Environmental Leader

Procter & Gamble has launched a sustainability scorecard and rating process to measure the environmental performance of its key suppliers. The new scorecard will assess P&G suppliers’ environmental footprint by measuring energy use, water use, waste disposal and greenhouse gas emissions on a year-to-year basis.

The company says the scorecard will be “open code” for use by any organization to help determine common supply chain evaluation processes across all industries.

The scorecard is similar to Wal-Mart’s sustainability index in that it asks questions about the sustainable practices of its suppliers including climate change action, greenhouse gas reduction targets, and renewable energy use, among other measures. P&G has been directly affected by Wal-Mart’s efforts – by one measure, made back in 2007, meeting Wal-Mart’s sustainability goals has cost P&G hundreds of millions of dollars.

Just as Wal-Mart’s scorecard has had a large effect on its suppliers, P%G says its rating system has the ability to encourage environmental improvement across its global network of suppliers – which represents approximately 75,000 businesses and $42 billion in spending each year.

P&G says its  scorecard is the culmination of 18 months work which included input from a supplier sustainability board made up of more than 20 leading supplier representatives from P&G’s global supply chain. The scorecard relies on protocols from the World Resources Institute, the World Business Council for Sustainable Development and the Carbon Disclosure Project, so as to, according to P&G, minimize redundant efforts. “Our suppliers wanted a tool that was flexible yet grounded in existing measurement standards,” said Rick Hughes, P&G global purchasing officer.

The scorecard is specifically designed to focus on, and encourage, year-on-year improvement – regardless of a supplier’s total size or the current stage of its sustainability program. A time line for roll-out beyond P&G’s key suppliers will be determined down the road.

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 – also similar to Wal-Mart’s efforts.

As P&G has followed Wal-Mart’s lead, P&G suppliers are being encouraged to use the scorecard within their own supply chains.

You can see P&G’s scorecard here: http://www.pgsupplier.com/environmental-sustainability-scorecard

The company says that in 2010 it is also transitioning from its current internal system of auditing to use third-party auditors and will subscribe to the SEDEX database where audit results can be shared by suppliers with all customers to save costs and resources.