Despite the quantifiable promises of a burgeoning green economy, complaints continue to be made about economic barriers to entering the sustainable business world. What so many major companies are coming to realize, however, is that investing today in environmentally conscious processes and products creates a far less expensive future. Bathroom- and kitchen-fixture giant Kohler Co. is committed to making its company and its products greener and more efficient, and by doing so, it makes the case that big business can be the perfect incubator for sustainable leadership.
“The world needs business leaders to stand up and lead by example in terms of sustainability,” says David Kohler, president of Kohler Co. “It’s okay to be a capitalist and an industrialist and an environmentalist at the same time; you can conduct business in a way that is right for the environment.”
To understand Kohler’s commitment to sustainability, one has to understand its beginning, a beginning of entrepreneurial spirit and perseverance. Founded in 1873 by John Michael Kohler, an Austrian immigrant, the company initially made and sold plows and farm implements. When a client wanted plumbing fixtures, however, John Michael complied, adding four feet to a horse trough to construct a cast iron bathtub. When the tub was a hit, the entrepreneur stuck with it, even though the country was mired in a financial crisis and plumbing was rare in rural areas. But Kohler continued to evolve and now houses an interiors division that manufactures tile and furniture and a global power division that makes engines and generators. It recently expanded into golf courses and resorts with The American Club in Kohler, Wisconsin, and the Old Course Hotel in St. Andrews, Scotland.
But the family-owned Kohler rejects the notion of privilege, and the company invests more than 90 percent of earnings back in the business. It has survived 18 recessions, in part by maintaining a commitment to operating on the leading edge of design and technology. “We are continuously bringing innovative new products to market,” David says. And that innovation is where Kohler’s sustainability story begins. “The company has always been a good environmental steward,” says David, who recalls that his great uncle, Walter Kohler, looked at the communities of Europe when creating the first 50-year master plan for the Kohler campus in Wisconsin in 1910. “He spoke often of the importance of earth and sunshine and clean air.”
That interest in nature evolved over the decades, and by 2008, Kohler’s management had decided that the potential for climate change created an imperative to do something more, and the company launched a sustainability program with three main pillars. “That’s when we reset our strategy and created more of a structured plan for sustainability,” David says. To execute this strategy, Kohler is looking at three areas that the company can directly address: its own environmental footprint, the creation of sustainable products, and an enhanced focus on communication and education.
Kohler went about reducing its carbon footprint by targeting zero net greenhouse gas emissions and zero net waste with offsets by 2035. It’s an ambitious goal, but since 2008, when it implemented the program, Kohler has achieved an average annual reduction in greenhouse gas emissions of three percent. That’s due to more than 1,000 sustainability projects in its facilities, including installing more efficient equipment such as a new dust-collection system that uses significantly less energy, developing alternative energy sources such as solar panels, and implementing recycling systems such as a waste heat-recovery system that uses excess heat from a pottery facility to heat water in a faucet-manufacturing building.
Manufacturing more environmentally favorable products is a huge part of Kohler’s sustainability plan. Kohler considers its projects to be eco-friendly if they exceed code requirements, which is not always an easy task. Specific kinds of ceramics are central to Kohler’s plumbing business, but the processes used to produce those ceramics are big consumers of natural gas. While it tries to find better means of production for those energy-consuming processes, Kohler is making the products greener for the consumer. As of January 2013, 10 percent of sales come from environmentally favorable products—a significant number for a $5 billion company—and the company offers more than 200 bathroom faucets, 100 toilets, and 50 showerheads and hand showers that carry the EPA’s WaterSense label, which denotes a low-flow or water-efficient fixture. Most significant, water-efficient products are the fastest-growing segment of Kohler’s plumbing business. The company also offers the only electronic fuel injection propane engine, which consumes 25 percent less fuel than alternatives, in the commercial mowing and industrial markets.
The third aspect of Kohler’s sustainability model is awareness. The company educates internal and external stakeholders about the importance of environmental practices. “It’s certainly an ongoing challenge to get people committed, and there are always skeptics,” David says. “But most people are very responsive to our efforts.”
To promote awareness internally, the company has appointed 130 sustainability champions to guide its 30,000 associates worldwide. They’ve helped spread the word about Kohler’s commitment to the environment, and sustainability has become a grassroots effort with associates driving its implementation. “We currently have hundreds of projects seeking to improve a process or a product in regard to sustainability, and the fact that this is happening organically is powerful,” David says. “Our associates have embraced sustainability because they want to be a part of a company that is doing great things and that makes a difference by trying to make the world a better place.”
This is one way in which Kohler stands out—the presence of what feels like a very genuine backing of sustainability. “We’re not driving sustainability because we need to put it in a report so shareholders can be impressed. We do it because we think it’s the right thing to do for the world.”
