Selling Small, Thinking Big: P&G's Sustainable Innovations
Selling Small, Thinking Big: P&G's Sustainable Innovations
If you work for a company that makes laundry soaps, then the resources used in your own operations are only a small part of your overall footprint. This is especially true if your company works on the global scale of Procter & Gamble.
When looking at the energy use of its products from manufacture to disposal, P&G found that far and way the biggest source of energy use came from customers washing their laundry in warm or hot water As a result, the company began to develop new products designed to not only to be washed in cold water -- using less energy -- but has begun developing a whole range of products it calls "sustainable innovation products."
I spoke with Peter White recently to find out what makes a P&G product sustainable, how the company incorporates social responsibility into its goals, and how to make every job a green job.
Matthew Wheeland: Peter, thanks so much for taking the time to talk today. I wanted to talk briefly about Procter & Gamble's overall goal for green products.
At our Greener by Design conference a few weeks ago, you mentioned that the company has set a goal to sell $20 billion in total sales of what you call "sustainable innovation products." Tell me a little bit about what kinds of products those are.
Peter White: Well, what we call sustainable innovation products and, as you say, we've set a goal that by 2012 we're going to develop and market at least $20 billion worth in cumulative sales. Sustainable innovation products are products with a significantly reduced environmental footprint versus previous alternative products.
So the environmental improvements are going to be significant and they're gonna be obvious and when we said that, we've actually defined what we mean by a significant improvement.
We looked across the whole lifecycle of the product and there has to be at least a 10 percent improvement, whether it's in energy use, whether it's in water, packaging, waste or transport, but as I said, over the whole lifecycle. And 10 percent may not sound a lot, but over the whole -- a 10 percent saving over the whole lifecycle is a significant improvement and a significant hurdle to meet.
As far as the products we're talking about, products in the laundry area, of course, low-temperature products like Tide Cold Water or in Europe we have the equivalent, which is Ariel Cool Clean. The significance there is that if you look over the whole lifecycle of washing clothes, by far the biggest energy consumption and therefore CO2 emission comes from the heating of the water for actually washing the clothes.
So if you can actually get people to wash at low temperature then clearly there's a huge energy and CO2 savings. In the U.S., it's very significant. If we could get everybody in the U.S. to wash at low temperature in cold water it would save around 3 percent of the total domestic energy consumption and would actually save somewhere around 6 percent of the country's greenhouse gas Kyoto commitment.
That's low temperature detergent, compacted products; you've seen across North America we've compacted our liquid laundry detergent within the product. We have other products for low-income consumers, for example, Downy One Rinse, which is for hand-washing in many developing countries. That reduces by around two-thirds the amount of water needed to actually do the washing.
Then, other sorts of products, our Braun shavers, for example, we've just got a new smart battery charger for the Braun razors and so that these shavers use around 60 percent less energy compared to the alternative product.
These are the sorts of things where there's a significant and obvious environmental improvement.
MW: And one huge element of this is how do you get customers to use these in the way they're intended, the cold water laundry detergents particularly, but before we get to that, how does Procter & Gamble go about developing and designing these products? Is it looking at what's already on your list of products on the shelves and figuring out ways to improve them or is it coming up with entirely new products?
PW: Well, I think, as in most things, it's both/and, and I think what is key here is to get sustainability into the innovation process, so we've sort of embedded it into the innovation process that our research and development folks use so that for some time they've been using tools like lifecycle assessment that actually look at the overall environmental impacts of a product throughout the total life.
As they assess new products, it's getting these sorts of assessment tools into the R&D process so that people early on can actually determine what the sustainability profile of their products are. Just to get back to that one example I gave earlier around Tide Cold Water, the whole idea of that came from an assessment of the energy consumption of the company. We did a lifecycle assessment essentially of Procter & Gamble.
We looked at all of our product categories and all the lifecycles of those products to see where, you know, our energy footprint lay and that gave us, I mean, quite a surprise at the time that, you know, there was this huge peak in laundry in the use phase and that actually led us to develop a low temperature detergent because, obviously, in that case there are benefits all around.
We tout the environmental benefit of low-temperature washing, but, you know, there's a clear -- the consumer benefit is the consumer saves energy and therefore saves money. It also at lower temperature is better for fabrics, so it's better for fabrics.
It's a benefit for the consumer. It saves the consumer money and it's better for the environment, so it's a win all around, so we're not asking the consumer to make a tradeoff here. We're actually providing benefits all around.
MW: You touched on the energy use idea, which I want to come back to again in a moment. Part of the design process you mentioned at the conference entails a shift from what you call green by design to products that are green by design. Can you explain the difference between those two ideas?
