PG&E Corporate Responsibility and Sustainability Report 2018

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Supplier Sustainability

Environmental sustainability is an integral factor in how we evaluate and manage our supply chain priorities and processes. It guides how we select, engage with and manage these vital supplier business partners, and it influences our product and service choices and strategies.

Our Approach

Driving Strong Supplier Engagement and Performance

Since 2007, we have supported environmental responsibility, excellence and innovation among our suppliers. We focus on advancing the performance of our top-tier suppliers—approximately 100 firms that represented 56 percent of PG&E’s spend in 2016.

We expect our top-tier suppliers to follow a set of Supplier Environmental Performance Standards (PDF). These 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 use, water use, 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, and
  3. Publicly report their performance against these goals.

We conduct annual evaluations in the form of a scorecard review of select top-tier suppliers on key performance indicators, including environmental performance, safety, product quality and operations, and diversity. In 2017, over 40 suppliers participated in a scorecard review. We also work with suppliers to drive continuous improvement, and we provide training to all suppliers on PG&E’s expectations and systems for improving environmental sustainability management. Additionally, we provide one-on-one coaching and mentoring to suppliers that need additional support.

Advancing Supplier Environmental Sustainability Performance

Since 2007, PG&E has been working to advance environmental sustainability within our supplier network.

  • Piloted energy efficiency projects with select suppliers
  • Co-founded Electric Utility Industry Sustainable Supply Chain Alliance (EUISSCA) Footnote 1a
  • 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
  • Conducted supply chain carbon emissions study with U.C. Berkeley and Climate Earth
  • Issued Supplier Environmental Performance Standards
  • Conducted assessment to guide program strategies
  • Updated Supplier Code of Conduct
  • Enhanced request for proposal (RFP) process to engage suppliers on sustainability issues
  • Enhanced supplier sustainability survey
  • Expanded supplier and internal training
  • Earned Electric Utility Industry Outstanding Achievement Award in Supply Chain Sustainability Footnote 1b
  • Served as Chair of EUISSCA and of Sustainable Purchasing Leadership Council (SPLC) Footnote 1c
  • Rolled out capacity building tool to help suppliers advance in environmental best practices
  • Ranked as most mature program among electric providers for third consecutive year Footnote 1d
  • Earned SPLC Leadership Award for Purchasing Innovation Footnote 1e
  • 1. Pacific Gas and Electric Company 1a, 1b, 1c, 1d, 1e

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, we 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.

Partnering with Industry Peers

PG&E continues to partner with industry peers through the Electric Utility Industry Sustainable Supply Chain Alliance (EUISSCA or the Alliance), a consortium of electric energy providers that Pacific Gas and Electric Company cofounded in 2008 to advance sustainable business practices among industry suppliers. The Alliance provides a forum to benchmark our performance and the performance of our suppliers, and to share best practices in areas spanning fleet operations to equipment end-of-life recycling.

PG&E continues to achieve the top ranking for program maturity among Alliance members.

2017 Milestones

In 2017, we continued to expand the scope of our efforts to engage suppliers and strengthen our internal partnerships. Highlights included:

  • Benchmarked our performance for continuous improvement. We benchmarked as a leader for the third year in a row in EUISSCA’s supply chain environmental sustainability maturity model for electric providers.
  • Expanded internal capacity building and collaboration. We continued an initiative to embed subject matter expertise in, and drive deeper collaboration with, operational teams within PG&E to promote clean and affordable opportunities and outcomes. We also developed a system to communicate environmentally preferable practices to internal partners responsible for purchasing equipment, products and services. It serves as a tool to identify opportunities with the highest combined business and environmental value.
  • Continued to reduce our footprint through product strategies. We initiated or continued 16 environmental initiatives in 2017 aimed at reducing PG&E’s environmental footprint across five purchasing categories.
  • Rolled out supplier capacity building. We rolled out an online resource to deliver environmental best practices to suppliers, measure supplier maturity relative to best practices and industry peers, and help suppliers plan improvements.
  • Improved request for proposal process. To make performance measurement more meaningful, we began using sector-specific, best practice-related peer benchmarking and performance scoring.

Measuring Progress

To rate suppliers’ performance relative to our Supplier Environmental Performance Standards, as well as identify areas for improvement, PG&E uses supplier responses to an annual survey conducted by EUISSCA. In 2017, PG&E achieved a 100 percent response rate from surveyed suppliers for the sixth consecutive year.

PG&E’s 2017 target was for at least 75 percent of top-tier suppliers to achieve a score of three or higher on a five-point scale. PG&E exceeded that goal, with 78 percent of suppliers meeting the standard. We maintained a target of 75 percent for 2018.

The following chart shows the progress in reported performance among top-tier suppliers between 2013 and 2017 against our Supplier Environmental Performance Standards.

Performance Against PG&E’s Supplier Environmental Performance Standard

Percentage of PG&E Top-Tier Suppliers Tracking Impacts
2013 2017
Greenhouse gases 79% 86%
Energy 89% 90%
Water 78% 87%
Waste 84% 90%
Compliance 87% 89%
Reduction Goals Adopted by PG&E’s Top-Tier Suppliers
2013 2017
Greenhouse gases 64% 67%
Energy 67% 75%
Water 57% 71%
Waste 61% 73%

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

PG&E Supplier Engagement in Environmental Management Compared to Aggregated Alliance Suppliers

Percentage of Suppliers Tracking Impacts
Alliance Suppliers PG&E Suppliers
Greenhouse gases 63% 86%
Energy 77% 90%
Water 59% 87%
Waste 64% 90%
Compliance 79% 89%
Percentage of Suppliers with Improvement Plans
Alliance Suppliers PG&E Suppliers
Greenhouse gases 45% 67%
Energy 50% 75%
Water 35% 71%
Waste 46% 73%

As part of our engagement in EUISSCA, we benchmarked our efforts against other member energy providers on the scope of our supply chain environmental sustainability efforts across 12 attributes. These included, among others, policy; supplier requirements; supplier, product and service selection; performance management; and performance reporting and recognition.

PG&E Supply Chain Sustainability Benchmarked Performance
  2016 2017
Percentage of attributes outperforming EUISSCA peers 58% 75%
Percentage of attributes at or better than EUISSCA peers 83% 100%

Looking Ahead

We continue to expand our focus on capacity building and accelerating the adoption of environmental best practices among internal partners and suppliers. This will include expanding internal stewardship of supply chain environmental sustainability initiatives, onboarding suppliers with an online tool for environmental capacity building, and using an environmental knowledge management system we developed in collaboration with the Alliance. Another major focus area is establishing broader supplier performance reviews relative to our Supplier Code of Conduct.