Linking Opportunity with Responsibility
Sustainability Report

2004

P&G 2004 Sustainability Report1

Sustainable development is a very simple idea.
It is about ensuring a better quality of life foreveryone, now and for generations to come.1
P&G’s Statement of Purpose
We will provide branded products and services ofsuperior quality and value that improve the lives of theworld’s consumers.
As a result, consumers will reward us with leadershipsales, profit and value creation, allowing our people,
our shareholders, and the communities inwhich we live and work to prosper.

Table of Contents
CEO Statement
VisionP&G Profile
Policies, Organization, and Management Systems
Performance
Environmental
Economic
SocialSustainability In Action
Water
Health and Hygiene
Index
Contact Information
AddendumThis report was prepared using the Global Reporting Initiative’s(GRI) July 2002 Sustainability Reporting Guidelines. The missionof the GRI is to promote international harmonization in thereporting of relevant and credible corporate economic,
environmental, and social performance information to enhance
responsible decision-making. The GRI pursues this mission througha multistakeholder process of open dialogue and collaboration in
the design and implementation of widely applicable sustainability
reporting guidelines. The GRI has not verified the contents of thisreport, nor does it take a position on the reliability of information
reported herein.

on theWeb

On the Cover
A mother and child in Haiti drink cleanwater because of P&G’s Safe Drinking
Water Program. Please see theSustainability in Action section for
more details.

Please visit these Web sites:
For further information about the GRI,
http://www.globalreporting.org
1 Definition from U.K. government report from Department for the Environment,

For the latest P&G news and shareholder and career
information, http://www.pg.com

2
3
4
16
37
39
49
52
53
55
56
58
62
63

Transport and the Regions – 1998.
Note: Years listed in this report‘s data charts signify the fiscal year ending June 30.
© 2004 The Procter & Gamble Company. All Rights Reserved.
References to trademarked products in this report are to trademarks owned by andregistered to The Procter & Gamble Company.

P&G 2004 Sustainability Report

2

CEO Statement

Earning Your Trust
Fair dealing and doing what’s right for the long term arefundamental at P&G. It’s how P&G people have done business forgenerations. It’s at the heart of the trust our Company and ourbrands have earned – and must continue to earn every day,everywhere – from consumers, business partners, and thecommunities in which P&G people live and work. It is the essenceof P&G’s integrity and leadership.
Preserving and strengthening P&G’s reputation is every employee’s
job. It starts with business performance: We must deliver reliable,consistent growth. We met this challenge in fiscal 2004 withresults that culminated in increasingly strong performance over the
past three years. Since July 2001, P&G cumulative sales havegrown 30 percent, and they exceeded $50 billion for the first time
ever, this past year. Earnings per share have grown more than
40 percent cumulatively in the past three years, and theCompany’s cumulative Total Shareholder Return has increased
more than 80 percent since July 2001.
These are solid results, but we know that consistent financial
performance is only one part of our responsibility as a company. It
is necessary but not sufficient. To continuously earn trust, we mustgrow with integrity, and we must lead in ways that fulfill our
Purpose of improving consumers’ everyday lives.
Growing with integrity requires ethical business conduct
everywhere we do business. This can be a demanding challenge inan organization of 110,000 people in nearly 80 countries. One
important way we respond to this challenge is by clarifying theCompany’s expectations for how we operate through ourWorldwide Business Conduct Manual, which we have updated
and are redeploying this year to reflect changes in our own
organization and in the world around us. It includes clear

principles, standards, examples, and resources to guide behavior
everywhere we operate. We consider it imperative that every
employee understand that P&G will not tolerate illegal or unethicalbehavior. While we value and expect business results, we place
equal value on how we achieve those results.
We also strive to earn the trust of shareholders, business partners,
and other stakeholders by fulfilling our Purpose. In the letter that
follows from George Carpenter, Director of P&G Corporate
Sustainable Development, you’ll learn of the most recent steps
we’ve taken to improve consumers’ everyday lives – now and forgenerations to come.
P&G is committed to fulfilling its responsibility to all our
stakeholders. And P&G people are dedicated to making P&G a
company of great results and – equally important – of great values
and character.

A. G. Lafley
Chairman of the Board,
President, and Chief Executive

P&G 2004 Sustainability Report3

Visionmodel in Pakistan, a social model in Haiti, and an emergency relief
model implemented most recently in Ethiopia.
• In May, we launched PUR in the Sindh province of Pakistan using
P&G’s commercial distribution infrastructure. We augmented thiswith more than 1,400 educators and a broad alliance of global
and local partners to help people understand the importance ofsafe drinking water to the health of their families.
• In Haiti, we’re working with PSI, a nonprofit NGO, to reach into
areas where economic and infrastructure constraints limit ourability to pursue a commercial model. This is a great example ofreaching new consumers and new markets, and we plan toexpand this model in the coming year with new partnerships in
sub-Saharan Africa.
Creating Corporate Social Opportunity
We have just completed a year of tremendous progress toward
our vision that P&G can link business opportunity with corporate
responsibility to create a concept we call “corporate social
opportunity.” We believe that we can build our businesses while
contributing our part to help address some of the toughest global
health and social issues.

• We are working with UNICEF, AmeriCares, the International
Rescue Committee, CARE, and other global relief groups toprovide the product to people who need safe drinking water
because of natural disasters and conflict situations. Through ourpartners, we have provided more than 30 million liters of safe
drinking water this past year to help in some of the world’s
worst disasters, including the Bam earthquake in Iran and thedevastating floods in Haiti and the Dominican Republic.

In last year’s Sustainability Report, I identified three key challenges
that P&G faces as we work toward this vision:
1. To create new businesses with sufficient scale to fund researchand development and market-development costs.
2. To develop new business models appropriate to lower-income,developing-country markets.
3. To lower costs to make products affordable in undeveloped
markets that lack large-scale supply chain and distribution
efficiencies that are normal in richer, developed markets.

Third, the low cost of the product – about the price of an egg inmany poor countries – and our partnerships with governments
and NGOs, are creating ways to make this product affordable inundeveloped countries not benefiting from economies of scale or
distribution channels that penetrate rural markets. The social
model described above that is being used in Haiti and Africa is an
example of this.

P&G’s safe drinking water work is a good example of the progress
we’re making in all three areas. We’ve chosen this as a key focus
area based on the United Nations Millennium Development Goalof providing improved access to safe drinking water.

We are only starting to turn our vision into reality. But imagine aworld where corporations, in partnerships with civil society andgovernment, can significantly deliver on the UN Millennium
Development Goal of addressing the world’s most critical healthissues. This improvement in society will provide the foundation forsustainable growth.

First, this is a new business opportunity for P&G, with the potential
scale to reach millions of people who today do not have access tosafe water. It is based on a simple and affordable technology
developed in collaboration with the U.S. Centers for Disease
Control and Prevention (CDC). The product has been shown in
health trials conducted by the CDC to reduce diarrheal illness by
up to 50 percent. The product is called PUR Purifier of Water andtreats even heavily contaminated drinking water so it meetsWorld Health Organization (WHO) standards.
Second, we are developing new business models based on
effective public-private partnerships. P&G has joined with USAID,
Johns Hopkins University, Population Services International (PSI),
and CARE to form the Safe Drinking Water Alliance. This is a
$5 million effort to learn how to best provide P&G’s safe drinking
water technology, using three different models: a commercial

In June, we were honored to receive a World Business Award insupport of the UN Millennium Development Goals, from theInternational Chamber of Commerce, the UN Development
Program, and the International Business Leaders Forum for oursafe drinking water program. This is motivation to continue on ourjourney to bring corporate social opportunity to life.

George D. Carpenter
Director
Corporate Sustainable Development

P&G 2004 Sustainability Report

P&G
Profile4

P&G 2004 Sustainability Report

5

P&G Profile
For 166 years, P&G has been providing trusted, high-quality brands
that make every day better for the world’s consumers. The
Company markets nearly 300 products (Global Key Brands arelisted below) in more than 160 countries around the world.
P&G’s worldwide headquarters is located in Cincinnati, Ohio,
U.S.A. The Company has on-the-ground operations in almost
80 countries worldwide and employs nearly 110,000 people.
P&G is a publicly owned company. Its stock is listed and traded on
the following exchanges: New York, Amsterdam, Paris, Basle,
Geneva, Lausanne, Zurich, Frankfurt, and Brussels.
As of July 30, 2004, there were approximately 1,426,000 common
stock shareholders, including shareholders of record, participants in
the Shareholder Investment Program, participants in P&G stock

ownership plans, and beneficial owners with accounts at banks
and brokerage firms.
This is the sixth Sustainability Report for P&G’s worldwide
operations. Data in this report covers the period from July 1, 2003,
through June 30, 2004. Last year’s report covers the July 1, 2002,
through June 30, 2003, time period. Financial information is given in
U.S. dollars.

on theWeb

For more information on P&G’s investor relations,please visit our Web site at:
http://www.pg.com/investors/sectionmain.jhtml
Please visit http://www.pg.com for the latest news andin-depth information about P&G and its brands.

Global Key Brands
Of P&G’s almost 300 brands around the world, these are the ones we consider our key brands.
Global Business Unit
Fabric and Home Care

Product Lines
Laundry detergent, fabricconditioners, dish care,household cleaners, fabricrefreshers, bleach, and carefor special fabrics

Key Brands
Tide, Ariel, Downy, Lenor, Dawn, Fairy, Joy, Gain, Ace Laundry
and Bleach, Swiffer, Dash, Bold, Cascade, Mr. Clean/Proper,
Febreze, Bounce, Cheer, Era, Bonux, Dreft, Daz, Flash, Vizir, Salvo,
Viakal, Maestro Limpio, Rindex, Myth, Alomatik

Beauty Care

Hair care/hair color, skin careand cleansing, cosmetics,
fragrances, andantiperspirants/deodorants

Pantene, Olay, Head & Shoulders, Clairol’s Herbal Essences,
Nice ‘n Easy, Natural Instincts and Hydrience, Cover Girl, SK-II,
Max Factor, Hugo Boss, Safeguard, Rejoice, Secret, Old Spice, Zest,
Vidal Sassoon, Pert, Ivory, Lacoste, Aussie, Infusium 23, Camay,
Noxzema, Infasil, Joy Parfum, Valentino, Sure, Wash&Go, Wella,
Koleston, Wellaflex, Shockwaves, Rochas, Escada, Gucci
Always, Whisper, Tampax, Lines Feminine Care, Naturella, Evax,
Ausonia, Orkid

Feminine protection pads,
tampons, and pantiliners
Baby diapers, baby and toddler
wipes, baby bibs, baby change
and bed mats
Paper towels, toilet tissue, andfacial tissue

Pampers, Luvs, Kandoo, Dodot

Health Care

Oral care, pet health andnutrition, pharmaceuticals, andpersonal health care

Crest, Iams, Eukanuba, Actonel, Vicks, Asacol, Prilosec OTC,
Metamucil, Fixodent, PUR, Scope, Macrobid, Pepto-Bismol,
Didronel, ThermaCare, Blend-a-med

Snacks and Beverages

Snacks and beverages

Pringles, Folgers, Millstone

Baby and Family Care

Charmin, Bounty, Puffs, Tempo

Building for the Future
William Procter andJames Gamble, Founders,
Candle & Soap Business

1837

1840

$1 Million
Net Sales

1850

1860

Regional
U.S. Markets

1870

P&G ProfileP&G 2004 Sustainability Report

6

P&G’s Billion-Dollar Brands

In order of appearance inphoto above, left to right.
Iams
Nutrition for every life stage
and lifestyle of your pet.
Head & Shoulders
Smooth, beautiful, flake-freehair. It's not what you’d
expect in a dandruff shampoo.
Head & Shoulders has
12 customized formulas –one just for you.
ActonelA prescription medication
to treat and prevent
postmenopausal osteoporosis.

Wella (Koleston)
The newest member of the
P&G Beauty Care family, withhair care products used insalons and at home.
CharminAmerica’s favorite bathroom
tissue.
Always/Whisper
Women around the world
count on Always or Whisper
feminine protection.
Downy/Lenor
Laundry feels soft and smells
fresh because of Downy andLenor.

PringlesPotato chips: Once You “Pop”
the Fun Doesn’t Stop!
Crest
Oral care products, creating
beautiful, healthy smiles
everyday.
Tide
Tough cleaning power thatgets out laundry stains.
Ariel
Fabric cleaning and care at its
best.
Olay
Designed for women of allages to “love the skinthey’re in.”

BountySpills happen. With the
Quilted Quicker Picker-Upper
paper towel, cleanup is easy.
PanteneHair around the world
shines because of Pantene
hair care products.
Pampers
Millions of babies experience
the comfort and dryness ofPampers diapers.
Folgers
Millions of Americans wake up
with Folgers coffee every day.

Building for the Future

Incorporated
Company
P&G Brand
Advertising

1880

ProfitSharing

P&G Code ofRegulations

Beginning of P&G
Research & Development

1890

Shortening &Oils Business

1900

1910

CanadaMarketP&G ProfileP&G 2004 Sustainability Report

7

Organizational Structure
P&G’s unique organizational structure makes it easy for innovation
to flow across the enterprise and around the world, to learn about
consumer needs as early as possible, and to commercialize the best
ideas and innovations profitably and quickly. We designed ourorganization to be global and local at the same time. This may
seem like a paradox, but we believe that meeting this challenge is
key to our success.

Global Business Services provides support services to P&G business
units and to P&G employees. These services include accounting
and financial reporting, information technology, purchases,
employee services such as payroll and benefits administration, andworkplace services, including facilities management.

P&G is organized around Global Business Units (GBUs) that
manufacture and market our products. GBUs are responsible for
spreading product innovations across the Company’s productcategories and geographic markets.
• Fabric & Home Care includes products for laundry, dishwashing,fabric enhancement, and cleaning hard surfaces.
• Baby & Family Care focuses on paper-based products – tissues,
towels, diapers, and baby wipes.
• Beauty Care includes cosmetics, hair care products, deodorants,
feminine hygiene products, and fragrances.
• Health Care includes pharmaceuticals and products for personal
health care, oral care, and pet health and nutrition.
• Snacks & Beverages products include coffee and potato chips, aswell as products for use in commercial establishments.
P&G’s four core categories – Fabric Care, Hair Care, Baby Care, andFeminine Care – account for nearly 50 percent of sales and an
even greater percentage of profit.
In addition to GBUs based on product lines, P&G also has Market
Development Organizations (MDOs), which are organized bygeography. MDOs move initiatives to local markets faster, morecreatively, and at less cost. They tailor the Company’s global
programs to local markets and use their knowledge of local
consumers and retailers to help P&G develop market strategies toguide the entire business.
Both the Corporate Functions and Global Business Services
organizations leverage our size to deliver better-quality services
internally, at significantly lower cost.
Corporate Functions covers two main focus areas: 1) upstream
research and development working with new, cutting-edgeknowledge, and 2) corporate needs not covered by GBUs or
MDOs, such as corporate human resources and corporate external
relations, as well as the sales effort called Customer Business
Development.

Building for the Future

Beginning of
P&G Market
Research

1920

SafetyPhilippines
Oral Care
Program and UK
Synthetic
Started Markets
Detergents Business

1930

1940

Tide
Introduced
Overseas
Division

1950$1 Billion
Net Sales

Disposable
First Fluoride Diapers
Toothpaste
Business

1960

P&G 2004 Sustainability Report

P&G Profile
Organizational Structure

8

The Five GBUs Operate in the Seven MDOs
Global Business Units (GBUs)

Market Development Organizations (MDOs)• Business Strategy and Planning• Brand Innovation and Design• New Business Development• Full Profit Responsibility• Market Strategy• Customer Development• External Relations• Recruiting

Fabric and Home Care
Beauty Care
Baby and Family Care
Health Care
Snacks and Beverages

North America
Latin America
Western Europe
Greater China
ASEAN, Australasia, and India
Northeast Asia
Central & Eastern Europe,
Middle East, and Africa

Corporate Functions

Global Business Services• Cutting-Edge Knowledge• Transfer Best Practices• Function Work Supporting P&G Corporation

Key Business Processes• Accounting• Info and Technology Services• Order Management• Employee Benefits & Payroll

Building for the Future
World Environment
Center Award
Affirmative
ActionEnvironmental
Audit Program1970

Toll-Free
Consumer
Hotline$10 Billion
Net Sales

1980

Feminine
Protection
BusinessStatementof Purpose

1990

1st Annual Global
Environment
ReportOpportunity
2000 Award

FutureShares Clairol
Wella
1998– Acquisition Acquisition
2001 2001
2004

2000

P&G ProfileP&G 2004 Sustainability Report

Plant Locations
Plant Name

City

Country

GBU Owner

Plant Name

City

Country

GBU Owner

Akashi
AlbanyAlexandria
AmiensAnaheim
Anchieta
ApizacoAtlantaAuburnAugusta
AuroraAvenelBangkok
Barquisimeto
Beijing
BekasiBelleville
Binh Duong
Blois
BorispolBrockville
Budapest
Cabuyao
Cairo
Campochiaro
Cape Girardeau
Casablanca
Cayey
ChengduChochiwon
ChonanCincinnati
Coevorden
Crailsheim
DammamDover
Escuintla
Euskirchen
Gattatico
Gebze
Goa
Green Bay
Greensboro
Gross-Gerau
GuatireHamburg
HavantHenderson
Huangpu
Hub
Hunt Valley
IbadanIowa City
Istanbul
JacksonJeddahJijonaKansas City Coffee
Kansas City F&HC
Kuantan
Leipsic

Akashi
AlbanyPineville
AmiensAnaheim
Anchieta
ApizacoAtlantaAuburnAugusta
AuroraAvenelBangkok
Barquisimeto
Beijing
Jakarta
Belleville
Binh Duong
Blois
BorispolBrockville
CsomorCabuyao
Cairo
Campochiaro
Cape Girardeau
Casablanca
Cayey
ChengduChochiwon
ChonanCincinnati
Coevorden
Crailsheim
DammamDover
Escuintla
Euskirchen
Gattatico
Gebze
Goa
Green Bay
Greensboro
Gross-Gerau
Guatire, Miranda
Hamburg
HavantHenderson
Guangzhou
Hub
Cockeysville
IbadanIowa City
Istanbul
JacksonJeddahAlicante
Kansas City
Kansas City
Kuantan
Leipsic

Japan
United States
United States
FranceUnited States
BrazilMexicoUnited States
United States
United States
United States
United States
ThailandVenezuela
China
Indonesia
CanadaVietnam
FranceUkraineCanadaHungary
Philippines
Egypt
Italy
United States
MoroccoPuerto Rico
China
Korea
Korea
United States
Netherlands
Germany
Saudi Arabia
United States
GuatemalaGermany
Italy
TurkeyIndia
United States
United States
Germany
Venezuela
Germany
United Kingdom
United States
China
Pakistan
United States
Nigeria
United States
TurkeyUnited States
Saudi Arabia
Spain
United States
United States
Malaysia
United States

Baby Care
Family Care
Fabric & Home Care
Fabric & Home Care
Snacks & Beverages
Fabric & Home Care
Family Care
Snacks & Beverages
Feminine Care
Fabric & Home Care
Health Care
Fabric & Home Care
Beauty Care
Fabric & Home Care
Fabric & Home Care
Health Care
Feminine Care
Fabric & Home Care
Beauty Care
Feminine Care
Fabric & Home Care
Feminine Care
Fabric & Home Care
Fabric & Home Care
Fabric & Home Care
Baby Care
Fabric & Home Care
Beauty Care
Fabric & Home Care
Family Care
Feminine Care
Fabric & Home Care
Health Care
Feminine Care
Fabric & Home Care
Baby Care
Fabric & Home Care
Baby Care
Fabric & Home Care
Feminine Care
Health Care
Family Care
Health Care
Health Care
Baby Care
Snacks & Beverages
Feminine Care
Health Care
Beauty Care
Beauty Care
Beauty Care
Feminine Care
Beauty Care
Fabric & Home Care
Snacks & Beverages
Baby Care
Baby Care
Snacks & Beverages
Fabric & Home Care
Fabric & Home Care
Health Care

Lewisburg
Lima
LondonLongjumeau
Louveira
Lucca
ManatiManchester
Mandideep
MariscalaMataroMateriales
MechelenMedellin
Mehoopany
Mequinenza
Mohammedia
Montornes
Naucalpan
NenaghNeuss
New Orleans
Novomoskovsk
Orleans
OxnardPescaraPhoenix
Pilar
Pomezia
Porto
PUR
RakonaRydalmere (Clairol)
Sacramento
Santiago
Seaton Delaval
Sherman
Shiga
South Brunswick
St. Louis
Stamford (Clairol)
TakasakiTalisman
Targowek
Tepeji
Tianjin
Timisoara
VallejoVilla Mercedes
Weiterstadt
Witzenhausen
Worms
XiqingLewisburg
Lima
LondonLongjumeau
Louveira
Lucca
ManatiManchester
BhopalApaseo El Grande
MataroLima
MechelenMedellin
Mehoopany
Mequinenza
Mohammedia
SalidaMexico City
NenaghNeuss
New Orleans
Novomoskovsk
Saint Cyr En Val
OxnardPescaraPhoenix
Pilar
Pomezia
Custoias
Minneapolis
Rakovnik
SydneySacramento
Santiago
Whitley Bay
ShermanShiga
New Jersey
St. Louis
Stamford
Takasaki
Mexico City
Warsaw
Tepeji
Tianjin
Timisoara
Mexico City
Villa Mercedes
Weiterstadt
Witzenhausen
Worms
Tianjin

United States
United States
United Kingdom
FranceBrazilItaly
Puerto Rico
United Kingdom
India
MexicoSpain
Peru
Belgium
Colombia
United States
Spain
MoroccoSpain
MexicoIrelandGermany
United States
RussiaFranceUnited States
Italy
United States
Argentina
Italy
Portugal
United States
Czech Republic
Australia
United States
Chile
United Kingdom
United States
Japan
United States
United States
United StatesJapan
MexicoPolandMexicoChina
Romania
MexicoArgentina
Germany
Germany
Germany
China

Health Care
Fabric & Home Care
Fabric & Home Care
Health Care
Feminine Care
Family Care
Health Care
Family Care
Fabric & Home Care
Beauty Care
Fabric & Home Care
Fabric & Home Care
Fabric & Home Care
Fabric & Home Care
Family Care
Baby Care
Fabric & Home Care
Feminine Care
Health Care
Beauty Care
Family Care
Snacks & Beverages
Fabric & Home Care
Family Care
Family Care
Feminine Care
Health Care
Fabric & Home Care
Fabric & Home Care
Fabric & Home Care
Health Care
Fabric & Home Care
Beauty Care
Fabric & Home Care
Baby Care
Beauty Care
Snacks & Beverages
Beauty Care
Snacks & Beverages
Fabric & Home Care
Beauty Care
Fabric & Home Care
Beauty Care
Baby Care
Baby Care
Beauty Care
Fabric & Home Care
Fabric & Home Care
Baby Care
Health Care
Family Care
Fabric & Home Care
Beauty Care

Note: Data as of July 2, 2004

9

P&G ProfileP&G 2004 Sustainability Report

10

Reliance on Third-Party
Manufacturers(percent)

10

10

9

Manufacturing Outsourcing
Most of our products are produced or assembled in P&G-owned
facilities. However, we rely on third-party manufacturers for about
10 percent of our total manufactured volume. This has increased
during the past few years, and we will continue to evaluate thirdparty manufacturers for our products in the future.

