procter & gamble prime b- - global ethic now · procter & gamble status rating prime...

Corporate Responsibility Rating

Procter & Gamble

Status

Rating

Prime B-

Industry:Country:ISIN:MSCI:

Household & Personal ProductsUnited States of AmericaUS7427181091COS Household Products

poor medium good excellent

- A company is being classified as "Prime" if it ranks among the world´s best companies within the same industry and fulfills the sector-specific minimum requirementsdefined by oekom research (best in class).

- The highlighted sections on the rating scales indicate the range of ratings achieved within the industry. The average rating is marked with a vertical line.- If relevant information is not made available, it may result in a poorer rating of the company within the applied rating method.- A company is being classified as F (failed) if, based on the definition by oekom research, it lacks transparency or has only very limited activities with respect to sustainability

issues. In this case it does not qualify for a detailed assessment and the rating process is curtailed.

Social Rating 40.0% B-

Weight Rating

Environmental Rating 60.0% B-

Weight Rating

Company Profile

Procter & Gamble's principal activity is to manufacture and market consumer products. The group operates in three globalbusiness units: Beauty and Health, Household Care, and Gillette GBU. Beauty includes professional hair care, skin care,feminine care, cosmetics, prestige fragrances, deodorants, and personal cleansing. Health Care includes oral care,personal health care and pharmaceuticals. Household Care, includes Fabric Care and Home Care, the Baby Care andFamily Care and the Snacks, Coffee and Pet Care businesses and Gillette GBU includes the Blades and Razors and theDuracell and Braun businesses. Famous brands are, eg, Febreze, Pampers and Pringles. In 2005, Procter & Gamblecompleted the acquisition of Gilette. In 2007, the company sold its Tempo tissue business.

Strengths and Weaknesses

+ comprehensive product information on separate website Science in the Box+ comprehensive risk assessment of products and ingredients+ good community involvement policy and management+ comprehensive code of conduct regarding fair business practices- lack of transparency regarding the use of genetically modified raw materials such as soy, corn and cotton- lack of transparency regarding measures to promote renewable raw materials

Industry

Classification Breakdown of Ratings (11 plus 0 F-Ratings)

Corporate Responsibility Rating 1 © oekom research AG

Procter & Gamble

Social Rating Environmental Rating

Staff and Suppliers 44.4% C-

- staff - freedom of association - work-life balance - safeguarding of jobs - health & safety - equal opportunities- subcontractors/suppliers

Weight Rating

Environmental Management 25.0% B

- environmental policy- environmental management system- external reporting- environmental performance indicators- climate change strategy- travel and transport

Weight Rating

Society and Product Responsibility 33.3% B-

- society - human rights - community - political donations - taxes and subsidies - stakeholder dialogue- customer and product responsibility

Weight Rating

Products and Services 60.0% C+

- product safety- renewable (natural) raw materials- animal testing- packaging- environmental controversies

Weight Rating

Corporate Governance and BusinessEthics

22.2% A

- corporate governance - board independence/effectiveness - shareholder democracy - executive compensation - shareholder structure- business ethics

Weight Rating

Eco-efficiency 15.0% A

- energy use- GHG emissions- water use- COD discharge- AOX discharge- total waste

Weight Rating


Procter & Gamble

Exclusionary Criteria

Business Areas

RiskIndustry

YesProducer

YesUser/

Retailer NoNoInfo

Abortion o o þ oAlcohol þ o o þ o

External research did not disclose any involvement.

Biocides o o o þ oChlororganic Mass Products o o þ oEmbryonic Research o o þ oFurs o o o þ oGambling o o o þ oGMOs þ o þ o o

Product range includes ingredients derived from GM corn, GMpotatoes (e.g. Pringles chips).

Military o o o þ oNuclear Power o o o þ oPornography o o o þ oTobacco o o o þ o

RiskIndustry

YesCompany

YesSupplier No

NoInfo

Animal Testing þ þ o oAnimal testing for consumer products and pharmaceutical R&D.

Business Malpractice o o þ oControversial Env. Practices o o þ oViolations of Human Rights o o o o þ

2007: Alleged violations of human rights in Brazil by cellulosesupplier Aracruz.

Violations of Labor Rights þ o o o þExternal research did not disclose major violations in recent years.

Business Practices

CommentsThe information regarding Exclusionary Criteria is based on company

documentation and/or external sources.Risk Industry: Indicates that the industry sector is frequently active in

controversial business areas or prone to controversial business practices.Biocides: Extremely or highly hazardous according to WHO. Only with regard

to producers, not retailers.Embryonic Research: In the context of human embryos or respective

embryonic cells.GMOs: In the context of genetically modified crops.

Military: Only with regards to products/services which are explicitly adaptedto military purposes.

Nuclear Power: With regard to commercial energy generation and traders, notusers; also production of key components for nuclear power stations.

Pornography: Definition based on UN Rapporteur's Rep., www.un.org/rights/dpi1772e.htm.

Animal Testing: Exceeding legal requirements or in the context of cosmetics.


Procter & Gamble

Additional Company Information

Business Data

Net Sales(USD m)

Net. Income(USD m)

Number ofEmployees

2005 56,700.00 7,257.00 110,000

2006 68,222.00 8,684.00 138,000

2007 76,476.00 10,340.00 138,000

Fiscal Year ends: 30.06.

Company Locations

Procter & Gamble is active worldwide and has major operationsin, eg, the United States and Europe. It also operatesmanufacturing facilities in countries such as Saudi Arabia, Egyptand China.

Breakdown of Net Sales

Net Sales by Business Segment 2007:

Household Care 46%Beauty and Health 42%Gillette GBU 12%

Breakdown of Employees

Employees by Region 2007:

No information available.

Participation in Rating Process

Upon request, the company did not provide additionalinformation or feedback on the rating. Therefore, the rating isbased on comprehensive publicly available information only.

Company Contact

Mr Keith ZookGroup Manager Corporate Sustainable DevelopmentP.O. Box 599US - Cincinnati, Ohio 45201-0599FonFaxEmailInternet

+1 513 983 9390+1 513 983 [email protected]

oekom research Contact

Analyst: Mr Oliver RüdelGoethestrasse 28DE - 80336 MunichFon +49 89 544184 90Fax +49 89 544184 99Email [email protected] www.oekom-research.com

Disclaimer

1. oekom research AG uses a scientifically based rating concept to analyze and evaluate the environmental and social performance of companies and countries.In doing so, we adhere to the highest quality standards which are customary in sustainability research worldwide.

2. We would, however, point out that, since criteria and weightings are determined subjectively by oekom research, we do not claim that any of the informationwhich we issue in the form of advice, rating reports, lists of recommendations or other research tools is objective; rather, it should be viewed as statementsof opinion. Therefore, oekom research can naturally give no guarantee of the correctness of its evaluations.

3. All the information contained in our sustainability research originates from sources which we consider to be accurate and reliable. It is, however, possible thathuman error, technical failure or other factors which cannot be ruled out may detract from the reliability of the information.

