Clorox Goes Green

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Sumi Cate, R&D group manager, Clorox: "The natural and sustainability trends are really starting to gain momentum within the chemical industry. I think that nature can teach us a lot. It's an area I've always had a lot of passion for." | photo by Jason Madara

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Carl Pope, executive director, the Sierra Club: Clorox's Knauss says of Pope, "Both Carl and I start with one foundational belief: Corporate America and environmental groups must start working together. We really do have the best interests of the consumer and the planet at heart." | photo by Jason Madara

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"We're exposed to an almost $3 billion market. If we got just a 5% market share, you're talking about a $150 million business." Don Knauss, the CEO of Clorox, may be laid up in Houston recovering from rotator-cuff surgery, but he can't help getting exercised about his company's breakout new product line. Late last year, the former Coca-Cola exec launched Clorox's first new brand in 20 years, a collection of natural-cleaning products called Green Works. "You're always trying to figure out what megatrends are going on," says Knauss, 57, who took over less than two years ago. "From day one," he says, he focused on the "explosive growth" opportunity in sustainability.

Green Works is one of the most successful launches of a new cleaning brand in recent memory. But it also has wider implications for anyone interested in the movement of the mainstream marketplace toward greener products. For Earth Day 2008, Knauss rang the opening bell at the New York Stock Exchange -- a first for a Clorox chief -- and at his side stood a most unlikely partner: Carl Pope, the executive director of the Sierra Club, the country's first -- and largest -- national environmental organization. Just a few weeks earlier, Clorox had announced that the Sierra Club logo would appear on all Green Works labels. In return, the Sierra Club would receive an undisclosed fee based partly on Green Works sales. It sounded like a win-win for everybody. What could go wrong?

Depends who you ask. Knauss couldn't be happier. He has seen Green Works' momentum continue to build, with Wal-Mart and other major retailers increasingly devoting shelf space to the hot-selling line. But within the Sierra Club, the reaction to the deal has been contentious, with emails flying back and forth and charges that Pope's executive committee has sold out -- and is retaliating against dissident members. The Sierra Club is now trying to pacify its troops, but the awkward pairing with Clorox underlines both the huge potential upside for major brands discovering green and the danger for nonprofit environmental groups plunging headlong into the for-profit world. It's the sort of thorny situation we're likely to see more often as saving the planet becomes less a cause than an industry.

By the time Knauss arrived at Clorox, in October 2006, company chemists had already been experimenting with biodegradable plant- and mineral-derived cleaning formulas for nearly a decade. "It was kind of a pet project -- we call it 'skunk work' -- in R&D," says research group manager Sumi Cate. "And as we were watching the technologies evolve, we saw the world was changing. We have seen a shift in both the supply and the quality of technologies available." Meanwhile, Clorox marketing executive Jessica Buttimer, a new mother, had noticed how fellow moms were constantly "chattering" about natural cleaning with a level of concern that seemed to belie the 1% market share held by brands such as Method and Seventh Generation. Surveys showed that 44% of consumers were theoretically interested in buying green cleaners -- a huge unexploited market -- so Buttimer and her team conducted interviews and identified the top-three reasons consumers weren't following through: doubts about effectiveness, expense (most green cleaners cost twice as much as conventional ones), and inconvenience (products tended to be available only at special stores). Clorox was positioned to address all of those concerns, and Knauss gave Buttimer's group the go-ahead for a new product line.

By last summer, thanks to Cate's chemistry group, Clorox had five products that were 99% petrochemical-free (ironically, the remaining 1% comprised the "fresh" scent and the green coloring) and matched or beat standard cleaners in consumer tests. Thanks to Clorox's volume and leverage with suppliers, they could be priced at just a 20% to 25% premium. But one challenge remained: how to get people to believe that Clorox could really be green. Green Works products qualified for the EPA's "Design for the Environment" label, certifying that they are free of the most toxic chemicals. Still, "there were a lot of greenwashing reports starting to surface," Buttimer says. "Consumers were a little bit skeptical." Clorox called in an outside expert, Joel Makower, founder andexecutiveeditorofGreenBiz>.com. He recommended that the company engage with environmental nonprofits to build support. "We looked around, and no one had greater credibility than the Sierra Club," says Knauss. "They were the Good Housekeeping Seal of environmental groups."