New Metrics
Fourstar Connections:
​A ​Solutions-Based EMS Provider Taking on Sustainability, Increasing Market Share

Massachusetts-based Fourstar Connections, founded in 1986 as a cable assembly shop, has evolved into a comprehensive solution provider with an extensive portfolio of services and solutions to tackle a wide range of manufacturing needs. It also differentiates itself with a focus on sustainability — as a value creator and risk mitigator for the company, as well as for its publicly traded customers.

We caught up with Fourstar’s owner and president, Phillip Holman, to learn more about the company’s commitment to sustainability, and why he thinks it’s time for CPAs to lean into discussions and strategy-setting around the issue.

What inspired you to explore sustainability, as it relates to your business of providing interconnected solutions in the manufacturing industry?

From recycling our waste to reducing energy consumption by installing solar panels, we have, in our own way, been ramping up our sustainability practices. As we learned more about sustainability, we realized that they offer benefits beyond simply doing the right thing; we can be socially responsible and increase our bottom line at the same time. So that led us to formulate our goals in a way that allows us to support our employees, customers, community and the planet through sustainability initiatives and increase our profitability at the same time.

Every business has its own definition of “sustainability.” How does Fourstar define sustainability, and is there a specific model that you’ve adopted to better implement initiatives?

Sustainability does cover a broad range of topics; we are focusing on those aspects that are important to our business and to our customers, such as:

**Fourstar Connections'
Phillip Holman,
speaker
**at
New Metrics '17.****- Recycling and waste reduction

• Monitoring and reducing our carbon footprint
• Responsible investing in our 401K plan
• Improving our employees’ health and mental wellness
• Giving back to the community

Many private companies believe that sustainability is not relevant to them because they are not publicly traded, and thus not required to disclose a lot of information. As the owner of a private company, what’s your take on this attitude?

We sell to multiple high-tech, publicly traded companies, and they impose their regulatory requirements on us so they remain compliant with their regulatory requirements. These include reporting on conflict materials, REACH compliance, and RoHS status. So, there is no avoiding this just because we are not publicly traded.

What are the main business drivers behind integrating sustainability into your business model?

Since we typically sell to large publicly traded companies, we need to respond to their regulatory needs as part of their accounting and supply chain system. This includes responding to requests for information around conflict materials and forced labor. We are asked to certify that we do not procure raw materials from companies that do not comply with these mandates. This creates a lot of work for our supply chain and our company, and is typically the cost of doing business with these companies.

The accuracy of the information we provide also has its limitations, since all we are doing is getting certificates of compliance that say “to the best of their knowledge” the materials are procured from companies that do not violate these mandates. With the Workforce Training grant Fourstar recently received, we will be able to build a more robust reporting system, which will differentiate us from our competitors, and eliminate any potential liability as part of our reporting.

Can you tell us more about the Workforce Training Grant?

In December 2016, we applied for a $170K matching grant that was recently approved to train our employees in sustainability. To our knowledge, this grant was a first-of-a-kind for the Massachusetts Workforce Training Grant program, and possibly for the whole country.

What do your employees think about your company’s focus on sustainability?

Overall, the support of the sustainability initiatives has been very positive. With that said, there is still a lot to learn about what other companies are doing, and the best practices in our industry. I think our employees have been surprised by the depth of the topic, and are trying their best to come up to speed on the best ways for us to execute our sustainability plan. Many of the changes we’ve made directly impact their health and well-being, and that’s a win for everyone. Some of the less tangible impact is felt on the morale and team-building level. People have worked together to accomplish professional and personal goals and this boosts an overall sense of community and achievement.

Can you tell us a little more about the different sustainability initiatives that have been implemented, or are currently being worked on, at Fourstar?

