W28608

THE PROCTER & GAMBLE COMPANY: PLASTIC WASTE AND THE

SACHET ECONOMY IN THE PHILIPPINES1

Emily Young, Megan Singh, MacKenzie Bier, Tulika Sharma, and Helen Tang wrote this case under the supervision of Wren
Montgomery solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling
of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveypublishing.ca. Our goal is to publish
materials of the highest quality; submit any errata to publishcases@ivey.ca. i1v2e5y5pubs

Copyright © 2022, Ivey Business School Foundation Version: 2022-12-14

In October 2019, The Procter & Gamble Company (P&G) was named a top ten corporate plastic polluter
by the global environmental coalition Break Free from Plastics.2 Multinational corporations had recently
faced scrutiny over their contributions to climate change, negative externalities, and plastic waste.
Compared with other industries, consumer packaged goods (CPG) companies experienced more consumer
pressure to present an environmentally friendly image and were likely to be the focus of campaigns related
to greenwashing claims.3 By 2021, P&G expressed its commitment to environmental sustainability and set
out to examine how best to address the plastic waste the company was responsible for.4

THE PHILIPPINES AND THE “SACHET ECONOMY”

The “sachet economy” referred to the practice, prevalent mainly in developing countries, of buying
consumer products in single-use packaging often made from plastic.5 Sachet packaging was usually
discarded in landfills, rivers, in the ocean, or in the streets. Often, products like shampoos, toothpaste, and
detergent were packaged in sachets to make the necessities affordable to those who lived in poverty (see
Exhibit 1).6 CPG companies gained significant market share and revenues by providing these countries with
these products. Notably, without the introduction of sachets, many low-income people would have been
left without access to necessities such as quality products for sanitation or even food.7 However, the
negative environmental externalities were catastrophic.

While solutions such as purchasing in bulk or in larger packages seemed like a sustainable alternative, many
people in developing countries did not earn enough income to afford larger purchases, and they could not
delay access to sanitary items in order to save up.8 At the same time, with oil usage in transport expected
to decline, the petrochemical industry was growing more dependent on sachets driving oil demand to
maintain revenues, despite the harm the sachet economy did to societies and the environment.9 Also CPG
companies had no motivation to stop manufacturing sachet products given their profitability. Lastly, there
was little economic incentive to encourage proper disposal by consumers.10 Combined, these factors
resulted in plastic pollution overwhelming communities.

The Philippines was one of the countries with a significant sachet economy. On average, workers earned a
little over US$90011 a month.12 The country’s poverty rate was 20.8 per cent, which led many citizens to

This document is authorized for use only in Elba Acuña's Estrategia 1 at Universidad Del Pacifico from Aug 2023 to Feb 2024.
Page 2 W28608

rely on convenience stores called sari-sari stores to buy essential items in smaller sachets.13 These stores
contributed to the 150 million sachets that were purchased in the country every day for an equivalent of a
few cents. In fact, sachets accounted for 52 per cent of the residual plastic waste produced in the
Philippines.14 The country also lacked the waste management and recycling infrastructure required to
support the disposal of the products, worsening the negative externalities caused by sachets. 15 The Asian
Development Bank and Department of Environmental and Natural Resources estimated that if consumption
of sachet products continued at the same rate, the Philippines would require 200 new landfills the size of
the one in Manila by 2020.16 Sachet packaging was not a sustainable long-term solution.

PROCTER & GAMBLE

P&G was the world’s largest CPG company with close to $78 billion in global net sales in 2019 and
operations in over 180 countries.17 P&G manufactured and sold consumer goods in many segments
including beauty, grooming, health care, snacks, pet care, household care, and baby care.18 During Earth
Week in 2018, P&G released its new sustainability goals, called Ambition 2030, to “enable and inspire a
positive impact on the environment and society while creating value for the Company and consumers.”19

By the end of 2019, P&G claimed to have made significant progress on its goals related to climate, water,
and waste. 20 Between 2010 and 2019, absolute greenhouse gas emissions were reduced by 25 per cent, and
water use in manufacturing facilities was reduced by 27 per cent per unit of production. For more than 92
per cent of the manufacturing sites, it was able to achieve zero manufacturing waste going to landfill.21
Many manufacturing plants were modified to run on wind electricity and steam from biomass. P&G also
modified its signature products, for example integrating bio-based ingredients in its Tide purclean laundry
detergent and packaging Head & Shoulders shampoo in bottles made of beach plastic.22

