Corporate Responsibility Rating

Procter & Gamble

Industry: Country: ISIN: MSCI: Household & Personal Products United States of America US7427181091 COS Household Products Status Rating

Prime B-

poor
-

medium

good

excellent

A company is being classified as "Prime" if it ranks among the worlds best companies within the same industry and fulfills the sector-specific minimum requirements defined 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% Weight

BRating

Environmental Rating

60.0% Weight

BRating

Company Profile Procter & Gamble's principal activity is to manufacture and market consumer products. The group operates in three global business 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 and Family Care and the Snacks, Coffee and Pet Care businesses and Gillette GBU includes the Blades and Razors and the Duracell and Braun businesses. Famous brands are, eg, Febreze, Pampers and Pringles. In 2005, Procter & Gamble completed 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)

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Procter & Gamble

Social Rating Environmental Rating

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

44.4% Weight

CRating

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

25.0% Weight

B Rating

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

33.3% Weight

BRating

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

60.0% Weight

C+ Rating

Corporate Governance and Business Ethics - corporate governance - board independence/effectiveness - shareholder democracy - executive compensation - shareholder structure - business ethics

22.2% Weight

A Rating

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

15.0% Weight

A Rating

Corporate Responsibility Rating

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Procter & Gamble

Exclusionary Criteria Business Areas
Yes Risk Yes User/ Industry Producer Retailer No Info

No

Abortion Alcohol Biocides Chlororganic Mass Products Embryonic Research Furs Gambling GMOs Military Nuclear Power Pornography Tobacco

o o o o o o o o o o

o o o o o o o o o o o o

o o

o o o o o o

o o o o o o o o o o o o

External research did not disclose any involvement.

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

Business Practices
Risk Yes Yes Industry Company Supplier No No Info

Animal Testing Business Malpractice Controversial Env. Practices Violations of Human Rights Violations of Labor Rights

o o o

o o o o

o o o o o

o o o

Animal testing for consumer products and pharmaceutical R&D.

2007: Alleged violations of human rights in Brazil by cellulose supplier Aracruz. External research did not disclose major violations in recent years.

Comments The 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 adapted to military purposes. Nuclear Power: With regard to commercial energy generation and traders, not users; 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.

Corporate Responsibility Rating

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Procter & Gamble

Additional Company Information

Business Data Net Sales (USD m) 2005 2006 2007

56,700.00 68,222.00 76,476.00

Company Locations Net. Income (USD m)

7,257.00 8,684.00 10,340.00

Number of Employees
110,000 138,000 138,000

Procter & Gamble is active worldwide and has major operations in, eg, the United States and Europe. It also operates manufacturing facilities in countries such as Saudi Arabia, Egypt and China.

Fiscal Year ends:

30.06.

Breakdown of Net Sales Net Sales by Business Segment 2007: Household Care Beauty and Health Gillette GBU 46% 42% 12%

Breakdown of Employees Employees by Region 2007: No information available.

Participation in Rating Process Upon request, the company did not provide additional information or feedback on the rating. Therefore, the rating is based on comprehensive publicly available information only.

Company Contact Mr Keith Zook Group Manager Corporate Sustainable Development P.O. Box 599 US - Cincinnati, Ohio 45201-0599 Fon +1 513 983 9390 Fax +1 513 983 6354 Email zook.km@pg.com Internet www.pg.com

oekom research Contact Analyst: Mr Oliver Rdel Goethestrasse 28 DE - 80336 Munich Fon +49 89 544184 90 Fax +49 89 544184 99 Email ruedel@oekom-research.com Internet www.oekom-research.com

Disclaimer 1. 2. 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. We would, however, point out that, since criteria and weightings are determined subjectively by oekom research, we do not claim that any of the information which we issue in the form of advice, rating reports, lists of recommendations or other research tools is objective; rather, it should be viewed as statements of opinion. Therefore, oekom research can naturally give no guarantee of the correctness of its evaluations. All the information contained in our sustainability research originates from sources which we consider to be accurate and reliable. It is, however, possible that human error, technical failure or other factors which cannot be ruled out may detract from the reliability of the information. 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 this information. In each case, users must carry out their own analysis and evaluation of the information. oekom research AG is the owner of all the information contained in its sustainability research. This information is protected by copyright. Any use thereof shall require the express prior written consent of oekom research. Use shall be deemed to refer in particular to the copying or duplication of the information wholly or in part, the distribution of the information, either free or against payment, or the exploitation of the information in any other conceivable manner.

3. 4. 5.

