Is shareholder capitalism broken?

Few would argue that it’s working well. Business as usual has us on a path to climate catastrophe. The housing/banking industry collapse threw the world into recession. We’ve seen Fukushima, the BP oil spill, the Massey coal mine deaths. Growing income inequality has become a persistent worry.

The conventional response to all that – indeed, the one that I share – is that smarter (though not more) regulation is needed. But a growing number of business people say the problems go deeper. They say a new kind of corporate legal structure is needed to require companies to operate for the  good of society, not just for their shareholders. These new corporations—they’re called B Corporations—are growing in number, and their structure has been enshrined into law in four states—Vermont, Maryland, New Jersey and Virginia.

Here’s what B Lab, the nonprofit behind B Corp, says on its website:

Our vision is simple yet ambitious: to create a new sector of the economy which uses the power of business to solve social and environmental problems. This sector will be comprised of a new type of corporation – the B Corporation – that meets rigorous and independent standards of social and environmental performance, accountability, and transparency.

And in its annual report:

After the latest round of economic and environmental crises, it’s clear we need systemic solutions to the systemic problem that places the interests of shareholders over the interests of workers, community and the environment.

Interesting, no? A couple of months ago, I heard Jay Coen Gilbert, a founder of B Lab along with Bart Houlahan and Andrew Kassoy,  talk about B Corp (it stands for Benefit Corp.) at a GreenBiz conference; afterwards, we caught up by phone to talk some more.

“We can’t have a new economy unless we have a new type of corporation,” Jay told me. “Corporate law actually works against sustainability.” Current law, he argues, require company executives to put shareholder’s interests ahead of everyone else’s.

Jay is himself a business guy. After graduating from Stanford grad, he joined  McKinsey & Co., then spent a couple of years working on child welfare issues for the government of New York City, and in 1993 founded with a shoe and apparel company for basketball players called And1. “We were very much the upstart, street ball brand,” he says. The company, which grew sales to $250 million, was sold in 2005, giving Jay the freedom to think about what to do next. He’d been inspired by socially responsible companies like Patagonia, Body Shop and Newsman’s Own, each of which, he said, was “very cool and inspiring in its own way, but all of the power and energy was diffused.”

How, he wondered, could the power of responsible business be harnessed?

“There was a clear need for a unifying brand that could help project the voice of this very compelling marketplace, from fair trade to clean tech, from microfinance to organic and local,” he says.

B Lab is the result, and he explains that the nonprofit trying to do several things at once.

First, it’s a certification effort, aimed at helping consumers identify responsible companies that meet rigorous and independent standards of social and environmental performance. “You can think of it as a LEED for business,” Jay says, referring to the system for rating green buildings.

More than 400 companies in 54 industries have been certified as B Corps. Most are small and privately held. Total revenues are under $2 billion. Among the early adopters are Seventh Generation, Method, Numi Organic Tea, New Leaf paper and Sansko. One of the bigger firms to be certified is Cascade Engineering, a $250-million Michigan plastics firm, which is profiled in the current issue of Inc.

These companies get actual benefits, along with the right to use the B Corps brand.  Salesforce and Intuit offer them discounts on software. Graduates of the Yale School of Management get favorable treatment of their student loans if they work for B Corps. The city of Philadelphia gives them tax breaks.

Second, B Lap is working with private equity investors to use its performance standards to help them make better-informed decisions about private companies. Its ratings are part of an initiative called the Global Impact Investment Rating System, or GIIRS, which provides data on the social and environmental impact of companies to investors who want to put their money into companies that are doing good. B Lab is beta-testing the GIIRS methodology with fund managers who have about $1.2 billion in assets under management.

Finally, Third, B Corps is pushing for new laws. The Benefit Corp legislation passed in four states creates a new corporate form which “redefines fiduciary duty, and holds companies accountable to create a material positive impact on society and the environment as measured by an independent, transparent third party standard.” Fundamentally, the idea here is to shield companies from protected from shareholder litigation when they made decisions that could negatively impact short-term profitability. Corporations operating in any state can, in theory, re-incorporate in these states to, in effect, redefine their purpose.

