When you sell more than eight billion plastic tubes of toothpaste per year, your footprint is of global significance.
Ann Tracy, Chief Sustainability Officer at Colgate-Palmolive shares Colgate’s successful strategies for integrating sustainability into supply chain and business strategy with Quartz Network Executive Correspondent, Britt Erler.
- Building and benchmarking for sustainability
- Aligning global teams with a single strategy
- Embedding sustainability across the company
Quartz Network: What has Colgate’s approach to sustainability been in the past?
Ann Tracy: It’s been an evolution. Like many companies, everybody’s on a spectrum. Our journey started over 20 years ago in the 90s when we were just focused on environmental compliance and building an environmental program across our supply chain. So, it really started in the supply chain in the early days where we were trying to focus on reduced greenhouse gas emissions, reduced water, reduced energy, and reduced waste to landfill. We started measuring those targets back in the early 2000s, around 2002.
We started with an environmental program—the E in ESG—to embed that across our operations around the world. Colgate is a global operation, so we have facilities all over the world. We set standards and we maintain the same standards everywhere around the world, whatever was higher, the local regulation or our own standards.
As we evolved through the first decade of this century, and we got into the 2010, we put more of a framework around sustainability with three pillars of people, performance, and planet, and just continue to build that environmental program, but now integrate more of the social and human aspects of our sustainability program. Colgate, being a major oral care provider around the world, of course, we’ve had a program in place to help children improve their dental hygiene and dental issues in vulnerable communities around the world. So we kind of built out our program under people, performance, and planet.
Then, we started to work much more with external partners. An important partner for us is World Resources Institute (WRI), which is a nonprofit based in Washington that’s focused on climate. So, our environmental program evolved more into a climate-related focus. We were one of the first companies to have science-based targets approved by WRI.
By the time we get to 2015, we had a program that was well-embedded in our supply chain, with many of the targets we continue to set and increase for ourselves in areas like greenhouse gas reduction, energy, water, and so forth. Now. fast forward to today. We’re really trying to take that same discipline that we’ve built into supply chain, embed it across the whole company, and build it into our strategy. Like you said, our goal is to build purpose driven brands.
Quartz Network: You mentioned the standard is the same across all of your teams globally. How do you ensure that they’re aligned with the strategy you have in place?
Ann Tracy: When we build the standards in our supply chain, we do a lot of benchmarking, but we tend to build our standards internally. We have frameworks in place, and we audit against those. We call them FPNR, which is our framework that we use to measure everything from planning to our environmental standards to other basic quality and safety standards—kind of a holistic program. We have assessment protocols in place to make sure that we’re applying those standards consistently around the world.
Quartz Network: Based on the standards and the strategies that you have in place, what are some of the accomplishments you’ve seen?
Ann Tracy: I would say we set our first set of real serious targets in 2015 that came due in 2020. We had targets such as reducing the amount of greenhouse gases and energy by a third and reducing the amount of water we use by 50%, as well as waste-to-landfill by 50%. All of these are in our own operations. Pleasingly, our supply chain has embraced these challenges. We not only met, but exceeded every one of those, some more than others.
I would say the one that was the toughest was reducing the amount of water we use in our operations because with many manufacturing sites, you need water to clean all the equipment. As the world becomes more complex, and our portfolio has become more complex, it required a lot more changeovers to make all these different products. So, our water usage reduction really plateaued for a couple years. Then, we partnered with Ecolab to improve how we clean our equipment using less water, less energy, and environmentally friendly chemicals. That really helped us to get past that plateau.
Quartz Network: Did you have to make any changes due to the pandemic and the new virtual environment?
Ann Tracy: When the pandemic first hit Asia, we had to shift some of our sourcing to alternative sites around the world—Latin America and Europe. Then, we reversed that when the pandemic spread everywhere else. So, what did that do to our overall footprint, and how did we manage it? Our logistics chains also changed along the way. But I would say it didn’t slow us down. We continued measuring. We achieved the targets we set for ourselves in terms of support and how we ensured each of the sites was getting the help and assistance they needed. We did pivot to a lot of virtual tools, including Google Glasses and virtual reality tools to help make sure we were supporting them.
Another important initiative that we had going on during the pandemic was the rollout of our new recyclable tube. We’ve talked a lot about some of these climate-related targets in our factory. Let’s talk for a minute about another emerging, important priority for Colgate right now, which is reducing plastic waste. It’s gotten more and more attention over the last several years. People are recognizing the impact it has on the planet, and it’s just growing at an exponential rate. If you stop to think about it, we’re a consumer products company. Most every product we make requires plastic packaging.
We joined the Ellen MacArthur Foundation New Plastics Economy Global Commitment to achieve 100% recyclable, reusable, or compostable plastic packaging by 2025. We’ve also set ourselves a target to reduce the overall amount of virgin plastic that we use by a third. That has a big impact on our supply chain and all the equipment we use because we’re changing our packaging. It has a big impact on what we’re doing in our factories.
At Colgate toothpaste, a big part of our business is oral care. So, knowing we were headed on this path five years ago to develop the technology for a recyclable toothpaste tube. It might sound simple, but the tube you’re probably most used to using is a multi-layer plastic tube with an aluminum layer in the middle. That’s why when you squeeze it, it stays. I like to say it has memory because it stays how you squeezed it. The aluminum protects the fluoride inside and the flavor inside, which is what you as a consumer expect.
