Corporate Responsibility and Sustainability Report 2020

Our Approach

PG&E formalized a supply chain environmental sustainability program in 2007 by focusing on improving supplier performance and reducing environmental impact via product and service selections.

We ask suppliers to provide information on their sustainable performance in several ways, through requests for proposals, supplier scorecard reviews and participation in an annual sustainability survey. We use the information from these requests in selecting suppliers and to guide our strategies to educate suppliers and improve performance. In addition, we seek to identify product and service strategies that measurably improve our environmental profile, using the “reduce-reuse-recycle” framework to guide our plans:

• Reduce resource consumption through our purchasing choices. Where there is no feasible option to reduce consumption, we seek to 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.

Our Supplier Code of Conduct sets forth the principles and ethical business standards of conduct that we expect suppliers to meet during the provision of goods and services. As business needs have evolved, so has the code and our efforts to engage suppliers in understanding their obligations to meet PG&E’s expectations.

We highlight the code during the RFP process and reference it in our contracts where suppliers acknowledge reading and complying with the code. It is also a focus of supplier training. We perform periodic assessments to check supplier conformance to our code, identify areas for improved education and training, and support supplier corrective actions, as needed.

2019 Milestones

In 2019, PG&E’s supply chain sustainability efforts focused on increasing supplier engagement and education. Highlights included:

• Benchmarked our supply chain environmental performance for continuous improvement. For the fifth year in a row, we benchmarked as a leader among electric providers in the Alliance’s Supply Chain Environmental Management Framework.
• Enhanced survey tool to gather supplier environmental data and metrics. PG&E led a multi-utility effort to enhance the online survey tool, The Sustainability Project, to capture supplier environmental performance results in the areas of waste, water, energy and greenhouse gas emissions. Through the tool, we asked suppliers to share their data, metrics and improvement targets and used the reported greenhouse gas data to begin assessing Scope 3 emissions.
• Updated workshops focused on environmental sustainability and supplier code of conduct. We expanded our environmental sustainability trainings to include three in-person workshops: one that targets diverse businesses called Diverse Suppliers Go Green; one that educates suppliers on how to meet our expectations to measure, reduce and publicly report environmental performance; and one that teaches suppliers to track and report greenhouse gas emissions. Based on supplier feedback, we also updated our in-person supplier code of conduct trainings to provide a full understanding of the code and review the importance of risk assessments and robust management systems in maintaining a code that meets customer expectations.
• Encouraged supplier speak up. Throughout the year, we leveraged opportunities to communicate about our Supplier Code of Conduct and the importance of suppliers speaking up about misconduct issues and concerns. For example, during training sessions, we reminded suppliers of the various pathways available for them to speak up and report misconduct issues or concerns.

Measuring Progress

In 2019, we requested sustainability survey responses from 268 suppliers and achieved a 73 percent response rate, which represented 68 percent of PG&E’s spending.

Through the survey tool, suppliers complete a self-assessment that measures their adoption of environmental best practices specific to their industry. This information provides the supplier with detailed benchmarking that can be used to prioritize strategies to reduce their environmental impact. In addition, suppliers can provide their most recent environmental performance data for energy and water use, as well as greenhouse gas emissions and waste generation. PG&E gains insight into how our suppliers compare to all suppliers answering the survey for other Alliance members.

Annually, we benchmark our supply chain environmental sustainability performance against the other Alliance members. PG&E’s suppliers have demonstrated leadership in tracking environmental impacts and setting voluntary reduction goals compared to all suppliers surveyed by Alliance members.

Additionally, PG&E’s Supply Chain Environmental Sustainability Program continued to lead among Alliance peers across different attributes. For example, some of the attributes benchmarked include supply chain management engagement and commitment, environmental expectations and standards for suppliers, and supplier performance evaluation.

In 2019, 62 percent of PG&E’s top-tier suppliers received a score of three or higher on a five-point scale, falling short of our target of 75 percent. Suppliers earn two points for assessing their current performance, two points for setting reduction targets, and one point for publicly reporting environmental performance. The survey was enhanced in 2019 to capture reduction target data. Suppliers not providing specific information on reduction targets were the primary driver of not meeting the goal. In response, PG&E is increasing efforts to educate suppliers on setting and sharing environmental reduction targets.

• 1. In 2018, PG&E revised the methodology for assessing survey responses due to the implementation of a new survey tool. In the table above, data for 2014 was updated to align with the 2018 calculation methodology.¹