Supplier Sustainability
PG&E’s commitment to sustainability influences how we assess and manage our supply chain priorities and processes. It is an important factor in our product and service choices and in the selection and management of suppliers. Our initiative to improve supply chain environmental sustainability supports our goal of environmental leadership and our mission to deliver safe, reliable, affordable and clean energy.
Our Approach
Driving Strong Supplier Engagement and Performance
Since 2007, we have encouraged environmental responsibility, excellence and innovation among our suppliers. Our approach focuses on advancing the performance of our top-tier suppliers—approximately 100 critical firms that represented about 60 percent of PG&E’s spend in 2015.
We expect our top-tier suppliers to follow a set of Supplier Environmental Performance Standards. These standards encourage performance improvement and promote greater transparency and accountability by setting the expectation that all top-tier suppliers:
- Implement an Environmental Management System and track greenhouse gas emissions (Scope 1 and 2), energy use, water use, waste and compliance with environmental requirements.
- Set voluntary reduction goals in three of the following areas: greenhouse gas emissions (Scope 1 and 2), energy, water and waste.
- Publicly report their performance against these goals.
We conduct annual evaluations of each top-tier supplier on key performance indicators, including safety, product quality and operations, diversity and environmental performance. We work with suppliers to drive continuous improvement and provide training to all suppliers on PG&E’s expectations and systems for improving sustainability management. And we provide one-on-one coaching and mentoring to suppliers that can benefit from support.
Advancing Supplier Sustainability Performance
Since 2007, PG&E has been working to advance sustainability within our supplier network.
2007–2008
- Piloted energy efficiency projects with select suppliers
- Co-founded Electric Utility Industry Sustainable Supply Chain Alliance
2009–2010
- Began survey to assess supplier environmental performance
- Added green evaluation criteria to request-for-proposal (RFP) process
- Added environmental metric to supplier scorecards
- Created Green Supplier of the Year Award
- Launched Diverse Suppliers Go Green program
2011–2012
- Conducted supply chain carbon emissions study with UC Berkeley and Climate Earth
- Issued Supplier Environmental Performance Standards
2013
- Conducted assessment to guide program strategies
- Updated Supplier Code of Conduct
- Enhanced RFP process to engage suppliers
2014–2015
- Enhanced supplier sustainability survey
- Expanded supplier and internal training
- Earned Electric Utility Industry Outstanding Achievement Award in Supply Chain Sustainability
Reducing Our Environmental Footprint through Product Strategies
PG&E works to identify product choices and procurement strategies that measurably improve our environmental profile. We use the “reduce-reuse-recycle” framework to guide our strategies and plans:
- Reduce resource consumption through our product choices. Where there is no feasible option to reduce consumption, buy products and equipment with a lower environmental footprint.
- Reuse products and equipment when they can be repaired or refurbished to meet required performance standards.
- Recycle products and equipment with licensed vendors if they cannot be refurbished for reuse.
When recycling options are not available, we dispose of products in compliance with environmental requirements.
Driving excellence in our remediation projects
Working cooperatively with the California Department of Toxic Substances Control, PG&E led the development of a guidance document to improve how PG&E and its contractors—and others—can manage the sustainability aspects of environmental remediation projects. Cumulative results achieved by PG&E and its contractors since 2010 include:
- Greenhouse gas reductions: 68,000 metric tons
- Energy savings from use of renewable energy: 54,000 kWh
- Offsite waste reduction: 130,000 tons recycled
- Reductions in liquid investigation-derived waste: 23 million gallons
- Reductions in soil investigation-derived waste: 148,000 tons
Partnering with Industry Peers
PG&E continues to partner with industry peers through the Electric Utility Industry Sustainable Supply Chain Alliance, a consortium that PG&E cofounded in 2008 to advance sustainable business practices among suppliers. The Alliance provides a forum to benchmark performance and share best practices in areas spanning from fleet operations to equipment end-of-life recycling.
