Audrey Choi: I'm Audrey Choi, Chief Sustainability Officer at Morgan Stanley and CEO of the Institute for Sustainable Investing. This season on At Scale, we've been taking a close up look at things that may seem insignificant, things that we may take for granted, but when you consider how much we rely on them and what they do for us, they actually have a big impact on the way we live, the flow of capital, and if we rethink and invest in them, a brighter future for our planet. On this episode, we're looking at a $188 billion industry built around a household staple that we're hopefully using many times a day.
Martin Mulvihil: You go down the soap aisle and you see everything from purple, to pink, to bright orange, to yellows. Those are all just synthetic dyes, petroleum derived. A lot of people associate smells with cleanliness. The reality is, that's a bunch of stuff that you don't need. And in fact, it's residuals that are being left behind that you smell. Another example of things that are added to soap that really aren't needed are foaming agents. That foam has nothing to do with whether or not it's good at removing dirt or killing bacteria. It's just put there to make you feel good.
Audrey Choi: Martin Mulvihill has spent a lot of time considering the promise and problems with soap. He's a founder of the Berkeley Center for Green Chemistry and a managing partner at Safer Made, an impact venture capital fund focused on safer and more sustainable products.
Martin Mulvihil: What soap is really good at is removing oils and killing bacteria, because it disrupts the outside of bacteria. That's why it does, in fact, clean germs off your hand. So hot soap and water are really good ways to prevent infection, to prevent the spread of disease. It used to be that you'd make your soap at home from lye and leftover fats. Those days are long gone, but since then, soap has an interesting history of responding to the society around it.
Audrey Choi: Today, Walmart carries more than 5,500 different products in their hand and body soaps and detergent categories. But those categories can be confusing. By definition, a true soap is made from natural ingredients, animal or vegetable oils, and lye. But in the 1960s and 70s, we moved away from that basic formula toward detergents or synthetic soaps made from petroleum.
Martin Mulvihil:There's so much that companies have taught us about liking soap, like fragrance, like color, like foam, that have nothing to do with the reason we use soap. If the function of soap is to clean, then there's a lot of things in there that are doing no good for us.
Audrey Choi: Or the environment. While soap is a miracle product in many ways, it's not 100% pure from a sustainability standpoint. Some of the ingredients we now use to make soap and household cleaners are actually harmful, and the ways we now make and package it create immense waste. Today on At Scale, we look at what we put in soap and how we can make soap even cleaner.
Martin Mulvihil: Soap really was one of the first public health inventions or interventions. And it is one of the first instances of chemistry, where you're using two molecules to make a third molecule that has a function that is better for you. So, it is really simple, but it's also really transformative.
Audrey Choi: The pandemic, especially the early days when hand washing was one of our few defenses, put a spotlight on the life saving qualities of soap, but we've been using it to clean ourselves, our spaces and our belongings for thousands of years. The earliest recorded mention of soap, a recipe for medical soap, dates back to around 2200 BCE. Since then, we've turned that basic, very powerful chemical reaction into thousands of products, everything from laundry detergent, to foaming body wash, to color depositing dog shampoo. Regardless of the format, soap is still one of our most powerful public health tools.
Even pre-COVID, health issues like diarrhea or acute respiratory infections accounted for half a million deaths each year, according to the World Health Organization. Proper hand washing with soap could reduce that figure dramatically. And yet 40% of the world's population, or 3 billion people, do not have somewhere to wash their hands with running water and soap at home. At the same time, we pump out endless options for scented foaming antibacterial hand soap, soap that may make us feel good, but isn't necessarily good for us or the environment, especially if it comes in liquid form.
Martin Mulvihil: In the 1950s, with the rise of chemistry and other industrialization, we got a ton of liquid soaps that were marketed as convenience items, and now liquid soap outsells powders and bars by four to one, almost in every category where you see both. When you think about the difference between liquid soap and solid soaps from a sustainability perspective, it takes more chemicals, more energy, and a lot more packaging to use liquid soap when you compare it to bar soap.
Audrey Choi: For starters, take the first ingredient on any container of liquid soap.
Martin Mulvihil: The water. The water really isn't necessary. It's not adding function. It's just taking up space, and means that a lot of liquid soap needs to come in plastic packaging.
