There's Money to Be Made in Trash, Procter & Gamble Says

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The world's largest consumer products company Procter & Gamble, which includes brands such as Tide and Pampers, has been focusing in recent years on finding value in what is left after its products are made and after they are used. Today, more than half of P&G’s manufacturing sites send zero manufacturing waste directly to landfills and 99.6 percent of all raw materials entering P&G plants are used in products or recycled, reused or converted to energy.

The company also is working to improve recycling and waste management in developed countries, with the help of the Closed Loop Fund, and in the developing world as part of its Waste to Worth project. The project is now being piloted in the Philippines and will be expanded to other countries soon.

Bloomberg BNA’s Andrea Vittorio talked about finding worth in waste with Procter & Gamble Vice President for Global Sustainability Len Sauers and Jill Boughton, who recently retired from P&G but still works on Waste to Worth. This interview has been edited for clarity and length.

Bloomberg BNA:

How is Procter & Gamble finding worth in its manufacturing waste? And how much value have you realized so far?  

Len Sauers:

We see, as part of the company’s long-term vision, zero consumer and manufacturing waste going to landfill.

At first, we only had a program looking to reduce manufacturing waste. In 2007, we began to look at that area in earnest, and we found that about 96 percent of the raw materials that were entering our plants were leaving as finished products, about 4 percent were not.

Of that 4 percent, we were recycling and repurposing about half of them. But it still left about 1 to 2 percent of the raw materials entering our plants going to landfills. We saw that as unacceptable.

So we put together a team of people, which we called our Global Asset Recovery and Purchases team, and their job was go into our plants and find those things that were going to landfill and create opportunity for those materials to be repurposed and find new life.

We’re very proud to say that 82 of our 140 plants are now zero manufacturing waste to landfill. And we are seeing, since 2007, more than $2 billion in value to Procter & Gamble from this program. That value comes from not only selling things which we were sending to landfill, but we’re also not paying landfill costs for materials.

Bloomberg BNA:

Can you give some examples of which Procter & Gamble brands that value is coming from?  

Sauers:

Sure, if you think about the kind of brands that P&G sells, think of things that are soap products in a way, like Tide laundry detergents; body washes, such as Olay; shampoos such as Pantene, Head & Shoulders. Let’s say we create products in our plants and those products are off-specification, for example, or for some reason can’t be sold. These kind of soap products may have gone to landfill in the past, but today we’re sending them to car washes to be repurposed there.

We have other products that are paper based: Charmin toilet tissue, Pampers diapers, our Always brand of feminine care products. There’s a number of things we’re doing with those products and their scraps. They can be used to generate energy. Cement kilns is a classic place we send these things. This waste can also be used in the building industry.

In Mexico, we’re taking the waste from our Charmin production and it’s going into low-cost roofing tiles. In other parts of the world such as India, we’re taking this scrap waste and it’s being integrated into buildings, for the partitions between walls and things like that. In China, our skin cream products are being formulated and blended with leather conditioners.

So there’s a whole host of opportunities for the kinds of products that we sell to be repurposed into some of these other areas.

Taking Care of Consumers' Waste

Bloomberg BNA:

You mentioned post-consumer waste was part of your long-term zero waste goal. What are you doing in that area?  

Sauers:

We look at post-consumer waste from two different perspectives. First, from the perspective of developed countries, where integrated waste management systems already exist. Then we have a separate program for developing countries, where those waste management systems don’t exist.

In the developed regions where they do this, we work to make those systems work better. In the U.S., for example, we have recycling systems here. Our goal is: how can we make those better? This is one of the reasons P&G joined the Closed Loop Fund. It provides low-interest or no-interest loans to municipalities to increase their recycling rates.

Now we do want to make this a virtuous cycle. So we’ve also set goals in the company that we want 90 percent of our packaging to be readily recyclable. We also have a goal to double our use of PCR [post-consumer recycled materials] in our products, which then drives a pool for recycling. So it’s setting the company up with external goals to improve the systems that are already in place.

That’s for the developed world. In the developing world, where integrated waste management systems do not exist, the work that we do there is to help create those systems. This is the Waste to Worth program, [which Jill Boughton runs].