• Recycling and waste reduction — We monitor and work towards reducing our waste through recycling and education. We offer reuseable packaging for our customer shipments.
• Monitoring and reducing our carbon footprint — We have installed solar panels and high-efficiency lighting to reduce our electrical usage.
• Responsible investing in our 401K plan — We have evaluated our 401K investments and offer ones that score high in responsible and sustainable investing.
• Improving our employees’ health — We have rolled out multiple initiatives for improving the overall health of our employees. These include weight reduction programs, stress relief programs, and the availability of yoga and personal trainers at work. We have also made changes to the type of food offered in our vending machines, and availability of fruits provided for our employees to snack on during working hours.
• Giving back to the community — The company supports multiple programs within the community where we donate our time to several causes and also help with fundraising. We recently held a matching-monies fundraiser for the fight against cancer. At our celebration event for being in business for 30 years, we presented a local organization with a check for $1,000. This is one of many types of programs we hold throughout the year. We’re proud that our employees actively support this community.

Have you partnered, or are intending to partner, with any other companies in Massachusetts to implement some of these sustainability initiatives? Are you aware of any other companies in Massachusetts that are undertaking similar initiatives?

We are actively looking to partner with other local companies to support our sustainability initiatives. One of the companies we have identified is our packaging supplier, who is also very focused on sustainability. They have installed a solar array for power, and have implemented a waste paper collection system in their building that uses significantly less electricity than their competitors. We have asked them to help us identify ways we can offer reduced or reusable packaging to our customers.

As a business owner, why do you think it’s important for CPAs, and even wealth advisors, to understand issues around sustainability?

CPAs and wealth advisors really need to understand the issues around sustainability as they pertain to privately held companies and their supply chains, and their advisory needs for requested disclosures from publicly traded customers — i.e. conflict minerals, forced labor, and human trafficking issues as well as climate, carbon issues, and natural resource intensity issues.

Here at Fourstar, we predominantly rely on outside business consultants to supplement the skills of the management team. These include a CPA and multiple business advisors. Prior to 2016, we had engaged a separate sustainability consultant to help us with these issues since none of our advisors had strong knowledge about sustainability issues that arise from doing business with large publicly traded customers. The more we immerse ourselves into the training and content being brought to us through the grant, the more obvious it becomes that sustainability issues are driving risks as well as providing business opportunities. At this stage, it might be better to have an integrated team where the advisors who are advising on traditional business strategy can also integrate sustainability into their plan to formulate a more holistic approach to business strategy.

Increasingly, consumers are demanding that companies be transparent and practice sustainability. As more companies make the shift, how will Fourstar remain competitive and differentiate itself, its brand, in the market?

We’re still considered early adopters within our market, so we don’t feel it as pressure, more so that we have the chance — and responsibility — to be industry leaders here. As well, we include our employees. It’s a from-the-inside-out effort and this translates across team lines and to our customers. One thing I have learned about branding is that an entire company has to be on board for the brand experience to be delivered to the customer. If your tagline says one thing, and your employees believe and react to a customer in another fashion, there is a breakdown. Because we, as a company, believe in sustainable practices from the ground up, we aren’t “selling” a brand — we naturally practice it. There is no pressure to deliver a mandate because this company-wide mindset creates consistency and congruency in our engineering, production and delivery, and our customers experience this.

Including our employees involves quality-of-life initiatives such as our commitment to making sustainable 401(k) investments. It requires a learning curve, and we found out that for us to undertake sustainable investments, we had to be satisfied with a smaller return on investment — and we did so at first, with no real understanding of the link between sustainability factors and the rate of return on our investments. We also did not have a complete understanding of how our investments affect us and the world around us.

Through the 401(k) education and scoring program we implemented at Fourstar, we now better understand our investment selections and have added options to choose investments that are creating positive impact in the world. There are many investments available that are not only impact-focused, but can also offer bigger returns and less risk than stocks or mutual funds that do not focus on sustainability. We were able to use one of our sustainability initiatives to increase participation in our 401(k), increase employee engagement, and help to create positive change in the world. That is a win-win-win. We see increased awareness of sustainability in our industry and by our customers and stakeholders. We’ve adopted sustainability at our core and are happy to be paving the way for other companies to adopt sustainability at theirs. It’s a worthy endeavor on all levels and we hope we can inspire others to explore sustainability practices as well.

What are you hoping your customers — especially your publicly traded customers — will think about (and respond to) your efforts around sustainability?

As we roll out our sustainability initiatives, such as an annual sustainability report, and voluntary compliance with carbon disclosure, we are hoping to find a large high-tech EOM customer who identifies with the same value system, and wants us in their supply chain.