{"id":24697,"date":"2017-11-15T18:16:25","date_gmt":"2017-11-15T23:16:25","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/colgate-is-conquering-climate-change-with-a-smile-michael-phelps-support-and-a-mouthful-of-corporate-initiatives\/"},"modified":"2017-11-15T18:20:55","modified_gmt":"2017-11-15T23:20:55","slug":"colgate-is-conquering-climate-change-with-a-smile-michael-phelps-support-and-a-mouthful-of-corporate-initiatives","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/colgate-is-conquering-climate-change-with-a-smile-michael-phelps-support-and-a-mouthful-of-corporate-initiatives\/","title":{"rendered":"Colgate is Conquering Climate Change with a Smile, Michael Phelp\u2019s Support, and a Mouthful of Corporate Initiatives"},"content":{"rendered":"

When consumers hear Colgate, they typically associate it with toothpaste.\u00a0 Now, why would a toothpaste company be focusing on combatting climate change?\u00a0 Well, Colgate is not just a toothpaste company.\u00a0 Colgate-Palmolive is a $15B consumer products company focused on home, pet, personal, and oral care with brands, such as: Ajax, Hill\u2019s, and Speed Stick. \u00a0Colgate operations spread across 80 countries with products inside 67% of households across the world. [1, 3] Each of those products requires significant water across the supply chain; Colgate\u2019s water footprint includes 9% from raw materials, 1% from manufacturing the product and 90% from consumers\u2019 use. [2] While Colgate\u2019s consumers continue to leave the sink on, global warming is putting pressure on the availability of fresh water.\u00a0 Additionally, Colgate\u2019s manufacturing facilities, packaging, and sourcing all contribute to increased emissions, in turn accelerating global warming. [2] Faced with these challenges, Colgate\u2019s management has made sustainability a priority for the past decade and moving forward. [1]<\/p>\n

In the near-term, Colgate has made significant investments in reducing water consumption downstream by consumers.\u00a0 In 2016, Colgate launched the #EveryDropCounts campaign to raise awareness for water overconsumption.\u00a0 More recently, the campaign has been led through a partnership with Michael Phelps [3].\u00a0 Between Phelps and the new labeling on Colgate packages, the campaign has reached over 2.7 billion people worldwide [1].\u00a0 Moreover, Colgate has partnered with MIT to develop a net zero water strategy to replenish water removed from highly stressed regions where Colgate operates [4].\u00a0 Colgate is also looking at their product formulations to see if there is potential to reduce the water required.\u00a0 For example, fabric softener technology within their Suavitel product line has prevented the need for a rinse cycle.\u00a0 [2]<\/p>\n

In the long-term, Colgate has set a number of ambitious goals to hit by 2020 within their manufacturing facilities and with their suppliers.\u00a0 One of these, like the short-term goals, is focused on reducing water usage. Colgate has set a goal to reduce manufacturing water intensity by 50% of their levels compared to 2002.\u00a0 [1] Outside of their water initiative, Colgate has set targets to limit the impact they have on emissions.\u00a0 Internally, Colgate has been investing in renewable energy with the hopes of reducing their absolute greenhouse gas emissions from manufacturing by 25% compared to 2002 [1]. \u00a0After pressure from a third-party advocate, Colgate has also agreed to set a goal of creating fully recyclable packaging for 3 out of their 4 categories by 2020 [5].\u00a0 Furthermore, Colgate wants to make more of the packaging from recycled materials with a goal of 50%+ of the packaging coming from recycled content by 2020. [5]<\/p>\n

Upstream, Colgate has been using their strength in the supply chain to apply pressure on their suppliers to become more sustainable. \u00a0Colgate has encouraged top suppliers to participate in a program to reach certain energy reduction targets and disclose greenhouse gas emission. [6] Additionally, for specific raw materials, Colgate has adjusted to more sustainable sourcing.\u00a0 For example, Colgate has increased their use of certified sustainable palm oil (77% of total palm oil used), which helps limit deforestation [2].\u00a0 Nonetheless, this effort should be viewed with uncertainty as there is no data on how much palm oil is truly organic (which limits deforestation, rather than replaces) and Amnesty International raised claims of forced child labor in the creation of the palm oil used by Colgate [7].\u00a0 While this does not impact their climate change initiative directly, it adds a small amount of skepticism to the extent of the corporate responsibility touted by Colgate.\u00a0 Additionally, while all of their sustainability initiatives are admirable, it is difficult to tell whether they are \u2018stretch goals\u2019 as there are no industry standards for most metrics Colgate tracks.<\/p>\n

Overall, Colgate has received accolades for their efforts to combat climate change, while maintaining the #9 position in Gartner\u2019s top 25 supply chains [8] and a 54-year record for consecutive annual dividend increases [9].\u00a0 Regardless, management still has other opportunities they could consider. \u00a0First, Colgate appears to have a gap in monitoring the sustainable sourcing of their suppliers (e.g., Amnesty International\u2019s palm oil claims and the responsible sourcing of seafood used in Hill\u2019s pet food [2]). \u00a0Additionally, as a leader in creating a sustainable supply chain, Colgate should leverage their strength to drive change in other consumer product companies.\u00a0 They could do this by developing industry-wide partnerships or using a lobbying group to support regulations (e.g., on water usage or greenhouse gas emissions).\u00a0 While this is likely very difficult to do, it could have a transformational change across the industry.<\/p>\n

Lingering questions:<\/u><\/strong><\/p>\n