2002 2003 2004

Financial Information
The Company reported net earnings of $6.48 billion for the fiscal
year ended June 30, 2004, an increase of 25 percent compared to$5.19 billion in 2003. Results included a charge of $538 million in2003 and $706 million in 2002, related to the Company’s
restructuring program.
Diluted net earnings per share were $2.32 in 2004, compared to$1.85 in 2003, and $1.55 in 2002, including the restructuring
charge impact of $0.39, $0.50, and $1.05 per share, respectively.
Net sales were $51.41 billion in 2004, up 19 percent from last year.
One of our first discretionary uses of cash is dividend payments.
Common share dividends grew 13 percent to $0.93 per share in
2004, representing the 48th consecutive fiscal year of increased
common share dividends. Total dividend payments, to bothcommon and preferred shareholders, were $2.54 billion, $2.25
billion, and $2.10 billion in 2004, 2003, and 2002, respectively.
Financial Highlights
Amounts in millions
except per-share amounts

Net Sales
Selling, General, andAdministrative Expenses
Income Taxes
Net Earnings
Basic Net Earnings
Per Common Share1
Total Assets
Long-Term Debt
Shareholders’ Equity

2004$51,4072003$43,377

2002$40,238

16,504
2,869
6,481

13,383
2,344
5,186

12,571
2,031
4,352

2.46
57,04812,554
17,278

1.95
43,706
11,475
16,186

1.63
40,776
11,201
13,706

1 Restated for two-for-one stock split effective May 21, 2004.

As part of P&G’s initiative to optimize resources to fit a growing
global business and to accelerate innovation and growth, theCompany operates its business through Global Business Units (GBUs),
as described on page 7.
• Fabric and Home Care
• Beauty Care
• Baby and Family Care
• Health Care
• Snacks and Beverages
This organizational structure accounts for why P&G does notprovide employee data, sales, or profits by country. Some countries
may provide this data in reports other than this one.
Net Sales by Global Business Units Prior to Restructure
Amounts in billions

Fabric and Home Care
Beauty Care
Baby and Family Care
Health Care
Snacks and Beverages
Corporate
Total

2004
13.9
17.1
10.7
7.0
3.5
(.7)
51.4

2003
12.6
12.2
9.9
5.8
3.2
(.3)
43.4

2002
11.6
10.7
9.2
5.0
3.2
.4
40.2

For more financial details, please see P&G’s 2004 Annual Report:
http://www.pg.com/investors/financial_reports/on the annualreports.jhtml
Web

P&G ProfileP&G 2004 Sustainability Report

Stakeholders
A stakeholder is anyone who has an interest in or interaction with
P&G. Stakeholders can be internal, such as the Company’s
110,000 employees and its Board of Directors, or external.
External stakeholders include P&G’s consumers who use our
products 2 billion times a day, our customers and suppliers withwhom we do business, our shareholders, and the communities inwhich P&G people live and work.

P&G’s External Stakeholders

Consumers,
Consumer Organizations
News Media

NGOs
HealthSocial Service
Education
Environment

Governments
Local
Regional
National
Agencies (such as Health Ministries,
Regulatory Boards)
Pan-National Commissions (such as EU)
Embassies, Diplomatic Missions

Stockholders

Business Partners
Retailers, Wholesalers, Distributors
Vendors, Contractors, Suppliers
Advertisers
Trade Unions

Industry Associations,
Professional Organizations,
Scientific/Medical Communities

11

P&G ProfileP&G 2004 Sustainability Report

12

Major Acquisitions
Net cash used for acquisitions in 2003-2004 totaled 7.48 billion.
The two major acquisitions were Wella and Hutchison Whampoa
China Ltd. (Hutchison).
Wella
P&G acquired a controlling interest in Wella AG in September 2003.
In June 2004, P&G and Wella entered into a Domination and Profit
Transfer Agreement. The agreement entitles P&G to exercise fulloperating control of Wella and receive 100 percent of future
earnings. P&G is to pay a guaranteed perpetual annual dividend
payment to holders of Wella’s remaining outstanding shares unlessthey wish to tender their shares.
The cash paid for the Wella acquisition was $5.09 billion.

Hutchison Whampoa
In June 2004, P&G bought the remaining 20 percent stake in its
China venture for a gross cash outlay of $2 billion. This purchasefrom Hutchison gave P&G full ownership of its China operation.
The P&G-Hutchison venture was established in 1988, when P&G
began operations in mainland China. At that time, P&G had astake in the business of almost 70 percent. P&G and Hutchison
restructured the original joint venture in 1997, which increased
P&G’s ownership to 80 percent and included provisions for a
future buyout of the remaining 20 percent.

The acquisition of Wella, with more than $3 billion in annual net
sales in more than 150 countries, gives P&G access to theprofessional hair care category as well as greater scale and scope inretail hair care, hair colorants, cosmetics, and fragrances. The
acquisition also provides potential for significant synergies with
P&G’s existing hair care business.

Major Divestitures
Proceeds from the divestiture of certain non-strategic brands andother asset sales generated $230 million in cash flow in thecurrent year.

Restructuring Program
In 1999, concurrent with a reorganization of our operations
into product-based Global Business Units, we initiated a multiyear restructuring program. Total restructuring program charges
were $538 million and $706 million after tax in 2003 and2002, respectively. The program was substantially complete at
the end of June 2003, with a remaining reserve of $335
million. Substantially all of the liability was settled through cash
payments through June 30, 2004.
The Company continues to undertake projects to maintain acompetitive cost structure, including manufacturingconsolidations and workforce rationalization, as part of its
normal operations.

P&G Outsources HR Support to IBM
P&G has outsourced its employee services operations to IBM
under a 10-year, $400 million agreement. IBM is now handlingservices for nearly 110,000 P&G employees in nearly 80 countries
and has taken operational responsibility for P&G’s humanresources centers in Costa Rica, England, and the Philippines.
Services provided by IBM include payroll processing, benefits
administration, compensation planning, expatriate and relocation
services, travel and expense management, and human resources
data management.
Nearly 800 P&G employees were offered transfers to IBM, with
98 percent accepting the offers.
This outsourcing enables P&G to improve employee services
while reducing costs. P&G selected IBM as its employee services
partner after a competitive evaluation process that included
review of several leading business service providers.

P&G ProfileAwards and Recognitions
P&G annually receives recognition for its work, its character, its
brands, and for community contributions. We are highlighting a
few and listing the others.
P&G is the only company to appear on all seven Fortune magazine
company lists in 2003, including:• Best Companies to Work For• Most Admired Companies• Best Companies for Minorities• MBA’s Top Employers
P&G ranks among the top companies for Executive Women(National Association for Female Executives), African Americans(Family Digest magazine) and Best Corporate Citizens (Business
Ethics magazine).

P&G 2004 Sustainability Report

13

World Health Organization Recognizes P&G Kazakhstan
The World Health Organization (WHO) recognized P&G’s
contribution to health care development in Kazakhstan. For the
past five years, P&G has sponsored programs for the prevention ofdiaper dermatitis and educational programs for feminine hygiene
and oral care, reaching about a million people. These programs
help encourage healthy lifestyles in Kazakhstan.

P&G Costa Rica Recognized for Social Responsibility
P&G Costa Rica’s Global Business Services Center has beenrecognized with the highest awards given by the American
Chamber of Commerce and the Costa Rican Chamber ofCommerce. Both honor P&G’s community outreach efforts andvolunteering initiatives that support equal access to educational
opportunities and prevent students from dropping out of school.
This marks the third year in a row that P&G Costa Rica’s Global
Business Services has been recognized by the American Chamberof Commerce for the most significant and consistent contributionsin the Social Category.

P&G Tops Dow Jones Sustainability Index
For the fifth straight year, P&G is the Non-cyclical Goods & Services
industry sector leader in the global Dow Jones Sustainability
Indexes (DJSI). The DJSI notes that “P&G integrates sustainability as
a promising business concept and ranks as the sustainability leader
in its industry.”

The award from the Chamber of Commerce of Costa Rica is thefirst ever given for Corporate Social Responsibility. It recognizes
P&G’s continuity in coordinating, implementing, and supporting
activities that benefit either communities or society in general forat least three years in a row. Individual and corporate members of
the Chamber nominated P&G for this honor.

Launched in 1999, the DJSI are the first global indexes tracking thefinancial performance of the leading sustainability-driven
companies. Only the top 10 percent of the world’s 2,500 largest
companies are components of the DJSI World Indexes, withinclusion based on their sustainability performance. P&G has been
a component of the index since its inception and industry leader
for the Non-cyclical Goods & Services market sector since 2000.
To access the P&G DJSI 2005 Sustainability Leader report,
please visit:
http://www.sustainability-indexes.com/djsi_pdf/
on the djsi_world/CompanyBiographies/Bios05/
Web
CBR_ProcterGamble_05.pdf

P&G Canada Is Family-Friendly Employer
Today’s Parent magazine has chosen P&G Canada as one of the
15 Top Family-Friendly Employers in Canada.
The magazine cited these benefits:• Maternity payments of 95 percent of salary for up to 15 weeks.
• Flexible work options.
• The women’s support workshop and the guest speaker forum
addressing women’s issues in the workplace.

P&G ProfileAwards and Recognitions

Corporate Awards• In the nationwide Plant of the Year competition in Germany, P&G’s
Crailsheim plant won the award in the category Excellent Goal Setting
and Performance Management. The competition is run by Produktion,
one of the leading industry newspapers in Germany, and by
management consultancy A.T. Kearney.
• P&G U.S.A. wins Latina Style 50 Awards for being best professional
company for Latinas based on number of Latina executives,
mentoring programs, education opportunities, child/dependent care
support, childbirth leave, alternative work policies, women’s issues,and Hispanic relations.
• P&G received 2004 Manufacturer of the Year for Global Logistics
Excellence, World Trade magazine in collaboration with National
Association of Manufacturers.
• P&G U.S.A. was listed in Fortune magazine as #1 in its industry and in
top 3 for innovation, employee talent, quality of management, use of
corporate assets, and quality of products/services.
• P&G named among world’s most socially responsible companies by
Global Finance magazine.
• P&G ranked #9 by Harris Interactive and the Reputation Institute forcorporate reputation.
• P&G Bulgaria wins top award for Teen Info Program, which helps
prevent and deal with teen crisis. Provides Web site and phone
consultation with psychologists.
• P&G Latin America chosen for 3rd year by American Chamber ofCommerce for Commercial Social Responsibility in Action Award.
• Chamber of Commerce in Costa Rica granted P&G’s Global Business
Systems organization there its Corporate Social Responsibility Award.
• P&G Korea received a Special Citation for Corporation Excellence forcorporate citizenship, innovation, and exemplary business practice.
• P&G U.S.A. received Special Recognition at Cincinnati’s Post-Corbett
Awards for its donation to Cincinnati Art Museum and commitment
to arts in general.
• P&G Kazakhstan was recognized by the World Health Organization
for its contribution to health development in Kazakhstan.
• Clarin lists P&G Argentina as 20th Most Admired Company, according
to survey.
• P&G Pakistan received the Consumer Protection Council Award“Helpline Trust” in recognition of its support for consumer protection
activities.
• P&G makes Fortune’s List of Blue Ribbon Companies.
• Alfa Bank and Lauder presented P&G Russia the first Award for
Excellence in Foreign Investment for conducting business successfullyin Russia.
• Oekko presented P&G Germany the #1 Corporate Branding Award in
the sustainability area.
• P&G U.S.A. ranked #2 in 100 Best Corporate Citizens magazine andhas been in top 5 past 5 years.
• P&G Germany named Best Internship Company 2003 by the student
Web site praktika.de.
• P&G Austria was ranked 5th best employer 2004 in the Trend Spezial
survey based largely on input from randomly selected employees.
• P&G Canada was chosen as one of Canada’s Top 100 Employers 2004
by Macleans magazine, and was one of the top 15 Family-Friendly
Employers in Canada 2004 by Today’s Parent magazine.

P&G 2004 Sustainability Report

14• P&G is at the top of 2005 Non-cyclical Goods and Services in the Dow
Jones Sustainability Indexes.
• P&G Japan selected as the Company of Consumer Excellence for2003 by the Japanese Minister of Economy, Trade, and Industry forthe most consumer-focused company.
• P&G Japan won Kobe City Award for good working environment for
both men and women for 2003 and also for ecology for 2003.
• P&G Colombia ranked #2 as Best Place to Work in 2003 regarding
credibility, respect, impartiality, pride, camaraderie.
• P&G Chile received several recognitions for being a great place towork in 2003 and 2004.
• Fater, P&G’s joint venture partner in Italy, ranked 9th in Great Places toWork.
• P&G U.K. receives Business Supporter of the Year award from YoungEnterprise magazine.
• P&G Spain named Most Family-Responsible Company in 2004.
• P&G U.K. was highly commended for Social Responsibility in the
Surrey Business Awards.
• P&G Spain named 3rd Most Attractive Employer for Business byretailer Universum.
• P&G Belgium named 4th Most Attractive Employer for Business byretailer Universum.
• P&G U.K. scoops top prizes at U.K. ProShare Awards: Best
Performance in Fostering Employee Share and Best Financial Education
Programme for Employees.
• Corporate Standards Systems wins 2004 CIO magazine Enterprise
Value award for demonstrating the business benefits of providing
significant efficiency gains, material savings, and productivity increases.
• P&G Asia received the Grand Award by the Malaysian Society ofOccupational Safety and Health for 2003 as the leader in our field.
Award recognizes the strength of our Health, Safety & Environment(HS&E) programs, our underlying DMS processes, and mostimportantly, the tremendous ownership our people have for the entire
HS&E program.
• In the U.K. Financial Times Best Company to Work For Awards, P&G
was the highest placed FMCG company and won a special
Whistleblower award for accessibility on issues resolution.
• P&G’s Pomezia Plant in Rome won the Best Factory Award from
Bocconi University for continuous improvement.
• P&G U.K. won Platinum Award for Diversity in the Workplace from
Opportunity Now.
• P&G Europe received the Minister of Economy, Labour and Social
Policy award for achievements and improvements done by Poland’s
Targowek Plant in field of ergonomics.
• P&G voted #1 by more than 6,000 U.S. consumers as Most Trusted of
All Consumer Product Goods Companies with regard to privacy
protection.
• P&G Romania earns People to People award as Best Corporate
Volunteering Program in Romania. Objective of the program is to
educate and involve young people in improving their communities.
• P&G U.K. (Egham & Brooklands) awarded Surrey Sustainability
Business Awards in 2003 in the category of social responsibility.

continued on next page

P&G 2004 Sustainability Report

P&G ProfileAwards and Recognitions

15

continued from previous page

Brand Awards• Trofeu Ponto Extra 2003 trophy presented to P&G Brazil in cleaning
category.
• R&D magazine selected P&G’s Power-FacoRE suite of reliability
engineering tools to receive a 2003 R&D 100 Award.
• Bonux wins 2003 Starcom Global Grand Prix Prize for P&G Lebanon.
• Puffs ranked #1 by Good Housekeeping Institute in U.S.
• Always, Alldays, Tampax, Pampers, Ariel, Pantene Pro-V Hair Care Line,
Head & Shoulders, Blend-a-med, Secret, Old Spice, Safeguard, Lenor,
Ace, and Comet received 15 awards in Kazakhstan’s Choice of theYear Awards.
• Dash’s Missione Bontà awarded Best Social Campaign in Italy by the
PR professionals association Assorel.
• Glamour magazine’s readers in Spain give Hair Category Award for2nd year in a row to Pantene Pro-V Repair and Protect Intensive Mask.
• Capital magazine and Tren-D Group chose P&G Turkey as Most
Admired Personal Care/Cosmetics and Cleaning Products Company in2003.
• Pampers wins Advertising Award from the Venezuelan Advertisers
Association.
• In Europe, Head & Shoulders and Max Factor Lipfinity win EACAEURO EFFIE Award.
• P&G Media received four Media Lions in Cannes, France, at the Lions
Direct and Media Awards at the International Advertising Festival,
recognizing thorough understanding of consumers and smart,innovative strategy. The jury cited three brands and one initiative:
Bonux in Lebanon – Multimedia
Pampers in Mexico – Radio
Vidal Sassoon in Japan – Traffic – Mobile phone
BeingGirl.com in the U.S. – Web site
• Actonel 35mg Dosepak receives Best of Show at 2003 AmeriStar
Awards.
• P&G U.S.A. wins 3 Supplier Performance Awards in Retail Category by
DSN Retailing Today, a trade publication for beauty aids, OTC
medications, and household cleaners.
• Attento in Japan wins Dentsu Advertising Award in household goods
category.
• Ad Age rated Prilosec OTC #3 new brand launch in 2003.
• P&G’s Safe Drinking Water Program received the United Nations
Development Program and International Chamber of Commerce
World Business Award in support of the United Nation’s Millennium
Development Goals.
• At P&G France, Ariel Style was elected Product of the Year 2004 in the
fabric care category; Kandoo Product of the Year 2004 in the baby
care category; and Head & Shoulders Citrus Fresh Product of the Year
2004 in the shampoo category. Also, Head & Shoulders Smooth andSilky was elected Victoire de la Beauté 2004 in the shampoo category
and Pantene Repair & Protect Mask Victoire de la Beauté 2004 in theintensive conditioner category. And Herbal Essences won Carrefour’sGrand Prix de la Beauté 2004.
Employee Awards• U.S. National Association for Female Executives placed P&G in top 30
for best companies for female executives.
• P&G Korea wins Great Workplace award from Economic Daily for 2ndyear in a row and Grand Prize in Fair Management category.

• P&G Puerto Rico rated #8 in Los 20 Mejores Patronos (The Top 20 Best
Employers).
• P&G India ranked #1 Best Employer in India by Business Today.
• P&G India rated in Top 25 Best Employers in India by Hewitt
Associates.
• Sangjoon Lee, Director, P&G Korea, received award from Ministry of
Health & Welfare for contribution to Korean community.
• Sukhee Cho, TER Group Manager at P&G Korea, received award from
Ministry of Health & Welfare for regulatory affairs and advertising.
• Paul Polman, P&G Europe, was awarded European Business Leader
Year 2003: Global/Local by the Wall Street Journal Europe/CNBC.
• The U.S. Advertising Council honors P&G CEO A.G. Lafley with 50th
Annual Public Service Award for his extraordinary commitment topublic service in his personal and corporate endeavors.
• P&G Costa Rica was granted the Employer of Choice Award as aresult of our participation in the country’s biggest and mostrecognized recruiting fair.
• Global External Relations Officer Charlotte Otto received the 2004
Human Relations Award of the Cincinnati Chapter of the American
Jewish Committee.
• In the U.K., two Rusham Park Technical Centre employees were
honored with royal recognition for dedication and commitment tocommunities in which they live and work.
• Philippe Charrier, general manager and vice president of P&G France,
was awarded the prestigious Legion of Honor by the French Ministryof Ecology and Sustainable Development in recognition of P&G
France’s long-standing commitment to the programs of the French
seashore agency Conservatoire du Littoral et des Rivages Lacustres inthe scientific, education, and communication fields.
Environment Awards• U.S. Environmental Protection Agency names P&G an Energy Star
2003 Million Monitor Drive Distinguished Participant for our national
campaign to reduce greenhouse gas emissions by activating energy
efficient features on computer monitors.
• P&G Oleochemicals receives The Malaysian Society of Occupational
Health and Safety Grand Award 2003.
• P&G Canada received the Excellence in Safety Award from the
Canadian Chemical Producers Association.
• P&G Argentina’s Pilar Plant received Environmentally Responsible
Company Award from Propiciar for its efforts in effluent
management.

on theWeb

For more information on awards received by P&G,
please visit our Web site at:
http://www.pg.com/news/quickref/
quick_reference.jhtml?ltb=N30

P&G 2004 Sustainability Report

16

Policies,
Organization,
Management
Systems

P&G 2004 Sustainability Report

17

Policies, Organization, and Management Systems

po
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in

po

eople
ofp
er

powerofm

successdrivers

w er

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ofa

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valuesintegrity • trust • ownership • leadership • passion for winning

Sustainable development is a simple idea – ensuring a better quality of life for everyone, now and forgenerations to come. P&G embraces sustainable development as a potential business opportunity, as
well as a corporate responsibility. Through our activities we contribute to the economic and social wellbeing of a range of other stakeholders, including employees, shareholders, communities in which we
operate, and more widely, to regional, national, and international development. In summary, P&G
contributes to sustainable development through both what we do and how we do it.
“What we do” provides products and services that improve the lives of consumers via health, hygiene,or convenience.
“How we do it” includes addressing any environmental and socioeconomic issues associated with our
products and services. Our Principles, Values, and Statement of Purpose, which are central to P&G’sorganization, tell us to do this. They act as guidance for the development of our entire organizational
structure, all over the world. They also lead us to a set of management systems and policies applied
across the whole Company.

Success Drivers, the competencies
that define how our people succeed
in today’s business environment. They
are the characteristics we look for in
new employees, how we measureperformance in the Company, and thebasis for our employee-development
and career systems.
P&G's edge over competition –the advantage that’s hardest forcompetitors to duplicate – isP&G people.

P&G 2004 Sustainability Report

Policies, Organization, and Management Systems

18

Our Purpose
We will provide branded products and services of superior quality
and value that improve the lives of the world’s consumers.
As a result, consumers will reward us with leadership sales, profit
and value creation, allowing our people, our shareholders, and thecommunities in which we live and work to prosper.