Consumers in Developing Countries

To display good corporate citizenship, many companies were donating their products to low-income
countries. P&G had been distributing sachets of its water-purifying powder at cost in water-challenged
countries for more than a decade (see Exhibit 1). This product was a small sachet containing powdered
flocculant, ferric sulphate and a disinfectant, calcium hypochlorite.23 A consumer just needed to add the
contents to a bucket of water and stir, then strain the water into a second container and wait twenty minutes
for most bacteria, viruses, and protozoa, even in highly turbid water, to be removed.24 Health intervention
studies showed that the incidence of diarrheal disease had been reduced from 90 per cent to less than 16 per
cent thanks to P&G’s product.25 P&G used a non-commercial approach by selling its sachets at production
cost to non-profit partners.26 Many product donations were paid for by P&G corporate philanthropy and
employee donations.27 While the sachet concept was a great innovation in bringing better quality products
to poor communities, it also created huge amounts of waste.28

Shareholders

The strength of P&G’s business was its deep understanding of and continuous adaptation to evolving
consumer trends. With sachet packaging making P&G products more affordable to lower-income
customers, the company was able to grow revenue and market capitalization significantly. As a result,
P&G’s business model created strong returns that were reflected in the stock price (see Exhibit 2).

This document is authorized for use only in Elba Acuña's Estrategia 1 at Universidad Del Pacifico from Aug 2023 to Feb 2024.
Page 3 W28608

CRITICISM OVER PLASTIC POLLUTION

For nearly 13 million residents of Metro Manila, the National Capital Region of the Philippines, waste had
become a major problem, with about 10,000 tons of garbage produced daily.29 Unlike many developed
countries, the Philippines had a very poor record in terms of segregation of reusable, recyclable, and
compostable garbage. Although the government passed strong laws addressing solid waste in 2000, official
data showed that little improvement was made by 2018.30

In 2017, a beach cleanup co-led by Greenpeace found that P&G was among the biggest plastic polluters on
the Philippines' Freedom Island. The environmental organization blamed corporations such as P&G for
failing to take responsibility for the problem they were contributing to.31 In 2018, the company committed
to ensuring that by 2030, 100 per cent of its plastic packaging would be reusable or recyclable, and planned
to reduce the amount of plastic in its packaging by 50 per cent.32 Even with less virgin petroleum plastic in
its product packaging, P&G would still be a major contributor to plastic pollution, as single-use plastic
packages were not biodegradable.33 In 2020, an environmental advocacy group accused the company and
nine other corporations of spreading a false narrative that the environment “would be healthy were it not
for the consumers who failed to recycle their plastic.”34 Meanwhile, recycling captured less than 10 per cent
of plastic, and that percentage was even smaller in developing countries.35 Further, experts stated that P&G
and other major plastic polluters had a “lack of ambition” for genuine change and were failing to find
feasible solutions for the islands of trash they were creating in countries such as the Philippines.36

ADDRESSING THE SACHET ECONOMY

P&G’s options moving forward included collaborating with other stakeholders to produce a circular
economy, developing biodegradable or waterless sachet packaging, or justifying the status quo and the
nature of the business.

Option 1: Collaborate with Other Stakeholders to Produce a Circular Economy

Other CPG companies, such as Unilever and Nestlé, also faced backlash over their use of sachet
packaging.37 With consumer demand incentivizing the shift toward more sustainable practices, these
companies were under the same pressure to reduce their carbon footprints. Progress toward a zero-waste
Philippines needed to be a collective effort, with tangible results requiring buy-in from multiple
stakeholders. P&G could combine resources with other CPG giants operating in the Philippines to develop
and implement a program to increase the recovery of sachet waste and reduce landfill dependence. A
partnership between CPG companies could entail building a residual plastic recycling facility in a bid to
create an open-loop recycling model for sachets by upcycling them into more durable products.38 Sachets
could be turned into high-value plastic products such as plastic blocks, eco-bricks, pallets, and chairs.39

To encourage and execute a proper collection of sachets, the companies would have to collaborate in
educating local communities on the recovery, treatment, and development of recycled products.40
Stakeholder involvement from non-profit organizations and schools could help achieve this goal through
the implementation of school-based plastic collection programs. To encourage students to contribute to the
upcycling efforts, the companies could offer them school supplies and gift tokens in return for collecting
and recycling plastic waste. With multi-stakeholder involvement, there would be great potential to improve
not just P&G’s environmental impact but also their social initiatives by using the eco-bricks to build schools
and donating chairs made from recycled sachets.41 However, partnerships and projects at this scale would
take years to plan and implement—years that P&G and the Philippines might not have.

