Exit Interview: Kim Jeffrey, Nestlé Water

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Exit Interview is an occasional series profiling sustainability professionals who have recently left their job.

Joel Makower: You were president and CEO of Nestlé Waters North America until last month. What did you oversee?

Kim Jeffrey: In 1992, Nestlé did a hostile takeover of the European water interest of the Perrier Group, and they got us along with it. I had been one of the early employees of this company starting in 1978. When I joined the company, there were about 30 people and we had $20 million in revenue. We ended up becoming 50 percent of Nestlé’s global water business. Last year, we were $4.7 billion in revenue.

Makower: You spend a lot of your time — more so than most other CEOs — talking and thinking about sustainability. How much of your job did that become?

Jeffrey: It became a large part, Joel. Since we made our first acquisition in 1980, which was Poland Spring, we inherited 485 acres of watershed land and a beaten-down 50,000-square-foot plant. The idea was that we were going to be in the domestic spring-water business. In order to do that and stay in business, we had to maintain the pristine nature of the resources that we were purchasing.

So it was natural to me, but it really didn’t become a large issue until around 2006, when Corporate Accountability International started ganging up on us for environmental waste and the fact that people don’t need bottle water; they could have tap water.

We’d been doing lots of really good stuff all along the way. We built the first LEED-certified food or beverage plant in America in 2002. We started lightweighting our packaging 15 years ago, but we weren’t telling anybody about it. I had always operated under the idea that I wanted to just do good stuff and stay quiet; let the good works speak for themselves.

But that’s the one thing I missed: the expectations of our society were evolving so rapidly, that if you don’t talk about this stuff, nobody knows you’re doing it.

Makower: When you did talk about it, did you find that the public receptive?

Jeffrey: At first, no. As I said, we had done a lot of good work. But when people accused us of being an environmental villain, I had to scratch my head and say, “You know what? I don’t know whether I am or not. I haven’t measured my carbon footprint. I don’t know what my impacts are in terms of quantifying them empirically.”

So I didn’t have good answers for awhile. I had never done a life-cycle analysis of bottled water against other beverage products. I didn’t know how much carbon we were emitting in the air every day. I didn’t know how much oil we consumed every year.

I set about to learn so that I could respond to these people. I honestly wasn’t prepared for it, and so I had to go out and get smart on this stuff. And the smarter I got and the more I learned, the more I dove into some of the issues that we have.

I mean, our carbon footprint is de minimis. It’s about 2 million metric tons of CO2 a year, and we’re at the 7.5 billion mark of CO2 emissions as a country. We use about a million barrels of oil a year for all of the plastic bottles we make. That’s 1/100th of 1 percent of total oil consumption.

Our major lightweighting push started in 2005. By the time people started attacking us, we had this bottle that was 30 percent lighter than the last bottle we had used. We pioneered lightweighting packaging for the entire beverage industry. Everybody is doing it now.

All these things combined so that when I had my act together, we really started to get traction.

Do facts really matter?

Makower: Do you think people have overreacted to bottled water?

Jeffrey: There are real environmental issues in our society, Joel, and then there’s the ones that we make up. And relative to our four walls of doing business, we have a carbon footprint that’s half of a carbonated soft drink.

So I would tell people, “Our packaging is lighter, the ingredients require less carbon. We’re half the carbon footprint of a soft-drink bottle.” Sometimes people’s eyes would glaze over, but slowly but surely, we started getting traction.

Makower: So if this is an emotional issue for people, how much do facts really matter?

Jeffrey: I’m fond of saying that everybody’s got opinions, but most of us don’t have really great facts. It couldn’t be truer in the environmental world because you know yourself that there are very few silver bullets out there. Things we do that we think are intuitively right, sometimes have the reverse impact from an environmental standpoint.

So, okay, let’s go back to glass or steel packaging instead of plastic. The carbon and the transportation and all the other aspects of glass or steel — they just don’t make sense. We can have these emotional opinions, but we need to start dealing with facts, and it’s critical in the environmental arena because we’re going to continue to do things that aren’t too smart if we don’t really understand lifecycle the analysis of the decisions we’re going to make.

Makower: Given that facts are challenging for some people, and emotion is high, what did you learn about how to engage with critics?

