1 92 90 90 0 S U
S US ST TAA II N
N AABBI LI L
I TTYY RRE EP P
OOR TR T

2

2000

SUSTAINABILITYREPORT

Statement of Purpose
We will provide products and services ofsuperior quality and value that improve
the lives of the world’s consumers. As aresult, consumers will reward us withleadership sales, profit and value
creation, allowing our people, ourshareholders, and the communities in

Sustainable development... is a very
simple idea. It is about ensuring abetter quality of life for everyone,
now and for generations to come.

which we live and work to prosper.

T

his report was prepared in accordance with the
Global Reporting Initiative’s (GRI’s) Sustainability
Reporting Guidelines on Economic, Environmental andSocial Performance, June 2000. The mission of the
GRI is to promote international harmonization in thereporting of relevant and credible corporate
environmental, social and economic performance
information to enhance responsible decision making.
GRI pursues this mission through a multi-stakeholder
process of open dialogue and collaboration in thedesign and implementation of widely applicablesustainability repor ting guidelines. GRI has notverified the contents of this report, nor does it take aposition on the reliability of information reported
herein. For further information about GRI, please visit:www.globalreporting.org

Please visit P&G’s corporate website for the latest P&G news andshareholder and career information:www.pg.com

Table of Contents
CEO and Chairman’s Statement ...................3
Vision ........................................................4
Sustainability... It’s Both WHAT We Do
and HOW We Do It .......................................... 4
A Business Perspective on Sustainability ........... 5

Editor’s Notes ............................................6
Executive Summary.....................................7
Profile of P&G .............................................9
Policies, Organizations &Management Systems ............................... 13
Performance ............................................ 29
Generally Applicable andRelevant Indicators ....................................... 30

FRONT COVER: In the Philippines, P&G and UNICEF
collaborated with local government units to build
community water facilities in 10 areas over a periodof three years. The water facilities include showers,
toilets, laundry areas and public wells.

Company-Specific Indicators .......................... 38

Sustainability In Action .............................. 45

References to trademarked products in this report are to trademarks owned byand registered to The Procter & Gamble Company.

3

CEO and Chairman’s StatementJ

ust over a year ago, P&G shifted from a narrow focus
on environmental quality to the more holistic concept ofsustainable development — the integration of environment,social equity and economic development. We seesustainable development, or sustainability, as closelyaligned with our Company’s Statement of Purpose, to“…provide products and services of superior quality andvalue that improve the lives of the world’s consumers.”
With a year’s experience now behind us, we remain firmly
committed to that opportunity to improve lives now and in
the future.
While we are still learning how sustainability becomesintegral to our business, this past year has seen several
meaningful milestones on this journey, both in our
products and in our policies and management systems.
Last fall, we market tested a new drink product that wasdeveloped jointly with UNICEF. It has the potential tosignificantly address the problem of micronutrient deficiency,
which results in blindness for 2.8 million children, a 10 to
15 percent decrease in IQ, birth defects, stillbirths,
congenital deafness, and increased risk of both maternal
and fetal morbidity and mortality. We will continue tolearn how to best bring innovations such as this to market
this fiscal year.
A new product with the potential to significantly reduce
food-borne disease and contamination is Fit, a fruit andvegetable rinse that removes 98 percent more residue andwax than just water. In 1999, we saw acquisition of thePuR water filtration business, which holds great potential
for the availability worldwide of clean drinking water. In
2000, we received regulatory approval in both Europe andthe United States for Actonel, a prescription drug for thetreatment and prevention of postmenopausal osteoporosis.
This past year, we completed a major review of ourcorporate policies and have taken several steps to assure
our policies are totally aligned with our core values. These
policies are published in a booklet, P&G – Our Values andCode of Conduct, that is available on our web site(www.pg.com). In 1999, we were among the first
supporters of the Global Sullivan Principles on corporatesocial responsibility. We are committed to their success increating a better quality of life for the world’s citizens.

2 0 0 0Fiscal 1999/2000 was a difficult year for theCompany and for our many employees around theworld. Earnings came in below the goals we hadoriginally established and believed we could achieve,and our stock suffered. In our drive to meet changes
in the marketplace — globalization, the Internet,
consolidation among retailers — we tried to do toomuch too fast. We now have a strong plan tore-establish the balance between top-line revenue
growth and bottom-line earnings growth.
We are confident about P&G’s future because theunderlying strength of our Company remains solid.
• We have a long history of “doing what is right.” In
March 2000, Business Ethics magazine ranked P&G
among the top five in its 100 Best Corporate Citizens list.
• Our top brands command more than a fourth of theirmarkets; we have global leadership in seven productcategories; and we have a steady stream of new
innovations to build our future.
• P&G people have a passion for winning and leading
innovation, and that passion is our greatest strength.
We look forward to the future — for the world’s consumers,for our employees and retirees, and for the communities inwhich we live and work.

A. G. Lafley
President and Chief Executive

John E. Pepper
Chairman of the Board

S U S T A I N A B I L I T Y

R E P O R T

4VisionSustainability... It’s Both WHAT We Do and HOW We Do ItW

hen the concept of sustainable development
was first unveiled in 1987, it was a radical idea
— that environment and development are synergistic toeach other, creating the wealth necessary to addresssocial equity issues of poverty and disease that plagued,
and still plague, much of the developing world.
Since then, sustainable development has dominatedglobal public policy discussions, but the discussions havebeen dominated by HOW things are done — environmental
management systems, ISO 14001, codes of conduct andstewardship, Total Quality, waste elimination,transparency and reporting, audits and verifications.
Further, the focus on HOW we do things has limited theeconomic benefit discussion for business to a bottom-line
issue — cost avoidance and reduction.
HOW we do our business is, and always will be,
important to us. P&G has always conducted its businesswith integrity. We have long been leaders in employee
benefits, workplace safety, environmental managementof our operations, ethical business practices andinvolvement in our communities. Designing waste outof our products and processes has saved us more than$505 million in the past six years.
As we explore the role of sustainability in P&G’s future
top line, we are also furthering our focus on WHAT we
do — our products, services and the way we bring themto market. This ensures we address consumer needs andaspirations in more innovative ways, developing entirely
new products and services, selling to new consumers,
and creating new markets.
We are focusing on several initial steps:• Embracing a more aspirational definition ofsustainability to stimulate innovation. Sustainability“is about ensuring a better quality of life foreveryone, now and for generations to come.”• Focusing sustainability-driven innovation on the twoareas where P&G can contribute most to improving
quality of life — Water and Health & Hygiene.

• Understanding the opportunities and the challenges

in bringing to market innovations that addressenvironmental and social issues.
Despite the long lead time from idea to market
introduction, we have been able to obtain some earlyexperience in bringing such innovations to market. We
did this by leveraging innovations already in our productpipeline when we embarked on a sustainability strategy
just a year ago. A. G. Laf ley and John Pepper discuss
several of these early innovations — Nutri Delight for
micronutrient deficiency, Fit for cleaning fruits andvegetables, and Actonel for postmenopausal osteoporosis.
We are not saying we have sustainability figured out.
We do not! Unfortunately, there are painfully few
examples of companies successfully building their futureon the concept of sustainability. There are at least as
many failures as there are successes. We are exploring
new, uncharted territory and learning as we go. We
remain committed to the belief that through ourinnovation and deep understanding of consumers’ needs
and aspirations, we can help create “a better quality oflife” for everyone, both today and for future generations.

George D. Carpenter
Director, Corporate
Sustainable Development

5

A Business Perspective on Sustainability
NOTE: Paul Polman is President, Global Fabric Care. Last year, he took the lead in developing a sustainability
business model for our Fabric & Home Care business that could serve as a model for our other businesses.

A

s a business manager with no experience directly
managing environmental or social issues, I
approach the subject of sustainability based on acareer in finance, marketing and business management.
My experience over the past year of integrating
sustainable development into a business has been oneof tremendous insight and learning, tempered by asolid dose of reality.
Despite the numerous challenges, there have also been
rewards in the learning and insight that sustainability
brings — linking sustainability directly to our Purpose,
focusing the definition in an actionable business-relevantway, providing business tools to help people apply
sustainability, and celebrating successes. Analogous to
Total Quality, which caused us to look at quality andcustomer satisfaction in an entirely new paradigm ofwhat is possible, sustainable development creates new
insight into consumers’ needs — looking at the world
through their eyes, their frustrations with day-to-day life,
and their aspirations for a better world in the future.
Today, there are multiple priorities competing forbusinesspeople’s attention. It is difficult to focus on a
new concept when that concept does not have a clear
definition or success models linked to business growth.
Therefore, one of my biggest challenges has been to
make sustainability relevant to business in a way thatmy fellow P&G business leaders will understand. Hereis how we addressed that challenge:
Sustainable Development is a difficult concept for
many consumers and business leaders to understand,especially in practical terms. The level of understanding
also varies widely around the world. To motivate ourpeople, we embraced an inspirational definition ofsustainability, closely tied to our Company’s Statementof Purpose, that speaks to “an improved quality oflife for everyone, now and for generations to come.”
Then, we developed a screening tool for new productsthat helps identify potential environmental, economic
development and social issues and opportunities
associated with that product concept.

so many different things. To address this, we chose to
search for opportunities in those areas of sustainable
development that are most closely linked to our businesses
and where we can contribute most to improving
quality of life — Water and Health & Hygiene.
Because many perceive sustainability to be synonymouswith the environment and with the generally negative
historical consumer reaction to green marketing andenvironmentally beneficial innovations, this leads many
people to discount the opportunities. Therefore, at P&G
we began by distinguishing sustainability from justenvironment. We made a point to talk about theopportunities of sustainability in the context of social
equity issues — poverty, disease, nutrition, the quality ofwomen’s lives.
Because the path from idea to market is a long one,the past year has resulted in only a few of ourinnovations that address Water and Health &Hygiene issues reaching the market. However, our
new sustainability mindset has resulted in morerobust business plans and exciting new opportunities.
For example, worldwide more than one billion
consumers do not have access to safe drinking
water; two to three billion consumers live in waterconstrained households; three billion do not haveaccess to adequate sanitation; more than three million
children die from water-related diseases each year.
All of these are opportunities to address real consumer
issues and concerns. By leveraging our core competencies
in water, we can make a real difference in consumers’
lives while building our business.
I look forward to sharing our sustainability successes
with you in the years ahead.