Our Values
P&G is its people and the values by which they live. We attract andrecruit the finest people in the world. We build our organizationfrom within, promoting and rewarding people without regard toany difference unrelated to performance. We act on the convictionthat the men and women of Procter & Gamble will always be ourmost important asset.
Leadership• We are all leaders in our area of responsibility, with a deep
commitment to deliver leadership results.
• We have a clear vision of where we are going.
• We focus our resources to achieve leadership objectives andstrategies.
• We develop the capability to deliver our strategies and eliminate
organizational barriers.
Ownership• We accept personal accountability to meet the business needs,
improve our systems and help others improve their effectiveness.
• We all act like owners, treating the Company’s assets as our own
and behaving with the Company’s long-term success in mind.
Integrity• We always try to do the right thing.
• We are honest and straightforward with each other.
• We operate within the letter and spirit of the law.
• We uphold the values and principles of P&G in every action anddecision.
• We are data-based and intellectually honest in advocating
proposals, including recognizing risks.

Consumers

P&G Values
Leadership
Ownership
Integrity
Passion for Winning
Trust
P&G
BrandsP&G
PeopleP&G Brands and P&G People are the foundation of P&G’s
success. P&G People bring the values to life as we focus on
improving the lives of the world’s consumers.

Passion for Winning• We are determined to be the best at doing what matters most.
• We have a healthy dissatisfaction with the status quo.
• We have a compelling desire to improve and to win in themarketplace.
Trust• We respect our P&G colleagues, customers and consumers, andtreat them as we want to be treated.
• We have confidence in each other’s capabilities and intentions.
• We believe that people work best when there is a foundation oftrust.

Policies, Organization, and Management Systems

P&G 2004 Sustainability Report

19

Our Principles
These are the Principles and supporting behaviors which flow fromour Purpose and Values.
We Show Respect for All Individuals• We believe that all individuals can and want to contribute totheir fullest potential.
• We value differences.
• We inspire and enable people to achieve high expectations,standards and challenging goals.
• We are honest with people about their performance.
The Interests of the Company and the Individual Are
Inseparable• We believe that doing what is right for the business withintegrity will lead to mutual success for both the Company andthe individual. Our quest for mutual success ties us together.
• We encourage stock ownership and ownership behavior.
We Are Strategically Focused in Our Work• We operate against clearly articulated and aligned objectives andstrategies.
• We only do work and only ask for work that adds value to thebusiness.
• We simplify, standardize and streamline our current work
whenever possible.
Innovation Is the Cornerstone of Our Success• We place great value on big, new consumer innovations.
• We challenge convention and reinvent the way we do businessto better win in the marketplace.
Governance Structure
P&G’s Board of Directors has adopted guidelines for determining
the independence of its Board members. At the time of thispublication, 81 percent of P&G’s Board members are from outside
the Company.
Corporate Governance Guidelines have existed for a number ofyears and recently were amended. They provide recommendations
on the qualifications for Board members regarding their expertisein guiding the strategic direction of the Company. Strategic
direction includes issues related to environmental and social risks
and responsibilities. The Board has several committees, including
Audit, Finance, and Public Policy, to address issues such as the
management of economic, environmental, and social risks,and responsibilities.
All shareholders may communicate in writing with the Board of
Directors, and all have the ability to submit proposals in the
Company’s proxy statement pursuant to U.S. Securities andExchange Commission rules. P&G does not have minority
shareholders, as no one entity or group holds a majority position in
Company stock.

on theWeb

To read P&G’s 2004 Annual Report, please click here:
http://www.pg.com/investors/financial_reports/
annualreports.jhtml

We Are Externally Focused• We develop superior understanding of consumers and theirneeds.
• We create and deliver products, packaging and concepts thatbuild winning brand equities.
• We develop close, mutually productive relationships with ourcustomers and our suppliers.
• We are good corporate citizens.
We Value Personal Mastery• We believe it is the responsibility of all individuals to continuallydevelop themselves and others.
• We encourage and expect outstanding technical mastery andexecutional excellence.
We Seek to Be the Best• We strive to be the best in all areas of strategic importance to
the Company.
• We benchmark our performance rigorously versus the very bestinternally and externally.
• We learn from both our successes and our failures.
Mutual Interdependency Is a Way of Life
• We work together with confidence and trust across business
units, functions, categories and geographies.
• We take pride in results from reapplying others’ ideas.
• We build superior relationships with all the parties who
contribute to fulfilling our Corporate Purpose, including ourcustomers, suppliers, universities and governments.

Executive Compensation
Executive compensation is based on principles that have served theCompany well and enabled it to increase shareholder value:• Pay competitively.
• Pay for performance.
• Design compensation programs that support the business.
These principles have helped the Company develop and retain
extraordinary executive talent. P&G develops executives from within,an achievement few other major corporations have matched.
A substantial portion of compensation is comprised of variable, atrisk incentives, the majority based on the Company’s long-term
success. We also benchmark the Company’s pay structure and its
business and financial performance.
Additionally, we expect executives to uphold the fundamental
principles in the Company’s Statement of Purpose, Values, andPrinciples, plus the Worldwide Business Conduct Manual, theSustainability Report, and the Environmental Quality Policy. These
principles include integrity, maximizing the development of eachindividual, developing a diverse organization, and continually
improving the environmental quality of the Company’s products
and operations. In upholding these principles, executives not only
contribute to their own success but also help ensure the prosperityof P&G’s business, employees, shareholders, and the communities
in which the Company operates.

P&G 2004 Sustainability Report

Policies, Organization, and Management Systems

Corporate Governance and Management’s Responsibility
Procter & Gamble has been built through the generations by thecharacter of its people. That character is reflected in our Purpose,
Values and Principles and in how well we live them as individuals
and as a Company. High-quality financial reporting is one of our
responsibilities – one that we execute with integrity.
High-quality financial reporting is characterized by accuracy,
objectivity, and transparency. Management is responsible formaintaining 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. They have engaged Deloitte & Touche LLP to audit ourconsolidated financial statements, on which they have issued an
unqualified opinion.
Our commitment to providing timely, accurate, andunderstandable information to investors encompasses:
Communicating expectations to employees. Key employee
responsibilities are reinforced through the Company’s Worldwide
Business Conduct Manual, which sets forth the Company’scommitment to conduct its business affairs with high ethicalstandards. Every one of P&G’s employees – from senior
management on down – is held personally accountable forcompliance. The Worldwide Business Conduct Manual is available
on our Web site at www.pg.com/company.
Maintaining a strong internal control environment. Our system ofinternal controls includes written policies and procedures,segregation of duties, and the careful selection and developmentof employees. The system is designed to provide reasonableassurance that transactions are executed as authorized andappropriately recorded, that assets are safeguarded, and that
accounting records are sufficiently reliable to permit the
preparation of financial statements that conform in all material
respects with accounting principles generally accepted in the
United States of America. We monitor these internal controls
through control self-assessments by business unit management
and an ongoing program of internal audits around the world.
Executing financial stewardship. We maintain specific programs andactivities to ensure that employees understand their fiduciary
responsibilities to shareholders. This ongoing effort encompasses
financial discipline in our strategic and daily business decisions andbrings particular focus to maintaining accurate financial reportingand effective controls through process improvement, skill
development, and oversight.

20

Exerting rigorous oversight of the business. We continuously review
our business results and strategic choices. Our Global LeadershipCouncil is actively involved – from understanding strategies toreviewing key initiatives, financial performance, and control
assessments. The intent is to ensure we remain objective in ourassessments, constructively challenge the approach to business
opportunities, identify potential issues, and ensure reward andrecognition systems are appropriately aligned with results.
Engaging our Disclosure Committee. We maintain disclosure controls
and procedures designed to ensure that information required to bedisclosed is recorded, processed, summarized, and reported timely
and accurately. Our Disclosure Committee is a group of senior-level
executives responsible for evaluating disclosure implications ofsignificant business activities and events. The Committee reports its
findings to the CEO and CFO, providing an effective process toevaluate our external disclosure obligations.
Encouraging strong and effective corporate governance from our
Board of Directors. We have an active, capable, and diligent Board
that meets the required standards for independence, and wewelcome the Board’s oversight as a representative of theshareholders. Our Audit Committee comprises independent
directors with the financial knowledge and experience to provide
appropriate oversight. We review significant accounting policies,
financial reporting, and internal control matters with them andencourage their independent discussions with our external
auditors. Our corporate governance guidelines, as well as thecharter of the Audit Committee and certain other committeesof our Board, are available on our Web site atwww.pg.com/company/our_commitment/corp_gov.

on theWeb

To read P&G’s 2004 Annual Report, please click here:
http://www.pg.com/investors/financial_reports/
annualreports.jhtml

Policies, Organization, and Management Systems

Policies
These are the policies that support our Purpose, Values, andPrinciples.
Our Values and Policies
As an important part of our Corporate Social Responsibility
program, we have released a publication, Our Values and Policies.
This booklet provides sustainable development guidelines forbusiness conduct that are based on P&G’s Purpose, Values, andPrinciples. These key elements are of utmost importance forproper conduct and respect for all individuals in the quest forcommon prosperity.
Our Values and Policies can be downloaded at:
http://www.pg.com/content/pdf/01_about_pg/
on the 01_about_pg_homepage/about_pg_toolbar/
Webdownload_report/values_and_policies.pdf

Sustainability Guidelines for Supplier Relations
We have developed a publication, Sustainability Guidelines for
Supplier Relations.
This document shares what we expect from our suppliers in termsof business conduct and what our suppliers can expect from us. It
explains that the foundation of our supplier selection guidelines is
our Statement of Purpose, Values, and Principles.
We operate within the spirit and letter of the law and maintainhigh ethical standards wherever we conduct business. We will
actively seek business relationships with suppliers who share ourvalues and promote the application of these high standards
among those with whom they do business.
Sustainability Guidelines for Supplier Relations can be
downloaded at:
http://www.pg.com/content/pdf/01_about_pg/
on the 01_about_pg_homepage/about_pg_toolbar/
Webdownload_report/guidelines_for_supplier_relations.pdf

P&G 2004 Sustainability Report21Policies, Organization, and Management Systems

P&G 2004 Sustainability Report

The Global Sullivan Principles
P&G was one of the founding members of the Global Sullivan
Principles. In accordance with the Global Sullivan Principles, we
support economic growth, social justice, human rights, politicaljustice, and equal opportunity wherever we do business in theworld. The products we deliver, the consumers we serve, and how
we serve them are in line with these expectations. We consider
ourselves a global company and a global citizen.
At P&G, everything we do begins with our Purpose, Values, andPrinciples. We have reviewed and revised our policies to make sure
we are aligned with the Global Sullivan Principles. We ensure ourcommitment to employees through our human resources systemand profit-sharing program. We train, educate, and develop our
people. We instill our culture and policies to ensure that everyone
is treated fairly and has the opportunity to contribute to our visionand mission. The profit-sharing program is designed to provide
employees with a stake in the future of the Company. Our flexible
work arrangements offer employees the opportunity to meet bothbusiness and personal needs. Programs such as these enable us tobe a sustainable business and a viable part of the communities inwhich we do business.
We are working to support the Global Sullivan Principles throughour products and businesses. We believe that by incorporating
sustainable development in our business approach, we can meetthe needs of consumers, employees, and shareholders. All thesecreate conditions conducive to delivering the Global Sullivan
Principles – a business proposition in which everyone wins.

Diversity Data – Global Enrollment
P&G continues to focus on diversity as a global strategy andexpects its workforce to become increasingly more diverse. Global
data on enrollment by gender is shown in the following table:
Global Enrollment % Female

Management
All Other Employees1

2004
36.7
36.9

2003
35.5
37.1

2002
34.6
41.6

1 The category of “All Other Employees” continues to be an evolving global database as
more of P&G’s plants are included.

The percentages of minority and female employees in the UnitedStates are shown in the following table:% Minorities
Management
All Other Employees2% FemaleManagement
All Other Employees2

2004

2003

2002

18.8
19.5

18.0
19.8

16.1
20.3

35.4
38.9

34.8
38.7

34.4
38.0

2 Administrative, Technical, and Plant Technicians

22

Diversity Policy
P&G has a strong legacy of ownership, commitment, andaccountability for diversity because we recognize the direct link
between the Company’s success, both short-term and long-term,and engaging the full power of all our employees. We believe afully utilized and diverse workforce creates competitive advantage
and fulfills P&G’s Purpose, Values, and Principles. Our businessleaders relentlessly pursue valuing, trusting, respecting, andleveraging individual differences and inclusion to ensure we are “intouch” with our global markets, customers, and business partners.
Thus, we are more creative and innovative in developing products
and services that improve the lives of the world’s consumers.
Diversity is a fundamental component of P&G’s culture and integral
to our “How to Win” business strategy for success.
Leadership Focus and Accountability
A. G. Lafley, Chairman of the Board, President, and Chief
Executive, holds himself accountable for leading diversity andmonitoring progress in every part of our Company. He also expects
top leadership to hardwire diversity into their business strategies,
establish clear expectations, and demonstrate personalaccountability. This encompasses showing strong, visible
leadership, commitment, and constant focus that includes diverse
leadership and work teams and robust systems for ongoingmeasuring and tracking of diversity progress.
At P&G, top executives conduct in-depth diversity reviews annuallywith organization heads to assess progress and reinforce leadershipaccountability for corrective actions across the business units. The
top 30 officers in the Company have diversity results tied to theirstock options awards, and strong diversity performance influences
top ratings. Diversity action plans are developed in each region of
the world to reflect the greatest opportunity for advancement oflocal diversity strategies.
Talent Support and Development
P&G strives to build a diverse and fully engaged organization byattracting the best talent from around the globe, leveraging thefull talent of each individual through effective assignment andpromotion planning processes, and executing with excellence thecritical systems that affect and support retention of each employee.
We focus on establishing long-term relationships with educational
institutions that have diverse populations of highly qualified
students. To broaden our candidate base worldwide, we havelaunched Recruitsoft, our first fully global Web-based online
candidate management system. We supplement our baserecruiting efforts by utilizing intern programs, participating in
recruiting conferences, and increased outreach to high school
students. We execute special programs such as INROADS and P&G
Marketing and Finance Summer/Winter Camps to introduce
students to P&G. Additional teams are available to help withefforts to recruit women around the globe and Hispanic, AfricanAmerican, military, and disabled candidates in the United States.
continued on next page

Policies, Organization, and Management Systems
Diversity Policy

P&G 2004 Sustainability Report23

continued from previous pageOur foundation systems for ensuring employee retention include
effective first-year orientation/join-up programs, providing a good
match with the first boss, developing coaching/mentoring/
advocacy relationships, high-quality challenging work/career plans,
training (virtual, classroom, and external) and supportive work/lifepolicies and practices. Employee support groups and network
teams exist throughout the organization and contribute strongly toeffective recruiting, join-up, and development efforts. These groups
include women globally and Hispanic, African-American,
Asian/Pacific-American, gay/bisexual/lesbian, and disabled
employees in the United States.
Inclusive Culture
P&G leaders are expected to build an inclusive work environmentthat welcomes and embraces diversity – an environment where
people feel comfortable being who they are, regardless of theirindividual differences, talents, or personal characteristics. This is anenvironment that provides everyone equal access to information,
opportunities, and involvement so each person learns, grows,
excels, and maximizes his or her personal contribution.
Training, policy, and sensing systems are utilized to reinforce
development of an inclusive culture. Focused diversity
training/learning processes are utilized to equip leaders to value
and nurture differences in management experiences, styles ofleadership, and problem-solving/decision-making approaches. All
employees have access to supportive and enabling policies andpractices in the areas of flexible work arrangements, family care,resource/referral services, and personal wellness management toimprove work/life balance and productivity. Employee surveys andculture sensing, as well as the diverse leadership networks, provide
advisory data and learnings to top leadership about how to be
more effective at leveraging local customer/employee practices
and beliefs.
Business and Community Partnerships
Improving lives in the countries and communities in which we
operate is a long-standing P&G value. We are committed tomaking a difference in all our communities – from India to Kenya,
from Canada to Brazil, from France to Australia. Around the world,
P&G and its employees strive to improve lives every day. This has
led to a focus on building effective business and community
partnerships in areas where we can make a meaningful difference:education, volunteerism to improve the quality of life in ourcommunities, and economic development.
Education is a means of improving quality of life and a pathway tofulfill personal aspirations. P&G supports educational programs,
from pre-school through college, through financial contributions
and mentoring/tutoring programs. The volunteer leadership of
P&G employees, who can be counted on to help with virtually
every significant community project, greatly enhances theeffectiveness of our contributions. Through volunteerism, P&G
provides ongoing support, sponsorship, and leadership for many
civic, cultural, and nonprofit organizations across all geographies inwhich we operate. In 2002/2003, the P&G Fund, the Company’s

philanthropic foundation, provided more than $23 million for
educational programs, $12 million for health and human services,and more than $6 million to civic, cultural, and public service
organizations that primarily benefit youth, women, and minorities.
P&G is committed to the economic development of minority- andwomen-owned businesses and suppliers around the globe. P&G
has one of the oldest supplier diversity programs in the UnitedStates, spending more than $1.1 Billion across nearly 700 minorityand women-owned suppliers. Additionally, P&G provides
continuing leadership in the advertising industry by partnering with
our agencies to refer applicants to each other and help minorities
gain entry into commercial production companies.
Summary
In 2004, P&G’s solid progress in diversity was recognized in many
U.S. surveys: Fortune’s World’s Most Admired (#1 in our industry
category), Family Digest’s Best Companies for African Americans(Top 7), DiversityInc’s Top 50 Companies for Diversity (#30),
Executive Women (Top 30), LATINA Style Magazine’s Best
50 Companies for Latinas to Work, and the Ohio Governor’s
Minority Business Development Recognition Award. P&G global
rankings for best places to work include: Latin America (Top 10),
Chile (Top 5), Canada (Top 100), and Singapore’s HRM Award for
the Best Retention Strategies.
P&G is committed to being a leader. We want our brands to leadin their categories and our Company to be a leader in our industry
and our communities. Our mission is to be, and be seen as, thebest consumer products company in the world. In order to achieve
our mission, we must be among the best places to work andleverage diversity as a competitive advantage. Our corporatechallenge is to become the most in-touch company in the world.
To be in touch is to practice – and believe passionately in – diversity
and inclusion.

P&G 2004 Sustainability Report

Policies, Organization, and Management Systems

Child Labor and Worker Exploitation Policy
P&G does not use child or forced labor in any of our global
operations or facilities, and we expect suppliers and contractors
with whom we do business to uphold the same standards. Morespecifically, we will not conduct business with suppliers employing
child, prison, indentured, or bonded labor, or using corporalpunishment or other forms of mental or physical coercion as aform of discipline.
In the absence of any national or local law, we will define “child”
as less than 15 years of age. If local minimum-age law is set below
15 years of age, but is in accordance with developing country
exceptions under International Labor Organization (ILO)
Convention 138, the lower age will apply.

more
info

For more information,please click here.

24

Millstone Supports Sustainable Coffee
Millstone Coffee has taken the lead to help Latin American coffee
growers sustain themselves. The brand has launched Signature
Collection coffees that improve quality of life for growers and offer
consumers exceptional coffee.
Consumers wanting to help support coffee growers can look forthese products:• Millstone Mountain Moonlight Fair Trade Certified – This coffee isFair Trade Certified by TransFair U.S.A., the only certifier of fairtrade products in the United States. Fair Trade Certification
guarantees consumers that a fair price has been paid for coffee
grown on small family farms, and that the farmers’ human rights
are protected. TransFair U.S.A. is part of an internationallyrespected certification system, operating in over 60 countries
worldwide.
• Millstone Cup of Excellence Signature Roast – This coffee comesfrom growers who win the prestigious Cup of Excellence. Thisaward recognizes the best coffees grown each season in Brazil,
El Salvador, Guatemala, Honduras, and Nicaragua. Millstone is
the first major roaster to purchase and sell coffee from Cup of
Excellence winners. P&G also donates substantial funds to thenonprofit organization TechnoServe, which organizes the Cup of
Excellence competition as well as other activities that help coffee
growers increase their incomes.
• Millstone Rainforest Alliance Certified Rainforest Reserve – Thiscoffee is certified by the Rainforest Alliance, a leadinginternational conservation organization. The Rainforest Allianceevaluates farms annually and guarantees that the coffee it
certifies meets rigorous environmental and social standards.
Rainforest Reserve was grown on farms that are vital refuges forwildlife and safe and healthy places to work.
Millstone Coffee is a gourmet brand sold by P&G in U.S. grocery stores.
on theWeb

For more information, please visit:www.millstone.com
www.cupofexcellence.org
www.transfairusa.org
www.rainforest-alliance.org

Policies, Organization, and Management Systems

Personal Information Privacy
Advances in computer technology have made it possible fordetailed information to be compiled and shared more easily andcheaply than ever, around the globe. That can be good news forsociety as a whole and for individual consumers.
At the same time, as personal information becomes moreaccessible, each of us – companies, associations, government
agencies, consumers – must take precautions against misuse ofthat information. Several countries already have laws protecting
consumers from misuse of their personal information, and manyothers are following suit.
P&G places high priority on safeguarding people’s personal
information. Even in countries without privacy legislation, we still
adhere to our privacy policy. We want to have the trust of consumers
and all others who do business with us, including employees,
shareholders, retail customers, and recruitment candidates.

P&G 2004 Sustainability Report25

Our corporate policy implementation is highly regarded around theworld for its focus on the consumer, and we are often asked toparticipate in government panels and symposiums to help
influence and educate others.

on theWeb

For more information on P&G’s global privacy principles,
please visit:
http://www.pg.com/company/our_commitment/
privacy_epc/index.jhtml

P&G adheres to U.S./European Union Safe Harbor principles.
For more information, visit:
http://www.export.gov/safeharbor/
In the United States, P&G is an active participant in the Better
Business Bureau OnLine (BBBOnLine) Privacy Seal Program.
For more information about BBBOnLine, visit:
http://www.bbbonline.org/

P&G’s robust privacy program is managed by a Global Privacy
Council. Our first objective is to protect an individual’s personallyidentifiable information as if it were our own. All outsidecompanies handling data on our behalf are required to abide by
our privacy principles.

Advertising Policy and Sustainable Development
If sustainable development is about ensuring a better quality of life
for everyone, now and for generations to come, then advertising
has a key role to play in this. Advertising helps inform consumers
about products and services and facilitates consumer choice. Afterall, it is consumers themselves who are best placed to choose how
best to improve their own quality of life.

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info

For more information, please click here.

