P&G Introduces Supplier Sustainability Scorecard

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Sustainability programs are such a large part of Procter & Gamble Co.’s operations that the company has extended its emphasis on continuous improvement beyond its own four walls. Recently, the CPG manufacturer launched a supplier environmental sustainability scorecard and rating process to measure — and, it hopes, help improve — the environmental performance of its key suppliers.

Working over 18 months in close collaboration with about 20 representatives on P&G’s Supplier Sustainability Board, the company developed a scorecard that will assess suppliers’ environmental footprint by measuring energy use, water use, waste disposal, and greenhouse gas emissions on a year-to-year basis. While the program is for internal use initially, the goal is to lay the foundation for a standard of supply chain evaluation processes that any organization in any industry can use, the company said.

“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 P&G Chairman, President, and CEO Bob McDonald in a statement. “We will grow P&G’s business by touching and improving more consumers’ lives in more parts of the world. … Keeping sustainability at the core of our business fuels innovation and strengthens our results.”

The scorecard relies on accepted worldwide measurement standards, including protocols from the World Resources Institute, the World Business Council for Sustainable Development, and the Carbon Disclosure Project. P&G, which made the scorecard available in April, asks suppliers to provide information on fuel and electric energy use, input/output of water usage, output of hazardous and non-hazardous waste, and measurement of direct and indirect greenhouse gas emissions.

There are also optional measures for renewable energy, recycled materials, transportation fuel efficiency, and any violations and sanctions. Suppliers are rated on a scale of 1-to-5 on how well they support P&G’s sustainability initiatives. Ultimately, P&G aims to enhance collaboration and encourage the sharing of ideas and capabilities to deliver more sustainable products and services to its consumers, the company said.

“We worked closely with a global team of P&G personnel, suppliers, and supply chain experts to determine the most effective way to measure the environmental performance of our diverse global supplier base,” said Rick Hughes, P&G global purchasing officer, in a statement. “Our suppliers wanted a tool that was flexible yet grounded in existing measurement standards, and, by working together, we developed a framework that will help drive real improvement across all industries.”

Any rollout beyond P&G’s key suppliers will be determined after feedback from the first phase of deployment is incorporated. Suppliers will have a full year to prepare 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 addition, as part of its effort to create an initiative that can have far-reaching cross-industry impact, P&G suppliers are also encouraged to use the scorecard within their own supply chains, the company said.