Consumer Giants Awaken to Green

[Editor's Note: This is the first in a series of articles excerpted from our annual State of Green Business Report. The report takes a close look at the data behind the green business movement to track whether we're moving the needle on corporate sustainability. Download the free report here.]

Large consumer packaged goods companies, the so-called CPGs, have long been reluctant entrants into the green world. The makers of the leading brands of detergents, personal care products, processed foods, and other things found up and down supermarket aisles have stayed largely on the sidelines, viewing green marketing as a risky, if not losing, proposition. Suddenly, the world's biggest brands seem to be leading the way. Kraft, Procter & Gamble, SC Johnson, and Unilever were among the CPGs making green pronouncements during 2010.

P&G, the world's largest CPG, took several major steps, not the least of which was a "sustainability vision" that set a series of long-term goals: Use renewable energy for 100 percent of its factories, use 100 percent renewable or recycled materials for all products and packages, and send zero consumer or manufacturing waste to landfills. The company also set interim 10-year goals, to be achieved by 2020.

State of Green Business

That was just the beginning. During 2010, P&G also introduced to the U.S. its Future Friendly campaign, an effort begun in Europe to raise awareness about greener products and practices; created a high-profile advisory panel of sustainability experts; launched a supplier scorecard; reformulated a bestselling shampoo to reduce toxins; announced concentrated versions of powder laundry detergents that significantly reduce packaging and energy use; and introduced sugarcane packaging to three of its brands. All of which followed 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.

Unilever, one of P&G's biggest competitors, followed suit, launching a Sustainable Living Plan focusing on the company's supply chain -- from the farms that supply raw materials for its products to the emissions and waste generated by customer use of those products. The company committed to sourcing 100 percent of agricultural raw materials sustainably by 2015, including palm oil; change the hygiene habits of 1 billion people in developing countries to help reduce diarrhea, the world's second biggest cause of infant mortality; make drinking water safer in developing countries by extending sales of its Pureit home water purifier; and improve standards of living by working with nonprofit groups to link 500,000 small-scale farmers and distributors to Unilever's supply chain.

What's going on here? Have these behemoths suddenly become treehuggers? Unlikely. Such initiatives are logical extensions of efforts already being undertaken, sometimes quietly, to address stakeholder concerns, improve operational efficiencies, and hedge risks related to petroleum use and greenhouse gas emissions. All of which provide opportunities to be seen as a leadership company -- not just by consumers, but by investors, job seekers, and employees.

Credit also must be given to Walmart, which has been pressing CPGs large and small to take such measures -- part of the retail giant's own commitments related to waste reduction, renewable energy use, and making affordable green products. Most of the leading CPGs also belong to the Sustainability Consortium, a research group set up by Walmart but now run independently. Among the consortium's 70-odd members are Church & Dwight, Clorox, Colgate-Palmolive, General Mills, Kellogg's, Kimberly-Clark, P&G, SC Johnson, and Unilever. Together, they represent more than $200 billion in annual sales.

Few of these companies are doing much green marketing. Most remain on the sidelines, devoting their marketing budgets to more traditional consumer value propositions. But behind the scenes, they are making dramatic shifts -- things unlikely to end up on product labels, advertisements, in-store promotions, or any of the other tools of the marketing trade.

In this video from the GreenBiz Group, Joel Makower looks at how the recession has affected sustainability efforts at companies large and small.

Photo CC-licensed by kozumel.