The Path to Sustainable ESG Management

The South Korean company Dr. Noah developed a new, hot pressing technology for use in making more environmentally friendly toothbrushes. (Image courtesy of Dr. Noah) 

The media has often dubbed South Korea “Plastic Korea” or “Trash Kingdom” due to the notorious amounts of plastic waste it generates. The country’s annual plastic waste per capita is 44 kilograms (nearly 100 pounds), making it the third-biggest producer in the world after Australia and the United States. However, the issues surrounding plastic waste extend far beyond Korea’s shores, and it is estimated that by 2040, the amount of plastic waste worldwide could reach approximately 1.3 billion tons. The social impacts of this mass waste are troubling, to say the least. Endocrine-disrupting chemicals emitted from plastic waste can contribute to cancer and reproductive disorders, and microplastics produced in the process of decomposition often make their way into tap water and foods.

The toothbrush, a household item most people use every day, is one of many products that contribute to the staggering amount of plastic we throw away every year. If the world’s population followed the common advice to replace their toothbrushes every 3 months, we would dispose of approximately 29.4 billion toothbrushes annually, which is equivalent to 600 thousand tons of waste. It is also especially difficult to recycle the small and sturdy plastic parts in toothbrushes; most get incinerated or end up in landfills where they will likely take up to 500 years to biodegrade.

With these problems in mind, and seeing the potential of a business solution, a dentist named Geunwoo Park founded the social venture company Dr. Noah in 2016 and began developing biodegradable bamboo toothbrushes as a replacement for plastic ones. But reducing plastic waste was not his only goal. Park also wanted to increase the income of residents in impoverished areas, including areas where bamboos grew. And in terms of business management, he wished to create harmony between the growth of staff and the company—something that put him a step ahead of most South Korean organizations thinking about environmental, social, and governance (ESG).

Today, Dr. Noah has produced nearly 1 million bamboo toothbrushes, reducing plastic waste by almost 17,000 kilograms, and increased the income of previously impoverished communities. It has also cultivated a work environment that promotes efficiency and balance through autonomy, delegated decision-making, and a growth mindset.

The company’s story sheds light on how businesses can effectively apply ESG, and in this article, we take a closer look at the socially responsible management practices Dr. Noah undertook to make progress in each of these areas.

Developing a Better Product

In 2008, Parks began traveling to remote areas of Southern Asia and Central Africa as a medical service volunteer. The communities he worked with lived in poverty and lacked access to food, water, education, and health care. After doing some research, he concluded that bamboos—the woody grasses commonly found in impoverished areas of subtropical monsoon climate regions—could be the key to solving numerous social issues at hand. “As I realized we could solve the root causes of these social problems if we applied a … business approach, not just in the form of a relief, I felt an unexplainable surge of passion that I’ve never experienced before,” says Park. Producing and selling bamboo toothbrushes would not only boost the incomes of residents in developing countries, but also contribute to the reduction of plastic waste in a way that corresponded to sales performance.

Park started by visiting China, where most of the world’s bamboo toothbrushes are manufactured, and found that toothbrushes made in impoverished areas relied on manual labor, were inferior in function, and—despite cheaper raw materials compared to plastic—cost more per unit than plastic toothbrushes. To overcome these drawbacks, he experimented with various production techniques and ultimately adopted a new technology called “hot pressing” that reduced the manufacturing process from 21 to 11 steps. The process produced high-quality bamboo toothbrushes that were price-competitive with their plastic counterparts.

Bamboo Toothbrushes and the Environment

One of the main advantages of bamboo toothbrushes is that the majority of the brush biodegrades much faster than plastic. While the nylon used to make the bristles does not biodegrade easily and no alternative has yet been developed, the environmental footprint remains much smaller.

Another advantage involves consumers’ growing interest in zero-waste products, including among the “MZ generation”—a Korean term referring to millennials and Generation Z—who tend to make purchases based on personal values and beliefs. The appeal of environmentally friendly products to these buyers can motivate competing companies to develop their own.

In addition, Dr. Noah is in solidarity with environmental initiatives as a participant in the 1% for the Planet movement, which directs a percentage of businesses’ annual sales to environmental organizations.

Economic and Social Impacts of Bamboo Toothbrushes

The impact of Dr. Noah’s work, as noted earlier, goes beyond environmental concerns. Another priority is advancing the income level of local residents in low-income regions, in part thanks to the comparatively underdeveloped bamboo industry in areas like Vietnam. When Park began his research in 2008, Chinese bamboo producers received $110-$130 per ton of bamboo due to the high demand for glasses and building materials, while Vietnamese bamboo went for $30-$40 per ton. Increasing the demand for raw materials from suppliers in impoverished areas of Vietnam to support a product with high added value (toothbrushes) later allowed suppliers to raise their price, and thus contribute to increasing resident income. Today, in Thanh Hóa, Vietnam’s largest bamboo-producing area, for example, 400,000 residents earn an average monthly income of about 80 thousand won (about $67).