Paul Polman
President, Global Fabric Care

Because sustainability can mean all things to all
people, each person brings a different perspective tothe concept and often deals with that unique view as
the most important element of sustainability. Thus, it
is a challenge to bring focus when the term can mean

2 0 0 0S U S T A I N A B I L I T Y

R E P O R T

6Editor’s Notes
In this, P&G’s second sustainability report, youwill see some of the new developments we aremaking in the disclosure and transparency ofcorporate information. We have again chosen towork within the Global Reporting Initiative (GRI),
Sustainability Reporting Guidelines on Economic,
Environmental and Social Performance, June 2000.
Since the first exposure draft of the GRI
sustainability reporting guidelines were releasedin March, 1999, a number of pilot testing
companies, including P&G, have been working
closely with members of the GRI steeringcommittee and other stakeholders to implement
these guidelines into published corporate
sustainability reports.
We published our first sustainability report lastyear based on the March, 1999 guidance. This
year you will notice some changes in the structureand format of our report. These changes are theresult of a comprehensive review program
co-ordinated by the GRI. Feedback on thelearnings from pilot testing companies and report
users as well as other stakeholders have been
incorporated into a new, revised guidance document.
We prepared the P&G 2000 Sustainability Reportconsistent with these guidelines.
We have also been in dialogue with a number ofother stakeholders discussing our 1999
sustainability report and P&G’s sustainability
policies. We have gathered a considerable amountof feedback — some praise and some constructive
criticism. Wherever possible, we have tried totake this into account in the production of thisyear’s report. For example, we received a numberof comments that last year’s report was “tooAmerican” for a global report, so we have started
to move the editorial seat around. This year it isbased in the U.K. We are continuing to focus on
Water and Health & Hygiene.
Since the production of last year’s report, we hopethat we have learned a lot from our stakeholders,
but this is only the beginning. We have a great
deal more to find out about how a company likeP&G can truly become a sustainable corporation.
In this report we will chart some of our progress
to date and present some of the learnings we have
made, in what has been a difficult year for P&G.
We have taken part in these discussions to gain
feedback for P&G’s future sustainability efforts.
Sustainability is still an evolving concept, andthere are many views on what really is sustainable
development. We are trying to define whatsustainability means for P&G, and we are stilllearning. If you have any questions, comments orgeneral observations to make about this report,
please contact me personally at:
Chris Smith
Procter & Gamble
Corporate Sustainable Development
Whitley Road
Longbenton
P.O. Box Forest Hall No. 2
Newcastle upon Tyne
NE12 9TS
U.K.
Fax: +44 (0) 191 279 2871
E-mail: sustainrep-im@pg.com
P&G’s 1999 Sustainability Report can befound at: www.pg.com/99sr

2000 SUSTAINABILITYREPORT
Editor: Chris Smith, Newcastle upon Tyne, U.K.
Core Report Team: Corey Snyder, Cincinnati,
Ohio, USA; Debbie White, Cincinnati,
Ohio, USA; Robin Tollet, Cincinnati, Ohio,
USA; Bea Buyle, Brussels, Belgium;
Paul van der Mensbrugghe, Brussels,
Belgium; Charles Peng, Kobe, Japan;
Joaquin Zepeda, Caracas, Venezuela.
Design: Andy Ruttle, Ruttle Design Group, Inc.,
Cincinnati, Ohio, USA.
The report team wishes to thank all the individuals
throughout the Company who contributed information, stories and data to this report.

7

Executive Summary
Key Sustainability Focus AreasOur sustainability focus continues to be Waterand Health & Hygiene. We have chosen
these two major areas as they are applicable
across all seven of the Company’s global business
units and the core drivers for sustainability:
economic development, social equity andenvironmental protection. While P&G intends tofocus on Water and Health & Hygiene, theCompany will not forget its long tradition of:• Doing what is right for consumers, employees,
shareholders and communities where it
operates.
• Building sales and profit growth in a sociallyand environmentally responsible manner.
• Increasing diversity within its workforce.
• Contributing to a more educated population.
• Maintaining high standards of health, safety
and environmental protection for its products
and operations throughout the world.

Major Impacts Associatedwith Products
Environment• Resource Use (Materials and Energy)• Water• Waste and Emissions
Social Equity• Health• Hygiene• Education

Economic Development• Shareholder Value• Employment• Taxes, Fees and Contributions

Financial Highlights(Millions of dollars except per-share amounts)

Net Sales
Marketing, Research & Administrative Expenses
Income Taxes
Net Earnings
Basic Net Earnings Per Common ShareTotal Assets
Long-Term Debt
Shareholders’ Equity

1999/2000$39,951$12,483$1,994$3,542$2.61$34,194$8,916$12,287

1998/99$38,125$10,845$2,075$3,763$2.75$32,113$6,231$12,058

1997/98$37,154$10,203$1,928$3,780$2.74$30,966$5,765$12,236

Philanthropic Contributions
The contributions made by The Procter & Gamble Fund and Corporate Contributions in North America
for the past three years are provided in the following table:
Total

1999/2000$28,292,768

1998/99$27,585,008

1997/98$26,614,350

This year’s total contribution reflects a 2.6 percent increase in spending vs. the 1998/1999 level. In
addition, with the implementation of the Company’s Organization 2005 initiative, we did not compile
global contributions data.
P&G and its employees have a long-standing commitment to being good citizens and neighbors inall the places where we do business around the world. We believe we have a responsibility to society to use its resources — money, people and energy — wisely. We satisfy our financial commitment through support for a wide range of educational, health, social service, cultural, civic andenvironmental organizations.

2 0 0 0S U S T A I N A B I L I T Y

R E P O R T

8Diversity Data — Global Enrollment
P&G expects its workforce to become increasingly more diverse. This is a global policy, and programs
are in place for continuous improvement in all regions. Global reporting of enrollment by gender isshown in the following table:
Global Enrollment 1999/2000
%Male
59

%Female41

This global data does not yet include plant technicians in the United States, United Kingdom and
Latin America; more complete data is expected to be available early next year. Global data is being
developed in a new system consistent with the Company’s Organization 2005. Thus, historic global
data is not available for comparison. The percentages of minority and female employees in the UnitedStates are shown in the following table:% Minorities% Female
1999/00 1998/99 1997/98
15.9
15.8
15.6

Management
All Other Employees (Administrative, Technicaland Plant Technicians)

18.8

18.5

1999/00 1998/99 1997/98
33.7
33.1
32.5

19.2

39.7

39.9

39.5

Manufacturing Waste & Cost Summary
All waste units are in thousands of metric tons unless otherwise noted. 1 ton = 1,000 kg = 2,205 lbs.
1999/2000 Global Business Unit Details

MeasureTotal

Production

1999/2000

1998/99

1997/98

BBC

BC

FHC

FC

FB

HC

TT

Packaged Product Shipped
Raw Materials from
Recycled Sources
Packaging Used
Packaging Material from
Recycled Sources

15,229476

14,644380

14,436
400

1,281
0

1,165
0

6,914
0

639
0

2,656
0

789
0

1,782
476

1293
444

1,375
490

1,367
455

70
27

122
25

585
242

57
19

288
81

99
22

72
28

879
55%

863
56%

893
53%

146
67%

59
50%

146
61%

67
79%

136
60%

29
37%

296
40%

317
12
39
19

271
27
31
20

324
12
37
20

45
0.3
1
1

20
3
3
0.9

37
7
7
3

13
0.7
0.1
0.1

30
0.01
18
5

10
0.7
5
1

162
0.6
5
7

Energy Consumption (105 GJ)
1,080
Water Consumption (MM cubic meters) 87.0
SARA Releases (1,000 tons)*
1.9

967
83.4
1.6

947
ND
1.9

90
7.1
0

38
3.7
0.01

281
14.1
1.5

35
0.4
0

107
10.7
0.1

30
2.1
0.04

499
48.8
0.2

Waste
Generated Waste
Percent Recycled/Reused Waste

Disposed Waste
Solid Waste — Non-Hazardous
Solid Waste — Hazardous
Effluents (Excluding Water)
Air Emissions

Other* Releases defined in the U.S. Superfund Amendments and Reauthorization Act by the U.S. Environmental Protection Agency.
NOTE: BBC - Baby Care; BC - Beauty Care; FHC - Fabric & Home Care; FC - Feminine Care; FB - Food & Beverage; HC - Health Care; TT - Tissues & Towel

Occupational Health & Safety Data
Past three years’ global data on two key metrics forworker health and safety:
Total Incident Rate
(injury and illness per 100 employees)
1999/2000
1998/99
1997/98
0.8
0.7
0.8
Total Lost Workday Case Rate(lost & restricted workday cases per 100 employees)
1999/2000
1998/99
1997/98
0.4
0.3
0.4

Summary of Violations andInterventions
Past three years’ global data on environmental,transportation, and worker health and safety violations and interventions:

NumberFines

1999/2000 1998/99
48
46$13,400 $33,250

1997/9854$73,100

9

Profile of P&G
markets approximately 300 brands of consumer products to nearly 5 billion consumers in morethan 140 countries. The products include laundry detergents, toothpastes, shampoos, feminine hygiene
products, pharmaceuticals, snacks, diapers, cosmetics and cold remedies. These products are best
known by their brand names: Tide, Ariel, Crest, Pantene Pro-V, Always, Whisper, Didronel, Pringles,
Pampers, Olay and Vicks.
P&G’s worldwide headquarters is located in Cincinnati, Ohio, USA. The Company has on-the-ground
operations in more than 70 countries and employs 110,000 people worldwide.
P&G is a publicly owned company. Its stock is listed and is traded on the following exchanges: New
York, Cincinnati, Amsterdam, Paris, Basle, Geneva, Lausanne, Zurich, Frankfurt, Brussels and Tokyo.
As of July 21, 2000, there were 291,965 Common Stock shareholders of record, including participantsin the Shareholder Investment Program. Five billion shares of Common Stock have been authorized.
About 1.31 billion shares were outstanding as of June 30, 2000.
This is the second Sustainability Report for P&G’s worldwide operations. Data in this report covers theperiod from July 1, 1999, through June 30, 2000. Financial information is given in U.S. dollars.
For more information on P&G’s geographical operations, please visit our web site at:www.pg.com/about/news/world.htm
For more information on P&G’s investor information, please visit our web site at:www.pg.com/investor
For more information on P&G’s products, please visit our web site at:www.pg.com/cgi-bin/cgiAbout/products.cgi?about