This is where I part ways with B Lab, but not before saying that what Jay and his colleagues  have accomplished in a few short years is nothing short of remarkable. They’ve catalyzed a movement, developed a sophisticated set of metrics around the corporations and the public good, won over hundreds of entrepreneurs and changed  laws in four states. They’re onto a big idea, and we can only hope it gets bigger.

The trouble is, the idea of business for the public benefit is not going to get big enough or important enough so long as it remains on the sidelines of shareholder capitalism. The world’s big companies–the Walmarts and GEs and McDonalds– would find it very hard, if not impossible, to re-incorporate as B Corps. If nothing else, they’d have to concede that there’s something fundamentally wrong with shareholder capitalism. They’re not going to do that–because, in my view, there’s nothing fundamentally wrong with today’s model.

While there are undoubtedly tensions  between maximizing short-term profits and building long term shareholder value, the job of a leader is to navigate those tensions and choose long-term value. Competitive markets also drive businesses to externalize their costs, but that problem is best addressed with regulation–starting, importantly, with a price on carbon. Corporate governance, too, needs fixing, so that managers are accountable to shareholders in fact as well as in theory.

There’s no doubt, in other words, that reforms are needed. But it’s my firm belief that companies that make the world a better place–by serving their customers, enabling their workers to flourish and giving back to their communities–will, in the long run, will be rewarded in the market and deliver superior returns to the owners. That will drive the change we want to see, at a scale that matters.

To create a new green economy, industrial capitalism must destroy itself. Disruptive, radical, breakthrough innovation is needed, on a mass scale. Government isn’t delivering the change we need. Can business step up to the challenge?

Innovation is on my mind because I’m just back from the GreenBiz Innovation Forum, a two-day event devoted to “sustainable innovation.” The San Francisco confab brought together smart and dedicated business people who engaged in lots of stimulating conversation and did some fun stuff—like trying to build a tower out of uncooked spaghetti, tape and a marshmallow. There’s video, photo and print coverage here.

I came away wondering whether the emerging orthodoxy of green business – one that is willing to settle for incremental changes by big companies, and clever but insubstantial breakthroughs by small ones—is going to get us where we need to go.

Two examples:

Procter & Gamble sets “carbon intensity” targets, meaning that it will produce its products (Tide, Bounty, Cascade, Crest, etc) with less energy. But because of the company’s growth imperative, it will pollute more, not less, in absolutely terms. [See P&G: A bold green vision but...]

Stonyfield Farm devises a corn-based yogurt cup, which gets us closer to a zero-waste, cradle-to-cradle consumption model. But the bigger challenge is to get  petroleum out of cars, trucks and planes, not yogurt cups.

These initiatives deserve applause, and their stories are worth sharing. But let’s not fool ourselves into thinking that they are the kinds of innovations that will deliver the environmental change we need.

Tim O'Reilly

The GreenBiz event was a reminder that big, multibillion dollar corporations aren’t good at disruptive innovation, even when they try. They don’t attract the right people; inventors and creative thinkers are repelled by cultures with lots of meetings, process, politics, budgets  and bureaucracies. Big companies are slow to move. They aren’t about having fun—and as Internet mogul Tim O’Reilly noted in a lively and provocative talk at GreenBiz breakthroughs are often driven by people  (the Wright brothers, the hackers who started the computer revolution, the Google guys) who want to have fun or make something cool.

Even when facing existential threats, big companies don’t cannibalize themselves, as Clayton Christensen has written. Newspapers didn’t invent Craiglist, which destroyed their classified business. The record industry tried to fright iTunes. My cool new “barefoot” running shoes (below), which challenge the business of conventional running shoes,  come from Vibram, an upstart, not from Nike or Adidas. Ford and GM didn’t invent Zipcar, and BP ain’t going beyond petroleum.

I moderated a panel with Adam Lowry, the co-founder of Method, who has thought a lot about this. It’s not merely that big companies aren’t very good at disruptive innovation, he argues, but that they resist radical change. In one of Method’s businesses, laundry detergent, P&G, the market leader, was the last to come along with smaller jugs and compacted detergent. [See The Future of Laundry Detergent.] Walmart insiders have told me that P&G was reluctant to shrink its Tide packaging.