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Procter & Gamble

Weight Rating

A. Social Rating
A.1. Staff and Suppliers A.1.1. Staff A.1.1.1. Freedom of association A.1.1.1.1. Policy regarding freedom of association The company endorses the Global Sullivan Principles, which comprise respect for employees' freedom of association. No further information is available. Comment: According to Procter & Gamble, the company is a founding member of the Global Sullivan Principles which support voluntary freedom of association. However, there is no information available regarding a detailed company policy covering this issue. A.1.1.1.2. Measures regarding freedom of association in countries where no independent labour union may be established or where freedom of association is prohibited by law No information is available whether the company has taken measures such as staff councils, extended engagement with international trade unions or labor rights training to ensure employees' participation in decision making within the company in countries where no independent labor union may be established or where 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 survey conducted by the International Confederation of Free Trade Unions, there are factual limitations to labor rights since no independent unions are allowed in these countries. A.1.1.1.3. Major controversies, fines or settlements related to freedom of association Research did not reveal any controversies related to freedom of association in recent years. Comment: A.1.1.2. Work-life balance A.1.1.2.1. Work-life balance initiatives A.1.1.2.1.1. Initiatives offered regarding reduction of working time and workplace flexibility 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 are covered by the information above. Comment: Procter & Gamble states that all employees have access to supportive and enabling policies and practices in the areas of flexible work arrangements to improve work-life balance. In this context, the company reports that P&G Japan earned the 'Tele-work Award' for its adoption of flexible work arrangements, including telework. 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 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 and practices in the areas of flexible work arrangements, family care, resource/referral services, and personal wellness management to improve work-life balance. The company further reports that it offers work-family balance benefits, including childcare leave. However, there is no detailed information available on dependant care initiatives, such as emergency childcare, eldercare, workplace child care, or on other flexible benefits, such as sabbaticals.

40.0%
44.4% 75.0% 14.3% 50.0%

BCCD+ C

50.0%

D-

0.0%

14.3% 50.0% 50.0%

D+ C+ B

50.0%

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Procter & Gamble

Weight Rating A.1.1.2.2. Average weekly working time No information is available on the breakdown of employees by country (as an indicator for minimum standards regarding 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 comply with all applicable wage and hour laws, rules and regulations, including minimum wage, overtime and maximum hours. However, there is no further information available (e.g., regarding the breakdown of employees by country). A.1.1.3. Safeguarding of jobs A.1.1.3.1. Occurrence of staff redundancies for operational reasons in recent years 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 (about 18 percent of its work force) during the following two years in production and distribution due to the merger of its operations with those of Procter & Gamble. Furthermore, according to external research, the acquisition of 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 No information is available whether the company has taken any measures to handle lay-offs. Coverage: No information is available. Comment: A.1.1.4. Health and safety A.1.1.4.1. Health and safety conditions in countries where the company operates No information is available on the breakdown of employees by country (as an indicator for minimum standards regarding health & safety conditions, which are set either by law or through labor agreements). Comment: A.1.1.4.2. Health and safety management system 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 management structure which ensures that all manufacturing facilities worldwide are operated safely and legally; that process hazards are minimized or eliminated; and that health risks are identified, managed, or eliminated. The company further reports that performance is monitored via mandatory annual internal audits. In addition, according to P&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 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 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 downgrading of this section. 0.0% X 33.3% C 33.3% A+ 28.6% 33.3% C+ D66.7% D28.6% 33.3% DD50.0% D-

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Procter & Gamble

Weight Rating A.1.1.5. Equal opportunities A.1.1.5.1. Policy on equal opportunities A comprehensive and detailed policy on equal opportunities and non-discrimination regarding various workrelated 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 not engage, or authorize its employees to engage, in discrimination or harassment. Furthermore, any form of retaliation 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 personal characteristic. 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 creates an intimidating, hostile or offensive work environment or unreasonably interferes with an employee's work performance. In addition, P&G gives some examples of situations that raise concerns regarding harassment and discrimination. The company also has a workplace violence policy that prohibits threats or acts of violence by company employees against others, or against company or third party property that they come in contact with in their roles as employees. A.1.1.5.2. Gender distribution in the company 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 is administrative, technical and plant technicians, were women. Moreover, women held 38.9% of global management positions. However, only one out of five leading executives was female. In addition, there is no information 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 Research did not reveal any fines imposed or controversies related to discrimination in recent years. Comment: A.1.2. Suppliers A.1.2.1. Subcontractor/supplier standards with regard to labour/health and safety issues 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 provided above). Comment: The company's Sustainability Guidelines for Supplier Relations include Procter & Gamble's expectations with regard to social/ethical issues: Suppliers must - at a minimum - meet all current, applicable rules, regulations and laws in their countries, including laws relating to the employment, discrimination and health & 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&G expects suppliers to provide a safe work environment, to prevent accidents and injury, and to minimize exposure to health risks. Labor practice expectations are included in the standard terms and conditions for suppliers. In case a pattern of violation of these principles becomes known to the company and is not corrected, business relationships will be discontinued. 25.0% 16.7% C+ A+ 0.0% X 66.7% C 14.3% 33.3% BA+

