Through its Kirei Lifestyle Plan, Kao aims to empower at least 1 billion people to live more gently and sustainably by 2030. We caught up with Kao’s Dave Muenz to hear about the company’s progress toward its goals; and how the pandemic has both impacted, but also provided opportunities for, progress on sustainability.
Initially founded in 1887, Kao Corporation — home to personal care brands including Bioré, Curél, Jergens, John Frieda, KMS, Oribe and more — is remarkably forward-focused. In 2019, the company launched its Kirei Lifestyle Plan — based on the Japanese word kirei, which means “clean, beautiful and orderly” — as part of its broader Environmental and Social Governance (ESG) goals. Kao aims to empower at least 1 billion people to live more gently and sustainably by 2030.
To learn more about Kao’s progress and efforts towards achieving its ambitious sustainability goals, we connected with Dave Muenz — Kao’s executive officer and ESG Division SVP — about the company’s progress toward its goals; and how the pandemic has both impacted, but also provided opportunities for, progress on sustainability.
Can you give me an update on how the Kirei Lifestyle Plan ESG strategy for 2030 has been going? Any progress or milestones to report thus far?
Dave Muenz: We introduced the Kirei Lifestyle Plan about two years ago now. We identified, as part of that journey, 19 different areas on which we needed to focus to work towards bringing this ideal to the world.
Recently, we've established some far-reaching decarbonization goals — we want to be carbon zero by 2040, and carbon negative by 2050. We've also committed to 100 percent renewable energy by 2030, and a 55 percent reduction of our own CO2 emissions by 2030.
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We are one of the first companies in Japan to establish a Power Purchasing Agreement (PPA) for renewable energy — something that's relatively new in Japan. This PPA allows us to purchase renewable energy directly from the source, establishing a long- term commitment from Kao with this renewable energy supplier. This is important because the suppliers of renewable energy need to have stable demand to which they can point when they go to get financing. We are making investments in future opportunities to create more and more renewable energy possible. So, that was a pretty big accomplishment, along our goal towards decarbonization — both within our own operations and then encouraging operational changes elsewhere in the system, as well.
Another area of big progress for Kao has been in supply chains. We manufacture many materials ourselves; and some of those materials are things that can help, from an agricultural point of view, promote better use of the land that's being farmed. One of the key commitments inside of the Kirei Lifestyle Plan is responsibly sourced raw materials. We recently launched a new set of ESG promotion guidelines for our supply chain and procurement, and made a strong commitment towards traceability.
We identify any high-risk supply chains — and employ not only our own audits, but third-party, independent auditing of our suppliers to ensure that they're adhering to the guidelines and principles that we have in place for fair treatment of people and the environment. We've committed to 100 percent FSC-certified pulp by 2025. On palm oil, we've committed to have 100 percent traceability, all the way back to the small palm plantation farmers, by 2025.
You spoke earlier about the importance of getting out of your comfort zone and working with partners — can you expand on that?
DM: Yes, it is a challenge to get people to reach out beyond the traditional boundaries of the company. We put a lot of our revenue back into R&D, around four percent of our revenue. We've always been focused on what we can do internally to further society and further our business.
When you think about the systemic shifts that need to occur — in order to truly tackle these issues in a meaningful way, it's far beyond the boundaries of what Kao or any other company can do by itself. We've worked to educate people internally about the magnitude of the change that's required. In the last couple of years, this is gaining some momentum.
Within Japan, we're working with one of our great competitors, Lion, to collaboratively collect and recycle thin films. We're working with Unilever Japan on a similar initiative around bottles. We're also working with the City of Kobe toward creating a circular system for these thin film plastics — innovating on horizontal recycling technologies that allow for those films to be remade into usable pellets of material that then can be put back into film packaging again.
I think it's really a harbinger of what we all need to do — get outside of our comfort zone of working within our own company, and really engage in meaningful ways with all of the other stakeholders to create a circular system.
What are some challenges, or learnings, from your ESG journey thus far?
DM: I think we all fight the pressures of the business and desire to further our ESG efforts and commitments — and finding ways to both benefit the business, as well as to further those initiatives. I think that's an ongoing effort, to find that sweet spot. I'm sure that's not something that's unique to Kao; I'm sure we all face that challenge in our companies. Closing the intention-to-action gap means innovating solutions and products that both meet the needs of our consumers, but also help them make sustainable changes more comfortable and easier in their lives.
Many communities around the world are still grappling with the pandemic. How have you continued to evolve and expand your pandemic-related activities?
DM: We've been engaging more and more directly with governments, both local and national, on efforts to provide education to people around all the various aspects of hygiene and its relationship to the virus. That's really continued and broadened. The pandemic has also given us the opportunity to reflect more on the environments that we've created for our employees. There's a lot of effort throughout our company, and I'm sure most companies, about the future of work and how to operate in an efficient manner that enables all of us to attain a better or a more balanced lifestyle.
There’s a unique commonality between the pandemic and our pressing environmental problems. More and more people have come to the realization that it's going to take collective action to fight COVID and all the variants, and it's going to take collective action to address sustainability issues.
Hopefully, we start to see people realizing that their actions mean something, and that they need to make changes as well, on a collective basis. I think that's probably an opportunity, coming out of the pandemic.
We're just a few weeks away from the COP26 Climate Conference; and this year has seen unprecedented climate-related disasters including fires, typhoons and floods around the world. Can you speak a bit about Kao's climate commitments and the role of consumer goods companies in addressing the climate crisis?
DM: Our commitments to meet the 1.5-degree level, versus the 2-degree level, and our effort on renewable energy, feeds directly into the key issues that are going to be discussed at the COP meeting.
But I think it all comes back to Kao’s role in society. We've done a lot of thinking about that and reflected on our history. Kao was established in the late 1880s. Purpose and societal benefit have been part of this company from our founding; and I think by focusing back on that, we’re really driving ourselves to, as I said, provide mechanisms and comfortable means for people to attain a more sustainable life through our products. To provide information, enticement or encouragement to live more sustainably, and in a gentler fashion — that's one of the cores of our Kirei Lifestyle Plan.
Those are probably the key things that we can do as a manufacturer of consumer products. Our products are used every day by millions of people — that's a huge amplifier.