In March 2020 Ethical Consumer viewed Procter and Gamble's supplier pages www.pgsupplier.com. This included a document entitled 'Sustainability Guidelines for External Business Partners' dated 2015 which set out the company's expectations of suppliers. Ethical Consumer also viewded the company's 2019 Citizenship report for additional information. On the basis of these documents, Procter and Gamble was rated as follows:

SUPPLY CHAIN POLICY - RUDIMENTARY
The guidelines stated that the company would not use forced labour, would permit freedom of association, would not employ a child under 15 (or 14 if ILO exempt) and would not allow discrimination by race, sex or for any other reason. However, the guidelines did not state that the company would pay a living wage, only that external business partners must comply with applicable wage laws. Nor did the guidelines specify that working hours would be restricted to 48 hours plus 12 overtime (without exception). P&G was therefore considered to have a rudimentary supply chain policy.

STAKEHOLDER ENGAGEMENT - RUDIMENTARY
Ethical Consumer also deemed it necessary for companies to demonstrate stakeholder engagement, such as through membership of the Ethical Trade Initiative, Fair Labour Association or Social Accountability International. It is also constructive for Trade Unions, NGOs and/or not-for-profit organisations to have systematic input to verify the company's supply chain audits. P&G had neither of these. The company did, however, have a system for workers to have access to an anonymous complaints system, free of charge and in their own language. Therefore P&G was considered to have rudimentary stakeholder engagement.

AUDITING AND REPORTING - POOR
The Citizenship Report stated that "We are in our third year of conducting social audits at our supplier’s facilities, focused on suppliers in Asia, South America and Europe." However, no publicly available results of these supplier audits were found.

Ethical Consumer also deemed it necessary for companies to have an auditing and reporting system. Results of audits should publicly reported and quantitatively analysed. The company should have a scheduled and transparent audit plan that applies to their whole supply chain, including some second tier suppliers. The company should also have a staged policy for non-compliance. The costs of the audit should be borne by the company. P&G had none of these things and was therefore considered to have a poor auditing and reporting system.

DIFFICULT ISSUES - POOR
Ethical Consumer also deemed it necessary for companies to address other difficult issues in their supply chain. This would include ongoing training for agents, or rewards for suppliers, or preference for long term suppliers. It would also include acknowledgement of audit fraud and unannounced audits, and other measures taken to address the issue of living wages, particularly among outworkers, and illegal freedom of association.

P&G did state, "We have been working to strengthen education and develop awareness-raising tools for the company and extended supply chain. As part of a wider learning program, we have developed a series of short videos (less than 2 minutes each) to help our employees and those of our vendors and contractors recognize human rights issues in the workplace." However, it was not stated whether this training was ongoing, so this was considered inadequate.

As P&G had none of these things and was therefore considered to have a poor approach to difficult issues.

Given that P&G had a rudimentary supply chain policy, rudimentary stakeholder engagement, poor auditing and reporting and a poor approach to difficult issues, the company received Ethical Consumer's worst rating for supply chain management.

Reference:

Sustainability Guidelines for External Business Partners 2015 (6 May 2019)

In May 2019 Ethical Consumer viewed the Advertising Standards Agency website, which listed multiple complaints against advertising of its Oral B toothpaste. Several of these complaints were upheld on the grounds that the advert made misleading claims about the toothpaste's capacity to repair tooth enamel and 'rejuvenate' gums. P&G therefore lost half a mark under Irresponsible Marketing.

Reference:

P&G (6 May 2019)

In March 2020 Ethical Consumer viewed Procter and Gamble's conflict minerals policy SEC form SD, available on the company's website.

Conflict minerals are minerals mined in conditions of armed conflict and human rights abuses, notably in the eastern provinces of the Democratic Republic of Congo (DRC). The minerals in question are Tantalum, Tin, Tungsten and Gold (3TG for short) and are key components of electronic devices, from mobile phones to televisions.

Ethical Consumer deemed it necessary for any company manufacturing electronics to have a policy on the sourcing of conflict minerals.