Key Brands
Fabric & Home Care
ACE BLEACH AND
PREWASHARIEL
BOUNCECASCADE
CHEER
DASH
DAWN
DOWNY
DRYEL
ERA
FAIRY
FEBREZE
FIT
JOY

LENOR
MR. CLEAN
TIDE
SWIFFERSUNNY DELIGHTSPIREECLIPSEFeminine Care
ALWAYSLINESTAMPAX
WHISPER
Food & Beverage
CRISCOFOLGERSJIFMILLSTONE
OLEAN
PRINGLES

Health CareACTONELASACOLBLEND-A-MED
CREST
DIDRONEL
MACROBIDMETAMUCILNYQUIL/DAYQUILPEPTO-BISMOLSCOPEVICKS FORMULA 44
VICKS VAPORUB

Baby CareBABYSANDODOTLUVS
PAMPERSPAMPERS BABY
WIPES
Beauty Care
COVER GIRLIVORYMAX FACTOR
OLAY
OLD SPICEPANTENE PRO-V
PERT PLUS
REJOICESAFEGUARD

SKII
SECRETVIDAL SASSOON
ZEST
Tissues & Towel
BOUNTYCHARMIN
PUFFS
TEMPO

Building for the Future$1 Million
Net Sales
1859

Wm. Procter &James Gamble,
Founders, Candle& Soap Business

1837

1850

2 0 0 0Regional U.S.
Markets1860

S U S T A I N A B I L I T Y

R E P O R T

1870

10

Financial Information
The Company reported net earnings of $3.54 billion, or $2.61 per common share, for the fiscal year
ended June 30, 2000. Results included a charge of $688 million after-tax related to its Organization2005 program.
Core net earnings for the fiscal year increased to $4.23 billion, excluding the Organization 2005
costs. Core net earnings per share were $2.95, an increase of 4 percent from the previous year. Fiscal
year earnings grew due to volume and sales progress partially offset by higher spending behind new
initiatives. Net sales grew to $39.95 billion. Excluding a negative 2-percent exchange rate impact, net
sales increased 7 percent on 4-percent unit volume growth.
Common share dividends were $1.28 per share in 2000. For the coming year, the annual dividend rate
will increase to $1.40 per common share, marking the 45th consecutive year of increased commonshare dividend payments.

Financial Highlights(Millions of dollars except per-share amounts)

Net Sales
Marketing, Research & Administrative Expenses
Income Taxes
Net Earnings
Basic Net Earnings Per Common ShareTotal Assets
Long-Term Debt
Shareholders’ Equity

1999/2000$39,951$12,483$1,994$3,542$2.61$34,194$8,916$12,287

1998/99$38,125$10,845$2,075$3,763$2.75$32,113$6,231$12,058

1997/98$37,154$10,203$1,928$3,780$2.74$30,966$5,765$12,236

As part of P&G’s Organization 2005 initiative to optimize
resources to fit a growing global business and to accelerateinnovation and growth, the Company began operating its
business through Global Business Units (GBUs), effective
July 1, 1999.
• Fabric & Home Care
• Baby Care
• Feminine Care
Paper Group• Tissues & Towel• Health Care
• Beauty Care
• Food & Beverage}

Net Sales by Global Business Units (Millions of dollars)
Fabric & Home Care
Paper (Baby Care, Feminine Care, Tissues & Towel)
Health Care
Beauty Care
Food & Beverage
Corporate
Total

P&G Brand
Advertising
1882

1880

ProfitSharing1887

Incorporated
Company
1890

1890

1999/2000$12,157$12,044$3,909$7,389$4,634$(182)$39,951

Beginningof P&G
Research &Development

1998/99$11,415$12,190$2,876$7,376$4,655$(387)$38,125

1997/98$11,019$11,685$2,889$7,469$4,620$(528)$37,154

Shortening &Oils Business

1900

1910

CanadaMarkets

P&G
Code of
Regulations

1920

11

Major Acquisitions
Acquisitions accounted for as purchases in 1999/2000 totaled $2,967 million. Including:

P&G acquired Iams in September 1999.
Iams joined P&G’s Health Careand Corporate New Ventures
global business unit.
®

Animal nutritionist Paul Iams
founded The Iams Company in1946 in a small feed mill near
Dayton, Ohio. Clay Mathile
joined Iams in 1970 andpurchased the company in 1982. Paul Iams
established the company’s nutritional foundation,
and Clay Mathile provided the vision to enable
The Iams Company to become a world leader in
dog and cat nutrition.
The Iams Company sells Eukanuba® and Iams®
premium dog and cat foods (dry and canned) in
77 countries. Iams employs more than 2,000
people and has annual sales in excess of $800
million. Iams is the leader in the premium petfood segment in the United States.
Iams makes dry dog and cat food at plants inLewisburg, Ohio; Aurora, Neb.; Henderson, N.C.;
Leipsic, Ohio, in the USA and Coevoorden in the
Netherlands. The Iams Heartland plant in North Sioux
City, S.D., USA, makes canned dog and cat food.

P&G acquired Recovery Engineering,
Inc. in September 1999.
In September 1999, P&G
completed a tender offer inwhich it purchased 97.7% of
the outstanding shares ofcommon stock of Recovery
Engineering, Inc. (REI). REI
designs, manufactures and markets drinking
water purification systems under the PuR® name.
P&G will manage PuR® as part of its Health Careand Corporate New Ventures global business unit.
Since introduced in 1986, PuR has been a leader
in tackling some of the world’s most difficult
drinking water problems. REI’s invention of theworld’s first, and still only, hand-operated
desalinator has allowed users to turn seawater
into fresh drinking water instantly.
Today our researchers and engineers are busy
developing products that will conveniently andaffordably improve the quality of our mostimportant resource, water.
For more information on PuR®, please visit
our web site at : www.purwater.com

For more information on Iams®, please
visit our web site at : www.iams.com

Major Divestitures
Divestitures accounted for as sales in 1999/2000 totaled $419 million. Including:• Demak Up• Chloroseptic• Attends• CoastExternal Recognition
Below is a list containing some of the key awards and recognition received by the Company overthe past year:

Corporate Awards•••

World’s Most Admired Soap & Cosmetic
Company, Fortune magazine, 2000.
Marketer of the Century, Advertising Age,
2000.
Best Partner presented by Russian Associationof Regional TV, 2000.

Building for the Future,
Beginning of
P&G Market
Research

1920

SafetyProgramStartedPhilippinesand U.K.
Markets

1930•

Most Respected Company in Czech Republicin the chemical, pharmaceutical and rubber
industry based on the company itself, thepeople within the company and the company’s
connections to society, 1999.
continued on next page...

continued...
Tide
Introduced
1946

Synthetic
Detergents

Oral Care
Business

Overseas
Division
1948

1940

2 0 0 0S U S T A I N A B I L I T Y$1 Billion
Net Sales

1950

R E P O R T

FirstDisposable
Fluoride
Diapers
Toothpaste Business
1955

1960

Affirmative
Action1965

12continued from previous page...
•

•

•
•

•

•

•

Philos Award ‘Philanthropistof the Year’ presented to
P&G by the NationalAwards and Recognitions
Committee of the American
Red Cross, 2000.
Three products have been
awarded People’s Brands by
the Narodnaya Marka
Organization Committee:
Best Soap (Safeguard), Best
Household Cleanser(Comet), Best Dishwashing
Brand (Fairy), 1999.
3rd Most Admired Spanish Company, by La
Actualidad Economica, 2000.
LAREX, a leading Romanian testing instituteand laboratory for consumer goods awarded
P&G the Award of Excellency for ProductQuality Surveillance, 1999.
P&G Thailand received the Gold Card
Certificate as a valued international traderfrom H.E. Deputy Minister of Finance, Pichase
Panvichatikul, 2000.
1st prize, Best in Consumer Satisfaction (Cold
Medicine) for Vicks, Indonesian Customer
Satisfaction Award (ICSA), 2000.

•
•

•

•

Environmental Awards•••

Employee Awards••

4th “100 Best Corporate Citizens,” based on
philanthropy, employee volunteers andcommunity activities, employee diversity ofwomen and minorities, employee benefits andsafety issues, Business Ethics Magazine, 2000.
10 Great Companies to Work For, Food
Processing Magazine, 1999.

Top Ten Places for Minorities to Work, basedon recruiting initiatives, internal programsand employee satisfaction, Vault.com, 1999.
Top 100 Corporations to Work, Hispanic
Magazine, 1999.
Top Ten Companies for Minority Candidates,
National Business Employment Weekly (WSJ),1999.
P&G Germany received the Total E-Quality
Award, presented by Total E-Quality
Deutschland e.V., for equal opportunities atwork, 1999.
P&G U.K. received two major national diversity
awards from Opportunity Now organization,
2000.

P&G cosmetics in Hunt Valley, Md., USA
received an award from Baltimore County fordemonstrating a commitment to recycling,
1999.
P&G cosmetics in Hunt Valley, Md., USA
received the Excellence Award For Significant
Achievement by a Large Business presented byBusiness for the Chesapeake Bay, sponsored by
the U.S. Environmental Protection Agency andthe Maryland Department of the Environment,
1999.
P&G Mexico received the Clean Industry
Award, presented by PROFEPA, the Mexican
Environmental Protection Agency, for Vallejo
and Talisman plants’ contribution to reducing
pollution, 2000.