But the challenge with green products and systems comes down to one thing. “Consumers are interested in understanding what they can do, but they don’t necessarily want to pay more for green products,” David says. That’s why Kohler’s focus has been on carrying the message that responsible choices don’t necessarily involve sacrifice. “You can have your cake and eat it too with products that deliver performance and beauty and value but are also in harmony with nature,” David says. To communicate that, Kohler has created global teams to conduct a life-cycle inventory of core materials, which include cast iron, stainless steel, and vitreous. The results of the inventory—which evaluates the environmental impact of a product’s use, from raw material extraction through the time the customer discards it—will be used to educate design associates and customers about the environmental implications of product design choices.
David says Kohler’s strategy, when properly conceived and executed, should not be about compromise or massive trade-offs. “It should be a win for the consumer, a win for the associate, a win for the environment, and a win for the company,” he says.
To promote its vision, the company has partnered with the EPA on the WaterSense program. Kohler was the first company to earn the EPA WaterSense Manufacturer Partner of the Year Award in 2008. It received the Partner of the Year award again in 2009, was lauded with Excellence Awards in 2010 and 2011, and received the Partner of the Year award for the third time in 2012. One of the initiatives noted by the WaterSense program was the Kohler-sponsored “Wasting Water is Weird” public service announcement campaign.
Kohler also partners with a number of industry organizations, including the USGBC, and Kohler has been one of the platinum sponsors of Greenbuild for the past five years. As a part of the third pillar in its sustainability plan, the company also is committed to philanthropy with its Save Water America initiative, through which the company has donated water-efficient plumbing products. The initiative has helped build nearly 2,000 Habitat for Humanity homes in 48 states over a three-year period. Other global stewardship projects connect Kohler associates with their communities by planting trees, building bathing and housing facilities for the disadvantaged, and responding to natural disasters. “All of these endeavors are facets of a communications strategy that seeks to communicate authentically what can be done,” David says.
Kohler’s awareness efforts include constructing LEED buildings for its facilities and helping other buildings achieve their own LEED certifications. “We’re designing products to work in LEED buildings, but we also have to live by example,” David says. “So in 2008, we decided that everything we built going forward would be designed to LEED standards.”
The company’s first LEED effort was the renovation of the environmental, health, and safety building on its campus in Wisconsin. To achieve Silver under the LEED-EB criteria, Kohler made several enhancements to the building’s exterior and interior. The building achieved a 50 percent reduction in water usage by installing new fixtures in the bathrooms, including Kohler waterless urinals, high-efficiency toilet, and touchless faucets. Natural lighting is used throughout the building, and long-lasting, low-energy compact fluorescent bulbs were installed. New landscaping included native Wisconsin plant life, and Kohler instated a green cleaning program, so only environmentally friendly cleaning products are used to in the building. All told, the building received all five points in the LEED Innovations category.
Since then, Kohler has continued down the path to LEED certification. In November 2011, just two years after the renovation of the environmental, health, and safety building, Kohler opened its first LEED-NC Gold-certified office building in Zibo, China. Compared to a standard office building of the same size and location, the facility uses significantly less potable water and energy, and 95 percent of its construction waste material was recycled.
The company’s new global communications building in Kohler, Wisconsin, built in 2012 to house its 180 corporate communications departments, is also certified Gold under LEED-NC. The 79,000-square-foot building, designed by Gensler, features water-conserving Kohler plumbing products, which will save an estimated 330,140 gallons of water per year. Thanks to a white roof, task lighting at each workstation, and low-mercury light fixtures and bulbs, the building uses approximately 18 percent less energy than a comparable building. More that 20 percent of materials were harvested and manufactured within a 500-mile radius, and 20 percent of materials were recycled.
Although David acknowledges that the company has achieved a lot in regard to sustainability since 2008, he still believes it has a ways to go, but he is ready to lead it there. “It’s my responsibility to ensure that this company continues to evolve and grow to be a proper reflection of our values, and I’m excited about that challenge,” he says.
If anyone can take Kohler into the next generation of sustainability, it’s David, in whom the company’s guiding principles have been deeply ingrained since birth. He began working at Kohler during summers in 1983. He didn’t return permanently to the company until 1993, after receiving a bachelor’s degree from Duke University, then a master’s degree in business administration from the Kellogg School of Management at Northwestern University, and working elsewhere. He joined Kohler as director of fixtures marketing for plumbing and specialty products. “I always knew I’d be back, because it’s an incredible company,” says David, who represents the fourth generation of the Kohler family to hold a leadership role in the business. “When you understand what the company stands for and see that those principles are true throughout the culture, you can’t help but be awed.”
Yet David acknowledges that this journey will not be easy. “Are we going to be perfect day one? No, but we’re on a path to strive for that,” he says. “And honestly, we don’t know exactly how we’ll get there in all of our areas; if we did, we’d do it tomorrow. But we’re holding ourselves accountable for consistent annual reductions, and that is going to lead to incremental improvements.”