PW: Well, essentially at the conference I was just making the distinction. I mean the role of design in green products, that's obviously the whole design process you could say, but it's green by design. It's the design piece that makes the difference.
The other point there is, you know, that you make it green by design, i.e. intentional and that's something, you know, that we have taken onboard, but if you're going to make green products you have to be very intentional and actually build it into the fabric of the company.
And it's not just about going out there and having green advertising. You have to have the R&D in place to actually design these products that have these significant and obvious environmental benefits. You obviously then have to have the communication to the consumer so the consumer understands what the benefits are and knows how to actually realize those benefits, but it goes much further than that.
If you're going to have it green by design throughout your company then you have to put in place a range of other programs as well as just obviously product development and that's, you know, part of what we're doing with our -- for the five sustainability strategies. I mentioned already we have a goal of $20 billion worth in sales of sustainable innovation products. That's on the product side, but our second strategy is around own operation, so actually improving the environmental footprint of our own operations, our own class and facilities.
And we've set a goal that over the decade 2002 to 2012 we will have reduced our environmental footprint in terms of energy, CO2, water and waste by at least 40 percent per unit of production.
So products, our own operations, and then thirdly, social programs, because the social part of sustainability is as important as the environmental part, so there we have programs to actually help children in need and deliver clean drinking water around the world as goals. The fourth strategy is again really about how you are intentional about this. You have to engage your employees because unless your employees are onboard the sustainability strategy isn't gonna work, so there our goal is to engage and equip all of our employees to build sustainability thinking into their everyday work.
And then our fifth -- the fifth point of our strategy is that we'll work with all the stakeholders involved, work transparently to shape the future sustainability agenda.
So that was my point about, you know, you can be green by design and incorporate green designing a product, but if you really want to do it properly you have to be green by design, i.e. intentional, and that requires a whole range of different actions and strategies across the company.
MW: There's a lot of work within those five points: I'm curious about how did you go about engaging employees in this process? What are some of the results you've seen and how did you go about doing that?
PW: Essentially, I mean our strategy, as I said, we want to engage and equip all our employees to build sustainability into their everyday work and there are three separate parts to that. The first is awareness building and making sure that everybody within the company knows about sustainability and knows about the corporate strategy and that awareness raising, we've done it in a range of different ways.
Within the company we have a sustainability ambassador's program, which is sort of like a network within the company that links up all the people who have a passion for sustainability, whether it's a part of their work or whether it's a personal passion, to link them up, provide the information, provide materials to them, tell them what's going on in the company, so there's that program.
We also recently on Earth Day, we had a event around the world to raise awareness on sustainability -- around 50 of our facilities around the world employees were engaged in demonstration events, exhibitions, fundraising events linked to sustainability, so that's the sort of awareness-raising piece.
The second piece is getting employees engaged because it's much more profitable if you can get them engaged in programs rather than just tell them what's happening. So at each site -- all of our sites we are setting up programs, for example, recycling programs, energy saving, water saving programs, sustainability awareness programs, actually at individual sites to get our employees actively involved in the process.
And then the third piece, which is probably the biggest challenge, is providing training for employees on what does sustainability mean for my job. We've talked about R&D, so if you're in R&D, sustainability means coming up with sustainable innovations, designing more sustainable products, but what happens if you're in marketing and the whole area of environmental marketing, marketing claims guidance.
If you're in the area of finance; what does sustainability mean if you're in finance? What does it mean if you're in the service organization? So for each of those functions we are developing training on what does sustainability actually mean for my job.
MW: That's a really interesting idea. That's something that we talk about a lot in terms of this growing interest in green jobs and everybody's looking for a job at a green company, but it seems like what would be more beneficial or have a bigger impact would be to make every job a green job. What sort of response have you gotten from employees as part of this sustainability awareness?
PW: Very much along the lines that you suggest. Our group, Global Sustainability, that I run, is a small corporate group. It only has 15 people in it, but i t's a corporate role; whereas, sustainability is a role for all 138,000 people within P&G. We often get people who have a passion for sustainability within the company coming and saying, "I'd like a job in the corporate sustainability organization." My response is there's an awful lot you can be doing in your own role on sustainability.
And the way that we have organized sustainability within the company, each of the global business units, each of the regions, each of the countries and each of the corporate -- and each of the functions has its own sustainability strategy that that group is working on. So whether you are in design, whether you are in human resources, whether you are in finance, whatever, the different functions have a sustainability strategy.