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Procter & Gamble

Weight Rating A.1.2.2. Measures taken to check compliance of key subcontractors/suppliers with the company's labour/health and safety standards 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 provided above. 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 or potential hazard, monitoring through periodic internal and external performance assessments including site visits with emphasis on high-risk suppliers. The company has clearly defined procedures in case of noncompliance, eg, formal notification, remediation action plans and termination of contract if a compliance issue is not resolved in a timely manner. However, there is no information available on active support for suppliers to 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 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 municipality of Esprito Santo, Brazil. The company allegedly controls 11,009 hectares of indigenous lands for its eucalyptus plantations. The people of Tupinikim and Guarani claim that the exchange of their land for money in the late 1990ies which was confirmed by the Federal Public prosecution service of Brazil was illegal and unconstitutionally. The conflict further escalated in January 2006, when the Brazilian police destroyed two villages after indigenous people occupied the Aracruz site. Reportedly, heavy vehicles from Aracruz participated in the destruction of the villages. The situation escalated again in March 2006, when 1,500 indigenous people entered the plantations to destroy Aracruz' research laboratories and about 5 million eucalyptus seedlings. According to NGO Robin Wood in August 2007, the Brazilian Minister of Justice declared 18,070 ha of lands in Espirito Santo as indigenous lands. No further information is available. A.2. Society and Product Responsibility A.2.1. Society A.2.1.1. Human rights A.2.1.1.1. Policy on human rights and cultural self-determination of communities/peoples affected by the company's activities A policy on human rights is available. However, there is no detailed information available on a policy regarding cultural 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 universal human rights, particularly those of employees, communities in which it operates, and parties with whom it does business. Furthermore, P&G states in its Forest Resources Policy that it purchases wood-derived fiber from suppliers that support universal human rights through work with local governments and communities to improve the educational, cultural, economic and social well-being of those communities. In addition, the company is committed to the Global Sullivan Principles. A.2.1.1.2. Major controversies, fines or settlements related to human rights 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 civil liberties. External research, however, did not disclose any major controversies directly related to the company's activities. 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). 0.0% X 33.3% 75.0% 14.3% 100.0% BB B+ B+ 50.0% D33.3% A-

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Procter & Gamble

Weight Rating A.2.1.2. Community A.2.1.2.1. Community involvement policy and management 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. employee volunteering, matched donations programs, strategic cooperation/partnerships with NGOs). Comment: According to the company, Procter & Gamble is committed to focus its global philanthropy on a consistent cause where the need is great and there is a clear fit with P&G's strengths, brands, and current programs. P&G reports that with this in mind it chose to focus on the development of children in need (ages 0-13), through its global cause, P&G Live, Learn and Thrive. According to the company's community relations policy, this includes using its resources to prevent childhood disease, to provide access to education and opportunities for learning, and to develop important life skills. To achieve those targets and to ensure enduring impact of its initiatives, P&G is involved in various partnerships with NGOs, International Organizations such as 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 initiatives through volunteering and matched donations programs. With regard to monitoring activities, the company provides 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 contributions during the previous year 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 initiatives subdivided 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 support and employee volunteering in a wide range of educational, health, social service, cultural, civic, and environmental organizations to benefit society. In this context, the company focuses on its global cause, P&G Live, 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 contaminated water, to global relief groups yielding more than 200 million liters of safe drinking water, thereby helping to reduce illness among children in some of the poorest parts of the world. In 2007, global philanthropic contributions made by P&G and the P&G Fund amounted to USD 125 million. A.2.1.3. Political donations 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 Political Action Committee during the last three years. Comment: Procter & Gamble's basic policy prohibits company contributions to either political candidates or political parties anywhere in the world. Accordingly, P&G policy does not permit the use of any PG facilities or 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 where such contributions/activities are permitted by law and express written permission has been given in advance by the company's Ethics Committee. According to the Center for Responsive Politics, during the election cycles of 2004 and 2006, the company's PAC has spent a total of USD 417,953. In addition, Gillette's PAC has spent a total of USD 85,508 during these election cycles. A.2.1.4. Taxes and subsidies A.2.1.4.1. Transparency of payments to governments (eg, income tax, customs duties, sales/valueadded tax) broken down by country Relevant payments to governments are disclosed as a whole. However, there is no information available on the breakdown of all relevant payments to governments by country. Comment: In 2007, the company's income taxes amounted to USD 4370m. However, no information was available on other types of payments such as customs duties and sales tax. Moreover, no breakdown by country 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 No information is available on whether the total sum of subsidies received broken down by country is disclosed. Comment: 33.3% D14.3% 66.7% D D+ 14.3% D50.0% B+ 28.6% 50.0% A A+