Adam Lowry

I don’t mean to pick on P&G, which has set some bold long-term sustainability goals and is doing what it can, within limits, to become more “green.” The trouble is, the status quo is OK for P&G, and maybe even very good for P&G.

“It’s plain to me that market leaders have an inherent disincentive for radical innovation,” Adam says. “Disruptive new ideas require a company to cannibalize itself. That’s incredibly risky for a business that has incumbency.”

By contrast, startups are good at innovation. That’s their reason for being. But while Method (or Seventh Generation or Stonyfield) can thrive as businesses without generating billions of dollars of revenues, they can’t move the needle on issues like climate change, water, air pollution, ocean acidification or toxics without getting much bigger.

That was one reason why my friend and neighbor Seth Goldman agreed to sell his startup Honest Tea to Coca-Cola. With more distribution and marketplace clout, he can have a bigger impact.

This space where big and small companies come together–either literally or through investments or collaborations–may turn out to be the most fertile ground for scalable, sustainable innovation.

Andrew Williamson

During the GreenBiz event, Unilever’s Phil Giesler and Andrew Williamson of Physic Ventures, a venture capital fund whose strategic partners include Unilever, PepsiCo and Humana, described their work, which involves discovering and funding small, sustainable startups. One such startup, called Novomer, is developing plastics and packaging made in part from carbon dioxide, a fascinating twist on the conventional idea of carbon sequestration, which requires burying CO2 underground.  This model of big companies funding startups, and driving them to scale, is a very promising one.

Other examples: GE’s work with venture capitalists to create an energy-smart grid innovation challenge, Coca-Cola’s partnership with Recycle Bank, GM’s investment in Coskata, Chevron and Unilever investing in and working with Solazyme. [See Gee whiz, algae!]

And then there is the occasional big company that is willing to take a big risk. At the GreenBiz event, Jim Hall, managing director of Waste Management’s green squad, talked about how the giant trash hauler is reinventing itself: While it still dumps lots of garbage in landfills, it is investing in recycling, composting, turning waste to energy and even helping its customers prevent waste by buying fewer materials or becoming more efficient. It’s doing so under pressure from customers like Walmart, P&G and Toyota that have embraced the goal of zero waste, but still.

The challenge for those of us who follow green business – reporters, investors, NGOs and academics – is to try to distinguish between innovations that matter and those that don’t. We don’t want to let the perfect become the enemy of the good, but we do want to be honest when good isn’t nearly good enough.

(Not invented by Nike)

Procter & Gamble, the world’s largest consumer products company, today unveiled a bold new sustainability vision.

Don’t start the cheering yet.

Yes, the company eventually aims to power of all its operations with 100% renewable energy, to use 100% recyclable or renewable materials in all its products and to have no waste from the manufacturing or use of its products end up in landfills.

The vision is unimpeachable.

But the path to get there is not so clear.

And the reason to withhold applause? In the next decade or so, if P&G continues to grow, its environmental impact is more likely to get worse that it is to get better.

This is a fundamental conundrum for consumer goods companies with traditional business models and even the best of intentions: The more stuff they sell (and of course they want to sell more stuff), the more they pollute.

What P&G does matters, a lot. It’s an $80 billion company (annual revenues, for the year ended June 30). Its brands include Tide, Pampers, Crest, Gillette, Bounty, Cascade, Oral-B, Pepto Bismol, Ivory, etc.  It reaches 4 billion–4 billion!–consumers around the world and aims to reach 5 billion in the next five years. And like General Electric, P&G is an executive training machine; many ex-P&Gers (Meg Whitman, Steve Ballmer, Steve Case, many more) have gone on to do big things.

