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The Clorox Co. is one of a few companies that currently issues an integrated report combining financial and sustainability data. Integrated reports are meant to show how sustainability is tied to a business’s value. Since 2008, Clorox’s sustainability initiatives have averaged $15 million in cost savings annually, and the company has also seen value in other ways. Bloomberg BNA’s Andrea Vittorio talked with Alexis Limberakis, Clorox’s director of environmental sustainability, about how sustainability can be good for the planet and good for a company. This interview has been edited for length and clarity.
From your perspective, how are Clorox’s sustainability initiatives good for your business, and how do you measure their impact?Alexis Limberakis:
When we established our first environmental sustainability strategy back in 2008, we identified sustainability as one of four key megatrends to drive growth for the company. And that really has played out. Roughly 40 percent of our growth in recent years has come from more sustainable products.
What we’ve learned in this journey is that by applying a sustainability lens to our business, we can drive innovation and new ideas for cost savings, as our people tend to look at problems and their solutions differently than they did before.
Also, we’ve been able to demonstrate both internally and externally that, by integrating sustainability into our business, we can drive positive results not just for the planet but also for our company. Certainly there are some of the softer benefits like employee engagement or corporation reputation. But I do really think our greatest value has come from the more direct positive impacts that integrating sustainability has had on our business.
And as far as those more direct impacts that are a little bit more measurable, I saw that Clorox has a goal to make sustainability improvements to at least half of your products by 2020. Can you tell me how that’s going so far and give some examples of the kinds of improvements you’re making?Alexis Limberakis:
In our efforts to make sustainability improvements to at least half our product portfolio by 2020, we’re not only reducing our product footprint but also driving innovation and cost-savings that are good for the business, which I just spoke to.
To provide some context: We already made such [sustainability] improvements to over half our portfolio between 2005 and 2011. But in 2011, we reset the clock to this new 2020 goal. This time it is a little bit harder than it was before, but we are making good progress. And I find it pretty amazing to see how creative we can be in finding new ideas for further reducing our footprint.
The first example I’d like to talk about is actually a pretty simple idea, but it is actually our most impactful to date: concentrating our namesake Clorox bleach by a third. Bleach is a really heavy product to ship around the country. Also, as you increase the concentration, you can reduce the packaging.
Just by doing this pretty-simple-on-its-surface change, we’ve annually been able to save 225,000 megawatt hours of electricity, 196 million gallons of water, 16 million pounds of paper and 10 million pounds of plastic. At the same time, we’ve also delivered asuperior-performing product and made it easier for consumers to handle and store the product.
It’s that kind of consumer win—on top of the planet impacts and the cost savings and all that—that are the ones we get most excited about because we can prove that you don’t have to sacrifice when it comes to sustainability. It can be good for everyone.
We’ve got a lot of those ideas under our belt. Another example is our Kingsford charcoal. In a series of innovations, we have been able to deliver increasingly faster-lighting charcoal by reducing the materials in our briquets. We’ve done this in a variety of ways. First we created grooves in our charcoal to increase the edges for lighting. More recently we added air pockets throughout the briquet to increase the air flow.
Over time, we keep reducing the time that it takes the charcoal to get ready to cook on, which is a really important benefit in the charcoal category—especially for weekday grilling, where consumers really don’t want to have wait for the charcoal to get readybefore they can cook.
So it’s been great for the consumers and also for the planet. Not only have we reduced the footprint associated with the roughly 20 percent of materials we’ve taken out of those briquets, but we’ve cumulatively saved about 3 million transportation miles from our logistics, as we are able to get more product onto each weight-limited truck.
As you’ve gone through different products, half of your products already and another half by 2020, are there common themes that have emerged as you’re looking at products with a sustainability eye. Do you have any lessons learned?Alexis Limberakis:
I think one of the other benefits I see from applying a sustainability lens to product development and product improvement is that we can prove out the idea that what’s good for the planet can also be good for the consumers and for the business.