4. In particular, we would point out that any assessment or piece of information must not be the sole factor in any investment decision taken by the user of thisinformation. In each case, users must carry out their own analysis and evaluation of the information.

5. oekom research AG is the owner of all the information contained in its sustainability research. This information is protected by copyright. Any use thereof shallrequire the express prior written consent of oekom research. Use shall be deemed to refer in particular to the copying or duplication of the information whollyor in part, the distribution of the information, either free or against payment, or the exploitation of the information in any other conceivable manner.


Procter & GambleWeight Rating

A. Social Rating 40.0% B-

A.1. Staff and Suppliers 44.4% C-

A.1.1. Staff 75.0% C-

A.1.1.1. Freedom of association 14.3% D+

A.1.1.1.1. Policy regarding freedom of association 50.0% C

The company endorses the Global Sullivan Principles, which comprise respect for employees' freedom ofassociation. No further information is available.

Comment: According to Procter & Gamble, the company is a founding member of the Global Sullivan Principleswhich support voluntary freedom of association. However, there is no information available regarding a detailedcompany policy covering this issue.

A.1.1.1.2. Measures regarding freedom of association in countries where no independent labourunion may be established or where freedom of association is prohibited by law 50.0% D-

No information is available whether the company has taken measures such as staff councils, extendedengagement with international trade unions or labor rights training to ensure employees' participation indecision making within the company in countries where no independent labor union may be established orwhere freedom of association is prohibited by law.

Coverage: No information is available.

Comment: The company has operations in China, Saudi Arabia, Egypt and Vietnam. According to a surveyconducted by the International Confederation of Free Trade Unions, there are factual limitations to labor rightssince no independent unions are allowed in these countries.

A.1.1.1.3. Major controversies, fines or settlements related to freedom of association 0.0% X

Research did not reveal any controversies related to freedom of association in recent years.

Comment: —

A.1.1.2. Work-life balance 14.3% D+

A.1.1.2.1. Work-life balance initiatives 50.0% C+

A.1.1.2.1.1. Initiatives offered regarding reduction of working time and workplace flexibility 50.0% B

Some initiatives regarding the reduction of working time and/or workplace flexibility are offered.

Coverage: No group-wide information was provided. It was estimated that more than 80% of employees arecovered by the information above.

Comment: Procter & Gamble states that all employees have access to supportive and enabling policies andpractices in the areas of flexible work arrangements to improve work-life balance. In this context, the companyreports that P&G Japan earned the 'Tele-work Award' for its adoption of flexible work arrangements, includingtelework. P&G further states that employee benefits include flex-time and less-than-full-time schedules.However, there is no detailed information available on these initiatives (e.g., regarding coverage). Furthermore,there is no information available on other initiatives such as job sharing, annualized hours/ banking of hours.

A.1.1.2.1.2. Initiatives offered regarding dependent care and flexible benefits 50.0% C

According to the company, initiatives regarding dependent care and/or flexible benefits are offered. However,no details are available.

Coverage: Group-wide coverage (= 100% of employees are covered by the information above).

Comment: Procter & Gamble states that all employees have access to supportive and enabling policies andpractices in the areas of flexible work arrangements, family care, resource/referral services, and personalwellness management to improve work-life balance. The company further reports that it offers work-familybalance benefits, including childcare leave. However, there is no detailed information available on dependantcare initiatives, such as emergency childcare, eldercare, workplace child care, or on other flexible benefits,such as sabbaticals.



A.1.1.2.2. Average weekly working time 50.0% D-

No information is available on the breakdown of employees by country (as an indicator for minimum standardsregarding average weekly working time which are set either by law or through labor agreements).

Comment: Procter & Gamble states in its Values and Policies that, at a minimum, the company will complywith all applicable wage and hour laws, rules and regulations, including minimum wage, overtime and maximumhours. However, there is no further information available (e.g., regarding the breakdown of employees bycountry).

A.1.1.3. Safeguarding of jobs 28.6% D-

A.1.1.3.1. Occurrence of staff redundancies for operational reasons in recent years 33.3% D-

According to external research, the company is in the process of implementing major layoffs.

Comment: According to external research, Wella announced in July 2004 that it would cut 1,200 jobs (about18 percent of its work force) during the following two years in production and distribution due to the mergerof its operations with those of Procter & Gamble. Furthermore, according to external research, the acquisitionof Gillette by P&G will lead to job cuts in the range of 5,000-6,000. No further information is available.

A.1.1.3.2. Implementation of, eg, socially adapted redundancy plans, outplacement programmes 66.7% D-

No information is available whether the company has taken any measures to handle lay-offs.


Comment: —

A.1.1.4. Health and safety 28.6% C+

A.1.1.4.1. Health and safety conditions in countries where the company operates 33.3% D-

No information is available on the breakdown of employees by country (as an indicator for minimum standardsregarding health & safety conditions, which are set either by law or through labor agreements).

Comment: —

A.1.1.4.2. Health and safety management system 33.3% A+

Coverage: 100% of employees are covered by a health and safety management system.

Comment: According to Procter & Gamble, the company has a group-wide health and safety managementstructure which ensures that all manufacturing facilities worldwide are operated safely and legally; that processhazards are minimized or eliminated; and that health risks are identified, managed, or eliminated. The companyfurther reports that performance is monitored via mandatory annual internal audits. In addition, according toP&G's Health and Safety Policy, every employee is trained to work in a safe and healthy manner.

A.1.1.4.3. Development of the accident rate during the last three years 33.3% C

Although in general the accident rate has been increasing, it decreased last year compared to the previous year.

Coverage: Group-wide coverage (= the rate applies to 100% of employees).

Comment: According to Procter and Gamble, during the last three years, the Total Lost Workday Case Rate(lost and restricted workday cases per 100 employees) was the following: 0.19 (2005), 0.29 (2006) and 0.26(2006).

A.1.1.4.4. Major controversies, fines or settlements related to health and safety 0.0% X

Research did not reveal any major fines imposed related to health and safety cases in recent years.

Comment: In its 2007 Sustainability Report, P&G lists three minor cases of Health and Safety non-compliance.Accordingly, fines in this context totalled USD 1,200. However, these minor cases do not lead to a downgradingof this section.



A.1.1.5. Equal opportunities 14.3% B-

A.1.1.5.1. Policy on equal opportunities 33.3% A+

A comprehensive and detailed policy on equal opportunities and non-discrimination regarding various work-related activities was provided.

Coverage: Group-wide coverage (= 100% of employees are covered by the information provided above).

Comment: In its Worldwide Business Conduct Manual, Procter & Gamble states that the company will notengage, or authorize its employees to engage, in discrimination or harassment. Furthermore, any form ofretaliation against an employee who reports known or suspected discrimination or harassment is prohibited.P&G defines discrimination as treating a person more or less favorably with respect to his/her employment(including recruiting, hiring, training, salary and promotion) than one otherwise would because of his/her race,gender, color, religion, national origin, age, sexual orientation, disability, or other non-job-related personalcharacteristic. Harassment is further defined as any behavior related to a person's race, gender, color, religion,national origin, age, sexual orientation, disability, or other non-job-related personal characteristic that createsan intimidating, hostile or offensive work environment or unreasonably interferes with an employee's workperformance. In addition, P&G gives some examples of situations that raise concerns regarding harassmentand discrimination. The company also has a workplace violence policy that prohibits threats or acts of violenceby company employees against others, or against company or third party property that they come in contactwith in their roles as employees.

