Sustainable Is Attainable

March 30, 2009

Marketers of household and personal care products explain how their innovative ideas are making the world a better place now and for generations to come.

Sustainable Is Attainable

Marketers of household and personal care products explain how their innovative ideas are making the world a better place now and for generations to come.

Tom Branna
Editorial Director

Forget for a moment, if you can, environmental scorecards and green certifications. Block out, if you are able, noise from non-government organizations and other outsiders looking in at the household and personal products industry.

"Sustainability is on the agenda today for all companies in all industries, whether it be building and construction, automotive, electronics, foods and the beauty industry," said Amarjit Sahota, director, Organic Monitor. "Growing awareness of issues like climate change, deforestation and the impact on the environment, and third world debt,have put sustainability at the forefront on most companies' agendas."

When it comes to the environment, the fact is, many companies have improved their practices and processes to create greener profiles for their companies and the products they sell. How? By reworking their operations, rethinking how they do business and revamping the development process all in an effort to eliminate waste and reduce carbon footprints. At the same time, however, they still manage to bring innovative products to consumers around the world.

“Our greatest moments of growth come from innovation. And a lot of our innovative strategies are based on sustainability,” noted Jorge Mesquita, group president, global fabric care, Procter & Gamble, Cincinnati, OH.

Sustainable development often means different things to different companies, but the most popular definition of sustainability may be traced back to a 1987 report by the World Commission on Environment and Development. It defined sustainable developments as those that “meet present needs without compromising the ability of future generations to meet their needs.”

Sounds great, but a few forward-thinking companies look beyond that definition to redefine how they do business. Along with The Body Shop, perhaps no other multinational beauty brand represents sustainability as well as Aveda, which was acquired by Estée Lauder in 1997. As a pioneer in the segment, it’s only natural that Aveda puts its own spin the concept of sustainability.

“We support the UN concept, but it is very open-ended and broad,” explained Chuck Bennett, vice president, earth and community care, Aveda, Minnea- polis, MN. “We define it more narrowly on the preservation of biodiversity.”

Seventh Generation’s chlorine-free paper fabric softener sheets are totally recyclable and biodegradable/compostable.
According to Dr. Bennett, the Aveda family of products was built from the inspiration of company founder, Horst Rechelbacher, who wanted to find safer products for hairstylists and consumers. Aveda, which was launched in 1978, has worked on sustainability for so long, in fact, that the task has become harder, rather than easier.

“In the area of energy efficiency, we’ve gotten all the low-hanging fruit,” explained Dr. Bennett. For example, the company’s manufacturing facility in Minnesota relies on 100% wind power. “But the longer you’re at it, the more difficult it becomes.”

Beyond Sustainable

Seventh Generation executives insist that sustainability is at the center of their business plan. So much so, that the company focuses its efforts on regeneration, according to Dave Rapaport, who is senior director of corporate consciousness for the Burling- ton, VT-based household care products company.

“It’s a long journey from sustainability to regeneration,” he explained. “We are doing things that do good that enhance the life-giving ability of earth and society. We’re trying to ensure that at the end of their lifecycle, our products are recycled as nutrients that have a positive effect (on the environment), or are technical nutrients that can be recycled back into other products.”

Help from the Consumer

Nearly every marketer in the laundry detergent category agrees that consumers play a critical role in sustainability. That’s because fabric care sustainability involves reducing energy, water and material usage.

Ariel Excel Gel is a success in the UK and is U.S. test markets.
According to Reckitt Benckiser’s estimates, for example, 60-70% of carbon contributions from the company’s products come from the consumer and how they use and dispose of products.

In an opinion piece written for The Daily Telegraph in December, Bart Becht, chief executive officer, Reckitt Benckiser (RB), insisted, “this is not about passing the buck on to our customers; it is about working with them.”

That’s the reason why RB launched its “Our Home Our Planet” initiative, which is designed to give consumers tips about the small steps they can take to save energy and resources. For instance, if everybody in the UK followed the suggested guidelines printed on Finish dishwash packages, it would save about 1.28 billion kilowatt hours per year—the equivalent of taking nearly 175,000 cars off the road, according to the Slough, Berkshire, UK-based company.

Through a variety methods and means, companies throughout the global household and personal products industry have developed innovative products and programs that underscore the belief that sustainable is attainable.

In the past two years, P&G has introduced Tide 2X concentrated laundry detergent and Tide Cold Water formula. The former saves more than 500 million liters of water a year, reduces CO2 emissions by more than 100,000 metric tons a year and eliminates more than 15,000 metric tons a year in packaging materials.

