Consumer goods giant P&G’s latest report lays out an admirable vision, but leaves the reader uncertain the company is taking the concrete steps to realise it
When candle maker William Procter and soap maker James Gamble founded their business during the US financial panic of 1837, sustaining the company for 175 years was probably not top of mind. Yet today Procter & Gamble (P&G) is looking ahead to how a global corporation can achieve long-term sustainability in a consumer society with diminishing natural resources. For a company producing thousands of diverse products at 130 manufacturing plants around the world, the potential benefit to the environment and the people who depend on it is significant.
P&G’s 2012 Sustainability Report, its 14th, is a strikingly designed 83-page PDF (a 32-page overview is also available). The report is structured around three main areas: products, operations, and social responsibility. A separate section covers employees and stakeholders. The report discloses performance related to P&G’s 2007-2012 sustainability goals and states new, generally ambitious goals for 2020. Performance reporting is supported by useful data visualisations, statistics and case studies.
Although the report makes no explicit mention of materiality, the list of topics covered is comprehensive and the weighting of issues seems appropriate to the sector.
P&G’s report shows admirable long-term vision. However, it struggles to bring a fully convincing action plan into focus.
Taken at face value, the chief executive’s message is highly encouraging. It commits to a long-term vision to power all plants with 100% renewable energy and use 100% renewable or recycled material in all products and packaging. As the maker of more than 50 different billion-dollar brands, including Crest, Tide, and Duracell, the latter goal is hugely ambitious. But the report stops short of setting out a plan for achieving the CEO’s vision, and P&G’s strategy does not match the scope of arch competitor Unilever’s Sustainable Living Plan.
P&G’s renewable energy goal for 2020 is to increase use at P&G plants to 30% from the current 7%. Significant, but hardly radical. No plan beyond 2020 is revealed, and even the plan to reach 30% is discussed in only limited detail. It will also be telling to see if recent company announcements about cost-cutting affect the scope of renewable energy plans.
The large majority of P&G’s environmental impacts lie outside its own operations, in its supply chain and with the consumer’s use of products. So the long-term target of 100% renewable ingredients is potentially far-reaching, and would be an industry groundbreaker. Unfortunately, the report does not elaborate on the science behind the goal or explain how it will be implemented. And it should be kept in mind that not everything that grows has a lower lifecycle impact than everything that doesn’t – full lifecycle assessments are needed to ensure sustainable outcomes.
The report states a 2020 goal to replace 25% of current petroleum-based raw materials with sustainably sourced renewable materials, citing past successes creating plant-based plastics. Any long-term plans for making flagship products such as Pantene and Pampers from fully renewable materials in the future are not discussed.
In comparison with Unilever’s Sustainable Living Plan, P&G’s goals do not appear as well developed or fully embedded in the company. There is a gap between the 2020 targets and the CEO’s vision, and the reasoning behind the renewable materials goal needs further explanation. Unilever focuses on iconic impacts in its formal goals, seeking to halve waste and greenhouse gas emissions across its products’ lifecycles by 2020. P&G keeps much of its focus on narrower areas, such as waste reduction pilot studies and paper purchasing.
Product innovation is where P&G can apply its multi-billion-dollar R&D capability to sustainability, and the report devotes 16 pages to an extensive products section. The section focuses on resource use across the product lifecycle. The company’s supply chain scorecards have been praised for drawing attention to environmental impacts from the multitude of companies that provide P&G’s ingredients.
P&G creates its own definition of “sustainable innovation products” – those with an environmental footprint at least 10% smaller than previous or alternative products. Examples include Tide Pods, which dissolve in cold water, reducing the need to heat water and saving energy in the laundry process. The company claims to have achieved its 2007-2012 sales goal of $50bn from these more sustainable products. As an internal tool to challenge product researchers, such a goal is probably effective. But as an external marker of progress, the information provided falls short.
Still, P&G’s robust report offers plenty of good news. Sustainability-related operations improvements, which saved the company nearly $1bn over the past 10 years, continue, and a $2bn annual R&D budget is sure to produce better products. In the final analysis, though, clearer pathways will be needed if P&G is to achieve its ambitious vision, and help create a sustainable consumer society some time in its next 175 years.
Follows GRI? Publishes partial GRI index; uses G3 guidelines, but no application level stated.
Materiality analysis? No
Goals? Yes, both quantitative and qualitative.
Stakeholder input? Not explicitly stated.
Seeks feedback? Yes
Key strengths? Attention to product lifecycle issues as well as operations.
Chief weakness? Fell a little short of 2012 targets for energy and carbon reductions.
Pleasant surprise? Bold long-term vision to use 100% renewable resources.CR Reporting Derek Sylvan P&G sustainability report