I think by doing that, we are better able to engage our own organization on our eco-journey, as they [our employees] can see the connection between sustainability and what’s really important to them in their own jobs. If their jobs are about cost savings or innovation or growth, they can see that connection and they’re more engaged with us.
Sustainability concepts can be pretty complex for many people. I think that’s the same for consumers, which is why we don’t always talk about this. But by thinking in terms of what employees and consumers value, I think we’re better able to engage them and let them see that sustainability is a real win-win. I think that’s one of the key lessons I’ve learned in my work here.
And could you give an example of how you’re communicating to your own employees about why this [sustainability] is a good thing?Alexis Limberakis:
I think a lot of it is about that win-win. We often are communicating the planet side and why that’s really important—the importance of reducing resource use, especially nonrenewable resources, and carbon and all that eco kind of stuff. We do a lot of educationaround that.
But we also like to tell the story of how it also is good for the business because people are motivated by and large by business results.
Employees are proud to be part of this organization and hear all the recognition we’re getting for the results we’re achieving and the cost savings we’re delivering and everything else. They’re very proud about this.
And our younger employees certainly expect companies to be acting as good stewards of the environment. So that is a good recruiting tool and engages them to stay with Clorox and feel proud about staying here.
Going back to your products again, you talked about the improvements you’re making to your existing products. But you were also one of the first companies in your industry to offer a line of green cleaning products [called Green Works]. So could you tell me abit about how these products and other green products you offer have contributed to your sales or added to your brand? Are you seeing demand from customers for these products?Alexis Limberakis:
I can’t share the sales of specific brands, but I can tell you that Green Works remains a small but really important business for the company. We still believe there’s an opportunity for growth on that brand.
And Burt’s Bees [a line of natural personal care products] is actually one of our fastest growing businesses at Clorox and in our last quarter delivered double-digit sales growth. So it’s doing great. And it’s also performing strongly internationally, where it’s now sold in 50 countries.
Consumers still are very interested in natural products. When it comes to cleaning, specifically, our portfolio gives consumers a choice. Now there are some consumers that are natural-only consumers. But there are many consumers who want natural for some situations and want more conventional cleaning products for other situations.
So, for example, if it’s just a basic dirt-and-grime kind of cleanup job, a natural cleaner will do for these folks. But in some cases, where there’s illness and they want to stop the spread of infection when there’s a sick child at home, they might need a disinfecting product, in which case they might use one of the other brands in our portfolio. So there’s a mix of consumers out there, but there’s definitely still a very high interest in natural products.
So you have your green products, you also have an ingredient calculator on your website [meant to help the company make more sustainable ingredient choices for its products and to inform consumers]. These are both considered industry firsts for a company likeClorox. Does that give you a competitive advantage against other companies in your industry, having been the first to do these sustainability efforts?Alexis Limberakis:
We have certainly been recognized for our work in this area, not just the results of improving the sustainability of our products or our operations but also for our ingredients disclosure, which, yes, you’re right, we were the first to disclose the ingredients in our cleaning products both in the U.S. and Canada.
We were named among top 50 companies on Newsweek’s Green Rankings and Corporate Responsibility Magazine’s Top 100 Best Corporate Citizens. And we recently received two U.S. Environmental Protection Agency Climate Leadership Awards: the GoalAchievement Award, recognizing our 16 percent reduction in greenhouse gas emissions between 2008 and 2011 as well as the Goal Setting Certificate, acknowledging our aggressive 20 percent greenhouse gas reduction goal between 2012 and 2020.
We’re getting a lot of these recognitions, and I think this first and foremost affirms that we’re on the right path. So that’s reassuring. And it certainly contributes to our corporate reputation amongst various stakeholders, be it our business partners, employees, NGOs [nongovernmental organizations], investors and the like.
But still I go back to what I said at the beginning: I think the greatest competitive advantage has been the results it has driven for the business in terms of driving innovation and cost-savings and those kinds of results. Those direct benefits to the business probablyare the biggest competitive advantage, frankly. Reputation obviously counts, employee engagement obviously counts, but I think it’s the direct translation to business results that’s really benefited us the most.
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