P&G warns suppliers that sustainability scores will impact overall ratings

The Procter & Gamble Co. (P&G) has rolled out an expanded and improved Environmental Sustainability Supplier Scorecard program. Starting this year, a supplier's results on this scorecard will affect supplier performance ratings, and will therefore impact a supplier's opportunity for future business with P&G. 

Suppliers and agencies will be evaluated and given a score from 1-5, and those that show exceptional performance (5/5) in the area of sustainability will be publicly rewarded. For those partners that do not score well, the scorecard results will form the basis for joint sustainability improvement plans and then be used to measure progress over time. In this way, P&G has put the ownership of the scorecard within the department that has the greatest influence to affect change with its external business partners.

P&G also will increase distribution of its scorecard to 600 suppliers, which has been updated to reflect learnings from the program's first year. These learnings were shared by P&G in a public webcast on April 7, 2011, where company executives stressed the importance of using innovative ideas and the cooperation of its suppliers to reach its very ambitious sustainability goals. As many Packaging Digest readers know, packaging plays a large part of P&G environmental stewardship vision. For example, P&G plans to use 100 percent renewable materials or recyclate for all our products and packaging and a 20 percent packaging reduction per consumer from 2010 to 2020. 

"Working with our external partners is clearly critical to realizing our long-term environmental vision as a company, and this scorecard is a helpful tool to facilitate that collaboration.," says Dr. Len Sauers, Procter & Gamble's vice president for global sustainability. "After all, using 100 percent renewable or recycled materials for all products and packaging will only be achieved through strong collaboration with our business partners."

The scorecard was designed to track and encourage improvement on key environmental sustainability measures in P&G's supply chain. The first year focused on assessing whether P&G could receive clear data to measure future improvements and jump-start innovation related to sustainability. The company found that most suppliers could track the requested key sustainability measures and that the process of innovation sharing had begun.

More than 20 leading supplier representatives globally, who form the P&G Supplier Sustainability Board, participated in the creation of the scorecard. "This isn't simply about collecting data," says Rick Hughes, P&G's chief purchasing officer. "The scorecard is the right tool to give us that snapshot across our supply chain so we can identify where to focus our collective supply network sustainability efforts, develop ideas to work on together, and reward those who excel."

Deployed about a year ago to nearly 400 strategic suppliers, the P&G Supplier Scorecard was designed to measure and improve the environmental performance of key suppliers with three goals:

By assessing the total environmental footprint of suppliers, this initiative encourages continued improvement by measuring energy use, water use, waste disposal, and greenhouse gas emissions on a year-by-year basis. 

The scorecard also encourages P&G partners to share innovative ideas that can improve the sustainability footprint of the business. Of the scorecards received by P&G, about 40 percent offered at least one innovation idea. Many of these have moved forward to become actual projects, including a chemical supplier who has begun work with P&G on renewable energy, renewable materials development, and ways to reduce emissions. 

"It was the scorecard that jumpstarted those projects," says Larry Loftus, director of purchases capability and strategy and a leader in developing the program. "I believe that many of the opportunities we identified through this process will result not only in environmental sustainability improvements but also in improvements to our bottom line as well as growth for our business partners."

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