Audrey Choi: Plastic packaging that's bulky and doesn't necessarily get recycled. On top of that, water is heavy to transport, and in some areas scarce. The carbon footprint of liquid soap is 10 times higher than that of bar soap, which is more compact and usually comes wrapped in paper or cardboard. But there are additional costs to chemical-heavy synthetic liquid soaps, technically detergents. Many of those extras, like the stabilizers and antimicrobial agents, can pose serious threats to the ecosystem and our health.
Martin Mulvihil: Like the triclosan, it's been banned from hand soap, because it is tied to endocrine disruption or harms to the hormone system of people. Additionally, you have other surfactants, or things that harm microorganisms, that get into the aquatic ecosystem. They stick around in the environment for years after you're done using them.
Audrey Choi: Researchers have found that the sharp uptick in soap consumption during the pandemic may actually increase environmental pollution and change the quality of the gray water. Antibacterial soaps are especially troubling. The additives can sabotage wastewater treatment processes, and in the right conditions, actually produce chloroform, a probable human carcinogen.And in regions where water treatment infrastructure is poor or non-existent, those residual chemicals go straight into the environment.
Martin Mulvihil: This whole notion that all bacteria are bad, or that we want to use the harshest chemistry to clean, is something that I've unfortunately seen come back as a result of the pandemic. But what science is showing us is that the bacteria on our skin, in our surroundings, in our living environments, are actually a lot healthier than we previously thought.
Audrey Choi: In fact, Martin sees cleaners and soaps leaning into this direction in the future.
Martin Mulvihil: I think pushed back a couple of years because of COVID, but it was something we were beginning to see before the start of this pandemic. And now I'm seeing more of the harsh chemistry take the day.
Audrey Choi: At the same time, there's a growing trend, at least in upscale markets, towards natural bio-based soaps. As more consumers get on board, the global organic soaps market size is expected to reach $383 million by 2025 But even going natural, using ingredients like cocoa butter, olive oil, goat's milk, or especially using palm oil, comes with its own set of problems.
Martin Mulvihil: So, the carbon footprint of a bio-based surfactant or any bio-based chemical tends to be better than one that's derived from petroleum, so that's good in terms of sustainability. The thing you have to be much more careful about is that you're trading that for land use, sometimes water use, and sometimes additional impacts to the ecosystems. The palm industry has come under a lot of scrutiny for the right reasons, tons of deforestation. So, it's not a simple one for one. The bio based stuff tends to be better in terms of CO2, but if you only focus on CO2, you're trading off the impact in these other parts of the environment and society.
Audrey Choi: Being able to choose between liquid and bar soap, synthetic or natural, is a privileged position. In many parts of the world, low income individuals have to make considerable trade offs to simply afford soap. If you live in or have traveled in Southeast Asia, India, Africa, Latin America, you can't escape the ubiquitous sachet, a small plastic pouch that holds about 10 milliliters, a single portion of shampoo, soap, or detergent. Strips of colorful sachets hang in even the smallest corner shops, on sale for about seven cents each, an appealing price point for people with low incomes. When sachets first became popular in India in the 1980s, they were seen as a breakthrough. They gave the poorest villagers access to high quality products. But when German entrepreneur Jane von Rabenau moved to India, she began to notice those sachets came with a hidden cost, an unofficial poverty tax.
Jane von Rabena: So, a lot of my friends came from low-income communities, and they were oftentimes paying a higher price to purchase everyday needs in these small packages. And on the other hand, there was no waste management. So they could either throw the trash into the waterways, which causes flooding, they could burn it, which causes respiratory diseases, or sort of let it lie around, which causes infestation from rats and cockroaches and mosquitoes. And so it really felt like they were hit double hard.
Audrey Choi: While Jane was on a grad school research trip in the Philippines, she came across a model that felt like it had the potential to solve the sachet problem.
Jane von Rabena: Water refill stations, where you essentially put a coin in, you had drinking water out, and its lower cost than bottled water. And I thought, why can't we do this for other products like detergent, shampoo, dishwashing liquid?
Audrey Choi: And that's how Jane came up with the idea for Siklus, a refill delivery company in Jakarta, Indonesia.
