Sustainability Spotlight: Callaway Golf Company's Inaugural Sustainability Report
Callaway range balls at the East Potomac Golf Links driving range in Washington, D.C.
There are few things in the early physical development of children that are more important than learning how to walk. Taking those initial steps is the birth of a fundamental aspect of our being that transforms how we interact with our surroundings and opens up new worlds of possibilities to explore. The knowledge and experience gained from taking our first steps translates into so much more, we learn to run, skip, jump, dance and climb and where we go from there is only limited by the bounds of our imagination.
The same can be said for companies, organizations and industries that commit to and ingrain sustainability into the ethos of their business operations. Back in our March 2022 newsletter, we shared the news that Callaway Golf Company, one of the world’s leading manufacturers of golf equipment, apparel and entertainment, produced their first ever 2021 Sustainability Report. For the next installment of our Sustainability Spotlight Series, we dive into that report and offer our Driving the Green takes on what we would like to see in future reports.
About Callaway Golf Company
Ely Callaway founded Callaway Golf Company in 1982 with “the purpose of designing, manufacturing and selling high-quality, premium performance golf clubs for every level of player.” The company’s first major splash in the golf industry came in 1991 with the release of the Big Bertha driver. The innovative approach to developing the Big Bertha driver set Callaway apart from its competition and put into motion the technological advances that have led to the development of today’s driver.
Outside of its 1997 acquisition of Odyssey Golf, an equipment company that produces putters, Callaway focused mainly on manufacturing equipment with some attention paid to producing accessories like bags, umbrellas and clothing. However in the past five years, Callaway has been very busy expanding its portfolio of brands to offer consumers a wide range of products and entertainment experiences.
2017 - Callaway acquires OGIO, a leading manufacturer and distributor of premium storage for equipment and personal items, and TravisMathew, a premium golf and lifestyle apparel, gear and accessory company.
2019 - Callaway acquires Jack Wolfskin, a German-engineered premium outdoor brand that is rooted in sustainability and focuses on designing ethically made and eco-conscious apparel, footwear and equipment. Our feeling is that this acquisition may have been one of the catalysts that drove Callaway to begin the sustainability reporting process.
2021 - Callaway merges with Topgolf, an off-course entertainment company that blends the fun, casual and inclusive nature of a driving range with restaurant quality food and beverage amenities.
“Good Ethics is Good Business”
Callaway released their inaugural Sustainability Report to show accountability for their actions, to improve the transparency of their day-to-day business operations and to establish baseline metrics that will guide future sustainability commitments and goals.
The process for producing this report began in 2019 with the launch of their Global Sustainability Program. From there, Callaway instituted a governance structure comprised of an Executive Sustainability Committee (CEO, CFO, all executive officers and their General Counsel) and a Sustainability Core Team (a group of select employees tasked with building, driving and reporting on Callaway’s large- and small-scale social and environmental programs).
Callaway then engaged their stakeholders to conduct a materiality assessment, using the Global Reporting Initiative Standards to guide the process. The GRI Standards are a globally recognized framework used by organizations that want to understand and report how their business operations impact the economy, environment and people. A materiality assessment is a stakeholder engagement process in which organizations determine the environmental and social sustainability topics of greatest importance to business operations as well as all stakeholder groups. Additional standards and sources used to determine material topics includes the Sustainability Accounting Standards Board and the Taskforce on Climate-Related Financial Disclosures. The following image shows lists and describes the 15 key environmental and social topics perceived to have the most significant impact on Callaway’s business and stakeholders.
Callaway’s Sustainability Strategy Framework is derived from these 15 material topics and based on four pillars: People, Planet, Product and Procurement. Here are a few notable items reported under each pillar:
People
Employees - 57% of management-level new hires are of a diverse category (non-white, female, or both).
Suppliers - Callaway audits all suppliers to comply with Supplier Code of Conduct.