Animal Welfare
P&G’s first priority is the safety of its consumers. We view safety as
an essential ingredient of all our products.
To achieve the highest safety standards, we evaluate all our
products via a comprehensive risk assessment. Except whererequired by law, P&G does not use animals to evaluate the safetyof non-food and non-drug consumer products. Of the limited
animal testing we use, the majority of it relates to drug and healthcare products.
P&G people care about the welfare of animals. We have been able
to reduce, refine, or replace animal testing due to increased use ofhistorical data, use of sophisticated new computer models, anddevelopment of alternative research methods. P&G is further
working toward the acceptance of animal research alternatives bygovernments around the world.
We are committed to the ultimate elimination of unnecessary
regulatory testing. Where testing is still necessary, we will also
meet or exceed standards established by the Animal Welfare Actof the United States, the U.S. Department of Agriculture, andDirective 86/609/EEC of the European Union.

on theWeb

For more information on P&G’s product testing, please
visit: http://www.pg.com/science/animal_alt.jhtml

Policies, Organization, and Management Systems

International Animal Care Advisory Board Assists Iams
Iams has begun working with an International Animal Care
Advisory Board, which helps evaluate Iams’ industry-leading
research policy while providing advice on new research alternatives
that provide for advanced levels of dog and cat care.
The Iams International Animal Care Advisory Board is anindependent group that currently consists of eight members,
representing various disciplines and fields of study, including
veterinary medicine, animal husbandry, behavior, welfare, andethics. They are:
• Michael Arms of the Helen Woodward Animal Center (a leading
California-based shelter and adoption facility)• Dr. Kathryn Bayne of the Association for Assessment andAccreditation of Laboratory Animal Care
• Rev. Kenneth Boyd, a professor of Medical Ethics at Edinburgh
University Medical School and a research director of the Instituteof Medical Ethics, Edinburgh, Scotland• Dr. Kelley Donham, MS, DVM, of the College of Public Health at
The University of Iowa is a Professor and Associate Head for
Agricultural Medicine, Occupational and Environmental Health• Dr. Stephen Hansen of the American Society for the Preventionof Cruelty to Animals• Dr. Robert Hubrecht of The Universities Federation for Animal
Welfare• Dr. Irene Rochlitz, an independent veterinary consultant in feline
welfare, Cambridge, England• Dr. Andrew Rowan of the Humane Society of the United States
The advisory board members make periodic unannounced visits toIams feeding study sites to provide reviews and recommendations.
They have completed visits to all Iams facilities and have found all
to be in compliance with the Iams research policy. Iams already has
implemented many suggestions made by these experts and willcontinue to work with them to innovate on the industry-leading
animal welfare program.
Iams considers this work non-proprietary and is readily sharing theresults with the pet food industry and with other interested groups
such as shelters. The work of this advisory board is a major step ina continued effort to enhance the well-being of dogs and catsaround the world.

P&G 2004 Sustainability Report

26

Iams Amico del Cuore Campaign in Italy
Iams has helped Italy’s abandoned pets by donating more than
140,000 meals through its Amico del Cuore (Best Friend)
campaign.
Consumers make the meals possible in two ways: They can buy an
Iams product and call the toll-free number indicated on the
package, or they can send in a story or drawing about a dog or
cat. For each call, story, or drawing received, Iams donates a meal.
Iams launched Amico del Cuore in 2003 and extended thecampaign for another year because of its popularity.
Every year, on average, 200,000 cats and 150,000 dogs areabandoned in Italy. Most of them get rescued by volunteers fromanimal welfare associations and go to their shelters. To reduce theincidence of pet abandonment, Iams promotes educational
programs that help pet owners make good adoption choices anddevelop good relationships with their pets. These materials include
the “Touring Club Italy Travel With Your Pet Guide,” which lists
places to stay that allow pets, plus a school program educating
children about the pet abandonment problem.

P&G 2004 Sustainability Report

Policies, Organization, and Management Systems

Environmental Quality Policy
We will provide products and services of superior quality and valuethat improve the lives of the world’s consumers. As part of this,P&G continually strives to improve the environmental quality of its
products, packaging, and operations around the world.

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info

For more information on P&G’s Environmental Quality
Policy, please click here.

Climate Change Policy
P&G supports efforts to deal with climate change under the
U.N. Framework Convention on Climate Change. P&G is not anenergy-intensive business, though we understand the potential
impacts of greenhouse gases from our operations. We take energy
conservation and efficiency seriously. We strongly support
continued scientific efforts to understand the causes and27

consequences of, and potential remedies for, the negative effects
of climate change.
It is critical that the international community take action to provide
the flexibility essential to minimize negative economic and social
impacts of climate change on countries, individual businesses, andthe general public.
Forest Resources Policy
P&G purchases forest resources – wood fiber and cellulose – to use
in the manufacture of its Baby Care, Feminine Care, and Family
Care paper products. The Company believes that these forest
resources should be managed for long-term viability.
The Company provides suppliers with its requirements regarding
the purchase of wood fiber and cellulose materials.
To see those requirements, please click here.
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HIV/AIDS
Though the spread of AIDS continues globally without an end insight, it has not had a significant impact on the economics of
P&G’s global business. This is because none of our major markets
are located in areas with high incidences, such as in sub-SaharanAfrica. Nonetheless, P&G participates actively in the fight against
AIDS, led by our organizations in sub-Saharan Africa.

more
info

For more information see the“Sustainability in Action” section.

Percent Sales Versus HIV Incidence(Excluding U.S.A.)
20%

South Africa

15% Kenya
HIV Incidence

Health and Safety Policy
P&G is committed to having safe and healthy operations aroundthe world. The goals are to protect the lives and health of its
employees and the communities surrounding its operations, aswell as to protect its assets, ensure business continuity, andengender public trust. To accomplish this, P&G will:• Operate facilities safely and ensure processes are safe andhealthy for our employees and residents of the surrounding
communities. We will accomplish this by following uniform
corporate safety standards around the world. Safe operations
have been a long-standing part of Company culture, reflecting
the belief that our people are our most important asset.
• Construct our facilities so as not to compromise the safety andhealth features designed into them.
• Monitor progress toward our objective of preventing injuries,
illnesses, and incidents. We will continually assess and improve
our safety and health technologies and programs.
• Have every employee understand and be responsible forincorporating safe behavior in daily business activities. Every
employee is trained to work in a safe and healthy manner.
• Have operating standards, practices, systems, and resources inplace to implement this policy.

10%5%

Nigeria
Stategic Countries

0%
0%

2%

4%

6% 8% 10% 12%
Sales

HIV/AIDS Policy
All employees, including those who are HIV infected or with AIDS,
are treated consistently with the Company's Purpose, Values andPrinciples (PVP) by the Company, their managers and coworkers.
Among other things, that means that each individual is treatedwith dignity and respect, and that we do not discriminate against
any individual based on any difference not related to performance.
We treat employees with HIV/AIDS the same as we treat thosewith other serious illnesses.
Specifically, an employee who is HIV-infected or with AIDS:• has the same employment rights and responsibilities as other
employees,• has the same eligibility for employee benefits and programs,
including medical care and disability coverage, as non-infected
employees,• is afforded privacy and confidentiality protection consistent with
the Company's handling of confidential, medical, or othersensitive information, and• is provided management support to remain productive.

Policies, Organization, and Management Systems

P&G 2004 Sustainability Report

28

Management Systems
P&G’s Management Systems ensure that the Company’s policies are implemented in a consistentmanner throughout the world. These Management Systems align with the Company’s policies andpromote a regular flow of information that helps the Company better manage its progress onelements of sustainable development. This section provides an overview of our Management Systems.

Human Resources
Human Resources ensures that P&G has the employees,organizational design, and work culture to deliver businessproductivity and to continually improve consumer, employee, andshareholder value.

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info

For more information on Human Resources,
please click here.

Employee Privacy
P&G respects the privacy of every employee. We are committed toprotecting the privacy of employee data and following all data
privacy laws. Only data needed to conduct business and provide
for the needs of employees will be collected. This data is protectedwith appropriate security systems and used only for intended
purposes. Employees have reasonable access to data that theCompany maintains about them.
Harassment Policy
P&G is committed to providing a harassment-free work
environment. This is the right thing to do not only from a social
perspective, but also from a business perspective, it enables ourdiverse workforce to contribute to their highest potential. We will
not tolerate harassment of anyone by anyone – including
employees, suppliers, customers, contractors, and agencies. Every
employee is expected to be proactive in ensuring that the work
environment is free from harassment of any kind. Managers ofothers are responsible for setting clear expectations for acceptablebehavior in the workplace.

Race for the Future
P&G Korea joined the Partners for the Future Foundation, anonprofit organization in the American Chamber of Commerce, ina corporate/employee donation program called Race for the
Future. The program helps the unemployed get education andvocational training.
P&G Korea employees signed up for a year of monthly payroll
deductions, which the Company matched. Participation was
outstanding – 100 percent. Donated funds in the amount of
US$16,500 went to the Home of Love, a job training facility forthe handicapped.
P&G provided not only monetary support to the Home of Lovebut also hope that its students can stand on their own to improvetheir lives.

Policies, Organization, and Management Systems

Insurance Systems
The Corporate Insurance Program sees that P&G is protected frompotential major losses. It tries to secure the best coverage at thelowest cost.

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For more information on Insurance Systems,
please click here.

Human and Environmental Safety of Our Products
The Product Safety and Regulatory Affairs (PS&RA) organization is
responsible for ensuring that products and packages are safe. Thismeans safe for consumers, safe for the environment, and incompliance with laws and regulations where they are sold. PS&RA
also addresses other environmental aspects of products andpackages, such as their compatibility with waste management
systems, natural resource use, or issues of “perceived safety.”

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info

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Business Continuity
P&G’s Global Business Continuity Program ensures that all criticalsites and work processes evaluate their risk mitigation programs,
exposure to catastrophic events at P&G sites and at our key
suppliers and service providers that could significantly interrupt
business operations, and the business impact of such events. Siteand business unit leaders then develop contingency plans tominimize business interruption if a disabling event should occur.
Crisis Management team structures are defined to manage
business recovery using the pre-defined contingency plans. Tests
are conducted annually to ensure the contingency plans are
sufficient and up-to-date. Business Continuity Plans are audited
annually, and a report of the Business Continuity Program’s status
is made each January to the Audit Committee.

Worldwide Health, Safety & Environment Systems
at Manufacturing Operations
Health, Safety & Environment (HS&E) is a global communityof resources responsible for ensuring that all manufacturing
facilities worldwide are operated safely and legally; that process
hazards are minimized or eliminated; that health risks are
identified, managed, or eliminated; and that waste from sites isreduced as much as possible. Several thousand employees spend
all or a portion of their time on HS&E management; this totals
more than 886 full-time equivalents.

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info

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please click here.

P&G 2004 Sustainability Report

29

HS&E Benchmarking
Benchmarking is an important tool used by P&G to assess andmaintain the health of its global HS&E program. Benchmarking
provides Corporate HS&E with data to verify the robustness of
our performance and to identify improved management andtechnology approaches.
To that end, P&G conducted an in-depth HS&E benchmarking
study with Alcoa, Dow, Duke Energy, du Pont, Georgia-Pacific,
Intel, and Nova Chemical. This study verifies that P&G continues toperform strongly in the areas of injury/illness, workers
compensation, property loss, and regulatory fines, as compared tothe benchmarked companies. In addition, it showed that P&G has
one of the most decentralized HS&E approaches; this has helped
us achieve the lowest HS&E cost per billion dollars of sales within
this group. A second study conducted by this group of companies,
along with BP and Johnson & Johnson, confirmed that we havevery strong approaches in the areas of compliance with the law,sustainable development, and HS&E cost management.
During the past year, P&G continued participating in several otherbenchmarking studies involving other multinational companies
headquartered in the United States and in Europe. For example,
one of these studies involved a comprehensive review of HS&E
activities at 17 leading U.S. companies. Another study involved asimilar review with five Europe-based companies. Other studies
were lead by GEMI (Global Environmental Management Initiative,
with a membership of more than 40 multinational companies) andsurveyed several key HS&E topics.
As a result of this work, we have concluded that, when comparedto other leading multinational companies, P&G has:
• Strong HS&E performance
Injury/illness rate for employees – lowest 25 percent
Lost workday rate for employees – lowest 25 percent
Penalties paid (in $/yr per $billion sales)– lowest 33 percent
Property loss (in $/yr per $billion sales)– lowest 33 percent• “Best in class” HS&E operations costs (in $/yr per $billion sales)• Shifted more HS&E work to site technicians than most othercompanies. This is one of the reasons for our lower costs.
While P&G’s current situation is quite positive when compared topeer companies, the long–term challenge is to continue delivering
excellent benchmarking results.

Policies, Organization, and Management Systems

P&G 2004 Sustainability Report

30

Medical Systems
P&G’s Global Medical organization advises and assists
management and employees in assuring a safe, healthful work
environment through the delivery of preventive health and clinicalservices. These services are for all employees, not just those atmanufacturing sites.
Global Medical manages health issues that may affect employees,
technologies, and brands. As P&G is a principles-driven company,
all medical system work is undertaken in the following orderof priority:
1. Save a Life (Protect our People)
2. Obey the Law (Protect Company Reputation)
3. Protect Key Technologies (Protect Brand Integrity)
4. Enhance Speed to Market (Protect Emerging Technologies)
5. Optimize Employee Productivity
All medical standards of performance and standard operatingprocedures flow directly from specific P&G Principles, Values, andother compelling business needs.

Fire Protection Systems
P&G operates its fire protection program on the basic principle thateach facility is unique and should have a program designed tomeet its specific requirements. The Insurance Division, working
with Global Business Unit fire protection leaders and local
management, determines the appropriate level of fire protection
for each P&G location.
Each facility’s program is organized and built around the following
key elements:• Protection Engineering• Maintenance and Inspections• Prevention Programs• Emergency Response• Qualified Personnel
Each facility has a fire defense profile that describes in detail the
program requirements.

In Mataro, Spain, P&G hosted a drillthat prepared the community to handle
a chemical emergency.

Emergency Protection Goes Beyond the P&G Plant
P&G shares its emergency response expertise with communities inwhich it operates, around the world.
In Pilar, Argentina, for example, P&G assists with training ofvolunteer firefighters. The Company also makes a financial
contribution, such as this year’s donation of a gas-oil pump. The
pump allows gas-oil from the fuel station to flow directly to thefirefighters’ quarters, saving time and reducing combustibility.
With this approach, P&G helps the community maintain a welltrained firefighter team with resources sufficient to meet any typeof emergency.
In Mataro, Spain, P&G’s Household Care plant has been called on
to help its local area prepare for emergencies.
The town asked the plant to host a training exercise last winter for
students at the local government’s school for firefighters. The plantorganized a drill around a simulated chemical release. The drill
involved 15 student firefighters, the plant’s emergency response
team, the local fire brigade, local police, and local government
officials. The event improved the town’s ability to coordinate key
players and to be better prepared, overall, in the event of an
actual emergency.
P&G was chosen from the Mataro area’s 80 chemical facilities
because of its outstanding safety and emergency protocols and its
previous participation in joint exercises with local fire and civil
defense teams.
This was the first time the town of Mataro had tested its protocol
for chemical emergencies, so the drill was featured on local TV
news, reaching more than 40,000 households.
Mataro’s town hall requested that P&G continue hosting
emergency exercises. This summer, the plant held a drill for
Mataro’s civil defense personnel, helping them reapply P&G’s
emergency response plan for other chemical facilities in the region.

P&G 2004 Sustainability Report

Policies, Organization, and Management Systems

Principal Industry and Business Associations
P&G holds membership in many industry, business, and environmental associations whose activities are
related to the Company’s. Please click on the links below to view these memberships.

Europe, Middle East, and Africa

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For a complete list,
please click here.

North America

more
info

For a complete list,
please click here.

Latin America

more
info

For a complete list,
please click here.

Asia

more
info

For a complete list,
please click here.

Worldwide

more
info

For a complete list,
please click here.

International Network to Promote Household
Water Treatment and Safe Storage
P&G is a founding and active member of the International
Network To Promote Household Water Treatment and Safe
Storage, backed by the World Health Organization (WHO). The
Network includes more than 30 expert groups committed to theimportant health benefits of purifying drinking water at thehousehold level in the developing world, particularly for children
and other vulnerable people.

31

Policies, Organization, and Management Systems

P&G 2004 Sustainability Report

32

Stakeholder Interaction
Communities
Each P&G production facility has site-specific activities to build
constructive relationships with local authorities, local industry
associations, neighbors, local action groups, thought leaders, andnews media. Depending on the culture of the community in which
the plant is located, this can range from regular official meetings
during which new information is shared or questions areanswered, to more informal meetings. This could be, for example,
a reception for the immediate neighbors, where information on
the past year and plans for the new year are discussed. P&G
ensures continuity in community interaction by meeting regularly
with local authorities to update them on plant news. In theneighborhoods of many P&G operations, the Company cooperates
with and sponsors local events, so the whole area benefits fromthe presence of a P&G site.
P&G recognizes the importance of improving the quality of life in
our local communities, and we support local initiatives andencourage employee involvement. The most valuable community
support we provide usually involves not only writing a check but
also taking advantage of the intellectual capabilities and energy ofP&G people. We look for areas where we can make a significant
long-term, systemic difference. This leads us to focus heavily on
education and health, with special emphasis on youth. It also leads
us to build alliances with strategic partners to achieve a better
result than we could alone. We look to our people in the area towork with their local communities and government officials tolearn where we can make the biggest difference.
In addition, P&G employees and retirees have a long tradition ofvolunteer involvement in the communities where we live. We lend
a hand to those in need. We pitch in when disaster strikes. We
support the arts. We support education. We invest our resources –and ourselves, through tens of thousands of volunteer hours – inour neighborhoods around the world.

NGOs: Local - Regional - Global

more
info

For more information,please click here.

Scientific Community

more
info

For more information,please click here.

Authorities: Local – Regional – Global
P&G communicates with local, regional, and global authorities
directly, as an individual company, as well as through industry
associations. Scientists and legal experts in the P&G External
Relations organization review existing and proposed legislation thatis relevant to the Company and work with authorities to ensurethat policies take the needs and experience of business into
account. This is done via meetings with the authorities andcomments on their position papers and industry position papers.
Activities like these can be very important to ensure the Company’s
needs are understood and considered when decisions are being
made that can influence P&G’s business.
P&G also works closely with authorities to provide assistance for avariety of programs around the globe. P&G provides business andscientific expertise, funding (either financial or donations of
product), and employees’ time to a wide variety of projects.

Protecting P&G Brands from Counterfeiters
Through its Global Brand Protection Group, P&G has madeimpressive progress in shutting down some of the world’s mostnotorious counterfeiters. P&G’s approach involves• Teaming up with other companies affected by counterfeiting tolobby for tougher intellectual property rights legislation andenforcement.
• Using both conventional and proprietary enforcement
approaches to close counterfeit manufacturing operations and tostop retailers from selling counterfeit products.
• Working with governments to educate their customs officers,
judiciary, prosecutors, legislators, and law enforcement officers
about intellectual property rights.
Global counterfeiting is estimated to be a $450 billion industry.
That’s more than 10 times the size of P&G. The counterfeiting
trade’s profits can be huge and often fund terrorists andorganized crime.
Studies show that consumers who purchase a counterfeit product,
believing it to be genuine, talk about its poor performance tofamily and friends, with all of them declining to buy the productagain for up to a year.

P&G 2004 Sustainability Report

Policies, Organization, and Management Systems

Philanthropic Contributions
P&G and its employees have a long-standing commitment tobeing good citizens and neighbors in all places where we dobusiness around the world. We believe we have a responsibility touse our resources – money, people, and energy – wisely. We show
our commitment through financial support and volunteerism.
Our historic focus on communities with P&G operations
has grown into a commitment to improving the lives of children
in need.
Global philanthropic contributions made by P&G, The P&G Fund,and Corporate Contributions for the past three years are provided
in the following table:

Total

2004
$103,647,125

2003$84,572,906

2002$77,746,930

P&G’s Geneva Office Reaches Out to Children in Need
Even in Geneva, a business capital, there are children in need. And
more of them than people often realize. That’s why employees at
P&G’s Geneva office volunteer their time and skills to five children’scharities in that city.

33

P&G Helps French Children Participate
in Sustainable Development
P&G France and the educational publisher Nathan have added an
important feature to the innovative Web site they developed in
2002. The site shows teachers how to integrate the concept ofsustainability into subjects they already teach and, with this newfeature, how their students can become directly involved insustainable development activities.
The site offers two projects the students can participate in, by
collaborating with local NGOs: One is a school-building project in
Afghanistan, in collaboration with CARE France, the other a wellconstruction project in China, in collaboration with the Enfants duNingxia association. The French children communicate with the
Afghan and Chinese children about education and water andabout ideas to make the Afghan and Chinese children’s daily
lives better.
P&G supervises and funds the Web site, which has been endorsed
by France’s Ministry for Environment and Sustainable Development.
P&G also helps the two projects with financial donations.

on theWeb

To see the site, please visit:www.eduquer-au-developpement-durable.com

Activities this year include:• Helping one of the charities update its logo.
• Assisting at weekly workshops run by the Children of Clair Bois,an organization serving children with multiple handicaps.
• Donating tickets to children's parks.
• Translating documents.
• Donating P&G products.

P&G Geneva volunteers offered consulting services to Païdos, a charity helping
adolescents in trouble. This included providing expertise in marketing strategies,
communication, and target group identification.
The dilemma: How to keep the kids off the streets. The solution: Open the Youth
Café Bar. And make it festive by donating some Pringles. Though consulting services
are no longer needed, one of the P&G volunteers has stayed with this project,
spending time with the Café kids one night a week.

P&G Helps UN Promote Volunteerism in Egypt
P&G Egypt sponsored and was one of four companies presenting
their corporate social responsibility programs at the United Nations
Development Programme Open Volunteer Day in Cairo in
December. The objective of this event was to get Egyptiancompanies involved in volunteerism and in various activities that
contribute to Egypt’s social development.
P&G’s presentation included information on its internationalsustainable development projects as well as its wide range of local
community activities. Many volunteers and celebrity guests visitedthe booth and took brochures. The Minister of Youth came by tolearn about the Company’s contributions to Egyptian society andits investments and operations in Egypt.

Policies, Organization, and Management Systems

Consumers
At P&G we have declared that “The Consumer is Boss.” We
are committed to meeting the needs of our consumers andproviding products that improve their lives. We embrace andpromote this mindset throughout the development and marketingof our products.
We set out to delight consumers by bringing to market only new
products and product improvements that genuinely meet theirneeds better than ever. Before establishing a project for a new
product or line extension, P&G technologists research consumer
needs in-depth to identify and understand those needs that are
not adequately met.

P&G 2004 Sustainability Report34

for product development, marketing, and manufacturing listen to
consumers describing their delights and disappointments with ourbrands. The Web site is a library of selected and edited consumer
calls, letters, and e-mails. (Privacy guidelines are strictly adhered to.)A new Consumer Relations system will provide even faster accessto worldwide consumers’ comments. This has already beenlaunched in Asia and will continue to roll out to all Consumer
Relations teams worldwide.
We listen carefully to consumers’ views on important topics
such as animal testing, waste management, and others. Moredetails about our efforts in these areas are elsewhere in this report.