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Procter & Gamble

Weight Rating A.2.1.5. Stakeholder dialogue A.2.1.5.1. External reporting on social/ethical issues 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 corporate website as well as affiliated websites (www.scienceinthebox.com, www.pgbeautyscience.com). The company provides information on employees (diversity and health & safety data, layoffs/outplacement programs, training, working conditions), product responsibility, as well as on its community involvement and philanthropic initiatives. In addition, P&G reports on HSE non-compliance and fines. Some issues in the report are covered in-depth (e.g. community initiatives, diversity, training and consumer information). Some issues, however, are only covered in a rather general way (e.g. working conditions). Apart from policies and standards, there is only little information on the company's supply chain management such as on supplier audits or counseling with regard to social issues. The company's 2007 sustainability report was prepared using the Global Reporting Initiative's reporting guidelines. No information is available whether the report has been audited by an external accountant. A.2.2. Product responsibility A.2.2.1. Policy regarding responsible marketing (eg, responsible advertising, privacy of consumer information) 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 and to ensure that messages are legal, decent, and honest. Furthermore, P&G states that it assumes its responsibility 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 to conform to relevant national codes and guidelines wherever it operates. P&G has a policy on advertising and promoting to consumers appropriately which is included in the company's Worldwide Business Conduct Manual and reads as follows: P&G does not permit its advertising or promotions for its products to be false or misleading. The policy also includes some examples of situations that raise concerns and a clear do and don'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 comparison with a competitor's product, that has not been substantiated through objective product testing based on sound statistical and scientific principles, and 3) must not run any advertisement or promotion that has not been reviewed by appropriate company legal personnel. P&G's Manual also includes a policy regarding privacy stating that all employees of the company should, in addition to meeting all applicable legal requirements concerning 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 providing reasonable protection for PII. This policy statement is equally accompanied by situations that raise concerns and a comprehensive list of dos and don'ts. 25.0% 15.0% C A+ 28.6% 100.0% A+ A+

Corporate Responsibility Rating

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Weight Rating 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 risk assessments) Comprehensive measures to provide comprehensive information on product characteristics, ingredients and potential hazards to consumers were described. Comment: The company provides extensive information on product characteristics and ingredients. Separate websites called Science in the Box and The Science of Beauty provide specific and non-proprietary information about P&G's Fabric and Home Care and P&G Beauty business in Western Europe. Science in the Box is available in five languages (English, French, Spanish, Italian, German). In addition, the company provides toll-free numbers on product packages. Procter & Gamble states that its Consumer Services are expert in responding quickly and effectively to occasional requests for urgent help such as following accidental ingestion of a detergent. Together with other members of the European Detergents Association in Europe, P&G runs the 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 its own view on substances of concern such as PBTs or POPs. For example, P&G explains why the company first started to phase out the use of the policyclic musks Tonalid and Galaxolide because of concerns raised by scientists in the mid-1990s and afterwards decided to stop the phase out and continue to use these substances 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 and Environmental Risk Assessment on ingredients of household cleaning products). The parties involved in the HERA project have committed themselves to an efficient development of the project by agreeing to contribute to the methodology, helping to select the substances to be studied, providing the hazard and exposure information on human health and the environment, talking to stakeholders and ultimately, producing and publishing 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) No group-wide information is available. It was estimated that less than 3% of relevant sales are generated from products carrying an eco-label. Comment: According to Procter & Gamble, based on its experiences over the past 20 years, the company believes that eco-seal programs have numerous problems, and that they neither encourage environmental progress 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's subsidiary Gillette, Duracell products provided for sale in the Nordic region carry the Nordic Swan eco-label. However, there is no information on sales volumes. 10.0% C 25.0% A

