this that really believe in, you know, a young, let's say, professionals that are starting their careers, and how important that time is for you, and others that maybe either don't have the time or don't have the interest now, it's so I always start when it will be my turn, right to dedicate my time and my effort and, and, and help this this this young adults out, I'm really going to do it, right, because I know how important it is for them. So really great experiences. Overall. Good.
Steve Statler 40:52
Cool. So you went, you went from there.
Iñigo Canalejo 40:57
I continued in the industry. And I worked. Now I did a lot of let's say, manufacturing work, obviously, I was working at a car plant. And I worked at one of my terms actually went to Germany as a student, we had a, an exchange program from the US to Germany, but the university had a lot of a lot of Germans that came to the US to GMI. But we didn't have so many Americans that went to Germany because of course, you know, engineering, mechanical engineering in German or an American, it was going to be very difficult. So at some point, my university said, Okay, we need to have this program in English so that we also have some students because if not, this is not a proper exchange program. So I was actually part of the first group of students that went to Germany for three months to learn at the faculty level, to learn engineering, and it was in English, and it was fantastic. I really enjoyed it. And I also stayed for another three months in Opal in in the headquarters, which is in a town called russelsheim. In Germany, and I there I was working in the r&d team, because I was obviously used to the manufacturing part. But this was very different than I wanted to do something different. There are in many r&d facilities in Spain, we have a lot of manufacturing plants, actually, the automotive industry is very big in Spain, but not in r&d. Actually, when I finished my university, and I finished my work with oppo, of course, you know, I had the possibility to continue to work in oppo but I thought, Man, I want to do something different. And I joined set, which is part of Volkswagen, which actually is the only car company that has an r&d facility in Spain. So I joined their r&d team, I joined a trainee program as well, where I did several rotations. And I spent some time in Germany, again, working for Audi. And then I worked in, in a department that was really interesting that was called take our product cost optimization, which is basically optimizing the cost of the of the product of the car, but also the weight. So we had a team of engineers whose only purpose was to reduce the cost of the car and reduce the weight of the car, which is of course, very much related to cost.
Steve Statler 43:06
Interesting. So I maybe I'm taking a leap too far. But it seems like this is kind of a little bit linked with carbon footprint in a way you're looking at the carbon cost you're looking at the weight costs was the carbon costs,
Iñigo Canalejo 43:22
in certain ways. And if you think that, you know, if you related to obvious things like you know, miles per gallon and fuel consumption, obviously, your weight is going to make a major difference in the performance of your car. Right. So very much so yeah, it was it was all around, you know, doing the same thing, but in a better way, doing more with less. And, to me sustainability is all about that as well. Very good.
Steve Statler 43:46
So how did you go from the automobile industry into reusable transport to returnable transport items it is
Iñigo Canalejo 43:55
at? That's a great question. I studied an MBA. So after my time, I'd say I started an MBA in Barcelona at ESA. So I quit my job and I did a full time MBA for two years. And I loved it. I really enjoyed it. Actually, it was a fantastic experience from a personal point of view. But I also learned a lot as an engineer, there are so many topics that that you don't cover in school. So it was was very complimentary to the to my background into my studies. And when you're in MBA on the second year, you have companies come in and present. And they're doing recruiting, of course, and you have opportunities to get to know new companies, new people, etc. No, and it's really, really great, actually. And one day I was working at a room with a friend of mine, and he said, Oh, there's there's a company called come in this afternoon, which is called chip. And I, of course, I had no idea who chip were and I said, Jeff, what do they do? And my friend says they do pallets. And I said Well that sounds boring. And he said and he said nice It's quite an interesting company, you know, they have this very sophisticated network that they use for politics that don't like pallets. You mean the the wooden things? Yeah, pallets of course, you know, imagine me coming from an automotive medium. So I ended up going on I'll come along, so I ended up going. And look, I'm I'm, in general, you know, I'm really curious about things, and I love learning. And I love, you know, learning about new stuff. So I thought, why that? Yeah, let's let's learn about what they do. So I attended the presentation, it was actually the president of Europe at the time that came over and made the presentation. And then we had like, a little cocktail, you know, with students to have a drink. And I remember at that time, of course, I found it interesting. And at that time, I was thinking, you know, if I ever work here, I don't see myself like, yeah, at a cocktail talking about PILOTs. I mean, come on, how variable can this be? Right? And then of course, I actually worked for chip and brambles for 17 years. So imagine, who would have said,
Steve Statler 46:01
and so so what is it that makes it more interesting than than you would think?