A.1.1.5.2. Gender distribution in the company 66.7% C

a. Ratio of female employees: 39.1% (as of 2007).

b. Gender distribution on executive board: As of 2008, the ratio of men to women was more than two to one.

c. Ratio of women in management positions: 38.9% (as of 2007).

Comment: According to the company, as of 2007, 39.1% of its non-management employees, that isadministrative, technical and plant technicians, were women. Moreover, women held 38.9% of globalmanagement positions. However, only one out of five leading executives was female. In addition, there is noinformation available on the total ratio of female employees with all employees as reference parameter.

A.1.1.5.3. Major controversies, fines or settlements related to discrimination 0.0% X

Research did not reveal any fines imposed or controversies related to discrimination in recent years.

Comment: —

A.1.2. Suppliers 25.0% C+

A.1.2.1. Subcontractor/supplier standards with regard to labour/health and safety issues 16.7% A+

There is a comprehensive subcontractor/supplier policy/standard with regard to labor/health and safety issues,which is binding on subcontractors/suppliers. Details were provided.

Coverage: Group-wide coverage (= 100% of subcontractors/suppliers are covered by the information providedabove).

Comment: The company's Sustainability Guidelines for Supplier Relations include Procter & Gamble'sexpectations with regard to social/ethical issues: Suppliers must - at a minimum - meet all current, applicablerules, regulations and laws in their countries, including laws relating to the employment, discrimination andhealth & safety. With regard to employment practices, the company specifies its expectations towards vendors,e.g. the prohibition of child labor and forced labor, non-harassment and non-discrimination. Furthermore, P&Gexpects suppliers to provide a safe work environment, to prevent accidents and injury, and to minimizeexposure to health risks. Labor practice expectations are included in the standard terms and conditions forsuppliers. In case a pattern of violation of these principles becomes known to the company and is not corrected,business relationships will be discontinued.



A.1.2.2. Measures taken to check compliance of key subcontractors/suppliers with the company'slabour/health and safety standards 33.3% A-

Reasonable measures have been taken to check compliance of key suppliers with the company's labour/health and safety standards.

Coverage: More than 50% of procurement volume from key suppliers is covered by the information providedabove.

Comment: In its sustainability report the company presents reasonable measures to check suppliers'compliance such as training of all purchasing staff, risk assessments with respect to country of operation orpotential hazard, monitoring through periodic internal and external performance assessments including sitevisits with emphasis on high-risk suppliers. The company has clearly defined procedures in case of non-compliance, eg, formal notification, remediation action plans and termination of contract if a compliance issueis not resolved in a timely manner. However, there is no information available on active support for suppliersto enhance compliance. In addition, it is not clear whether these measures also are applied to subcontractors.

A.1.2.3. Major social controversies, fines or settlements related to subcontractor/supplier activities 50.0% D-

According to external research, subcontractors/suppliers are involved in major social controversies. Therefore,this section was downgraded.

Comment: The following controversies led to a significant downgrading:According to external research, the Brazilian company Aracruz Celulose, a major cellulose supplier of Procter& Gamble, is involved in a land dispute with indigenous people (200 Tupinikim and Guarani) in the municipalityof Espírito Santo, Brazil. The company allegedly controls 11,009 hectares of indigenous lands for its eucalyptusplantations. The people of Tupinikim and Guarani claim that the exchange of their land for money in the late1990ies which was confirmed by the Federal Public prosecution service of Brazil was illegal andunconstitutionally. The conflict further escalated in January 2006, when the Brazilian police destroyed twovillages after indigenous people occupied the Aracruz site. Reportedly, heavy vehicles from Aracruzparticipated in the destruction of the villages. The situation escalated again in March 2006, when 1,500indigenous people entered the plantations to destroy Aracruz' research laboratories and about 5 millioneucalyptus seedlings. According to NGO Robin Wood in August 2007, the Brazilian Minister of Justice declared18,070 ha of lands in Espirito Santo as indigenous lands. No further information is available.

A.2. Society and Product Responsibility 33.3% B-

A.2.1. Society 75.0% B

A.2.1.1. Human rights 14.3% B+

A.2.1.1.1. Policy on human rights and cultural self-determination of communities/peoples affectedby the company's activities 100.0% B+

A policy on human rights is available. However, there is no detailed information available on a policy regardingcultural self-determination of communities/peoples affected by the company's activities.

Comment: According to Procter & Gamble's Values and Policies, the company is committed to universalhuman rights, particularly those of employees, communities in which it operates, and parties with whom itdoes business. Furthermore, P&G states in its Forest Resources Policy that it purchases wood-derived fiberfrom suppliers that support universal human rights through work with local governments and communities toimprove the educational, cultural, economic and social well-being of those communities. In addition, thecompany is committed to the Global Sullivan Principles.

A.2.1.1.2. Major controversies, fines or settlements related to human rights 0.0% X

According to external research, the company conducts business in countries with a poor human rights record.However, external research did not disclose the company's involvement in major controversies.

Comment: The company has operations in countries classified as "Not Free" by Freedom House, e.g., China,Saudi Arabia, Egypt, Vietnam. This classification indicates a poor record regarding political rights and civilliberties. External research, however, did not disclose any major controversies directly related to the company'sactivities. Thus, this aspect was not graded.However, Aracruz, a major cellulose supplier of Procter & Gamble, is involved in a human rights controversy(see A.1.2.3).



A.2.1.2. Community 28.6% A

A.2.1.2.1. Community involvement policy and management 50.0% A+

The company has set internal responsibilities and monitoring procedures regarding community involvement,has implemented a comprehensive policy including strategic targets, and uses different tools (e.g. employeevolunteering, matched donations programs, strategic cooperation/partnerships with NGOs).

Comment: According to the company, Procter & Gamble is committed to focus its global philanthropy on aconsistent cause where the need is great and there is a clear fit with P&G's strengths, brands, and currentprograms. P&G reports that with this in mind it chose to focus on the development of children in need (ages0-13), through its global cause, P&G Live, Learn and Thrive. According to the company's community relationspolicy, this includes using its resources to prevent childhood disease, to provide access to education andopportunities for learning, and to develop important life skills. To achieve those targets and to ensure enduringimpact of its initiatives, P&G is involved in various partnerships with NGOs, International Organizations suchas UNICEF, and other organizations such as the United States Centers for Disease Control and Prevention.P&G underscores its commitment by giving its employees the opportunity to participate in these initiativesthrough volunteering and matched donations programs. With regard to monitoring activities, the companyprovides extensive information on the development of various initiatives in its sustainability report.

A.2.1.2.2. Transparency and type of social, cultural and environmental corporate contributionsduring the previous year 50.0% B+

There is a continuous involvement in projects with a high social and/or environmental relevance. However,there is no detailed information available on the total amount spent on community involvement initiativessubdivided into relevant sub-categories (e.g. working hours, in-kind donations and total cash donations).