You can read a straightforward account of the P&G sustainability plan here at Greenbiz and a thoughtful (and favorable) analysis from my friend Joel Makower here. This is the latest iteration of P&G’s sustainability commitment, and the company has some meaningful accomplishments, as Joel reports. Just the past six months, P&G has:

introduced to the U.S. its Future Friendly campaign, born in Europe, a multi-brand and multi-platform effort to raise awareness about greener products and greener practices;

created a high-profile panel of sustainability experts to advise on its Future Friendly efforts;

launched a supplier scorecard to measure their environmental impacts;

reformulated a bestselling shampooto reduce toxins;

announced concentrated versions of powder laundry detergentsthat significantly reduce packaging and energy use; and

introduced sugarcane packaging to three of its shampoo and makeup brands.

First, these are all visionary long-term goals. No target dates are attached to them.

Second, P&G has been slow to develop this vision–which is strikingly similar to the the one laid out by Walmart in 2005. Indeed, while comparisons are inevitably imperfect, my impression is that when you measure P&G against Walmart, the world’s biggest retailer, or GE, the world’s most admired industrial company, or IBM, whose Smart Planet work is path-breaking, P&G is moving more slowly and timidly than any of those iconic FORTUNE 500 firms. It’s also trailing innovative competitors like Method (See Revolution in the laundry room) and Seventh Generation. More evidence that P&G is following, not leading? P&G’s Tide, the market leader, trailed Unilever’s All in the race to shrink laundry detergent packaging.

Third, and most important, P&G is mostly talking about eco-efficiency, as Sauers, to his credit, acknowledges. To pick just one example, P&G’s interim goals for 2020 include a commitment to reduce “packaging by 20 percent per consumer use.” This won’t be easy, I’m sure, and it’s admirable. But….let’s assume that P&G grows by a not-unreasonable 25% over the next 10 years. The company will then be producing more packaging, not less, than it does today.

P&G also tends to measure its reductions of  greenhouse gas emissions and water usage on a per-unit, rather than absolute basis. Strictly from a business standpoint,  this makes sense because as the company buys and sells businesses, it needs a consistent metric against which to define progress. But, as I wrote back in 2008 at Fortune.com with respect to P&G (See Buy Toilet Paper, Save the Planet):

Relative efficiency doesn’t matter to the planet. What matters is how many tons of greenhouse gases are emitted, and most scientists say those numbers need to first stabilize and then go down, dramatically.

Like most companies, P&G is still wrestling with the challenge of how to grow revenues and limit its footprint at the same time.

Given that, let’s hope that P&G’s talent for innovation will be focused on making consumption more sustainable. This page on P&G’s website offers a few examples, some impressive, most not so. If P&G can persuade more consumers to use Tide Coldwater or, in Europe, Ariel Cool Clean, both of which eliminate the need to heat water for laundry, we’ll all be better off. Opportunities around sustainability also lie in emerging markets, from which much of P&G’s growth will come.

As Len Sauers told Joel & Greenbiz:

I have a firm belief that all issues of sustainability will be solved by innovation. And at P&G, one of our core strengths is innovation, so as we go down this path to tackle these issues that the world is facing, I believe it’ll be our innovative solutions that are very helpful there. I see this as business opportunity for the company.

I’ve joined the laundry-detergent revolution. Well, revolution may be stretching it  — but changes unfolding (sorry!) in laundry rooms across America show how innovation can move us closer to a sustainable economy.

The revolution metaphor is useful because it’s a reminder that real innovation is more likely to be driven by upstarts, insurgents and rebels–like Method, one of my favorite companies–than by powerful incumbents who want to preserve the status quo.

Take a look:

Over the last several years, big, wasteful jugs of  laundry detergent like this one from Procter & Gamble’s Tide  have all but disappeared from grocery store shelves. These jugs were good for marketing people who plastered messages on the package but they weren’t good for anyone else.

Today, the new normal is concentrated 2x (meaning half the liquid in every load) detergents like Unilever’s Small and Mighty All, which use less packaging and water, saving money on shipping costs and waste. Tide sells lots of 2x as well.. The 2x packages are convenient, easy to store and pour.

But the greenest, smartest and most innovative detergent is an 8x concentrate from Method, which uses less water in a smaller package and should save consumers money. This is good for everyone except news P&G or Unilever, which have profited from the  overdosing of laundry, as we’ll explain.