Iñigo Canalejo 46:08
Yeah, that's, that's really it. Because of course, when you say a pallet, you know, it doesn't sound exciting. I think what's exciting about this industry is everything that is behind the pipe, right? All this stuff that you don't see, and how complexities really and the let's say the scale of the operation of the solution is there, it's obviously a very smart solution. But the scale have everything that goes up in the in everything that happens in the background, in order for this to actually work, let's say to make it happen, and, and to be honest, they had a really interesting program as well there, I joined the brambles literacy program, which was a three year rotational program again. So I spent one year in Germany one year in London, and then I came back to Madrid actually, I had been out of Madrid for many years. And I came back to Madrid to work in Madrid now. That's what I mean Madrid now. Yep. So after, after London, I came to Madrid and now I continue to be based in Madrid. So it was the program already made it interesting as well, for me, again, from my background, and spending time abroad, etc, I was always interested in working in, let's say, international backgrounds, you know, with people from other cultures working abroad as well. And I didn't really see myself working for, you know, a Spanish business, located in Spain with with only like a local business, I always had, you know, maybe they maybe in my unconscious, actually working for an international business with an international background, etc, which was more of what I was used to actually.
Steve Statler 47:38
So I saw one of the things that you focused on was Brexit, right? That was high civilities. So how has Brexit? You know, how is the actuality the reality compared to what you were kind of preparing for?
Iñigo Canalejo 47:55
Wow, Brexit? That's an interesting one. So look, what the way that I give you the reason why I did Brexit, actually, so I was already working in sustainability at brambles, and I'm Brexit was something that obviously people knew about. Of course, nobody knew whether it was still going to happen or not. Right. This was, I mean, the referendum had already taken place. But there was so much debate around the implications, and whether it was going to be a hard Brexit or not, you know, all this story, of course. And what happened at brambles was that, you know, there were different people in different departments sort of looking at Brexit, and how it would affect them. But probably not in a in a very serious manner, because nobody really knew what was going to happen. And, you know, I'd say from the first identification, we thought, well, that is not going to be that bad. They say, No, it doesn't really affect us so much. But as things started to develop, then, of course, you know, we started to look into Brexit in a bit more depth, we realize, well, maybe it actually does. So one of the decisions that was made was, okay, we need like, like a Brexit project manager, we need somebody in the company that is coordinating all of the reports that understands what is happening, and of course, how is this going to affect us so that we can put up a mitigation plan in place? And, of course, you know, who's there? Who has the profile for that? Well, it's very difficult, right? I mean, there isn't just one single profile to do that. I mean, other than somebody that had done, you know, the, the year 2000 project back in, in 9899, with which was sort of similar, no, a big disruption coming in, obviously, from a technology point of view was very different. But here it was, yeah, something sort of unknown. It could be a potential big disruption. And one of the one of my mentors at Rambis asked me, you know, we were thinking about this, we were debating this in the, in the leadership team, and we thought, you know, I thought maybe you would be a good candidate for that. And I thought to myself, you know, why me? I'm not British. That's the first thing I thought so I don't know anything about Brexit. and therefore, you know, why would you want a Spaniard? You know, looking after Brexit company? And they, the answer to my question was precisely because your Spanish, so we want somebody that is completely outside of this whole, it's a political debate because of course you need to understand that Brexit was something very, very well controversial, as you know, of course, you know, let's say in, in day to day life of people in the UK and people in Europe in general, but also in day to day life at work. So you have different people with different opinions, so it could get a bit, that's a sort of personal. So they thought actually, having somebody that has nothing to do with this is probably a good idea. So for me, it was a bit tough because I thought, well, you