Jeffrey: I like doing it, frankly. I know that when I walk into a room where half the people don’t like me, I’m starting out about three feet deep in a hole, and I’ve got to pull myself out. I’ve waded into that discussion in the recycling area where, initially, when I started proposing extended producer responsibility-type legislation to deal with all of the recyclable materials that we have, people initially thought, “Well, he’s just trying to get out of a bottle bill.” It was almost like, “I know you’re trying to screw me. I just can’t figure out how.”

It took me a while, but over time, Joel, I would say that when I go into a room where I’ve got naysayers, I may not convince everybody, but I’m going to give people more to think about than they came in the room with.

“You can’t have bottled water.”

Makower: Let’s talk about consumers, the users of your product. What have you learned about their willingness to engage, have a conversation, and maybe even change their habits?

Jeffrey: Let’s start with where our category is today. Bottled water is now the number-two-selling beverage in America. Our household penetration is over 75 percent. It grew by 7 percent this year because carbonated soft drinks are declining. It will be about four or five years before the lines cross and bottled water becomes the number-one-selling beverage in America — and that’s with all the noise around it.

Makower: So consumers generally are receptive, not minding what you are from a sustainability perspective?

Jeffrey: I think people are still very concerned about plastic waste and what’s going into landfills. I don’t want to trivialize that at all.

But this is the conundrum we have. The people that don’t like bottled water would tell you, “You can’t have bottled water. You can have tap water. And you can’t drink carbonated soft drinks any more because of the calories. And, oh, by the way, when Sandy comes up to the East Coast and renders a million people homeless, it’s okay to have bottled water for those emergency issues.”

Here is an interesting statistic: There are a billion packages of beverages sold in the United States every single day. Seventy percent of the beverages we drink come in packages, and the reason they do is because people want the safety and trust of a sealed package. It’s just the way we’ve become as a society.

Now, if people want tap water, we’re fine with that, too, because we haven’t taken any share of market from tap water. All of our business over the last 20 years has come from the decline of soft drinks. In the last 10 years, carbonated soft drink consumption is down 20 percent, and 70 percent of it has gone to bottle water.

“I could use a little help here”

Makower: You make it sound like you’re a lone voice in the industry working on recycling. What’s been your experience about your industry partners — your competitors — in building a recycling market and educating the public around sustainability as it relates to your product?

Jeffrey: On the subject of extended producer responsibility — where we as an industry take the responsibility for the post-consumer handling of our materials — I don’t have any friends at all. I think some of the beverage companies would rather see that than a bottle bill, but they haven’t put their arm around me and said, “Kim, let’s go do this together.” It’s interesting to me because we live under extended producer responsibility laws in Europe, and all of the companies that sell their products in America also sell in Europe.

I could use a little help here. We put 20 billion dollar’s worth of recyclable material into landfills every day, and that’s not sustainable. We can make food-grade material out of recycled PET bottles today, and we need to be doing more of it. We have more demand for recycled PET than we have supply, which is why the price of recycled material is higher than virgin resin.

One of my goals is to figure out a way to get recycled content resin to the price of virgin resin. We need more recycled material coming into the stream in America to make this happen.

Makower: What would it take to do that?

Jeffrey: We need to come together and figure out systemic ways to improve recycling in the United States. We have a broken system of recycling in America. Nobody is winning right now on this thing. We’re not moving the needle.

Makower: What does that look like from a policy perspective?

Jeffrey: We started a website, Recycling Reinvented, a year ago. We provided the seed money for it. We have several members now and a board of directors that includes Bobby Kennedy.

We’re embarking on a study of the cost of extended producer responsibility. It’s the counterpoint to the Grocery Manufacturers Association. They’ve got their own study that says it costs $15 billion if [extended producer responsibility] went nationwide. They basically got a study that told them what they wanted to know, and we don’t think it’s accurate.

Makower: What should we expect to see next?

Jeffrey: We’re talking to several states right now. I don’t want to tell you who. We’ve done a lot of outreach work with NGOs, foundations, people who are interested in this. We’ve gone into the lion’s den and talked to several companies on this. Once they learn about the way we’re proposing it, they’re more neutral about it.

The goal would be to have a law passed in one state at least in the next couple of years where we could take a look at an extended producer responsibility system that would allow us all to determine whether this is a good idea or a bad idea.

Makower: So it sounds, postretirement, that you’re going from the frying pan into the fire.

Jeffrey: Well, I don’t know if it’s the fire, but I would say this — that I’ve invested enough in it, over the last couple of years, that I’m going to stay with it. I’ve got lots of things to do in my retirement.

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