Why Procter & Gamble is resetting its sustainability goals
The world's largest consumer packaged goods company is expanding some of its commitments and dialing back on another.
Today, Procter & Gamble is updating its sustainability commitments, expanding some of its efforts and dialing back on another. Behind that announcement is a larger story about how the world’s largest consumer packaged goods story is viewing sustainability these days.
Setting sustainability goals for a multinational company can be tricky stuff. How high can you set the bar and still set yourself up for success? And what if you reach your goal ahead of schedule — do you raise the bar? What if you’re not making the progress you hoped — do you lower the bar? Four years ago, P&G set a series of 10-year goals. As it nears the halfway point, it’s a good time to reassess.
As part of its assessment, P&G is adding four new 2020 goals, aimed at expanding its efforts in water conservation and improving the environmental sustainability of its packaging. It is also revising an existing goal to drive more innovation on renewable materials.
The reassessment coincides with the emergence of Martin Riant, group president, Global Baby and Feminine & Family Care, who late last year became P&G’s executive sponsor of sustainability, a position for which he volunteered. Riant, who has been with the company since 1980, took a fresh look at the 2010 goals. Riant leads Procter and Gamble’s $21 billion baby, feminine and family care business. The sector features a portfolio of powerful billion-dollar brands such as Pampers — P&G’s largest — and Bounty, Charmin and Always, along with other iconic brands including Tampax, Naturella, Puffs and Luvs.
“As I came in to my role the first thing I was looking at is, are we very clear on where we have our strategic focus on sustainability?” he told me recently. “Are we really working on the areas that are going to have the most impact, both in terms of sustainability but also in helping us create value as a company?
“The vast majority of those goals that we established at the time looked like they were in the right order of magnitude and we should be able to deliver on them by 2020. ... (However,) it became apparent that while we’re on track for most of these goals, there are some areas which we should be acting on — or should at least be talking about — that were simply absent from the goals.”
Moreover, “The goals weren’t sufficiently hardwired with the business units in the company,” a state of affairs with which many corporate sustainability executives can identify.
The water goals being announced today reflect the understanding among many companies about the declining or unreliability of that precious resource in many parts of the world. While Riant said P&G isn’t a major water user in most areas where it operates, it’s still a growing concern. The lion's share of P&G's water impacts come during the consumer-use phase — think shampoo, toothpaste and laundry detergent.
As a result, the company is focused on the smaller share: water used in its own facilities. Specifically, P&G is committing to reduce water used in its manufacturing by 20 percent per unit of production, with a specific focus on conservation efforts at facilities in water-stressed regions, and to provide 1 billion people access to “water-efficient products,” although that is not defined.
As part of its focus on water, the company is being "much more rigorous about doing assessments of our facilities,” said Riant. “Before any new facility is located or decided upon, we want to make sure we understand its supportability from a water availability point of view. We are also going through each of our existing facilities and understanding the current water availability environment where they are located. Are they in stressed areas? Do we need to give them a priority in the interventions that we can make from a technology point of view? I think we’re getting much more systemic about our operations in that regard because it’s necessary given the problems in some areas now.”
I asked Riant how much of the company’s water-efficiency goals will come from new technology and how much from operational changes. “It’s frankly quite hard to separate the two,” he responded. “A lot of the what you might call operational impacts are very dependent on us finding new, efficient processes. There will also be operating efficiencies — being careful that we recycle water by allowing it to evaporate out of the system and that kind of thing — but a lot of it is coming up with novel, more efficient technologies for using water.”
Foiled by oil
The other part of P&G’s announcement has to do with its commitment, set out four years ago, to replace 25 percent of its petroleum-derived raw materials with renewable materials by 2020. Today, the company is revising that commitment downward. Rather, stated the company, it is committing “to creating technologies by 2020 that would let P&G substitute its top petroleum-derived raw materials with renewable materials, as cost and scale permit.”
To be sure, there’s an barrelful of squishiness in that statement.
The original commitment turned out to be unfeasible, due in large part to the drop in petroleum prices brought about by the fracking revolution. That made the cost of adopting alternative solutions less financially viable.
Like so many seemingly simple commitments — to outsiders, at least — this one turned out to be not-so-simple.
“We developed a number of solutions, but they proved to be too costly and too complex to expand on a global scale,” Riant said. “As we started getting into the process of going through our materials list and seeing what we could change to biobased feedstocks, these were at a scale nobody had really done before.” Each new process “needed to be confirmed, scaled up and done in an affordable way, and in many cases would require substantial infrastructure investment by our supply base to get there.
“In other cases, the materials already existed but the cost of production was so much higher than the petro-based materials that to get to a full 25 percent substitution by 2020 would have hugely added costs either to us, our suppliers or the consumer. And based on where we understand consumers to be in terms of not wanting to make tradeoffs in that respect, we said, ‘We’re just not going to be able to go that fast but we shouldn’t stop. Eventually we’re going to need to do this.’”
The company has started to incorporate some of the more available and affordable feedstocks in parts of the business, said Riant, “partly to get the learning of how to use them but also to learn how we can start to engage consumers in a way that would impact their purchase preference.” For example, Pantene Nature Fusions is packaged in bio-plastic bottles, and the company has made that part of the brand positioning.
The potential payoff
Meeting its sustainability goals is not just a technology challenge, said Riant. It’s also a people challenge. “We’ve got to learn how to communicate this to consumers in a way that they can make a choice for more sustainable products, and somehow converge getting more affordable costs with the consumer willing to pay a little bit more for these biobased products, until they really have a scale.”
It’s a challenge that P&G — along with every other consumer goods company — has struggled with for more than two decades: inspiring consumers to embrace sustainability in no-compromises kind of way.
“I don’t think we’ve done nearly enough with consumers in this area,” said Riant. “Some of that flows from us not having the businesses as connected in the delivery of our sustainability goals as they need to be. And that’s something we’re changing. I think there is a lot of upside if we can make sustainability more accessible and transparent to consumers so people can actually find out what we’re putting in our products and why, and how renewable they are. And then, as we make progress in this area, communicating that to consumers in a way that it makes the overall proposition more attractive.”
The potential payoff is considerable. Procter & Gamble serves nearly 5 billion people around the world — about 70 percent of the planet. Getting even a fraction of those souls committed to less-resource-intensive products could lead to significant reductions in energy, material and water use, solid waste, and their concomitant greenhouse gas emissions.
It won't be easy, but the convergence of technology and people can ease the way. “In the days when a lot of our communication with the consumer was a 30-second TV commercial, you’re not going to allow much of your communication time to be about sustainability because you need to communicate a reason why the consumer should choose your product,” said Riant. But online is a different world, where interested consumers can click endlessly to learn more: “It gives us much more option to introduce elements of sustainability into the overall consumer communication on our brands, and that’s something we’ll be working on.”
For Riant, this isn’t just business — it’s personal. Before we ended our conversation, he emphasized that he is “personally very keen to make this happen,” referring to the company’s overall sustainability strategy. “I am in charge of a business which is essentially a disposable business. I would feel much better personally if more of those products were made of renewable materials and were ending their life more usefully.”
Photocollage at top by GreenBiz Group