Acquisition activity was not material in 2016 or 2015.
P&G’s Global Business Continuity Program ensures that all P&G businesses and sites evaluate their risk profile and exposure to catastrophic events that could significantly interrupt business operations. Site and business unit leaders then develop mitigation plans to reduce the vulnerability to a catastrophic event and contingency plans to minimize business interruption if a disabling event should occur. Crisis Management team structures are defined to manage business recovery using the predefined contingency plans. Tests are conducted annually to ensure that the contingency plans are sufficient and up-to-date.
Business Continuity Plans are audited regularly, and a report of the Business Continuity Program’s status is made periodically to the Audit Committee.
P&G continues to focus on diversity as a global strategy and expects its workforce to become increasingly diverse, enabling us to serve more of the world’s consumers Global data on enrollment by gender is shown in the following table:
The percentages of minority and female employees in the U.S. are shown in the following table:
P&G strongly believes that ending animal testing is the right thing to do. We do not test our products or ingredients on animals anywhere in the world unless required by law. We are working hard to make it obsolete. Therefore, we’ve developed over 50 alternative, non-animal testing methods, and have invested more than $380 million in finding alternatives and getting them accepted by regulators around the world.
We are passionate about continuing our progress in alternatives to research involving animals so that animal testing can be eliminated. Highlights of our progress include:
P&G scientists invented the first ever non-animal alternative to skin allergy tests to be officially adopted by the OECD in 2015. Skin allergy is a complex process and an important safety question for almost all ingredients. As a result, this test, known as DPRA (Direct Peptide Reactivity Assay), marks a milestone in overcoming the need for animal testing. The DPRA was widely applauded by the international scientific and animal welfare community and won a prestigious animal welfare prize in 2015.
For additional information on the non-animal alternative to skin allergy tests, please go to: http://us.pg.com/sustainability/social-responsibility/policies-practices/animal-welfare-alternatives/skin-allergy-testing
For details of our policy and practices, please go to:
At The Procter & Gamble Company, we take great pride in our long history of doing what’s right. If you analyze what’s made our Company successful over the years, you may focus on our brands, our marketing strategies, our organization design and our ability to innovate.
But if you really want to get at what drives our Company’s success, the place to look is our people. Our people are deeply committed to our Purpose, Values and Principles. It is this commitment to doing what’s right that unites us.
This commitment to doing what’s right is embodied in our financial reporting. High quality financial reporting is our responsibility, one we execute with integrity and within both the letter and spirit of the law. High-quality financial reporting is characterized by accuracy, objectivity and transparency. Management is responsible for maintaining an effective system of internal controls over financial reporting to deliver those characteristics in all material respects. The Board of Directors, through its Audit Committee, provides oversight. We have engaged Deloitte & Touche LLP to audit our Consolidated Financial Statements, on which they have issued an unqualified opinion.
P&G has approximately 130 manufacturing facilities in more than 35 countries. These facilities handle the majority of P&G’s production.
Our primary focus is delighting consumers. To ensure that our products deliver superior value and quality, our manufacturing facilities must provide the most efficient option for the Company. We conduct regular reviews to ensure that our facilities are highly competitive, and this process includes benchmarking versus third-party manufacturers. P&G has regional facilities which provide the best value equation to support our approximately 5 billion consumers around the world.
When it makes sense for the business and it is the most competitive solution, we may decide to use contract manufacturers. For example, when entering a new market, introducing a new product or accessing a technology or process we don’t currently have, we may rely on contract manufacturing. In these instances, we are usually manufacturing in the region and for the region, as almost all of our third-party manufacturers are regional. In addition, many of our products simply do not lend themselves to shipping long distances. The exception to this would be where unique manufacturing capability exists in one region and we are able to economically ship across regions.
The percentage of P&G production supplied by contract manufacturers varies according to the needs of the business. and the ability of P&G facilities to compete and win production based on providing the best value. Currently, our plants do this extremely well, and we rely on third party manufacturers for only 10% to 15% of our total manufacturing volume.
~130 manufacturing sites in more than 35 countries
Countries where P&G has manufacturing operations include:
United Arab Emirates
Proceeds from asset sales in 2016 contributed $432 million in cash, primarily from plant asset sales and other minor brand divestitures. Proceeds from asset sales contributed $4.5 billion in cash in 2015 primarily from the sale of our Pet Care business, the sale of our Chinese battery venture, and other minor brand divestitures.
Your Trust—Our Most Important Ingredient
Since Procter & Gamble was founded more than 175 years ago, ensuring the safety of people who use our products, and the safety of the world we all live in, has been at the heart of what we do. This commitment to safety is both our heritage and our future, so we have ~700 in-house experts devoted globally to human and environmental safety and regulatory compliance of all our products and ingredients.
Being safe, feeling safe, and ingredient choices
Before we market a new product, we ensure its safety through a four-step, science-based process. We use the same process as regulatory agencies around the world, like US FDA, EPA, the EU, the WHO, and others. Simply put, that is being safe.
But feeling safe can be a different matter altogether. You may be curious about the actual ingredients we choose, so we are sharing more information on both what’s in our products and what’s not in our products, based on common questions you’ve asked. Our overall goal is to provide ingredient information to help make you make informed choices about the products you use every day. So we have added more information online over the past few years, including our decisions to exit ingredients such as triclosan and phthalates. One important area where we receive questions is product fragrances.
