- 07 Jun 2023
- Climate Rising
Beyond Net Zero: How Seventh Generation Plans to Achieve Real Zero Carbon
Resources
Company resources:
Other resources:
- Clean Creatives public relations consortium
- Climate Rising episode: Strengthening Carbon Offsets: The Oxford Offsetting Principles (3/23/22)
Guests
Climate Rising Host: Professor Mike Toffel, Faculty Chair, Business & Environment Initiative
Ashley Orgain, Chief Impact Officer, Seventh Generation
Transcript
Editor’s Note: The following was prepared by a machine algorithm, and may not perfectly reflect the audio file of the interview.
Mike Toffel:
This is Climate Rising, a podcast from Harvard Business School. And I'm your host Mike Toffel, a professor here at HBS. A lot of companies have declared net zero climate targets. Today is the first in a series of episodes that seeks to unpack what that means and how companies are going about achieving these commitments.
In this episode, I'm talking with Ashley Orgain, Chief Impact Officer at Seventh Generation, a home care company that's built its entire brand around sustainability. I'll ask Ashley why they've chosen to set a real zero goal instead of a net zero goal and what that means in practice. I'll also ask her how Seventh Generation is applying its climate lens to aspects of their business that aren't typically included in corporate climate goals like marketing and creative services. Here's my interview with Ashley Orgain from Seventh Generation.
Ashley, thanks so much for joining us here on Climate Rising.
Ashley Orgain:
Mike, it's great to be here.
Mike Toffel:
Let's start with an introduction. What's your role at Seventh Generation and maybe a bit about how you got there.
Ashley Orgain:
I am Seventh Gen's first ever Chief Impact Officer, and I've held that position for about a year now. Before that, I was our head of advocacy and sustainability, and I started at the company about 14 years ago. I started as an intern when I was pursuing my MBA in green business and knocked on the door of the head of sustainability at the time and asked if they had any special projects and that was my entree in. And so from intern to chief impact officer, my scope now includes overseeing all of our environmental and social impact.
Mike Toffel:
Tell us a little bit about the company. Seventh Generation's been around for a while, but some of our listeners might not be familiar with it.
Ashley Orgain:
Seventh Generation's been around for 30 years, and the inspiration behind the name comes from the Great Law of the Iroquois that in our every deliberation, we'll consider our impact on the next seven generations. So from day one, we have been putting out environmentally preferable home care products. For a period of time, we also produced a line of baby care. We sell everything from laundry detergent to spray cleaners, and we do so across the country in a variety of different grocery stores and natural retailers.
Mike Toffel:
So U.S. focused as far as your markets?
Ashley Orgain:
We are U.S. focused, correct.
Mike Toffel:
Got it. Let's talk a little bit about its climate journey. I've known a Seventh Generation for recyclable or compostable products, products with all natural ingredients. More recently, Seventh Generation has been sort of leaning in, as with many companies, to understand its carbon footprint and think about climate change in a more focused way. I know that your recent 2021 climate impact report notes that for scopes 1 and 2, the carbon emissions that are associated with your onsite operations and with your purchased electricity, that you've reduced them to zero. Not a lot of companies have made such a claim. I wonder if you can tell us, first of all, what are those emissions and then how did you go about reducing them to zero?
Ashley Orgain:
Well, let me first by saying I don't want us to get more credit than we're due for this achievement because a lot of it has to do with the fact that Seventh Generation is based in Burlington, Vermont and that we don't have any of our own facilities. And so we're leasing facilities and exist in a city that is energized by 100% renewable energy and we have access to thermal that is also renewable. So we have set this ambitious target to get to a 100%, and it was a partnership that we had with our city to be able to achieve. And it really is just the fact that we don't run our own manufacturing. We just lease our office buildings.
Mike Toffel:
Okay, great. So then let's talk about what I will refer to as your upstream, which is the manufacturing of your products, which are done by suppliers. That's part of your scope 3 and then the downstream is the use of the products and the carbon emissions that's associated with its use. But let's start upstream. Tell us a little bit about what you're doing with your suppliers to measure and reduce their carbon impacts.
