Inside Green Business, July 24, 2006


Profile: SC Johnson

[Rachel's introduction: The SC Johnson Company has devised a system for ranking chemicals based on their environmental impact, thus giving a boost to green chemistry.]

By David Clarke

As companies face mounting pressure to limit their use of toxic chemicals, a patented system called "Greenlist," developed by SC Johnson for classifying and managing chemicals based on their environmental impact, has already influenced other attempts to eliminate harmful chemicals, including efforts by activists who praise the firm's aggressive promotion of greener chemistry.

The family-owned consumer products manufacturer based in Racine, WI, has made its Greenlist process a key element of its business strategy, relying on it to influence chemical companies that supply its raw materials.

Besides its Greenlist efforts, the company is working with DuPont, Hewlett-Packard and Tetra Pak, as well as a group of leading universities, to develop a "base of the pyramid (BOP) protocol" that can identify and develop sustainable new products and business in low- income markets -- a cutting-edge direction in sustainability.

While Greenlist and the BOP protocol are two ways in which SC Johnson is using sustainability as a business strategy, there are other programs as well, says Scott Johnson, vice president of SC Johnson's Global Environmental and Safety Actions. For example, one of the company's largest facilities for manufacturing globally sold products, located in Waxdale, outside Racine, is solely powered by two co- generation turbines that burn landfill and natural gas, saving the company millions of dollars a year while obviating the production of 52,000 tons of greenhouse gases annually.

In South Africa and elsewhere, the company also participates in programs that promote its products while reducing malaria and benefiting the health of local communities.

Greenlist, however, stands out among the company's efforts, according to several outside observers. Basically, Greenlist is a process the company uses to evaluate whether the chemicals it uses in its products could adversely impact human health or the environment, says Dave Long, SC Johnson's Sustainable Innovation Manager. Depending on the type of material, four to seven criteria are used evaluate and rate chemicals. The criteria include whether a chemical biodegrades, which would make it less risky; its potential to harm aquatic organisms and human health; how the European Union (EU) classifies the chemical based on its environmental impacts; its vapor pressure, which affects its potential to become an air pollutant; its octanol/water coefficient, which affects its water polluting properties; and other factors.

Depending on how environmentally good or bad a chemical is rated based on the Greenlist criteria, it is given a number: 3 is "best," 2 is "better," and 1 is "acceptable." A raw material rated 0 can be used, but only when there is no viable alternative and only with senior management approval. In such cases, a request must clearly demonstrate that there is no alternative and include a plan for eventually eliminating the material.

"Everything is science-based," says Long, who notes, for example, that aquatic toxicity testing must use three or more organisms. Also, he says, for biodegradability assessments the company uses the 301 approach employed by the Organization for Economic Cooperation and Development.

Since its inception in 2001, Greenlist has been used to rate 95 percent of the raw materials the company uses. SC Johnson does not manufacture chemicals but instead buys raw materials from hundreds of chemical companies. These raw materials include waxes, preservatives, fragrances, solvents, propellants, resins, surfactants, insecticides, packaging, and other materials.

The Greenlist process arises from a basic company commitment to environmentally preferable choices, according to senior officials. "We've long been embracing sustainability," Johnson says. "We aren't jumping on a bandwagon or reacting to government regulations. In fact, the standards we hold for ourselves are sometimes ahead of the government regulations," he notes, adding that the company is also working in partnership with government programs.

"We're doing today what five generations of Johnson family leadership have led by example," says Johnson, who is not a relative of the family. "We're doing this because it's the right thing to do," both for the business today and for future generations, he adds.

The company's focus on Greenlist grew out of a personal commitment by Fisk Johnson, the company's current chairman, to continue in a tradition established by his father and grandfather, explains Long. In the 1930s, Fisk's grandfather sought out a sustainable source of wax, and his father, a founding member of the World Business Council for Sustainable Development, phased out ozone-depleting chlorofluorocarbons three years before doing so was mandated. When he became chairman in 2000, he recognized that eco-efficiency -- which focuses on reducing waste and raising recycling rates -- is limited in scope, and so 2he asked, "What do we do next?" explains Long. The company sells products in 110 countries, has operations in 70 nations, and thus has a large environmental footprint. The question for Fisk Johnson was, "How do we improve it?"

