P&G takes positive approach in launch of its new sustainability scorecard

Procter & Gamble, which manufactures hundreds of well-known brands of consumer items used an estimated 4 billion times daily around the world, is taking a stand for sustainability.
 
P&G recently announced a move to make its suppliers more accountable with the launch of an environmental sustainability scorecard and rating process. P&G joins other large companies such as Walmart, IBM and Kaiser Permanente in establishing systematic programs to measure suppliers’ progress.

The scoring system will assess P&G suppliers’ environmental footprint and encourage continued improvement by measuring energy use, water use, waste disposal and greenhouse gas emissions on a year-to-year basis. The new scorecard focuses on environmental stewardship, while the social aspects of sustainability are addressed in P&G’s supplier code of conduct.

Before this effort was launched, P&G did not have a clear approach to work on sustainability issues with its multitide of suppliers, according to Larry Loftus, P&G director of purchases, capability and strategy. “The strength of this program will be the level of engagement,” he adds. “Buyers will assess the supplier ratings and then talk with them in a positive manner about how to make improvements. It’s a collaborative tool.”

Suppliers involved in design
P&G’s new supplier scorecard is the result of 18 months of work and close collaboration with the organization’s Supplier Sustainability Board, which includes more than 20 leading supplier representatives from P&G’s global supply chain. Representatives on that board include a wide variety of companies such as chemical company BASF, Chinese manufacturer Global Closure Systems and freight handler J.B. Hunt.

The scorecard relies on global measurement standards and sound science, Loftus says, including protocols from the World Resources Institute, the World Business Council for Sustainable Development and the Carbon Disclosure Project.
 
He says P&G in most cases is not asking for new data, but that the system utilizes metrics on which suppliers are already reporting. The scorecard includes data on materials for both P&G’s products and packaging.

P&G’s goal in deploying the scorecard is to enhance supply chain collaboration, measure and improve key environmental sustainability indicators, and encourage the sharing of ideas and capabilities to deliver more sustainable products and services for its consumers.
 
“The launch of the Supplier Environmental Sustainability Scorecard represents the next step in P&G’s commitment to environmental sustainability and reflects the company’s holistic, end-to-end supply chain strategy,” said Bob McDonald, P&G chairman of the board, president and CEO. “We will grow P&G’s business by touching and improving more consumers’ lives in more parts of the world... more completely. To accomplish this, we must continually innovate and grow responsibly and sustainably. Keeping sustainability at the core of our business fuels innovation and strengthens our results.”

Loftus says about 400 key suppliers that represent about 50 percent of the company’s purchases, have been asked to submit their initial data by July 1. The scorecard is specifically designed to focus on year-over-year improvement, regardless of a supplier’s total size or the stage of its sustainability program.

Roll-out beyond P&G’s key suppliers will be determined once the company has been able to assess the success of the first phase of deployment. Suppliers will have a full year to prepare to report their data before the rating can adversely impact their supplier rating with P&G. In the future, P&G will use the scorecard to determine each supplier’s sustainability rating as part of P&G’s annual supplier performance measurement process.

In an effort to create an initiative that can have cross-industry impact, P&G suppliers are also encouraged to use the scorecard within their own supply chains, Loftus says.

In presentations, P&G states that this initiative “is not just about about ‘green’ products tied to a current consumer movement, but a systemic approach covering our total supply chain, from raw materials to manufacturing processes to the consumer.”

To see more information on the scorecard, visit www.pgsupplier.com/environmental-sustainability-scorecard.

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