Case Study: Clorox Applies Mainstream Principles to the Business Case

This is part 8 of 11 from “Sustainability: The ‘Embracers’ Seize Advantage,” a report on the findings of the 2010 Sustainability & Innovation Global Executive Study and Research Project.

Beth Springer is not given to overstatements when asked how far she thinks her company has gone in integrating sustainability into its business. “We’ve been on a journey for several years,” she says. “And we’ve reached a point where we have an idea of how we want to proceed and of some of the benefits as well as the challenges.”

It is a realism that helps Clorox make the business case for sustainable development. The company has worked to set goals and metrics for its different business units and functions in areas such as greenhouse gas reduction, solid waste reduction and water reduction, and has introduced “eco-assessments” to assess the risks and opportunities in each of its business units. “It’s come to a level where it’s concrete enough and driven down into the organization so that it’s becoming part of the fabric of the business,” says Clorox’s executive vice president of international and personal care.

Part of the pressure to do so has been internal, from employees who want to work for a company that takes social and environmental responsibilities seriously. “And I think, as is always the case, if you didn’t have a few senior people who took it on as a mission, it wouldn’t happen,” says Springer. However, external forces are at work, not only in the form of consumers and advocacy groups, but also retail customers such as Walmart, which is pushing its sustainability agenda down into global supply chains.

But to overcome any resistance, Springer stresses the need to make the business case in the same way a company would for any strategy. “We treat it that way — it’s not something special that deserves a pass on having a strategic and financial rationale,” she says. “At the same time, it’s not a project we’re undertaking because it’s going to dramatically improve EPS [earning share] in the short term.”

Even so, Clorox has seen tangible and intangible benefits emerge from making sustainability a priority, and consumer demand has helped it in the repositioning of product lines such as Brita, the launch of Green Works cleaning products and the acquisition and growth of Burt’s Bees all-natural personal care. “Most of our biggest growth opportunities are in capitalizing on consumer megatrends,” explains Springer. Part of this, she says, is the desire to improve health and wellness. “But it’s also about people’s desire for more natural and more sustainable products.”

While the U.S. economic slowdown has dampened growth in Green Work’s and Burt’s, both are still good businesses. “If you can meet category performance requirements, command a bit of a premium and you can commit to continuous cost reduction in those products, then you can make money on natural products,” says Springer.

Ultimately, one of the biggest benefits has been the reaction of employees to the company’s sustainability focus, something Springer saw after the company declared its eco strategy and introduced office sustainability initiatives such as double-sided printing, recycling and using virtual meetings to reduce travel. “They’re totally into it,” she says. “It makes them feel good and like they make a personal difference. They’re proud of the company. And that to me is proof positive that this helps you attract, retain and engage employees.”