Procter & Gamble: A CSR Perspective -by Sarang Tilak, PGDBM, SIMSREE Roll No: 857
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INDEX Topic no. 1.
Topic
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Introduction and Mission Values of P&G Triple Bottom Line Concept in 5 case of P&G: ECONOMICAL aspect ENVIRONMENTAL aspect 8
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SOCIAL aspect
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In A Nutshell
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Procter & Gamble Procter & Gamble Co. (P&G, NYSE: PG) is a Fortune 500, American global corporation based in Cincinnati, Ohio, that manufactures a wide range of consumer goods. As of 2008, P&G is the 23rd largest US Company by revenue and 14th largest by profit. It is 10th in Fortune's Most Admired Companies list (as of 2007). P&G is credited with many business innovations including brand management, the soap opera, and "Connect & Develop" innovation. According to the Nielsen Company, in 2007 P&G spent more on U.S. advertising than any other company; the $2.62 billion it spent is almost twice as much as General Motors, the next company on the Nielsen list. P&G was named 2008 Advertiser of the Year by Cannes International Advertising Festival. Procter & Gamble has expanded dramatically throughout its history, but its headquarters still remains in Cincinnati. P&G's dominance in many categories of consumer products makes its brand management decisions worthy of study. For example, P&G's corporate strategists must account for the likelihood of one of their products cannibalizing the sales of another.
MISSION: To provide branded products and services of superior quality and value that improve the lives of the world's consumers, now and for generations to come.
VALUES: P&G is its people and the values by which we live. We attract and recruit the finest people in the world. We build our organization from within, promoting and rewarding people without regard to any difference unrelated to performance. We act on the conviction that the men and women of Procter & Gamble will always be our most important asset. LEADERSHIP: • We are all leaders in our area of responsibility, with a deep commitment to deliver leadership results.
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• We have a clear vision of where we are going. • We focus our resources to achieve leadership objectives and strategies. • We develop the capability to deliver our strategies and eliminate organizational barriers. OWNERSHIP: • We accept personal accountability to meet our business needs, improve our systems, and help others improve their effectiveness. • We all act like owners, treating the Company's assets as our own and behaving with the Company's long-term success in mind. INTEGRITY • We always try to do the right thing. • We are honest and straightforward with each other. • We operate within the letter and spirit of the law. • We uphold the values and principles of P&G in every action and decision. • We are data-based and intellectually honest in advocating proposals, including recognizing risks. PASSION FOR WINNING • We are determined to be the best at doing what matters most. • We have a healthy dissatisfaction with the status quo. • We have a compelling desire to improve and to win in the marketplace. TRUST • We respect our P&G colleagues, customers, and consumers, and treat them as we want to be treated. • We have confidence in each other's capabilities and intentions. • We believe that people work best when there is a foundation of trust.
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The TRIPLE BOTTOM LINE CONCEPT’s application in case of P&G
ECONOMICAL Effective from July 1, 2007, the company's operations are categorized into 3 "Global Business Units" with each Global Business Unit divided into "Business Segments," according to the company's June 2007 earnings release. 1. Beauty Care •Beauty segment •Grooming segment 2. Household Care •Baby Care and Family Care segment •Fabric Care and Home Care segment 3. Health & Well-Being •Health Care •Snacks, Coffee and Pet Care
Management and staff Current members of the board of directors of Procter & Gamble are: Norman Augustine, Bruce Byrnes, Scott D. Cook, Joseph Gorman, A.G. Lafley, Charles R. Lee, Lynn M. Martin, W. James McNerney, Jr., Johnathan Rodgers, John F. Smith, Jr., Ralph Snyderman, Richard Dearlove, Margaret Whitman, and Brian Bowns. Norman Augustine will be retiring from the Board following the Company's October 2007 meeting[9]. In 2007, the P&G's Canadian division was named one of Canada's Top 100 Employers, as published in Maclean's magazine, the only consumer products company to receive this honor.[10]
Procter & Gamble brands
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23 of P&G's brands have more than a billion dollars in net annual sales and another 18 have sales between $500 million and $1 billion.