Following thorough screening of these products to ensure safety
and compliance with all relevant legal requirements, P&G market
researchers appoint panels of consumers to try out the products
and answer the key question: Do these products better meet
consumer needs in practice? Based on what consumers tell us inthese early trials, the test product may be rejected or adapted andimproved.
Our commitment to our consumers does not stop there. When
our products reach the market we want to hear what consumers
have to tell us about their experiences with them. Providing tollfree numbers on our packages makes it easy to contact us. Via
our Consumer Relations organization, we learn a great deal fromthe more than 5 million consumers worldwide who contact us
every year.
Our skilled Consumer Services advisors are expert in responding
quickly and effectively to occasional requests for urgent help (suchas following accidental ingestion of a detergent), answering
general questions, and listening to comments. Consumers call to
ask for information or to tell us about their experiences with aproduct – a delight or, less fortunately, a disappointment. Listening
to consumers enables us to retain the features of our products that
consumers like, make improvements where necessary, and address
specific issues such as difficulties with packaging or productavailability in their local stores. Consumer calls give us critical early
indications about acceptance of our new initiatives as well as
valued feedback about established products. These comments
have influenced product development, packaging, the way wemanage direct marketing and promotions, the way wecommunicate with consumers to enable them to get the very bestfrom our products – and more.
This consumer learning is so valuable to us that we have
implemented leading-edge tools to bring the voice of theconsumer to those who can make a difference within P&G. In the
United States and Western Europe, we have created “Listening to
The Boss.” Via this internal Web site, P&G managers responsible

Science in the Box
Feedback from consumers as well as from government, public
interest groups, and the scientific community has told us that people
want to know about the science and safety behind our products.
In late 2002, our Fabric & Home Care business launched
www.Scienceinthebox.com. The site contains a wide range of
information regarding product research and development, safety,
and sustainability for our laundry and cleaning products in Western
Europe. It also provides opportunity for dialogue via on-line surveys
and e-mail.
Since its launch, use of the Science in the Box Web site has grownsteadily; we now get more than 20,000 visitors every month.
Numerous European media and government authorities have cited
it as a leading example of corporate information sharing.
In 2003, we upgraded Science in the Box. We then held astakeholder workshop in the Netherlands to gather feedback andengage in dialogue about issues surrounding our Fabric & Home
Care products. Participants included representatives from scientificinstitutes, industry, consumer organizations, and environmental
and social non-governmental organizations, as well as
policymakers and journalists. Ideas from this workshop are being
used to make further improvements to Science in the Box.
We also are exploring how the Science in the Box concept might
be expanded to our other business units. And we are developing a
corporate site – P&G Perspectives – to share our views on a rangeof public policy and scientific issues relevant to our business.

on theWeb

To see the Science in the Box Web site, please visit
www.Scienceinthebox.com

Policies, Organization, and Management Systems

Combined Stakeholder Dialogues
P&G convenes workshops, inviting scientists, regulators, and NGOs
to come together to discuss specific issues and attempt to reach acommon understanding. P&G gains invaluable experience fromthese types of interactions. These dialogues also hold great
promise for frank discussions in the future.
Shareholders
There are approximately 1,426,000 common stock shareowners,
including shareholders of record, participants in the Shareholder
Investment Program, participants in the P&G stock ownershipplans, and beneficial owners with accounts at banks andbrokerage firms, as of July 30, 2004.
We work to increase the value of P&G stock for all our shareholders
in a variety of ways, including growing the Company’s sales andearnings each year. Our Shareholder Services team is available every
day to answer questions, listen to shareholder feedback, andprovide perspective on Company decisions.
Contact Info:
E-mail us at shareholders.im@pg.com.

P&G 2004 Sustainability Report

Sustainable Development Congress in Turkey
P&G co-sponsored Turkey’s first Sustainable Development Congress
for the Business World, in cooperation with TEMA (the Turkish
Foundation for Combating Soil Erosion, for Reforestation and theProtection of Natural Habitats) and TOBB (the Union of Chambers
and Commodity Exchanges of Turkey). The Congress was aimed ataccelerating sustainable development action initiated by the Turkishbusiness community and providing understanding that allows thebusiness community to broaden its activity.
In addition to speakers from P&G, TEMA, and TOBB, there werespeakers from the State Planning Organization DPT, the United
Nations Development Program, the World Business Council for
Sustainable Development, Shell, the Turkish LP gas company
Aygaz, the European Commission, the World Bank, and theTurkish Ethical Values Center. In the audience were local andnational regulatory officials, academicians, and NGOs.
P&G made two presentations at the Congress, one on the 21st
century role of business in sustainable development and anothergiving examples of P&G Turkey’s local sustainability projects. P&G
also participated in a panel discussion on the future of sustainable
development in Turkey and what needs to be done.

Call for financial information at 1-800-764-7483 (call1-513-945-9990 outside the United States and Canada).
Speak to a Shareholder Services representative at 1-800-742-6253(call 1-513-983-3034 outside the United States and Canada). They
are available Monday through Friday, 9 a.m. - 4 p.m. EST.
Write to The Procter & Gamble Company, Shareholder Services
Department, P.O. Box 5572, Cincinnati, Ohio, U.S.A. 45201-5572

on theWeb

35

For more information, please visit:
http://www.pg.com/investor

Discussion at the Sustainable
Development Congress for theBusiness World will help Turkey’s
business community do more tofurther sustainable development.

Policies, Organization, and Management Systems

P&G’s Commitment to Product Safety, Chemicals
Management and Sustainability
Household consumer products use a variety of chemical
ingredients to provide benefits to society – improving thecleanliness of our homes, personal hygiene, nutrition and health,and enabling an overall better quality of life. One expectation ofsuch products is that they will be safe, meaning their use will notadversely affect human health or the environment.
Throughout its history, P&G has believed that the safety of our
products is a prerequisite for responsible business. Our co-founder,
James Gamble, stated in the mid-1800s that “if you cannot makepure goods and full weight, go to something else that is honest,
even if it is breaking stone.” Today, this philosophy is reflected in
our Statement of Purpose: “We will provide branded products andservices of superior quality and value that improve the lives of theworld’s consumers.” Safety is an intrinsic part of our products’
quality and value.
Our approach is based on the scientific assessment andmanagement of risk – the likelihood that people or theenvironment will be exposed to harmful amounts of a substance.
Risk assessment is based on two factors: (1) how “toxic” or“hazardous” a chemical is, and (2) how it is used, specifically theextent of exposure to humans or the environment.
In recent years, some stakeholders have expressed concern about
using risk as the basis for product safety. These concerns havebeen driven by several issues, including:• Questions about whether the hazards of existing chemicals havebeen sufficiently studied, and whether chemical exposures canbe adequately understood.
• Frustration with the slow pace of developing publicly available
risk assessments.
• New scientific findings that have not been previously known or
evaluated.
As a result, some believe that it might be better to base decisions
on a chemical’s hazards alone. This has been coupled with calls forthe far-reaching use of the “precautionary principle,” whereby
substances that are classified as “hazardous” would be broadly
restricted, with little further evaluation. We recognize the attractionof such a “black and white” approach. However, we believe that it
could cause chemicals that are being safely used to be unjustifiably
removed from the market, potentially depriving society ofinnovative and beneficial technologies. Furthermore, experiencehas shown that even chemicals that could be considered “nonhazardous” (e.g., soybean oil or even water) can cause harm
under certain circumstances, while “hazardous” chemicals can besafely used (e.g., ethanol).
We recognize that continuing questions about the safety ofchemicals mean that industry must take a more collaborative andopen approach. Thus, we have initiated a variety of industry
partnerships, including: the collaborative assessment of laundry andcleaning product ingredients in Europe (Human and Environmental

P&G 2004 Sustainability Report

36

Risk Assessment – HERA – (http://www.heraproject.com);
evaluations of “High Production Volume Chemicals” in the
United States and Organization for Economic Cooperation andDevelopment; assessments of flavors, fragrances, and colorants by
European and U.S. cosmetic products associations; work in Canada
to implement renewed chemicals legislation; the promotion ofrisk assessment via the U.S. Alliance For Chemical Awareness(http://www.chemicalawareness.com) and the American ChemistryCouncil; and development of a targeted risk assessment approachin Europe, via the European Center for Ecotoxicology and Toxicology
of Chemicals, an industry-sponsored research organization(http://www.ecetoc.org).
In addition, we are actively promoting the responsible production anduse of chemical products, and better information sharing with the
public. For example, we are working with the European soap anddetergent industry association (AISE) to provide consumer guidanceon how to use detergents properly (http://www.washright.com), as
well as formulation improvements. We launched and then expanded
a P&G Internet site (http://www.scienceinthebox.com) to help informconsumers and stakeholders about the science and safety behind ourEuropean cleaning products. (See Science in the Box, page 34.)
From a policy standpoint, we continue to believe that chemicals
management programs should be based on:
1. Efficient risk-based priority-setting processes that use hazard
data and basic exposure information together to identify issuesof potential concern, followed by practical risk evaluations thatanalyze chemicals in a tiered fashion to resolve such issues.
2. Risk management decision-making that combines information
on a chemical’s risks, benefits, and costs with an understandingof societal concerns; the risks, benefits, and costs of alternatives;
and the use of appropriate precautionary measures.
3. Communications that provide meaningful and relevant safety
information to stakeholders, such that they can makeknowledgeable decisions.
These policies are the foundation of what we do internally, as
well as what we encourage across government and industry.
Internally, they are enabled by collaboration between Research& Development, Product Safety and Regulatory Affairs,
Manufacturing, External Relations, and management. Our efforts
also often go beyond safety and risk to include product lifecycle
issues such as energy and resources use and waste management.
Collectively, we believe these activities and policies enable
continued progress toward sustainability and enable us to provide
safe, effective products that improve lives.

P&G 2004 Sustainability Report

37

Performance

P&G 2004 Sustainability Report

38

Performance
P&G measures operational performance in order to drive continuous improvement. A comprehensive,
Company-wide system of measuring performance has been developed. This approach enables theCompany to report data on a wide range of operational categories.

Our actions are not just profit-driven but also progress-driven, toensure a better quality of life for everyone, now and for generations
to come. Our extensive consumer research related to our brands
also helps us identify ways we can best address sustainability.
Process for Data Collection
P&G’s data collection systems have been in place for many years.
They are designed to be simple enough so that the people closest
to the work, regardless of location, can use the tools. This
simplicity enables the Company to collect data and update systems
annually at a relatively low cost. Each business unit is responsible
for accuracy and consistency of its data.
All data are reported on a global basis. In order to achieve
consistency and to ensure a common understanding throughout
the organization, employees are trained in how to report anddocument data. Metric units and English are used as the businesslanguage, backed up with local translations, where needed.
To ensure the standard collection of data, the Company has thefollowing work processes in place:• Key terms are defined.
• The data to be collected are identified.
• Flow sheets are agreed upon regarding who collects data and on
what systems.
• Technically sound methods are used by facilities to estimate data
and validate year-to-year results.
• Personnel are trained on the work processes, as appropriate.
Acquisitions and Divestitures
All plants that operated during the fiscal year either reported data,or it was estimated based on past performance, except for the
recent Wella acquisition. For the eco-efficiency graphs, theproduction units from Wella were also excluded.
Five sites were either shut down or divested during the fiscal year.
The emissions from each were prorated based on the number ofmonths operated.

Major Opportunities and Impacts
Associated with Products and Services
Environmental Protection• Resource Use• Water• Waste Reduction
Social Responsibility• Health• Hygiene• Education
Economic Development• Shareholder Value• Employment• Taxes, Fees, and Contributions
The very nature of producing and using products causes P&G andconsumers to use resources and to generate wastes and emissions.
P&G is committed, through its Environmental Quality Policy, toreducing or preventing this whenever possible.
With products that are effective and of good value, P&G aims toprovide social and economic benefits that improve the lives of theworld’s consumers. We do this via:
• Introducing innovative technologies.
• Generating employment in the communities in which we dobusiness.
• Supporting local and national economies through taxes,
contributions, and purchases.
• Increasing shareholder value.
• Improving the health and hygiene of consumers through our
products and information on their use.

Performance

P&G 2004 Sustainability Report

39

Environmental
As the diagram illustrates, P&G’s use of material resources is highly efficient. The vast majority ofmaterials are converted to products, and the output of manufacturing waste (which is largely
non-hazardous) is low.

Manufacturing Material Flows 2003-2004

Energy 73.1 million GJ

95.76%
Finished Product

Raw Materials& Packaging

Materials for Recycling/Reuse
2.39%

Non-Hazardous
Solid Waste 1.55%

Hazardous
Solid Waste 0.11%

Air Emissions 0.08%

Water Emissions 0.11%

Manufacturing Resource & Waste Summary by Global Business Unit (GBU)
TotalsAll waste units are in thousands ofmetric tonnes unless otherwise noted.†

Production
Product Shipped
Raw Materials from Recycled Sources
Waste
Generated Waste
Percent Recycled / Reused Waste
Disposed Waste
Solid Waste
Non-Hazardous
Hazardous
Effluents (Excluding Water)
Air Emissions**
Other
Energy Consumption (105 GJ)¶
Greenhouse Gas Emissions** ¶Water Consumption (million cubic meters)
SARA Releases (metric tonnes)***2004 Global Business Unit Detail*

2004

2003

2002

BFC

FHC

BC

HC

SB

18,471
102

17,055
119

16,151
208

4,132
102

10,072
0

1,332
0

1,367
0

1,568
0

817
56%

793
52%

798
54%

428
61%

155
51%

148
53%

42
48%

44
52%

300
21
21
16

317
9
35
24

304
19
23
20

153
1.4
4.0
10.2

52
14.4
7.4
2.8

60
3.8
5.5
0.4

19
1.4
1.0
0.5

16
0
3.0
2.0

731
2,937
79
1,843

758
3,122
86
1,567

706
3,148
85
1,274

470
2,087
54.0
0.12

146
464
14.1
1,345

51
159
5.2
39

32
116
1.8
459

32
111
3.4
0

† 1 metric tonne = 1,000 kg = 2,205 lbs.
* BFC = Baby & Family Care; FHC = Fabric & Home Care; BC = Beauty Care; HC = Health Care; SB = Snacks & Beverages.
** Air emissions include particulates, SO2, NOx, CO, and VOC whereas greenhouse gas emissions include CO2 from fuel combustion sources.
*** Releases defined in the U.S. Superfund Amendments and Reauthorization Act (SARA) by the U.S. Environmental Protection Agency.
¶ Energy use and greenhouse gas emissions have been restated using conversion units recommended by the U.S. Department of Energy in its 1605 reporting initiative.
The major change was in the conversion of electricity from kilowatt hours to gigajoules (GJ). Actual energy use didn’t change. The greenhouse gas emission factors changed slightly.

Performance
Environmental

P&G 2004 Sustainability Report

Energy Consumption(by type, 105 GJ)
704

758

731

EnergyEnergy eco-efficiency*, as measured by production units per
gigajoule (GJ), improved 18 index points. Improvements were
throughout the business units.
Results are shown in absolute value by business unit and alsopresented in eco-efficiency format. Our eco-efficiency is more than71 percent greater than in 1990, meaning there is 71 percent
more product being made per unit of energy. Last year, we
restated the electricity usage figures to 1990. The actual usage
wasn’t changed, just the conversion to gigajoules.

2002 2003 2004
Fuel

Electricity

Purchased Steam

Energy Consumption(by GBU, 105 GJ)
704

758

731

Family Care improved by more than 5 percent by improving drying
technology as well as application of best practices. Energy audits
and benchmarking with similar Family Care plants helped identify
easy-to-achieve improvements.
As part of our ongoing efforts to minimize losses, the Company
does a loss analysis at the plant level. Losses are defined asanything not shipped out the door as product, including energy
used. When energy is identified as a major loss at a plant, it
receives intense focus for loss reduction.
* Eco-efficiency data used throughout this report is based on the framework
developed by the World Business Council for Sustainable Development.

on theWeb

To learn more, please visit:
http://www.wbcsd.ch/templates/
TemplateWBCSD4/layout.asp?MenuID=1

P&G Runs Energy-Efficient Computer Monitors
The U.S. Environmental Protection Agency has recognized P&G for
its energy-saving computer practices. The Company was one of
only six organizations honored nationwide for outstanding
leadership in the ENERGY STAR® Million Monitor Drive, a national
campaign to reduce greenhouse gas emissions by activatingenergy-efficiency features on computer monitors.

2002 2003 2004
Baby & Family Care Fabric & Home Care
Beauty Care Health Care Snacks & Beverages

Energy Eco-Efficiency(global production units / gigajoule,indexed vs. 1990)
171
152

2002 2003 2004

Using free IT tools from ENERGY STAR, the six organizations willsave more than 45 million kilowatt hours per year. This will savemore than $3 million in energy costs and prevent almost 35,000
tons of carbon dioxide emissions.
Computer monitors come with built-in ENERGY STAR power
management features. Activating these features saves energy byallowing the monitors to go into a low-power “sleep” mode wheninactive. A simple touch of the mouse or keyboard “wakes” themonitor. The Environmental Protection Agency estimates thatroughly 40 percent of the United States’ computer monitors don'ttake advantage of these features, costing businesses andorganizations millions of dollars a year in wasted electricity.
“Protecting the environment through sound, energy-efficient
practices is a priority for us,” said Robin Tollett, Corporate Health,
Safety & Environment. “The ENERGY STAR program has been
good for our bottom line and good for the environment. ENERGYSTAR just makes good business sense.”

153

The U.S. Environmental Protection
Agency recognized P&G for its use ofenergy-saving features on computer
monitors.

40

Performance
Environmental

P&G Saves and Even Produces Energy
P&G plants continuously search for opportunities to reduce energy
consumption. This contributes to the United Nations’ efforts tominimize the negative effects of climate change.
Here are a few examples of energy saved over the past year, alongwith an example of extra energy produced:• In the Western European plants where P&G makes powder
laundry detergents, a “Connect and Save Energy” task force is
identifying potential energy savings. Tools being used include
benchmarking, understanding energy usage in manufacturing
processes, prioritizing, and studying both time-tested and newtechnologies. The task force encourages information sharing andreapplication of good ideas, connecting thought leaders within
P&G and also among external groups such as other companies
and energy experts.
The task force expects a 10 percent energy saving within 12 to
18 months. This is especially important now, with Western
Europe’s energy costs expected to rise about 15 percent a year
for several years. Reducing energy costs will help keep down
manufacturing costs and thus the cost of detergents.
• In North America, the Family Care plants making tissue andtowel products continued a multi-year energy and water
reduction effort. The effort emphasizes “best performance”
benchmarking, efficient use of steam and compressed air, andoptimization of plant energy control systems.
A number of energy projects and operating system
improvements have been completed in the past year. These
include upgrades to compressed air controls at several plants andinstallation of new paper-drying equipment. Overall, these
improvements have led to a 5 percent increase in energy
efficiency for P&G’s North American business.

P&G 2004 Sustainability Report

41

Cogeneration Power Plants at Crailsheim
P&G’s paper products plant at Crailsheim, Germany, recently
needed to increase its central heating capacity. The need arose
following several building expansions as well as shutdown of thePampers module, which used to generate heat that the plant
recovered.
Normally, Crailsheim would install another boiler. But anengineering study by an outside firm revealed an opportunity to
reduce carbon dioxide and also save money.
Crailsheim receives its electrical power and natural gas from local
supplier STW (Stadtwerke Crailsheim). Under a cooperative
agreement, STW installed two gas-driven Sokratherm CHP –cogeneration – units, operated by a 12-cylinder MAN motor, inside
the plant’s central heating station. This was done at no out-ofpocket expense to P&G. The plant pays only for heat consumed.
The units’ electrical power capacity is 680 kilowatts, heating power
about 1,000 kilowatts. With an estimated annual unit run time of
5,380 hours, Crailsheim can produce 3,650 megawatt hours ofelectricity and 5,380 megawatt hours of thermal energy, at an
overall efficiency exceeding 90 percent. There are no losses as aresult of power transportation; normal losses in Germany are in therange of 4 percent. CO2 reduction is 2,900 metric tonnes annually.
Plans are to increase the unit’s run time to 6,900 hours annually bymeans of a 500-kilowatt absorption cooling unit – trigeneration.
This will lead to power production of 4,690 megawatt hours ofelectricity and a CO2 reduction of 3,600 metric tonnes annually.
Crailsheim’s changes should position the plant well for the EU’s
emissions trading scheme that comes into effect in 2005.

• Production of Pampers diapers generates paper dust, which theplant in Euskirchen, Germany, used to collect in plastic bags.
Now the plant has a filter press that makes compact pellets fromthe dust. The pellets have a high caloric value and are sold as
fuel to produce energy.

Crailsheim Plant, Germany.

Performance
Environmental

P&G 2004 Sustainability Report

42

Water
Water use has decreased this year while production increased,
resulting in the eco-efficiency’s increasing by 21 index points.
Efforts to reduce water consumed are showing results. The heightof the bars (amount of water consumption) has changed
substantially between 2002 and 2004 because one of our larger
sites, in Cincinnati, Ohio, moved from one GBU to another. This
site has since reduced its water use and was one of the main
contributors to the overall reduction.
Water Consumption Eco-Efficiency

Water Consumption(global production units / cubic meters,
indexed vs. 1998-1999)
147(by GBU, thousand / cubic meters)

116

126

2002 2003 2004

85

85

79

2002 2003 2004
Baby & Family Care Fabric & Home Care
Beauty Care Health Care Snacks & Beverages

Clairol Receives Green Circle Award
P&G’s Clairol plant in Stamford, Connecticut, is a recipient of a2003 Green Circle Award from the Connecticut Department ofEnvironmental Protection. The award recognizes Clairol’s effort torecycle reverse-osmosis reject water by using it in the plant’s
scrubber and cooling systems. This resulted in a 20 percent
reduction in the use of drinking-quality water.

P&G Helps City Design Wastewater Treatment System
P&G’s Alexandria plant in Louisiana has been working with its local
community on a new wastewater treatment system. The project
involves seeking funding, selecting technology, and system design.
The new system will provide needed wastewater capacity for theCity of Pineville, facilitate commercial and residential development,
and prevent the need for the P&G Alexandria plant to add pretreatment technology.
The new wastewater treatment system is a joint effort of the P&G
Alexandria plant, the City of Pineville, and local civil engineering
contractor Pan American Engineers. P&G brought in corporate
expertise from the Environmental & Wastewater Resources groupin its North America Fabric and Home Care Health, Safety andEnvironment department.

