Different Shades of Green
There’s no denying that the environmental movement is reshaping the economy. But how diverse companies achieve their objectives is a different story altogether.
On the surface, the two couldn’t seem more disparate. On one side of the debate, there’s natural’s pioneer Horst Rechelbacher, the founder of Aveda, creator of Intelligent Nutrients and a long-time proponent of environmentally friendly personal care products. On the other side, there’s Procter & Gamble (P&G), the multibillion-dollar household and personal care corporation with far-flung operations in every corner of the globe. Both insist their environmental efforts can have a real impact on consumers and the planet.
In September, at a summit sponsored by former U.S. President Bill Clinton, P&G grabbed the spotlight with a pledge to have $50 billion in cumulative green product sales by 2012. The move expanded on the company’s 2005 pledge to achieve $20 billion in green product sales.
“Procter has been a leader in environmental sustainability for decades. We’re consistently ranked among the most ‘green’ companies,” explained Glenn Williams, a company spokesman, noting that P&G created an environmental department back in 1972.“It’s not new for us. But we’ve always been quiet about our sustainability efforts. It’s not part of our DNA to thump our chest on these kinds of things.”
The Consumer Is Boss
But now, caught in a bruising battle with competitors who are perceived as being greener, P&G is stepping up to the mike and broadcasting some of its accomplishments. Why now? Like so many other P&G initiatives, it all starts with the consumer.
“The consumer is boss. And consumers have said that they are interested in sustainable products,” explained Mr. Williams. “We are fortunate in the fact that we didn’t have to invent them. We had them already. So the exercise is showing people how they can use our products vs. an unknown brand.”
For example, using Tide Coldwater reduces energy use, which, in turn, reduces the user’s environmental footprint. In the kitchen, Cascade Complete cleans so well that the user can set his dishwasher on the light side and skip the pre-wash cycle, which saves nearly seven liters of water every time a family does the dishes.
|P&G’s Tide Coldwater can help consumers save energy.
“We believe the mainstream consumer is more willing to trust a brand she already uses or has heard of than a brand she has never heard of, especially if there is a perceived cost- or product-performance difference,” explained Mr. Williams. “She’d rather use Tide than an unknown green brand.”
So who is the P&G consumer? According to Mr. Williams, it is the 70% of consum-ers who are neither on the environmental side nor the “I-don’t-care” side of the argument. These consumers care about sustainability, but it may not be their first criteria when determining whether or not to buy a product.
Why They Buy
But while P&G may be focused on folks in the middle of the green debate, more consumers have a growing interest in organic ingredients. In fact, 20% of consumers indicate that having organic ingredients in their personal care products is very important in their purchase decision process. This represents a growth of almost 29% from 2008, according to the Natural Marketing Institute’s (NMI) 2009 LOHAS Consumer Trends Survey. Moreover, 27% of consumers indicate that having no artificial ingredients in their personal care products is very important in their purchase decision. This represents a growth of 10% from 2008, according to NMI.
With consumers besieged by terms such as organic and natural, Darrin Duber-Smith, president of Green Marketing Inc., Boulder, CO, pointed out that the terms mean very different things. Organic means a material or product has been certified. That’s a far cry from natural, which does not require any certification.
“Organic is always natural; natural is almost never organic,” he explained.
No wonder, then, that most large companies pursue the natural route—the journey is less arduous and the list of ingredients is long, according to Mr. Duber-Smith.
Of course, there are groups that can certify products as being natural. Chief among them is the Natural Products Association (NPA), which issued guidelines for personal care products back in May 2008. In order to get the NPA Seal of Approval, a product must meet several criteria, such as containing at least 95% truly natural ingredients or ingredients that are derived from natural sources.
But regardless of whether a company chooses to seek an NPA Seal, USDA Organic status or follow Cosmos standards, Mr. Duber-Smith insisted that most large corporations are not committed to either organic or natural.
“Their position is that it’s too hard to work with naturals and organics are too hard to locate,” he said.
In Europe, at least, some of the confusion may be ebbing. That’s because several groups, including Ecocert (France), BDIH (Germany), Bioforum (Belgium), Cosmebio (France), ICEA (Italy) and Soil Association (UK), have published a Cosmos standard, which defines minimum requirements and common definitions for organic and/or natural cosmetics. According to Cosmos, companies will be able to seek certification next month.
An Innovator Speaks Out
Clearing up the confusion should provide a lift to the green movement, a possibility that can’t come fast enough for Mr. Rechelbacher. While he noted that the natural personal care industry has come a long way in the 30-plus years since he started Aveda, the industry still has a long way to go.
“We’ve made great headway, particularly in food, (but) cosmetics is still running backwards,” he said. “The FDA regulates food and drugs but not cosmetics—because they’re neither food nor drugs. We need some regulatory agency.”
Most industry executives would balk at such a suggestion, but Mr. Rechelbacher insisted that consumers are quietly killing themselves by absorbing toxic chemicals.
|Horst Rechelbacher: “This is a new economy that’s waiting for new chemistry.”
Big business, he said, can start small by changing formulas to use more natural fragrances. Similarly, artificial colors can be replaced with natural colors.
“We have a lot of substitutes for food coloring agents that are based on seeds, vegetables and fruit,” he insisted.
More difficult to create are shampoos, because there are no organic-certified foaming agents that perform well, he explained.
But in urging large corporations to jump on the green bandwagon, Mr. Rechelbacher admitted that, for now, there aren’t enough organic materials to go around.
“I wish we would use more organic materials,” he told Happi. “Pesticides are killing agents that kill the good stuff as well as the bad.”
Mr. Rechelbacher said that 85% of the food grown in the U.S. is mineral-depleted due to the overuse of pesticides and insecticides. That overuse has also had a detrimental impact on agriculture, turning what was once fertile soil into infertile dirt. As more nutrients are lost, more farmers are forced out of business, insisted Mr. Rechelbacher.
Find a Green Partner
Of course, if multinationals want to make a big splash in the green category, they can always buy a smaller company—and Mr. Rechelbacher—who has been in that position when he sold Aveda to Estée Lauder back in 1997—even had a suggestion for would-be buyers.
“Buy my company (Intelligent Nutrients)!” he joked. “I’m 68 years old, I’m not going to run it (forever)! Besides, I like to build brands of the future.”
Humor aside, Mr. Rechelbacher insisted that the green movement in the household and personal care industry reflects the global move to improve the planet.
“The planet cannot reverse itself without changing that which causes the effect,” he explained. Or, to put it in business terms, “to get into the black you have to stop doing what put you into the red.”
Can going green grow profits? It seems as though companies large and small are beginning to make that connection. If the movement continues to spread, it will have a radical impact on the household and personal care industry.