PG&E Corporate Responsibility and Sustainability Report 2021

COVID-19 Response

Supply Chain Sustainability

PG&E aims to improve environmental and ethical business performance by ensuring that sustainability is embedded in our sourcing processes. We drive risk reduction and performance improvements for our suppliers through training and assessments while ensuring these efforts align with PG&E’s broader commitment to serving people, the planet and California’s prosperity.

Our Approach

Our approximately 4,500 suppliers represent industries such as construction, professional services, vegetation management and manufacturing and comprised $9.9 billion dollars of spend in 2020. Additionally, about 64% of our suppliers are located in California. Since 2007, we have striven to reduce the environmental impact of our products and services, and drive supplier environmental performance improvements.

We ask suppliers to provide information on their sustainable performance through requests for proposals (RFP), supplier scorecard reviews and participation in an annual sustainability assessment. This information helps us with supplier selection, our training strategy and in developing tools to help suppliers improve environmental 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 to:

  • 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 suppliers 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 (Code) 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 reviews to check supplier conformance to our Code, identify areas for improved education and training and support supplier corrective actions as needed.

2020 Milestones

In 2020, PG&E’s supply chain sustainability efforts focused on understanding key areas of environmental impact and Code awareness. Highlights included:

  • Completed PG&E supply chain greenhouse gas hotspot assessment. This assessment highlighted that over 60% of PG&E’s Scope 3 emissions for purchased goods and services occur in construction services, vegetation management and manufacturing. Information received from this assessment influenced training and supplier engagement activities in 2021.
  • Launched development of a sustainable infrastructure construction playbook. After identifying key areas of greenhouse gas emissions in our supply chain, PG&E began leading an Alliance initiative with other utilities to develop a utility and supplier playbook to support sustainable infrastructure construction. The playbook will cover material selection, planning and disposal considerations.
  • Targeted attendees for Code training. Throughout the year, we leveraged opportunities to communicate about our Code and the importance of suppliers speaking up about misconduct issues and concerns. During training sessions, we reminded suppliers of the various pathways available for them to speak up and report misconduct issues or concerns. The Code training reached 75% of suppliers, representing the top 80% of spend in 2019 and 2020.
  • Conducted Supplier Code of Conduct conformance reviews. In 2019, we selected more than 130 suppliers to participate in a conformance review—managing supplier risk by evaluating our suppliers’ management systems. In 2020, suppliers without a proper management system in place were given a corrective action plan to help bring them into conformance.

Measuring Progress

In 2020, we requested sustainability assessment responses from 316 suppliers and achieved a 68% response rate, which represented 69% of PG&E’s 2019 spending. This response rate was down slightly from 2019; however, it represented an increase in 19 supplier responses year over year. We had a response rate of 97% from our 35 top-tier suppliers, which represented 29% of PG&E’s 2019 spend.

Suppliers complete a self-assessment that measures their adoption of environmental best practices specific to their industry. This information provides suppliers 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. This information provides insight into how our suppliers compare to suppliers across Alliance members.

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

PG&E Supplier Engagement in Environmental Management Compared to Aggregated Alliance Suppliers
Percentage of Suppliers Tracking Impacts Alliance Suppliers PG&E Top-Tier Suppliers
Measure environmental performance 58% 89%
Setting reduction targets 30% 51%
Public reporting of environmental performance 26% 43%

Additionally, PG&E continues to lead among Alliance peers in the areas of supply chain management engagement and commitment, environmental expectations and standards for suppliers, and supplier performance evaluation.

PG&E Supply Chain Sustainability Benchmarked Performance
  2019 2020
Percentage of attributes outperforming Alliance peers 75% 83%
Percentage of attributes at or better than Alliance peers 100% 100%

In 2020, 66% of PG&E’s top-tier suppliers received a score of three or higher on a five-point scale—up from 62% in 2019, but below our target of 75%. Suppliers can earn two points for assessing their current sustainability performance, two points for setting reduction targets, and one point for publicly reporting environmental performance.

Similar to 2019, many suppliers failed to provide specific information on reduction targets which factored into their ability to meet the goal. We plan to focus future efforts on key supplier industries representing the largest greenhouse gas impact and encouraging those suppliers to measure and reduce greenhouse gas emissions.

Performance Against PG&E’s Supplier Environmental Performance Standard Footnote 1
Percentage of PG&E Top-Tier Suppliers Aligning with Expectations 2015 2020
Measure environmental performance 60% 89%
Setting reduction targets 55% 51%
Public reporting of environmental performance 41% 43%
  • 1. In 2018, PG&E revised the methodology for assessing responses due to the implementation of a new assessment tool. In the table above, data for 2015 was updated to align with the 2018 calculation methodology.1

In 2019, PG&E worked with a third party to complete a conformance review of select suppliers. Selected suppliers submitted documentation demonstrating that they have the appropriate management systems to support their conformance to PG&E’s Supplier Code of Conduct.

In 2020, suppliers who were unable to provide all of the documentation, or did not have the appropriate management systems in place, were issued a corrective action plan, which helped guide the supplier through gaps in their management systems and helped bring them into conformance.

Supplier Conformance Review Results
Results Total Percent
Passed review 50 38%
Corrective action issued 82 62%
Corrective actions closed 77 94%