Such a policy would articulate the company's commitment to conflict free sourcing of 3TG minerals and its commitment to continue ensuring due diligence on the issue. The policy should also state that it intends to continue sourcing from the DRC region in order to avoid an embargo, which would hurt local workers even more.

Procter and Gamble made all of the above commitments.

Ethical Consumer also expects companies to demonstrate its commitment by supporting conflict-free initiatives through membership of a multi-stakeholder initiative supporting the conflict-free minerals trade and / or financially supporting in-region mining initiatives. The company stated, "we have engaged with other companies through trade associations and industry initiatives, such as the Responsible Business Alliance-Global e-Sustainability Initiative’s (“RBA-GeSI”) Responsible Minerals Initiative (“RMI”), to improve transparency with respect to smelters and other upstream participants in the Conflict Minerals supply chain." However, the company did not state whether it continued to do this, and was not listed as a member to the Responsible Minerals Initiative, nor other initiatives considered adequate by Ethical Consumer.

With respect to the sourcing of conflict minerals by suppliers, the company said: "We expect suppliers to have a policy in place and implement a system to trace the origin of tin, tantalum, tungsten, and gold supplied to the Company, following the template developed by the Responsible Minerals Initiative.."

Since the company 'expected' rather than 'required' its suppliers to adopt a robust conflict minerals policy and since supplier agreements and contracts were not available on the P&G website, it cannot be confirmed that P&G suppliers are required to follow robust and responsible conflict minerals sourcing protocols.

The SEC filing did include a list of named smelters, the minerals they processed, stating that all listed smelters appear on the RMI smelter list.

Given that Procter and Gamble had reasonable conflict minerals sourcing statements, but because it did not demonstrate its commitments through membership of a multi-stakeholder initiative, and had poor detail on ensuring that these commitments were upheld by suppliers, P&G received Ethical Consumer's worst rating for conflict minerals and lost a whole mark under Human Rights and Habitats and Resources.

Reference:

Conlfict Minerals Report 2018 (2018)

According to a SumOfUs action page, viewed by Ethical Consumer in November 2016, Procter and Gamble purchased palm oil from Felda Global Ventures, a Malaysian company that was said to be the world’s largest palm oil plantation operator. According to SumOfUs:

"Felda deals in the human trafficking of its plantation workers, confiscating close to 30,000 passports, and still works with labor contractors and recruiters who charge enormous fees to trafficked foreign workers. Plantation workers are trapped in modern day slavery, all to produce palm oil that ends up in P&G products. The multinational consumer goods company is well aware of the problem, and yet still buys conflict palm oil from its joint venture partner Felda. [...]

"Procter & Gamble can’t pretend to ignore the plantation workers’ ordeal. A 2015 Wall Street Journal article documented the human rights violations happening in Felda palm oil plantations. Because they’re complicit, companies like Procter & Gamble are responsible for the plight of modern slaves either working on palm oil plantations or dying on their way there. Last year, Thai and Malaysian police found nearly 150 bodies of people thought to have died in human traffickers’ camps at the border.

"Mohammad Rubel, who was smuggled into Malaysia by traffickers and was later held captive in a jungle camp, says he worked on a palm plantation for six months without receiving a salary. Muhi, another worker, says that “there is no escape,” and that Felda contractors “bring policemen and threaten to send us to jail.” In Malaysia illegally and without passports, these workers are trapped for the sake of cheap palm oil."

Procter & Gamble therefore lost half a mark under Palm Oil and half a mark under Human Rights.

Reference:

Action: end modern slavery in P&G supply chain (17 November 2016)

In March 2020 Ethical Consumer viewed P&G's US Securities and Exchange Commission filing Exhibit 21, located only the website docoh.com, which listed the company's subsidiaries as of June 2019. According to this list, P&G had subsidiaries in the following countries: Bangladesh, China, Israel, Mexico, Nigeria, Pakistan, Philippines, Russia, Saudi Arabia.

All of these countries were considered by Ethical Consumer to be governed by oppressive regimes at the time of writing. P&G therefore lost a whole mark under Human Rights.

