Agencies Also on the Hook for P&G's Green Scorecard

Suppliers to Receive One Year to Prepare Data on Sustainability Before It Has Impact on Business

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BATAVIA, Ohio ( -- Hey you there, sitting in your Manhattan ad agency office in your organic cotton T-shirt sipping a latte from a cup made out of recycled paperboard as you book airline tickets online for Cannes: Procter & Gamble Co. would like to know more about your carbon footprint.

The world's biggest advertiser today unveiled its Supplier Environmental Sustainability Scorecard for key suppliers, with the first reports due July 1. And neither advertising agencies nor media companies appear to be off the hook. Indeed, a P&G spokeswoman noted that WPP participated in crafting the scorecard, adding that agencies and others won't be held accountable for answering questions that don't pertain to their industries.

P&G didn't disclose how many suppliers will be required to file the first round of questionnaires, or whether any media companies are specifically participating yet.

But the goal is for all P&G suppliers to file the scorecards eventually, following evaluations of the first phase of reporting, which was developed by a board that included 20 top suppliers.

Clearly, ad agency holding companies and media players rank among P&G's biggest suppliers. Publicis Groupe alone gets around $900 million annually in P&G business, P&G executives have disclosed before in discussing the company's agency-compensation model. Numerous TV networks and other media players also top nine figures in annual P&G business.

'The next step'
On the theory that carbon footprints and environmental impacts follow the money, out of P&G's $79 billion in sales last year, $7.6 billion was spent on such things as media expenses and agency fees. That was a lot less than the just less than $39 billion that went into cost of goods sold. But agency and media suppliers also tend to be more concentrated than raw material or transportation suppliers.

The scorecard "represents the next step in P&G's commitment to environmental sustainability," Chairman-CEO Bob McDonald said in a statement. "Keeping sustainability at the core of our business fuels innovation and strengthens our results."

P&G said suppliers will have a full year to prepare their data before their ratings can adversely affect their supplier ratings . Eventually, though, P&G will use the scorecard to determine sustainability ratings as part of P&G's annual performance reviews.

Some good news for ad agencies and possibly media companies: P&G is giving extra credit for providing sustainability ideas.

That gives ad agencies, such as Saatchi & Saatchi (a.k.a. "the Ideas Company"), which also has an environmental sustainability practice, Saatchi & Saatchi S, the ability to offset more than a few decisions to take the taxi rather than the subway.

Omnicom Group's BBDO, which is the lead agency on P&G's environmentally focused multi-brand "Future Friendly" marketing initiative, might also parlay that into forgiveness for the occasional employee putting plastic soda bottles into the trash instead of the recycling.

Top marks
Getting a top, or five, rating on the scorecard requires reporting and improving on all applicable-to-the-industry P&G core environmental-impact measures, working collaboratively on all applicable P&G sustainability initiatives, jointly developing several ideas adopted by P&G, and reporting on all additional feasible measures of environmental impact requested by P&G. Getting a one rating, or far below expectations, essentially comes from doing none of that.

The environmental measures include a broad range of energy usage, waste disposal, reduction and recycling, and environmental regulatory compliance factors.

P&G's scorecard is not unlike one it's already reporting on upstream to its biggest customer, Wal-Mart Stores, but Wal-Mart's only applies to suppliers of products, not agencies and media companies, a spokesman said. The P&G scorecard, also unlike Wal-Mart's, doesn't include workplace, diversity and community involvement questions, but a P&G spokeswoman said that's because the company already covered those areas in previous sourcing scorecards.

For its part, Unilever also recently developed a supplier scorecard aimed at reducing deforestation caused by palm oil suppliers, an issue over which the company has been criticized in the past by such groups as Greenpeace. CEO Paul Polman has also pledged to reduce the company's absolute environmental impact as it seeks to double its size, and he gave new Chief Marketing Officer Keith Weed duties overseeing sustainability efforts when he took the job last month.

"Multinationals historically haven't always been seen in the best light," Mr. Weed said in a recent interview, but added that they may actually "be the solution for the environment and sustainability" because they often source ingredients in one country, make products in another and sell them in a third.

"We can optimize the whole value chain," Mr. Weed said. "I think actually the multinationals working across multiple markets ultimately are going to be the people who can lead the agenda."

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