Henkel maintains that it has set the standard for laundry bottle design.
“It is most important to reduce energy usage,” explained Sharon Mitchell, senior vice president of research and development for P&G’s global fabric care business. “To that end, we launched Ariel Excel Gel in the UK. It works at 15°C. Consumers love it and it is getting positive feedback.”

Ariel Excel Gel is in U.S. test markets, but the product is designed for front-loading washers, which still don’t have a high penetration rate in American households.

Also outside the U.S., P&G markets Downy Single Rinse, a low-foaming product that saves water in emerging markets where most laundry is cleaned in buckets.

“These consumers often draw water from wells and rinse clothes in multiple buckets,” explained Ms. Mitchell. “Downy Single Rinse enables consumers to use two-thirds less water to get their clothes clean. It is growing rapidly.”

Elsewhere, P&G is trying to convince consumers to add two extra garments to each wash load. On a global scale, that simple exercise would save one billion liters of water a month, according to P&G estimates.

It’s all part of P&G’s 2012 sustainability goals that are focused on three key areas: products, operations and social responsibility. Regarding products, P&G’s goal is to develop and market at least $20 billion in cumulative sales of “sustainable innovation products,” which are defined as products with a significantly reduced (>10%) environmental footprint versus previous or alternative products. When P&G published its “report card,” for the year ended July 31, 2008, sales of these products totaled $2.05 billion.

In operations, P&G’s goal is to deliver an additional 10% reduction (per unit production) in CO2emissions, energy consumption, water consumption and disposed waste from P&G plants, leading to a total reduction during the decade of at least 40%. From July 2007 to July 2008, energy usage dropped 6%, CO2emissions fell 8%, waste disposal dropped 21% and water usage fell 7%.

Finally, in regard to social responsibility, P&G created the Live, Learn and Thrive program to improve the lives of needy children from infancy to 13 years old. The goal is to help 250 million kids by preventing 80 million sick days and saving 10,000 lives by delivering two billion liters of clean water through P&G’s Children’s Safe Drinking Water program. For the year ended July 31, 2008, the program reached 60 million kids, delivered 430 million liters of clean water, prevented 18 million days of disease and saved 2,442 lives, according to P&G.

Henkel’s Efforts

Another multinational soaper, Henkel, has identified five focal areas—energy and climate, waste and wastewater, materials and waste, health and safety and social progress—and every new project must address one of these areas in a positive way, explained Thomas Mueller-Kirschbaum, corporate senior vice president, responsible for research and development and supply chain, home and laundry care.

Aveda’s Enbrightenment skin care family of products includes the Enbrightenment Brightening Creme, which is packaged in 100% post consumer recycled material.
“When we launch a product or project, it must address at least one of these points in a positive way,” he said. “It must pass through this stage gate.”

In the past couple of years, several products have passed through those gates, as Henkel has rolled out an array of products with reduced environmental impact. For example, Purex Natural Elements contains natural fragrance extracts. Plus, it is concentrated, resulting in less packaging and waste.

“The 2X concentrated formula concept is a fête accompli,” noted Rick Theiler, senior vice president of technology, Henkel. “From a technology perspective, more concentration is possible, but consumer habits play a critical role.”

Mr. Theiler also noted that it is easier to create sustainable products when it is built into the product design. For the Purex Natural Elements 2X formula, for example, Henkel designed a new bottle that Mr. Theiler said has become the industry standard. At the same time, he told Happi that more benefits are attainable by reengineering the entire product design process.

“You have to rethink the product from cradle to grave, then you can change manufacturing process, you can bring different energy sources and then you change consumer behavior so that they are automatically willing to become more sustainable,” he said.

A Sustainable Revolution?

According to Mr. Theiler, sustainability is not dissimilar to the quality revolution that was brought forth by W. Edwards Deming, a business management expert, who is credited with helping Japan become a world power after World War II.

The Body Shop offers an array of natural ingredient-based body butters.
“It’s not an instantaneous process. It’s continuous improvement all the time. You’ll see a lot of small steps, but we will continue to reduce the amount of material, reuse the material and minimize waste in manufacturing,” Mr. Theiler said.

In October, Henkel rolled out Terra Activ household cleaners in Europe. They contain an average of 85% renewable raw materials. Moreover, all of the surfactants used are readily and completely biodegradable. In fact, Henkel says it is the first company worldwide to purchase palm kernel oil certificates, which were obtained for Terra Activ.

Of course, household care product companies aren’t the only companies at the forefront of the sustainability issue.