Vallejo Plant Donates Treated Water to Local Gardens
Mexico City´s Vallejo plant has found a way to keep parks green
and gardens blooming in its community.
Vallejo has installed its own wastewater treatment system and uses
treated wastewater to water the plant’s green areas. Nonetheless,some of this wastewater still needs to be discharged. A donation
program with Azcapotzalco Municipality puts this wastewater togood use, helping to overcome community water shortages,
especially during the dry season. Under the program, Vallejo hascommitted to donating 40 cubic meters of treated water daily,
which can be increased if needed.
Vallejo and other plants across Latin America have been installing
wastewater treatment and reuse systems since 1990. These plants
include Anchieta, Brazil; Pilar, Argentina; and more recently
Barquisimeto, Venezuela. Today, the first three have zero industrial
discharge, while Barquisimeto is about to complete the transition.
At Vallejo, there has been a more than 30 percent decrease in raw
water consumption.

P&G 2004 Sustainability Report

Performance
Environmental

Emissions, Effluents, and Wastes
Greenhouse Gas
Every company in every sector of the economy has a role incontrolling greenhouse gas emission. While P&G is not an energy
intensive company, we are stepping up to do our part. P&G iscommitted to energy efficient programs, and we participate involuntary programs.
P&G’s eco-efficiency of greenhouse gas has improved by 30 index
points. Each point represents the amount of product leaving ourplants per metric tonne of CO2 emissions. The main reasons forthis year’s improvement are reduced reliance on coal burning andoverall efforts to reduce energy usage.

Greenhouse Gas Emissions Eco-Efficiency(global production units per metric tonne of CO2,
indexed vs. 1990)
241
211
192

2002 2003 2004

Greenhouse Gas Emissions(by GBU, thousand metric tonnes)

In addition, absolute CO2 emissions are lower this year due toreduced coal burning as well as multiple energy-saving projects.
We are more than 240 percent more efficient as compared to 1990.

3148 3122

2936

2002 2003 2004
Baby & Family Care Fabric & Home Care
Beauty Care Health Care Snacks & Beverages

Pilar Plant Recognized for Improvement
P&G’s Pilar plant in Argentina has received the Environmentally
Responsible Company award from Propiciar, recognizing the plant’s
effluent management achievement. The award cites “collaborationand the teamwork with the county toward the protection ofenvironment and the quality of life of our district.”

Climate R.E.S.O.L.V.E.
P&G continues its active participation in Climate R.E.S.O.L.V.E.
(Responsible Environmental Steps, Opportunities to Lead by
Voluntary Efforts). This ambitious initiative was developed by theBusiness Roundtable in response to a call for voluntary action to
reduce overall greenhouse gas emissions by 18 percent by 2012.

Propiciar is the local government agency that focuses on theenvironment.

Over the past year, operational improvements coupled with
reduced coal burning have led to a reduction of more than
12 percent on an intensity basis. The decrease was broad-based,with contributions from all P&G businesses.

43Performance
Environmental

P&G 2004 Sustainability Report

Total Waste for Disposal
Total waste for disposal is our key management measure to keep
waste under control. Total waste disposed comprises the sum of
non-hazardous and hazardous solid waste, plus effluent measured
as COD (chemical oxygen demand) and air emissions. It excludes
recycling or reused waste. This measurement has been in effectsince 1990.
Our disposed waste had a 31 point increase in eco-efficiency. This
reduction was broad-based across all our GBUs.
Waste Disposed Eco-Efficiency(global production units per metric tonne of waste,indexed vs. 1990)
226
189

195

2002 2003 2004

Waste Disposed(by type of waste, thousands of metric tonnes)
366

385

358

2002 2003 2004
Solid Waste Non-Hazardous
Solid Waste Hazardous
Effluents Air Emissions

Waste Returned to Process or Market
The percentage of waste recycled remained flat, and revenue
received from recycling remained steady at $21 million.
Waste Recycled or Reused(percent of waste)
54

52

56

2002 2003 2004

44

Cairo Plant Improves Solid Waste Management
P&G’s manufacturing plant in Cairo, Egypt, initiated a solid waste
management improvement project last year to minimize solid
waste generation and increase recycling. The project yielded
benefits for the environment, the local community, and P&G.
The project used the diverse skills and knowledge of amultifunctional team with representatives from four departments –Production, Storage, Technical Packaging, and Health, Safety &Environment. The team leveraged existing P&G systems andprocedures and tackled the issue in two steps:
1. understanding the different types and main sources ofsolid waste.
2. using market research to identify market opportunities
for recycling.
The team streamlined the plant’s solid waste handling process andachieved a 19 percent reduction of solid waste at the source. It
increased the recycling of solid waste from 66 percent to 88
percent by involving external recycling companies. Overall, solid
waste sent to the local landfill has decreased by 14 tons a month.
These improvements have contributed to environmental protection
as well as the quality of life and the economy of the local
community. In addition, the Cairo plant benefits from selling
recyclable material.

Performance
Environmental

P&G Finds Innovative Ways to Recycle Manufacturing Waste
Around the world, P&G plants are finding innovative ways torecycle waste from their manufacturing processes. This keeps
waste out of landfills, makes it available for productive uses, andeven saves P&G money. Here are some examples:• Louveira, Brazil: This site has achieved a net reduction in waste ofmore than 300 metric tonnes per year, despite a production
increase of 30 percent.
One project involved recycling a variety of plant waste, including
corrugated cardboard, plastics, diapers and feminine pads,
shampoo bottles, and Hipoglós Pomade Tubes. The plant
contracts with a supplier, who separates the materials and finds
outlets for recycling them. This project takes care of most of theplant’s solid waste.
Another project improved disposal of waste from the health carebusiness, including Vicks and Hipoglós Pomade. These wastes
came in the form of return products from stores. They previously
went to an incinerator, and the ash was landfilled. Now the
returns go to a cement plant, where they are burned for fuel formaking cement.
A third project involved plastic residue that used to go to alandfill. Now it is being used in the roof manufacturing process.
Not only did these three projects keep P&G wastes out oflandfills, they also saved P&G more than $210,000 in waste
handling costs.
• Dover, Maryland: This plant has waste in the form of unsold
finished product. The product used to go to an incinerator or alandfill. Over the past year, the plant tested an arrangement thatinvolved selling the waste to a supplier, who composts it into
usable material. This change reduced the plant’s landfill waste by
about 40 percent and its waste handling costs by 25 percent.
Other P&G sites are studying this arrangement.
• Akashi, Japan: This plant has been working on reducing
industrial waste by recycling defective product and unused raw
materials. The plant contracts with a waste operator who
separates defective diapers into cotton and other material. The
cotton gets made into products for house cats, such as sheets
and litter. Another waste operator takes the remaining raw
material for processing into pellets to be made into plastic
products such as flowerpots.

P&G 2004 Sustainability Report45• Cairo, Egypt: This plant identified an opportunity to recycle somesolid waste that used to go to landfill. The waste now goes toseveral contractors for processing and reuse. This projectincreased the waste recycled at the plant from 66 percent to 88
percent and keeps an additional 14 metric tonnes of solid waste
out of the landfill each month. It also saves the plant 210,000
euros (US$250,000) annually.
• Mehoopany, Pennsylvania: This plant implemented a process tohelp it reclaim lost revenue from materials that ended up in thetrash rather than being sold as scrap.
In an interim step, the plant sorted recyclable materials fromcompacted waste loads destined for a waste-to-energy facility.
This effort also involved helping employees understand theimportance of separating these materials and finding productive
outlets for the previously discarded materials. The effort yielded a
20 percent reduction annually in the volume of disposed waste.
Now the system has been improved so that segregation takes
place while the waste is still on the manufacturing line versus
after manufacturing. This should make reclamation more
effective, increase revenue from sale of the materials, and reduce
hauling charges.
• Cabuyao, Philippines: Children in two Filipino schools arelearning in classrooms made from scraps from P&G’s Cabuyao
plant. Materials from the making of diapers, Joy dishwashingliquid, and Downy fabric softener were used to make concrete
blocks for the school expansions. Additional blocks were madefor use at Philippine air force bases and for other publicconstruction projects. And “honey cones” embankment
protection materials were made for erosion prevention at a canalthat irrigates rice fields.

P&G 2004 Sustainability Report

Performance
Environmental

Non-Hazardous Solid Waste Disposed
Overall, the non-hazardous solid waste disposed to landfill has
decreased this year, resulting in a 26 point increase in ecoefficiency. P&G continues to find innovative recycling methods.

Non-Hazardous Solid Waste Eco-Efficiency(global production units per metric tonne,
indexed vs. 1990)
210
184
159

2002 2003 2004

Hazardous Solid Waste Disposed
Hazardous waste has increased (shown as lower eco-efficiency).
This was due in large part to a major increase from a one-timecleanup at one of our plants in France.
Hazardous wastes are defined by regional policies and local rules, sothey vary from region to region. In the United States, a strong focus
on reduction, recycling, and material substitution has reduced theamount of hazardous waste requiring disposal over the past three
years. To further reduce our risks, the number of approved
hazardous waste disposal sites that all U.S. plants use is limited.
Similar programs have been started in many regions of the world.

SARA 313 Releases (United States only)
U.S. P&G plants report annually on the release of toxic chemicals
to the air, water, and land. These releases are defined in the U.S.
Superfund Amendments and Reauthorization Act (SARA) by the
U.S. Environmental Protection Agency. The purpose of thisdocumentation (referred to as section 313) is to report publicly
the releases and transfers of hazardous chemicals as defined by
the agency.
The amount of SARA 313 releases has increased 18 percent,proportional to production increases at plants using thosechemicals.

Air Emissions
Each site monitors total suspended particulates, volatile organic
compounds (VOCs), carbon monoxide (CO), nitrogen oxides(NOx), and sulfur oxides (SOx). The total amount of air emissions
released has decreased 33 percent, resulting in a higher
eco-efficiency. The decrease was related to the reduction incoal burning.

Hazardous Solid Waste Eco-Efficiency(global production units per metric tonne,
indexed vs. 1990)
1143

523

510

2002 2003 2004

SARA 313 Releases(global total metric tonnes released or transferred)
1843
1567
1274

2002 2003 2004

Air Emissions Eco-Efficiency(global production units per metric tonne,
indexed vs. 1990)
208
142

126

2002 2003 200446

Performance
Environmental

Effluents to Water
Wastewater COD (chemical oxygen demand) went down morethan 40 percent, resulting in a much higher eco-efficiency. The
increase in eco-efficiency was in part due to a number of sites’
going to “zero discharge” and additional wastewater treatment.

P&G 2004 Sustainability Report

Wastewater COD Eco-Efficiency(global production units per metric tonneof COD, indexed vs. 1990)
372
276
205

2002 2003 2004

Audit Programs
P&G’s internal standards go beyond legal compliance and apply
to all its plants worldwide. The fundamental philosophy is tohave the same standards worldwide, implemented by trained
professionals at all plants and audited each year using a consistent,
comprehensive approach. The metrics used are consistent withthat philosophy. Charts show the performance of Health, Safety &Environment and Fire Protection.
P&G HS&E audit programs are designed to ensure compliance withnational, state, and local regulatory requirements as well corporate
environmental standards and procedures. Audit findings arereported promptly to the business management teams, who must
address and correct all issues in a timely manner.
Audits measure performance against a mandatory set of standards
and standard operating procedures. The target performance iseight or better on a 10-point scale. Audit results are consistent
with last year’s results. The percent of plants conducting audits isless than previous years.

Percent of Plants
with Audit Scores > 8.0
91
80 82

91

83

82

2002 2003 2004
HS&E

2002 2003 2004
Fire Protection

Percent of Plants Conducting
Annual Audits
81

81
72

The Company reviews its sites on a frequent basis. The chartshows percent of sites receiving an audit this year.

2002 2003 200447

Performance
Environmental

P&G 2004 Sustainability ReportCompliance with Laws and Regulations
There are numerous health, safety, and environmental requirements
worldwide. Plants are subject to emission limits and operating
requirements embodied in these statutes, regulations, laws, andpermits. It is P&G’s intent to comply with both the letter and thespirit of statutes, regulations, laws, and permit requirements.
Identified compliance issues are treated seriously, and all noncompliance matters are resolved as expeditiously as possible.
The table lists global data on environmental, transportation, andworker health and safety violations over the past three years.
Number
Fines

2004
64
$28,320

2003
67$154,756

2002
45$39,026

The number of fines stayed about the same as last year while theseverity, as measured by fines, fell more than 80 percent.
Transportation-related incidents continue to be a focus area.
A breakdown of 2004 Notices of Violation (NOVs) andOccupational Safety & Health Act (OSHA) interventions follows:

Water-Based
Air-Based
Solid Waste-Based
Paperwork
Transportation-Based
Other
Worker Safety
Total

Number
31
6
1
0
23
3
0
64

Fines
$2,630$6,240$0$0$18,200$1,250$0$28,320

Environmental Liabilities
P&G is subject to environmental laws and regulations that in the
future may require the Company to take action to correct theeffects on the environment of prior manufacturing and waste
disposal practices. Accrued environmental liabilities for remediationand closure costs were $36 million and $34 million at June 30,
2004 and 2003, respectively. Current year expenditures were
not material.

48

Notice of Violation
The Notice of Violation reported in 2003 for our plant in Wisconsin
was quickly and successfully resolved by mid-2003. It involved
reporting of air emissions.
The incident occurred during the start-up phase of a new,automated reporting system that correctly captured more than95 percent of the required data. We reported the missing
5 percent. Subsequent testing confirmed that all actual air
emissions were within regulatory limits. The regulatory agency was
satisfied, and no further action was needed. We are confident thatthe reporting system is now 100 percent reliable.

P&G 2004 Sustainability Report

Performance
Economic

49

Economic

on theWeb

Additional economic data can be found in our financial report at:
http://www.pg.com/content/pdf/01_about_pg/01_about_pg_homepage/about_pg_toolbar/
download_report/annual_report.pdf

Economic Development
Innovation is P&G’s cornerstone. More than $1.8 billion is invested
annually in research and development – the largest amountamong consumer product companies worldwide. We have morethan 28,000 patents worldwide, and we average more than one
new patent per day.
These intellectual assets are of tremendous value to P&G. But
some are not being fully realized; we invent more than we cancommercialize. Through our External Business Development group,
we continue to identify non-strategic proprietary technologies
which, when developed to their full potential, can yield sustainable
revenue sources and bring important technologies to the market
that enhance the lives of the world’s consumers.
Through technology donations, universities and other not-for-profit
research institutions can receive these off-strategy, yet highly
valuable, patents and technology know-how, and provide theresearch and development needed to bring them to commercial
reality. P&G is excited to see these technologies reach their fullpotential. Each donation fosters applied research development
work at universities and research institutions and can eventually
deliver new revenue streams to the universities through outlicensing and/or start-ups. As part of the donation, P&G receives a
tax benefit for our shareholders.

Financial Highlights
Amounts in millions
except per-share amounts

2004
Net Sales$51,407
Net Earnings
6,481
Before-Tax Earnings
9,350
Total Assets
57,048
Basic Net Earnings
Per Common Share1
2.46
Dividends Per Common Share1
0.93

2003
$43,377
5,186
7,530
43,706

2002$40,238
4,352
6,383
40,776

1.95
0.82

1.63
0.76

1 Restated for two-for-one stock split effective May 21, 2004.

P&G 2004 Sustainability Report

Performance
Economic

50

Technology Donations, Fiscal Year 2003-2004
Through P&G’s technology donations, we contribute valuable patents, seed money, time, and resources
to U.S. universities and research institutions for the enhancement of education and the long-term
benefit of society. These nonprofit groups can continue the research efforts, providing a venue fordevelopment of potential new products and technologies. Listed is an overview of technologies
donated last year, along with their sustainability implications.

Technology

Recipient

Sustainability Implications

Oral Cancer Therapy

Cornell University

Treatment to combat oral cancers caused by, forexample, cigarette smoking.

Periodontal Disease Treatment

Columbia University

Treatment to prevent and treat periodontitis.

Insect Control

University of Florida

Safe and environmentally friendly vapor phaseinsecticides for home or commercial use.

Cubosomes

Cincinnati Children’s Hospital

Improved cubic liquid crystals useful in drugdelivery in a controlled-release fashion.

Alopecia and Glaucoma
Treatment

Duke University

Novel compounds for the treatment of hair loss
and glaucoma.

Cancer Chemotherapy Drug
Resistance Inhibitor

Moffitt Cancer Center

Prevents and/or treats drug resistance, making
cancer chemotherapy more effective against
leukemia and other diseases.

Global Purchases
P&G is a global company. We produce our brands in 114 plants in
42 countries around the world. This year, P&G purchased morethan $25 billion in materials and services to manufacture andmarket our products. We employ locally and purchase the majorityof our raw materials within those regions where we manufacture
our products. Our purchasing professionals understand andparticipate in both global and local markets to acquire thematerials and services required to make our products.

Performance
Economic

Purchases through the Supplier Diversity Program exceeded$1.1 billion during fiscal year 2003-2004. This spending accounted
for about 9 percent of P&G’s total U.S. spending. P&G is one of
only 14 companies in the United States at this level.

51

Supplier Diversity Spending
.865
.939
.949
.960
1.100

(amounts in billions of dollars)

.225
.282
.420
.411
.401
.547
.661

Supplier Diversity Program
In 1972, P&G established a program to identify and work withminority-owned businesses in the United States. Today, theSupplier Diversity Program has nine people dedicated to this work.
The Vice President of Purchases serves as Executive Sponsor.

P&G 2004 Sustainability Report

Our ongoing commitment to investingin minority- and women-owned
business enterprises has resulted inincreasing expenditures.

93 94 95 96 97 98 99 00 01 02 03 04

As minorities become a larger proportion of America’s population,
P&G sees its role as a facilitator of economic health for minority
businesses and the households that rely on them for income.

Middle East: Progress for Women
P&G has been furthering the progress of women in the Middle
East, both inside and outside the Company.
Inside the Company, the four women in the Arabian Peninsula
office in Jeddah, Saudi Arabia, have made great strides since they
started in 2000. Then, local regulations and customs required them
to be hired as contractors, at less pay than their male counterparts,
and also to work in a separate building.
The women, along with some of their male colleagues, asked forchanges that would enable them to contribute more fully.
A year later, the women became official P&G employees, with fullgovernmental support, equal rights, strong career paths, and an
office in the same building as their male colleagues. Today, though
they work in a separate office area, out of respect for local
customs, they have top-of-the-line technology, including ateleconferencing tool that allows face-to-face interaction with themen without violating local beliefs. One has become the Arabian
Peninsula’s first woman brand manager, another has become a
Consumer Marketing Knowledge manager, and a third has taken
an international assignment.
Progress this year has been so great that the four women attended
a major strategy meeting in the same room with the men. The
meeting featured a woman speaker addressing gender diversity.
One of the four women employees – the brand manager – serves
as diversity leader for the Arabian Peninsula and will be rolling out
diversity training in the region over the coming months.
The Arabian Peninsula’s plan is to hire four more women by spring
2005, in Finance & Accounting as well as in Marketing andConsumer Marketing Knowledge. The women also will move to
new offices that allow joint meetings with both women and men
employees.

Outside the Company, P&G Saudi Arabia celebrated the 20th
anniversary of Always feminine pads with a program called
Celebrating You… Always. The program recognized andsupported Saudi women.
Celebrating You… Always highlighted the achievements of Saudi
women and also raised funds for three women’s charities. Twodozen women of achievement, in fields including education,
medicine and social affairs, visited more than 100 schools andcolleges to enlist student participation. Students signed a banner,pledging to donate to a local charity. P&G pledged a donation foreach signature on the banner.
Celebrating You… Always was designed and executed incooperation with a number of well-known charity institutions in
Saudi Arabia, as well as with the professional women who worked
with the students.
Celebrating You… Always generated more than 50,000
signatures, yielding SR89,000 (US$24,000) for the charities. P&G
added another SR150,000 (US$40,000) to support their vocational
training programs.
Some 120 Saudi women of distinction attended the program’s
final event. They included representatives of women's welfare
associations and charities and local and pan-Arab media. At theevent, Princess Sarah Al Anqari, wife of the governor of thewestern region, launched The Saudi Women’s Achievement
Award, which annually will recognize leading Saudi women andtheir work.

Performance

P&G 2004 Sustainability Report

52

SocialWages
P&G supports paying employees a competitive wage, as
benchmarked against other leading companies. Consistent with
our principle of valuing personal mastery, we reward employees for
improving their skills and capabilities.
Benefits
P&G is a recognized leader in employee benefits. The Company’s
benefits have been developed to help protect the financial securityof employees. These benefits include comprehensive coverage forhealth care, generous vacation and holiday time, and otherwork/family balance benefits, including flextime, child care leave,and less-than-full-time schedules.
Plant HS&E Leadership Training
A key indicator of HS&E system capability is the percentage ofplants with trained and qualified leaders. Leadership candidates
train on-site for an extended period after attending a week-long“distance learning” event where their knowledge and ability tohandle special situations are assessed. For full qualifications thecandidates must complete a qualification project at their own
plant. Currently, more than 70 percent of plants worldwide haveleaders qualified by Corporate/GBU staffs.

Percent of Plants
with Qualified Leaders
73

77

76

71

72

76

Industrial Hygiene and Safety
The health and safety of Procter & Gamble employees areparamount in the principles of the Company.
Nothing we do is worth getting hurt.
Safety and health can be managed.
Every illness and injury could and shouldhave been prevented.
Safety and health are everyone's responsibility.
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 toanother job or medical treatment beyond first aid. LWDC includes
all cases that involve days away from work or days of restrictedactivity beyond the day of injury or onset of illness.
The TIR target for sites is to be below 1.5 cases per 100 employees
worldwide. To achieve such rates, programs to address employee
safety, such as safe behaviors, ergonomics, and confined spaceentry, have been implemented. No target has been set for LWDC
because of our belief that one has to manage incidents that
potentially could lead to lost workdays.
The following data is based on criteria established by P&G for use
at all worldwide plants and technical centers. This year’s total
incident rate stayed nearly the same, at .55 versus .54 incidents
per 100 employees, while the lost workday case rate also stayed
the same, at .21 versus .22 cases per 100 employees.