Method is a privately-held company that was started in 2000 by Adam Lowry, a former climate scientist, and his friend Eric Ryan in their San Francisco bachelor pad. It has grown into a company with more than $100 million in revenues, and an impact bigger than its size. Method introduced the first concentrated laundry detergent — a 3x concentrate — to the mass market back in 2004 through Target.  A year or so later, amidst much fanfare, Unilever and Wal-Mart followed with a 2x Small and Mighty All. By most accounts P&G, the king of the detergent shelf with such brands as Tide, Gain and Era, came along  later, under pressure from Wal-Mart.

Adam, who is 35, spoke about Method, innovation and green marketing earlier this month at FORTUNE’s Brainstorm Green conference. We caught up the other day by phone to talk about how and why Method has become a sustainability leader.

There’s a tension, Adam argues, between size and innovation. “When you think about companies that dominate our economy, these are not organizations that welcome change and they are not usually nimble organizations,” he says. “The general model, for big companies, is to design something, build a patent fortress around it, and then extract as much profit as you can until the product runs its course.”

“Market leaders thrive when markets are static,” he adds.

Pushing towards sustainable models requires just the opposite–persistent innovation. “We need to be willing to take what makes us money today and throw it out the window and replace it with something that’s better, greener and a lot less certain,” he says.

This restless desire to improve led to the path-breaking 8x product, which packs enough detergent to do 50 loads of wash into a 20 fluid oz bottle that sells for $15 at Method’s website, at Amazon or at major retailers including Costco, Target and Wal-Mart. There’s a $2 off coupon, as I write this, at the Method site.)

Comparing Method’s price to a conventional detergent is tricky because, Adam argues, the conventional guys encourage waste.

He calls its laundry’s dirty secret:

The laundry jug is the SUV of consumer products–it’s antiquated, wasteful, and costly, but supremely profitable for its makers.

Why? Because caps on conventional containers of detergent are often twice the size of the recommended dose and the “fill to here” lines are hard to see. Method did a study that found that more than half of consumers either fill the cap full or eyeball the amount needed. Using too much detergent is  bad for clothes which get worn out more quickly,  bad for washers that get gunked up, bad for the environment because more laundry soap flows into waterways and bad for the wallets of customers who buy more than they need.

It’s good only for the manufacturers who sell between $3-billion and $4-billion of detergent a year. As Adam writes:

If a third of that is pure waste, one could assume that detergent manufacturers make $1 billion a year on consumers overusing laundry detergent. It’s clearly not that the technology to make caps less wasteful and easier to use has eluded detergent manufacturers all these years. They have a billion little reasons not to find a solution.

By contrast, Method’s 8x product works with small pump that prevents overdosing by delivering a little squirt into the washer. I’ve been using it for a couple of months, and it’s easier and more fun that pouring blue liquid into a cap. You can learn a lot more about the product here.

Interestingly, while the website touts the environmental benefits of  8x detergent (“our product uses drastically less water, 36% less plastic and requires 33% less energy and oil to produce than widely available 2x detergent”), Method is as  well known for its stylish designs as for its green cred. “I think it’s a mistake to market yourself as green,” Adam says, in part because eventually all products will have to be green.

While Method is still a small company, it’s gotten the attention of the big guys. Clorox, which has a GreenWorks laundry product, has accused Method of infringing on the image of a yellow daisy that both companies use on their packages. Method’s having some fun with the accusation, setting up a website called votedaisy.com that asks consumers to vote on who owns the daisy–Method, Clorox or Mother Nature. You can watch Adam on video here.

When I called P&G to ask whether they were developing an 8x detergent product, Len Sauers, the firm’s amiable head of sustainability, told me the company doesn’t talk about future products. He did say that P&G sells a laundry detergent in Europe called Ariel Excel Gel which uses cold water is compacted more than any laundry soap sold in the U.S. “As a sustainability guy, I’m a big fan of compaction,” Len said. But as the industry leader, he noted, P&G needs to make cure its mass customer base is ready for change. “We target mainstream consumers, those who want to do the right thing and don’t want tradeoffs,” he told me. Of course, as best as I can tell, there aren’t any tradeoffs with the 8x product, though it may be a hard sell to consumers who don’t expect to pay $15 for something that comes in a small package.