Jane von Rabena: So, you essentially just go on our app, choose the product and quantity, and we come the next day. And you can just go outside and use your own containers to refill detergent, shampoo, dishwashing liquid.
Audrey Choi: After you've made that online order, a delivery person comes on a moped or scooter, a common form of transportation in dense Asian cities, except this is a soap refill station on wheels. A couple of big dispensers are attached to the back of the bike. Customers can order as little as they like, so it's still affordable, but without the single use plastic waste.
Jane von Rabena: I think what we really see is that people love getting things to their doorstep, makes it so much more convenient.
Audrey Choi: That convenience is important to make Siklus more attractive than sachets. At the moment, up to 70% of detergent in Indonesia is sold in sachet form, and part of the appeal is that people are eager to avoid wasting it.
Jane von Rabena: People are very sensitive, like, okay, I don't want to overuse this product. I don't want my children to press on the soap bottle and so much comes out, right? So you basically make sure that you only use five milliliters of shampoo by opening their packaging, versus if you were to use a bottle you'll likely end up using 15 milliliters, because you just press on it and too much product comes out.
Audrey Choi: But over time, those consumers are actually paying more, an unofficial poverty tax, because the per unit price is higher. And then there's the sachet itself, made from a plastic metal laminate that is very difficult and costly to recycle.
Jane von Rabena: Indonesia is the second largest ocean plastic polluter in the world, and only 45% of waste even gets collected, which means that it just ends up getting into water waste, getting into the ocean, getting burned.
Audrey Choi: Jane is hoping Siklus can make a big impact in Indonesia, and she sees how her customers like being part of that change.
Jane von Rabena: What we also find is that a large number of Indonesians, well, they're not like the big environmentalists that carry their reusable straw around with them. They do care that plastic waste is a problem, and they're excited about doing something about it.
Audrey Choi: Siklus also helps customers stay loyal to their favorite brands. They have partnerships with some of the biggest household names like Procter & Gamble, Nestle, and Wings. And it's often cheaper to refill with Siklus than buy sachets.
Jane von Rabena: So, we're usually around 20% cheaper, but for some cases we're actually 40% cheaper. Usually a sachet is seven cents, but then what we find, we have customers that oftentimes buy more because we also sell reusable containers that make rationing very easily where you can make sure that only two milliliters gets dispensed.
Audrey Choi: While some of the companies that supply product to Siklus still produce sachets, Jane says their willingness to work with her team makes her feel hopeful. With help from the Morgan Stanley Sustainable Solutions Collaborative, she hopes Siklus will be able to scale up.
Jane von Rabena: I mean, just this morning I was at a beach and I actually collected some trash. And a lot of it was brands that we sell. And I think that of course on one hand it's a bit demotivating, but on the other hand, it shows that we're relevant, that it's needed. That if we can scale, we'll actually have a huge impact, and that's very motivating. We already saved over a million plastic packages, but this is really just the beginning. So I'm excited to make it a billion.
Audrey Choi: While Siklus works on solving the plastic sachet waste problem. Samir Lakhani's nonprofit, Eco-Soap Bank, tackles waste higher up in the production cycle.
Samir Lakhani: Every time a bar of soap or a flavor of soap is changed on manufacturing lines, whatever is left within the manufacturing line itself is considered waste. And every time one of these "changeovers" occurred, about a ton or two of soap, 10 to 20,000 bars of soap estimated, are thrown away each time.
Audrey Choi: Eco-Soap Bank takes that waste soap and recycles it into bar soap and donates it to NGOs, or sells it at a low cost to people who need it most: refugees and people living in remote and marginalized areas, where even sachets are still luxury items. Samir saw that need firsthand while he was traveling through rural Cambodia eight years ago, and watched a woman washing her newborn baby with laundry detergent.
Samir Lakhani: And she told me that a single bar of soap was the equivalent of two days' wages, and that she was going to prioritize buying food instead. That experience in Cambodia was not something necessarily new to me. I had heard stories from my parents when they were living in east Africa, that they would also regularly use laundry powder or detergent.
Audrey Choi: Both cheaper alternatives to gentler, but more expensive body soap. Eco-Soap Bank believes no one should have to make that choice or go without.