Comment: According to the company, Procter & Gamble's philanthropic contributions include financial supportand employee volunteering in a wide range of educational, health, social service, cultural, civic, andenvironmental organizations to benefit society. In this context, the company focuses on its global cause, P&GLive, Learn and Thrive (see A.2.1.2.1.) and on its signature program Children's Safe Drinking Water.Accordingly, P&G has provided PUR, a low-cost technology developed by the company to purify contaminatedwater, to global relief groups yielding more than 200 million liters of safe drinking water, thereby helping toreduce illness among children in some of the poorest parts of the world. In 2007, global philanthropiccontributions made by P&G and the P&G Fund amounted to USD 125 million.

A.2.1.3. Political donations 14.3% D-

There is a policy on not making political donations without permission of the responsible committee or executive.External research revealed that significant political donations were made through the company's PoliticalAction Committee during the last three years.

Comment: Procter & Gamble's basic policy prohibits company contributions to either political candidates orpolitical parties anywhere in the world. Accordingly, P&G policy does not permit the use of any PG facilitiesor resources by employees for political campaigning, political fundraising or partisan political purposes.Exceptions to the contribution policy and the use of company facilities or resources are allowed only wheresuch contributions/activities are permitted by law and express written permission has been given in advanceby the company's Ethics Committee.According to the Center for Responsive Politics, during the election cycles of 2004 and 2006, the company'sPAC has spent a total of USD 417,953. In addition, Gillette's PAC has spent a total of USD 85,508 duringthese election cycles.

A.2.1.4. Taxes and subsidies 14.3% D

A.2.1.4.1. Transparency of payments to governments (eg, income tax, customs duties, sales/value-added tax) broken down by country 66.7% D+

Relevant payments to governments are disclosed as a whole. However, there is no information available onthe breakdown of all relevant payments to governments by country.

Comment: In 2007, the company's income taxes amounted to USD 4370m. However, no information wasavailable on other types of payments such as customs duties and sales tax. Moreover, no breakdown bycountry is disclosed.

A.2.1.4.2. Transparency of financial assistance received from governments (eg, grants, tax relief,and other types of financial benefits) broken down by country 33.3% D-

No information is available on whether the total sum of subsidies received broken down by country is disclosed.

Comment: —



A.2.1.5. Stakeholder dialogue 28.6% A+

A.2.1.5.1. External reporting on social/ethical issues 100.0% A+

The company provides comprehensive and transparent social/ethical reporting on a regular basis.

Coverage: Group-wide coverage (= 100% of employees are covered by reporting).

Comment: The company reports on social/ethical issues in its Sustainability Reports and on its corporatewebsite as well as affiliated websites (www.scienceinthebox.com, www.pgbeautyscience.com). The companyprovides information on employees (diversity and health & safety data, layoffs/outplacement programs,training, working conditions), product responsibility, as well as on its community involvement and philanthropicinitiatives. In addition, P&G reports on HSE non-compliance and fines. Some issues in the report are coveredin-depth (e.g. community initiatives, diversity, training and consumer information). Some issues, however, areonly covered in a rather general way (e.g. working conditions). Apart from policies and standards, there isonly little information on the company's supply chain management such as on supplier audits or counselingwith regard to social issues. The company's 2007 sustainability report was prepared using the Global ReportingInitiative's reporting guidelines.No information is available whether the report has been audited by an external accountant.

A.2.2. Product responsibility 25.0% C

A.2.2.1. Policy regarding responsible marketing (eg, responsible advertising, privacy of consumerinformation) 15.0% A+

A comprehensive policy on responsible marketing was provided.

Coverage: Group-wide coverage (= 100% of sales are covered by a policy).

Comment: Procter & Gamble generally states that there is a responsibility to ensure truth in advertising andto ensure that messages are legal, decent, and honest. Furthermore, P&G states that it assumes itsresponsibility to ensure the sensitive portrayal of all groups in society, including women, children, the elderly,and minorities. For this reason, P&G is committed to actively support truth-in-advertising mechanisms and toconform to relevant national codes and guidelines wherever it operates. P&G has a policy on advertising andpromoting to consumers appropriately which is included in the company's Worldwide Business ConductManual and reads as follows: P&G does not permit its advertising or promotions for its products to be falseor misleading. The policy also includes some examples of situations that raise concerns and a clear do anddon't list for employees that states that employees: 1) must tell the truth in company advertising and promotions,2) must not make a substantive claim about a company product, or a competitor's product, or a comparisonwith a competitor's product, that has not been substantiated through objective product testing based on soundstatistical and scientific principles, and 3) must not run any advertisement or promotion that has not beenreviewed by appropriate company legal personnel. P&G's Manual also includes a policy regarding privacystating that all employees of the company should, in addition to meeting all applicable legal requirementsconcerning privacy, strive to protect individuals personally-identifiable information (PII) as if it were their own- including providing notice of types of use, choices concerning use, ability to access/update, and providingreasonable protection for PII. This policy statement is equally accompanied by situations that raise concernsand a comprehensive list of dos and don'ts.



A.2.2.2. Measures taken to provide comprehensive information on product characteristics,ingredients and potential hazards to consumers (eg, glossary, dosage of products, results of riskassessments)

25.0% A

Comprehensive measures to provide comprehensive information on product characteristics, ingredients andpotential hazards to consumers were described.

Comment: The company provides extensive information on product characteristics and ingredients. Separatewebsites called Science in the Box and The Science of Beauty provide specific and non-proprietary informationabout P&G's Fabric and Home Care and P&G Beauty business in Western Europe. Science in the Box isavailable in five languages (English, French, Spanish, Italian, German). In addition, the company providestoll-free numbers on product packages. Procter & Gamble states that its Consumer Services are expert inresponding quickly and effectively to occasional requests for urgent help such as following accidental ingestionof a detergent. Together with other members of the European Detergents Association in Europe, P&G runsthe WashRight campaign that promotes correct usage of laundry products and efficient use of water and energy.Furthermore, on its P&G Perspectives website, the company provides background information along with itsown view on substances of concern such as PBTs or POPs. For example, P&G explains why the companyfirst started to phase out the use of the policyclic musks Tonalid and Galaxolide because of concerns raisedby scientists in the mid-1990s and afterwards decided to stop the phase out and continue to use thesesubstances as more comprehensive research became available which did not support earlier predictions.In addition, Procter & Gamble is one of the supporters of the European HERA project (Human andEnvironmental Risk Assessment on ingredients of household cleaning products). The parties involved in theHERA project have committed themselves to an efficient development of the project by agreeing to contributeto the methodology, helping to select the substances to be studied, providing the hazard and exposureinformation on human health and the environment, talking to stakeholders and ultimately, producing andpublishing HERA risk assessments. Data are being made available to the public (www.heraproject.com).Part of the information provided by the company is not available in all relevant languages (e.g., Mandarin,Japanese).