Sustainability is a critical issue toL’Oréal, explained Pierre Simoncelli, the company’s director of sustainable development. He explained that over the years, the company has put many programs in place, but went ahead and created a sustainable development department in 2002 and has been issuing reports every year. Since 2003, for example, the company has reduced energy use by 17% per unit of finished product. More specifically, in 2007, the company achieved an overall waste recovery rate of 95%, by re-using 37% of its waste, recycling 35% and incinerating 23% to generate heat.

The global beauty giant’s products have also become more eco-friendly. L’Oréal’s brands, such as The Body Shop and Kiehl’s, already use bottles made from 100% recycled plastic. Moreover, packaging weight has been reduced too. For example, in 1996, a Fructis shampoo bottle and cap weighed 29.5g. In 2007, the weight had dropped to 21.8g.

“On the formulation side, we have increased the number of natural ingredients we use in formulas. In fact, 40% of our raw materials are natural ingredients,” explained Mr. Simoncelli. “And many have been developed with fair trade partners.”

Further down the road, L’Oréal is committed to using 100% sustainable palm oil. To reach its goal, L’Oréal is a member of the Roundtable of Sustainable Palm Oil (RSPO), a group that includes Colgate-Palmolive, Ecover, Henkel, Johnson & Johnson, Kao, Lion, Reckitt Benckiser, Seventh Generation and Unilever.

A Sustainable Portfolio

L’Oréal has expanded its portfolio of sustainable products through the acquisition of companies such as The Body Shop (acquired in 2006) and Kiehl’s (2000). Although both added to the L’Oréal coffers, they brought a bit of their culture as well.

“When you make an acquisition such as Kiehl’s, you must respect their values. We can’t make Kiehl’s into a small L’Oréal. It’s synergy. We do what we do best and they do what they do best,” he said.

With its acquisition of Aveda, Estée Lauder, too, has benefited from an exchange of ideas on what it means to be sustainable. But more work remains. Dr. Bennett said that major goals include zero waste and zero carbon footprint.

“But we haven’t fully defined how that will work for Aveda, because we’re still trying to understand the opportunities.”

Another area of opportunity, of course, lies in the products themselves. Aveda’s goal is to create 100% natural products, but Dr. Bennett noted that 100% natural doesn’t always translate into effective products. For example, he noted that 100% natural hair dyes are still difficult to achieve. And how does Aveda define “natural?” Any ingredient that has 50% of its molecular weight from natural sources qualifies.

Sustainable agriculture is a key issue at Aveda too. To that end, the company prefers working with indigenous communities, whom Dr. Bennett calls the first line of defense for biodiversity.

“We have good relationships with many communities,” he said. “The benefits are multiple—we get the materials we need and we help communities remain viable to protect the forest.”

Dr. Bennett explained that his company is looking beyond palm oil for its surfactants and is sourcing babassu oil from northern Brazil. Aveda is successfully working with conventional suppliers too. Its essential oils and botanical extracts are 90% sourced, but that percentage drops for bulk commodities.

Sourcing Issues

As interest in sustainability grows, Dr. Bennett admitted that sourcing be- comes an issue, as the competition for sustainable and organically-produced materials has become intense.

“In the past we had one source, now we need multiple source for supply cause our business is growing and the competition is growing,” he observed. “Even the same natural ingredient grown in two different regions may not have the same performance or aroma. That’s becoming a problem.”

Problems aside, do all these sustainability efforts improve the bottom line? Mr. Simoncelli noted that initiatives such as reducing packaging materials and water consumption saves money, but in the short term, investing in solar panels and the like costs money—which may be an issue for short-sighted management boards.

“If management cannot or does not view sustainability as a competitive advantage, nothing can happen,” he cautioned. “But for the consumer goods industry, it is a very efficient business model.”

"Sustainability needs to become an integral part of a company's strategy," agreed Mr. Sahota of Organic Monitor. "Companies need to avoid taking a short-term perspective and look to undertake long-term sustainability initiatives like offsetting carbon emissions, reducing waste and ethical sourcing. This is the only way forward as companies realize we have finite resources on this planet and we need to change our business practices to accommodate this."

All of the moves described here illustrate just how much the household and personal products industry has accomplished in recent years, but there is more to come, as sustainability initiatives become an even bigger part of the collective consciousness, according to industry experts.

“Media attention to sustainability has gone up tenfold in the past five years,” noted Mr. Theiler, who pointed out that 95% of consumers are willing to buy green products and 20% of them are buying—a three or four-fold increase from just a few years ago.

“The awareness is there, the interest is there,” he concluded. “There has been a sea-change in the effort to bring green products to market. We’ve just begunthis journey.”
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