For more information on awards received
by P&G please visit our Corporate web site
at: www.pg.com/cgi-bin/cgiAbout/awards.cgi

P&G Venezuela Wins Industry of the Year Award
P&G won the top industry award at Coindustria’s annual Congress, held June 29, 2000, in Caracas.
This is the first time a company has been recognized for such specific accomplishments as helping
develop the industrial sector and being a marketplace, as well as a social, investment leader.
The award comes at a very special moment in P&G Venezuela’s history. It is our 50th anniversary.
The plaque we received reads as follows: Coindustria, Venezuela’s Industry Federation, gives thisRecognition as Industry of the Year to Procter & Gamble de Venezuela due to its High andContinuous Contribution to the Development of National Industry during their Fifty Years ofHistory. This Trajectory has Positioned them as Leaders in the National Market and Pioneers in
Social Investment.

Environmental Toll-free
Audit
Consumer $10 Billion
ProgramHotline Net Sales

1970

Feminine
Protection
Businesses

1980

Statementof
Purpose
1987

World
Environment
Center Award
1992

1990

Opportunity
2000
Award
1994

FutureShares1998

2000

Organization
2005

13

Policies, Organization &Management Systems
P&G improves the quality of life for many different people
in many different ways.

S

ustainable development is about improving
quality of life for everyone, now and forgenerations to come. P&G contributes
to this directly by providing
products and services that
improve the lives of consumers,
whether in terms of health,hygiene or convenience.
Through our activities wealso contribute to theeconomic and social wellbeing of a range of otherstakeholders, including
employees, shareholders,local communities in which we
operate, and more widely toregional, national andinternational development. So P&G
contributes to sustainable development
both through “what we do” and “how we
do it.”“How we do it” includes ensuring we address any environmental andsocio-economic issues associated with our products and services. This isachieved by ensuring that the whole Company works within an agreed setof management systems and policies. Central to P&G’s organization are
our Principles, Values and Statement of Purpose. These act as guidance
for the development of our entire organizational structure, wherever weare in the world. This year we have made further improvements to anumber of policies, including vendor selection guidelines, child labor policy
and our global Health, Safety and Environment (HS&E) systems.

Statement of Purpose
We will provide 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 the communities
in which we live and work to prosper.

2 0 0 0S U S T A I N A B I L I T Y

R E P O R T

14Core Values

P&G is its people and the Core Values by which they live.

P&G People

Integrity

We attract and recruit theWe always try to do the rightfinest people in the world.
LEADERSHIPOWNERSHIP thing. We are honest and
PEOPLEWe build our organization
straightforward with eachfrom within, promoting andother. We operate within the
PASSION
rewarding people without
letter and spirit of the law. We
INTEGRITY
FOR
regard to any difference
WINNING uphold the values and principles of
TRUST
unrelated to performance. We act
P&G in every action and decision.
on the conviction that the men and
We are data based and intellectually
women of Procter & Gamble will always be ourhonest in advocating proposals, including
most important asset.
recognizing risks.

Leadership

Passion for Winning

We are all leaders in our area of responsibility,with a deep commitment to deliver leadershipresults. We have a clear vision of where we aregoing. We focus our resources to achieve
leadership objectives and strategies. We develop
the capability to deliver our strategies andeliminate organizational barriers.

We are determined to be the best at doing whatmatters most. We have a healthy dissatisfaction
with the status quo. We have a compelling desire
to improve and to win in the marketplace.

Ownership
We accept personal accountability to meet thebusiness needs, improve our systems and help
others improve their effectiveness. We all act likeowners, treating the Company’s assets as our own
and behaving with the Company’s long-term
success in mind.

Trust
We respect our P&G colleagues, customers andconsumers and treat them as we want to betreated. We have confidence in each other’scapabilities and intentions. We believe thatpeople work best when there is a foundationof trust.

Donation to The Nature Conservancy
In September 1999, P&G donated $1.25 million to The Nature
Conservancy (TNC) — the world’s largest private conservation organization — for conservation programs in Brazil and the United States.
In Brazil, $450,000 will help protect two of the earth’s most important habitats, the Pantanal and the Guaraquecaba. The Pantanal is
the world’s largest freshwater wetland area and is home to morethan 650 bird species, 260 fish species and as many as 600 speciesof aquatic plants. The Guaraquecaba is in the Atlantic Forest andcontains some of the highest levels of biodiversity in the world.

Cedar Falls hosts one of
the rarest communities ofNorthern White-cedar at The
Nature Conservancy’s Edgeof Appalachia Preserve.

In the United States, the Big Darby Creek project and the Edge of Appalachia Preserve System,
both in Ohio, will receive a total of $800,000. The Big Darby Creek is an 86-mile-long aquatic
system that harbors 103 species of fish and 38 species of mussels. The Edge of Appalachia Preserve encompasses 13,000 acres (5,260 hectares) and shelters more than 100 rare plant and animal species. P&G has worked with The Nature Conservancy since the late 1980s. This donation
will enable TNC to collaborate with a diverse group of partners to develop conservation programs
that bring together local communities and business, government and conservation interests inconstructive, cooperative relationships.
For more information on The Nature Conservancy visit: www.tnc.org

15

Principles

These are the Principles and supporting behavior which flowfrom our Purpose and Core Values.

We Show Respect for All Individuals••••

We believe that all individuals can and want tocontribute to their fullest potential.
We value differences.
We inspire and enable people to achieve highexpectations, standards and challenging goals.
We are honest with people about theirperformance.

We are Externally Focused
•
•
•

•

The Interests of the Company and theIndividual are Inseparable••

We believe that doing what is right for thebusiness with integrity will lead to mutual
success for both the Company and theindividual. Our quest for mutual success ties us
together.
We encourage stock ownership and ownershipbehavior.

We Value Personal Mastery
•

•

•

•
•

We operate against clearly articulated andaligned objectives and strategies.
We only do work and only ask for work that
adds value to the business.
We simplify, standardize and streamline ourcurrent work whenever possible.

•
•

•

•

We place great value on big, new consumer
innovations.
We challenge convention and reinvent the way
we do business to better win in themarketplace.

We strive to be the best in all areas of strategic
importance to the Company.
We benchmark our performance rigorously
versus the very best internally and externally.
We learn from both our successes and our
failures.

Mutual Interdependency is a Way of Life

Innovation is the Cornerstone of Our Success•We believe it is the responsibility of all
individuals to continually develop themselves
and others.
We encourage and expect outstanding
technical mastery and executional excellence.

We Seek to be the BestWe are Strategically Focused in Our Work•We develop superior understanding of
consumers and their needs.
We create and deliver products, packaging andconcepts that build winning brand equities.
We develop close, mutually productive
relationships with our customers and our
suppliers.
We are good corporate citizens.

••

We work together with confidence and trust
across functions, sectors, categories andgeographies.
We take pride in results from reapplying
others’ ideas.
We build superior relationships with all theparties who contribute to fulfilling our
Corporate Purpose, including our customers,
suppliers, universities and governments.

John C. Sawhill (1936 -2000)
On May 18, 2000, John C. Sawhill, the President and Chief Executive Officer of
The Nature Conservancy and a member of P&G’s board of directors, died of complications from diabetes. Mr. Sawhill joined The Nature Conservancy in January,
1990. Under his leadership, the Conservancy grew into the world’s largest private
conservation group, with annual revenues of $780 million, a roster of 1.1 million
members, and a network of 1,300 private nature reserves. Since 1996 he served on
P&G’s board of directors, where he played a strong role in introducing and helping
the Company think through what sustainable development means.

2 0 0 0S U S T A I N A B I L I T Y

R E P O R T

16Policies
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 nottolerate unacceptable worker treatment such as
the exploitation of children, physical punishment
or abuse, or involuntary servitude. We expect our
suppliers and contractors with whom we dobusiness to uphold the same standards. Should apattern 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 the following definitions:
CHILD LABOR:• We will look first to the sovereign laws of thecountry 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 yearsof age but is in accordance with International
Labor Organization (ILO) Convention 138, thelower 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.

Campaign ‘Bolsa Escola’
at P&GB

razil’s non-governmental organizationMissão Criança acts to ensure all children
have the right to a school education. Many
children do not go to school because theirfamilies need them to work and earn money.
Missão Criança set up a Bolsa Escola (School
Scholarship) program to give these children to
get an education rather than having to work.
Families will receive a “wage” from Missão
Criança if all their children attend schoolrather than work. There are approximately
56,000 children, from seven to 14 years old,and 25,000 families that have received the
School Scholarship. In 1999, Missão Criança
benefited five states in Brazil. This year they
are extending to 10 states.
This year we invited our employees in theBrazilian head office to make a cash contribution to the Bolsa Escola program, and for each
employee contribution P&G would match thesame amount. Our employees and the Company
donated $12,400 to Missão Criança. This will
ensure the education of 57 children and givethem the chance for a better future, yet still
give their families the income they need.

SUPPLIER or CONTRACTOR is someone who has
a “direct” business or contractual relationshipwith P&G. We will urge our suppliers and contractors to promote the application of these principles by those with whom they do business.

Our Values and Code of Conduct
As an important part of our Corporate Social Responsibility
program, we have released a new publication, Our Values andCode of Conduct.
This booklet provides sustainable development guidelines forbusiness conduct that are based on P&G’s Purpose, Core Values
and Principles. These key elements are of utmost importance forthe proper conduct and respect for all individuals in the quest
for common prosperity.

http://pg.com/about_pg/sectionmain.jhtml<ClickHere

17

The Global Sullivan Principles
Last year, P&G was one of the handful of companies who were charter
supporters of the Global Sullivan Principles for corporate social responsibility when they were announced in Accra, Ghana, and then in November
at the United Nations in New York.
The objectives of the Global Sullivan Principles are to support economic,
social and political justice by companies where they do business; to support human rights and to encourage equal opportunity at all levels of
employment, including racial and gender diversity on decision-making
committees and boards; to train and advance disadvantaged workers fortechnical, supervisory and management opportunities; and to assist with greater tolerance andunderstanding among peoples, thereby helping to improve the quality of life for communities, workers
and children, with dignity and equality.
For more information on the Global Sullivan Principles visit:
globalsullivanprinciples.org

Guidelines for Vendor Selection
We have developed a new publication, Sustainability Guidelines for
Vendor Relations.
This document shares what we expect from our vendors in terms ofbusiness conduct and what our vendors can expect from us. It explains that the foundation of our vendor selection guidelines is ourStatement of Purpose, Core 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 vendors who share our values and promote the application of these high standards among
those with whom they do business.