A.2.2.3. Ratio of sales from products carrying an eco-label (eg, Blue Angel, The Flower, Green Seal,Nordic Swan) 10.0% C

No group-wide information is available. It was estimated that less than 3% of relevant sales are generatedfrom products carrying an eco-label.

Comment: According to Procter & Gamble, based on its experiences over the past 20 years, the companybelieves that eco-seal programs have numerous problems, and that they neither encourage environmentalprogress nor empower consumers. P&G further believes that the sharing of factual information with consumers,based on their needs, can more effectively encourage environmental progress. According to the company'ssubsidiary Gillette, Duracell products provided for sale in the Nordic region carry the Nordic Swan eco-label.However, there is no information on sales volumes.



A.2.2.4. Major controversies, fines or settlements related to customer and product responsibility 50.0% D-

According to external sources, there have been controversies, fines or settlements related to customer andproduct responsibility in recent years. Therefore, this section was downgraded.

Comment: The following controversies led to a significant downgrading:In April 2005, Procter & Gamble has agreed to pay a fine of CNY 200,000 (about USD 25,000) as ordered bythe Administration for Industrial and Commerce in Nanchang city, China. According to external research, theruling alleges that Procter & Gamble failed to produce documents to prove that 'SK-II products use the mosteffective anti-aging technology' as claimed in its advertisements. If the buyers of SK-II across the country alljoin a current class-action lawsuit, P&G may face claims of more than CNY 80m.According to external research, the company has been criticized for its marketing practices, especially withregard to its drink Sunny Delight. In 2001 and 2002, the Center for Science in the Public Interest (CSPI)criticized that Sunny Delight was presented in a way that made consumers believe it to be a real fruit juice,even though it contains only five percent fruit juice. In 2002, the company replaced the description "Real FruitJuice" to "Orange Flavored Citrus Punch with Other Natural Flavors". In late 2003, a radio advertisementclaiming the drink contained less sugar than spinach was banned in Great Britain. Regulators ruled that theadvert was misleading and must be withdrawn.According to external research, a British-based researcher accused Procter & Gamble in February 2006 ofhiding data regarding its osteoporosis drug Actonel. Aubrey Blumsohn is leading a P&G-funded study of thetop-selling bone loss drug and claimed that in 2004 he discovered that P&G concealed and omitted Actoneldata 'in an apparent attempt to improve the drug's image of effectiveness.' Blumsohn said the drug makerhas refused to provide him with the raw study data he needs to interpret his research into the drug, despitethe fact that he is listed as the author on medical abstracts, draft publications and statistical reports derivedfrom his research. Blumsohn took his case to court in February 2006, telling lawmakers of the alleged dataconcealment. No further information is available.Furthermore, despite the fact that the CSPI reported close to 20,000 incidents of adverse reactions toconsumers from P&G fat substitute olestra, after the FDA had lifted olestra warnings in summer 2003, Procter& Gamble does not provide any information on possible side effects any more.Regarding Gillette, a study on shaving foams and gels carried out by German consumer magazine Öko-Testin March 2004 criticized the company's products assessed (Gillette Series Gel and Gillette for Women SatinCare) for containing formaldehydes, PEG/PEG-derivatives, as well as potentially allergenic scents.Additionally, products of the company were listed on the Environmental Working Group's Skin Deep-websiteas containing controversial substances such as endocrine disrupters and/or carcinogens (April 2006).

A.3. Corporate Governance and Business Ethics 22.2% A

A.3.1. Corporate governance 33.3% B

A.3.1.1. Independence and effectiveness of the board 28.6% B-

A.3.1.1.1. Separation of power between CEO and chair of the board 50.0% D-

There is no separation of power between the CEO and the Chairman of the Board.

Comment: As of 2008, Mr A. G. Lafley was Chairman of the Board, President and CEO of Procter & Gamble.

A.3.1.1.2. Existence of different board committees independent of executive managers (eg,remuneration committee, audit committee, nomination committee) 50.0% A+

There are separate and independent committees in charge of remuneration, internal audits and nominations.

Comment: According to Procter & Gamble's Corporate Governance Guidelines, the company's audit,compensation, and governance & nominating committees are comprised entirely of independent membersof the Board.

A.3.1.2. Shareholder democracy 42.9% A-

A.3.1.2.1. Assignation of voting rights (eg, one share entitles the holder to one vote) 33.3% B+

One common share entitles to one vote. However, besides common shares the company has preferred shares.

Comment: —

A.3.1.2.2. Size of shareholding necessary to raise a resolution 33.3% A+

There are minor restrictions on submitting a resolution at the annual general meeting.

Comment: In the US, the condition to be able to present a resolution on the agenda of a general meeting isto own company shares worth USD 2,000 for one year.



A.3.1.2.3. Facilitation of shareholder participation (eg, broadcasting of annual meeting, e-voting onproxy statements) 33.3% B+

The company facilitates shareholder participation by broadcasting the annual general meeting and givingshareholders the opportunity to vote on proxy resolutions via Internet or phone. However, there is no informationavailable if the company provides access to company appointed proxies during the annual general meeting(e.g. via phone).

Comment: Besides the above mentioned measures, P&G states that an interpreter will be available forshareholders attending the annual general meeting who are hearing-impaired.

A.3.1.3. Transparency of compensation schemes for executive board members 14.3% A+

Compensation for the CEO and the most highly paid executive board members is disclosed on an individualbasis and sub-divided according to fixed amounts, variable performance-related components and long-termincentive components.

Comment: —

A.3.1.4. Transparency of shareholder structure (eg, disclosure of major shareholders in the annualreport) 14.3% D-

Information on major shareholders is not publicly available.

Comment: —

A.3.2. Business ethics 66.7% A+

A.3.2.1. Code of conduct regarding fair business practices 33.3% A+

A detailed and comprehensive code covering important aspects such as corruption, antitrust, conflicts ofinterest, gifts and validity of information was provided.

Coverage: Group-wide coverage (= 100% of employees are covered by the code).

Comment: The P&G Worldwide Business Conduct Manual includes comprehensive policies regarding fairbusiness conduct. Besides the above mentioned, issues covered by the manual include price fixing, termsand conditions of trade, discounts, market allocation, insider dealings, commercial bribery, intellectual propertyrights.

A.3.2.2. Measures taken by the company to ensure fair business practices 66.7% A+

Comprehensive measures have been implemented to ensure fair business practices.

Coverage: Group-wide coverage (= 100% of relevant employees are covered by the measures mentionedabove).