Ashley Orgain:
So scope 3, that's where the problem exists and where we have put all of our energy and effort. When you look upstream, about 60% of our carbon emissions come from the materials, the ingredients, and the packaging that we use to make our products. The number one driver of that 60% is actually a key raw material, palm kernel oil, that we use for our key ingredient surfactants in our cleaning agents. So that is something that we have been aware of and we have been setting targets against as it has been uncovered.
The second big emission driver of that 60% is another key raw material, citric acid and sodium citrate. The emissions from that raw material come from the fact that that is manufactured in Asia on a dirty energy system. And so we've set target to address that by shifting our sourcing to cleaner energy grids. Europe, North America is where we're starting to set specs for sourcing those raw materials.
And then finally, in our polymers, that makes up the remaining part of our scope 3 upstream. And we have already benefited from mission reductions in choosing to have 100% recyclable PCR in our packaging, but we do have a little bit left to go. And some of the plastics that we use are virgin. And so we have a target to move our polymers towards recycled content versus virgin content.
Mike Toffel:
Let me just circle back on some of these materials or ingredients that you're referring to. On the citric acid, you referred to the idea that you're going to change manufacturers so that you can procure these materials from cleaner grids. There's lots of things that tend to go into these procurement decisions, cost, availability, responsiveness, quality, and one doesn't hear grid cleanliness as a top 10 factor in the conversations that I have with folks about where are they going to procure or where are they going to build their plants. Is this new or is this just an area that you are emphasizing that most other companies don't? And where does this fit among the many other things that must go into the decision about where to procure?
Ashley Orgain:
It's not new to us. I mean, when we look at the decisions that are within our direct control, where we can drive down our emissions, this rises to the top. And so that means that we have to dedicate time and attention and resources against it. It's not a decision that the sustainability team can make alone. And so as you point out, it requires really strong partnership with our procurement teams. It isn't something that we can turn on a dime usually when it’s six or nine months’ period of time. It takes a lot of lead time to find those suppliers, to build those relationships, to get those contracts. So it is something again, that has been set out as an emission we want to reduce. We have a sense of the intervention that needs to be made and now it's about building the relationships and the plan to get there.
Mike Toffel:
Right. And then on the palm oil side, Palm oil has, in some places, been critiqued as an enabler of deforestation, especially in the tropics, which has climate impacts and also has ecosystem preservation concerns. How have you been navigating the palm oil situation?
Ashley Orgain:
Palm oil's been a very sticky issue for us for over a decade. When we understood the devastation to the environment, to the communities, to the ecosystem from this raw material, we set out as one of the first in our industry to commit to RSPO Certification. So over a decade ago, we were at the table helping to shape the standards around the Roundtable on Sustainable Palm Oil. We have been pursuing RSPO for the last decade, but we now understand that the sustainable production is just a first step, that actually what we want to now pursue is regenerative agriculture. And so the role that we're playing right now is helping to shape the next level of standards that we anticipate will come to continuously improve the sourcing of this ingredient that'll be beneficial to livelihoods and the environment.
Mike Toffel:
Great. So just to clarify, RSPO is a standard in the palm oil space that lays out what are the minimum acceptable practices of sustainable palm oil. Is that right?
Ashley Orgain:
Correct. Yes.
Mike Toffel:
Great. All right, so let's talk downstream. We've talked about some of the major impacts of the materials and the ingredients and the packaging on the upstream side. On the downstream side, your detergents and cleaners are being used by customers and you've identified that as another area, which has climate impacts based on the use of your materials. Can you talk a little bit about, again, what are those issues and then what steps are you taking to try and reduce?
Ashley Orgain:
This is where we see actually the most significant impact that we have from a carbon emission standpoint. Because when you look at our scope 3 in totality, 90% of that is from consumer use. You back out consumer use and the upstream portions, 60% of that is materials and ingredients and packaging that we just discussed. You put that back in, we still have 90% that actually comes from consumers washing and drying their clothes and washing and drying their dishes. And the energy that their homes are using that on, an outsized basis is coming from a dirty electricity grid. So that is where we see the impact from the use phase of our products.