<ClickHere

http://pg.com/about_pg/sectionmain.jhtml

Animal Welfare
Animal welfare is important to Procter & Gamble.
We are committed to the ultimate elimination oflaboratory testing using animals.
Procter & Gamble no longer uses animals in
evaluating the safety of our non-food, non-drug
consumer products, except when required by law.
Animal research may still be necessary to evaluate the safety of novel ingredients and new-tothe-world product types for which no validated
non-animal tests are currently available.
We believe the development of alternatives to animal research makes good scientific, ethical andbusiness sense. We have invested more than $120
million in the development of alternatives thatare helping to reduce, refine and replace the needfor animal tests.

T

his year, the Humane Society of theUnited States (HSUS) presented its prestigious Russell and Burch Award to Dr.
Katherine Stitzel, DVM, associate director of
P&G’s Human Safety Division. The annual
award is given to a scientist who is a leader inadvancing alternatives to the use of animals
in research. HSUS vice president for animal
research issues Martin Stephens, Ph.D., said,“Dr. Stitzel has worked tirelessly with researchers, federal officials and animal advocates to find win-win solutions that move us
closer to the goal of ending pain and suffering
for animals in consumer products testing
while maintaining the highest scientificstandards.”
Dr. Stitzel is the first representative of any
company to be recognized with this award.

For more information on P&G’s product safety
testing, please visit our web site at:www.pg.com/animalalternatives.

2 0 0 0S U S T A I N A B I L I T Y

www.hsus.org

R E P O R T

18

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 carry out 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 impactof our products and packaging in their design, manufacture, distribution, use and disposal whenever possible. We take aleading role in developing innovative,
practical solutions to environmental issues related to our products, packaging
and processes. We support the sustainable use of resources and actively
encourage reuse, recycling andcomposting. We share experiences andexpertise and offer assistance to others
who may contribute to progress inachieving environmental goals.
• Meet or exceed the requirements of all environmental laws and regulations. We use environmentally sound practices, even in the absence of governmental standards. We cooperatewith governments 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 anduse state-of-the-art science and product life
cycle assessment, from raw materials throughdisposal, to assess environmental quality.
• Provide our consumers, customers, employees, communities, public interest groups andothers with relevant and appropriate
factual information about the environmental quality of P&G products, packaging and operations. We seek to establish and nurture open, honest and timely
communications and strive to be
responsive to concerns.
• Ensure every employee understands
and is responsible and accountable forincorporating environmental quality
considerations in daily business activities.
We encourage, recognize and reward individual
and team leadership efforts to improve
environmental quality. We also encourage
employees to reflect their commitment toenvironmental quality outside of work.
• Have operating policies, programs andresources in place to implement ourenvironmental quality policy.

Transport OptimizationAs part of P&G’s Environmental Quality Policy, we try to reduce or prevent the environmental
impact of our products and packaging. Under-utilization of transport delivery systems can indirectly affect the environmental impact of our products.
Currently, trucking accounts for more than 80 percent of consumer goods delivery. Up to 50 percent of vehicle capacity in the European grocery industry is substantially under-utilized, due to either empty or partially filled trucks. This contributes to traffic congestion, environmental pollution and extra costs. As a member of the European Transport Optimization project, P&G has beenworking to reduce the “wasted” journeys associated with partially filled trucks.
There is consequently a huge potential to reduce the costs and environmental effects of transport
operations by optimal use of capacities. To improve the current situation, P&G works with suppliers, retailers and logistics services providers to:• raise awareness of the problems related to transport of consumer goods.
• establish guidelines and promote best practices for optimizing transport via industry associations.
At the same time, work is being done to raise awareness among regulators and legislators of key
opportunities in the transport area.
Improving transport capacity utilization will ultimately benefit the consumer and society by limiting air and noise pollution, lowering prices and reducing traffic congestion as a result of fewer
ton/miles carried.

19

Data Privacy Policy
P&G is committed to data privacy. We believethat information about an individual consumer isthe property of the individual, not P&G. As a result, we always ask permission from individual
consumers to use any personally identifiable data
we collect in the conductof business. This includes
fully informing consumers about the information
we collect, what we dowith it, how we protect the data, and how consumers can control the data they have provided to

P&G. The U.S. Better Business Bureau awarded
48 of P&G’s North American web sites the
BBBOnLine Privacy Seal in March, 2000, thelargest BBBOnLine application to date. P&G also
provides leadership to industry self-regulatory
initiatives including BBBOnLine and the Online
Privacy Alliance.

For more information on P&G’s Privacy
Policy visit:www.pg.com/privacy.htm
www.BBBOnLine.org

Diversity
Everyone at P&G is united by the commonalityof the Company’s values and goals. Diversity is
the uniqueness each of us brings to fulfillingthese values and achieving these goals. Our differences are physical, such as race, gender andage. They also include less visible differencessuch as cultural heritage, sexual orientation andposition in the organization.

DisabilitiesThose differences bring fresh perspective andimportant insights into how we do businessaround the world — a rich source of competitive
advantage for P&G.

To execute work in this area, a task force was created, People With Disability. The mission of thistask force is to enable hiring, on-boarding, retention and advancement of people with disabilities.
This is achieved by providing guidance and recommendations in five main areas: (1) Accessibility/
Work Accommodations, (2) Education and Training, (3) Policy, (4) Recruiting, Hiring, and Retention Practices, and (5) Inclusion Business Partners.

Developing and managing a strong, diverse organization is essential to achieving our businessobjectives. Our business opportunities are increasingly related to the entire world. And it is adiverse world. We must have the ability to deal
with diverse consumers and customers in orderto develop products and services of superior
quality and value.
Diversity provides a broader, richer, more fertile
environment for creative thinking and innovation. Because we see diversity as an asset, we will
attract and fully develop talent from the fullrange of the world’s rich cultural base. It is fromthis diverse talent pool that our future leadership will come.
We value the different perspectives that P&G people
bring to the business. Our workplace environment encourages collaboration, which brings our different
talents and experiences together to produce better
ideas and superior services and products.

2 0 0 0P&G values all diversity, including people withdisabilities, throughout our employment systems.
The Company works with employees to ensurethat support and resources are available to enablepeople with disabilities to achieve the same highexpectations, standards and challenging goals as
all other employees.

Some examples of this work include:• Upgrading facilities and participating in pre-assessments during the design phase at new locations
to meet the needs of workers with disabilities.
• Conducting benchmark visits with other leading companies (Unum Insurance, IBM andCincinnati Children’s Hospital) to look at new
and innovative ways of attracting and accommodating people with disabilities.
• Increasing our recruiting communication andsupporting career opportunities by establishinga recruiting team, that uses Braille businesscards. We also produced open-caption video fordeaf and hearing-impaired people and posted
on our web site recruiting materials that are
more accessible for the visually impaired.
• Hosting and sponsoring initiatives such as
Able to Work, President’s Committee on
Employment of People with Disabilities and
Kentucky Deaf Festival.

S U S T A I N A B I L I T Y

R E P O R T

20Organizational StructureTo gain even more value from our basic strengths, we have changed the way we’re organized andthe way we work. Our goals were to make it easy for innovation to flow across the enterprise
and around the world; to learn directly from consumers as early as possible; and to profitablycommercialize the best ideas and innovations quickly.
We’re doing all that. Global Business Units (GBUs) flow product innovations across categories and geographic markets. Market Development Organizations (MDOs) get initiatives to local markets faster, morecreatively, at less cost. And our Global Business Services (GBS) and Corporate Functions organizations
leverage our size to deliver better-quality services internally at significantly lower cost to the Company.
We designed our new organization to be global and local at the same time — a paradoxical challengethat we believe is key to our future success.

21Management 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 on elementsof sustainable development. This section provides an overview of our Management Systems, focusing
on recent changes to our global Health, Safety and Environment (HS&E) programs at our
manufacturing operations. Next year’s report will focus on product-related management systems.

Human and Environmental Safetyof our Products

Worldwide Health, Safety & Environment
Systems at Manufacturing Operations

Professional & Regulatory Services (P&RS)
addresses issues related to products and packages.
P&RS is responsible for ensuring that products aresafe for consumers, safe for the environment and incompliance with laws and regulations where they
are sold. P&RS 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.”

Health, Safety and Environment (HS&E) is a global community of resources responsible for ensuring that the nearly 140 manufacturing facilities
worldwide are operated safely and legally; thatprocess hazards are minimized or eliminated; that
health risks are identified, managed or eliminated; and that all waste from sites is reduced asmuch as possible. More than 1,700 employees
spend all or a portion of their time on HS&E
management.

P&RS is also responsible for ensuring that any
claims the Company makes about the safety or
environmental profile of its products are
scientifically sound.

There are 3 major components to an HS&E
organization at a site: the base HS&E component(includes Environmental, Technical Safety andIndustrial Hygiene & Safety disciplines), Fire
Protection (FP) Systems and Medical Systems.

Risk assessment is the process the Company
uses to assess the safety of its products andingredients. In this process, chemical hazard
and exposure information are related in a waythat describes the likelihood for a chemical to
adversely affect biological systems. The P&RS
organizations in each business unit work
closely with product development teams in thedevelopment, selection and formulation of
product ingredients and mixtures with acceptable risk profiles, as well as satisfying otherimportant business and consumer needs.
Part of P&RS is the Environmental Science
Department. This is a resource center for basic
science which develops procedures, data andunderstanding that are used to make businessdecisions and develop environmental risk
assessments. As a Company resource, its role
is to advance science and develop protocols
for understanding and evaluating theenvironmental safety and impact of products
and packages. It also conducts basic studies intoxicology, microbiology and biodegradation.