Samir Lakhani: I think sometimes here in the west, we might take soap for granted. But I think what people often don't realize is that with the current trajectory, by 2030, 1.9 billion people will still live without regular access to soap at home. To me, that is absolutely unacceptable, especially in a world where a quarter billion bars is thrown away by the soap industry every single year.
Audrey Choi: Since 2014, Eco-Soap Bank has recycled nearly 1,900 tons of soap.They currently work with a dozen manufacturers, including well known brands like Unilever and Dr. Bronner's. They collect containerfuls of soap from factory floors and ship them to recycling hubs staffed by local women in Sierra Leone, South Africa, Tanzania, Nepal, and Cambodia.
Samir Lakhani: Because we're able to receive raw materials for free, or are either paid to take it away from factories, we can manufacture soap at a fraction of the usual cost, and sell our soap anywhere between 40 and 60% cheaper than what you can find on retail shelves in the least developed countries around the world.
Audrey Choi: But Eco-Soap Bank doesn't stop at providing soap. The women who work in their recycling factories double as hand washing ambassadors, promoting soap use and good hygiene in their communities. The organization also offers hand washing education programs to 3,500 schools. And all of this, averting landfill waste, employing local women, providing no to low-cost soap, all this has an economic impact. Research shows that every dollar invested in hygiene and sanitation in the developing world generates on average $25.50. And Samir believes there's a lot of potential to scale up, especially because more consumers with a lot of spending power are starting to care about sustainability throughout a product's lifecycle.
Samir Lakhani: We only recycle about 25 million bars of soap every single year, which is about 10% of the available waste supply generated annually. So that gives you a little picture into our runway, and where we still need to go.
Audrey Choi: And where does this leave us? Once you become aware of all the problematic ways we currently make, package and dispose of soap, what do we do? As a chemist with a deep knowledge of what goes in soap, Martin Mulvihill has changed his behavior.
Martin Mulvihil: Learning all of this has made me use even fewer products in my own daily routine. I definitely use bar soaps in my bathroom. I don't have any loyalty to a particular brand or type, because I recognize how little differentiation there is.
Audrey Choi: Overall, Martin says we need to look at the big picture when it comes to sustainability.
Martin Mulvihil: We need to think not only about the things that are obvious to us, like carbon dioxide emissions and plastics, but the things that are a little more subtle, like what are the long-term effects of the chemicals, the actual components on the ecosystems? What are the long term effects of those chemicals on our bodies?
Audrey Choi: Keep that in mind next time you reach for a soap product on a shelf. Martin is feeling hopeful about the ways consumers and brands are driving change.
Martin Mulvihil: The opportunity to bring something safer and more sustainable to market, we believe will come in the set of brands that are able to convince and excite consumers about the opportunity of powder detergent, or the opportunity of concentrates.
Audrey Choi: Concentrates, lightweight, sustainably packaged strips or tablets that you combine at home with water. As consumers and brands alike switch towards concentrates, bar soaps and other more sustainable forms of soap, that can lead to fewer chemicals in the environment, less plastic waste and lower emissions from transporting all that water around the world.
If we are more mindful about our choices, as individuals, as policymakers and as brands, we can advance sustainable solutions at a systemic level. The soap industry, for example, interacts with so many of our biggest sustainability challenges: climate change, plastic waste, ecosystem degradation, and even a global health pandemic. And encouraging simplicity in our soap choices may actually be an opportunity for business.
Take Unilever, one of the largest soap and detergent manufacturers. They recently committed to eliminating fossil fuels as ingredients in their cleaning products by 2030, a move the company says would reduce the carbon footprint of those products by up to 20%. Brands that value transparency and take responsibility for the entire life cycle of their products can mitigate risk, reduce costs and see their market share grow as more and more consumers understand that complexity of sustainability and demand higher standards. Now is the time to embrace this opportunity, to build on the simple but transformative power of soap, and to think about clean, sustainable solutions.
Next time on At Scale, concrete, it's the most widely used manmade substance, literally the foundation of our cities, homes and infrastructure. And that's a problem, because it has a huge carbon footprint. We'll find out how rethinking concrete can help us build a more sustainable future. I'm Audrey Choi, Chief Sustainability Officer at Morgan Stanley, and CEO of the Institute for Sustainable Investing. Thanks for listening.