Sustainability Goes Cold

Volume 21 Letter 11

Sustainability certainly is on everyone’s mind these days and it can be a divisive issue. There are those who feel new government regulations to reduce global warming by taxing carbon emissions will drive business to a stand still, halting prosperity. On the other side there is a solid group of business leaders who feel “Sustainability” offers a great opportunity to correct what’s wrong with our planet whilst building wealth.
As governments make promises and protesters declare climate summits a failure there are some business leaders out in front making a difference…and making money. Here is a story about one of those leaders.

Virginie Helias is the Chief Sustainability Officer for Procter & Gamble (P&G). She was recently interviewed on an (excellent) webinar hosted by the University of Miami. She told a compelling story about how goals for sustainability and the goals of business can work together to create value for business, for customers and for the environment.

At the time, Ms. Helias had just taken over the P&G cleaning products division in Europe. The business clearly wasn’t doing well and she was looking for opportunities to revive the business unit. Doing their homework, she and her team looked over the market data and discovered two things. First was that washing clothes was one of the most hated household chores, second only to cleaning toilets. Secondly, and more interesting to the team, was that consumers hated what doing the laundry did to their utility bill. In Europe gas and electricity are two to three times more expensive than most other places in the world. Operating a washer that uses expensive hot water is a pricy endeavour that eats into household budgets. (This is also why many Europeans don’t even own a clothes dryer).

Seeing this as an opportunity, the people at P&G got to work developing a new formulation of washing detergent that would work in cold water. The detergent needed to clean clothes as well as (if not better) than the current “hot water” solutions. Needless to say, when P&G developed and launched a new formulation of cold water laundry detergent, European sales went through the roof.

The brilliance of this strategy is in its simplicity. I’m not suggesting for a moment that it was easy to develop a cold water washing powder – I’m sure R&D had their work cut out for them. However, while P&G could not eliminate the chore itself, the simplicity of their strategy involved eliminating the expense of filling the washing machine with hot water. On the face of it the main benefit is saving the consumer money on their electric bills, which of course they did, but the benefits go way beyond the obvious….let’s count them:

  1. Customers saved money: Eliminating the need for hot water created a positive financial impact on consumers’ electricity bills
  2. Reduced need for energy: The energy savings on national power grids wasn’t staggering but still notable.
  3. Reduced environmental impact: Many European countries burn coal and gas to produce electricity. Eliminating the need for hot water for laundry reduces the strain on the electrical grid, burning less fuel and reducing carbon emissions.
  4. Enhanced P&G’s bottom line: Sales of P&G clothes washing products skyrocketed. Ms. Helias and her team found a market opportunity that turned the P&G European cleaning products division around.

What can we learn from Ms. Helias:

  1. Sustainability can be an opportunity: Consumers and businesses want to do the right thing. If that can mean saving consumers money while improving the bottom line and saving the environment ….well, that’s always a good thing!
  2. Do your homework: Opportunity doesn’t fall in your lap – Ms. Helias and her team at P&G did their homework and found that consumers were frustrated with the cost of washing their clothes.

As the world struggles to meet its climate change goals and governments try to set regulations that will curb carbon emissions, there will be winners and losers in every industry. Eliminating internal combustion engines is an obvious change we all hear about but, as evidenced by the experience at P&G, many of these changes aren’t so obvious. Finding opportunity and navigating your way through these turbulent transformations that sustainability will bring is a challenge every business leader will face. Since sustainability is a global issue that will touch every business in varying degrees, I encourage you all to look for the opportunities that might be lurking in your business arenas. What strategies are you building to help create a better world?

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