Corporate Responsibility Rating

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oekom research AG

Procter & Gamble

Weight Rating A.2.2.4. Major controversies, fines or settlements related to customer and product responsibility According to external sources, there have been controversies, fines or settlements related to customer and product 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 by the Administration for Industrial and Commerce in Nanchang city, China. According to external research, the ruling alleges that Procter & Gamble failed to produce documents to prove that 'SK-II products use the most effective anti-aging technology' as claimed in its advertisements. If the buyers of SK-II across the country all join 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 with regard 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 Fruit Juice" to "Orange Flavored Citrus Punch with Other Natural Flavors". In late 2003, a radio advertisement claiming the drink contained less sugar than spinach was banned in Great Britain. Regulators ruled that the advert was misleading and must be withdrawn. According to external research, a British-based researcher accused Procter & Gamble in February 2006 of hiding data regarding its osteoporosis drug Actonel. Aubrey Blumsohn is leading a P&G-funded study of the top-selling bone loss drug and claimed that in 2004 he discovered that P&G concealed and omitted Actonel data 'in an apparent attempt to improve the drug's image of effectiveness.' Blumsohn said the drug maker has refused to provide him with the raw study data he needs to interpret his research into the drug, despite the fact that he is listed as the author on medical abstracts, draft publications and statistical reports derived from his research. Blumsohn took his case to court in February 2006, telling lawmakers of the alleged data concealment. No further information is available. Furthermore, despite the fact that the CSPI reported close to 20,000 incidents of adverse reactions to consumers 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 ko-Test in March 2004 criticized the company's products assessed (Gillette Series Gel and Gillette for Women Satin Care) 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-website as containing controversial substances such as endocrine disrupters and/or carcinogens (April 2006). A.3. Corporate Governance and Business Ethics A.3.1. Corporate governance A.3.1.1. Independence and effectiveness of the board A.3.1.1.1. Separation of power between CEO and chair of the board 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) 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 members of the Board. A.3.1.2. Shareholder democracy A.3.1.2.1. Assignation of voting rights (eg, one share entitles the holder to one vote) 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 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 is to own company shares worth USD 2,000 for one year.
Corporate Responsibility Rating 12 oekom research AG

50.0%

D-

22.2% 33.3% 28.6% 50.0%

A B BD-

50.0%

A+

42.9% 33.3%

AB+

33.3%

A+

Procter & Gamble

Weight Rating A.3.1.2.3. Facilitation of shareholder participation (eg, broadcasting of annual meeting, e-voting on proxy statements) The company facilitates shareholder participation by broadcasting the annual general meeting and giving shareholders the opportunity to vote on proxy resolutions via Internet or phone. However, there is no information available 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 for shareholders attending the annual general meeting who are hearing-impaired. A.3.1.3. Transparency of compensation schemes for executive board members Compensation for the CEO and the most highly paid executive board members is disclosed on an individual basis and sub-divided according to fixed amounts, variable performance-related components and long-term incentive components. Comment: A.3.1.4. Transparency of shareholder structure (eg, disclosure of major shareholders in the annual report) Information on major shareholders is not publicly available. Comment: A.3.2. Business ethics A.3.2.1. Code of conduct regarding fair business practices A detailed and comprehensive code covering important aspects such as corruption, antitrust, conflicts of interest, 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 fair business conduct. Besides the above mentioned, issues covered by the manual include price fixing, terms and conditions of trade, discounts, market allocation, insider dealings, commercial bribery, intellectual property rights. A.3.2.2. Measures taken by the company to ensure fair business practices Comprehensive measures have been implemented to ensure fair business practices. Coverage: Group-wide coverage (= 100% of relevant employees are covered by the measures mentioned above). 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 specific dos 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 Chief Legal 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 provided several means of reporting any concerns about violations, e.g., via the P&G's AlertLine. AlertLine is a toll-free number that can be called by any employee or other interested person 24/7 to report any violations concerning the Manual. P&G states that AlertLine is not staffed or monitored by company personnel and may take calls in most languages spoken by employees around the world via a translator service. Furthermore, all calls can be completely anonymous if the caller desires (in that case callers receive a confidential identification number so they can inquire about the status of their reported concern). P&G also reports that every employee is trained on 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. 66.7% A+ 66.7% 33.3% A+ A+ 14.3% D14.3% A+ 33.3% B+

Corporate Responsibility Rating

13

oekom research AG

Procter & Gamble

Weight Rating A.3.2.3. Major controversies, fines or settlements related to business ethics Research did not reveal major fines or settlements paid by the company in the context of antitrust or similar in recent years. Comment: According to external research, as of April 2006, former investors of Gillette, who sold their stocks between November 5, 2004 and January 30, 2005, accuse Gillette and certain of its officers of failing to disclose the upcoming deal with Procter & Gamble. At the time this transaction became public, Gillette's stock price increased significantly. No further information is available. Investigations are still ongoing. For the time being this minor controversy does not lead to a downgrading of this section. 0.0% X