This document is authorized for use only in Elba Acuña's Estrategia 1 at Universidad Del Pacifico from Aug 2023 to Feb 2024.
Page 4 W28608

Option 2: Develop Biodegradable Sachet Packaging or Waterless Products

There were many developments in biodegradable plastic sachet packaging under way, with the global
sustainable packaging market expected to reach a value of $255 billion by 2026, assuming a compound
annual growth rate of 7 per cent from 2019 to 2026.42 Companies such as Unilever and L'Oréal also set
sustainability goals to make all of their plastic packaging fully reusable, recyclable, refillable, or
compostable by 2025.43 By 2020, P&G India was producing 25 per cent of its shampoo and conditioner
bottles with recycled plastic from the oceans.44 The move toward biodegradable plastics and the circular
economy was quickly on the rise. One option for P&G could be to invest in producing biodegradable and
compostable packaging to replace the plastic and aluminum sachets. It is important to note that such
packaging could be more expensive to produce, which could impact the low prices of the sachets in a very
price-sensitive market.45 However, it may be more effective at reducing waste, since low-income consumers
often lacked incentives and resources to recycle. Additionally, the leftover product residue in the packaging
made it more difficult to recycle.

P&G could also consider expanding the range of waterless beauty and hygiene products: dehydrated squares
of product that were activated with water and packaged in cardboard boxes, making them plastic-free. This
would eliminate plastic waste in the sachet economy and significantly reduce the amount of water in the
production and consumption process, combating global water scarcity. The manufacturing, production, and
shipping-related emissions could be 50 per cent lower than for regular, liquid-based products.46

Option 3: Justify the Status Quo and the Nature of the Business

Although the sachet economy had negative environmental impacts, an argument could be made that the
positive social impacts outweighed them. Small packages allowed customers to buy products on an as-
needed basis, making them more accessible and affordable. P&G could focus on the social benefits and
expand the production and sales of sachet goods while engaging in other corporate social responsibility
initiatives, such as donating to the building of waste management and recycling infrastructure in the low-
income geographies where these products were being used.

DECISION

With rising concerns among stakeholders, P&G needed an actionable solution that would prove effective
in battling plastic pollution. What did P&G’s key stakeholders expect? How could P&G achieve the “triple
bottom line” by focusing on profits, people, and the planet? Whichever course of action P&G chose to take,
the company also needed to be prepared to address claims of greenwashing.

This document is authorized for use only in Elba Acuña's Estrategia 1 at Universidad Del Pacifico from Aug 2023 to Feb 2024.
Page 5 W28608

EXHIBIT 1: P&G PUR WATER-PURIFYING POWDER SACHETS

Source: “Photo Gallery,” The P&G Children’s Safe Drinking Water, accessed May 12, 2022, https://csdw.org/photo-gallery/.

EXHIBIT 2: P&G STOCK PRICES (2014–2019)

Source: Created by the authors based on The Procter & Gamble Company, “Historical Prices of Shares for The Procter &
Gamble Company, 2014–2019,” Yahoo! Finance, accessed May 12, 2022.

This document is authorized for use only in Elba Acuña's Estrategia 1 at Universidad Del Pacifico from Aug 2023 to Feb 2024.
Page 6 W28608