Comment: Procter & Gamble's Worldwide Business Conduct Manual includes detailed policy statements,which are each exemplified by 'relevant situations that raise concerns' and accompanied by a list of specificdos and don'ts, which are mandatory for all employees. According to P&G, the company's Ethics Committee,which currently consists of the company's Global Human Resources Officer, Chief Financial Officer, and ChiefLegal Officer, is responsible for maintenance, oversight, and final interpretation of the content of the Manual.Furthermore, the company states that every employee is held accountable for compliance and is providedseveral means of reporting any concerns about violations, e.g., via the P&G's AlertLine. AlertLine is a toll-freenumber that can be called by any employee or other interested person 24/7 to report any violations concerningthe Manual. P&G states that AlertLine is not staffed or monitored by company personnel and may take callsin most languages spoken by employees around the world via a translator service. Furthermore, all calls canbe completely anonymous if the caller desires (in that case callers receive a confidential identification numberso they can inquire about the status of their reported concern). P&G also reports that every employee is trainedon the Manual. Accordingly, a variety of online tools, links and references that provide additional information,including quizzes, Q&A's, and online training, may be accessed through the company's intranet. In addition,the Manual is available in several relevant languages and internal controls are carried out to ensure compliance.However, there is no information available if employees must sign an acknowledgement of the Manual.



A.3.2.3. Major controversies, fines or settlements related to business ethics 0.0% X

Research did not reveal major fines or settlements paid by the company in the context of antitrust or similarin recent years.

Comment: According to external research, as of April 2006, former investors of Gillette, who sold their stocksbetween November 5, 2004 and January 30, 2005, accuse Gillette and certain of its officers of failing todisclose the upcoming deal with Procter & Gamble. At the time this transaction became public, Gillette's stockprice increased significantly. No further information is available. Investigations are still ongoing. For the timebeing this minor controversy does not lead to a downgrading of this section.



B. Environmental Rating 60.0% B-

B.1. Environmental Management 25.0% B

B.1.1. Corporate policy covering environmental issues 11.1% A+

A comprehensive environmental policy was provided.

Coverage: Group-wide coverage (= 100% of production volume is covered by a policy).

Comment: The company has a comprehensive Environmental Quality Policy which covers issues such asproduction processes, products, packaging, eco-efficiency, continuous improvement, legal compliance,product life cycle assessments, reuse and recycling, and open communication with external stakeholders. Inaddition, the company has a comprehensive Forest Resources Policy including requirements for P&G's fiberprocurement (see B.2.2.1).

B.1.2. Environmental management system 22.2% B-

B.1.2.1. Implementation of an environmental management system (EMS) 44.4% B+

Coverage: An EMS is implemented. However, coverage was not specified. It was estimated that more than50% of locations are covered by the EMS.

Comment: According to Procter & Gamble, it has a Health, Safety and Environment (HSE) managementsystem in place at all manufacturing operations worldwide. The implementation of HSE management systemsalso includes technical centers and acquisitions. However, there is no information available on whether otherlocations (eg, distribution centres, headquarters) are covered by an EMS.

B.1.2.2. Certification to an international standard 22.2% C

Coverage: Some locations are certified to an international standard. However, coverage was not specified.

Comment: According to the company, Procter & Gamble's EMS has been subject to an independent externalreview. The reviewer (ERM) has verified that P&G's system meets the intent of both ISO 14001 and EMASstandards. At this time, however, Procter & Gamble believes that going beyond this to formal certification ofthe management system, including verification of site statements, does not add value to the existing system.According to the company's subsidiary Gillette, more than two thirds of its 34 production sites worldwide hadobtained ISO 14001 certification by 2003.

B.1.2.3. Implementation of an environmental management system in non-OECD countries 22.2% B+

Coverage: An EMS is implemented. However, coverage was not specified. It was estimated that more than50% of locations in non-OECD countries are covered by the EMS.

Comment: According to Procter & Gamble, it has a Health, Safety and Environment (HSE) managementsystem in place at manufacturing operations worldwide. However, there is no information available whetherother locations (e.g., distribution centers, headquarters) are also covered by an EMS.

B.1.2.4. Certification to an international standard in non-OECD countries 11.1% C

Coverage: Some locations in non-OECD countries are certified to an international standard. However,coverage was not specified.

Comment: According to the company, Procter & Gamble's EMS has been subject to an independent externalreview. The reviewer (ERM) has verified that P&G's system meets the intent of both ISO 14001 and EMASstandards. At this time, however, Procter & Gamble believes that going beyond this to formal certification ofthe management system, including verification of site statements, does not add value to the existing system.According to the company's subsidiary Gillette, as of 2004, it operates four manufacturing facilities in non-OECD countries that are certified to the ISO 14001 standard.



B.1.3. External reporting on environmental issues 22.2% B

Environmental reporting covers various issues on a regular basis.

Coverage: No group-wide information was provided. It was estimated that more than 80% of employees arecovered by reporting.

Comment: Procter & Gamble reports on environmental issues in its annual sustainability reports, additionaldocuments and information presented on its corporate website, as well as on several stakeholder informationwebsites (Science in the Box, The Science of Beauty, and P&G Perspectives). Issues covered include policies,management systems, performance data, animal testing as well as product safety and ingredients. In addition,P&G reports on HSE non-compliance and fines. However, there is no information available on other relevantissues such as business travel and policies to promote renewable raw materials. Furthermore, P&G providesonly limited information on packaging issues. The company's 2005 Sustainability Report was prepared usingthe Global Reporting Initiative's July 2002 Sustainability Reporting Guidelines.P&G's sustainability reporting does not yet cover Gillette (about 20% of total employees). No information isavailable whether the report has been audited by an external accountant.

B.1.4. Environmental performance indicators (compilation of input and output data on, eg, rawmaterials, energy, water, air emissions, and waste) 11.1% A

The company collects environmental data for various areas of resource consumption and emissions.

Coverage: Group-wide coverage (= 100% of manufacturing operations are covered by environmentalperformance indicators).

Comment: Procter & Gamble provides environmental data on waste (e.g., generated waste, reused waste,disposed waste), energy consumption, water consumption, effluents, air emissions, greenhouse gasemissions, COD discharge as well as SARA releases as defined by the US Environmental Protection Agency.According to Procter & Gamble, all data are reported on a global basis for all manufacturing sites and includetechnical centres. However, there is no data available on AOX discharge as well as on raw material use.

B.1.5. Strategy and formal systems for addressing climate change 11.1% B-

Reasonable steps have been taken regarding the implementation of concrete strategies and formal systemsto address climate change.

Comment: According to the company, P&G is concerned about the potentially negative consequences ofclimate change, and believes that the growing scientific evidence, substantiating links of greenhouse gasesto global climate change, warrants prudent action. Furthermore, P&G states that it supports efforts to dealwith the issue under the UN Framework Convention on Climate Change (UNFCCC) and encourages all nationsinvolved to search for consensus under the UNFCCC. In this context, the company states that it accepts thecompany's responsibility to understand the potential contributions of greenhouse gases from its business andto take prudent and cost-effective actions. According to P&G, the company supports continued scientificresearch to understand the causes and consequences of climate change, and find meaningful and efficientremedies for managing the negative effects (e.g., US Climate Change Science Program, 2004). P&G alsoreports that the company continues its active participation in Climate R.E.S.O.L.V.E. initiative (ResponsibleEnvironmental Steps, Opportunities, to Lead by Voluntary Efforts) of the US Business Roundtable. Accordingto the company's sustainability report, P&G's actual greenhouse emissions in 2007 were less than in thebaseline year 2002 although production had increased significantly.

