| Fortune | ||
Buy toilet paper, save the planet
You know that green concerns are mainstream when even Procter & Gamble - maker of heavily packaged goods - say they want to be sustainable. But can they really do it?
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| Selling consumers larger toilet paper rolls saves energy, but P&G doesn't always foreground green concerns. |
(Fortune) -- Buy a MegaRoll of Charmin bathroom tissue ("It's 4 Single Rolls in 1!"), and you will help save the planet. You can also score points for environmental responsibility by cleaning clothes with Tide Coldwater, or wrapping your baby's behind in Pampers.
So, at least, says Procter & Gamble, the $77-billion-a-year consumer products giant whose brands include Charmin, Tide and Pampers, along with Crest, Iams, Gillette, Folger's, Pringles and many more.
The company has evidence to back up its green claims: Bigger toilet paper rolls mean less packaging and waste. Cold-water detergent saves energy and reduces greenhouse gas emissions. Today's disposable diapers use less material, which gives them a lighter environmental footprint.
Last year, P&G has pledged to sell $20 billion of products like these that have a "reduced environmental impact" and to improve its "environmental profile" by using energy and water more efficiently and curbing waste.
It all sounds great, and if you were to meet Len Sauers, P&G's new vice president of global sustainability, as I did last week, you would be persuaded that the company is serious and well-intentioned. "We're a science-based company," Sauers says proudly, explaining that P&G has done careful "life cycle analyses" of its best-selling products, to see how they can become more sustainable.
Sauers, who is 49, is an affable toxicologist with a Ph.D. who can can talk with confidence about what happens to Tide detergent or Crest toothpaste after they flow down the drain and into a sewage treatment plant - good things to know if you are trying to reduce your company's environmental impact.
But there are at least a couple of problems with P&G's approach to sustainability, and they reflect the challenges that face most big companies face as they try to go "green." One problem is that P&G won't ask its customers to pay more, accept any less quality or make any compromises at all to achieve an environmental benefit. Clearly, this limits what the company can do - it won't, for example, make paper towels out of recycled fiber if the towels don't work as well with those made from trees.
The second problem is that P&G (PG, Fortune 500) won't commit to making any absolute reductions in its greenhouse gas emissions, energy use or waste because the company needs to grow. That's a necessity for a big public company, but it's not a route to solving major environmental problems. "There's just so much that one company can do," Sauers told me.
So let's take a closer look at what P&G can - and cannot - do. On the plus side, the company can - and has - improved efficiency. P&G says it has reduced energy usage, emissions, water and waste by about 30% in the last five years, and it will reduce all of them by another 10% per unit of production over the next five years. That's meaningful.
The phrase "per unit of production" is a key, however. Sauers says the company uses that metric so that its reporting isn't affected by acquisitions or divestitures of businesses or, for that matter, by rising or declining sales. "I need a consistent way to measure and report over time," he says.
But becoming more efficient doesn't mean that the company will reduce emissions, energy, water consumption or waste in absolute terms. As it happens, P&G cut its greenhouse emissions by 5.5% between 2005 and 2006, an impressive feat because the company bought Gillette that year and added $21.5 billion in revenue. Between 2006 and 2007, though, emissions grew by about 1.1% - slower than sales grew, but still.
Relative efficiency doesn't matter to the planet. What matters is how many tons of greenhouse gases are emitted, and most scientists say those numbers need to first stabilize and then go down, dramatically. "Will we ever declare an absolute goal?" Sauers asked. "I don't know."
Innovation is another strength at P&G. Its biggest environmental breakthrough is probably Tide Coldwater. The impact of washing clothes in cold water is not trivial, as Sauers notes in a slide presentation he shared with me: If every U.S. household used cold water for laundry, the energy savings would be 70 to 90 billion kilowatt hours per year, which is 3% of the nation's total household energy consumption. These savings would translate into 34 million tons of carbon dioxide per year not released into the environment, which is nearly 8% of the Kyoto target for the United States.
Switching to oversized rolls of bathroom tissue or paper towels can also have big impact. According to P&G, if 1 million consumers switched from Regular Charmin to Charmin Mega, it would save 85,000 gallons of diesel fuel and 500,000 pounds of trash per year because the MegaRolls need fewer cardboard cores per sheet of tissue. Interestingly, that's not how the MegaRolls are sold to consumers. Instead, the packaging says: "Change the Roll Less Often!" Similarly, Tide Coldwater is marketed as a way for consumers to save money and improve fabric care, and not for its environmental benefits.
"We do not advertise in the U.S. with an environmental message," Sauers says. That's because P&G doesn't think that its most of its customers care all that much about their environmental impact. But it's a missed opportunity for P&G to raise awareness. P&G is also clear about the fact that its sustainable innovations won't require consumers to pay more or give up anything in terms of quality or convenience. "If you give them everything they want, they will choose sustainability," Sauers says. "But they will not accept a tradeoff."
To be fair, operating in a series of highly competitive businesses limits P&G's options. You may have noticed that Tide and other laundry detergents now come in concentrated form and smaller jugs, which saves packaging and shipping costs. That's great, but it was not really P&G's doing. Unilever (which makes "Small & Mighty All") led the way, and it ultimately took Wal-Mart (WMT, Fortune 500) to persuade competing purveyors of laundry detergent to shrink their packaging. No one company was willing to take the risk of acting alone, and losing market share.
I don't mean to single out P&G for criticism. It's a great company, with admirable values. The point is, there are limits to what even first-rate companies can do so long as they are driven to grow. As P&G says in its sustainability report: "The very nature of producing and using products causes P&G and consumers to use resources and to generate waste and emissions."
It makes me wonder with "sustainable growth" - the declared mantra of many big companies - is an admirable goal or an oxymoron. 
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