Suppose that every person in the world were to demand goods and services in the same quantities as people in western industrialised nations demand and use them. How many Planet Earths do you think would be needed to supply all the resources required to meet that level of output? Just the one? One and half? Two? A recent report calculates the figure as three (WBCSD Sustainability Through the Market – www.wbcsd.org/newscenter/reports/2001/stm.pdf).
How should we respond to this statistic? Should we do our bit to ‘save the world’ by ensuring that poorer countries make no extra claims on existing resources, so that we in the West may retain our own lifestyle? Or should those of us in developed countries forfeit our lifestyle and our use of resources in order to provide a better quality of life for people in the developing world? Should we look for two more worlds to colonise and plunder? Or is there another way?
Initially, many organisations responded by focusing only upon a form of sustainable development that emphasised better management of existing resources. Schemes were put forward that incorporated environmental management systems, codes of conduct, waste elimination procedures, audits and internationally recognised standards.
All of these matters are very important in managing resource use. However, the approach focused too heavily on ‘how to do things’. Sustainability is a broader concept. It is important to focus on both what companies do, as well as how they do them. We need to look at the kinds of products and services that businesses develop and the ways in which businesses bring them to the marketplace to meet consumer demand, and ultimately improve their quality of life.
Sustainable development
For Procter & Gamble (P&G), the goal of sustainable development is to ensure a better quality of life for everyone, both now and for generations to come. In making the case in favour of businesses adopting a policy of sustainable development, P&G has adopted a holistic approach. This means treating demand and supply as part of a system through which an organisation can improve people’s lives through what it does and how it does it.
P&G’s aim has been to contribute to sustainable development through its own activities. At the same time, the company’s approach to sustainability has enabled it to build a better business for itself that gives it a competitive advantage on a global scale. P&G’s approach has been to meet new and existing consumer demands through a responsible attitude towards methods of supply. The approach involves integrating three elements:
- environmental protection
- social responsibility
- economic development.
The inter-relationship of the three elements is best illustrated as a three-legged stool. This stool is stable and serves its intended purpose only for as long as all three legs are intact and functioning. Lose one leg and the stool collapses. The metaphor is clear. If a project that is dedicated to providing goods and services through economic development does not also take into account both environmental protection and social responsibility, then the opportunity for sustainable development is lost.
A holistic view of sustainable development
Taking a holistic view of sustainable development opens up many business possibilities to improve lives, particularly in developing countries. P&G staff use their research and product development skills to think more widely about the sort of products they should be bringing into the market place with a view to meeting people’s needs and improving their quality of life. This has resulted in a great deal of innovation. This is because when a problem is approached from a different angle, it is seen in a different light and the solutions that people suggest will also necessarily be different. At P&G, it is no longer sufficient for staff to identify a business opportunity. They must also devise an approach to meeting that business opportunity that takes into account and satisfies environmental, social and economic requirements.
Such an approach is consistent with P&G’s statement of purpose: ‘to provide products of superior quality and value that improve the lives of the world’s consumers’. One of the biggest single barriers to achieving sustainable development is poverty. People who are very poor cannot reasonably be expected to make consumption decisions that take into account ‘social responsibility’ and ‘environmental protection’ – their main concern is survival. With this in mind, P&G has sought to identify areas through which market expansion can help not only to widen consumers’ choice of products, but also increase the incomes of local people and raise their quality of life. Two key determinants of quality of life are:
- access to clean water
- standards of health and hygiene.
More than one billion people worldwide do not have access to safe drinking water; two to three billion consumers live in households where water supplies are severely constrained and three billion do not have access to adequate sanitation. Every year, more than three million children die from water-related disease.
Improving the position
P&G is able to contribute positively towards improving the position. For example, Fairy Liquid Extra Hygiene, an antibacterial dishwashing liquid, is playing an important role in helping to control bacteria when used in conjunction with good household hygiene practice. Together with this, in 1999, P&G in Spain and Portugal worked with UNICEF (United Nations Children’s Fund) to buy one dose of BCG vaccine for every bottle of Fairy sold to Iberian consumers. The outcome was more than 3 million vaccines for children in Senegal, which is one of the poorest countries of the world and with a high incidence of tuberculosis. The Fairy programme was so successful that it was reapplied in the UK, which managed to raise an additional 4 million vaccines for UNICEF. Spain and Portugal repeated the programme in 2000 and raised a further 4 million vaccines, a total of over 11 million children protected from tuberculosis.