know, I think I need to learn, I mean, I knew a little bit, of course, I think I need to learn a lot more about Brexit. So I ended up, you know, reading the Financial Times, and listening to BBC and watching, you know, UK TV, basically, every day, as part of my job actually, which made it really interesting. I actually learned a lot I, of course, I had been with the business for already, what, 1415 years, so I knew the business very well. But, you know, this opened me a lot of different things about about the business, I was already very much into sustainability as well. So therefore, you know, areas like finance or areas like I don't know, things like, of course, customs, which was very important for us. I learned a lot in that as well. And of course, very soon, we realized that Brexit was a big deal for us as well, just as it worked for many companies. So you asked me, you know, how did it turn out at the end versus what was what was expected? Let's say, again, you know, if you were asked me at the beginning of my assignment that would say, well, Brexit is not going to be that bad. Then if you ask me, at the middle of my assignment, we were like, Oh, my God, what's going to happen? Because with pallets, I mean, there was one big deal with pallets. And maybe you learned about this, which was around fetal sanitation conditions. And basically, you know, there is a an international rule called ISPM 15. That that is set up by FAO by the Food and Agriculture Organization of UN that determined that every piece of timber that crosses international borders, needs to be sanitized needs to be fit or sanitized to kill bacteria, basically, and this is to protect the forest. So there was a there was a bacteria called nematode that would basically destroy a pool forest many years ago, and there's still cases in some place isolated cases. But in any case, that meant that pilots you know, that would travel the world, let's say we need to be treated keep treated. So basically, you put them in a kiln, you heat treat them for hours, and then that kills you know, all of the living animals in in the palette and therefore in the woods, and therefore, you know, the cross contamination. Possibility is is gone. Now, there was an ecologist
Steve Statler 52:55
got something on it, obviously, you can't do that.
Iñigo Canalejo 53:00
When you manufacture the pallet, you just need to do it once. Oh, when you manufacture the pallet, yeah, it with fresh timber when you manufacture. And then, I mean, the reason why Brexit affected these ways that the European Union, when this was put in place, set up a rule that movements of pallets within the European Union, did not need fetal sanitation did not need this treatment, because all of the countries were already doing what they had to do to protect the poorest right. And of course, this included the UK. So when the UK decided to leave the European Union, that meant that this rule did no longer applies, this assumption is no longer apply. So therefore, all of the ballots crossing the UK back and forth every year would need to be heated. Now when you have a company like brambles that owns over 300 million pilots in circulation, and of course, you cannot distinguish one from the other, all of a sudden, you realize what does this mean that I need to keep treat my full pool my whole pool, so that I am complying with the with the legislation with the law, let's say. So again, a really big deal. Now there was only one small advantage, which is that, of course, part of the key to reusable packaging is standardization. So there is a size and sort of a weight and a design a standard design of a pallet that is called the Euro pallet. So it's used in Europe mainly and the dimensions are 800 by 1200. And in the UK, there is another size of pallet that we call the UK pallet or the international pallet, which is 100 by 1200. And this was actually an advantage because most of the flows to the UK were done on this specific format. So you know if worse came to the show to say okay, we need to heat treat all of our pool. Well at least you know, we knew that it will have to be only or the majority of the pilots will be of that format and not the rest as well.
Steve Statler 55:01
So the British nonstandard, we're going to do it our way actually helped this. So. So this is the net that it was like not super disruptive for brambles, business, or
Iñigo Canalejo 55:15
it was very disruptive in terms of getting ready for it, to be honest. I mean, at the end, things worked out quite well. But I mean, again, no challenges, like these challenges, around costumes challenges around GDPR. I mean, there were so many issues, as I mentioned, that just getting ready for it was was a big deal. It's a big project, basically affected every single part of the organization.
