Procter & Gamble’s has been producing and commercializing iconic brands since 1837 (See Exhibit 1 for P&G business details). But the environmental changes caused by emissions of greenhouse gases (GHG) has threatened its mission of touching and improving people’s lives. Procter has responded to this enormous challenge with significant efforts. The teams behind leading brands such as Pampers, Pantene, Tide and Gillette have begun important initiatives to raise awareness and implement sustainable business practices. Will the centenary company be able to live up to its mission?
There are good reasons to think this will be the case. Procter officially recognizes the scientific consensus connecting greenhouse gas (GHG) emissions and climate change and has been working hard to reduce the emissions in its supply chain in 150 sites around the world. Procter understands that climate change poses an existential threat to its business. Sustained changes in temperatures, precipitations patterns and the frequency and intensity of droughts and snow storms2 would result in damages to property plant and equipment and in alterations in the price of raw materials like virgin wood fiber and palm oil. Even more importantly, consumer behavior changes are pushing demand of sustainable brands and government regulations penalize companies with no reduction in GHG footprint. To address these challenges, the company has adopted aggressive sustainability strategies.
First, P&G has the goal of reducing absolute GHG emissions 30% by 20201. In order to achieve this, they will source 100% of their energy from renewable sources, throw zero manufacturing waste to landfills and optimize distribution by moving 20% of its North America truck transportation to cleaner-burning natural gas within two years1. Second, Procter is launching product and packaging innovations that will help consumers reduce their own GHG emissions. For instance, the recently launched Cascade Platinum Action Packs help a household save up to 2,600 gallons of water per year1. Another example is the change of packaging in Pampers diapers in Europe, which translated into 80% less packaging waste per diaper1. Third, Procter has committed to achieve zero deforestation in their palm and virgin wood fiber supply chain by working with their suppliers to ensure that they meet their no deforestation requirements and working with government and organizations to set standards and methodologies to prevent any kind of deforestation.
In addition to this important interventions, I believe Procter could pursue the following policies to further reduce its contribution to global warming:
- Invest in recycling education in the communities where it operates. With the amount of solid waste that is generated in the world per day, recycling should be a priority. It is known from research that social norms and education play a role in the participation levels of recycling3. P&G could play a critical role here bringing recycle education to communities.
- Use 100% of recyclable materials in primary and secondary packages.
- Increase the investment in R&D to develop new formulas that have less environmental impact. For instance, Downy no rinse reduced the amount of water needed to complete a rinse cycle by half.
With more than 70 leading brands, presence in more than 160 countries, more than 150 sites and more than 120,000 employees, P&G has given us a lesson of how a $75-billion-dollar business it’s not only a profit source but also an agent of change committed to continue touching and improving people’s lives. This doesn’t mean that all the work is done. But it does show that sustainability is not necessarily divorced with business growth and that when companies make a clear commitment to improve it is possible to achieve significant results. Will efforts like these and those of other companies be enough to create a sustainable future for the generations to come? (624 words)
1 Procter & Gamble, “2015 Sustainability Report” (PDF file), downloaded from P&G website, [http://us.pg.com/sustainability/at-a-glance/sustainability-reports], accessed November 2, 2009.
2 Robert Mendelsohn: The Impact of Climate Change on the United States Economy (Cambridge University Press,1999), p. 15.
3 Ryan J. Six, “Analysis of policy and educational approaches within the Seattle recycling program” (Ph.D. diss., Iowa State University, 2008), pp. 18.