PG&E Corporate Responsibility and Sustainability Report 2017

Supplier Sustainability

PG&E’s commitment to sustainability shapes how we assess and manage our supply chain priorities and processes. It guides how we select, engage with and manage these vital business partners, and it influences our product and service choices and strategies, which support our goal of environmental leadership and our mission to deliver safe, affordable, reliable and clean energy.

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 critical firms that represented about 60 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 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 we provide training to all suppliers on PG&E’s expectations and systems for improving sustainability management. Additionally, we provide one-on-one coaching and mentoring to suppliers that need additional support.

Advancing Supplier Sustainability Performance

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

  • Piloted energy efficiency projects with select suppliers
  • Co-founded Electric Utility Industry Sustainable Supply Chain Alliance (EUISSCA)
  • 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 RFP process to engage suppliers
  • Enhanced supplier sustainability survey
  • Expanded supplier and internal training
  • Earned Electric Utility Industry Outstanding Achievement Award in Supply Chain Sustainability
  • Served as Chair of EUISSCA and Sustainable Purchasing Leadership Council

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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 energy providers that PG&E 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.

In 2015, Pacific Gas and Electric Company earned the EUISSCA Outstanding Achievement Award for our “commitment to a sustainable supply chain and active engagement in and support of EUISSCA.” This was the first award for supply chain sustainability among national energy providers.

2016 Milestones

In 2016, 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. Beginning in 2015, EUISSCA began benchmarking members against its supply chain environmental sustainability maturity model for electric providers. PG&E benchmarked as a leader for the second year in a row.
  • Deepened focus on internal capacity building and collaboration. Launched an initiative to embed subject matter expertise in, and drive deeper collaboration with, operational teams within PG&E to drive more clean and affordable opportunities and outcomes.
  • Expanded supplier capacity building. Continued to develop an online resource as a way to deliver environmental best practices to suppliers. We expanded the resource beyond energy efficiency to include waste management and minimization, water efficiency, greener chemicals and procurement of environmentally preferable products.

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 2016, PG&E achieved a 100 percent response rate from surveyed suppliers for the fifth consecutive year.

PG&E’s 2016 target was for at least 70 percent of top-tier suppliers to achieve a score of three or higher on a five-point scale. PG&E exceeded that goal, with 74 percent of suppliers meeting the standard. To maintain this progress, PG&E set a goal of 75 percent for 2017.

The following chart shows the progress in reported performance among top-tier suppliers between 2012 and 2016 against our Supplier Environmental Performance Standard.

Performance Against PG&E’s Supplier Environmental Performance Standard

Percentage of PG&E Top-Tier Suppliers Tracking Impacts
2012 2016
Greenhouse gases 73% 84%
Energy 71% 87%
Water 51% 88%
Waste 56% 88%
Compliance 78% 91%
Percentage of PG&E Top-Tier Suppliers with Reduction Goals
2012 2016
Greenhouse gases 62% 68%
Energy 82% 70%
Water 63% 66%
Waste 77% 65%

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

Percentage of PG&E Suppliers Tracking Impacts
Alliance Suppliers PG&E Suppliers
Greenhouse gases 45% 58%
Energy 50% 65%
Water 40% 55%
Waste 44% 58%
Compliance 48% 64%
Percentage of PG&E Suppliers with Improvement Plans
Alliance Suppliers PG&E Suppliers
Greenhouse gases 35% 48%
Energy 36% 49%
Water 27% 39%
Waste 30% 42%

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

PG&E Supply Chain Sustainability Benchmarked Performance
PG&E Supply Chain Sustainability Benchmarked Performance 2015 2016 Footnote 1
Outperforming peers 22% 58%
At or better than peers 55% 83%
  • 1. Two metrics were added in 2016, bringing the total to 12.

Looking Ahead

We will continue our focus on capacity building among internal partners and suppliers in 2017, with two primary objectives. First, we will continue our work to create online, sector-specific best practice resources. Second, we will look to make performance measurement more meaningful by replacing a one-size-fits-all request for proposal and survey questionnaire with sector-specific, best practice-related peer benchmarking and performance scoring.