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.

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 May 2021 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.

To avoid a worst rating on conflict minerals, Ethical Consumer also expected companies to demonstrate their 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.

Therefore, P&G received Ethical Consumer's worst rating for conflict minerals and lost a whole mark under Human Rights and Habitats and Resources.

Reference:

SD form 2020 (24 May 2021)

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 May 2021 Ethical Consumer viewed P&G's US Securities and Exchange Commission filing Exhibit 21, which listed the company's subsidiaries as of June 2020. 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:

10-k filing exhibit 21 (3 May 2021)

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 a half mark under the Palm Oil category and a whole under Workers' Rights.

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)