Billion dollar brands • Always is a brand of feminine hygiene products, including maxi
pads, pantiliners (sometimes called Alldays), and feminine wipes, produced by Procter & Gamble.--See also Brand homepage; related trademarks: Ultra Thins; Flexi-Wing; Maxis; Alldays; CleanWeave. • Ariel is a brand of washing powder/liquid, available in numerous forms and scents. • Actonel is brand of Osteoporosis drug Risedronate co marketed by Sanofi-Aventis. • Bounty is a brand of paper towel sold in the United States, Canada and the United Kingdom. • Braun is a small-appliances manufacturer specializing in electric razors, coffeemakers, toasters, and blenders. • Crest is a brand of toothpaste. • Dawn is a brand of dishwashing detergent. • Downy/Lenor is a brand of fabric softener. • Duracell is a brand of batteries and flashlights. • Gain is a brand of laundry detergent and fabric softeners. • Gillette is a safety razor manufacturer. • Head & Shoulders is a brand of shampoo. • High Endurance is a deodorant by Old Spice. • Ivory is a soap. • Nice 'n Easy is a hair color product. • Olay is a brand of women's skin care products. • Oral-B is a brand of toothbrush. • Pampers is a brand of disposable diapers. • Pantene is a brand of haircare. • Prilosec OTC is a brand of heartburn medicine co marketed by AstraZeneca. • Puffs is a type of facial tissue. • Secret is a deodorant.
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• Tide is a brand of laundry detergent. • Vicks is a brand of over-the-counter medications. • Wella is a brand of hair care (shampoo, conditioner, styling, hair
color). • Whisper is a brand of pantyliners.
Manufacturing Procter & Gamble manufactures its products across the globe. Manufacturing operations are based in the following geographies * * * * * *
US Canada Latin America Europe China (31 wholly-owned factories) and other parts of Asia Africa
Productions Procter & Gamble produced and sponsored the first radio opera soap operas in the 1930s (Procter and Gamble's being known for detergents (soaps) was probably the genesis of the term "soap opera"). When the medium switched to television in the 1950s and 1960s, most of the new serials were sponsored and produced by the company. Two of their serials, As the World Turns and Guiding Light, are still on the air today and are produced by TeleNext Media, Inc for Procter & Gamble. The serial The Young and the Restless also is regularly sponsored by products from Procter & Gamble, as well as other daytime serials.
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ENVIRONMENTAL Environmental Quality Policy Procter & Gamble is committed to providing products and services of superior quality and value that improve the lives of the world's consumers. As part of this, Procter & Gamble continually strives to improve the environmental quality of our products, packaging and operations around the world. To carry out this commitment, it is Procter & Gamble's policy to: • Ensure our products, packaging and operations are safe for our employees, consumers and the environment. • Reduce, or prevent, the environmental impact of our products and packaging in their design, manufacture, distribution, use and disposal whenever possible. We take a leading role in developing innovative, practical solutions to environmental issues related to our products, packaging and processes. We support the sustainable use of resources and actively encourage reuse, recycling and composting. We share experiences and expertise and offer assistance to others who may contribute to progress in achieving environmental goals. • Meet or exceed the requirements of all environmental laws and regulations. We use environmentally sound practices, even in the absence of government standards. We cooperate with governments in analyzing environmental issues and developing cost- effective, scientifically based solutions and standards. • Continually assess our environmental technology and programs, and monitor progress toward environmental goals. We develop and use state-of-the-art science and product life cycle assessment, from raw materials through disposal, to assess environmental quality.
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• Provide our consumers, customers, employees, communities, public interest groups and others with relevant and appropriate factual information about the environmental quality of P&G products, packaging and operations. We seek to establish and nurture open, honest and timely communications and strive to be responsive to concerns. • Ensure every employee understands and is responsible and accountable for incorporating environmental considerations in daily business activities. We encourage, recognize and reward individual and team leadership efforts to improve environmental quality. We also encourage employees to reflect their commitment to environmental quality outside of work. • Have operating policies, programs and resources in place to implement our environmental quality policy. P&G's philosophy is grounded in a belief that we should be a leader in our industry in implementing our global environmental program. To do this, we concentrate on environmental innovation and accountability for results. We believe our accomplishments illustrate this commitment. For example, P&G was first to bring innovations such as concentrated products, refill packages and recycled plastic bottles to our industry. We have made great strides in reducing overall packaging per case by an average of 27 percent since 1990. During the same period, our focus on pollution prevention has resulted in a 37 percent reduction in waste, air and water emissions from our manufacturing plants. We recognize that environmental progress is a never-ending journey of continuous effort and improvement. However, by focusing on improving the lives of consumers through innovative technologies that work better and more efficiently, we believe we can continue to sustain both the growth of our business and the health of the environment. P&G Sets Sales Target For Greener Products Procter & Gamble has announced five-year sustainability goals as part of its 2007 Global Sustainability Report (PDF). P&G says that it plans to generate at least $20 billion in cumulative sales of products with reduced environmental impact over the next five years. Financial Times reports that the environmental impact of those products will be at least 10 percent less than those of previously available products. This is believed to be the first time a consumer products company has set itself a financial target for developing and selling greener items, rather than for waste or energy reduction.
