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Clorox: Rudimental Simplicity

By William D Alessandro on December 02, 2010 at 11:12am.
Content:

Clorox is synonymous with commonplace bleach — as in ‘Honey when you are at the supermarket, remember to pick up some Clorox’. The brand and its alternative trade names are first in the market in the US and more than a dozen other countries. That is a surprising accomplishment given the price pressure on commodities in an extremely competitive global marketplace.

It is a safe bet, though, that consumers know very little else about the 97-year-old California-based business. A single-product company for decades, Clorox was a subsidiary of what would become an archrival, Procter & Gamble. After owning Clorox for more than 10 years, P&G spun off the company under an anti-trust court order in 1969. Its subsequent history is a lively story of successful and disastrous acquisitions. 

Along with the ubiquitous disinfectant, Clorox owns Hidden Valley salad dressings, Kingsford charcoal for barbeques, Brita water filters, Glad trash bags, Fresh Step cat litter, and Poett all-purpose cleaners, to name a few. The most interesting recent buyout is Burt’s Bees, purchased in 2007 to take advantage of consumers’ growing interest in natural products.

The first responsibility report from the corporation will enlighten the general public about the role sustainability is starting to play at Clorox. Investors and activists may take a quick look and decide to skip it.

The report has five sections, each defined by Clorox as a critical area of corporate responsibility and renamed: governance (Be Accountable); product manufacturing and marketing (Be Trusted); personnel and human relations (Be Inclusive); environmental protection (Be Mindful); and philanthropy (Be Committed). Some, but not too much, quantitative information can be found in each section along with the sorts of narrative routinely included in contemporary sustainability reports. 

The inaugural report is 61 generously illustrated pages. Eight pages are strictly graphic dividers. The text is lightened even more by numerous subheadings and sidebars. 

Five pages are devoted to index the location of the metrics recommended by the Global Reporting Initiative (GRI) guidelines. Two pages are used to explain the corporate target for the 100th anniversary in 2013. The destination is called "True North," a catchword for the goal to deliver double-digit average annual growth in profits.

Clorox identifies four “mega-trends” propelling the company towards the centennial pay dirt. One is the global demand for health and wellness at home and in public institutions, like hospitals and schools (i.e., places where Clorox disinfecting products can be sold). The other trends are consumers’ search for high-value but affordable goods, the company’s need to sell in multicultural marketplaces, and sustainability, which the company interprets as what is in, on, and around the consumers’ personal environments. 

Clorox does not delve deeply or provide management’s insight into these mega-trends. They are mentioned obliquely where they connect to one of the five areas of corporate responsibility.

The company plans to issue a report like this one every other year. An abridged version will come out annually.


Communication:

The appearance and content is a throwback to environmental and social reports published 10 years ago. Readers do get a digestible overview of the corporation’s commitments. However, more progressive features related to transparency and full disclosure are not in evidence. Many assertions are made with very little or no follow-up. The report is a tease.

For instance, the report says all facets of corporate responsibility at Clorox are reviewed extensively, including a materiality assessment. But there is no meaningful discussion of the nature of such input.

In a cursory review of stakeholder engagement, one encounters revelations like this: “We hold annual meetings during which we inform our shareholders about our company strategy, financial performance and business growth objectives”; and this: “We meet with NGOs on a variety of issues, including sustainability and product safety.”

A table of corporate responsibility goals says Clorox is “halfway to goal of making sustainability improvements to 25 percent of product portfolio by 2013 (versus 2009 baseline)”. The statement raises so many questions disappointment is bound to follow. So it does when no answers are provided in the 'Be Mindful' section or the 'Be Trusted' chapter on products.

Much has been made in the business press of the acquisition of Burt’s Bees for just over $900 million and the launch of the company’s own new Green Works line of bio-based cleaners. Clorox takes up three pages to talk about mainstreaming theses natural products. How they fit into the overall scheme along with hundreds of other products on the company’s shelves is not made perfectly clear. A better picture is found in a separate overview posted on the web pages for investors. There one can see that Burt’s Bees accounted for 4% of the 2010 net sales of $5.2 billion. 

In the report Clorox states: “We’re in the early stages of formal CR reporting and establishing a comprehensive data-collection system. We will continue to build these processes with the goal to expand our reporting globally — including the communication of additional goals, targets and indicators.”


Credibility:

Clorox did not seek external assurance — and says so but without explaining why. Instead, the company remarks: “Our content has been thoroughly reviewed by Clorox legal and internal audit teams to ensure our data is accurate.”

The environmental data is a combination of internal and third-party compliance tracking and measurement. The report does not give any further specifics about the procedures. On the other hand, the report is checked independently by GRI as meeting the B application level.

A sweet touch is the offer to contribute up to $10,000 to the American Red Cross International Response Fund. The company donations will come in the form of a $5 contribution for every reader who completes an online survey expressing their opinions about the report.  


Recommendations:

1.  Rather than post separate reports, blend the information into the strategic business overview prepared for investors.
2.  Plan on annual in-depth reports, not biennial ones.  
3.  Improve the quality and usefulness of the CR data at least to the level of the market performance indicators.
 
William D’Alessandro is president of Victor House News Co., an independent agency reporting on law and the environment for trade publications and executive newsletters.  He also edits Crosslands Bulletin http://www.crosslandsbulletin.com covering strategic corporate environmental management and sustainability issues.