Procter & Gamble has plenty on its plate these days as returned CEO A.G. Lafley fights to restore the CPG giant to some semblance of the sales-and-earnings juggernaut that he created a decade ago. But now more than ever, the brand is facing pressure to perform in an area that didn't much have to concern Lafley in his first stint with the company: sustainability.
A leader by many measures, a laggard by others, P&G was dropped last year by the Dow Jones Sustainability Index from its list of 100 North American companies deemed leaders in that field after the company had been on the list for seven consecutive years. The index declined to explain the move to USA Today. P&G also is getting dinged as the second-highest producer of greenhouse gases among CPG companies, according to Bloomberg, and for not cutting greenhouse-gas emissions and energy consumption by as much as rival Kimberly-Clark, percentage-wise, though P&G noted it’s much bigger.
And yet P&G also recently joined with Walmart in the $100 million Closed Loop Fund to help US cities boost recycling programs. The company said by 2018 it will cut water content in laundry detergent by 25 percent, saving 45 million gallons of water annually. And P&G has responded to Greenpeace protests by vowing to begin policing its entire palm oil supply by next year.
P&G over the last few years also brought 50 plants worldwide to “zero-waste-to-landfill” status, saving space in local landfills—and saving the company $1 billion a year—by harnessing electricity from incinerating trimmings from Pampers product, for instance, and converting paper refuse into ceiling tiles in Mexico.
“Only in a landfill does that waste have no value,” Len Sauers, vice president for global sustainability, told Chief Executive. “Our goal was to find some value in all that waste, which has been a good investment for the company. Plus, not paying to have the stuff landfilled.”
One impediment to even greater sustainability efforts by P&G and other companies is that rank-and-file Americans don’t care nearly as much about them as do journalists, environmentalists and other information elites. In fact, about 75 percent of American consumers won’t agree to trade off environmental advantages for a decrease in performance in a product positioned as green or sustainable, P&G research showed, while about 10 percent will accept a price penalty.
Lafley repeated P&G’s conclusion in the company’s most recent sustainability report. “People have told us that they want sustainable products with no tradeoffs,” he said.
Critics also are lambasting the Closed Loop Fund even though its first CEO is Ron Gonen, New York City’s former recycling czar, and other big companies including Johnson & Johnson, Unilever, Coca-Cola and PepsiCo have joined as well.
“It’s really just a drop in the bucket,” Matt Prindiville, with the US-based environmental policy organization Upstream, told The Guardian, “both in terms of what it actually costs the companies and the amount that’s actually needed to significantly boost recycling in the US.”
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