Reference:

docoh.com/filing/80424/0000080424-19-000050/PG-10K-2019FY/file/14 (11 March 2020)

On 30th November 2016 Amnesty International released a report called “The Great Palm Oil Scandal: Labour Abuses Behind Big Brands Names.” The report investigated labour exploitation on plantations in Indonesia that provide palm oil to Wilmar, one of the world’s largest processor and merchandiser of palm and lauric (palm kernel) oils
and controls over 43% of the global palm oil trade. The report also traced the palm oil produced in Indonesia for Wilmar to a range of consumer goods
companies that use palm oil in their products.

Amnesty International found serious human rights abuses on the plantations of Wilmar and its suppliers. These included forced labour and child labour, gender discrimination, as well as exploitative and dangerous working practices that put the health of workers at risk. The abuses identified were not isolated incidents but due to systemic business practices by Wilmar’s subsidiaries and suppliers, in particular the low level of wages, the use of targets and ‘piece rates’ (where workers are paid based on tasks completed rather than hours worked), and the use of a complex system of financial and other penalties. Workers, especially women, are employed under casual work arrangements, which make them vulnerable to abuses.
Amnesty stated “All of these are obvious and predictable areas of concern and risk. However, none of the companies that buy palm oil from Wilmar could demonstrate to Amnesty International that they had identified and addressed the actual abuses documented by Amnesty International.”
Procter and Gamble confirmed that it brought palm oil from Wilmar. The company however refused to provide the requested information on refineries advising that this information was confidential. Amnesty felt it was highly likely that it was sourcing palm oil from refineries where the palm
oil has been directly supplied or, at the very least, been mixed with palm oil produced on plantations
where there are severe labour rights abuses.

P&G confirmed that the company did not undertake any independent inspections at plantation level to identify labour risks or abuses linked to Indonesian palm oil sourced from Wilmar. The company said that it relied on the RSPO certification scheme. Amnesty’s report had highlighted RSPO standards to be insufficient for identifying and addressing labour issues, and stated that relying on RSPO audits was "inadequate as a response to the serious risk of labour abuse." P&G also told Amnesty
International that it relied on Wilmar to self-report labour issues as part of the quarterly updates that it provides to the company. P&G did not explain what information was required in the quarterly updates so it was not possible for Amnesty to assess the extent to which P&G required Wilmar to report on labour abuses in these updates. Moreover, Amnesty stated "this approach – predicated on self-reporting of abuses by Wilmar, rather than proactive assessments by P&G – reflected a derogation of the
responsibility to respect human rights."

The company lost marks under the Palm Oil and Workers' Rights categories.

Reference:

The Great Palm Oil Scandal: Labour Abuses Behind Big Brands Names (30 November 2016)

In March 2020 Ethical Consumer searched the P&G website for a cotton sourcing policy. Although the company sold products, such as tampons, made from cotton, no policy could be found.

According to Anti-Slavery international (ASI) website viewed by Ethical Consumer in August 2018, Uzbekistan and Turkmenistan were two of the world’s largest exporters of cotton, and every year their governments forcibly mobilised over one million citizens to grow and harvest cotton. Due to the high proportion of cotton likely to have come from Uzbekistan and Turkmenistan and the prevalence of forced labour in its production, the company lost half a mark in the Workers Rights category.

The Organic Trade Association website, www.ota.com, stated in July 2018 that cotton covered roughly 2.78% of global arable land, but accounted for 12.34% of all insecticide sales and 3.94% of herbicide sales. Due to the impacts of the widespread use of pesticides in cotton production worldwide the company also lost half a mark in the Pollution & Toxics category.

According to the International Service for the Acquisition of Agri-Biotech Applications (ISAAA), a non-profit pro biotech organisation, genetically modified cotton accounted for 80% of cotton grown in 2017. Due to the prevalence of GM cotton in cotton supply chains and the lack of any evidence that the company avoided it, it was assumed that some of the company's cotton products contained some GM material. As a result it lost half a mark under the Controversial Technology category.

Overall the company received Ethical Consumer's worst rating for its cotton sourcing policy.

Reference:

www.pg.co.uk (3 May 2019)