Innovation

The innovation being implemented is the reduction of waste in the environment, particularly emphasizing the elimination of unsafe ingredients used in their products, such as microplastics that are not biodegradable. Colgate-Palmolive previously used microbeads in select few of their products to improve the aesthetic appearance and ability to clean, prior to knowledge of the consequences on the planet. This innovation emerged as a result of Colgate’s outside sources of research and development recognizing the potential contribution of pollution to the environment caused by the ingredients, mostly in the world’s oceans and lakes.

At the end of the day, upper level management in the company makes the decisions regarding the ingredients used in the formulas of their products; however, the creation of this innovation was a collaborative effort from many different parties. Both the groups of people that raised the concerns regarding the environmental impact of these microplastics and the Colgate-Palmolive business partners who conducted the research to confirm that these ingredients were harmful to the planet played a huge role in its creation. Having said that, upper level management did have to balance incurring the cost of conducting the research and reformulating the products that contained these ingredients while keeping shareholders happy and maintaining profits. Credit must be also given to the trusted suppliers of Colgate-Palmolive for working with them in the elimination of microplastic from their formulas and supporting their goals set towards sustainability. Lastly, the creation and implementation of this innovation would not have been possible without the necessary capital funded by the shareholders of Colgate-Palmolive.

This innovation relates to Colgate's mission of striving to have a positive impact on the planet all while efficiently earning profit. This innovation most directly affects the 14th of the 17 UN Sustainable Development Goals, “Life Below Water,” due to the fact that elimination of microplastics from Colgate-Palmolive’s products is significantly reduces pollution of the world’s oceans and lakes. A quote from the interview with employee Pooja Kulkarni that best describes the innovation is when she stated that they have removed harmful microbeads from products and “replaced them with biodegradable beads to make the product safer to use in terms of the environment.” It is truly inspiring to see that a company such as Colgate-Palmolive is not only concerned with making money, but also cares about the long-term well-being of the planet.

Inspiration

Colgate-Palmolive’s main inspiration for its sustainability efforts comes from the core values which make up the organizational culture of the company. The first value Colgate holds true is Caring. Colgate truly cares for not only their employees, but for their consumers and environment too, and works effortlessly to align their innovations specifically with the health and care of each. Their third value, Continuous Improvement, motivates personnel to search for innovation, not only to improve performance, but to improve on the positive and negative effects that come from the usage of Colgate products, and their sustainable efforts.

The most effective core value that advocates innovation is the second one, Global Teamwork. By having an extensive global reach, through foreign employment, sourcing, and partnerships, Colgate maintains a voice for all employees and consumers. This allows them to share vital information regarding the impact Colgate products and efforts have on the environment and community across the globe, further helping to drive and maximize the impact of their sustainability initiatives.

Colgate-Palmolive also derives inspiration from the commitment to the specific Global goals that they set for themselves. These five goals include: "Helping Colgate people and their families live better, Contributing to the communities where we live and work, brands that delight consumers and sustain our world, making every drop of water count, and reducing our impact on climate and the environment." It is important to note these goals and standards are held against Colgate by the corporation itself. Pooja discussed the importance of this in our interview by noting that most of the projects she was discussing with us were derived from efforts, “not enforced by environmental focus groups or government environmental protection agencies.” These were efforts made to keep the integrity and social responsibility of Colgate-Palmolive greater than any global corporation like it.

Overall impact

The creation and implementation of this innovation by Colgate-Palmolive has had positive effects on its business, society and the environment.

The effect is evident in that Colgate-Palmolive has improved the sustainability profile in 78% of its products and no longer has any products containing microbeads or phthalates. Society is benefitting from this innovation due to the fact that the environment they live in is being made safer and that the contamination of waters that we consume fish from and drink water from, is being reduced. A quotation from the interview that stands out is when Pooja explained that the innovation, “was so impactful because it helped us stop contaminating the environment, as well as the water we drink and helping marine animals.” Colgate-Palmolive was named to the 2017 World’s Most Ethical Companies list, 2016 Most Innovative Growth Companies list in India by Forbes Magazine and was one of 25 companies globally named to the Water A List for leadership in water stewardship. In 2016, Forbes Magazine named Colgate-Palmolive one of the World’s Most Valuable Brands, Most Innovative Companies and 25 Most Reputable Companies. The short term effects of the innovation were significant improvements in profitability of the company as well as considerable benefits to society and the environment. This innovation is fairly new so there is not much information to accurately examine its long-term effects; however, based on its progress, the future looks promising.

Business benefit

Despite the efforts made towards continuously making their products safer for the Earth and its inhabitants, since 2012 this company has experienced a 2% increase in gross profit margin, a $0.13 increase in diluted earnings ($ per share) and a $0.33 increase in dividends paid ($ per share). Gross profit margin and dividends paid are significant indicators of the profitability of a company. Not only are they making the world a safer place, but they are also significantly increasing the profit they earn and keeping investors happy by making them money.

Colgate-Palmolive finds it extremely important to make sure that they use ingredients in their products that are not only safe to consumers but also to the environment. Colgate feels that it is not enough to preserve their image of product safety and environmentally friendly products but they must continually improve as a company to earn the trust of their customers.

Colgate has made it clear that they listen to their customers concerns and will do whatever it takes to earn their trust. Recently, they introduced a list to their website to discuss the safety of certain ingredients used in their products and other ingredients they no longer use. This was done after listening to customer concerns about products they no longer feel are safe or beneficial to use. An example of this is Colgate no longer uses microplastics in their toothpastes because of a concern that microplastics could have a negative impact on ocean pollution. This transparency and ability to learn and improve as a company benefited Colgate in customer growth and trust, with is extremely important for a company that produces health products.

Social and environmental benefit

Colgate's innovation has many societal and environmental benefits. Since the microbeads in the soaps and toothpastes did not get filtered out in the lakes, this meant that the microbeads remained in the lakes. The microbeads were harmful to the marine animals, and caused them to die. This is harmful towards the environment due to an increase in the death of aquatic animals. These microbeads also contaminated the water which is bad for society because this is the water that humans consume. By removing the microbeads, Colgate limited the amount of contaminants in lakes and rivers. This caused a decrease in the death of aquatic animals due to the microbeads, and a decrease of contaminants in the water which helped the water humans drink become more clean. Overall, the removal of microbeads in both soaps and toothpastes helped both the environment and society.

Interview

Pooja Kulkarni, Research Scientist