Mike Toffel:
And so what can you do based on the fact that your customers live where they live and they have the grid that they have, and by using your materials, using your products, they're washing their clothes or washing their dishes? What can a company like Seventh Generation do to reduce those impacts?
Ashley Orgain:
Well, first and foremost, we want to make sure that the products that our consumers use can be efficacious in cold water because the impact that comes when you dial up your water to hot or to warm versus keeping it at cold. So number one thing we do is formulate to work in cold water.
The second thing we do is we educate folks that this is an action you can take, a decision you can make in your own home to reduce your carbon emissions, but we understand that the burden shouldn't be on the consumer alone. That actually this is a much bigger problem that we're facing as a society and what we need to be doing is moving towards a more renewable electrical energy grid. And so where we find ourselves playing more and more of an aggressive role is in the advocacy and pushing for progressive public policy around clean renewable energy.
Mike Toffel:
Got it. What you're describing is sort of both the demand side of the customer space, which is that they should hopefully use cold water since your products enable them to do so and therefore they can require less energy. And on the same side, green the grid so that the energy that they do use is less carbon intensive. Is that the right way to think about that?
Ashley Orgain:
That's right, yes.
Mike Toffel:
Thanks for reviewing some of the major climate impacts associated with your products. Let's talk a bit about the target setting because one of the things that was most interesting to me when I was recently becoming reacquainted with Seventh Generation and its climate story is that you've set a goal that you call real zero. In the goal setting space, there's net zero goals, there's science-based target associated goals, and now there's real zero goals. I wonder if you can help us think through, first of all, what's the difference between these and why you've chosen to lean into the real zero as the goal of choice?
Ashley Orgain:
If we're talking about what real zero is, I think it's helpful to talk about what it's not and it's not net zero. When you look at net zero, it's really about balancing out a company's emissions from what they're producing to what is being extracted. For Seventh Generation, we look at that and say, "That's not sufficient." That what we know we need to leave a healthier livable planet for future generations is to ensure that there's no production and no emissions at the point of source.
So we set to counter what was being heralded as net zero commitments, a real zero commitment, that our efforts are going to go against driving down to total source emission reductions. And it's important to understand the role that we feel like we play within the sustainable business movement is that Seventh Gen has always been a provocateur. We've been out there at the front pushing more progressive ideas, hoping that we're creating a pull for other companies to come along. So net zero, I would say, laudable commitments, yes, but when you start to unpack some of the activities that we're seeing other companies pursue, they're not getting to the root cause of the issue. And so we wanted to expose that with a real zero commitment and encourage others to come along with us with that source production.
Mike Toffel:
So can you say either conceptually or more tangibly, what are some of the steps that other companies are taking that you would not take because you have a real zero goal and not a net zero goal?
Ashley Orgain:
We're seeing a lot of companies’ activities lead them to offsetting and we're seeing several companies make commitments that they are going to be foresting a certain acreage or hectarage to offset the amount of emissions that are being produced in production or manufacturing. We know that there is not enough land on planet Earth for all the foresting activities that would need to occur to offset those emissions that are being produced. So Seventh Generation has made a commitment that we are going to move and we have moved away from offsetting. That is not an aspect of our strategy. Where you'll find other companies in this current environment, that is key to them being able to achieve what they're calling net zero.
Mike Toffel:
You mentioned the offsets aren't sufficiently scalable and of course there's lots of other concerns about offsets with the additionality and the measurement and the permanence and so on. We've talked about that in earlier episodes. Offsets still are a challenging area for sure. What about on the scope 2 side? You mentioned earlier that given your location, you have direct access to renewable power, but not everyone does. And so you see things like RECs or procurement programs to try and stimulate the demand and therefore the supply of renewables somewhere else. Would that be within the real zero? Is that allowed or would that also not be allowed?