When SC Johnson first looked for methods to evaluate products and materials so it could reduce its footprint, it did not set out to build a new chemical ranking system. But no system existed to measure the attributes of raw materials and "steer formulators in the right direction," Long says. So the company created the Greenlist process.

Originally, SC Johnson's goal was to raise the overall rating for its raw materials to 1.4 in six years, almost halfway to the highest ranking of 3. The company reached 1.41 two years ahead of schedule, resulting in the increased use of "better" and "best" materials by more than 13 million kilograms and eliminating more than 11 million kilograms of 0-rated materials. In December 2002, the company phased out the production of chlorine-based external packaging materials worldwide. It also phased out bottles made of polyvinyl chloride and the use of bleached paperboard, which relies on chlorine as a bleaching agent. These and other changes did not add significant costs for raw materials, the company says.

Today, when a Greenlist rating is completed, the results are instantly sent to SC Johnson chemists worldwide. Company chemists try to formulate new products using chemicals rated 3 or 2. When they reformulate existing products, they must include materials that have an equal or higher rating than materials used in the original formula. For example, when SC Johnson reformulated Windex in 2002, it eliminated a volatile organic compound (VOC) solvent and thereby reduced VOC use by 1.8 million pounds. Windex was reformulated again in 2004, resulting in the elimination of 400,000 million pounds of VOCs and improving Windex's cleaning power by 30 percent.

Since receiving a patent last December for Greenlist, SC Johnson has been in the process of licensing the system to one company and is in discussion with others. The licensing is royalty-free, but the company stipulates that a user of Greenlist must 1) set goals to improve the company's environmental footprint; 2) track implementation; and 3) report publicly the progress being made against the goal. SC Johnson receives credit as the creator and owner of Greenlist.

"We get interesting questions from companies that are looking for examples of how they can 'green' their chemicals," says Long. "We've even been contacted by the World Bank," which is interested not in the Greenlist chemical criteria but in the applying the basic model to evaluate light bulbs that are more efficient but have a higher mercury content.

The next Greenlist step is to set the company's goal for 2011. That goal is still being defined, but it will be "a significant increase in the score," requiring "disruptive technology, not incremental change," says Long. For example, a switch from petroleum to bio-based products is a possibility.

"The striking thing about Greenlist is that it's a core strategy for the company," says Rich Liroff, a senior fellow at World Wildlife Fund who works with the Investor Environmental Health Network. SC Johnson has made Greenlist "a core goal," Liroff says -- actively training employees to use the process "from the get-go" while tying employee compensation to successful use of the system.

"No doubt about it, they're a leader," Liroff says. "It's quite remarkable."

In fact, he adds, "Quite a few points in my program were inspired by their program."

Liroff developed a benchmarking tool for both investors and senior corporate executives to use in assessing the progress of their own companies, or of other companies, in meeting the growing demand for environmentally preferable products. Other environmentalists echo Liroff's views, although one activist questioned why the company's plug-in household fragrance produce, Glade, is even necessary.

Greenlist is now several years old. But a new sustainability effort under way at SC Johnson involves the BOP protocol. About the company's BOP strategy, Johnson says, "There are four billion people at the base of the world's economic pyramid. As we continue to grow the business, this is a critical mass of people to tap into by developing business models that target these consumers."

Johnson notes that the company is at work on an effort to test the BOP protocol in Kenya, a project that lets local people help SC Johnson understand the real needs of the community. "A business model is being developed and piloted by the company in partnership with some of the groups the [BOP] 'testers' worked with in Kenya," Johnson says.

The company has also had success helping farmers grow the natural source of insecticide pyrethrum, an active ingredient used in Raid, helping SC Johnson while also enabling the farmers to grow a more sustainable business and boost their household income, Johnson says.

Johnson comments that what is important with BOP is that, "At the same time we are seeking to grow profits for the company, in using the BOP model and developing products and businesses in partnership with BOP consumers, we are bringing these consumers sustainable value."