Similarly, P&G recently joined forces with the WHO (World Health Organisation) to offer a number of P&G’s graduate trainees the opportunity to join the Go, Give & Grow project. These graduates have been placed on key initiatives such as the Stop Tuberculosis programme in Africa, Roll Back Malaria in Egypt, and Polio Eradication in Ethiopia. Their experience of such issues will provide valuable expertise and understanding of these key issues within their chosen areas, whether this be research, marketing or management.
Again, P&G recently tested a new drink product that has been developed jointly with UNICEF to combat micronutrient deficiency. This dietary deficiency results in blindness for 2.8 million children and affects infant IQ and mortality. Nutri Delight has the potential to combat this form of micronutrient deficiency.
Environmental, social responsibility and economic development issues
By concentrating on ‘How we do it’ as well as ‘What we do’, P&G attempts to address any environmental, social responsibility and economic development issues associated with its products and services. For example, all products have implications for:
Environment
- Resource use (materials and energy)
- Water quality and availability
- Waste and emissions.
Social responsibility
- Health
- Hygiene
- Education.
Economic development
- Shareholder value
- Employment
- Taxes, fees and contributions.
Resources used in producing goods and services generate wastes and emissions. A simple inputs/outputs diagram illustrates this fact. For example, producing a household product requires raw materials, packaging and energy as inputs. Besides the tangible packed product, other consequential outputs will be materials for recycling, for reuse or for treatment on site, non-hazardous solid waste, hazardous solid waste, air emissions, and water emissions. Each of these has an environmental impact.
P&G’s systematic approach towards reducing environmental impact has improved its manufacturing efficiency. For example, the company’s use of energy is nine times more efficient than in 1985. Today, P&G is able to produce 50% more product output per unit of waste water than in 1990. Moreover, the shift away from coal to cleaner fuel has helped P&G to reduce CO2 production by three and a half fold per tonne of production. The ‘more from less’ principle can be illustrated by looking at the development of Ariel, P&G’s laundry detergent. Innovations in detergents have allowed the wash temperature across Europe to be lowered by around 15°C, leading to a reduction in household energy use. Reducing the average wash temperature has been equivalent to saving 1.5 Megawatt hours of energy per year in the UK alone. That represents enough energy to heat around 200,000 homes by gas central heating for one year.
Stakeholders
Wherever it operates, P&G attempts to do what is right for consumers, employees, shareholders and communities in a socially and environmentally responsible manner. Its drive towards greater social responsibility has included widening the diversity within its workforce to include people from a broader range of backgrounds and experiences and also making a positive contribution to education.
Education programmes have included:
- sharing leadership skills with schools
- contributing to work experience programmes and initiatives in the school sector
- supporting community groups and programmes designed to save endangered species eg the water vole.
At the same time, the key focus upon water and upon health and hygiene has provided products and services that have helped to improve basic living standards in developing countries. P&G is a global company employing over 100,000 people worldwide. Brands are produced in nearly 130 plants around the world and the majority of raw materials are purchased locally in regions where products are manufactured. P&G contributes taxes and benefits where it operates and its successes are shared through increasing shareholder value, local charitable donations and the opportunity to access a wider range of products and services.
Conclusion
P&G has received external recognition for its approach to sustainable development. For the second year running P&G holds first place within the Dow Jones Sustainability Index ‘non durable household products’ group and reports its work annually under the Global Reporting Initiative (GRI) guidelines. The GRI promotes international harmonisation in reporting of environmental, social and economic performance statistics, in order to promote a more open environment for responsible decision making (www.globalreporting.org).
This case study illustrates how P&G has innovated to develop a range of products and services that are helping to provide a better quality of life for everyone, as well as business opportunities for itself. It demonstrates that it is perfectly possible for companies that take environmental protection, social responsibility and economic development seriously not only to survive, but to flourish.