Ashley Orgain:
That is allowed and is actually key to our strategy, and core principle to that is additionality. So we have, as I shared, manufacturers who make Seventh Gen products. We don't make them ourselves. And we have a commitment to what we call a green power program that has been set as an expectation of all of our manufacturers to procure green power for the percentage of business that Seventh Generation is of their overall portfolio. And renewable energy credits tend to be key to them achieving that expectation.
Mike Toffel:
Okay, that's super interesting. What about science-based targets? Where does that fit into this conversation?
Ashley Orgain:
Well, we've also set a science-based target. We actually were one of the first in our industry. We submitted back in 2017 and got approval in 2018. We have a 90% consumer use emission reduction target, incredibly aggressive. We also have an 80% reduction from our materials ingredients impact.
Mike Toffel:
Making commitments upstream is something that we see with a lot of companies and they demand data from their suppliers to track their progress. But it's much less common as far as I know, to set a goal of consumer use or downstream. How will you keep track of the progress you're making with the educational campaigns, the advocacy work you mentioned earlier? How will you know whether you're on track or ahead of schedule or behind schedule?
Ashley Orgain:
Right now, we're looking at the public policy wins and the campaigns that we have been working on for the last, three, four years. We started with a city level campaign and then moved to state-based campaigns, looking at city level commitments to renewable and clean energy and then the same for the state. So we're tracking progress in that direction.
At the federal level, at one point in time, we're tracking progress against the Clean Power Plan. We're now looking at what is going to come from the IRA. While obviously not directly because of our activity alone, we have been able to educate and mobilize our consumers, right alongside the NGOs that are leading this work and driving our fans to those organizations to take action and participate in the public policy changes.
Mike Toffel:
Got it. So it's a more macro approach as opposed to putting in sensors at your customers washing machines or dishwashers to see how often they are using a cold cycle, for example.
Ashley Orgain:
We have not gotten that technical, but we have asked consumers to reply to surveys and ask how often are they washing in cold and we track that as well.
Mike Toffel:
Where is that nowadays? What's the ballpark sense of that?
Ashley Orgain:
I would say we're 30% to 60% and it's such a gap because what we're seeing quite often is consumers intend to do something, but the follow through of behavior is not always there.
Mike Toffel:
What are the main channels through which you sell? You used to sell direct, if I recall correctly.
Ashley Orgain:
For a brief period of time, you're right, we had a direct to consumer business. We have a very healthy online e-com business across multiple retailers. We also are in bricks and mortar on shelf at Target and Walmart, your Hannafords, your Stop & Shop. Depending upon where you are regionally, many groceries across the U.S.
Mike Toffel:
Yeah. I think what folks who haven't thought about this space much may not recognize is that having these distribution channels separates the brands from their customers as opposed to those who sell direct where they get direct knowledge of who their customers are, what the bundle of goods that they procure, how often they do so, where they actually live. In the case of most companies that sell through middlemen of various types, you have an approximation. You know how much you sell to this Hannafords grocery store and you can approximate what electricity grids are large, but you can't really know whether those customers have electrical heat or whether they have natural gas heat unless they respond to surveys that you must include in your packaging, I imagine.
Ashley Orgain:
That's correct, yes.
Mike Toffel:
It's a challenge to keep track of consumers when they're separated like that.
Ashley Orgain:
It is. And so I would say as a mission-based business, we think much more than just the sustainability targets that we're setting. We truly want to leave the world a better place and not just for the select few that are buying Seventh Gen, but what is it going to look like and what are the systems that we need to participate in changing so that seven generations out from now we have a healthy livable planet.
Mike Toffel:
Let's talk about some of the tools that you've deployed that I think are quite interesting to prioritize your efforts. For example, I know that you've at least contemplated using an internal carbon tax, which creates a shadow price based on how carbon intensive various options are when you're thinking about new products or new locations. Can you tell us a little bit about that and is it a real cost or is it just sort of a paperwork cost? How does that play out?
