Corporate Responsibility and Sustainability Report

Our Approach

Supplier diversity is a core part of our business strategy. We set annual goals to hold ourselves accountable for improved performance. We are also working to further integrate these efforts with our ongoing commitment to advance safety, reduce our environmental impact, ensure product quality and performance, adhere to a high standard of compliance and ethics, and manage costs.

Championing Diverse Suppliers

We promote supplier diversity through a broad network of Supplier Diversity Champions, a group of employees responsible for expanding supplier diversity within our lines of business. Through regular meetings with senior leadership, these employees set diversity goals, develop strategies, share best practices and monitor progress toward continuous improvement of our supplier diversity results.

PG&E also actively engages with organizations at the local, state and federal levels to promote supplier diversity, spur innovation and increase competition. Last year, PG&E participated in more than 100 outreach events to meet and promote diverse suppliers, introduce prime suppliers to the diverse business enterprise (DBE) community and learn and share best practices with peer companies.

Encouraging Prime Suppliers to Participate in Supplier Diversity

PG&E encourages prime suppliers to subcontract with diverse suppliers and establish business-solution partnerships. We ask them to develop robust supplier diversity programs of their own, which include setting subcontractor diversity goals, tracking progress through monthly reports and participating in periodic audits. PG&E executives also work closely with prime suppliers to drive diversity goals and foster mentoring relationships with diverse suppliers. Results show that these efforts are working. In 2013, our prime suppliers spent $675.5 million on diverse subcontractors, a 10.6 percent increase over 2012.

Strengthen Suppliers and Relationships

PG&E offers a broad range of technical assistance and training initiatives, many in collaboration with community-based organizations. These initiatives help diverse suppliers build their capacity and include scholarships from accredited programs like the UCLA Management Development for Entrepreneurs Program and the University of Washington Minority Business Executive Program to help diverse suppliers expand their business capabilities.

PG&E also is focused on helping diverse suppliers embrace emerging technologies and stay competitive in a changing supply chain. Doing so serves as a catalyst for the growth and expansion of emerging and diverse firms.

PG&E’s technical assistance program includes signature training offerings for diverse suppliers:

• Diverse Suppliers Are Safe focuses on how to develop and strengthen a robust safety program within companies.
• Diverse Suppliers Go Green educates participants on how to establish a sustainability program, reduce their environmental footprint and identify green business opportunities.
• Diverse Suppliers Go Global highlights the advantages of participating in global supply chains and markets.

In addition, our Supplier Development Program provides executive mentorship and cross-functional team support to help diverse suppliers identify development opportunities.

2013 Milestones

In 2013, we reached new heights by spending $2.3 billion—or 42.1 percent of our total procurement—with diverse suppliers, exceeding our goal of 38.5 percent and representing an increase of $265.2 million, or nearly 13 percent, over 2012.

Highlights of our efforts in 2013 included:

• Further embedded supplier diversity within our core business. Our employees looked across the business and the full range of product and service categories to develop new opportunities for diverse suppliers. For example, we added our first diverse supplier of electricity last year. Additionally, our Gas Operations team achieved a 35.3 percent DBE spend in 2013, introducing more than 40 new diverse suppliers to the line of business and awarding contracts to a number of these companies.
• Integrated Lesbian, Gay, Bisexual, Transgender (LGBT) firms into our program. We partnered in 2013 with the Golden Gate Business Association, America’s first LGBT chamber of commerce, to host the first supplier diversity utility business development workshop for LGBT business owners.
• Continued expanding outreach to military veterans. We hosted the first “Boots to Business” workshop, designed to help veteran and service-disabled veteran-owned businesses succeed. Held in partnership with the U.S. Small Business Administration, the event was part of a multi-phase effort to introduce transitioning military service members to the fundamentals of small business ownership.

Measuring Progress

Over the last five years, PG&E has significantly increased diverse spending. Our total spend grew $1.9 billion, or more than 50 percent, while our diverse spend increased $1.3 billion, or 172 percent.

In 2013, PG&E set new all-time highs in these DBE categories:

• Minority business enterprises: $1.5 billion or 27.4 percent of total spend
• Woman business enterprises: $686.1 million or 12.5 percent of total spend
• Service-disabled veteran-owned business enterprises: $125.5 million or 2.3 percent of total spend

This record spending continues an 11-year trend of consecutive year-over-year growth in diverse business spending and demonstrates our long-term commitment, which has helped earn PG&E top rankings for diversity practices by DiversityInc for six consecutive years as well as other recent national honors.

Supplier Diversity and Small Business Results
Category	2011 (%)	2012 (%)	2013 (%)
Minority Men	16.7	16.7	19.8
Minority Women	6.4	7.5	7.6
Minority Business Enterprise	23.1	24.2	27.4
Women Business Enterprise (WBE)	11.7	12.5	12.5
Subtotal Women, Minority Business Enterprise (WMBE)	34.7	36.7	39.8
Service-Disabled-Veteran Business Enterprise (DVBE)	1.8	2.2	2.3
Total DBE	36.6	38.8	42.1
Utility Target	34.0	37.3	38.5
Non-Diverse Small Business	6.0	5.3	7.1
Grand Total	42.6	44.1	49.2
	2011 ($, millions)	2012 ($, millions)	2013 ($, millions)
Supplier Diversity Spend	1,611	2,052	2,317
Non-Diverse Small Business Enterprise Spend	264	280	393
Total Diverse and Small Business Spend	1,875	2,332	2,710

Looking Ahead

We look forward to continuing to identify opportunities for diverse businesses, allowing them to grow and hire while strengthening California’s economy.

Near-term areas of focus include:

• Expanding our engagement with prime suppliers through more training and communication about diverse supplier subcontracting, partnering and mentoring
• Broadening the role of the Supplier Diversity Champions through education and engagement
• Offering technical assistance and capacity-building initiatives to support the development of diverse suppliers in such growth areas as gas pipeline safety, energy procurement and new technology
• Continuing to identify innovative ways to incorporate supplier diversity into our business areas