How Nyquil, Old Spice, and Duracell Are All About to Become More Energy Efficient

Old Spice ad

In general, manufacturers have little reason to, say, swap out incandescent lightbulbs for CFLs in their factories unless there is some sort of financial incentive. There is no bigger incentive than having one of your main customers--in this case, the world's largest consumer product manufacturer Procter & Gamble--ask you to shape up or get out. And why does P&G feel obliged to step in? They're planning for a future when oil prices skyrocket--the company wants its suppliers to be prepared, while everyone else's suppliers try to charge them more money.

To that end, P&G announced this week the results of its first Environmental Sustainability Supplier Scorecard, which is, in PR terms, "designed to track and encourage improvement on key environmental sustainability measures in P&G's supply chain." In real human terms, it's a way for P&G to figure out which suppliers are falling behind in the energy, water, waste, and greenhouse gas emissions departments--and then to help them do better.

Last year, P&G sent out a call to 383 strategic agencies and suppliers (the people who provide materials for products like Tide, Crest, Old Spice, and Bounce) to fill out its scorecard. The challenge: ensuring that the same scorecard could work for an ad agency and a petroleum supplier. Judging by the numbers, it did. An impressive 81% of suppliers and agencies responded (if you are selling to a company as big as P&G, you respond when they ask for things), with 94% able to report their electric energy usage and 63% able to report greenhouse-gas emissions.

This high response rate is partially because many suppliers were already paying attention to these metrics. Dow Chemical told us, for example, that it has saved $9 billion using energy efficiency measures over the past 15 years, which it can use to pay for things like its 96 Superfund sites. When P&G came knocking (Dow sells proprietary materials for packaging, detergents, and cosmetics), the company was ready. "We're working on ways together to have discussions around reducing energy usage and reducing water usage that can only come when companies are more open and transparent," says Mark Wieck, Dow Chemical's director of sustainability.

This year, suppliers no longer have the option to hide their massive CO2 emissions from P&G. The scorecard is now mandatory. Fill it out, or stop selling to P&G. Instead of simply tossing energy-gobbling suppliers by the wayside, P&G is working with them to improve. "We want to identify where outages and gaps are, sit down with a supplier, and figure out how to work together to address them," says Larry Loftus, director of purchases capability and strategy for P&G.

In some cases, that's as simple as recycling water in a production plant. In others, it's a bit more tricky--like starting to track water or energy usage for the first time. But these are the kinds of things that even the most energy-inefficient companies will have to start doing (however grumpily) now that major companies like P&G and Walmart are demanding information.

There's a bonus involved for suppliers who score well and go so far as to offer P&G tips on how to improve efficiency: a higher rating on the scorecard. That translates into an increase in business from P&G. It's a good deal all around: P&G can rest easy when oil and energy prices shoot up to ungodly numbers in 10 years, suppliers get more love from P&G, and the best performers get serious bragging rights.

Reach Ariel Schwartz via Twitter or email.

Read More: Hedging Bets On Going Green

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1 Comments

  • Bradley Short

    This is the sort of supply-chain responsibility that businesses need to embrace to truly enact global environmental change. As you mentioned, Walmart is doing this as well, which shows how these huge brands are making waves in the sustainability world.

    When P&G or Walmart says "jump," suppliers ask "how high?" If these mega-brands are truly committed to sustainability, they can drive real change through initiatives just like this.

    This gets the attention of suppliers who aren't working with these big companies (at least not yet) as well. Moves like this can help to create a sea-change that would be good for everybody, except big polluters, that is.

    Bradley Short
    http://www.businessearth.com/c...