In 2019, Dr. Noah signed a memorandum of understanding with the Vietnam Thanh Hóa local government under which the government allows Dr. Noah the complimentary use of 200,000 square meters (about 49 acres) of land and infrastructure support for 50 years. The company will use the land to build a factory, which in turn will create more jobs and improve the sustainability of the industry. It is also pursuing a study with the Seoul National University Institute of Advanced Machines and Design on the physical properties of local bamboos for export and use elsewhere. “We have imported 110 tons of bamboo from Vietnam [to South Korea] as of 2019,” Park explains, and as a result, “it is estimated that around 1,350 poor bamboo farmers have managed to reach the median income level.”

The positive influence of Dr. Noah is also apparent in South Korea. For example, the company helps five seniors every month through Cclim, an organization that provides safe and light handcarts to seniors who collect discarded paper for recycling. Dr. Noah pays for advertising on the carts, which Cclim passes on to the seniors who use them. Dr. Noah also runs a dental clinic for homeless people and refugees in collaboration with Advocates for Public Interest Law, which works to advance refugee and migrant human rights and publishes The Big Issue Korea, a magazine that assists homeless people in achieving financial independence.

Building an Effective and Healthy Organizational Culture

While the company has met with success on a variety of fronts, it has also had its share of failures. After witnessing China’s inefficient manual labor process, Park aimed to develop the world’s first machine that could automatically place toothbrush bristles into bamboo toothbrushes. However, the machine, which had taken two years to develop, had frequent breakdowns, and by December 2017, all of Dr. Noah’s team members had left the company, leaving only Park and a single intern. “From then on,” says Park, “I’ve come to realize the importance of having a team consisting of experts, and we focused on team building.”

Today, Dr. Noah’s leadership team includes people with different backgrounds and areas of expertise, each of whom has made a unique contribution to the company. For example, Chief Technology Officer Gyeongtae Lee, who previously ran an electricity business based on renewable energy and has a background in mechanical engineering, developed the hot pressing technology through an industrial-educational cooperation program with the Seoul National University’s Institute of Advanced Machines and Design. Co-Chief Executive Officer Yohan Gye and Chief Procurement Officer Kathy Ku were social innovators with experience running a water purifier business in Uganda and came on board to help Dr. Noah enter into global markets as it scaled. Although they are all experts in different fields, including core technology securement, company operations, and product management, they have come together under the shared vision of reducing plastic waste while mitigating poverty.

At the same time, the company is cultivating a “growth-oriented environment” to acknowledge and embrace the diversity of staff members, and develop their individual potential. It does this by providing space for reflection (such as conducting monthly team surveys); the promotion of cross-departmental, peer-to-peer relationships and open communications (such as through all-hands meetings); and funding work-related book purchases and training expenses. As Lee explains, “The purpose is to give employees the opportunity to think about the individual’s course of growth and not just of the collective group.” The company also tries to foster a working environment equipped for work-life balance through work policies such as “just a moment” leave, which allows workers to take 1- to 2-hour breaks, as well as flexible working hours between 8 a.m. and 7 p.m., and self-regulated lunch breaks from noon to 2 p.m.

These efforts have contributed to Dr. Noah’s rapid growth: The number of employees has increased from two to 56 over the last four years, and sales performance has increased eightfold over the past year. The company sees compensation and growth opportunities as solutions to employee burnout, an issue many social venture companies struggle to overcome. “We believe one’s compensation must match the amount of contribution one made for the common good,” says Gye, emphasizing that it is crucial to move away from the outdated mindset that justifies individual sacrifice for the altruistic purposes of the business. And while conceding that it is easier said than done, Park asserts that the company will accomplish the organization’s mission in a sustainable manner by continuing to balance impact and revenue and working toward its vision.

Taking a Lead in ESG Management

Dr. Noah’s sales reached $800 million won (about $700,000) in 2020 and nearly 1.1 billion won (about $1 million) in just the first half of 2021. The financial and social values are fully integrated with its social business model, as the faster the sales increase, the greater the social achievements—in terms of environmental protection and poverty reduction—become. It has also attracted numerous social innovation awards and a cumulative investment amount of 5.9 billion won (about $5 million), including 800 million won in seed funding.

But Dr. Noah does not hope to become the company that sells the most toothbrushes in the world. Instead, it hopes to maximize its social impact by becoming a company that encourages every plastic toothbrush company in the world to make its own bamboo toothbrush. Consider the environmental impact that Colgate, the world’s number-one seller of toothbrushes and toothpaste, could have if it sold eco-friendly products. Having launched the sustainable oral-care brand Juni in the United States in 2020, Parks says there is nothing more rewarding than incentivizing global consumer goods companies like Colgate to take green action.

Since 2016, Dr. Noah has been steadily walking the path of sustainable ESG management in the pursuit of social impact and social innovation. Its continuous efforts to conduct new research and become a more socially valuable company have led to environmental, social, and economic success. Looking ahead, it will explore ways to quantify the impact generated from its supply chain, including how much collaboration has improved Vietnamese bamboo farmers’ and their families’ quality of life. Amid growing interest in social enterprises, Dr. Noah offers inspiration for entrepreneurs who dream of starting new socially responsible businesses that take all levels of ESG into account.

Read more stories by Daum Lee, Eunseo Lee, Yewon Jeong & Yumin Jo.