2 0 0 0During 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 anincreased efficiency in the functioning of these
programs. In addition, an improved alignmenthas 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
pro-cesses and new initiatives that are being
introduced at its own manufacturing operations
as well as at contractor manufacturing operations. The schematic below indicates the phases
at which Risk Assessment takes place. The whole
Risk Assessment process is designed to enable“high-speed” innovation.

S U S T A I N A B I L I T Y

R E P O R T

22Base HS&E Program
During the past fiscal year, the following three
disciplines were integrated into one base HS&E
program: Industrial Hygiene & Safety (IH&S),
Technical Safety and Environmental. The IH&S
group originally focused on protecting the healthand safety of employees. Technical Safety focusedon maintaining the safety of capital assets. Environmental focused on protecting the environment
through legal compliance and reducing emissions
to air, water and land. With this integration we
have ensured that the strong individual building
blocks in these disciplines were maintained andmade available to the entire HS&E Program.

Ivorydale Plant SO3 Elimination
The Ivorydale plant in Cincinnati, Ohio, hit a
milestone this year in the detergent-making
department with the final elimination of bulk
SO3 storage. The last stage included the final
emptying and cleaning of the SO3 storagetank as well as the mist eliminator, vaporizer, Brinks demister and reactor. This will
eliminate all risk of fuming acid incidents inthe department.
This effort began last year when the plantinstalled sulfur burning to produce the small
amount of sulfur trioxide needed for the detergent-making process. This eliminates theneed for bulk storage and has improved theoverall safety of the site.

As indicated in last year’s report, P&G’s Environmental Management System (EMS) meets theintent of ISO 14001, a global environmental
management standard, as well as the European“Eco-Management and Audit Scheme” (EMAS), a
similar standard in the European Union. During
the integration of this EMS into one HS&E
Management System, P&G ensured that this“meeting the intent” of ISO 14001 and EMAS
was not lost. This was again positively verified byEnvironmental Resources Management, Inc., ahighly respected international environmental
consulting firm. P&G will regularly verify that it
continues to meet the intent of both theseinternational standards.
The logical flow of the programs and the transparency have been maintained. HS&E’s policy is still
derived from principles, values, legal requirements
and regulatory requirements. The policy istranslated into action by standards of performance(Mandatory Whats) and standard operating procedures (Mandatory How To’s). These are augmented
by current best approaches, which include guidance
documents, training programs, certifications andother tools needed to meet the standards. Feedbackon performance, measurements of accomplishments
and opportunities for improvement are all provided
by mandatory annual audits.

23

Medical Systems

Insurance Systems

The Global Medical network advises and assists
management and employees at the sites in assuring a safe, healthy work environment through thedelivery of preventive health and clinical services
which optimize business contributions.

The goal of the Corporate Insurance Program is
to optimize the financing of insurable risks tominimize costs while providing protection fromthe effect of potential major loss.

Global Medical manages health issues which may
impact employees, technologies and brands. The
work priorities of Global Medical are to:
1. Protect our people.
2. Obey the law.
3. Protect key technologies.
4. Enhance speed to market.
5. Optimize employee productivity.

The Program is guided by the following basic
principles:• The Company’s primary defense against loss iseffective loss prevention programs.
• Insurance is no substitute for effective loss
prevention.

All medical standards of performance andstan-dard operating procedures directly flow from
specific P&G Principles, Core Values and othercompelling business needs.

The Corporate Insurance Program covers areas ofloss and potential loss such as property damage;business interruption resulting from property damage; legal liability resulting from property damage
or personal injury; the legal liability of Directors,
Officers, Trustees and employees arising from theperformance of their duties; and theft.

Fire Protection Systems

Human Resources

P&G operates its fire protection program on
the basic principle that each facility is uniqueand should have a program designed to meetits specific requirements. The Insurance
Division, working with 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
within each Key Element.

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

Employee Training at P&G
P&G provides continuous training of its personnel. In this era of increasing information and communication technologies, Information Technology (IT) training is an essential part of this life-long
education. Within Europe, the Portuguese presidency of the European Council indicated IT training as one of its priorities, as “digital illiteracy” is threatening to become a new social barrier. The
conclusions of the Lisbon European Council made a special appeal to companies’ corporate senseof social responsibility in this area. A recent example of our commitment in this area is the P&G
2000 Program in Romania (see page 27).
P&G employees have access to a variety of IT training programs, many resulting from the evolution of technologies and software, depending on their jobs and interests. The training programsvary from special applications training to basic workstation training and office systems training.
Overall, P&G spends approximately $125 million per year on the continuous IT training of its
employees. This compares to a yearly R&D budget of $1.9 billion.
The paper published by the Portuguese presidency of the European Council is available
on: europa.eu.int/eur-lex/en/com/pdf/2000/com2000_0318en01.pdf

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Principal Industry & Business Associations
P&G holds membership in many industry, business and environmental associations whose activities
are related to the Company’s. The list below is a sample of those with whom we work:

Europe, Middle East and Africa
•
•
•
•

•
•

•

•
•
•
•

•

•

Advertising Associations: WFA - World Federation of Advertising.
Chemical Industry Associations: CEFIC - European Chemicals Industry Association.
Cosmetics Industry Associations: COLIPA Cosmetics & Fragrances Industry.
Detergent Industry Associations: AISE - Association Internationale de la Savonnerie de laDetergence 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 the Environment.
Paper Associations: EDANA - European Industry of Non-Woven Products; HAPCO - European
Industry of Hygiene Paper Products.
Pharmaceutical Associations: AESGP – OTC
Manufacturers Association; FPIA - Pharmaceutical Industry Association.
Waste Management Associations: ASSURRE Association for Sustainable Use and Recovery of
Resources in Europe.

UNICE (Union of Industrial & Employers’
Confederation of Europe): The officially recognised representative of business interests with
the institutions of the European Union - for example the Commission and Parliament. It consults with these bodies as one of the social partners, provides industry perspective on new proposals and contributes expert members to Fora
and committees set up by the Community institutions. It consists of the industry federationsof the 15 EU member states and 20 other European countries. It does not have direct company
membership. Nevertheless companies provide
experts to a number of working groups often
via a member federation. P&G contributes
expertise to groups working on Trade,
Consumer Policy, Waste and Environmental
Management systems.

Latin America
•
•

•
•

•

•
•
•

•

•

Advertising Associations: CONAR - Chilean
Advertising Self-Regulation and Ethics Council.
Business Councils for Sustainable Development: CEVEDES - Venezuelan Business Council
for Sustainable Development.
Chemical Industry Associations: ASOQUIM Venezuelan Association of the Chemical Industry.
Cleaning Products Industry Associations:
ABIPLA - Brazilian Association of Household
Cleaning Products.
Cosmetics and Toiletries Industry Associations:
CANIPEC - Mexican Association of the Industryof Cosmetics and Perfumes.
Employer Associations: Peru 2021 - Peruvian
Employers Association.
National Industry Associations: Union Industrial - Argentinian National Industry Association.
Pharmaceutical Products Associations:
CAVEME - Venezuelan Pharmaceutical Products
Association.
Soaps and Detergents Manufacturers Associations: ANALJA - Colombian Soaps and Detergents Manufacturers Association.
Waste Management Associations: Latin
America Federation of Waste Management.

Waste Management Associations: P&G isa key participant in Latin American waste
management associations. Some Latin American countries are considering enacting packaging waste take-back legislation modeled after that prevalent in the European Union.
This type of legislation makes waste management so expensive that implementation would
not only be economically unwise, it would
even have negative ethical implications giventhat the cost of collecting packaging waste
would equal or surpass the total Health Careand Environmental Protection budgets inmany of the countries. Industry has formed
waste management associations in Argentina(CEMPRE), Brazil (CEMPRE), Mexico(SUSTENTA), Puerto Rico (ICPRO), Uruguay(CEMPRE) and Venezuela (ADAN) to promote
the concept of Integrated Solid Waste
Management as an appropriate solution to
the problem. These Associations are groupedin the Latin America Federation of Waste
Management to coordinate strategies andexchange ideas.

25

North America
•
•
•

•
•

•

•

•
•

•

•
•

Asia

Advertising Associations: ANA - Association of
National Advertisers.
Business Associations: BRT - Business Roundtable; BSR - Business for Social Responsibility.
Chemical Industry Associations: CSMA Chemical Specialties Manufacturers Association;
ACS - American Chemical Society (formerly
CMA); CCPA - Canadian Chemical Producers
Association.
Cosmetics Industry Associations: CTFA - Cosmetic, Toiletry and Fragrance Association.
Detergent Industry Associations: SDA - Soap
& Detergent Association; SDAC - Soap & Detergent Association of Canada.
Environmental Associations: CEPA - Canadian
Environmental Protection Agency; WERF - Water Environment Research Foundation, National
Environmental Development Association; GEMI Global Environmental Management Initiative.
Food Associations: FCPMC - Food and Consumer Products Manufacturers of Canada; NFPA
- National Food Processors Association.
Grocery/Brand Associations: GMA - Grocery
Manufacturers of America.
Health Care Associations: CHPA - Consumer
Health Products Association; PhRMA - Pharmaceutical Researchers and Manufacturers ofAmerica.
Legislative/Public Policy Associations: ALEC American Legislative Exchange Council; CSG The Council of State Governments; NCSL - National Conference of State Legislatures.
Paper Associations: AF&PA - American Forest& Paper Association.
Waste Management Associations: CSR Canada- Corporations Supporting Recycling; KAB Keep America Beautiful.

GMA (Grocery Manufacturers of America):
This is the world’s largest association of food,beverage and consumer product companies.
With U.S. sales of more than $460 billion,
GMA members employ more than 2.5 million
workers in all 50 states. The organization applies
legal, scientific and political expertise from its
member companies to vital food, nutrition andpublic policy issues affecting the industry.

BSR (Business for Social Responsibility):This US-based business association of over 1,400
companies serves as a global resource for companies seeking to sustain their commercial successin ways that demonstrate respect for ethicalvalues, people, communities and the environment. BSR assists its members in creating value
by providing expert help as companies address
the full range of corporate responsibility issues.