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P&G’s sales target for environmentally enhanced products will be significantly supported by its move to shift its liquid detergent market in the U.S. to double concentrate formula. P&G is also changing its core statement of corporate purpose - that it seeks to “improve the lives of the world’s consumers with its branded products and services” -? to add the phrase “now and for generations to come,” according to the FT article. The company also said it will reduce CO2 emissions, energy and water consumption, and disposed waste per unit of production by an additional 10 percent each, contributing to a 40 percent reduction over the decade (2002-2012). Other goals include: • Improve the lives of 250 million children through its corporate cause, Live Learn and Thrive. It will also deliver another two billion liters of clean water through its Children’s Safe Drinking Water program over the next five years. The company estimates that this will prevent 80 million days of disease and save 10,000 lives. • Help P&G employees build ‘?sustainability thinking and practices’ into their daily work. • Continue to work with external stakeholders, such as the Centers for Disease Control, UNICEF, the World Health Organization and Populations Services International, to create new opportunities and solutions for the world’s sustainability challenges. P&G is a founding member of the recently announced Supply Chain Leadership Coalition, an organization that will press suppliers to release data about carbon emissions and climate-change strategies.
Environmental Credentials •
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All P&G products are held to P&G's high standards for environmental and human safety; we do not differentiate between which products meet these standards and which do not - they all do. P&G has been the Dow Jones Sustainability Index Super Sector Leader for seven consecutive years in the "NonDurable Household Products" market sector.
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P&G has been leading the industry with innovations like concentrated products, recycled plastic bottles and refill packages to the industry. P&G's Central Product Safety Environment Group was established to develop new methods for evaluating the environmental safety of consumer products. P&G was one of the first companies to establish such an organization. P&G has hundreds of scientists and engineers responsible for assessing the environmental safety of our products and operations. P&G's environmental organization has published more than 700 articles over the past 45 years; almost 500 of those since 1990. In 1992, P&G received the World Environment Center Gold Medal for International Corporate Environmental Achievement. P&G has been listed by FTSE4Good ethical investment index since its inception. 95.93% of all materials entering P&G factories worldwide leave as finished product (waste is 4.07% of which more than 50% is recycled).
SOCIAL CSR There are various CSR activities carried out by P&G with genuine intention of giving back to the society. A few highlighted have been discussed within this project. They are: • PROJECT SHIKSHA – SECURE YOUR CHILD’S FUTURE (2003) • REBUILDING LIVES IN EARTHQUAKE HIT BHUJ (2001/2002) • PROJECT POSHAN – FIGHTING MALNUTRITION IN INDIA (2000)
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PROJECT OPEN MINDS – EDUCATING INDIAS WORKING YOUTH (1999)
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PROJECT DRISHTI – THE FIRST EVER SIGHT RESTORATION PROGRM IN INDIA(1999)
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PROJECT FUTURE FOCUS - THE FIRST EVER ROUND WRITE IN CAREER GUIDANCE SERVICE (1998)
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PROJECT PEACE - ENVIRONMENTAL EDUCATION PROGRAMME (1996) Let us now study each of these projects.
• PROJECT SHIKSHA – SECURE YOUR CHILD’S FUTURE (2003) With a mission to make a difference to current alarming situation of children’s’ literacy, Procter & Gamble (P&G) has joined hands with India’s premier child rights organization Child Relief and You (CRY) and Sony Entertainment Television to launch ‘Shiksha’, a program to help educate underprivileged children across India. Under Shiksha, P&G and Sony appealed to their consumers and viewers to support the cause and make it easy for them to do so - all an individual has to do is purchase a large pack of either Tide, Ariel, Pantene, Head & Shoulders, Rejoice, Vicks VapoRub or Pampers during April, May and June 2005, and he/she will help support one day’s education of one child per pack purchased. Irrespective of the sale of its brands from Shiksha, P&G has committed a minimum of Rs. 1 crore to CRY. Education has managed to reach the underprivileged and even the poorest of the poor, children numbering around 87,000 in India. Thanks to the corporate social responsibility (CSR) initiatives of FMCG major Proctor & Gamble (P&G). P&G's CSR programme in partnership with CRY empowers consumers across the country to participate and support the education of marginalised children in India via a simple purchase of any of P&G's products. P&G India closed Shiksha '08 with the largest-ever contribution of Rs 3.2 crore to CRY and other initiatives reaching out to over 87,000 children in the coming year. With a motto of 'Padhega India, Badhega India', Shiksha believes that the secret to a brighter India lies in children attaining their right to free, quality education.