Total Incident Rate
(injury and illness per 100 employees)

2002 2003 2004
HS&E

2002 2003 2004
Fire Protection

.67
.54

HS&E Program Costs
There are two aspects of Health, Safety & Environment (HS&E)
program costs:
1. Capital costs for new HS&E equipment.
2. People and operating costs for existing facilities.
HS&E capital costs for 2003/2004 were $24.6 million (slightly lessthan last year) to ensure compliance in our facilities. This included
the purchase and construction of pollution control equipment suchas wastewater pretreatment systems and air emission controls.
HS&E total costs for operating existing sites in 2003/2004 were$158 million. (This does not include the $21 million in revenue
gained from recycling activities.).55

2002 2003 2004

Total Lost Workday Case Rate(lost and restricted workday cases
per 100 employees)

.27

.22

.21

2002 2003 2004

P&G 2004 Sustainability Report

53

Sustainability
In Action

P&G 2004 Sustainability Report54

Sustainability in Action

To bring our sustainability efforts to life, we decided to focus onareas in which we can most effectively make a positive difference
and which can involve all our businesses and regions. After muchinternal and external discussion, we selected two areas:• Water• Health and Hygiene
P&G’s work in these areas entails developing new ideas regarding
our products, services, initiatives, and markets. For example, it
includes• Reaching consumers we have never reached, such as in the ruralvillages and urban slums of the developing world.
• Creating new products responding to the needs, frustrations,and aspirations of those new consumers and selling those
products at an affordable price.
• Exploring new business models, often with new supply anddistribution systems to lower cost and extend reach.
Why Water?
Water affects the lives of all of us, each day. Worldwide, morethan
• 1 billion people do not have access to safe drinking water.
• 3 to 4 billion people do not get enough water.
• 3 billion people do not have access to adequate sanitation
systems.
• 3 million people – mostly children – die from water-related
illnesses each year.

P&G has chosen to focus on water because we have a great dealof expertise in this area and tremendous capability to improve life
for people with insufficient access to clean water. In addition,water is integral to the use and disposal of most P&G products;
nearly 85 percent of them have some connection with householdwater use.
Why Health and Hygiene?
Health and hygiene affect all of us, in both the developed and thedeveloping worlds. Here are some current concerns:• Population growth is leading to overcrowding and disease in
major urban areas.
• Micronutrient deficiency or "hidden hunger" affects many
millions of people, causing blindness, inadequate childhood
growth, and other developmental issues.
• Food-borne diseases impact greater numbers of people
every year.
• People’s increased mobility enables infection and disease to
move rapidly around the world.
P&G has chosen to focus on health and hygiene because we have
many products that improve health and well-being and that clean
skin, clothing, and homes.

Photo courtesy of UNICEF/Pirozzi

Key Sustainability Focus Areas
At P&G, we proactively bring together innovative ideas andresources to create new products and services that improve thequality of people’s daily lives around the world, at all income levels.
P&G is particularly well-positioned to do this because we are intouch daily with the needs of the world’s consumers.

Sustainability in Action
Water

P&G 2004 Sustainability Report

55

Water
P&G’s Safe Drinking Water Program
One of the UN Millennium Development Goals is to halve theproportion of people without access to or able to afford safe
drinking water by 2015. Today, more than a billion people lackaccess to safe drinking water, so meeting this target is a significant
challenge. It requires that at least 125,000 unserved people beconnected to safe water supplies each day.

PUR Supports Millennium Development Goals
PUR Purifier of Water has won an International Chamber ofCommerce World Business Award for supporting the UN
Millennium Development Goals. This is the first worldwide awards
program to recognize the significant role business can play in theimplementation of the UN’s targets for reducing poverty aroundthe world by 2015.

An estimated 2 million children each year – 5,000 each day – diebecause of diarrheal diseases, many of which could be prevented
with safe drinking water.

Winning projects were selected by an independent judging panel
drawn from business, labor, research and academic organizations,environmental groups, and the United Nations.

Though efforts are underway around the world to bring safe andsufficient water services to these people, P&G has a way to bringclean water right now to those not yet reached. We do this with a
new product we invented called PUR Purifier of Water.

P&G provides PUR Purifier of Water at cost to global relief agencies
so they can provide safe drinking water in emergency situations.
PUR has been used in Botswana, Chad, Malawi, Liberia, andZimbabwe. PUR Purifier of Water is also being tested in several
markets to learn how it can be provided on a sustainable basis in
the developing world.

PUR is a low-cost, simple-to-use water treatment system forhousehold use. PUR’s technology and ingredients are based on
those used in municipal water treatment systems in the developed
world. The product is ideal for the developing world because it
costs one U.S. cent to purify a liter of water.
PUR comes in a sachet that gets mixed with 10 liters of water. Ina few minutes, dirt and other contaminants separate from thewater. The water gets poured through a filter cloth and stands for
20 minutes. This process removes pathogenic bacteria, viruses, andparasites. The result is clean, safe water that meets World HealthOrganization guidelines.

The Millennium Development
Goals were established by world
leaders at the UN Millennium
Summit in September 2000.
The Goals include:• universal primary education• promotion of gender equality• eradication of extreme hunger• improved maternal health• environmental sustainability• reduction of child mortality

P&G’s safe drinking water technology is a breakthrough forconsumers in the developing world because• It is affordable.
• It gives consumers control of their own water supplies, in theirown homes.
• It visibly proves that water has been cleaned.
PUR was developed by the Procter & Gamble Health Sciences
Institute in collaboration with the U.S. Centers for Disease Control
and Prevention. In tests in Guatemala, Pakistan, and Kenya, PUR
reduced the incidence of diarrhea by up to 50 percent. In a test in
Bangladesh, PUR reduced the poisonous arsenic from well water
so it met local safety standards.

Local Water

Add PUR and stir

Filter through cloth

Clean, safe water

Sustainability in Action
Water / Health and HygieneP&G 2004 Sustainability Report

56

well as repeated wringing. The strenuous physical requirements ofrinsing can cause hand and back pain.
In the Philippines specifically, many households receive only limited
water and only during limited hours. Rinsing three or four times
can get expensive or may not even be possible.
Filipino housewives typically do laundry three to five times a week,with each session lasting two to three hours.
Tide 1-Banlaw provides a major lifestyle
improvement for Filipinos.

Tide 1-Banlaw dramatically conserves water as well as time andeffort, freeing women to do other things for their families.

New Tide Economizes on Rinse Water
An innovative new Tide product in the Philippines is saving waterin households that rinse laundry manually. Instead of having torinse soapy clothes three or four times, consumers rinse only once
if they use Tide 1-Banlaw (Tide 1-Rinse, in English).

Because some consumers try to cut down on rinsing by using lessdetergent than necessary, their wash often comes out dingy. With
Tide 1-Banlaw, they’re more likely to use the correct amount ofdetergent, resulting in cleaner wash. The product’s formula also
helps with this by preventing minerals and particulates in the waterfrom depositing on the clothes.

In the Philippines and other developing countries, consumers often
wash by hand or in semi-automatic machines that don’t rinse.
Doing laundry may require carrying water to the laundry area asTide 1-Banlaw uses a new silicone technology. It is being test
marketed in Davao and is expected to be sold throughout thePhilippines and also in other countries where hand rinsing is common.

Health and Hygiene
P&G Helps Children’s Health Via UNICEF’s
Fresh & Caring Start
This is the fourth consecutive year P&G has worked with the U.S.
Fund for UNICEF (the United Nations Children’s Fund) on the Give
Kids a Fresh and Caring Start campaign. The objective of thecollaboration is to provide children around the world a betterchance to grow to adulthood in health, peace, and dignity.
Dawn dishwashing liquid donated 10 cents for each Dawn
product sold during September and October of 2003, for a totalof $150,000. This put Dawn above the $1 million mark forcontributions over the four years of the campaign.
Additionally, the Dawn, Downy, Bounce, and Tide brands issued
coupons in millions of U.S. newspapers, donating 10 cents to theHalloween campaign Trick or Treat for UNICEF for each coupon
redeemed. This generated another $200,000.
Safeguard Dramatically Improves Lifein Developing Countries
Over the past decade, P&G has been taking its North American
Safeguard bar soap brand to developing countries. Safeguard’s
antibacterial benefits have greatly improved health and hygiene inplaces such as the Philippines, Pakistan, and China.
Clean Water in the Philippines
P&G continues its partnership with UNICEF to provide water andsanitation facilities in the Philippines.

In a project called Handog 2big Operation in the local language –H2O for short – P&G’s Safeguard soap and UNICEF are providing
water and sanitation facilities, along with hygiene education
programs, in 21 schools. The two-year program is expected tobenefit more than 10,000 students.
Local people are volunteering labor and materials to build thefacilities. UNICEF oversees construction and provides the remaining
materials. P&G is funding H2O in the amount of P$4 million(nearly US$70,000).
H2O follows a five-year P&G/UNICEF program that brought waterand sanitation facilities to communities and schools throughconstruction of 190 water supply systems and 500 toilet facilities.
This program reached more than 60,000 Filipinos.
A 2000 World Health Organization survey showed that 10 million
Filipinos need safe water and 13 million need sanitation facilities.
Unhygienic conditions in the Philippines lead to diarrhea, theforemost cause of death there.

Sustainability in Action
Health and Hygiene

P&G Fights HIV/AIDS in Africa
Worldwide, 40 million people are infected with HIV/AIDS. Statistics
are frightening; it is estimated that someone becomes infected
every six seconds.
Infection rates in some African countries run as high as 40 percentof the population. AIDS has become the leading cause of death in
sub-Saharan Africa, with more than 28 million people infected.
In addition to the many, many lives lost, there are an estimated
14 million orphans.
With sub-Saharan Africa being the most impacted area in theworld as regards HIV/AIDS, P&G’s sub-Saharan organization isleading the Company’s anti-AIDS effort. We are also seeking ways
to combine our Safe Water program with the distribution of AIDS
drugs – starting in Uganda and Haiti. This will prevent the diseases
associated with unsafe water from impacting individuals who havea depressed immune system due to HIV.
P&G’s effort, which began in 1998, was revised this year tocoordinate with the latest national and international developments
and standards. The effort’s objectives are to:• Help prevent the spread of HIV/AIDS via employee and family
awareness and prevention programs at our various African
locations,• Offer medical plans that assist employees with HIV/AIDS to getlife-prolonging medication and in some cases supplement thesewith additional Company support.
The workplace portion of the effort consists of the following
elements• Establishing baseline measurements, such as knowledge,
attitude, perception (KAP), and disease prevalence.
• Conducting risk analysis and impact assessment, considering
issues such as costs to P&G and impact on customers, suppliers,
health care facilities.
• Implementing prevention strategies, such as awareness training,
voluntary counseling and testing for HIV/AIDS and Sexually
Transmitted (STD) diseases and• Implementing “Wellness programs” strategies to keep infected
employees as healthy as possible and providing Post exposure
prophylactics (PEP), anti-retroviral treatment (ART), Nevirapine,
vitamins and nutritional supplements, and home-based care.
• Evaluating and monitoring the effectiveness of theseinterventions.
• Assessing and improving Company benefits.
The goals for the next two years are:
• 80 percent of employees will volunteer for “Know Your Status”
testing.
• 80 percent of employees will visit the Company’s HIV/AIDS Web
site.
• Employees’ knowledge, attitude, and perception (KAP) will
improve.

P&G 2004 Sustainability Report

57• P&G will have qualified, in-house peer educators and/or
counselors at a ratio of one for every 50 employees.
The oversight and evaluation of the program is the responsibility ofthe sub-Saharan African Vice President and the Human Resource
Associate Director. P&G also has offered our management
knowledge and people resources to the U.S. Embassy in South
Africa to help it deploy the $5 billion in aid promised by the U.S.
President’s Emergency Plan for AIDS Relief (PEPFAR).

on theWeb

For more information on P&G’s anti-HIV/AIDS workin South Africa, please visit http://www.pg.com/sr

Hand Washing
Hand washing sounds simple to people who have abundant soap
and running water, though it’s a task that often gets skipped indeveloping countries. Hand washing is critically important inpreventing the spread of disease.
Study Shows That Hand Washing Saves Lives
Washing hands with soap is effective in preventing diarrhea
among children at highest risk of death from this illness, according
to a study done by P&G and the U.S. Centers for Disease Control
and Prevention and published in the Journal of the American
Medical Association.
The study was conducted in 900 households in Karachi, Pakistan,
one of many cities in the developing world in which diarrhea
commonly leads to death. P&G provided Safeguard soap to twothirds of the households in the study. Over the course of a year,
results showed that the households receiving soap reported only
half the incidence of diarrhea as the other households. Importantly,
the study showed that hand washing can prevent diarrhea among
those most vulnerable and at greatest risk of death – infants under
12 months and people who are malnourished.
Bidding Farewell to Disease
An education campaign in China has helped people understandthe importance of hand washing in preserving health andpreventing disease. People in three major cities came to the
Mobile Health Education Wagon to see how germs get
transmitted via the touch of a hand. The Wagon featured aninteractive demonstration, using fluorescence, to show germtransmission in a vivid way.
Called Bidding Farewell to Disease Starts with Hand Washing –Health Education China Tour, the campaign was organized by the
Safeguard Research Institute for Family Hygiene and the China
Medical Association.
Education regarding hand washing became a critical need in China
during the recent SARS epidemic.

P&G 2004 Sustainability Report

58

Index
GRI#

Index Listing

Page(s)Profile
1.1
1.2
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9

Statement of vision and strategy
Statement from CEO
Name of organization
Major products and/or services, including brands, if appropriate
Operational structure
Description of major divisions, operating companies, subsidiaries, and joint ventures
Countries where operations are locatedNature of ownership
Nature of markets served
Scale of reporting organization
List of stakeholders

32
5
5, 6, 10
7, 8
7, 8
9
5
5
5, 10
11

Report Scope
2.10
Contact person
2.11
Reporting period
2.12
Date of most recent report
2.13
Boundaries of report (countries/regions, products/services, divisions/facilities/joint ventures/subsidiaries) and specific limitationsof scope
2.14
Significant changes in size, structure, ownership, or products/services that have occurred since the previous report
2.15
Basis for reporting on joint ventures, partially owned subsidiaries, leased facilities, outsourced operations, and other situations
that can significantly affect comparability from period to period
2.16
Explanation of the nature and effect of any restatements of information provided in earlier reports
2.17
Decisions not to apply GRI
2.18
Criteria/definitions used in any accounting for economic, environmental, and social costs and benefits
2.19
Significant changes from previous years in the measurement methods applied to key economic, environmental,
and social information
2.20
Policies and internal practices to enhance and provide assurance about the accuracy, completeness, and reliability thatcan be placed on the sustainability report
2.21
Policy for independent assurance
2.22
Means to get additional information and reports about economic, environmental, and social aspects of theorganization’s activities
Structure & Governance
3.1
Governance structure of the organization, including major committees under the board of directors that are responsible
for setting strategy and oversight of the organization.
3.2
Percentage of impendent board directors
3.3
Process for determining board expertise
3.4
Board-level process for overseeing sustainable management
3.5
Linkage between executive compensation and achievement of the organization’s financial and non-financial goals
3.6
Organizational structure and key individuals responsible for oversight, implementation, and audit of economic,
environmental, social, and related policies
3.7
Mission and value statements
3.8
Shareholder mechanisms to provide information to Board
Stakeholder Engagement
3.9
Basis for identification and selection of major stakeholders
3.10
Approaches to stakeholder consultation
3.11
Type of information generated by stakeholder consultations
3.12
Use of information generated by stakeholder engagements
3.13
Explanation of whether and how the precautionary approach or principle is addressed by the organization
3.14
External developed, voluntary economic, environmental, and social charters, sets of principles, or other initiatives
to which the organization subscribes or which it endorses.
3.15
Principal memberships in industry associations
N/A = Not applicable. P&G only reports on data that is relevant to the business. It does not collect data that is used solely for the sustainability report.

62
5
55, 7, 10
12
12
39
N/A
33, 38
N/A
38
N/A
5,21,49

7, 20
19
19
19
20, 22
7
18, 19, 21
19

19, 32, 35
32
N/A
N/A
36
22
31

IndexGRI#

P&G 2004 Sustainability Report

Index Listing

Page(s)Stakeholder Engagement (continued)
3.16
Policies and/or systems for managing upstream and downstream impacts
3.17
Approach to managing indirect economic, environmental, and social impacts resulting from its activities
3.18
3.19
3.20

59

Major decisions during the reporting period regarding the location of, or changes in, operations
Programs and procedure pertaining to economic, environmental, and social performance
Status of certification pertaining to economic, environmental, and social management systems.

27, 29, 51
17, 22, 25, 26, 27,33,
38, 49, 50, 52
12
20, 29, 30, 47
N/A

GRI Content Index
4.1
Table Identifying Location of Indicators
Performance Indicators
Integrated Indicators
Economic Indicators
Direct Economic Impact – Customers
EC1
Net Sales
EC2
Geographic breakdown of markets

10, 49P&G reports data by global business units.

Direct Economic Impact – Suppliers
EC3
Costs of good, materials, and services purchased
EC4
Percentage of contracts that were paid in accordance with agreed terms, excluding agreed penalty arrangements

50
N/A

Direct Economic Impact – Employees
EC5
Total payroll and benefits broken down by country or region

52

Providers of Capital
EC6
Distributions to providers of capital broken down by interest on debt and borrowings, and dividends on all classesof shares
See Our Annual Report
EC7
Increase/Decrease in retained earnings at end of period
See Our Annual Report
Public Sector
EC8Total sum of taxes of all types broken down by country
13 - Globally
EC9
Subsidies received broken down by country or region
See Our Annual Report
EC10
Donations to community, civil society, and other groups broken down in terms of cash and in-kind donations per typeof group
49 - Globally
Environmental Indicators
Materials
EN1
Total materials use other than water, by type
EN2
Percent of materials used that are wastes

39
39

EnergyEN3
EN4

Direct energy use
Indirect energy use

40
40

Water
EN5

Total water use

42

Biodiversity
EN6
Location and size of land owned, leased, or managed in biodiversity-rich habitats
EN7

Major impacts on biodiversity

P&G does not track biodiversity land use
as in general we do not operate in these areas.
P&G does not track biodiversity land use
as in general we do not operate in these areas.

IndexGRI#

P&G 2004 Sustainability Report

Index Listing

Environmental Indicators (continued)
Emissions, Effluents, and Waste
EN8
Greenhouse gas emissions
EN9
Use and emissions of ozone-depleting substances
EN10
EN11
EN12
EN13

NOx, SOx, and other significant air emissions by type
Total amount of waste by type and destination
Significant discharges to water by type
Significant spills of chemicals, oils, and fuels in terms of total number and total volume60

Page(s)43
We do not use ozone depleting substancesin our manufacturing operations.
46
44, 4647
39

Environmental Impacts of Products/Services
EN14
Significant environmental impacts of principal products and services
34 - Please visit http://www.scienceinthebox.com
EN15
Percentage of weight of products sold that is reclaimable at the end of the products’ useful lifeand percentage that is actually reclaimed
P&G is a consumer goods company.
End use of products generally means
product is disposed of.
Compliance
EN16
Incidents of and fines for non-compliance with all applicable international declarations/conventions/treaties,
and national, subnational, regional, and local regulations associated with environmental issues
Social Performance Indicators – Labor Practices/Decent Work
Employment
LA1
Breakdown of workforce by region/country/type
LA2
Net employment creation and average turnover segmented by region/country48

We report globally. Please see page 39.
N/A. We do not track this data.

Labor/Management Relations
LA3
Percent of employees represented by independent trade unions
LA4

While employees are free to join a union,
the Company does not track this data.
Policy and procedures involving information, consultation, and negotiations with employees over changes in thereporting organization’s operations (e.g. restructuring)
12

Health & Safety
LA5Practices on recording/notification of occupational accidents/diseases
48
LA6
Description of formal joint health and safety committees comprising management and worker representatives andproportion of workforce covered by any such committees
29
LA7Standard injury, lost day, and absentee rates and number of work-related fatalities
39, 48LA8Description of policies/programs (for the workplace and beyond) on HIV/AIDS
27 - Please visit http://www.pg.com/srTraining/Education
LA9
Average hours of training per year per employee by category of employee

We do not track this information.

Diversity/Opportunity
LA10
Description of equal opportunity policies or programs, as well as monitoring systems to ensure compliance andresults of monitoring
21, 22, 28, 51
LA11Composition of senior management and corporate governance bodies, including female/male ratio and otherindicators of diversity as culturally appropriate
19 - Please see our Annual Report
LA17
Specific policies and programs for skills management or for lifelong learning
52
Social Performance Indicators – Human Rights
Strategy/Management
HR1
Description of policies, guidelines, corporate structure, and procedures to deal with all aspects of human rights
relevant to operations, including monitoring mechanisms and results.

21 - Please view our
Values and Policies, 24

P&G 2004 Sustainability Report

Index

GRI#

Index Listing61

Page(s)Strategy/Management (continued)
HR2
Evidence of consideration of human rights as part of decisions, including selection of suppliers/contractors.
21 - Please view ourSustainability Guidelines for Supplier Relations
HR3
Description of policies and procedures to evaluate and address human rights performance within the supply chain
and contractors, including monitoring systems and results of monitoring.
21 - Please view ourSustainability Guidelines for Supplier Relationss
Non-Discrimination
HR4
Description of global policy and procedures/programs preventing all forms of discrimination in operations

Freedom of Association
HR5
Description of freedom of association policy

21 - Please view our
Values and Policies

P&G recognizes the Global Sullivan Principles
which support voluntary freedom of association.
See page 22.

Child Labor
HR6
Description of policy excluding child labor as defined by ILO Convention 138

24

Forced/Compulsory Labor
HR7
Description of policy to prevent forced labor

24

Social Performance Indicators – Society
Community
S01
Description of policies to manage community impact
Bribery & Corruption
S02
Description of policy, procedures/management systems, and compliance mechanisms for organizations andemployees addressing bribery and corruption

24, 32

21

Political Contributions
S03
Description of policy, procedures/management systems, and compliance mechanisms for managing political lobbying
and contributions
S04
Awards received relevant to social, ethical, and environmental performance21
13, 14, 15

Social Performance Indicators – Product Responsibility
Consumer Health & Safety
PR1
Policy for policy for preserving customer health and safety during use of products and services, and extend to which
this policy is visibly stated and applied, as well as description of procedures/programs to address this issue, including
monitoring systems and results of monitoring.

29, 34

Products & Services
PR2
Description of policy, procedures/management systems, and compliance mechanisms related to product informationand labeling.

29, 34

Respect for Privacy
PR3
Description of policy, procedures/management systems, and compliance mechanisms for consumer privacy.
PR9
Description of policies, procedures/management systems, and compliance mechanisms for adherence to standards
and voluntary codes related to advertising.

25
25

P&G 2004 Sustainability Report62

2004 Sustainability Report
Global Editor

Cindy Mastin, U.S.A.

Core Report Team Ina Andreasen, Denmark
Angela Vanegas, Venezuela
Lucy Bogaerts, Belgium
Bea Buyle, Belgium
Dionisis Kolokotsas, Belgium
Anne McConnell, Canada
Chris Smith, U.K.
Robin Tollett, U.S.A.
Pam Wright, U.S.A.
Shinobu Yasutake, Japan
Copy Editor

Jan Sherbin, Cincinnati, Ohio, U.S.A.