2 0 0 0••••

Detergent Industry Associations: ISTMA Indian Soap & Toiletries Makers’ Association;
SDA - Taiwan Soap & Detergent Association;
SDA - Thailand Soap & Detergent Association.
Economic Associations: APEC - Asia/Pacific
Economic Cooperation.
Industry Councils: CII - Confederation of Indian
Industry; FICCI - Federation of Indian Chambersof Commerce and Industry; Federation of Thai
Industries; ASSOCHAM - Associated Chambersof Commerce and Industry of India.
Paper Associations: JHPIA - Japan Hygiene
Product Industry Association; Taiwan Paper Industry Association.

CII (Confederation of Indian Industy):
This is India’s premier industry association,with more than 3,800 corporate members.
The CII represents the interests of Indian industry by taking initiatives to facilitate industry to become competitive. P&G works with
CII on a number of programs including theelimination of trademark and packaging
infringements and environmental issues likethe adoption of ecolabels concurrent withISO Type 2 or 3 ecolabels.

Worldwide••••

WBCSD - World Business Council for Sustainable Development.
ICC - International Chamber of Commerce.
Conference Board.
SETAC - Society of Environmental Toxicology
and Chemistry.

SETAC - Society of Environmental
Toxicology and Chemistry: This is a
nonprofit professional society devoted toadvancing multi-disciplinary approaches tosolving environmental problems. SETAC’smembership extends across business,government and academic sectors, offering
an important forum for scientists, engineers
and risk managers to participate in theexchange of ideas and principles underlying
sound environmental management policies.
P&G has supported the efforts of SETAC
since 1979. The ecological risk assessment
tools developed through SETAC help P&G
and other companies evaluate the safety of
new product and packaging systems. P&G
serves on numerous SETAC boards, panels
and advisory groups.

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Stakeholder Interaction
Consumers
Consumers are our key stakeholders. They are consulted at the beginning of every product’s development. In fact, even before a project is established,
P&G technologists will conduct extensive consumer
interviews to find out what are the real consumer
needs, what are viewed as shortcomings in the current products and where needs today are unmet.
Based on this consumer understanding, new test
products will be developed. After screening the
new test product to ensure there are no possible
safety concerns with the formula, P&G exposes
the test products to panels of consumers for theirevaluation. The test product will be adapted andfine tuned to meet consumer expectations. The
adapted product will again go through safety andlegal screening to ensure it is safe and complies
with all relevant legal requirements.
Once the product is on the market, consumers
will contact us with their comments on day-today use of the product. All over the world, P&G
has Consumer Relations organizations where
consumers can get a response to any comments
they may have. These comments can range
from product performance to aesthetics to requests for help with accidents with the product(e.g. small children drinking liquid detergent).
P&G Consumer Relations people are trained togive advice and background information and,
where needed, to channel questions to otherprofessionals to ensure the consumer is helped
rapidly and effectively.
We receive more than 5 million consumer
contacts worldwide each year through 800-line
phone calls, e-mails and other written correspondence. While many of these contacts are via
telephone calls, e-mail contacts are steadily increasing.
Consumer comments are tracked in data bases andserve as an important information source for future
product development. Consistent comments on performance — both positive and negative — can lead
eventually to changes to the product. Positive comments ensure that those features consumers like areretained, while negative comments are importantlearnings for us to further improve our products.
For example, with Pampers, consumers complained about the fixing tapes, which were becoming
loose. The tape was replaced by amore effective one.

A more recent example
is Swiffer. The length of
the sweeper handle wasincreased as a result ofconsumer feedback.

Communities
Each P&G production facility has site-specificactivities to build constructive relationships withlocal authorities, local industry associations,neighbors, local action groups, thought leadersand news media. Depending on the culture of thecommunity in which the plant is located, this canrange from regular official meetings during which
new information is shared or questions areanswered, to more formal meetings. This couldbe, for example, a reception for the immediateneighbors, where information on the past year
and plans for the new year are discussed. When
open days on the sites are impossible to organize,(for example, this year the Amiens plant inFrance has been under complete transformation),
we ensure continuity in community interaction bymeeting regularly with the local authorities to
update them on plant news.
In the neighborhoods of many P&G operations,the Company cooperates with and sponsors local
events, so the whole area benefits from thepresence of a P&G site.

Kansas City Clean-Up
In September, 1999, while doing soil coring
for a new building, the Kansas City Folgers
plant discovered that it had been sending oil
into the soil at a level of 20 feet below ground.
It was determined that the oil originated froma vacuum pump exhaust header that was piped
into an old incinerator stack. The site replaced
this system with a new, modern collection
system to ensure containment.
The plant immediately notified the state andP&G environmental leaders. Plant personnel
then spent their Labor Day weekend mitigating
the source of the oil and remediating 70
barrels of oil-laden fly ash.
An environmental consulting firm was brought
in to do additional coring to delineate theextent of the problem. There was no Notice of
Violation or any other negative repercussions
from the incident. The immediate response
and the excellent relationship between Plant
Resources and local environmental officials
make this a model for quick-response
corrective action.

27

P&G 2000 Program - Romania
This year P&G Romania initiated the P&G
2000 Program, which offered 160 schools acomputer lab. To fund the project,
P&G donated 3 percent of sales fromits products bearing the P&G 2000
logo, within the period October toDecember 1999. Products participating in the program were Ariel, Tide,
Perlan Bonux, Ace, Pantene Pro-V,
Head & Shoulders, Blend-a-Med,
Always and Pampers. P&G opened the fundwith an initial donation of 100 computers.
The P&G 2000 Program officially closed on
February 1, 2000, with announcement of the
160 winning schools. During the presentation
event, 10 of the winning schools were in a live
dialogue via the Internet with journalists andpublic personalities. Each of the 160 schools
received a computer laboratory equipped withfive IBM computers, connected to the Internet
through Xnet, which also offered them a oneyear free Internet subscription and connectivity equipment.

Scientific Community
P&G works a great deal with external scientists
in various disciplines (e.g. human and/or environmental toxicology, new technologies, etc.).
This happens during many phases of a product’s life: at the initial development of newtechnologies, during the early marketing
phases, and on an “as needed” basis while theproducts are on the market.
As a technology-based company, P&G has longestablished relationships with many leading
scientists at various universities all over theworld. P&G often asks for their advice in panels
which take place before a product is placed on themarket. On key developments,
the Company organizes
Scientific Advisory Groups(SAGs) consisting of leading
external scientists. They
review the data P&G
scientists have collected sothey can assess aspects suchas safety. Then they
recommend additional workor modifications to theprogram to ensure theCompany has adequately
addressed all safety issues

2 0 0 0

Authorities: Local - Regional - Global
P&G communicates with local, regional andglobal authorities directly, as an individual company, as well as through industry associations.
Scientists and legal experts in the P&G External
Relations Office review existing and upcoming
legislation that is relevant to the Company andwork with authorities to ensure that policies takethe needs and experience of business into account.
This is done via direct meetings with the authorities and comments on authorities’ position papers
and industry position papers. Activities like thesecan be very important to ensure the Company’s
needs are understood and taken into accountwhenever decisions are being made that can
influence any aspect of the P&G business.
P&G also works closely with authorities to provide
assistance for a variety of programs around theglobe. We provide business and scientific expertise,funding (either financial or donations of product)and employees’ time to a wide variety of projects.

Ace and the South Africa
Department of Health
The Ace-Department of Health (DoH) Drinking
Water Project was initiated in 1997. The
objective of the Project was to develop posters
to educate communities in rural areas about
disinfection of their drinking water.
Two posters were developed: One outlined thedisinfection of water collected from community
taps, by standing for a while in the house with
5ml of Ace added to 25 l of water. The second
poster acted as a guideline for disinfection of
surface water for drinking purposes, 10 ml of
Ace added to 25 l of water.
The DoH laboratories conducted efficacy tests
on Ace, proving its disinfection capabilities. As
soon as word spread regarding the success of thisProject, we were approached by the Kwa-Zulu
Natal Province to develop posters reflecting good
drinking water habits and practices around thehouse. We currently have these posters printed
in both English and Zulu.
During the severe floods earlier this year, P&G
was very active in educating people in squatter
camps hit by f loods and where there was avery high risk that the sewage system would
collapse. We also helped in the f lood areas in
the Northern Province and Kwa-Zulu Natal.

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P&G Working with
Kobe City’s Solid Waste
In 1996 Japan’s Kobe City developed amaster plan for the management of nonindustrial solid wastes. The objective of theplan was to keep the amount of disposed
waste at 1993 levels by phasing in a set ofwaste reduction targets.
However, when the levels of solid waste
began to increase in 1998. To address this,Kobe City established a working group toreview the master plan for the year 2000.
The working group consists of three groups:
thought leaders, industry representatives
and local citizens. P&G is participating as
one of the industrial representatives.
The report of the working group will be
submitted to the Kobe City Environmental
Preservation Committee, and a revised
master plan developed.

NGOs : Local - Regional - Global
P&G frequently enters into dialogue withnongovernmental organizations (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 can approach 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 (fromextreme to moderate) and by their geographic
links (from local to global). Depending on theircharacteristics, a number of NGOs can be seen as
the vocal spokespeople for the general public.
Consumer organizations exist in many countries.
These organizations contact companies to compare
products and voice comments they receive fromtheir members. P&G continuously provides
consumer organizations with information on
new initiatives and cooperates with them inanswering consumer questions.

Combined Stakeholder Dialogues
Depending on the issue, P&G also sets up workshops, inviting scientists, regulators and NGOs
together to discuss a specific issue and to attempt
to come to a common understanding. P&G gains
invaluable experience from these types of interaction. These dialogues also hold great promise for
frank discussions in the future.

European Partners for theEnvironment and WBCSD
P&G is a founding member and active supporter of European Partners for theEnvironment (EPE), a multistakeholder organization bringing
together public authorities, business, trade unions and environmental NGOs to promote sustainable development. Peter Hindle,
P&G’s Director of External Relations for Global
Fabric and Home Care, is the current Presidentof EPE.
Together with the World Business Council for
Sustainable Development (WBCSD), of which
P&G is also a member, EPE has addressed a
Joint Memorandum to the President of theEuropean Commission, with proposals for the
first European Sustainable Development
Strategy. Peter Hindle and other EPE/WBCSD
representatives met with the EC President todiscuss the proposals further.