Corporate Responsibility Rating

14

oekom research AG

Procter & Gamble

Weight Rating

B. Environmental Rating
B.1. Environmental Management B.1.1. Corporate policy covering environmental issues 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 as production processes, products, packaging, eco-efficiency, continuous improvement, legal compliance, product life cycle assessments, reuse and recycling, and open communication with external stakeholders. In addition, the company has a comprehensive Forest Resources Policy including requirements for P&G's fiber procurement (see B.2.2.1). B.1.2. Environmental management system B.1.2.1. Implementation of an environmental management system (EMS) Coverage: An EMS is implemented. However, coverage was not specified. It was estimated that more than 50% of locations are covered by the EMS. Comment: According to Procter & Gamble, it has a Health, Safety and Environment (HSE) management system in place at all manufacturing operations worldwide. The implementation of HSE management systems also includes technical centers and acquisitions. However, there is no information available on whether other locations (eg, distribution centres, headquarters) are covered by an EMS. B.1.2.2. Certification to an international standard 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 external review. The reviewer (ERM) has verified that P&G's system meets the intent of both ISO 14001 and EMAS standards. At this time, however, Procter & Gamble believes that going beyond this to formal certification of the 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 had obtained ISO 14001 certification by 2003. B.1.2.3. Implementation of an environmental management system in non-OECD countries Coverage: An EMS is implemented. However, coverage was not specified. It was estimated that more than 50% of locations in non-OECD countries are covered by the EMS. Comment: According to Procter & Gamble, it has a Health, Safety and Environment (HSE) management system in place at manufacturing operations worldwide. However, there is no information available whether other 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 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 external review. The reviewer (ERM) has verified that P&G's system meets the intent of both ISO 14001 and EMAS standards. At this time, however, Procter & Gamble believes that going beyond this to formal certification of the 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 nonOECD countries that are certified to the ISO 14001 standard.

60.0%
25.0% 11.1%

BB A+

22.2% 44.4%

BB+

22.2%

22.2%

B+

11.1%

Corporate Responsibility Rating

15

oekom research AG

Procter & Gamble

Weight Rating B.1.3. External reporting on environmental issues 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 are covered by reporting. Comment: Procter & Gamble reports on environmental issues in its annual sustainability reports, additional documents and information presented on its corporate website, as well as on several stakeholder information websites (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 relevant issues such as business travel and policies to promote renewable raw materials. Furthermore, P&G provides only limited information on packaging issues. The company's 2005 Sustainability Report was prepared using the 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 is available whether the report has been audited by an external accountant. B.1.4. Environmental performance indicators (compilation of input and output data on, eg, raw materials, energy, water, air emissions, and waste) The company collects environmental data for various areas of resource consumption and emissions. Coverage: Group-wide coverage (= 100% of manufacturing operations are covered by environmental performance 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 gas emissions, 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 include technical 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 Reasonable steps have been taken regarding the implementation of concrete strategies and formal systems to address climate change. Comment: According to the company, P&G is concerned about the potentially negative consequences of climate change, and believes that the growing scientific evidence, substantiating links of greenhouse gases to global climate change, warrants prudent action. Furthermore, P&G states that it supports efforts to deal with the issue under the UN Framework Convention on Climate Change (UNFCCC) and encourages all nations involved to search for consensus under the UNFCCC. In this context, the company states that it accepts the company's responsibility to understand the potential contributions of greenhouse gases from its business and to take prudent and cost-effective actions. According to P&G, the company supports continued scientific research to understand the causes and consequences of climate change, and find meaningful and efficient remedies for managing the negative effects (e.g., US Climate Change Science Program, 2004). P&G also reports that the company continues its active participation in Climate R.E.S.O.L.V.E. initiative (Responsible Environmental Steps, Opportunities, to Lead by Voluntary Efforts) of the US Business Roundtable. According to the company's sustainability report, P&G's actual greenhouse emissions in 2007 were less than in the baseline year 2002 although production had increased significantly. B.1.6. Travel and transport B.1.6.1. Policy/measures taken to reduce the environmental impact of business travel (eg, use of video conferencing, carbon neutral travel) No information is available whether the company has implemented a policy and/or measures to reduce the environmental impact of business travel (e.g. use of video conferencing, carbon neutral travel). Coverage: No information is available. Comment: 22.2% 33.3% C D11.1% B11.1% A 22.2% B

