Product, Service & Design Innovation
Proving the #BusinessCase:
P&G Exceeds 2 Sustainability Goals; One Creates $1.6B in Value

This week, Procter & Gamble published its 16th annual sustainability report, which reveals how the CPG giant made far-reaching — and as it turns out, lucrative — improvements to its global operations years ahead of schedule.

In 2010, the company set a variety of 2020 sustainability goals, including having 40 percent of the virgin wood fiber used in its tissue and towel products Forest Stewardship Council® certified by 2015, and reducing its manufacturing waste to landfill to less than 0.5 percent of input materials. Today, 54 percent of its virgin wood fiber is FSC-certified and its waste to landfill has been reduced to 0.4 percent — exceeding two of its 2020 goals six years ahead of schedule.

We spoke with Len Sauers, P&G’s VP of Global Sustainability, to get an inside look at the company’s robust sustainability strategy — and learn the importance of partnerships in making it successful.

When did P&G start its sustainability journey?

Len Sauers: Sustainability has been a part of the company for a very, very long time; we just didn’t call it sustainability at that time. In fact, we set up our first environmental science department back in the 1960s, when we began to look at the environmental quality of the ingredients we were using — we were probably one of the first companies to look at it.

I came on the scene around 2007, and that was also when P&G really decided to take sustainability up a notch with the announcement of our first public goals in the area and the beginnings of us talking externally about all the good work we’ve been doing within the company. 2007 was the first year we put our goals out around reducing the footprint of our operations and our products. In 2010, we announced our long-term vision in sustainability, including powering all our plants with 100 percent renewable energy, using 100 percent renewable or recycled materials for all products and packaging, having zero consumer and manufacturing waste go to landfills and designing products that delight consumers while maximizing the conservation of resources.

Since 2010, we have established 14 goals to help us reach our long-term vision. This year, we’ve added four new goals and revised one of our existing goals. As a corporation we are progressing towards 18 goals for 2020 and we have already achieved two.

How does P&G’s sustainability strategy align with the core business strategy?

LS: It is very important for us to integrate sustainability into our core business strategy. There are hundreds and hundreds of people within P&G working towards our long-term sustainability vision and bringing these various goals to life within their business units and functions. For example, we are particularly proud of the work we are doing reducing our manufacturing waste: 70 of our plants — half of them — are zero waste to landfill. That program by itself has brought $1.6 billion in value to P&G over a 5-year period. This is only one example of how sustainability is a very important business strategy for the corporation. By showing how this business strategy delivers to bottom and top lines, you create a situation for the company that wants to do sustainability because it is so beneficial to the business.

In the report, you’ve identified your stakeholders as communities, local-regional-global authorities, NGOs and consumers. How do you engage with your stakeholders?

LN: We are the first to admit that we don’t have either the capacity or the capability to achieve this vision we articulated by ourselves, nor to achieve these goals by ourselves. Even though we are a global company with over $80 billion in revenue, an over $2 billion R&D budget and 118,000 people, we just cannot do this work alone. That’s why partnership has become so important.

For example, we talk about wanting to use renewable materials — like pulp, palm oil, sugar cane and other commodities — but just because it’s renewable doesn’t necessarily means it’s sustainable. There can be other environmental issues associated with renewable materials. On that front, we established a global partnership with WWF, as they are the world’s experts on sustainable sourcing, and we have regular meetings with them in order to advance our programs. We also have two formal meetings every year where all of our scientists get together and review our programs. Most importantly, regarding our vision, if we are thinking about reducing waste or stopping deforestation, industry must come together to solve these problems.

Our consumers are also our partners in many ways: Some of the goals we are trying to achieve — like ensuring 70 percent of all washing machine loads are washed in cold water — the consumer is the one who has to change their habit and turn the temperature down.

How big is P&G’s sustainability team?

LS: We have a very small group of people who are accountable for creating the sustainability report, but we have hundreds of people in the company that are accountable for creating the data and helping the programs come to life. Within the company we have experts that are responsible for delivering the goals. We have teams focused on each goal, and this becomes part of people’s jobs in the functions and in the business units, embedded in their job descriptions and KPIs. They are accountable for the data, and delivering the goals and all of that information comes into our Global Sustainability team — the small group of people who correlates all data and brings it together — who works with all these divisions to help confront possible barriers, and we answer technical questions and support them.

In terms of the goals that have been reached, did the company do anything specific to help meet them ahead of schedule?

LS: When we put the most talented team together and give them a goal to achieve, they are going to work in their earnest to achieve it as quickly as best as they can. If we look at our manufacturing waste goal, for example — when people began to work that goal, everyone was pleasantly surprised at the financial value to the company working on waste. I don’t think anyone could have predicted that as we went into working this goal. When the team came together and began reducing our manufacturing waste, it became apparent that this was going to bring great financial value to the company — therefore, interest in achieving that goal became greater and greater because of that.

Our FSC certification goal was achieved ahead of schedule because of the partnership with WWF. They are the world’s experts on sustainable sourcing and they have helped us tremendously in our pulp sourcing.

So in one case, it was the financial driver that helped us achieve the goal quicker and in the second case, it was the correct partnership with a global partner who brought expertise to the table to help us.

Can you give us more insight into the manufacturing waste reduction program?

LS: This program is run by an organization within P&G called Global Asset Recovery & Purchases (GARP) — a group of about 30 individuals — and their job is to find out what P&G is sending to landfills and determine a way to create value from that material. They would go into all 140 different manufacturing facilities, find out what was being thrown away and find ways to create value from it. For example, the plants that make laundry detergent sent off-spec laundry detergent, that couldn’t be sold, to landfill. The GARP team learned that — and now we send the off-spec laundry detergent to car washes. Another example is Olay — off-spec products can go to organizations that make leather conditioners. Unusable fibers from Charmin plants are now turned into low-cost roof tiles to help provide homes for local families.

There are hundreds of examples of how this group has determined value for the stuff that we were throwing away. When we talk about $1.6 billion in value, it comes in two ways: One is we are now selling the stuff we used to throw away, and secondly we are not paying landfill costs for these materials, and it magnifies itself — with a company our size we see the numbers come in our favor.

What are the next steps to achieving the remaining 16 goals?

LS: There will be an internal team that is accountable for these goals and I’m confident that our teams will do their best to achieve them. There will be different challenges for each of them but by collaboration and teamwork, we’ll work towards these goals.

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