Adam, by the way, has nothing against P&G. “P&G is an amazing company,” he says. “Every year they grow their earnings. But they follow a certain formula. And we want to challenge that formula.” Spoken like a true revolutionary.

What are the “greenest” brands in the U.S.? Until we can define “green,” there’s no meaningful way to answer that question. Of course, that doesn’t stop people from having, and expressing, opinions.

Last summer, a group of agencies owned by the giant marketing and communications company WPP – the PR firm Cohn & Wolfe, branding experts Landor Associates and pollster-consultants Penn, Schoen & Berland Associates (PSB) – joined with Esty Environmental Partners, a consulting firm run by Yale prof and author Dan Esty, to survey about 5,000 consumers around the world about green products, companies and brands. This Friday,  the agencies will host a lunch in New York where I’ll moderate a panel (see below) to talk about the survey, called Green Brands, Global Insights.

The survey produced all sorts of interesting results—would you believe that 38 percent of consumers in Brazil are willing to spent 30 percent or more for green products?—but what jumped out at me was the list of the U.S.’s greenest brands. Here goes.

1. Clorox Green Works

2. Burt’s Bees

3. Tom’s of Maine

4. SC Johnson

5. Toyota

6. P&G

7. Wal-Mart

8. Ikea

9. Disney

10.  Dove

To which I can only say: I would never, ever have predicted that list.

On  the  bright side, I’m impressed that some Americans know that SC Johnson and Ikea are among the most environmentally responsible companies in the world, although I wouldn’t have thought of SC Johnson, which makes Windex, Raid and Saran Wrap, as a brand.

Seeing Clorox’s GreenWorks line atop the list doesn’t surprise me. I’m told the company spent $30 million (a figure I can’t confirm) to promote the new brand, so it looms larger in the minds of consumers than, say, Seventh Generation and Method, competitors whose ethos strikes me as deeper green. I’ve never bought a GreenWorks product but I happily spend my money on Seventh Generation and Method.

Toyota presumably gets credit for the Prius, which overshadows its gas-guzzling trucks and minivans.

Wal-Mart, we could argue about. The company would definitely make my list.

The names that surprised me are Disney and Dove.

Disney, it turns out, has a slew of environmental initiatives underway, but few have crossed my radar screen, perhaps because my kids outgrew the Disney world some years ago. The company announced targets earlier this year to reduce emissions, waste and fuel use. Maybe movie-goers give Disney credit for the Wall-E movie, an environmental cautionary tale. On the other hand, Disney operates a couple of cruise ships that spew thousands of tons of greenhouse gases and it  sells an awful lot of junk (food and souvenirs) at its theme parks.

Dove is more of a puzzle. Greenpeace International ran a campaign against Dove in 2008 because the company that makes it, Unilever, is said to be the world’s largest consumer of palm oil. Palm oil cultivation is a major cause of deforestation To its credit, Unilever, which has been an environmental leader for a decade or more, agreed to strongly support efforts to halt deforestation. But it’s hard to see how that makes Dove a green brand. It may be that Dove’s path-breaking and praiseworthy Campaign for Real Beauty led consumers to believe that a company that wants to free women from beauty stereotypes is also likely to be “green.”

All of this points to the need for independent standards to help guide consumers–who do care about the issues–through a thicket of environmental claims. Wal-Mart’s sustainability index can’t come soon enough.

In the meantime, we’ll dig deeper into the survey on Friday. I’ll be joined by Mark Penn of Penn Schoen & Berland, consultant and author Dan Esty, Russ Meyer, the chief strategy officer of Landor and Annie Longsworth, who leads the sustainability practice at Cohn & Wolfe. The event is by invitation only but feel free to email me (marc.gunther@gmail.com) to request an invitation.