Local Communities - Since 2003, Callaway has donated $6.4 million worth of golf equipment and other products.
Planet
Energy Management - 2021 report establishes baselines for energy consumption of manufacturing, distribution, retail, and entertainment facilities.
Topgolf consumes 104,232 MWh, over double the rest of Callaway’s operations and the equivalent of about 9,500 US households across 58 US Topgolf facilities.
Each Topgolf consumes the electricity of about 164 US households.
Climate Change and Emissions - Callaway has increased the number of EPA-certified SmartWay carriers from 50% in 2016 to 89% in 2020
Waste Management and Recycling - Callaway’s North American facilities generated 6,086 metric tons of waste and recycling in 2021 (including 3,609 metric tons of waste and 2,477 recycled)
Water and Wastewater Management - Topgolf US venues recorded 833 megaliters (ML) of water usage, as compared with 171 ML for global Callaway operations.
Each Topgolf facility uses the water consumption equivalent of roughly 126 US households.
Product
Product Design and Innovation - Callaway brands intend to learn from Jack Wolfskin, which has produced material technologies that saved the equivalent of 34,330,000 recycled one-liter PET bottles.
Product Management - Callaway’s ‘Trade In! Trade Up!’ Program encourages resale, repair, and donation of products to extend product life cycles.
Product Quality and Compliance - Over 80% of Jack Wolfskin’s products have been approved by bluesign, which key Callaway brands like Travis Mathew appear poised to learn from.
Procurement
Procurement Practices - In 2021, Callaway contracted with suppliers from 20 countries mostly positioned in South Asia, but has consolidated individual manufacturing partners to allow deeper oversight of ESG performance
Supplier Assessment and Engagement - Callaway assessed all of its 75 suppliers on social and environmental compliance, identifying 5 partners for Performance Improvement Plans
Driving the Green Takeaways
It may seem obvious reading through this article (and the report) that a company as big as Callaway should be investing in this type of transparent reporting. However, the most important takeaway is that they HAVE actually produced this report and ARE committing to transparency and the learning process that comes along with it. The report is by no means perfect, but it sets the bar for other manufacturers to follow Callaway’s lead.
Callaway is taking major steps to diversify their workforce and bring new golfers to the game but what are they doing to protect it? A recently stalled bill in Callaway’s home state of California, coined the Public Golf Endangerment Act, sought to incentivize the sale of municipal golf course land to developers in an effort to solve the state's affordable housing crisis. Golf courses tie up a lot of real estate and as the value of that land grows, so do the number of naysayers that argue golf’s inaccessibility and elitist nature are a detriment to ecosystems and communities. Golf needs companies like Callaway and organizations like the PGA TOUR to stand up and prevent bills like California AB1910 from making their way through state legislatures or there won’t be enough affordable public access golf supply to house the demand created by the industry’s growth initiatives.
Callaway’s procurement policy standards show they are on the right track to managing supply chain efficiencies but we would be interested to see how much raw material they are using to produce their equipment and apparel. They use steel, titanium alloys and carbon fiber for their clubs; synthetic rubber, thermoplastics and zinc compounds for their golf balls; and cotton, wool, rubber and synthetic fabrics for their apparel and footwear, but how much? The Conflict Mineral Policy does provide assurance that the sourcing of tin and tungsten for their clubs does not directly or indirectly finance armed groups in those sourcing countries but how much are they using? What happens to the products that don’t get sold? Can those materials be reused to make new golf clubs? Are they trying to find a solution to this?
We whole-heartedly celebrate the leadership Callaway has shown in producing this report so we can debate, nitpick and offer our armchair philosopher takes. The report’s transparency allows us to formulate deeper discussion in the hopes of generating debate and constructive criticisms meant to drive the industry deeper down the sustainability reporting rabbit hole. The golf industry will be in a much better place when transparency and accountability become as commonplace as an advertisement for the latest models of drivers, irons or golf balls.