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Irrespective of sales, every year P&G commits to a minimum of Rs 1 crore to its partner CRY, which will be allocated to projects focused on enabling the child's right to education. These funds will be deployed to the established Shiksha projects that work with the state education departments to re-look at existing education policies; create awareness to build more schools with better infrastructure, and more basic amenities like water, electricity, and health; and enrol more children into formal schools and promote retention in schools. Project Shiksha is part of P&G's global philanthropy programme P&G Live, Learn and Thrive' that focuses on the development of children in need across the globe, with Education of Children via Shiksha being the priority in India. About CRY: CRY is a leading Indian non profit organization working for child rights. CRY believes that every child has a right to survival, protection, development and participation in an environment of equal opportunity. CRY’s approach to sustainable development is based on the firm belief of community empowerment and citizen action whilst holding the state responsible for ensuring children’s rights. CRY’s objective is to demonstrate that real, sustainable change is possible through the building of grassroots models and through concerted advocacy for child rights. Started in 1979, today CRY partners 157 child development projects across India. To celebrate its 25th year CRY has initiated an awareness campaign on the rights of the child. It is represented by a symbol, the pinwheel called the ‘Free a Child Chakri’. In keeping with the global philosophy of continuous development of the community, P&G in association with Sony Entertainment Television launched an education initiative ‘Shiksha – Secure Your Child’s Future’ across the country. In order to ensure P&G reached the non-Hindi speaking audience, a tie-up with three other channels in the south was undertaken. In the north, west, east, Karnataka regions – Sony TV telecast the promotion and announced winners on its No. 1 soap opera Kkusum, in Andhra Pradesh – Maa TV promoted Shiksha with Todi Kodallu, in Tamil Nadu – Jaya TV promoted Shiksha with Sahana and in Kerala – Asianet promoted Shiksha with Snehadooram.
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By purchasing packs of Vicks, Whisper, Ariel, Tide, Head & Shoulders and Pantene between 21st April – 12th June 2003, this unique education promotion allowed a mother to win Rs. 2 lakhs towards Graduate Education Fee of one child (24 such Prizes), or Rs. 5,000 towards Next Year’s Tuition fee for one child (96 such Prizes), and a number of Consolation Prizes, all courtesy P&G. All Shiksha prizes could be gifted and were transferable, in case the winner is not a parent or, if his/her child was above 21 years of age. Shiksha received a positive response from all parts of the country. This promotion was greatly appreciated as purchase of any P&G product allowed one to win education for his/her child. REBUILDING LIVES IN EARTHQUAKE HIT BHUJ(2001/2002) P&G in partnership with Swayam Shikshan Prayog (SSP) opened four Community Resource Centers for the earthquake victims in the Chakasari, Paggivand, Hanjiya and Jodhpar vands (hamlets) of Rapar Taluka, Kutch District, Gujarat. The Community Centers provide basic education for children; training on building earthquake-resistant shelters and has supported the formation of 22 Women's Savings Groups which contribute towards an income-generating fund, for future entrepreneurial activity. The P&G-SSP project positively impacts 25 villages, 3750 families and 22,500 people and helped mobilize women’s groups and communities in Gujarat for their long-term sustainable development. Credit fund will be provided as a revolving fund to