ENDNOTES
1
This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives
presented in this case are not necessarily those of The Procter & Gamble Company or any of its employees.
2
“Big Firm Products Top Worst Plastic Litter List: Report,” Phys.org, October 23, 2019, https://phys.org/news/2019-10-big-
firm-products-worst-plastic.html.
3
Magali A. Delmas, Vanessa Cuerel Burbano, “The Drivers of Greenwashing,” California Management Review 54, no. 1 (2011): 73,
https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/14016/cmr5401_04_printversion_delmasburbano.pdf.
4
“Alliance to End Plastic Waste,” Procter & Gamble Good Everyday, August 21, 2022,
https://www.pggoodeveryday.ca/impact/end-plastic-waste/.
5
“Sachet Economy, “Global Alliance for Incinerator Alternatives,” accessed August 21, 2022, https://www.no-burn.org/sachet-
economy/.
6
“Rethinking Single-Use Sachets: Why Companies Need to Think Ahead,” Zero Waste Living Lab, accessed April 4, 2022,
https://zerowastelivinglab.enviu.org/blogs/rethinking-single-use-sachets-why-companies-need-to-think-ahead/.
7
Dennis Posadas, “Sachets Help Low-Income Communities but Are a Waste Nightmare,” The Guardian, May 22, 2014,
https://www.theguardian.com/sustainable-business/sachet-packaging-low-income-communities-waste-nightmare.
8
Posadas, “Sachets Help Low-Income Communities.”
9
Eli Patton, “Turning Off the Tap: Plastic Sachets and Producer Responsibility in Southeast Asia, New Security Beat”, September
3, 2020, https://www.newsecuritybeat.org/2020/09/turning-tap-plastic-sachets-producer-responsibility-southeast-asia/.
10
Posadas, “Sachets Help Low-Income Communities.”
11
All currency amounts are in US dollars unless otherwise specified.
12
“Average Salary in Manila 2022,” Salary Explorer, accessed September 4, 2022, http://www.salaryexplorer.com/salary-
survey.php.
13
“Philippines Economic Update October 2019,” The World Bank, October 10, 2019,
https://www.worldbank.org/en/country/philippines/publication/philippines-economic-update-october-2019-edition; Patton,
“Turning Off the Tap.”
14
Prime Sarmiento, “Pleas Against Plastic Repackaged in Philippines,” China Daily, November 16, 2021,
https://global.chinadaily.com.cn/a/202111/16/WS6192ef55a310cdd39bc757b5.html#:~:text=In%20the%20case%20of%20th
e,the%20tourism%20and%20fisheries%20sectors.
15
Patton, “Turning Off the Tap.”
16
Posadas, “Sachets Help Low-Income Communities.”
17
The Procter & Gamble Company, 2019 Annual Report, accessed April 4, 2022,
https://www.pg.com/annualreport2019/download/PG-2019-Annual-Report.pdf; all currency amounts in US dollars unless
otherwise specified.
18
“Procter & Gamble,” Business Model Navigator, accessed December 3, 2022, https://businessmodelnavigator.com/case-
firm?id=81.
19
The Procter & Gamble Company, “P&G Announces New Environmental Sustainability Goals Focused on Enabling and
Inspiring Positive Impact in the World,” news release, Business Wire, April 16, 2018,
https://www.businesswire.com/news/home/20180416005203/en/PG-Announces-New%20Environmental-Sustainability-
Goals-Focused-on-Enabling-and-Inspiring-Positive-Impact-in-the-World.
20
The Procter & Gamble Company, 2019 Citizenship Report, December 2, 2019,
https://us.pg.com/citizenship2019/pdf/citizenship_report_2019_environmental_sustainability.pdf.
21
The Procter & Gamble Company, 2019 Citizenship Report, 134.
22
“Procter & Gamble Launches New Eco-friendly Detergent, Tide Purclean,” Renewable Carbon News, May 31, 2016,
https://renewable-carbon.eu/news/procter-gamble-launches-new-eco-friendly-detergent-tide-purclean/; “P&G’s Head &
Shoulders Creates World’s First Recyclable Shampoo Bottle Made with Beach Plastic,” The Procter & Gamble Company,
January 19, 2017, https://news.pg.com/news-releases/news-details/2017/PGs-Head--Shoulders-Creates-Worlds-First-
Recyclable-Shampoo-Bottle-Made-with-Beach-Plastic/default.aspx.
23
“Flocculant/Disinfectant Powder,” Centers for Disease Control and Prevention, January 10, 2022,
https://www.cdc.gov/healthywater/global/household-water-treatment/flocculant-filtration.html.
24
“Household Water Treatment Options in Developing Countries: Flocculant/Disinfectant Powder,” Centers for Disease
Control and Prevention, January 2008, https://www.cdc.gov/safewater/publications_pages/options-pur.pdf.
25
“Flocculant/Disinfectant Powder.”
26
Margaret Hanson, “Pure Water,” Management Today, August 30, 2020, https://www.managementtoday.co.uk/pure-
water/article/647187.
27
Hanson. “Pure Water.”
28
Posadas. “Sachets Help Low-Income Communities.”
29
Bong S. Sarmiento, “Plastic Trash from the 'Sachet Economy' Chokes the Philippines' Seas,” Mongabay Environmental
News, October 9, 2018, https://news.mongabay.com/2018/10/plastic-trash-from-the-sachet-economy-chokes-the-philippines-seas/.
30
Bong S. Sarmiento, “Plastic Trash from the 'Sachet Economy.'”
31
“Nestlé, Unilever, P&G among Worst Offenders for Plastic Pollution in Philippines in Beach Audit,” Greenpeace International,
September 22, 2017, https://www.greenpeace.org/international/press-release/7621/nestle-unilever-pg-among-worst-
offenders-for-plastic-pollution-in-philippines-in-beach-audit/.

