Supplier
Sustainability

100% Response rate of suppliers participating in our annual supplier performance survey

PG&E’s commitment to sustainability is an increasingly important factor in driving our supplier relationships—influencing how we select, engage with and manage vital business partners. We are taking a collaborative, long-term approach to advance sustainability practices in our supplier network of products and services, enabling PG&E to better serve our customers and support our goal of environmental leadership.

Our Approach

Maintaining Strong Business Practices and Systems

Through our Supplier Sustainability Program, launched in 2007, we encourage responsibility, excellence and innovation among our suppliers and work to advance supply-chain best practices within our industry. Our approach focuses in particular on managing the performance of our “top-tier” suppliers—approximately 80 critical firms that represent about 60 percent of PG&E’s $5 billion annual spend.

Through a structured supplier performance management program, we work with suppliers to develop metrics, review performance and identify goals for continuous improvement. We conduct regular performance evaluations with each top-tier supplier using a scorecard of key performance indicators including safety, product quality and operations, supplier diversity, and environmental performance.

We expect our top-tier suppliers to follow a set of Supplier Environmental Performance Standards. The standards encourage performance improvement, and promote greater transparency and accountability by setting the expectation that all top-tier suppliers:

  1. Implement an Environmental Management System and track greenhouse gas emissions (Scope 1 and 2), energy, water, waste and compliance with environmental requirements.
  2. Set voluntary reduction goals in three of the following areas: greenhouse gas emissions (Scope 1 and 2), energy, water and waste.
  3. Publicly report their performance against the goals.

Partnering with Industry Peers

PG&E continues to partner with industry peers through the Electric Utility Industry Sustainable Supply Chain Alliance, a consortium of utilities that PG&E co-founded in 2008 to advance sustainable business practices among utility industry suppliers. The Alliance provides a forum to benchmark our performance and share best practices in areas from fleet operations to life-cycle assessment. Consistent with the Alliance’s Strategic Plan, PG&E voluntarily reports its supply chain operations greenhouse gas emissions as well as its energy consumption and reduction goals.

Recognizing Innovation

PG&E’s Green Supplier of the Year award recognizes suppliers that demonstrate excellence across a broad spectrum of environmental factors. Commercial real estate firm Cushman & Wakefield earned the award in 2013 for initiatives such as switching to daytime cleaning schedules to reduce PG&E’s energy usage, improving waste diversion and implementing guidelines to help PG&E achieve or maintain LEED certification at a number of facilities.

2013 Milestones

In 2013, we benchmarked our program against other leading utilities and companies to assess our progress and identify areas for improvement. We also completed several key initiatives:

  • Conducted an assessment to guide program strategies. We assessed the environmental and social risks and opportunities across our service and product categories, which is helping us focus our supplier engagement based on the impact, size of spend and other factors.
  • Updated our Supplier Code of Conduct. The revised code aligns with global best practices and better reflects the breadth of environmental, social and governance issues impacting our suppliers. The update also set clear expectations and created more objective measures to help us assess supplier performance.
  • Enhanced our processes to engage suppliers. We updated the sustainability evaluation criteria in our bidding process and also helped a number of suppliers begin to publicly report progress against their goals.
  • Delivered customized internal training. We provided training for employees in PG&E’s sourcing organization on the importance of corporate sustainability and their role in driving improvement among our suppliers.

Measuring Progress

To rate suppliers’ performance relative to our Supplier Environmental Performance Standards, as well as to identify areas for improvement, PG&E uses supplier responses to an annual survey conducted by the Electric Utility Industry Sustainable Supply Chain Alliance. In 2013, PG&E again achieved a 100 percent response rate from surveyed suppliers.

PG&E’s 2013 target was for at least 55 percent of top-tier suppliers to achieve a score of three or higher on a five-point scale. PG&E exceeded that goal, with 59 percent of suppliers meeting the standards.

The following chart shows the progress in reported performance among top-tier suppliers between 2010 and 2013 against our Supplier Environmental Performance Standard.

Additionally, PG&E’s suppliers have demonstrated leadership among Alliance suppliers in tracking environmental projects and setting voluntary reduction goals.

Looking Ahead

We will continue to work with our top-tier suppliers toward mutually beneficial sustainability goals and building even stronger partnerships. In 2014, this will include holding supplier training sessions and beginning to expand our sustainability program to tier-two suppliers. We have also set a goal for 65 percent of our top-tier suppliers to achieve a score of at least three on the five-point scale that measures performance relative to our Supplier Environmental Performance Standards.

Looking ahead, we have initiated a number of projects:

  • Feasibility assessment to explore cables with reduced electrical line losses
  • Research to reduce hazardous chemicals
  • Online compendium of energy efficiency best practices for suppliers
  • Environmentally preferable purchasing specifications for office and facility commodity purchases
  • Assessment of double-stacking transformer units to reduce transportation and related impacts

Our Sustainability Journey

Business

Safety

Customers

Employees

Economic Vitality

Environment

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