self-help groups. The operational cost for each Centre is Rs, 25,000 met by P&G. The centers have been built from a Gujarat Earthquake Relief Fund created after the earthquake of 26th January 2001 by employees of P&G India, Brussels, Japan, Canada, among others and the Company contribution. P&G employees also made contributions directly to the Red Cross Society for other rehabilitation work in Gujarat. In addition, P&G is currently working on forming women’s microcredit groups to ensure the sustainability of these community centers and to further empower these women and increasing the number of community centers from four to seven. •
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PROJECT POSHAN – FIGHTING MALNUTRITION IN INDIA (2000) P&G and UNICEF launched Project Poshan to combat malnutrition in India. India has 40% of the world’s malnourished children. POSHAN targeted three key projects: an Adolescent Girls’ Initiative to educate girls in Mumbai slums on health problems and improve their lives with Anemia
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prevention through IFA tablets; a Women’s Parenting Network in Chennai to provide information on care during pregnancy; and Day care projects in Jaipur, which focused on increased food intake and micro-nutrients. Once again, P&G raised Rs. 50 lakhs by contributing Re. 1/- from sales of large size packs of Ariel, Whisper, Head & Shoulders and Pantene sold in the months of May, June and July 2000. •
PROJECT OPEN MINDS – EDUCATING INDIAS WORKING YOUTH (1999) P&G in partnership with UNICEF launched Project Open Minds to support and educate children across the Australia, ASEAN and the India (AAI) region. According to UNICEF, only 55% of the children of India complete primary education. The support that P&G provided was in terms of money and publicity. For every large size pack of Vicks VapoRub, Whisper, Ariel Power Compact, Head & Shoulders and Pantene purchased by consumers during November 1999 to January 2000, P&G on behalf of consumers contributed the cost of one day’s education of a working child to the ‘OPEN MINDS’ fund. In India P&G raised Rs. 1.25 crore for ‘OPEN MINDS’ which was donated to UNICEF in February 2000 •
PROJECT DRISHTI – THE FIRST EVER SIGHT RESTORATION PROGRM IN INDIA(1999) P&G tied up with the National Association for the Blind (NAB) to launch Project Drishti and restore eyesight to 250 blind girls through corneal transplant operations. FOGSI (Federation of Obstetricians and Gynaecologist Societies of India) and UNICEF had declared 1999 as the Year of the Adolescent Girl. On studying the problems of the blind girl, P&G realized that, what better way to celebrate the FOGSI-UNICEF, Year of the Adolescent Girl (YOGA) than to attempt to give sight to as many blind girls that the company could. Till date 138 sight restoration operations have been successfully conducted across the country. •
PROJECT FUTURE FOCUS - THE FIRST EVER ROUND WRITE IN CAREER GUIDANCE SERVICE (1998) P&G in association with Resource Management Group (RMG) launched a 365 days Free Write-In Service ‘P&G Future Focus’ for the first time to the youth of India, where a panel of professional Career Counsellors would send personalized answers to letters within 15 days of the receipt of the queries. •
PROJECT PEACE - ENVIRONMENTAL EDUCATION PROGRAMME (1996) Page 15
P&G launched PEACE – a unique Environmental Education Program for children in schools across Bombay and Thane representing a crosssection of economic backgrounds. Children were exposed to a fascinating account of the Indian environmental scenario. The Multiplicity of EcoSystems in India, Air around Us, Water, Solid Waste and Adopting Conservation in our Lifestyles were the topics dealt with using interesting media like music, games, project-work, slides, video films, group discussions, etc.