This document is authorized for use only in Elba Acuña's Estrategia 1 at Universidad Del Pacifico from Aug 2023 to Feb 2024.
Page 7 W28608

32
“Environmental Sustainability,” The Procter & Gamble Company, accessed May 12, 2022, https://us.pg.com/environmental-
sustainability/.
33
Matthew McClure, “Everything You Should Know about Single-Use Plastic,” Greenpeace, July 22, 2021,
https://www.greenpeace.org/africa/en/blogs/14052/everything-you-should-know-about-single-use-plastic/
34
Barrett J. Brunsman, “P&G Sued Over Plastic Packaging,” Cincinnati Business Courier, May 2, 2020,
https://www.bizjournals.com/cincinnati/news/2020/03/02/p-g-sued-over-plastic-packaging-by-environmental.html.
35
Brunsman, “P&G Sued Over Plastic Packaging.”
36
Louis Gore-Langton, “Break Free from Plastic: PepsiCo, Unilever and P&G Prioritizing False Plastic Waste
Solutions, Reusable Scale-Ups Needed,” Packaging Insights, June 22, 2021, https://www.packaginginsights.com/news/break-
free-from-plastic-pepsico-unilever-and-pg-prioritizing-false-plastic-waste-solutions-reusable-scale-ups-needed.html.
37
Posadas, “Sachets Help Low-Income Communities.”
38
Thomas Singer, “Business Transformation and the Circular Economy: A Candid Look at Risks and Rewards,” The
Conference Board, May 11, 2017, https://www.stern.nyu.edu/sites/default/files/assets/documents/TCB-Business-
Transformation-and-the-Circular-Economy-RR.PDF.
39
“Slave to Sachets: How Poverty Worsens the Plastics Crisis in the Philippines,” The Economic Times, September 3, 2019,
https://economictimes.indiatimes.com/news/international/world-news/slave-to-sachets-how-poverty-worsens-the-plastics-
crisis-in-the-philippines/eco-bricks/slideshow/70956232.cms; “Environmental Coalition PARMS to Build P25-M Plastics
Recycling Facility,” Manila Bulletin, December 12, 2017, https://www.thefreelibrary.com/Environmental+coalition+PARMS+to
+build+P25-M+plastics+recycling...-a0518489804.
40
“Environmental Coalition PARMS to Build P25-M Plastics Recycling Facility.”
41
“P&G, World Vision Recover and Upcycle Millions of Plastic Sachet Waste through Sustainable Waste Management
Program in Schools,” Greenbulb Communications, October 15, 2020, http://greenbulbpr.com/pg-world-vision-recover-and-
upcycle-millions-of-plastic-sachet-waste-through-sustainable-waste-management-program-in-schools/.
42
“Sustainable Packaging Market by Product (Recycled, Degradable, Re-usable), by Material (Paper, Metal, Plastic, Glass),
by Application (Health Care, Food & Beverages, Personal Care)⎯Global Industry Analysis, Market Size, Opportunities and
Forecast, 2019⎯2026,” Acumen Research and Consulting, November 27, 2022,
https://www.acumenresearchandconsulting.com/sustainable-packaging-
market/amp?fbclid=IwAR21X1PF7YuvTld8QOK9NWuMUrL1-7LgUaEFNohHAkod73TrxDF9u5pVHCY
43
Vaishali Dar, “How Brands are Playing the Sustainability Game,” Financial Express, March 29, 2020,
https://www.financialexpress.com/brandwagon/how-brands-are-playing-the-sustainability-game/1912498/.
44
Dar, “How Brands Are Playing the Sustainability Game.”
45
Posadas, “Sachets Help Low-Income Communities.”
46
Sarah George, “Plastic-Free Sachets and Hydrogen-Powered F1 Cars: The Best Green Innovations from CES 2021,” edie,
January 19, 2021, https://www.edie.net/news/8/Plastic-free-sachets-and-hydrogen-powered-F1-cars--The-best-green-
innovations-from-CES-2021/.

This document is authorized for use only in Elba Acuña's Estrategia 1 at Universidad Del Pacifico from Aug 2023 to Feb 2024.