Elaine Cohen, Exclusive to the Sustainable Business Forum as part of the Reporting: How They Do It series

Procter & Gamble (P&G) is a Fortune 500 American multinational corporation headquartered in the US manufacturing a wide range of consumer goods including laundry detergents, fabric softeners, cleaning  personal care products, dental care, feminine products and diapers. In 2011, P&G made $82.6 billion dollars in sales and employs 127,000 people in 80 countries, selling products in 180 countries.

Reporting Period: July 2010 to June 2011

Format:

Framework: GRI referenced and indexed, no level declared

Assurance: None

Material issues: No Materiality Matrix – just three focus areas: Products, Operations and Social Responsibility

Special features: Great interactive PDF enabling excellent navigation

Interesting practices:

  • P&G Sustainability Board sponsored by the Chairman
  • Health and Safety Statement: "Nothing we do is worth getting hurt"
  • At the 2010 Clinton Global Initiative, P&G committed to provide a cumulative of 4 billion liters of clean water by 2012 and to scale up the program to provide 2 billion liters of clean water every year by 2020 in order to save one life every hour
  • Top P&G officers have diversity results tied to their stock options awards
  • Strong reductions in waste and waste recycling
  • Good coverage of wood pulp purchasing policy

 

P&G's Social Responsibility section is one of the few in Sustainability Reporting these days which addresses outputs and impacts rather than actions. The Live, Learn and Thrive program, P&G's branded umbrella program for a range of initiatives to improve life for children and youth around the world,  has reached over 315 million children in 60 countries since its inception in 2007 and, P&G maintains, prevented 115 million days of disease and saved over 14,000 lives. P&G Children’s Safe Drinking Water Program Methodology is clearly described, having been developed with external organizations, Population Services International and Aquaya Institute. This is a good example of community impact reporting and shows impressive progress. P&G say that Live, Learn and Thrive is "woven into our philanthropy, cause marketing, product donations, disaster relief, and employee engagement", making it much more than a simple charity program and more of a strategic arm of business development. I believe this approach is one to emulate.

ImageThis is P&G's thirteenth sustainability report and it's well-written, clear and well-constructed. It's not overly cluttered, the downside of which may be under-reporting. While the section on Diversity and Inclusion is nicely presented, including gender numbers at management (42.3% female)  and employee levels (37.2% female),  I wondered about how this plays out in top management, which is where the numbers usually become less attractive. P&G discusses its "Vibrant Living" initiative, caring for employee health, which seems like an energizing program – I wondered about actual employee involvement in the program or its impacts on employee health to date. Employee safety performance is reported for P&G manufacturing and development sites – I wondered about office safety performance and perhaps specific reference to road safety. Supplier diversity is addressed and policies explained – I wondered about data which substantiates actual progress made in implementation. Perhaps P&G decided to leave out such details in the interests of report compaction (like soap powders, see below).  Nonetheless, I believe a little more data would result in greater credibility for P&G's reporting.
 
An area of P&G's Sustainability Report which is extensively covered is Sustainable Innovation, aptly so, because sustainable design is the core of best-practice business-integrated sustainability. P&G's Sustainable Innovation Products have at least  a 10% improvement in one or more aspects of environmental sustainability (energy, water, transportation, amount of material used, renewable energy or materials), achieved without negatively impacting the overall sustainability profile of the product. There are some nice examples, such as use of plant-based packaging for shampoo bottles and laundry powder compaction. Since setting a goal in 2007 to increase Sustainable Innovation to $50 billion in sales, P&G has sold $40 billion of these Sustainable Innovation Products. For a company which makes around $80 billion in sales each year, this amounts to between 12 and 15% of total sales since mid-2007. I suspect that improvement per product is very much dependent on the starting point, so in many cases, a 10% improvement in just one aspect of a product's sustainability might not be such a significant stretch.  The 10% improvement in one aspect goal seems to me to be rather a soft goal for such a leading Fortune 500 most-admired company. I would be interested to know when P&G might move towards a more absolute measure which demonstrates how overall product sustainability is shifting across the entire P&G range?

P%G's new 2020 goals of (1) 100% renewable energy to power all plants, (2) 100% renewable or recycled materials for products and packages and (3) zero consumer and manufacturing waste related to products going into landfills are clearly ambitious and present more of a challenge. While it seems reasonable that P&G won't yet have all the answers about how these will be achieved over a 10 year period, P&G's reporting on current energy and carbon emissions performance could be more robust. P&G reports an energy reduction of 52% since 2002 on a production-adjusted basis, but absolute energy consumption and carbon emissions reduced only slightly in the last three years and increased in 2011. Sustainability, it's true, is necessarily measured over multi-year performance, but I believe achievements made between 2002 and 2007 are history.  I would be more interested in P&G's current target period and plans to improve current absolute performance. Energy and emissions data exclude contract manufacturing and Scope 3 emissions– both numbers affect P&G's environmental impacts considerably. More comprehensive reporting would improve credibility.

Overall, P&G's 2011 Sustainability Report creates the impression that much more is going on than is included in this 76 page document. P&G's sustainability website adds some more detail. However, lack of external assurance, no reference to material issues, several disclosures which do not meet GRI guidelines despite being box-ticked in the P&G GRI Index, lack of vital data in key performance areas and limited future plans to achieve targets do not quite provide reassurance that P&G is on track to step up sustainability performance in future years.