CSR ACTIVITIES AT GLOBAL LEVEL Pursuing a Sustainability Business So how are companies trying to meet this challenge? P&G has worked with UNICEF to combat micronutrient malnutrition. Over half a billion people worldwide are deficient in iodine, iron and vitamin A, resulting in stunte growth, impaired learning, increased child and maternal mortality. 250,000 children go blind every year. To address this problem, P&G developed a powdered drink product, NutriStar, which effectively delivers the missing micronutrients. The product was clinically Business Council for Sustainable Development Report,April 2001. WBCSD, Geneva9 WBCSD, 2002. Sustainable Livelihoods – the business connection. World Business Council for Sustainable Development, Conches, Switzerland. tested in Tanzania, test marketed in the Philippines,then marketed in Venezuela.Every year, over three million people, many of them children, die from diarrhea. One billion two hundred million people are without access to safe drinking water, yet safe water would reduce diarrhea incidence by about one-third. The UN Millennium goal equates to delivering safe drinking water to 125,000 new people every day. The consumer marketplace is one of the few places where one can envision creating that kind of scale. Yet it has been largely ignored until now in the pursuit of safe drinking water. Several years ago, P&Gpurchased the PuR brand, a U.S. based inhome water purification business. We are developing low cost technologies, and businessmodels to bring those technologies to consumers,that will be effective on the more serious water problems in the developing world. Similarly, over 2 billion people are without adequate sanitation, and better hygiene canreduce deaths caused by diarrhoea by up to 33%. P&G has been in the bar soap business for decades, and our Safeguard brand, working in developing countries with local health ministries to create awareness about the importance of hygiene, is showing how publicprivate partnerships can reach far more people with health messages than either the ministry or we could do individually. Individuals will change their consumption practices when they realize they can improve their quality of life. In many parts of the world, dental hygiene is virtually
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unknown, or poorly developed. P&G has partnered with national organizations in many countries, including China, Poland and Russia to raise awareness. Clinical studies in Poland and Russia showed a 60% reduction in cavities. In the process, we laid the foundation for a new market where none existed before. There is also the possibility to link developed world markets to developing world needs, through causerelated marketing initiatives. P&G’s Fairy brand organized an initiative Finding the Sustainable Development Business Case 2-56 George Carpenter and Peter White Corporate Environmental Strategy: International Journal for Sustainable Business with UNICEF to help combat tuberculosis in West Africa. For every bottle of product purchased, P&G paid for a TB vaccine to be delivered by UNICEF where it was most needed. This initiative was run in Spain and Portugal, then twice in the UK, and in total delivered some 11 million TB vaccines, while building P&G’s business. These product and business model innovations can significantly improve lives, and help build business. This is not business as usual and it is not philanthropy; it is building social, environmental and economic sustainability into business in a strategic way. Developing new products and new business models for developing markets present significant challenges, however, and not all initiatives succeed. Our Nutristar product, for example, was intended for developing world markets, yet was developed with a developed world mindset. It included all of the available technology, rather than being aimed for a low purchase price. Consequently it proved impossible to reach all of the consumers who needed the product. Combined with political instability in Venezuela which prevented us from refining our business model, this led to Nutristar being withdrawn from test markets. Managing Sustainable Development The importance of the business case for delivering sustainable development cannot be overstressed. If we rely on philanthropy to deliver improved quality of life around the world, it will only go as far as the funding will allow. If we rely on the moral case alone, it will be restricted to those companies driven by high ethical standards. If there is a real business case, however, then such initiatives will continue to grow and spread, and we can start to achieve the considerable scale that is needed to deliver against the millennium development goals. Once there is a real business case, the water will start to run downhill; until now we’ve been trying to push it uphill. The real business case requires that companies link opportunity with responsibility. If the focus stays limited to just areas of corporate responsibility, the oft-quoted view that sustainability provides long term value, but short term costs, will prevail. It can also cause problems with how sustainability is managed within companies. If it is seen only as a responsibility, sustainable development will be treated as an issue to be managed, rather than as a business opportunity to be
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pursued. Consequently, it will be managed by a corporate function, much as health, safety and environment has been managed in the past. Only if responsibility is linked with opportunity is sustainable development likely to get the attention of senior management and become built into businesses in a strategic way. In Conclusion to find the real business case for sustainable development, companies need to find ways to link opportunity with responsibility. They need to: • Turn attention from just eliminating negatives to creating positives; • Move beyond eliminating “non-value” to creating “new value;” • Not just look for market-based solutions, but see the market itself as a solution; and • Evolve from seeing the value of sustainability as removing the risk from business, to seeing sustainability as their business. In no way do we claim that we, or our company, have fully figured out the business case for sustainable development. However, we do know that a robust business case is necessary to deliver a better quality of life on the scale needed to achieve the development goals that the world has set. When Procter & Gamble had to promote Biomat, a laundry detergent in Israel, they were in a quandary. Their primary audience were the Jews who were orthodox to the core. They shunned conventional mass media like TV & radio as they saw it as bad influence. P&G decided to appeal to their motivation for charity - to help the needy. The initiative included a road show of a mobile Laundromat - people were urged to give their old clothes for charity. These clothes would then be cleaned at the Laundromat (using Biomat, of course) and then given to the needy. While this may not be the conventional CSR initiative (long term, cause-related) other such examples abound. In India, Sakthi Masala has been consistent in its CSR effort to help the disabled. They offer employment opportunities and rehabilitation centres for the disabled. P&G India's CSR initiative - Shiksha - has been successfully contributing to CRY. They motivate consumers to purchase certain brands of P&G - a part of the sale proceeds are then contributed to the CR fund.
