Ask Doug Baker

Doug Baker, CEO, Ecolab

Baker has been Ecolab’s CEO since 2004, running its global businesses in cleaning and sanitizing for the health care, restaurant, and hospitality industries, among others. In 2007, Ecolab’s practices placed it on Institutional Investor magazine’s list of “America’s Most Shareholder-Friendly Companies,” on CRO magazine’s list of the “100 Best Corporate Citizens,” and on Ethisphere magazine’s list of the “World’s Most Ethical Companies.”

“Can Sustainability”—environmentally green operations—“and Profitability Co-Exist?” Baker asked in the title of his recent First Tuesday talk at the Carlson School of Management. Here’s how he answers that question and your questions.

Q: What is your reaction to Bill Gates’s recent statement that capitalism should be more responsible for shaping and improving society?

Gary Johnson, MSP Communications

A: Capitalism is a positive force that contributes greatly to society, and it can do more, provided that companies are able to balance their financial performance and social responsibility. What is often lost in the discussion is that successful companies make money, we create jobs and we pay taxes—and taxes fund investments in society. Companies like Ecolab that are performing well contribute to our communities by ethically and sustainably growing our business and through charitable giving and direct involvement in key areas like education, environmental, and community programs.

It also should not get lost in the discussion that we live in these communities as well. We want—and need—strong, vibrant communities to ensure we attract and retain the very best employees.

Q: Is sustainability always in opposition to profitability?

Gary Johnson

A: Sustainability and profitability are not opposing factors. In fact, we would argue that operating with sustainability in mind is an economic advantage, decreasing manufacturing, energy, and other costs.

Our customers are looking to us as the experts in optimizing their total impact, because it saves them time and money while still delivering the best results. All of them are looking to reduce their energy and water consumption. For example, a single installation of our Apex warewashing system reduces energy use by 2,100 kilowatt-hours, plastic waste by 43.5 pounds, and water consumption by 7,300 gallons a year. If every full-service restaurant in the U.S. converted to Apex, we’d save our customers 1.09 billion kilowatt-hours of energy and 3.65 billion gallons of water—enough energy to power 100,000 homes for a year and enough water for 144,000 families. That translates into huge cost reductions for our customers, making them—and frankly us—more profitable.

Q: How does Ecolab balance the investment needed to establish sustainability with the constant pressure for earnings-per-share performance?

Mark Sheffert, Manchester Companies

A: It is really pretty simple: Driving sustainability drives earnings for us. By providing our customers with products and services that reduce their consumption of water and energy, and ultimately save them money, we continue to grow and succeed. Also, reducing our consumption internally saves money as well. I haven’t seen a business yet whose goal it is to use more fuel!

Q: How long is Ecolab’s time horizon for ‘payback’ on investments in sustainability? When should shareholders expect a return and at what multiple?

Mark Sheffert

A: We’re getting paybacks today, and frankly, we’ve been seeing dividends on our efforts in this area for decades. We decreased our packaging waste by 90 percent in 1984, when we were the first company to introduce solid capsule technology for washing dishes in restaurants. Capsules replaced the traditional five-gallon plastic container. This and hundreds of innovations since then provide customers with immediate transportation, energy use, water consumption, and reduced waste benefits, and those savings help drive demand for our product.