Collaborative Efforts on Sustainability in the Home Care Industry:

Opportunities and Challenges

Patrick Donnelly, Ph.D.

AOCS

• AOCS (American Oil Chemists' Society) is an international scientific society open to all who are interested in fats, oils, surfactants, detergents and related materials.

• Founded in 1909

• Over 4,300 members from over 90 countries worldwide

Population growth Increase in life expectancy Rise in living standards Increase in consumption Resource limitations

Need for Sustainability

I am very concerned about environmental problems

47%

54%

56%

68%

70%

72%

34%

31%

31%

25%

24%

21%

19%

15%

13%

9%

6%

7%

0% 20% 40% 60% 80% 100%

Americans

Canadians

Argentineans

Brazilians

Mexicans

AgreeNeutralDisagree

Average (17 Nations)

Source: Greendex 2012: Consumer Choice and the Environment

I Am Currently Trying Very Hard to Reduce My Own Negative Impact on the Environment

15%

43%

44%

45%

55%

65%

60%

47%

36%

40%

32%

31%

25%

10%

20%

15%

13%

4%

0% 20% 40% 60% 80% 100%

Americans

Argentineans

Canadians

Brazilians

Mexicans

Agree

Neutral

Disagree

Average (17 Nations)

Source: Greendex 2012: Consumer Choice and the Environment

Industry Response to Sustainability

• Corporate sustainability efforts have traditionally been performed in isolation, focused on improving efficiencies in manufacturing and within the supply chain – Greenhouse Gas Emissions

– Energy Use

– Worker Safety

– Water Use

– Waste Generation

The Business Case for Collaboration

0 10 20 30 40 50

Sharing/reducing costs

Achieving first-mover advantage

Strengthening reputation and leadershipcredentials

Sharing/reducing risk

Sharing expertise, competencies, orperspectives

Source: GlobeScan, Collaborating for a Sustainable Future (2013)

46

46

35

29

23

% Responses

Progress on Sustainability: Importance v. Ease of Collaboration (% total mentions)

Most important for collaboration Ease of collaboration

Source: GlobeScan, Collaborating for a Sustainable Future (2013)

Collaborative Efforts in the Home Care Industry

• AOCS examined collaborative efforts for sustainability in the home care industry

• Activities were mapped geographically and by “life cycle” stage

• A “roadmap” was developed describing – The business case for collaboration

– Select case studies throughout the product lifecycle

– A more extensive list of activities and resources to support the industry

• Objective is to expand and amplify collaborative efforts

Collaborative Efforts in the Home Care Industry

• Key findings: – Collaboration is an important

tool to advance sustainability

– Reliance on a lifecycle approach gives focus and priority to key areas

– Focus on one or two key areas is important for success (build programs over time)

– The issues are complex, there an iterative approach, coupled with realistic expectations, is essential.

• Anticipated release: fall 2014

Despite Industry Efforts, Challenges to Sustainability Remain

• Consumer expectations on product performance

• Consumer willingness to pay higher prices

• Consumer behavior/culture

• How can industry shape consumer demand?

“Others” 5-10%

Extremely price-centric;

“Never Greens”

“Mainstream Consumers” 75-80%

Generally consider themselves

“sustainably aligned” but tend to be unwilling to

accept trade-offs or pay higher prices

“Greens” 10-15%

Deeply committed to sustainable concepts

Willing to accept trade-offs and pay higher prices

Consumer Sustainability Mindset Model

“Others” 5-10%

Extremely price-centric;

“Never Greens”

“Mainstream Consumers” 75-80%

Generally consider themselves

“sustainably aligned” but tend to be unwilling to

accept trade-offs or pay higher prices

“Greens” 10-15%

Deeply committed to sustainable concepts

Willing to accept trade-offs and pay higher prices

Consumer Sustainability Mindset Model

The Sustainability Challenge

The Rise of Social Media

“Others” 5-10%

Extremely price-centric;

“Never Greens”

“Mainstream Consumers” 75-80%

Generally consider themselves

“sustainably aligned” but tend to be unwilling to

accept trade-offs or pay higher prices

“Greens” 10-15%

Deeply committed to sustainable concepts

Willing to accept trade-offs and pay higher prices

Consumer Sustainability Mindset Model

Social Media Susceptible?

“Others” 5-10%

Extremely price-centric;

“Never Greens”

“Mainstream Consumers” 75-80%

Generally consider themselves

“sustainably aligned” but tend to be unwilling to

accept trade-offs or pay higher prices

“Greens” 10-15%

Deeply committed to sustainable concepts

Willing to accept trade-offs and pay higher prices

Consumer Sustainability Mindset Model

? Social Media Susceptible?

Gamification

• Use of game elements and game design techniques into a non-game environment in order to educate, change attitude or behavior and inspire action

• Goal is to motivate people to do something by making the experience fun, rewarding, and desirable (i.e., game-like)

Gamification works

• 375M people play (and pay for) social games each month on facebook

• 120+ M people enrolled in travel reward programs

• Retailers are increasing awarding “points & badges” to encourage store visits

Summary

• Collaboration is an important tool for advancing sustainability in the home care industry

• Consumer “willingness to pay” and longstanding cultural/behavior elements remain significant barriers to sustainability

• Social media technologies have created new opportunities to promote sustainability and interact with consumers

• Gamification may emerge as an important strategy not only to educate consumers, but to shape attitudes and behaviors of consumers with respect to sustainability.