In 2015, PG&E won the group’s Outstanding Achievement Award for our commitment to a sustainable supply chain and active engagement in and support of the Alliance. This was the first award for supply chain sustainability among our industry at the national level.
2015 Milestones
Recognizing innovation
PG&E’s Responsible Supplier of the Year Award recognizes suppliers that demonstrate excellence across a broad spectrum of environmental and supplier diversity factors. Altec, which has been a key partner for PG&E in fleet innovation and a leader in supply chain responsibility, received the award in 2015. Altec’s plug-in battery-powered system for trouble trucks has saved approximately:
- 500,000 gallons of diesel fuel
- 5,000 metric tons of carbon dioxide
- $2 million through reduced fuel costs
In 2015, we continued to expand the scope of our efforts to engage more suppliers and strengthen our internal partnerships. We completed several key initiatives, including:
- Automated our supplier sustainability scorecard. Working with industry peers, PG&E helped lead the development of automated supplier sustainability scorecards, making it easier to integrate sustainability into supplier performance reviews.
- Deepened our focus on supporting suppliers’ ability to grow their businesses. We piloted an online resource with energy efficiency best practices as a way to deliver technical assistance to suppliers. We also launched a similar project for sustainable construction best practices.
- Recognized supply chain sustainability at employee awards event. At PG&E’s annual Supply Chain Responsibility Achievement Awards, we recognized outstanding performance by individuals and teams in supply chain sustainability.
- Launched the first sustainable supplier matchmaking event at the Sustainable Procurement Leadership Council’s national conference.
Measuring Progress
PG&E annually rates supplier environmental performance against our Environmental Performance Standards and identifies areas for improvement by evaluating supplier responses to a survey conducted by the Electric Utility Industry Sustainable Supply Chain Alliance (Alliance). In 2015, PG&E achieved a 100 percent response rate from surveyed suppliers for the fourth consecutive year.
PG&E’s 2015 target was to have at least 65 percent of top-tier suppliers achieve a score of three or higher on a five-point scale. Our results exceeded that goal, with 74 percent of suppliers meeting the standard. In light of those gains, PG&E set a goal of 70 percent for 2016.
The following chart shows the progress in reported performance among top-tier suppliers between 2011 and 2015 against our Supplier Environmental Performance Standard.
Performance Against PG&E’s Supplier Environmental Performance Standard
| 2011 | 2015 | |
|---|---|---|
| Greenhouse gases | 32% | 78% |
| Energy | 52% | 83% |
| Water | 40% | 69% |
| Waste | 45% | 72% |
| Compliance | 44% | 81% |
| 2011 | 2015 | |
|---|---|---|
| Greenhouse gases | 29% | 64% |
| Energy | 50% | 64% |
| Water | 36% | 55% |
| Waste | 44% | 57% |
Additionally, PG&E’s suppliers that are Alliance members have demonstrated leadership among Alliance suppliers in tracking environmental impacts and setting voluntary reduction goals.
Supplier Engagement in Environmental Management Compared to Alliance Suppliers
| Alliance Suppliers | PG&E | |
|---|---|---|
| Greenhouse gases | 60% | 78% |
| Energy | 62% | 83% |
| Water | 49% | 69% |
| Waste | 51% | 72% |
| Compliance | 56% | 81% |
| Alliance Suppliers | PG&E | |
|---|---|---|
| Greenhouse gases | 49% | 64% |
| Energy | 47% | 64% |
| Water | 39% | 55% |
| Waste | 41% | 57% |
Looking Ahead
We will continue to work with our suppliers, internal partners and industry peers to identify actionable opportunities to improve the environmental sustainability of our supply chain, accelerate adoption of best practices and achieve mutually beneficial sustainability goals. In the near term, our continuous improvement efforts will focus on expanding the engagement and training of employers and suppliers and creating online, sector-specific best-practice resources that will improve capacity building and make performance measurement more meaningful.