Greening Our Supply Chain

Given the size and scope of our supply chain, there are many opportunities to minimize the environmental impact of the products and services we purchase. PG&E is working collaboratively with suppliers, academia and other utilities to pursue this opportunity.

We are taking a systematic, long-term approach to reduce the environmental impact of our supply chain, enabling PG&E to better serve our customers and take important steps toward our goal of environmental leadership.

Strengthening Our Business Practices and Systems

One important area of focus is maintaining strong internal processes and systems to manage the performance of our top 100 suppliers. These companies include the most strategic suppliers for our business, including those with whom we spend significant dollars and that are critical to our operations.

Our supplier performance management program provides a structured, integrated process to jointly develop rigorous metrics and key performance indicators, review performance and develop goals for continuous improvement. We conduct recurrent performance evaluations with each top tier supplier using a scorecard of key performance indicators such as safety, product quality and operations, supplier diversity and environmental performance.

In 2011, we embarked on an initiative to update the set of environmental performance metrics included in the scorecards. Leveraging benchmarking research across various industries, we developed new environmental performance standards to promote greater transparency, rigor and accountability. The new standards clearly detail our priorities, provide clarity in the supplier evaluation process and allow suppliers to improve their score throughout the year.

PG&E rolled out the new supplier environmental performance standards in 2012 and now expects all top tier suppliers to:

  • Implement an environmental management system that tracks the following environmental impacts: greenhouse gas emissions (Scope 1 and 2), energy, water, waste and compliance with environmental requirements
  • Set voluntary reduction goals
  • Publicly report their annual performance against goals

Suppliers will report their performance against these new standards in an annual sustainability survey.

These expectations set out fair but rigorous requirements for continuous improvement in environmental management. By setting clear goals and expectations, we will continue to work with our suppliers to identify opportunities to reduce the environmental footprint of their operations.

Working with Suppliers to Pursue Innovation

Our suppliers have achieved environmental improvements across a spectrum of projects. In 2011, MJ Avila earned PG&E’s Green Supplier of the Year Award for their efforts to minimize the environmental impact of their support for PG&E’s 250 MW solar photovoltaic installation.

Other suppliers have continued to actively engage on initiatives to reduce their environmental impact. For example, one of PG&E’s key distributors, McJunkin Redman, spearheaded a waste reduction initiative at its distribution centers. Last year, by setting up recycling bins for metal bands in their pipe yards, the company recycled more than 100,000 pounds of metal waste. McJunkin also eliminated styrofoam peanuts from their packaging materials, saving more than $40,000.

Another company, Southwire, partnered with PG&E to expand the use of reusable plastic reels or reel-less packaging, for transporting electric wire and cable. By doing so, Southwire reduced the use and ultimate disposal of wooden reels.

Partnering with Industry Peers

PG&E continues to be an active member of the Electric Utility Industry Sustainable Supply Chain Alliance, a consortium we co-founded in 2008 as a way to work collaboratively with other utilities and organizations on greening our supply chain.

The Alliance established a supply chain operations greenhouse gas emission and energy consumption reduction goal of 10 percent by 2015 using a 2008 baseline of nearly 3 million MMBTUs. The Alliance also committed to having a majority of member suppliers establish a voluntary greenhouse gas emission reduction goal by the end of 2012. PG&E is actively involved in the Alliance’s working teams to educate suppliers on the programs available to assist them in establishing greenhouse gas reduction goals.

Additionally, the Utility’s Senior Vice President of Safety and Shared Services served as Chair of the Alliance in 2011, leading the development of a strategic and operating plan to better focus the Alliance’s objectives on developing green standards and driving adoption of those standards by the industry’s supply base.

Focusing on Our Carbon Footprint

PG&E embarked on a multi-year initiative in partnership with U.C. Berkeley and Climate Earth, a carbon accounting consultancy in San Francisco, to quantify the full greenhouse gas footprint of all products and services procured in our supply chain. These represent Scope 3 greenhouse gas emissions.

We performed this study in two phases and completed it in December 2011:

  • We completed a scoping study to measure greenhouse gas emissions from three years of procurement data, mapping more than 122,000 products and services to establish emission factors. This initial study yielded greater visibility into the greenhouse gas emissions of our supply chain and identified areas with the highest concentrations of emissions (excluding contracts for power generation).
  • We then selected a short-list of five suppliers to complete in-depth case studies to identify detailed opportunities to reduce emissions. Recommendations from these case studies have led to greater collaboration with our key suppliers.