CSR in Pakistan: Starting with the company’s health-related activities, it certainly has done a magnanimous job. Whether it’s infant health, issues faced by adolescent girls or mothers, the company has initiated awareness programs for each
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of them. The CSR activity is carried out on a national scale unlike Unilever Pakistan and is brand-oriented. Like Safe Guard Mother Education Program, Sehat-o-Safai Program, Always Agahi Program or Pantene Solo Program, among others. The company has recently launched Khwabon Sey Aagey initiative in collaboration with the Pakistan Medical Association. The program is aimed at saving the lives of new born babies. Similarly, in the education sector, the company is running many development programs. The initiatives includes building and refurbishing of schools including those in the earthquake ravaged areas. Speaking of media campaigns, the company is way ahead and is breaking many new boundaries. Commander Safeguard was the most popular TV campaign in the history of Pakistan. The P&G team devised a new superhero type character and created excellent animations at par with international standards. The animation films, propagating health and cleanliness awareness, became a craze in the kiddos and not-so-kiddos alike. Having written a lot of praise for the company and that too sans any monetary benefits, now I’ll shift my gears towards some positive criticism. All of the P&G health and awareness campaigns involve the participation of the customers. Involvement of the customers is good but the company is actually promoting its products and increasing sales by advertising its CSR efforts. The trend started more than a decade ago with Anwar Maqsood and some other showbiz personalities flaunting Ariel as the best detergent as it’s helping building schools for the underprivileged. The advertisement said that the more Ariel packs you buy the more money will go into school building. That was a new advertising gimmick then and people responded very heavily making Ariel the most selling detergent of the time. Given the huge success of Ariel education campaign, P&G made it a core strategy to never start any ’socially responsible’ project unless and until there are some prospects of increasing the sales of a particular product. Now I can’t decipher why the world’s biggest FMCG company, which is earning millions from Pakistan as well, is so tight-budgeted that it can’t spend a million or two for a social cause? At least Unilever is not promoting its products for its so-called CSR projects regardless of their microscopic nature. Can someone please bring some CSR sanity to the P&G top shots?
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P&G's Partnerships with NGOs to Deliver Water Purification Product: In 2003, a $20 million R&D and marketing project at Procter & Gamble (P&G) had reached a financial impasse after eight years of work. A decade earlier, the company had spotted an opportunity to supply a waterpurifying product to the developing world, which, it was hoped, would increase the company's share of the mass consumer market in the emerging economies. At the same time, the company believed it could save lives by providing a simple way to purify household and drinking water. Unsafe water supplies and inadequate sanitation kill more than 3 million people every year, making this problem collectively more lethal than Aids. The project stalled in late 2003 when it became clear that the financial returns for selling a powder product called PUR Purifier of Water did not justify further investment in commercial terms. At this point, P&G changed tack, transforming the project into a corporate social responsibility (CSR) programme. Alan Lafley, P&G's president and chief executive, moved it to the corporate sustainability department (CSD), itself a new division. Thereafter, the company developed partnerships with not-for-profit organisations in social, health services and humanitarian relief to market and distribute the product more effectively. Procter & Gamble's partnership with non-profit organisations is proof that local markets can be won over to new products. In 2003, a $20 million R&D and marketing project at Procter & Gamble (P&G) had reached a financial impasse after eight years of work. A decade earlier, the company had spotted an opportunity to supply a waterpurifying product to the developing world, which, it was hoped, would increase the company's share of the mass consumer market in the emerging economies. At the same time, the company believed it could save lives by providing a simple way to purify household and drinking water. Unsafe water supplies and inadequate sanitation kill more than 3 million people every year, making this problem collectively more lethal than Aids. The project stalled in late 2003 when it became clear that the financial returns for selling a powder product called PUR Purifier of Water did not Page 20