So, we had to come up with a technology that, first and foremost, made sure the toothpaste you use inside was still of the same quality level. We wanted to make sure that it was acceptable a squeezable tube for the consumer. Thirdly, and probably most importantly, that it would go into a mainstream recycling stream. This is HDPE plastic, which is the same kind of plastic used for milk bottles, or in our case, our fabric softener bottles. So, it’s an existing recycling stream. We did a lot of work with material recycling facilities, the infrastructure out there to make sure that it went through the stream.
Along the journey to develop it, we worked with the Association of Plastic Recyclers to make sure it was accepted. They’re known in the US as thought leaders on designating what is recognized as recyclable or not recyclable. So, we had to work with them to ensure they accepted it and recognized it as recyclable. We’re doing the same thing in every country and region where we’re rolling this out. We’ve committed to rolling out every single toothpaste tube in this new design by 2025. We sell between 8-9 billion tubes a year, so it’s a lot of tubes.
Quartz Network: We often think it should be simple to make things more sustainable, but listening to you now, it is clearly not that simple. It is so extensive how much it expands across the entire company.
Ann Tracy: The reason it’s taking several years is because we have to change all our equipment investment. We’re working with, like I said, a lot of partners in different countries to make sure that they understand that it’s recyclable. We have to educate consumers.
The other thing we’re doing, which I’m very proud of, is developing a technical bundle book, and we’re sharing the technology with anybody who wants it. We’ve talked to more than 20 companies. One of them is a direct competitor of ours. I should be open about the fact that a number of suppliers have also gotten their designs accepted. It’s similar technology, so we’re not the only ones with it. There are two suppliers now making this tube. Publicly, Henkel and Procter and Gamble have stated that they’re now starting to use recyclable tubes. Our point of view is, “Great, hurry up.” We want everybody to be in a recyclable tube, because unless everybody’s in the recyclable tube, it’s not going to actually be recyclable, because people aren’t going to know and they’re not going to put it in there.
Quartz Network: Are there other strategies or goals set for the next five years that Colgate is planning to work on?
Ann Tracy: We’ve developed a new, memorable framework, which I like to call the SMILE strategy. It’s driving social impact with a capital S—a big red capital S—helping millions of homes—capital M I L—and preserving our environment—capital E—and that’s how you get the SMILE. We still are focused on those big ambitious vision spaces of social and our products. We’re really leaning into designing more sustainable products so we can help people live more sustainably at home. That’s helping millions of homes. Then, preserving our environment. We’ve increased the targets we have on reaching net zero carbon by 2040. We’re in the process of building a roadmap to get there. Of course, the plastic targets I mentioned. Next-generation water stewardship strategy continues to reduce water, as well as zero waste and sustainable sourcing.
What’s different now in this environmental focus area is that we’re going beyond our own supply chain now. We’re working with our suppliers upstream and our consumers downstream because 90% of the footprint of our products is occurring when people take the product home and use it. I you think of the last five years focused on our own supply chain, now we’re going upstream and downstream of our supply chain and going broader.
Quartz Network: For companies that are just jumping on the bandwagon, so to speak, and are just starting to implement sustainability programs and strategy into their business goals, what do you believe are some of the key areas that they should focus on?
Ann Tracy: I would start with what’s called a materiality assessment. A good way to get a feel for what that looks like is to go on our website or other CPG websites. It’s basically a matrix of what’s important and relevant for your business financially, risk-wise, and opportunity-wise. There’s a lot of opportunities here as well.
Then, on the other axis of the matrix is what’s important to stakeholders. The thing that can be a little overwhelming about sustainability is that everybody is your stakeholder. You’ve got the investors, customers, which in our case, are the retailers, the consumers, your senior managers, your board. I like to say the most important stakeholder of all is our employees because it’s a source of pride and it’s a source of motivation for our employees.
To make our SMILE strategy achievable in the future, everybody at Colgate has to play a role. It’s not just the supply chain, although the supply chain continues to play a critical role. Now, we’re on a journey to embed it across all functions, including finance and HR. So, our employees have to be motivated to do that. It’s a source of pride. We are finding that younger generations, the entry-level people we’re hiring, they’re looking for this in their company. They want a company that has a purpose, that takes sustainability seriously. So it’s important too for future generations.
Quartz Network: What do you recommend for leaders in the same position as yourself who are either just starting this journey or continuing what they’ve been working on for so long?
Ann Tracy: I think the first thing that comes to mind is to educate yourself. To me, as a leader, I think it’s about education or just reading what’s going on. I wouldn’t worry about becoming an expert in everything. I certainly wasn’t when I got started in this space. But there’s a lot of information out there. So, just start learning about it, and focus on what you think is important to your particular business. You don’t have to look at everything, but what’s relevant to you. If you’re old like me, you can talk to your kids. They’re good. I have four Gen Z-ers, so they’ll tell me what they think is going on.
Another nice thing to do is to engage your employees as leaders. Have some sessions with them, talk to them about it, and find out what’s important to them. Like I said, I think employees are one of the most important stakeholders. I would encourage you to conduct an employee-wide sustainability survey to understand what is important to them. We did this and it actually informed our materiality assessment. It was really helpful to understand what was on their mind. The pleasing thing was that what they were thinking was what was most relevant for our business. So that was good to know.
Now, we’re going to repeat it because we want to understand if they see progress? We’re really focused on more communication internally. You can never communicate enough about what you’re doing. So, start communicating what you’re doing, even if it’s baby steps. They want to know, and they’ll help you get there.
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