Corporate Responsibility Rating

16

oekom research AG

Procter & Gamble

Weight Rating B.1.6.2. Measures taken to increase transport efficiency Reasonable measures have been implemented to increase transport efficiency. Coverage: The company did not specify the percentage of transport volume covered by the information provided above. Comment: Procter and Gamble states in its Environmental Quality Policy that it is committed to reduce or prevent the environmental impact of its products and packaging, including in their distribution. The company further reports on several measures, e.g., the company has a comprehensive Western Europe Distribution Strategy and is implementing a network of Regional Distribution Centers. Thus, distances driven by the company's trucks are reduced by approximately 10 million kilometers per year due to optimum siting of Regional Distribution Centers, increased ability to more fully load trucks because they now carry a multiproduct assortment, an increase in shipments going directly to customers from Procter & Gamble plants. The company states that the company produces locally and purchases the majority of its raw materials within those regions where the company manufactures its products. However, no detailed information is available. B.2. Products and Services B.2.1. Product safety B.2.1.1. Measures taken to assess the impact of ingredients and final products on the environment and human health (eg, risk assessment) Comprehensive measures have been implemented to assess the impact of ingredients and final products on the environment and human health (e.g. risk assessment). Comment: With regard to product safety, the company states that it assesses risks of products and ingredients in Human Health Risk Assessments (HHRAs) and Environmental Risk Assessments (ERAs). HHRAs cover different routes of exposure (e.g. skin contact, inhalation, ingestion from surfaces of dishware or long-term ingestion 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 including relevant research/science fields is provided on the company's website Science in the Box. Information provided includes case studies. In addition to Science in the Box which mainly covers P&G's fabric and home care business in Western Europe, the company also publishes information on risk assessment procedures on its P&G Perspectives website and on The Science of Beauty website. Furthermore, Procter & Gamble is one of the supporters of the European HERA project (Human and Environmental Risk Assessment on ingredients of household cleaning products). The parties involved in the HERA project have committed themselves to an efficient development of the project by agreeing to contribute to the methodology, helping to select the substances to be studied, providing the hazard and exposure information on human health and the environment, talking to stakeholders and ultimately, producing and publishing 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 of a 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 the intermediates and finally the product itself, including packaging, transportation of raw materials, intermediates and 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 use of 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) Reasonable measures have been implemented to improve environmental, health and safety aspects of products. Comment: According to Procter & Gamble's Worldwide Business Conduct Manual, employees must ensure that any reports of product safety concerns that have been raised about company products in the market have been properly reported to appropriate company product safety or legal personnel for assessment and resolution. Furthermore, the company reports on its consumer services advisors who are listening to consumer feedback 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 continues to 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 the company, other controversial substances, such as Nonylphenol and Nonylphenol Ethoxylates, are gradually eliminated and substituted in most product formulations. However, limited information is available on R&D guidelines including clear phase-out targets for controversial substances (e.g., PBTs, allergens, endocrine disrupters). 50.0% B+ 60.0% 35.0% 50.0% C+ AA 66.7% B-

Corporate Responsibility Rating

17

oekom research AG

Procter & Gamble

Weight Rating B.2.2. Renewable (natural) raw materials B.2.2.1. Policies/measures taken to promote renewable raw materials (eg, substitution of petroleum-based by plant-based chemicals/substances) No information is available whether the company has implemented measures to promote renewable raw materials (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 argues that it needs the flexibility to use both oleochemical and petrochemical surfactants. In this context, P&G states that it does not give preference to natural over synthetic surfactants. No further information is available on measures 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) Reasonable measures have been implemented to ensure the sustainable extraction of renewable raw materials (e.g. sustainable farming practices, sustainable wild harvesting of herbs). However, external research revealed controversial practices by one of the company's suppliers. Comment: With regard to wood-derived fiber, the company has a comprehensive position on deforestation and the processing of woods in mills. For example, the company ensures that pulp from suppliers comes from plantation-grown trees or sustainably managed forests. According to the company, Procter & Gamble does not purchase pulp derived from tropical rain forests or old growth forests, unless they are being actively managed for sustainable yield and preservation or biodiversity. Furthermore, P&G states it ensures that suppliers meet the above requirements through mill visits, comprehensive written surveys and third-party certification of sustainable forest management practices. According to the sustainability report, all pulp suppliers 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 taken to 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) No information is available whether a group-wide policy on the use of ingredients derived from genetically modified raw materials (e.g. soy, cotton, wood) exists. Comment: According to NGOs such as Greenpeace, as of 2006, Pringles chips contain GM corn and potatoes outside of Europe. B.2.3. Animal testing B.2.3.1. Policy on animal testing 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 company does not test its consumer goods products on animals unless forced to do so by law. With regard to its health care products, P&G is committed to use the minimum number of animals necessary for the development of these products and to progress toward the goals of reduction, refinement and replacement. Finally, P&G's pet nutrition policy states that the dogs and cats the company works with receive the best care and that P&G is working hard on alternatives to find even better ways of getting this information and eliminating the need for research with other animals. Furthermore, P&G's pet nutrition subsidiary Iams will be moving all of its dog and 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 animal shelters. The transition was to be completed by October 2006. Iams also announced that it was halting the use of feeding studies to achieve the Association of American Feed Control Officials (AAFCO) nutritional adequacy statement and moving to data on file for nutrient profiles where they exist. P&G further states that it is committed to use non-animal testing methods whenever possible, to research and validate alternative testing methods, to speed up the approval of reliable non-animal test methods, and to eliminate regulations that require unnecessary animal testing. According to external research, however, the company has been criticized for conducting animal tests on chemical ingredients and products. It remains unclear which household & consumer products are animal tested. In this context, NGOs like Peta, the National Anti-Vivisection Society and Uncaged claim that the company 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 by NGOs including Peta for several cruel and lethal experiments involving e.g. the inducement of diseases such as gingivitis, which would contradict Iams animal research policy. 20.0% 30.0% C D33.3% D33.3% C 25.0% 33.3% D D-