justify further investment in commercial terms. At this point, P&G changed tack, transforming the project into a corporate social responsibility (CSR) programme. Alan Lafley, P&G's president and chief executive, moved it to the corporate sustainability department (CSD), itself a new division. Thereafter, the company developed partnerships with not-for-profit organisations in social, health services and humanitarian relief to market and distribute the product more effectively. P&G Pakistan tried the commercial route once more in 2004, but the results were not encouraging. In 2005, P&G officially announced its new non-commercial approach and its decision to sell PUR at $0.04 per sachet, the cost of production. PUR would be sold at cost to non-profit partners, but a large number of donations of the product would be paid for by P&G corporate philanthropy and employee donations. The new non-profit strategy proved a success and by the end of 2006, P&G had sold 57 million sachets, at cost, to humanitarian organisations, in contrast to the mere 3 million sachets sold during the commercial phase. The biggest lesson of this study is that P&G knew when to close the commercial venture and when to leverage partnerships with non-profit organisations to fulfill a broader social need. It did so with clear expectations about the cost of making it sustainable, meaning that PUR would be a non-profit venture - driven by a social mission rather than profits. It left the social marketing - educating the target customer about the risks of untreated water and distributing the product at an affordable price - to the non-profit organisations. P&G first researched new water-purifying technologies in 1991, following a major outbreak of cholera in Central America. P&G's diluted chlorine bleach water-purification technology was not well received by all its target customers in the region, some of whom said that the water looked dirty and tasted of chlorine. In 1995, the company signed a collaborative research agreement with the US Centers for Disease Control and Prevention (CDC) to test and develop water-purification products. After joining forces with CDC, P&G tested a low-cost water filter in Guatemala, but local people complained that the filters clogged up too quickly. P&G then reverse-engineered the municipal water treatment process, leading to the discovery of the powder product. PUR is a sachet of powder, which when swirled into a 10-litre bucket of dirty water results in clean and safe drinking water. It was launched in
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2000, priced for a low-income commercial market at $0.08-$0.10 a sachet. Independent studies show that it is effective in reducing the cases of water-borne disease, with an upper range of 90% and an average disease reduction rate of 50%. However, after three years of market tests in Guatemala, Morocco and Pakistan, the product had not made a profit. Mixed results came back in 2003, with repeat purchase rates of 5%, 10% and sometimes 25%. The decision then facing Lafley was clear: push ahead on the PUR initiative, given its public health benefits, or terminate the initiative, given its costs and low returns. Employees who had worked with the product, however, found it difficult to shut down a product line that held so much promise. Greg Allgood, who worked in the consumer health products unit, recalls an internal memo: "The memo had no conclusion about what to do with the product, but it was very clear that no product engaged our employees and our stakeholders - customers, governments, UN groups, NGOs - like this one." PUR was relaunched as a CSR product in 2004 within the Safe Drinking Water Alliance, a partnership comprising P&G and the Johns Hopkins University Bloomberg School of Public Health's Center for Communication Programs (CCP), Population Services International (PSI) and UK charity Care. The Safe Drinking Water Alliance was the first in a series of partnerships between P&G and non-profit organisations featuring PUR and was designed as a pilot programme to test three marketing strategies: social marketing, commercial marketing and disaster and humanitarian relief networks. Now working in P&G's CSD unit as director of the Children's Safe Drinking Water (CSDW) programme, Allgood says: "Our purpose as a company is to improve the lives of the world's consumers. Our brands, such as Pantene, Oil of Olay, Always, Tide and Ariel, touch consumers every day in ways that meet their needs. Our focal philanthropy programme, the Children's Safe Drinking Water programme, makes our purpose as a company tangible for our employees and critical stakeholders." Simple in theory, but finding the right formula is often more difficult. Local barriers to entry are often tricky to overcome in 'bottom of the pyramid' markets. Certainly, P&G discovered that traditional marketing methods did not work; consumers were suspicious of new products that required them to change the way they managed their lives. During 2004, it began a new testing strategy. Putting the product into the CSD unit and turning
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it into a non-profit venture gave enthusiasts such as Allgood the room to explore alternative marketing.
In a Nutshell: • • •
P&G, a giant in FMCG industry, is one of the most efficient corporations on the global platform P&G’s success is largely attributed to its corporate strategies and the management decisions A fierce competitor in its field, P&G is also environmentally conscious and tries to do minimise the loss/harm caused due to their production processes
• It constantly makes sure to have its technologies updated and processes complying all the laws and regulations thus making sure that its ethical responsibilities are met with • On the CSR front, we can see that P&G has constantly been active in being SOCIALLY CONSCIOUS AND CONTRIBUTING and a responsible CORPORATE CITIZEN • The various CSR activities carried out by Procter and Gamble demonstrate the diverse issues that they have tried to solve and valuable contributions they have made • Finally, if we look at their activities and their Mission and Values they tally to a great extent which tells us that they always have their goals on their mind while carrying out its business operations
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