DesignAndy Ruttle, David Hess – Ruttle Design Group
Cincinnati, Ohio, U.S.A.

The report team thanks all the individuals throughout the world
who contributed information, stories, and data to this report.
Special thanks to Greg Allgood, P&G U.S.A., for the use of his
photography on the cover and throughout the report.

Contact
Cindy Mastin
Corporate Sustainable Development
1 Procter & Gamble Plaza
Cincinnati, Ohio 45202 U.S.A.
E-mail sustainrep.im@pg.com

on theWeb

P&G’s 2004 Sustainability Report can be found at:
http://www.pg.com/sr

P&G 2004 Sustainability Report

63

Addendum“For More Information” links from previous pages in this report.

Policies, Organizations, andManagement Systems
Policies
Child Labor And Worker Exploitation Policy
P&G does not use child or forced labor in any of our global
operations or facilities. We do not tolerate unacceptable worker
treatment such as the exploitation of children, physical punishment
or abuse, or involuntary servitude. We expect our suppliers andcontractors with whom we do business to uphold the same
standards. Should a pattern of violation of these principles become
known to the Company and not be corrected, we will discontinue
the business relationship.
For purposes of implementing the above policy, we will employ thefollowing definitions:
CHILD LABOR:• We will look first to the sovereign laws of the country in which
we are doing business.
• In the absence of any national or local law, we will define“child” as less than 15 years of age.
• If local minimum-age law is set below 15 years of age but is inaccordance with International Labor Organization (ILO)
Convention 138, the lower age will apply.
FORCED LABOR is any work or service extracted from any person
under the menace of any penalty and for which said person has
not offered himself voluntarily.
SUPPLIER or CONTRACTOR is someone who has a “direct”
business or contractual relationship with P&G. We will urge our
suppliers and contractors to promote the application of theseprinciples by those with whom they do business.

Advertising Policy and Sustainable Development
We believe advertising contributes to sustainable development
through a variety of general and specific ways in the marketplace.
To achieve sustainability through the market, we need effective
competition to drive innovation and increased efficiency.
Competition thrives on advertising, and advertising thrives oncompetition. Competition promotes innovation, which leads tobetter products and services, and more variety and choice for
consumers.
There are also many specific business-building opportunities inwhich advertising can contribute to sustainable development byimproving lives around the world:• In developing countries, advertising often also involves healtheducation and awareness raising, such as addressed by P&G’s• Healthy Smiles dental health campaign in China.

• Providing social or environmental messages as part of public
service or corporate campaigns. P&G’s Open Minds campaign inIndia, for example, raised public awareness of the plight of India’s
working street children while collecting money to fund theireducation.
• Promoting innovative products that have environmental or social
benefits.
• Promoting more sustainable use of existing products to maximize
environmental or social benefits. For example, the WashRight
campaign, run by P&G and other members of the European
Detergents Association in Europe, promotes correct usage oflaundry products and efficient use of water and energy.
• Communicating the sustainability attributes and performance ofcompanies and other organizations as the public increasingly
wants to know more about the companies behind products andservices.
Despite contributions to sustainable development, advertising’s roleand effects have been questioned. Advertising has been blamedfor spreading Western lifestyles around the world and for
promoting excessive consumption in developed countries.
Spreading awareness of how other people live is one of theinevitable consequences of the global media revolution. We do not
accept that people in developing countries should be denied abetter quality of life. The first priority of sustainable consumption
must be to provide access to adequate consumption opportunities
for everyone. Nearly half the world’s population lives on less than$2 per day; they need access to adequate products and services
that can improve their daily lives.
In developed countries, the idea that advertising fuels overconsumption is also misplaced as advertising cannot make people
buy things they do not want or need. Advertising can inform andinfluence and help consumers make more informed decisions, but
it is consumers who choose how best to improve the quality of
their own lives. Advertisers alone are unable to regulate the overall
demand for goods and services.
However, there are clear responsibilities, as well as opportunities,
for advertisers such as P&G. There is a responsibility to ensure truthin advertising and to ensure that messages are legal, decent, andhonest. We also assume our responsibility to ensure the sensitive
portrayal of all groups in society, including women, children, theelderly, and minorities. For this reason, P&G actively supports truthin-advertising mechanisms and conforms to relevant national codesand guidelines wherever we operate.
The contribution of advertising to sustainable development is
discussed in more detail in the report “Industry as a Partner for
Sustainable Development – Advertising,” which has been writtenby the advertising industry in collaboration with UNEP – the United
Nations Environment Program. P&G helped the World Federationof Advertisers (WFA) and the European Association ofCommunication Agencies (EACA) write this report, which wascontinued on next page

Addendum

P&G 2004 Sustainability Report64

continued from previous page

presented at the World Summit on Sustainable Development in
Johannesburg, South Africa, in August 2002. P&G is an active
member of WFA and is on the Advisory Committee of UNEP’s
Advertising and Communication Forum on Sustainability.

including economic, environmental, recreational value andpreservation of natural beauty. P&G does not own or manage
forests, but as a major purchaser of wood-derived fibers andcellulose materials, we have a responsibility and economic interestin the long-term viability of the world’s forest resources.

Environmental Quality Policy
We will provide products of superior quality and value that best fill
the needs of the world’s consumers. As a part of this, P&G
continually strives to improve the environmental quality of its
products, packaging and operations around the world. To carryout this commitment, it is P&G’s policy to:• Ensure our products, packaging and operations are safe for our
employees, consumers and the environment.
• Reduce or prevent the environmental impact of our products andpackaging in their design, manufacture, distribution, use anddisposal whenever possible. We take a leading role in developing
innovative, practical solutions to environmental issues related toour products, packaging and processes. We support thesustainable use of resources and actively encourage reuse,recycling and composting. We share experiences and expertiseand offer assistance to others who may contribute to progress inachieving environmental goals.
• Meet or exceed the requirements of all environmental laws andregulations. We use environmentally sound practices, even in theabsence of governmental standards. We cooperate withgovernments in analyzing environmental issues and developing
cost-effective, scientifically based solutions and standards.
• Continually assess our environmental technology and programs
and monitor progress toward environmental goals. We develop
and use state-of-the-art science and product life cycle
assessment, from raw materials through disposal, to assess
environmental quality.
• Provide our consumers, customers, employees, communities,
public interest groups and others with relevant and appropriate
factual information about the environmental quality of P&G
products, packaging and operations. We seek to establish andnurture open, honest and timely communications and strive tobe responsive to concerns.
• Ensure every employee understands and is responsible andaccountable for incorporating environmental quality
considerations in daily business activities. We encourage,
recognize and reward individual and team leadership efforts toimprove environmental quality. We also encourage employees toreflect their commitment to environmental quality outside ofwork.
• Have operating policies, programs and resources in place toimplement our environmental quality policy.

It is our position that sustainability of global forest resources is best
achieved by a balance of three forestry approaches:• Preservation of sufficient temperate, boreal, and tropical forests
to ensure that biological diversity, recreation, and natural beauty
are maintained.
• Mixed-use plans for maintaining forests through a combinationof sustainable timber harvest and management forenvironmental and recreational goals.
• Plantation forest management to maximize fiber yield. This helps
lessen the pressure to harvest trees from forests that could bepreserved or are managed under mixed-use plans.

Forest Resources Policy
P&G’s Position on Sourcing Wood Fiber and Cellulose-Derived
Materials:
It is P&G’s position that forest resources worldwide must be
responsibly managed to sustain them for both current and future
generations in order to meet a wide range of societal needs,

Arriving at the right balance of forest uses requires the involvement
and cooperation of a wide variety of stakeholders, including
experts in academia, government, public organizations, industry,and local landowners and indigenous peoples. The principles ofsustainability include economically and environmentally responsible
harvesting and reforestation management to minimize impacts on
wildlife habitat, soil, and water quality, with protection of special
sites of unique geological, biological, or historical significance.
Consistent with this position:• P&G purchases cellulose fiber only from suppliers who comply
with legal requirements and demonstrate forestry practices andsourcing commitments consistent with the principles ofsustainable forestry. This holds for plantation-grown and naturalforests.
• P&G does not purchase cellulose fiber derived from sites
designated for preservation or judged to have uniqueenvironmental or cultural value.
• P&G qualifies suppliers and monitors forestry practices throughsite visits and comprehensive surveys, working with suppliers toaddress opportunities for continual improvement. We encourage
our suppliers to participate in regional land management
decision-making processes that involve industry, academic,
government, and special-interest groups.
• P&G encourages third-party verification or certification ofcompliance with sustainable forestry practices when it
contributes to improvement in practices but does not require or
support requirement of certification by any single organization.
P&G encourages development of standards, performancemeasures, and continual improvement in best practices for forest
ecosystems. These advances are judged more important than
implementing complex audit and recordkeeping systems that canbe required by certification programs.
P&G is also committed to strategies that reduce demand on theworld’s forest resources, including use of recovered fiber anddevelopment of additional non-forest derived sources of fiber.
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P&G 2004 Sustainability Report65

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Management Systems
Human Resources
Human Resources ensures that P&G has the employees,organizational design and work culture to deliver increasing
business productivity and to continually improve consumer,
employee and shareholder value. They provide recruiting, training,development, diversity, benefits and compensation coordination
for the Company.
It is the Company’s intent to develop all employees to their fullpotential. To achieve this goal the following support systems are inplace:• Career discussions, performance appraisals, assignment plans,transfer and promotion plans.
• Informal network support groups.
• Mentoring to provide informal support and guidance, in addition
to coaching and training provided by each employee’s direct
manager.

Insurance Systems
The goal of the Corporate Insurance Program is to optimize thefinancing of insurable risks to minimize costs while providing
protection from the effect of potential major loss.
The Program is guided by the following basic principles:• The Company’s primary defense against loss is effective loss
prevention programs.
• Insurance is no substitute for effective loss prevention.
The Corporate Insurance Program covers areas of loss andpotential loss such as property damage; business interruption
resulting from property damage; legal liability resulting fromproperty damage or personal injury; the legal liability of Directors,
Officers, Trustees and employees arising from the performance of
their duties; and theft.

Human and Environmental Safety of our Products
Product Safety & Regulatory Affairs (PS&RA) addresses issues
related to products and packages. PS&RA is responsible for
ensuring that products are safe for consumers, safe for theenvironment and in compliance with laws and regulations where
they are sold. PS&RA also addresses other environmental questions
or issues about products and packages, such as their compatibility
with waste management systems, natural resource use or issues of“perceived safety.”
PS&RA is also responsible for the development, validation andadoption of alternatives to animal testing and ensures that any
claims the Company makes about the safety or environmental
profile of its products are scientifically sound.
Risk assessment is the process the Company uses to assess thesafety of its products and ingredients. In this process, chemicalhazard and exposure information are related in a way that

describes the likelihood for a chemical to adversely affect biologicalsystems. The PS&RA organizations in each business unit work
closely with product development teams in the development,
selection and formulation of product ingredients and mixtures withacceptable risk profiles, as well as satisfying other importantbusiness and consumer needs.
A key part of PS&RA is the Central Product Safety (CPS)
organization. CPS has the direct responsibility to “ensure that our
products are safe for consumers and safe for the environment.”
This involves conducting basic studies in toxicology,
biodegradation, together with an understanding of exposures, toultimately complete human and environmental safety assessments.
In addition, this organization has responsibility for the basic andapplied research used to develop state-of-the-art risk assessments
as well as to make business decisions. As a Company resource, its
primary role is to advance science for understanding andevaluating the human and environmental safety and impact of our
products.

Worldwide Health, Safety and Environment Systems at
Manufacturing Operations
Health, Safety and Environment (HS&E) is a global community ofresources responsible for ensuring that the approximately 130
manufacturing facilities worldwide are operated safely and legally;that process hazards are minimized or eliminated; that health risks
are identified, managed or eliminated; and that all waste from sites
is reduced as much as possible. Several thousand employees spend
all or a portion of their time on HS&E management, which totals
more than 1,350 full-time equivalents.
There are 3 major components to an HS&E organization at a site:
the base HS&E component (includes Environmental, Technical
Safety and Industrial Hygiene & Safety disciplines), Fire Protection(FP) Systems and Medical Systems.
During the past fiscal year, P&G has further integrated its technical
HS&E programs and at the same time provided a stronger
interface platform for the three above-mentioned HS&E
organization components, which ensures an increased efficiency inthe functioning of these programs. In addition, an improvedalignment has been achieved with changed work systems at the
manufacturing operations.
A phased, detailed Risk Assessment is the process the Company
uses to assess the safety of its processes and new initiatives thatare being introduced at its own manufacturing operations as well
as at contractor manufacturing operations. The whole Risk
Assessment process is designed to enable “high-speed”
innovation.

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P&G 2004 Sustainability Report66

continued from previous pagePrincipal Industry and Business Associations
Europe, Middle East, and Africa
Advertising Associations: WFA – World Federation of Advertising
Chemical Industry Associations: CEFIC – European Chemicals
Industry Association; DUCC – Coalition of Downstream Users
Cosmetics Industry Associations: COLIPA – Cosmetics & Fragrances
Industry
Detergent Industry Associations: AISE – Association Internationale
de la Savonnerie de la Detergence et des Produites d’Entretien
Employer Associations: UNICE – Union of Industrial & Employers’
Confederation of Europe
Environmental Associations: ECETOC – European Center for Ecotox
and Toxicology of Chemicals; EUROPEN – The European
Organization for Packaging and the Environment
Euro/American Business Associations: AECA – American European
Community Associations; EU Committee of AmCham
Food Associations: CIAA – European Food Industry Association;
CIES - Food Business Forum
Grocery/Brand Associations: AIM – European Brands Association
Multi-stakeholder Associations: EPE – European Partners for theEnvironment
Nordic Partnership: WWF and Industry Partnership in Nordic
Region to Target Sustainability to Rewarding Business
Paper Associations: EDANA – European Industry of Non-Woven
Products; HAPCO - European Industry of Hygiene Paper Products
Pet Food Industry Association: PFMA – Pet Food Manufactures
Association
Pharmaceutical Associations: AESGP / OTC Manufacturers
Association; FPIA – Pharmaceutical Industry Association
Waste Management Associations: ASSURRE – Association for
Sustainable Use and Recovery of Resources in Europe
North America
American Chemical Society
American Industrial Health Council
American Legislative Exchange Council
Association of National Advertisers
Business for Social Responsibility
Business Roundtable
Canada’s Research-Based Pharmaceutical Companies (Rx&D)
Canadian Chamber of Commerce
Canadian Chemical Producers Association
Canadian Manufacturers and Exporters
Canadian Consumer Specialty Products Association
Canadian Cosmetic, Toiletry and Fragrance Association
Consumer Specialty Products Association
Consumer Health Products Association
Cosmetic, Toiletry and Fragrance Association
CSR Canada – Corporations Support Recycling
Food and Consumer Products Manufacturers of Canada
Global Environment Management Initiative
Grocery Manufacturers of America
Keep America Beautiful
National Conference of State Legislatures
National Environmental Development Association
National Food Processors Association

Non-Prescription Drug Manufacturers Association of Canada
Pharmaceutical Researches and Manufacturers of America
Soap & Detergent Association
Soap & Detergent Association of Canada
The Council of State Governments
US Council for International Business
Water Environment Research Foundation
Latin America
ABIPLA – Brazilian Association of Household Cleaning Products
ANALJA – Colombian Soaps and Detergent Manufacturers
Association
Argentinian National Industry Association
ASOQUIM – Venezuelan Association of the Chemical Industry
CANIPEC – Mexican Association of the Industry of Cosmetics andPerfumesCámara Nacional de la Industria de Aceites, Grasas, Jabones y
Detergentes. Mexico
Cámara Nacional de las Industrias de la Celulosa y del Papel.
Confederación Patronal de la República Mexicana.
CONCAMIN – Confederación de Cámaras Industriales.
Asociación Nacional de la Industria Química. Mexico
AMECE – Asociacion Mexicana de Estandares para el ComercioElectronico
Asociacion Mexicana de Fabricantes de Pañal Desechable y
Similares, A.C. (AMPADE)CONAR – Consejo de Autorregulación y Etica Publicitaria. Mexico
COMCE – Consejo Mexicano de Comercio Exterior
CONMEXICO – Consejo Mexicano de la Industria de Productos deConsumo
CAVEME – Venezuelan Pharmaceutical Products Association
CEVEDES – Venezuelan Business Council for Sustainable
Development
ANDA. Venezuelan Association of Advertisers
CONINDUSTRIA. Industrial Confederation of Venezuela
CONAR – Chilean Advertising Self–Regulation and Ethics Council
SOFOFA – Manufacturers Industry Association
Chamber of the Cosmetic Industry of Chile
AmCham – Chilean American Chamber of Commerce
Chilean–Brazilian Chamber of Commerce
ANDA – National Advertisers Association Chile
Latin America Federation of Waste Management
Peru –Sociedad Nacional de Industrias
Asia
State Committee of Cosmetic Industry
Asia/Pacific Economic Cooperation
Australian Consumer & Specialty Products Association
China – Amcham Membership
China – CC of Foreign Invested Enterprises GZ
China – Academy of Environment Science
China – Association of Enterprises with Foreign Investment
China – Association of Fragrance Flavor and Cosmetic Industry
China – Daily Use Groceries Association
China – Detergent Products Industry Association
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China – Association of Surfactant, Soap and Detergent Industries
China – Hygiene Supervision Magazine
China – Hygienic Material & Technology Association
China – National Household Paper Industry Association
China – Standardization Association
China – Standardize Technological Consulting Service Center
China – China Toothpaste Industry Association
China – GD Associated Net for Anti–counterfeit & High–quality
Protection
China – GD Fragrance Flavor Cosmetic Branch of GD Light Industry
Association
China – Guangdong Quality Magazine
China – Guangdong Quality Management Association
China – Guangzhou Municipal Foreign Trade Investment Law
Association
China – Guangzhou Municipal Lawyers' Association
China – Guangzhou Quality Inspection Association
China – Guangzhou Trademark Association
China – GZ "Three" Associations of Economic & Technological
Development District
China – GZ Association of Enterprises with Foreign Investment,
China
China – GZ Education Fund Association
China – GZ Industry & Commerce Administration Management
Institute Branch of Foreign Investment
China – Living Use Paper Specialized Committee of China Paper
Making Institute
China – National Bar Code Association
China – National Environment Hygiene Standard Specialized
Committee (MOH)
China – Perfume / Fragrance Magazine
China – Quality Management Association
China – State Committee of Cosmetics Industry Standardization(SBQTS)
China – State Technical Committee of Paper Making Industry
Standardization
China – State Technology Committee of Food Industry
Standardization
China – Tianjin Association of Enterprises with Foreign Investment
Hong Kong – The Cosmetic and Perfumery Association of Hong
Kong
Hong Kong – The Hong Kong Association of the PharmaceuticalIndustry
India – Associated Chambers of Commerce and Industry of India
India – Confederation of Indian Industry
India – Federation of Indian Chambers of Commerce and Industry
India – Feminine & Infant Hyginene Association
India – Indian Soap & Toiletries Markers’ Association
Indonesia – Indonesian Cosmetics Association
Indonesia – Indonesian Food&Beverage Industry Association
Indonesia – Indonesian Moslem Scholar Association
Indonesia – Indonesian Pulp & Paper Association
Indonesia – Indonesian Tissue Paper Association
Indonesia – National Standardization Body
Indonesia – Pharmaceutical Industry Association
Japan – Japan Cosmetic Industry Association

Japan – Japan Health and Nutrition Food Association
Japan – Japan Hygiene Product Industry Association
Japan – Japan Soap and Detergent Association
Japan – Pharmaceutical Association of Japan
Korea – American Chamber of Commerce
Korea – Association for Fair Trade of Tissue & Hygiene Products
Korea – EU Chamber of Commerce
Korea – Korea Chemical Management Association
Korea – Korea Cosmetics Industry Assoc.
Korea – Korea Food Industry Association
Korea – Korea Food Traders Association
Korea – Korea Hygiene Paper Product Association
Korea – Korea Paper Manufactures’ Association
Korea – Korea Pharmaceutical Trade Assoc.
Malaysia – American Malaysian Chamber of Commerce(AMCHAM)
Malaysia – Federation of Malaysian Manufacturers –FMM Food
manufacturer
Malaysia – Malaysian International Chamber Of Commerce And
Industry – MICCIMalaysia – The Cosmetic, Toiletry & Fragrance Association of
Malaysia–CTFA
Philippines – Soap & Detergent Association of the Philippines
Philippines – Cosmetic, Toiletry & Fragrance Association of thePhilippines
Singapore – The Cosmetic, Toiletry & Fragrance Association of
SIngapore–CTFAS
Taiwan – Taiwan Cosmetic Industry Association
Taiwan – Taiwan Paper Industry Association
Taiwan – Taiwan Soap & Detergent Industry Association
Thailand – Federation of Thai Industries
Thailand – Thailand Soap & Detergent Association
Worldwide
Conference Board
International Chamber of Commerce
Society of Environmental Toxicology and Chemistry
World Business Council for Sustainable Development

Stakeholder Interaction
NGOs: Local – Regional – Global
P&G frequently enters into dialogue with nongovernmentalorganizations (NGOs) to understand their concerns and cares. In
order to work constructively with stakeholders, it is essential tohave their confidence and to be seen as a reliable and open
discussion partner. By building an open relationship we canapproach our NGO partners when issues arise. There is a wide
range of NGOs varying by area of interest (environmental,
consumer, animal welfare, etc.), by attitude (from extreme tomoderate) and by their geographic links (from local to global).
Depending on their characteristics, a number of NGOs can be seenas the vocal spokespeople for the general public.
Consumer organizations exist in many countries. These
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continued from previous pageorganizations contact companies to compare products and voicecomments they receive from their members. P&G continuously
provides consumer organizations with information on new
initiatives and cooperates with them in answering consumer
questions.
Scientific Community
P&G works a great deal with external scientists in various
disciplines (e.g. human and/or environmental toxicology, newtechnologies, etc.). This happens during many phases of a
product’s life: at the initial development of new technologies,
during the early marketing phases, and on an “as needed” basis
while the products are on the market.
As a technology-based company, P&G has long establishedrelationships with many leading scientists at various universities allover the world. P&G often asks for their advice in panels whichtake place before a product is placed on the market. On key
developments, the Company organizes Scientific Advisory Groups(SAGs) consisting of leading external scientists. They review thedata P&G scientists have collected so they can assess aspects suchas safety. Then they recommend additional work or modifications
to the program to ensure the Company has adequately addressed
all safety issues.

P&G 2004 Sustainability Report68