B.1.6. Travel and transport 22.2% C

B.1.6.1. Policy/measures taken to reduce the environmental impact of business travel (eg, use ofvideo conferencing, carbon neutral travel) 33.3% D-

No information is available whether the company has implemented a policy and/or measures to reduce theenvironmental impact of business travel (e.g. use of video conferencing, carbon neutral travel).


Comment: —



B.1.6.2. Measures taken to increase transport efficiency 66.7% B-

Reasonable measures have been implemented to increase transport efficiency.

Coverage: The company did not specify the percentage of transport volume covered by the informationprovided above.

Comment: Procter and Gamble states in its Environmental Quality Policy that it is committed to reduce orprevent the environmental impact of its products and packaging, including in their distribution. The companyfurther reports on several measures, e.g., the company has a comprehensive Western Europe DistributionStrategy and is implementing a network of Regional Distribution Centers. Thus, distances driven by thecompany's trucks are reduced by approximately 10 million kilometers per year due to optimum siting ofRegional Distribution Centers, increased ability to more fully load trucks because they now carry a multiproductassortment, an increase in shipments going directly to customers from Procter & Gamble plants. The companystates that the company produces locally and purchases the majority of its raw materials within those regionswhere the company manufactures its products. However, no detailed information is available.

B.2. Products and Services 60.0% C+

B.2.1. Product safety 35.0% A-

B.2.1.1. Measures taken to assess the impact of ingredients and final products on the environmentand human health (eg, risk assessment) 50.0% A

Comprehensive measures have been implemented to assess the impact of ingredients and final products onthe environment and human health (e.g. risk assessment).

Comment: With regard to product safety, the company states that it assesses risks of products and ingredientsin Human Health Risk Assessments (HHRAs) and Environmental Risk Assessments (ERAs). HHRAs coverdifferent routes of exposure (e.g. skin contact, inhalation, ingestion from surfaces of dishware or long-termingestion via drinking water) and possible effects (e.g. skin irritation, skin sensitization/allergies). In ERAs,the ecotoxicity and biodegradability are assessed. Extensive information on HHRAs and ERAs includingrelevant research/science fields is provided on the company's website Science in the Box. Information providedincludes case studies. In addition to Science in the Box which mainly covers P&G's fabric and home carebusiness in Western Europe, the company also publishes information on risk assessment procedures on itsP&G Perspectives website and on The Science of Beauty website.Furthermore, Procter & Gamble is one of the supporters of the European HERA project (Human andEnvironmental Risk Assessment on ingredients of household cleaning products). The parties involved in theHERA project have committed themselves to an efficient development of the project by agreeing to contributeto the methodology, helping to select the substances to be studied, providing the hazard and exposureinformation on human health and the environment, talking to stakeholders and ultimately, producing andpublishing HERA risk assessments. Data are being made available to the public (www.heraproject.com).Procter & Gamble conducts life-cycle assessments (LCAs) to evaluate the potential environmental impact ofa product throughout its entire life cycle by quantifying the use of resources and environmental emissions.LCAs take into account the supply of raw materials needed to produce the product, the manufacturing of theintermediates and finally the product itself, including packaging, transportation of raw materials, intermediatesand the product, use of the product, and disposal of the product.No information is available whether the company has implemented measures to assess the impact of the useof nanotechnology.

B.2.1.2. Policy/measures taken to improve environmental, health and safety aspects of products(eg, R&D guidelines, feedback/monitoring systems, reduction/elimination of hazardous/controversial substances)

50.0% B+

Reasonable measures have been implemented to improve environmental, health and safety aspects ofproducts.

Comment: According to Procter & Gamble's Worldwide Business Conduct Manual, employees must ensurethat any reports of product safety concerns that have been raised about company products in the market havebeen properly reported to appropriate company product safety or legal personnel for assessment andresolution. Furthermore, the company reports on its consumer services advisors who are listening to consumerfeedback on products via a toll-free hotline. These consumer calls may also raise safety issues. However,there is no detailed information available on how the company ensures follow up of this feedback system.Regarding the substitution or elimination of controversial/hazardous substances, P&G states that it continuesto use some controversial substances (e.g., policyclic musks Tonalid and Galaxolide, and Diethylphtalate(DEP)) under appropriate conditions (e.g., minimizing use in high volume applications). According to thecompany, other controversial substances, such as Nonylphenol and Nonylphenol Ethoxylates, are graduallyeliminated and substituted in most product formulations. However, limited information is available on R&Dguidelines including clear phase-out targets for controversial substances (e.g., PBTs, allergens, endocrinedisrupters).



B.2.2. Renewable (natural) raw materials 25.0% D

B.2.2.1. Policies/measures taken to promote renewable raw materials (eg, substitution ofpetroleum-based by plant-based chemicals/substances) 33.3% D-

No information is available whether the company has implemented measures to promote renewable rawmaterials (e.g. substitution of petroleum-based by plant-based chemicals).

Comment: In P&G's publication 'Natural and Synthetic Surfactants - Which one is better?', the company arguesthat it needs the flexibility to use both oleochemical and petrochemical surfactants. In this context, P&G statesthat it does not give preference to natural over synthetic surfactants. No further information is available onmeasures implemented to promote renewable raw materials.

B.2.2.2. Policies/measures taken to ensure the sustainable extraction of renewable raw materials(eg, sustainable farming practices, sustainable wild harvesting of herbs) 33.3% C

Reasonable measures have been implemented to ensure the sustainable extraction of renewable rawmaterials (e.g. sustainable farming practices, sustainable wild harvesting of herbs). However, external researchrevealed controversial practices by one of the company's suppliers.

Comment: With regard to wood-derived fiber, the company has a comprehensive position on deforestationand the processing of woods in mills. For example, the company ensures that pulp from suppliers comes fromplantation-grown trees or sustainably managed forests. According to the company, Procter & Gamble doesnot purchase pulp derived from tropical rain forests or old growth forests, unless they are being activelymanaged for sustainable yield and preservation or biodiversity. Furthermore, P&G states it ensures thatsuppliers meet the above requirements through mill visits, comprehensive written surveys and third-partycertification of sustainable forest management practices. According to the sustainability report, all pulpsuppliers had certified their forestry operations (eg, 50% certified to SFI, 29% to CERFLOR and 8 to FSC).No further details are available on measures taken. In addition, no information is available on measures takento ensure the sustainable extraction of other renewable raw materials, eg, palm oil or soy oil.

B.2.2.3. Policy on the use of ingredients derived from genetically modified raw materials (eg, soy,cotton and wood) 33.3% D-

No information is available whether a group-wide policy on the use of ingredients derived from geneticallymodified raw materials (e.g. soy, cotton, wood) exists.

Comment: According to NGOs such as Greenpeace, as of 2006, Pringles chips contain GM corn and potatoesoutside of Europe.

B.2.3. Animal testing 20.0% C

B.2.3.1. Policy on animal testing 30.0% D-

According to the company, household & personal products are only tested when required by law. However,external research revealed alleged breaches of this principle.

