On 3rd May 2021 Ethical Consumer viewed Procter and Gamble's supplier pages www.pgsupplier.com. This included a document entitled 'Responsible Sourcing Expectations for External Business Partners' dated 2020 which set out the company's expectations of suppliers. Ethical Consumer also viewed the company's Citizenship Report 2020 and Modern Slavery Statement 2020 for additional information. On the basis of these documents, Procter and Gamble was rated as follows:
SUPPLY CHAIN POLICY - POOR
A strong policy would include the following commitments: no use of forced labour, permission of freedom of association, payment of a living wage, the restriction of working hours to 48 hours plus 12 overtime (without exception), no use of a child labour (under 15 or 14 if ILO exempt), no discrimination by race, sex or for any other reason.
The Responsible Sourcing Expectations document set out adequate standards on forced labour, freedom of association and discrimination. However, in relation to wages and working hours it required adherence to local laws only which was not considered adequate. Its policy on child labour stated: "The minimum age for employment is 15 years (or 14 years where local law allows) unless the local legal minimum age foremployment or the age for completing compulsory education is higher." This was not considered adequate because it allowed for 14 year old to be employed in accordance with local law rather than ILO exemptions. Overall, Proctor & Gamble was considered to have a poor 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
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.
The Citizenship Report 2020 mentioned an auditing and risk assessment process but did not provide significant detail. It did, however, state that the company had a staged approach to instances of non-compliance. The Modern Slavery Statement 2020 also said: "our Group evaluates our suppliers and identified high-risk suppliers on a number of parameters including known risks and country location. Our Group requires that an independent, third party auditor audits high-risk suppliers, and, if outages are found, that supplier is re-audited within two years." However, no clear and transparent auditing schedule or analysed audit results could be found. It did not state who bore the costs of audits. As such it was considered to have a poor approach to auditing and reporting.
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 procurement 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.
The company's Modern Slavery Statement 2020 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 did not appear to constitute a significant ongoing training programme for procurement agents and so was considered inadequate.
No other discussions of difficult issues were found and it was considered to have a poor approach to difficult issues overall.
Given that P&G had a poor 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 and lost a full mark in this category.
Sustainability Guidelines for External Business Partners 2015 (6 May 2019)