As we went into these developing countries, we found that most of them had laws already on the books mandating the creation of waste management systems, but unfortunately the municipalities within the country could not comply with the laws, because they didn’t have the resources for it. And for many of these municipalities, they had other priorities such as water and sanitation.

So we at P&G had the idea, “Well there’s a lot of value in that waste that’s lying on the street and in open dumps. Could we come up with a business model whereby someone could come in and set up a system where they would make money by handling that waste?” And we set up an entrepreneurial kind of system, where you get an owner/operator in there working with the city to collect the waste and convert it into things of value.

This was the genesis of the Waste to Worth program. We’ve been working on this for at least five years.

Feeding Local Economies With Trash

Bloomberg BNA:

So Jill, could you talk about the work that you’re doing in developing countries and what specific projects you’ve done so far?  

Jill Boughton:

As Len said, this started back when Procter & Gamble announced their goal of trying to understand how to eliminate consumer and manufacturing waste to landfill. At the time, I was in Procter & Gamble as a product developer, and I worked on what was called destructive innovation, which is all about: “How do you create new markets? How do you create new businesses?” And Procter & Gamble basically assigned my team to that goal.

Just like with the global asset program, I had a very top notch team of experts that I worked with in the company. We spent a greater part of two to three years just researching advances in technology, researching business models, trying to really understand first of all what was going on.

We came to the conclusion that in order for infrastructure to last in developing regions, it needed to be tied with economic development, which is a fancy way of saying someone needs to make a profit. Now Procter & Gamble wasn’t necessarily—or isn’t at all—looking to be the person that makes that profit but somebody else can.

Then we looked into developed regions and realized that the business models for waste management wouldn’t work in developing regions largely because they were predicated on things like taxes. A lot of the places where we work can’t even enforce their taxes much less use them to build infrastructure.

We realized that waste had an inherent value. So instead of saying, “let’s mitigate the waste,” we said “let’s figure out a way to extract the value back from it.”

At the time, we initiated two pilots in the Philippines. Procter & Gamble really helped us in terms of setting up meetings with government officials, helping us understand what contracts needed to be in place, doing a lot of the base research, introducing us to the Asian Development Bank [which is a partner in Waste to Worth].

We’ve progressed a long way since then. All of the base studies [for the two pilots] have been done. We have an owner/operator in place to own and manage the facilities. We hope to break ground on them later this year.

With Waste to Worth, you’ll notice I didn’t say waste to energy. The reason I mention that is because another thing we found out was that to extract worth from waste, you might be looking at a different construct in different cities.

In one city, Cabuyao, we are actually making electricity there because the electricity price is very high, which can enable a profitable business model, and they have a need for electricity. In a different city that we’re working in, Dagupan, a tiny little fishing village, electricity won’t be profitable there. So what we’re doing there is we’re making gas and converting that so gas-powered tricycles can run on the biogas from food waste. In the case of nonrecyclable plastics, we’re converting that to diesel fuel, which we’re selling back to the fishing fleets.

So it’s a really unique way of their trash feeding their local economy. That’s what we strive for. How do you find a way to allow a municipality’s trash to feed its local economy?

Making ‘Waste to Worth' Go Viral

Bloomberg BNA:

Do you plan on replicating this idea in other places besides the Philippines?  

Boughton:

Absolutely, no question. In fact, it’s already starting to happen. Procter & Gamble has been directly involved in two of our pilots. We’ve already got three more in development. We now actually have branched out into other countries as well.

What’s really been fascinating is that most of the government entities have come [in] our direction. This [waste management] is a scary place for a lot of people in developing regions. I think the fact that this program emerged out of a reputable company like Procter & Gamble and the Asian Development Bank has given a lot of these government entities some comfort that we’re really trying to do the right things right.

So it is already starting to happen. That said, we can’t let it happen willy-nilly. That’s not useful either. So one of things we’re working on is how we can be much more strategic about replicating it.

If there is money to be made in the trash, it will go viral. It’s just a matter of how to do it in such a way that it’s responsible. That’s really what we’re focused on.  

To contact the reporter on this story: Andrea Vittorio in Washington at avittorio@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

A video on how Procter & Gamble is finding worth in waste is available at https://www.youtube.com/watch?v=GPLqLBT5q8c.