Comment: Procter & Gamble has a comprehensive policy on animal testing stating the following: The companydoes not test its consumer goods products on animals unless forced to do so by law. With regard to its healthcare products, P&G is committed to use the minimum number of animals necessary for the development ofthese products and to progress toward the goals of reduction, refinement and replacement. Finally, P&G'spet nutrition policy states that the dogs and cats the company works with receive the best care and that P&Gis working hard on alternatives to find even better ways of getting this information and eliminating the needfor research with other animals. Furthermore, P&G's pet nutrition subsidiary Iams will be moving all of its dogand cat feeding studies from external contract facilities and universities to three locations: pet owners' homes,the Iams Pet Health and Nutrition Center and organizations where dogs and cats already live, such as animalshelters. The transition was to be completed by October 2006. Iams also announced that it was halting theuse of feeding studies to achieve the Association of American Feed Control Officials (AAFCO) nutritionaladequacy statement and moving to data on file for nutrient profiles where they exist. P&G further states thatit is committed to use non-animal testing methods whenever possible, to research and validate alternativetesting methods, to speed up the approval of reliable non-animal test methods, and to eliminate regulationsthat require unnecessary animal testing.According to external research, however, the company has been criticized for conducting animal tests onchemical ingredients and products. It remains unclear which household & consumer products are animaltested. In this context, NGOs like Peta, the National Anti-Vivisection Society and Uncaged claim that thecompany continues to conduct tests for cosmetic products and ingredients that are not required by law (2006).As far as the company's pet food Iams is concerned, the company has been heavily criticized in 2005 byNGOs including Peta for several cruel and lethal experiments involving e.g. the inducement of diseases suchas gingivitis, which would contradict Iams animal research policy.



B.2.3.2. Strategies to reduce the use of animal testing 40.0% A+

Comprehensive measures have been implemented to reduce, replace and/or refine animal testing.

Comment: According to P&G, the company is a leader in alternatives to animal testing, investing more thanUSD 200 million to date and helping to develop more than 50 proven alternative methods. In this context, thecompany states that it collaborates with governments and academia to promote acceptance of alternativesand actively shares its discoveries so that others can benefit from its progress. Accordingly, P&G usesworldwide computer networks and models (e.g., QSAR, Quantitative Structure Activity Relationships), in vitrocell culture tests, advanced chemistry methods and human clinical studies. In addition, P&G states that itsscientists have worked with government agencies, animal welfare groups and other companies to developnew, non-animal tests for eye and skin irritation using cultured human tissue such as the type used in skingrafts. P&G also reports on a USD 3 million research program under way on three-dimensional computer skinmodels to continually improve alternative tests for assessing skin and scalp safety. In addition, the companyhas compiled an extensive database for use in predicting toxicity, which is used by all of its research scientists.Procter & Gamble is a member of the European cosmetics industry's steering committee on alternatives toanimal testing (SCAAT).

B.2.3.3. Development of the number of animals used during the last three years (total number ofanimals used factored against total R&D expenditure) 30.0% D-

No information is available on the development of the number of animals used during the last three years.


Comment: Procter & Gamble states that it no longer uses animals in evaluating the safety of its non-food,non-drug consumer products except when required by law. According to the company, this has eliminatedanimal testing for around 80 percent of Procter & Gamble's products around the world. No further informationis available.

B.2.4. Packaging 20.0% C

B.2.4.1. Measures taken to reduce the impact of packaging 50.0% B+

Reasonable measures have been implemented to reduce the impact of packaging.

Coverage: No group-wide information was provided. It was estimated that more than 50% of packaging volumeis covered by the information provided above.

Comment: P&G's Environmental Quality Policy includes a commitment to sustainable packaging. Thecompany aims to minimise the environmental impact of packaging in design, manufacture, distribution, useand disposal. Information on measures is provided on the affiliate website scienceinthebox.com. Accordingto the website, all P&G packaging is subjected to ecological risk assessments and for some products life cycleanalyses are available. The company considers the following principles in product development: reduction,recycling, re-use, replacement and removal of certain materials in packaging. P&G reports variousreplacement, reduction and recycling measures that resulted in the reduction of the amount of raw materialsand energy, eg, a new process in bottle manufacturing requiring 20% less resin, a software system thatreduced the weight of some widely-used packaging and helps saving 400t of raw materials a year acrossEurope, and recycling of the cases used in transport and distribution with rates between 75%-93%. In addition,the company refers to its refill systems that contribute to the re-use of packaging material. P&G also participatesin industry and government programmes to reduce the impact of packaging. However, no further details areavailable, eg, on measures regarding the removal or limitation of controversial packaging materials.

B.2.4.2. Development of the volume of packaging during the last three years (total volume ofpackaging factored against total production/sales) 50.0% D-

No information is available on the development of the volume of packaging during the last three years.


Comment: —

B.2.5. Major controversies, fines or settlements related to environmental issues 0.0% X

Research did not reveal any major environmental controversies in recent years.

Comment: —



B.3. Eco-efficiency 15.0% A

The company provides eco-efficiency data for total waste, water use, GHG emissions, energy use and CODdischarge. However, GHG data only comprise of CO2 emissions and there is no information available onAOX discharge. The data cover production sites and technical centers.

a. Absolute Values

Energy Use[GJ]

GHG Emissions[t]

Water Use[m3]

COD Discharge[t]

AOX Discharge[t]

Total Waste[t]

2005 n/a n/a n/a n/a n/a n/a



b. Factored Valuesagainst

Production[GJ/t]

Production[t/t]

Production[m3/t]

Production[kg/t]

Net Sales[g/USD]

Production[t/t]

2005 4.13 0.17 5.00 1.8000 n/a 0.05

2006 3.78 0.14 4.40 1.3000 n/a 0.04

2007 3.64 0.14 4.20 1.0000 n/a 0.04

Energy Use by Production [GJ/t] GHG Emissions by Production [t/t] Water Use by Production [m3/t]

COD Discharge by Production [kg/t] Total Waste by Production [t/t]


Procter & Gamble

Annex - Information Origins

Company Sources

Publicly available company documentation, such as annual reports, social and environmental reports and sustainability reports,as well as company web pages. In addition, internal documents or other company information (eg, obtained through interviewswith company representatives), where provided.

External Sources (examples only)

American Federation of Labor - Congress of Industrial Organizations (AFL-CIO)amnesty internationalBBCBusiness & Human Rights Resource CentreCampaign for Labor Rightscampaignmoney.orgCenter for Responsive Politics (Open Secrets)competition authoritiesCorpWatchenvironment agenciesEnvironmental Working GroupEnvironment News ServiceEuropean Union institutionsFinancial TimesFriends of the EarthGlobal March Against Child LaborGreenpeaceGuardianHuman Rights CommissionHuman Rights WatchInternational Labor Organization (ILO)International Trade Union Confederation (ITUC)Multinational MonitorOrganisation for Economic Co-operation and Development (OECD)People for the Ethical Treatment of Animals (peta)Planet ArkPublic CitizenResponsible ShopperReutersTransparency InternationalUN Global CompactUnited Nations Environment Programme (UNEP)US Food and Drug AdministrationWWF


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