Ashley Orgain:
We set a voluntary internal tax on carbon back in 2015. To be quite honest, we really struggled to get the right kinds of behaviors out of that vehicle over the course of its lifetime. So we have shifted the model. But what it was intended to do was really to incentivize core business functions to think about what they can do on a year-to-year basis to make improvements against our emissions. Where we ended up running into challenges is early on we could make improvements. We could work with our logistics teams to buy biodiesel, we could work with our supply teams to push out green power programs.
But when you start looking at some of these real significant drivers like palm kernel oil, like sodium citrates, the activities were much longer lead than the annual cycle at which we set and generated revenue for this tax. And so we rethought the approach and we actually retired the carbon tax in its original form and we put in place what we're calling a carbon fund. And so we still set aside, based on our upstream emissions, money every year that funds key projects to target those top three drivers of our MEPS, our Materials Engagement Packaging.
Mike Toffel:
What does it mean to fund those processes, given you outsource these, they're independent suppliers? So you have funds, they are made available to your suppliers to help them as a sort of a co-investment process?
Ashley Orgain:
What it looks like this year, because this is the first year we're piloting the program with the fund, is we're actually supporting two on-the-ground implementation partners in Indonesia that are helping to build out a regenerative agricultural standard for palm kernel oil. They're working directly with farmers, small holders that are producing palm that will go to mills that hopefully someday will be within Seventh Generation supply shed and it'll be an improved footprint that we aim to benefit from in the longer term. So starting to get those kind of systems change initiatives underway with this fund for a longer lead emission reduction impact.
Mike Toffel:
It's interesting that you're choosing this approach to develop a scheme that could change the whole industry and that you hope leads to changes by not just your suppliers but lots of suppliers as opposed to working directly with your own suppliers and sort of trying to fix that narrow slice. That sounds to me it's consistent with your mission base approach, which you mentioned earlier. Is that right?
Ashley Orgain:
That's right on. I would also say, and we didn't touch on this earlier, but Seventh Generation was acquired by Unilever back in 2017. And so visibility to the farms that are producing the palm that would end up as a raw material for our ingredients has become more complex. And so our role is to help create what could be a standard that can get scaled by a Unilever later in time. So it's not just for the broader industry, but it's also what's this role that we can play within our parent company that we look to.
Mike Toffel:
Let's talk a little bit about this change in ownership to Unilever. How did that affect the environmental and climate programming at Seventh Generation?
Ashley Orgain:
In really great ways actually. I mean, they invested in this business that enabled us to grow this team to the size of five. And for a small business that's a lot of headcount. I truly believe, and we were shared this information at the sale that they wanted to buy Seventh Generation because of our mission, because we were leading the home care industry with the environmental standards that we've set, with the social commitments that we've made. And so they have kept that out there as distinct and the promise that we will continue to push and lead into with our business and our consumers.
Mike Toffel:
And so what's next for Seventh Generation? Where do you imagine bringing your program? What are the products that they're looking to develop? Are they staying within home care? Are they diversifying out of that? What should we be looking for a few years down the road?
Ashley Orgain:
When you think about it from a climate perspective, we're looking at a couple of places. We're starting to explore what kind of innovations that we can do to reduce emissions through use that go beyond just cold water. How can we reduce drying time, how we reduce washing time? So innovations we hope to see out in the next couple of years.
In addition, we're starting to step back and look at what have been hidden emissions within a business' portfolio, looking really at finance emissions for the very first time. And so every single decision that we make with a supplier that we use, with a service provider, we are starting to evaluate the climate footprint from that decision. So similar to what we would do with a supply chain, asking our suppliers key questions around the energy that we use, we're starting to look at our banks, we're starting to look at our insurance providers in addition to the marketing creative service agencies that we use in understanding the fossil fuel clientele that they might have in their portfolio, the work that they might be doing to continue to underwrite or support fossil fuel expansion and extraction that's having unintended consequences and leading to resulting finance emissions.
We're calling this our climate fingerprint, looking again at everything that we are touching that's having unintended consequences and a better understanding of what we can do about that.
Mike Toffel:
You mentioned banks and insurance companies and marketing agencies or creatives that you work with. Can you take us through an example of one of those verticals?