Steve Statler 55:37
And I know you're not an economist, but what's your view on the impact of this on Europe, Europe's economy? And what's your view on the impact on the UK economy, and I realized, this is like a huge subject. So just kind of your well, headline view. That's
Iñigo Canalejo 55:55
nasty, I continue to read about that. And basically, of course, when when I, you know, this is, of course, my personal opinion, but I when I was going through all of this, and I met, you know, a lot of employees, colleagues of mine that were pro Brexit, actually, you know, and I was trying to also understand it, but to me, you know, looking at, you know, all of the implications for us as a business, but in general to the economy, of course, you know, it didn't make much sense to connect it from from the outside. And I continue to read, and I see that, you know, the UK economy are already at the time was, was suffering from this, and, you know, same same as the European but in a more accelerated way. And I think that's the situation now as well, that basically, the growth that is taking place in the UK is not as easy as it would have been, if it were, if it wasn't for Brexit, it's unfortunately, I think it has affected them, will it? Will it continue to affect them for a long time? I don't know. That's, that's, I think that's what nobody really knows. But so far, I think it definitely has.
Steve Statler 56:58
Well, this has been fascinating. We could talk some more about it, I know that we haven't gone right up to the final piece of the story, which is you move from brambles to iffco. So maybe we should just say a few words on that. And then we'll get to the really fun bit, which is your music choice for?
Iñigo Canalejo 57:16
Sure. So I mean, for some people that might not know if Cole was actually part of the brambles group for almost 10 years. So I already knew we've got from before, but brambles decided to divest Ico in 2018. And, and basically, not sorry, 2019. And they sold the business now, and Ico is a company that does reasonable packaging, specifically for fresh produce, by reusing a plastic plastic crates. So very similar business to what Jeff is doing with with pallets that say, but of course, in a more niche market, which is the fruit and veg, let's say primary packaging, in most cases. So when when, when Rumba is so difficult to me, it was a sad decision, let's say because of what I was already working in sustainability. Of course, there were, you know, all of the great things around reusable packaging applied to go as well. And effort. Well, it's a great business unit, it's very complementary to what we're doing. It's part of our story. We're already working in things like plastic, of course, we were working on things like water conservation, etc. And I thought, well, you know, this is a business decision, of course, I respected it, but it was sort of sad thing. So then my poorly made my current a boss joined iffco, a year after he was sold as a CEO. And then a year after that, he actually called me and said, Well, he sent me a text and he said, How are you doing in ego? You know, we need to catch up soon. And of course, you know, that the moment I saw that, I knew I knew what was coming. Right. And it's funny, because it never crossed my mind before. I don't know why, you know, when we sold the business, or later on, it never crossed my mind that, oh, you know, what's going to happen with sustainability? And if so, I mean, I thought about it, of course, but for some reason, I never saw myself going to eco actually, of course, the moment I saw that text, I knew I knew what was the question I was gonna get? No. So of course, you know, are you interested in and to be honest, the first thing I thought was, wow, you know, I was sort of put back because, my, my, my reflection was, I'm going to have to make a tough decision. That was that was the first thing that crossed my mind. Because I was really happy at rammers. I had been there for many years, I had done many different roles, but in the last years, I was working in sustainability. We, we have a fantastic we had a fantastic program. I was I was you know, with lots of of course, room for development is well, and therefore I really had had no reason to leave, right. But on the other hand, I thought well, maybe an opportunity comes that I cannot say no to and then I need to think about about doing something else and that That's exactly what happened, of course. So this was a fantastic opportunity for me to lead an easy functional sustainability program at that company. And to, you know, basically shape it in the way that I that I wanted, and to take it to the next level. So really, really excited and really, actually, you know, a, let's say, thankful for given the opportunity to do something like that.