“People are very entrenched in the way they do their laundry,” says Adam Lowry, the co-founder and chief “greenskeeper” at Method. And that’s a problem, as we’ll explain in a moment.

Method is an eight-year-old company that makes “environmentally-friendly cleaning products that are safe for every home and every body.” Started in a San Francisco bachelor pad by Lowry—a former climate scientist!—and his friend Eric Ryan, privately-held Method now has more than $100 million in annual revenues, about 100 employees and a good deal of buzz for its style as well as its green products. Although Method was the first company certified as a Cradle to Cradle company in the U.S., it’s probably better known for its packaging aesthetic than for its commitment to sustainability.

“If your brand position is, hey, we’re the green alternative to the toxic stuff, and everyone else offers green products, you’re no longer differentiated,” Lowry says. “It’s also not very interesting.”

“We’re trying to create broad appeal, way beyond the green consumer, for products that have ‘green’ as one of their qualities,” he says. “There have been far to many green things that have been designed to be green, and they suck.”

Lowry spoke today at the Greener By Design conference in San Francisco, hosted by my friend Joel Makower and run by Greener World Media. (I’m a senior writer at Greenbiz.com, a GWM media property.) He’s an interesting guy—34, with a chemical engineering degree from Stanford, who worked for the Carnegie Institution before starting Method.

Method is at the forefront of changes sweeping the home cleaning business. (No pun intended.) Premium brands like Method, Seventh Generation and Restore are growing. The big players in the industry, meanwhile, are introducing green brands, like Clorox’s Greenworks and SC Johnson’s Nature’s Source. All tend to talk about themselves as plant-based, biodegradable, natural, non-toxic, chlorine-free and the like. I confess, I can’t even begin to sort out the competing green claims.

Method, though, was the first cleaning company to introduce a triple-concentrated laundry detergent back in 2004. That was a simple and very good idea—it reduced packaging, appealed to retailers because it saved shelf space and shipping costs and was easier for consumers to shlep home. At first consumers balked—they weren’t sure they were getting enough detergent for their money—but with a big push from Unilever, which introduced a product called Small & Mighty All, and an even bigger push from Wal-Mart, the idea caught on. Now most laundry detergents are compacted.

“We thrive by making the market change and getting our competitors to follow our innovations,” Lowry says. “You now can’t buy at Wal-Mart or Target a non-concentrated laundry detergent.”

Even so, there’s lots of waste in the laundry biz. Most customers fill the cap on the bottle to the brim. More is better, they figure. Lowry says Method would like to find a way to get people to use only the detergent they need, and to deliver it with less packaging.

“We have a quandary.” Lowry says. “We make a lot of plastic bottles. I’d rather make a refill system.”

If consumers were willing to bring their empty containers back to the store and refill them, they could eliminate the packaging associated with each purchase and, presumably, save money. Restore is trying out a refill system for its products in cooperation with Whole Foods Markets in the Midwest. (Here’s a link to the Restore website that explains how it works.)

The problem is, it’s inconvenient. “If you don’t bring consumers along with you, the most wonderful innovation is useless,” Lowry says. Plus have you ever seen how much coffee is spilled on the floor in supermarkets where people grind the beans themselves? The aisles could get pretty sticky once people start dispensing laundry detergent.

Method is working on the next big idea in laundry detergent, Lowry tells me, but he won’t say much more than that. “It will bring fundamental change to the category,” he says. He will say that when he thinks about the future of laundry detergent – and it’s a good thing someone is – he sees an evolution from plastic bottles to a refill model to a subscription model to a service model.

“We want to get paid for cleaning people’s clothes, not for selling liquid. The business model has to change,” he said.

No, I don’t know what he’s talking about either, but one can envision a smart washing machine that would dispense exactly the right amount of detergent and no more, then clean your clothes, separate the rinse water from the detergent and the dirt, and then  recycle the water and detergent and do it all over again. A closed-loop system, if you will.

“When I think about Method in the future,” Lowry sats, “I want to be able to revolutionize every product category in which we compete.” Continuous improvement is the name of the game. Method is worth watching. And it’s clearly about a lot more than pretty bottles.