The different business units, for example, you know, our baby care business has its own strategy. Fabric care has its own strategy and there are people within those organizations who are responsible for delivering on sustainability in those, so there are more people working on sustainability outside of the sustainability function than there are inside for either one.
And I would agree, you know. The question of people sort of say, "Well, I'd like to work in the sustainability organization." I would say if you work for a company, you can make sustainability part of your job.
MW: In thinking about promoting the new products that we were talking about earlier as far as these more sustainable or greener products, are there obstacles to getting customers to buying these? Is it still -- the first question is always does it work as well as the usual stuff or what I used to buy?
PW: Well, I think -- I don't know. Back in the '90s, there was a lot of green marketing but, unfortunately, you know, if people said, "This product is green," what the consumer often heard was, "This isn't gonna work as well. I'm gonna have to put twice as much in" or "They've left the important stuff out."
So that could mean that they were being asked to compromise on either performance or on value for the sake of sustainability and our strategy today is no tradeoffs. We are not going to ask consumers to compromise on performance or value for sustainability, so it's not either/or. It's both/and.
Essentially, consumers want products that work, provide superior performance, products that give good value and are more sustainable, so you've got -- that's the trick with sustainable innovation is how to actually meet all three of those at the same time. It's still true today: If you offer a consumer or tell them it's a more sustainable product but it hasn't got either the performance or it's gonna most more then there are only a few consumers who will be willing to make that compromise.
And our aim is to think sustainability for the mainstream and that means providing consumers with all sustainable products that give performance and value. Now if you get it right, the product -- for example, a Tide Cold Water, an Ariel Cool Clean, there are so many benefits that consumers will recognize them.
Essentially, they're effectively getting the detergent for free because every year they will save so much in energy that it will virtually pay for the detergent and in some countries that has been the main sort of message to consumers. It provides brilliant cleaning and it saves you money, so, you know, the money saving or it saves you energy. That has been the main message.
In other countries -- depending on the level of awareness around environment, in some countries we have focused more on superior cleaning, good value and good for the environment rather than focusing on specifically the money saving and energy saving.
So essentially you have to find out what is it that the consumer wants and then communicate in those terms and basically adapt your communication to what the consumer needs are in that country.
MW: The last thing I want to talk about is something that I'm hearing more and more lately, which is, well, a key element of Procter & Gamble's overall sustainability strategy includes this idea of social responsibility or social responsibility programs, the idea that you focus not just on the environment for sustainability but you also look at the triple bottom line. What does that look like at Procter & Gamble?
PW: Well, on the social responsibility piece, we look at the sustainable development as a three-legged stool, so we've got environmental protection that we talked about already. Then we've got economic development but also social responsibility.
So a three-legged stool and like most stools with three legs it doesn't work very well if one of the legs is considerably shorter than the other, so we've tried to keep all three of those aspects in play at the same time. It's very important, so on the social responsibility piece, I mean we've, you know, taken it as a mission for the company. We have a corporate cause which is called "Live Long and Thrive" designed to help children in need.
And we've set a goal that we will -- over the next five years we will reach 250,000,000, so that's quarter of a billion children, through this program. Live Long and Thrive helps children live, so it's programs that concentrate on help and learn, programs that focus on education and thrive, the programs that bring self-awareness.
Now one of our programs, one of the signature programs for that is a thing called Children's Safe Drinking Water Program and that uses a very sustainable innovation. It's a product that was developed by P&G. Essentially, it's a small sachet about the size of a teabag that can clean up a bucketful of dirty water into clean drinking water up to WHO drinking water standards.
This is a product that is very cheap to make and to distribute. We're talking a cost of around 3 1/2 cents U.S. for ten liters of water, so essentially you're cleaning that water for .3 of a cent per liter and the requirement for clean water is two to three liters of clean drinking water a day.
It's a couple of cents to be able to give clean drinking water to someone for that, so a very cheap way of delivering clean water. We've deployed that sachet through a variety of different partners around the world in over 30 countries and we've just celebrated the delivery of our billionth liter. We've delivered a billion liters of clean, safe drinking water through this program and we've set a goal that by 2012 we will have delivered another two billion liters of clean, safe drinking water.
So again, this is using sustainable innovation. It's a sustainable innovation product. This time, it's actually delivered through essentially a philanthropic program. We deliver it through disaster relief operations, the major disaster agencies, Red Cross, CARE, UNICEF, and also through social marketing, through organizations like Population Services International who market these in social markets around the world.
So they are the sort of core of our social responsibility program. We also have on-the-ground programs, you know, where we offer it because we believe it's important that we're part of the communities wherever we live and operate.
MW: Great, Peter, thanks so much for taking the time to speak with us today.