Procter & Gamble’s Diversity Reporting Lacks Full Accounting

As You Sow, the advocacy group that calls on all US citizens to hold the police, government, and institutions accountable, has called out global consumer products giant Procter & Gamble’s diversity reporting, citing its refusal to divulge methods used to assess the effectiveness of its diversity and inclusion programs. As a result, a shareholder resolution on diversity disclosure is headed for a showdown at the October 13 annual meeting.

A megacorporation with home products for laundry, living rooms, bedrooms, kitchens, nurseries, and bathrooms, Procter & Gamble (P&G) announced this summer that it is aiming for 100% recyclable packaging by 2030. If the $340 billion company can’t be transparent on its diversity hiring and retention practices, what hope is there for its sustainability goals?

Image courtesy P&G

In a September 2020 press release, As You Sow announced that it has been unable to reach an agreement with Procter & Gamble on how it assesses the effectiveness of its diversity and inclusion programs. This sits in contrast to other companies where As You Sow has made similar requests, including Gilead, JPMorgan Chase, Mastercard, MetLife, Morgan Stanley, and Oracle, which have all agreed to meaningful increases in their diversity reporting.

Specifically, investors are asking Procter & Gamble for goals, metrics, and trends related to its promotion, recruitment, and retention of protected classes of employees. Shareholders want Procter & Gamble to show that its internal practices match its extensive advertising campaign focused on race relations in America.

Investors are concerned that Procter & Gamble risks being seen as exploitative if it continues to advertise themes of gender and race without providing detailed data on its own internal diversity. The company currently provides very limited data around the diversity of its employees and does not provide information linked to promotion, recruitment, or retention rates of these employees.

In an exclusive comment for CleanTechnica, Meredith Benton, workplace equity program manager for As You Sow and principal at the consultancy Whistle Stop Capital, states:

“P&G has put extensive time and resources into branded advertisements focused on racial injustice. It estimates that diverse consumers could bring up to $1 billion in extra sales to the company. Given this, a concerning disconnect exists in its lack of transparency on internal race and gender relations. In contrast to other companies, P&G has declined to release meaningful, standardized diversity data. Investors are requesting these metrics in order to assess the effectiveness of diversity, equity, and inclusion programs.“

What is Procter & Gamble’s Diversity Reporting Like?

As part of the company’s $7.33 billion annual advertising budget, Procter & Gamble has built a race-focused campaign releasing several short films.

• “The Talk” shows the unique conversations Black parents need to have with their children.
• “The Look” depicts the subtle ways in which a Black man experiences bias throughout the day.
• “Circumstances” details the higher death rate of African Americans from COVID-19.
• “The Choice” asks how Black Americans should respond to incidents indicating their lives do not matter.

“How do words become actions?” poses Andrew Behar, As You Sow CEO. “We engage many companies that say the right words about their diversity programs; however, we do not know what actions are actually being taken. In today’s climate of racial justice awareness, it’s time for P&G to show the world that they are leading by example.”

Gaps in the Procter & Gamble Diversity Reporting

On its website, P&G claims, “We know the importance of diversity in the workplace. That’s why we attract, hire, and keep diverse people on our team so that we can better understand our world and our consumers. To keep that talent here, we’re creating opportunities and investing in plans for hiring, retaining, and developing them—to the executive level.”

However, P&G provides no quantitative data or meaningful statistics that allow investors to determine the effectiveness of its human capital management as it relates to workplace diversity. As You Sow describes how stakeholders are concerned that P&G’s statements are “corporate puffery, language described by the United States Federal Trade Commission as marketing exaggerations intended to ‘puff up’ products and not able to be relied upon by consumers and investors.”

Shareholders are requesting that P&G publish annually a report assessing the company’s diversity and inclusion efforts at reasonable expense and excluding proprietary information. They say, at a minimum, the report should include the process for Procter & Gamble’s diversity reporting, including assessing the effectiveness of its diversity and inclusion programs and the board’s assessment of program effectiveness.

Image retrieved from nrel.gov

P&G’s Record on Sustainability

The 3-pillar conception of social, economic, and environmental sustainability, commonly represented by 3 intersecting circles with overall sustainability at the center, has become ubiquitous. The recurring theme of these pillars has a tendency to prioritize short-term gains over serious considerations of ecological impacts, either to biodiversity or ecosystem services.  In today’s growing economy, overconsumption and overproduction have accelerated environmental deterioration worldwide.

Among solutions for reducing loss and waste include awareness raising, business process redesign, integrated supply chain models, redistribution, recovery, and disposal. Procter & Gamble announced in 2018 that it had already achieved many of the environmental and sustainability goals for 2020 and would continue to work toward those it had not already achieved. To what degree has P%G met all 3 pillars of sustainability?

The company set new 2030 Ambition Goals:

• Responsible Packaging: P&G’s 20 leadership brands including Always, Ariel, Dawn, Fairy, Febreze, Head & Shoulders, Pantene, Pampers, and Tide will use packaging that is 100% recyclable or reusable.
• Electricity: Purchase enough renewable electricity to power 100% of its plants. It’s important to note that this is just electricity (versus energy) as many of P&G’s plants utilize boilers or turbines that run on natural gas. Natural gas has been essential in operations like papermaking where it makes Charmin and Bounty, which rely heavily on natural gas boilers or cogeneration turbines to generate steam to dry the paper.
• GHG Reduction: P&G manufacturing sites will cut greenhouse gas emissions in half. Setting a GHG reduction target is a solid step towards addressing the more comprehensive picture of a facility’s carbon footprint.
• Water: Source at least 5 billion liters of water from circular sources. Its 2020 goal was to reduce freshwater use by 20% and against that, it has already achieved a 27% reduction in water usage per unit of production. The new goal is not as clear, as it is not compared to anything and the concept of ‘circular water’ is not defined without digging through several thick reports. The concept of circular sourcing of water is a blending of the circular nature of water and how it moves around the earth and the emerging concept of the circular economy.
• Society: Create partnerships that stem the flow of plastic into the world’s ocean, protect and enhance forests, expand recycling solutions for absorbent hygiene products, and protect water in priority basins around the world.

If Procter & Gamble’s diversity reporting is not fully disclosed, then it stands to reason that the company’s sustainability goals may also be less than forthcoming. Sustainability goals cannot be achieved without improved knowledge on feedback between social and ecological systems, effectiveness of management systems, and the influence of corporate practices on the social distribution of ecosystem services and products.