Corporate Responsibility Rating

18

oekom research AG

Procter & Gamble

Weight Rating B.2.3.2. Strategies to reduce the use of animal testing 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 than USD 200 million to date and helping to develop more than 50 proven alternative methods. In this context, the company states that it collaborates with governments and academia to promote acceptance of alternatives and actively shares its discoveries so that others can benefit from its progress. Accordingly, P&G uses worldwide computer networks and models (e.g., QSAR, Quantitative Structure Activity Relationships), in vitro cell culture tests, advanced chemistry methods and human clinical studies. In addition, P&G states that its scientists have worked with government agencies, animal welfare groups and other companies to develop new, non-animal tests for eye and skin irritation using cultured human tissue such as the type used in skin grafts. P&G also reports on a USD 3 million research program under way on three-dimensional computer skin models to continually improve alternative tests for assessing skin and scalp safety. In addition, the company has 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 to animal testing (SCAAT). B.2.3.3. Development of the number of animals used during the last three years (total number of animals used factored against total R&D expenditure) No information is available on the development of the number of animals used during the last three years. Coverage: No information is available. 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 eliminated animal testing for around 80 percent of Procter & Gamble's products around the world. No further information is available. B.2.4. Packaging B.2.4.1. Measures taken to reduce the impact of packaging 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 volume is covered by the information provided above. Comment: P&G's Environmental Quality Policy includes a commitment to sustainable packaging. The company aims to minimise the environmental impact of packaging in design, manufacture, distribution, use and disposal. Information on measures is provided on the affiliate website scienceinthebox.com. According to the website, all P&G packaging is subjected to ecological risk assessments and for some products life cycle analyses 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 various replacement, reduction and recycling measures that resulted in the reduction of the amount of raw materials and energy, eg, a new process in bottle manufacturing requiring 20% less resin, a software system that reduced the weight of some widely-used packaging and helps saving 400t of raw materials a year across Europe, 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 participates in industry and government programmes to reduce the impact of packaging. However, no further details are available, 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 of packaging factored against total production/sales) No information is available on the development of the volume of packaging during the last three years. Coverage: No information is available. Comment: B.2.5. Major controversies, fines or settlements related to environmental issues Research did not reveal any major environmental controversies in recent years. Comment: 0.0% X 50.0% D20.0% 50.0% C B+ 30.0% D40.0% A+

Corporate Responsibility Rating

19

oekom research AG

Procter & Gamble

B.3. Eco-efficiency The company provides eco-efficiency data for total waste, water use, GHG emissions, energy use and COD discharge. However, GHG data only comprise of CO2 emissions and there is no information available on AOX discharge. The data cover production sites and technical centers.

Weight

Rating

15.0%

a. Absolute Values
Energy Use [GJ] 2005 2006 2007 n/a n/a n/a GHG Emissions [t] n/a n/a n/a Water Use [m3] n/a n/a n/a COD Discharge AOX Discharge [t] [t] n/a n/a n/a n/a n/a n/a Total Waste [t] n/a n/a n/a

b. Factored Values
against Production [GJ/t] 2005 2006 2007 4.13 3.78 3.64 Production [t/t] 0.17 0.14 0.14 Production [m3/t] 5.00 4.40 4.20 Production [kg/t] 1.8000 1.3000 1.0000 Net Sales [g/USD] n/a n/a n/a Production [t/t] 0.05 0.04 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]

Corporate Responsibility Rating

20

oekom research AG

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 interviews with company representatives), where provided. External Sources (examples only) American Federation of Labor - Congress of Industrial Organizations (AFL-CIO) amnesty international BBC Business & Human Rights Resource Centre Campaign for Labor Rights campaignmoney.org Center for Responsive Politics (Open Secrets) competition authorities CorpWatch environment agencies Environmental Working Group Environment News Service European Union institutions Financial Times Friends of the Earth Global March Against Child Labor Greenpeace Guardian Human Rights Commission Human Rights Watch International Labor Organization (ILO) International Trade Union Confederation (ITUC) Multinational Monitor Organisation for Economic Co-operation and Development (OECD) People for the Ethical Treatment of Animals (peta) Planet Ark Public Citizen Responsible Shopper Reuters Transparency International UN Global Compact United Nations Environment Programme (UNEP) US Food and Drug Administration WWF

Corporate Responsibility Rating

21

oekom research AG