Common Ingredient Questions—Product Fragrances
In 2012, we posted online the list of ingredients we use to design our unique product fragrances, but we found that people are also interested in what we do not use in our fragrances. In 2016 we updated our fragrance information online to include two lists—a list of over 140 ingredients we do not use, and a list of the many ingredients we do use to design our product scents. P&G abides by the highest fragrance safety standards of regulatory authorities globally. On top of that, we conduct our own safety assessment for all of our product fragrances. This list of ingredients we do not use has been part of our fragrance evaluation process for many years, and we have now made it available to the public as well. We will continue to update this information regularly, and follow up with those who may have specific questions about a fragrance ingredient in a particular product. Our goal is to help give people peace of mind as they make informed choices about the products they use and enjoy every day from P&G.
Looking for more ingredient information? You can learn more about other ingredients at http://us.pg.com/our-brands/product-safety/ingredient-safety
Our Sustainability Report covers environmental data on sites where we have operational control and the facility falls within the typical boundary of our GHG Inventory Management Plan. HS&E data covers approximately 122 manufacturing sites, 17 offices and technical centers, and 36 distribution facilities. Human Resources data covers all P&G facilities, unless otherwise stated. Financial data covers The Procter & Gamble Company and its controlled subsidiaries.
Health and Safety Policy
P&G is committed to having safe and healthy operations around the world. The goals are to protect the lives and health of its employees and the communities surrounding its operations, as well as to protect its assets, ensure business continuity, and engender public trust.
To accomplish this, P&G will:
Worldwide Health, Safety & Environment Organization
Health, Safety & Environment (HS&E) is a global community of resources responsible for ensuring that all sites worldwide – including innovation centers, distribution centers, acquisitions and established plants – are operated safely and legally; that process hazards are minimized or eliminated; that health risks are identified and managed or eliminated; and that waste from sites is reduced as much as possible. Several thousand employees spend all or a portion of their time on HS&E management.
There are three major components to a site’s HS&E organization: Environmental, Technical Safety and Industrial Hygiene & Personnel Safety. In addition each site typically has both a Fire Protection Systems Leader and an overall HS&E Leader. The HS&E site organization also closely partners with the site Health Service, or Medical leader. P&G uses a phased, detailed Risk Assessment process to evaluate the safety of processes and initiatives being introduced at its own manufacturing operations as well as at contractor manufacturing operations. The Risk Assessment process is designed to enable high-speed innovation.
Industrial Health and Safety
The health and safety of P&G employees are paramount in the principles of the Company:
The Company tracks and reports two metrics for worker safety: total incident rate (TIR) and total lost workday case rate (LWDC). TIR includes all cases that result in loss of consciousness, lost workdays, restriction of work or motion, medical transfer to another job or medical treatment beyond first aid. LWDC includes all cases that involve days away from work or days of restricted activity beyond the day of injury or onset of illness. The TIR target for sites is to be below 0.5 cases per year per 100 employees. To achieve such rates, programs to address employee safety, such as safe behaviors, ergonomics and confined space entry, have been implemented. No target has been set for LWDC. Instead, incidents that potentially could lead to lost workdays are managed. These charts summarizes performance over the last three years.
Top five sites with the Highest Number of Employee Safe Working Hours
P&G’s internal HS&E audit programs are designed to ensure compliance with national, state and local regulatory requirements as well as corporate standards and procedures. Audit findings are reported promptly to the business management teams, which must address and correct all issues in a timely manner. P&G’s audit programs apply to all plants, innovation centers, and distribution centers worldwide. The fundamental philosophy is to use standards worldwide, implemented by trained professionals at facilities and audited each year using a consistent, comprehensive approach. The metrics used are consistent with that philosophy. Audits measure performance against a mandatory set of standards and standard operating procedures. The target performance is 8.0 or better on a 10-point scale. The percentage of sites assessed this year was 94%.
HS&E Audit Scores
P&G HS&E resources have been working through a rigorous calibration exercise across all geographies to ensure an appropriate calibration and focus on high-priority areas. This calibration exercise is helping to ensure we are holding ourselves to the highest standards and has resulted in a decrease in the number of sites achieving scores of 8.0 or higher. In addition, over the last few years, we added several acquisition sites. As is typical with many acquisitions, it takes time for them to reach an HS&E audit score of 8.0 or higher, and several sites are still short of that target. However, through robust action plans, over the last year we have closed the gaps from previous audits and today have over 79% of our global sites scoring of 8.0 or higher.
P&G operates its fire protection program on the basic principle that each facility is unique and should have a program designed to meet its specific requirements. Working with the Insurance division, HS&E has developed a checklist-based assessment process that evaluates the fire protection equipment, maintenance and inspection, and emergency response capability of a site versus the appropriate level of fire protection required at that site. Each plant, innovation center, and major distribution center is assessed annually. The target performance is 8.0 or higher on a 10-point scale.
Fire Protection Audit Scores
The fire protection assessment program was changed significantly in 2011, even though we had a historically low number of fire losses and no regulatory issues. The new audit process was designed to be much clearer and calibrated relative to our internal fire protection standards.
These process changes resulted in a more rigorous and globally calibrated approach to conducting these assessments. This 2011 process change decreased the number of sites with scores of 8.0 or higher. However, since that intervention, we have been making steady progress and this year, 69% of sites had Fire Protection audit scores of 8.0 or higher. Sites will continue to work against action plans to improve scores over the course of the next year.
Site HS&E Leadership Training
A key indicator of HS&E systems capability is the percentage of sites with trained and qualified leaders. Leadership candidates train onsite for an extended period after attending a week-long seminar where their knowledge and ability to handle specific situations are assessed. For full qualification, the candidates must complete a qualification project at their own plant. This training and qualification program applies to all sites, including technical centers, and acquisitions. In 2012, we saw a decrease in the number of qualified leaders due to acquisitions and normal attrition. Short-term gaps were covered via corporate resources while we accelerated training plans. The charts below summarize our progress over the last three years.