Behind Procter & Gamble's Sustainability Vision
Behind Procter & Gamble's Sustainability Vision
Procter & Gamble's announcement today of a new "sustainability vision" is a noteworthy moment -- not just for the world's largest consumer packaged goods company, but for the world of sustainable business.
It represents another yardstick of how major corporate players view their place on the sustainability landscape: being "socially responsible," of course, but also seizing the global business opportunities that can inure to companies taking leadership roles in environmental and social well-being.
P&G's CEO Bob McDonald and VP of Global Sustainability Len Sauers announced the goals today on a webcast that I had the honor of hosting. (My participation was part of a business relationship between P&G and GreenBiz.com, though neither I nor any of my GreenBiz colleagues played any role in the substance of the announcement.)
"We don't treat environmental sustainability as something separate from our base business," said McDonald, who also holds the title of Executive Sponsor of Sustainability at P&G, a rarity among CEOs. "When we operate sustainably, we earn gratitude, admiration and trust that lead to opportunity, partnerships and growth." He explained that among P&G's goals is to reach five billion consumers over the next five years. "This is roughly a billion more consumers than we're reaching today. But, we must reach and serve these consumers responsibly. It does us no good to grow our business today at the expense of tomorrow."
At first glance, P&G's four new commitments -- powering its plants with 100% renewable energy, using 100% renewable or recycled materials for all products and packaging, having zero consumer and manufacturing waste go to landfills, and designing products "that delight consumers while maximizing the conservation of resources" -- closely resemble the three broad environmental goals set by Walmart in 2005 ("to be supplied 100 percent by renewable energy; to create zero waste; and to sell products that sustain people and the environment.")
But there are big differences. For starters, unlike Walmart's goals, which have no specific timeline, Procter & Gamble -- which makes everything from Pampers to Pringles to Pepto-Bismol to Prilosec -- seems to have mapped out milestones. Today it announced several, including committing by 2020 to replace 25 percent of petroleum-based materials with "sustainably sourced renewable materials," reduce consumer packaging by 20 percent, reduce manufacturing waste to less than one-half of 1 percent, use 30 percent renewable power for its manufacturing plants, and reduce truck transportation 20 percent. The company says it will report progress on these goals annually.
It's also significant that unlike Walmart's unveiling of its goals in 2005 (or GE's ecomagination announcement that same year), P&G's announcement wasn't a bolt from the blue -- that is, an audacious goal from a company that had previously been largely silent on sustainability issues. Today's announcement seems the logical extension of a series of steps the company has been taking. For example, in just the past six months, P&G:
- introduced to the U.S. its Future Friendly campaign, born in Europe, a multi-brand and multi-platform effort to raise awareness about greener products and greener practices;
- created a high-profile panel of sustainability experts to advise on its Future Friendly efforts;
- launched a supplier scorecard to measure their environmental impacts;
- reformulated a bestselling shampooto reduce toxins;
- announced concentrated versions of powder laundry detergentsthat significantly reduce packaging and energy use; and
- introduced sugarcane packaging to three of its shampoo and makeup brands.
All of which follow the company's 2009 commitment to sell $50 billion in "sustainability driven" products by 2012, a goal the company says it is on target to meet.
Just last week, at the Clinton Global Initiative, P&G launched a Children's Safe Drinking Water program with the intent "to provide enough clean water to save a life every hour." It plans to do this by delivering more than 2 billion liters of clean drinking water a year by 2020, which it says will help save an estimated 10,000 lives and preventing 80 million days of diarrheal illness annually. Clearly, this is not window dressing.
Indeed, it's that link between the developing world and the developed that is becoming a key source of business value and growth for the company. As P&G aims to ramp up its customer base by a cool billion people, it is turning to its culture of innovation to create products that benefit those not just at the base of the pyramid, but also the rest of us.
Consider something called Downy Single Rinse. "Normally, in the developing world a woman would need maybe four buckets of water in order to wash her clothes -- one for washing and then several rinses," Len Sauers explained to me recently. "Through technology that we've put in Downy Single Rinse, she only needs to do one rinse, not three." The result: saving water, perhaps enough to pay for P&G's product in the first place. In fact, its marketing pitch for the product included "Downy for free!" The company used a similar approach with its Tide Coldwater (and, in Europe, Ariel Cool Clean), which claims to save consumers enough in their hot water bills to pay for the detergent.
This isn't just clever marketing, it's a solid green value proposition -- a money-saving product that has an environmental benefit. We simply haven't seen enough of those.
"I have a firm belief that all issues of sustainability will be solved by innovation, says Sauers. "And at P&G, one of our core strengths is innovation, so as we go down this path to tackle these issues that the world is facing, I believe it'll be our innovative solutions that are very helpful there. I see this as business opportunity for the company."
(Sauers will be discussing the company's approach to product creation as one of the featured speakers at our upcoming GreenBiz Innovation Forum.)
It's encouraging to see a big company that understands that success in sustainability comes from actually improving lives, not simply selling people more stuff.
Of course, P&G's business is decidedly about "stuff." And not all of it is universally beloved. For example, reasonable voices will disagree on whether introducing disposable diapers in emerging economies like China promotes hygiene (and, according to one study, extends babies' sleep an extra 30 minutes per night) or promotes wastefulness in a world of limited resources. Business case studies are built of such debates.
And so time will tell whether and how much P&G's self-described "purpose-inspired growth strategy" -- of "touching and improving more consumers' lives in more parts of the world... more completely" -- actually changes lives. But it's pretty clear that the company is going to try.
Either way, P&G's "sustainability vision" represents the culmination of a major turnaround. It doesn't seem that long ago that P&G wasn't held in high regard in sustainability circles. Suddenly, it seems like the newest corporate good guy.
I asked Sauers, who's been with the company for nearly 24 years, how he sensed the shift. "I think it's a wonderful and exciting time for the company because I really do believe we can make a meaningful difference in environmental sustainability," he responded. "We have so many smart people in our R&D organization who I know are going to come up with these great innovations that enable consumers to be sustainable. I have the good fortune of having a full commitment from our CEO, which enables things to happen so much more easily within the company."
Sauers concluded: "It's just a great time to be in the company. It's going to be very interesting over the next few years here at P&G."