Ashley Orgain:
Sure. Why don't I choose marketing and creative services? So much of our fingerprints work has actually been informed by thought leaders and leading advocates who have been creating methodologies to better understand what kind of emissions are resulting from business activities. We're seeing and actually the UN General Secretary called us out at a meeting last fall that PR agencies might be working on one side of their portfolio for a green leader like Seventh Generation in supporting them in advertising and building out their marketing engine while at the same time working to help build out the same services for a Shell or an Exxon that is pushing out information that is confusing and dishonest about their real climate impacts.
So Seventh Generation asking our marketing service creative agencies, "Who else are you working with and how do we fit within that business mix? And are there other businesses that we could choose to go work with that are more values aligned?"
Mike Toffel:
So that's sort of asking them who are your fellow clients?
Ashley Orgain:
Yes.
Mike Toffel:
Interesting. That's one of the first times I've heard that strategy being deployed. Are you the first to use this that you know of or is this common in areas that I just haven't uncovered yet?
Ashley Orgain:
From a corporate perspective, yes. There is a exceptional organization called Clean Creatives that's out there that has been pushing this agenda and publishes annually what's called the F-List that basically exposes the companies that are doing exactly what I described, working for one side of the business to support a green agenda on the other side of the business, pushing disinformation about the climate crisis.
Mike Toffel:
Dare I ask, does the F stand for failing? Phew.
Ashley Orgain:
It does.
Mike Toffel:
Okay. One of the questions we like to ask all of our guests is, given you've been in this space for quite a while, and I'm sure you deal with those who are excited to get into this space, whether it be in a sustainability space or the impact arena as it's described in your title or business and climate change, where are you seeing the biggest opportunities and what advice do you give to such folks?
Ashley Orgain:
I feel like an area that is still emerging is around advocacy. I think we're seeing companies understanding the role that they can play in helping to change the system and bringing a business case for public policies that are going to protect the planet and improve the health of communities and have benefit to their bottom line. And so I feel like there's ripe opportunity. And to go even further, to do so by mobilizing consumers, building a relationship with the marketing engine in a business, in a corporate environment is where you're seeing more of a sustainability agenda head. So it's not just about what we can do internally, but what do we now know about the role that we play within the larger system and how we can mobilize and engage and activate our consumers to join us in that effort.
Mike Toffel:
Two things there. One is a branding and marketing and consumer engagement strategy, and then there's also a piece about advocacy to the public policy arena, whether that be done directly or whether you're trying to steer your consumers to dedicate some energy toward the policy arena is, am I hearing that right?
Ashley Orgain:
You are, yes. You definitely are. And I think the first, a branding marketing agenda is only going to be impactful if it is authentic, and it can be when you peel back the layers validated by commitments and actions that are driven by a sustainability function. I feel like what you're seeing is when they fail is when you don't have that in place.
Mike Toffel:
And since we're talking about advice, where should folks looking to get into either side of this campaigning, whether it be engaging with customers or engaging in policy more directly, where should they look? Should they be looking in marketing departments and in the government relations departments? Should they be looking in sustainability departments? Should they be going to NGOs to pursue support roles there? Where would you advise them to go seek roles to get into this domain, which sounds super interesting?
Ashley Orgain:
I have had the honor to hire someone who came from Greenpeace and they are bringing brilliance to the team that is unmatched. So I look at some of my peers in my role and they're doing the same. They are sourcing from leading environmental organizations that have helped build campaign expertise and experience. That's transferable, I feel like, to the business because particularly this function is about the impacts and understanding the issues. But I think getting an understanding of the marketing technicalities, the bits and pieces is so important in this work as well.
Mike Toffel:
Great. Well, Ashley, it's been a fascinating conversation to learn about Seventh Generation's work and its deep dive into real zero and some of the tools it's used and its strategy to sort of engage customers. So thank you so much for spending time with us on Climate Rising.
Ashley Orgain:
Thanks, Mike. It's been really fun. Good conversation.
Mike Toffel:
That was my conversation with Ashley Orgain, Chief Impact Officer with Seventh Generation.