P&G Jordan / UNICEF
Working to Detect Early
Childhood Disabilities
Earlier this year a Jordanian TV production
agency, Elsaje Production House, launched anawareness project that brings together the private sector, local NGOs, United Nations agencies and donor countries. This project involved
the development, production, and broadcasting of public service announcements on issuesof concern such as human rights, environmentand health.
P&G (Pampers) contributed to this campaign
through co-sponsoring, with UNICEF (United
Nations Children’s Fund), a message on theearly detection of childhood disabilities. To initiate the process, P&G met with representatives
from the Jordan Ministry of Health, UNICEF
and the production agency to assist in the identification, selection and development of thethemes. The production agency produced a message broadcast on Jordanian National TV, aired
twice daily for two consecutive weeks.

29

Performance
P&G has developed a comprehensive system of measuring performance throughout the Company.
The Company measures operational performance in order to drive continuous improvement.
This approach enables the Company to report data on a wide range of operational categories.

Process for Data Collection•All data are reported on a global basis. In
order to achieve consistency and to ensure acommon understanding throughout the organization, employees are trained in how to report anddocument data. Metric units and English are usedas the business language, backed up with local
translations, where needed.
To ensure the standard collection of data, theCompany has the following 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 byfacilities to estimate data and validate year-toyear results.

Personnel are trained on the work processes, as
appropriate.

P&G’s data collection systems are designed to be
simple enough so that the people closest to thework, regardless of location, can use the tools.
This simplicity enables the Company to collectdata and update systems annually at a relatively
low cost. Each business unit is responsible for
accuracy and consistency of the data.

Acquisitions and Divestitures
All facilities that operate during the fiscal year
reporting period, including the recent acquisitionof Iams and PuR, reported data. The recent acquisitions of Iams and PuR have been included. For
divestitures, wastes and emissions are estimatedfor the last year in which they operated.

WBCSD Eco-Efficiency ProjectEco-efficiency is at the heart of the World Business Council for Sustainable Development’s(WBCSD) philosophy. The word itself, a combination of economic and ecological efficiency, is now
firmly entrenched in the business lexicon as more companies come to recognize that eco-efficient
practices can feed right through to the bottom line.
“Only what gets measured gets done” is the underlying principle of the eco-efficiency project. The
intent is to develop an effective approach for companies to measure their eco-efficiency, and toreport to internal and external stakeholders.
A f lexible approach, the objective is to establish a general, voluntary framework that is flexible
enough to be widely used, broadly accepted and easily interpreted by a large spectrum of sectors.
The specifics of defining, measuring and communicating eco-efficiency will necessarily vary fromone business to another, and comparisons between different businesses must be approached withgreat caution. The eco-efficiency data should be presented in such a way as to be scientifically
proven, relevant, accurate and useful. The concept identifies two categories of indicators:• Generally applicable and relevant indicators: These indicators relate to all companies
independent of type. It includes energy, materials, water, greenhouse gases and total waste.
• Company-specific indicators: Goes further than the selected indicators above. For example, total
waste is broken into its components, such as hazardous waste, wastewater and air releases.
The environmental data presented in this report (unless otherwise stated) are based on the WBCSD
eco-efficiency project.

www.wbcsd.ch

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Major Impacts Associated with Products and Services
Environment• Resource Use (Materials and Energy)• Water• Waste and Emissions

Social Equity• Health• Hygiene• Education

Economic Development• Shareholder Value• Employment• Taxes, Fees and Contributions

The environmental impacts associated with P&G’s products and services, by the very nature of producing and using a product, use resources and generate wastes and emissions. P&G is committed, throughits Environmental Quality Policy, to “reduce or prevent” this whenever possible.
The social and economic benefits associated with P&G’s business aim to “improve the lives of the world’s
consumers.” We do this by providing innovative technologies that represent value to our customers. We
can provide employment in our communities, support the local and national economy through taxes,
contributions and purchases, and increase shareholder value. By providing products and informationon their appropriate use, we improve the health and hygiene of consumers through more effective andbetter-valued products.

Generally Applicable and Relevant Indicators
Environment
As the diagram on the next page illustrates, P&G’s use of material resources is highly efficient. The
vast majority of materials are converted to products, and the output of manufacturing waste (which islargely non-hazardous) is low. To give a more comprehensive understanding of materials used, data for
packaging and manufacturing operations is provided below.
The waste summary is presented in two ways. The table below presents the data in metric tons by
Global Business Unit (GBU). The following sections present the data graphically in an eco-efficient
format; in other words, the graphs show production per resource consumed or waste generated.

Manufacturing Waste & Cost Summary
All waste units are in thousands of metric tons unless otherwise noted. 1 ton = 1,000 kg = 2,205 lbs.
1999/2000 Global Business Unit Details

MeasureTotal

Production

1999/2000

1998/99

1997/98

BBC

BC

FHC

FC

FB

HC

TT

Packaged Product Shipped
Raw Materials from
Recycled Sources
Packaging Used
Packaging Material from
Recycled Sources

15,229476

14,644380

14,436
400

1,281
0

1,165
0

6,914
0

639
0

2,656
0

789
0

1,782
476

1293
444

1,375
490

1,367
455

70
27

122
25

585
242

57
19

288
81

99
22

72
28

879
55%

863
56%

893
53%

146
67%

59
50%

146
61%

67
79%

136
60%

29
37%

296
40%

317
12
39
19

271
27
31
20

324
12
37
20

45
0.3
1
1

20
3
3
0.9

37
7
7
3

13
0.7
0.1
0.1

30
0.01
18
5

10
0.7
5
1

162
0.6
5
7

Energy Consumption (105 GJ)
1,080
Water Consumption (MM cubic meters) 87.0
SARA Releases (1,000 tons)*
1.9

967
83.4
1.6

947
ND
1.9

90
7.1
0

38
3.7
0.01

281
14.1
1.5

35
0.4
0

107
10.7
0.1

30
2.1
0.04

499
48.8
0.2

Waste
Generated Waste
Percent Recycled/Reused Waste

Disposed Waste
Solid Waste — Non-Hazardous
Solid Waste — Hazardous
Effluents (Excluding Water)
Air Emissions

Other* Releases defined in the U.S. Superfund Amendments and Reauthorization Act by the U.S. Environmental Protection Agency.
NOTE: BBC - Baby Care; BC - Beauty Care; FHC - Fabric & Home Care; FC - Feminine Care; FB - Food & Beverage; HC - Health Care; TT - Tissues & Towel

31

Energy Eco-Efficiency
Energy efficiency is important to all of us. The trend from 1985 shows energy use as nine times more
efficient (9x production for each gigajoule used). Over the past three years, fuel use has decreased andelectricity use increased. In terms of eco-efficiency as used in the graph, the bar is decreasing forelectricity and increasing for fuel.

Total Energy (Production Units / gigajoule)Indexed vs. 1984/85

1000
800
Electricity

600

Fuel
400
200

0
Base
Year = 100

97/98

98/99

99/00

2 0 0 0

The Company first analyzes new projects using
life cycle cost analysis before they reach the site.
This analysis compares up-front capital costs toongoing expenses. For example, spending money
up-front to fully insulate a building is comparedto the ongoing expense of heating or cooling thesame building.
The Company also does a loss analysis at the site
level. Losses are defined as anything not shippedout the door as product, including energy use.
When energy is identified as a major loss at asite, it receives intense focus for reduction.

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32Materials Eco-Efficiency
The Company achieved record shipments for the year ending June 30, 2000. Packaging for productremains less than 10 percent of total volume shipped and is slightly improved verses ’98/’99.

Indexed vs. 1997/98

120(Production
Units per Ton)

100
80
60
40
20

0
Base
Year = 100

97/98

98/99

99/00

GlobalRecycled Material Used in Packaging
Percent Recycled Material
Used in Packaging

Packaged Product Shipped

40
35
30
25
20
15
10
5
0

(Percentage)

97/98

98/99

99/00

GlobalRecycled material is used in a variety of packages from corrugated shipping cartons to plastic bottles.
More than 30 percent of the material that P&G uses for packaging is from recycled sources.

Reduced Pampers Package Introduced in Western Europe
An innovation in packaging for Pampers baby diapers in Western Europe has reduced the weightof diaper shipping packages by approximately 90 percent. This was made possible by replacing theouter cardboard case with a polyethylene film. The “elimination of the outer casing” initiative
represents a significant contribution
to packaging material source reduction. For total Pampers volume inWestern Europe (Germany, Austria,
Switzerland, Sweden, Belgium,
Netherlands, U.K., France, Greece)
it presents a packaging material
source reduction of approximately
14,000 metric tons per year.
An in-house screening Life Cycle
Inventory (LCI) has been conducted tocompare both packaging designs interms of their environmental profiles.
Overall, the LCI results confirm theenvironmental progress this packaging
development represents, in addition toits cost savings and benefits to retailers. Results demonstrate a positive environmental profile for the polyethylene with a reduction in
total resource consumption and emission parameters. Retailers will see practical benefits from thisinnovative packaging. The transparent film wrap allows Pampers diapers to be easily recognizedon pallets. In addition, handling and opening of the new packages is faster and easier than thestandard cardboard cases.

33

Water Eco-Efficiency
To show the complete picture for water, we report for the first time water consumed as well as the
COD in waste eff luent. Wastewater COD is not as eco-efficient as it was last year, but it is still
considerably better than in 1990. We are able to produce 50 percent more production per unit ofwastewater than we were able to in 1990. Eff luent waste includes oxygen-consuming substancesin the wastewater but excludes water.
Sites began tracking the consumption of water two years ago. Water eco-efficiency has improved thisyear. Overall, water use is up slightly even though our largest business user, Tissue & Towel, has showna reduction (4 percent). Efforts are underway to develop further plans to reduce water consumed.

Wastewater COD Disposed(Production
Units per Tonof COD)

150
100
50

0
Base
Year = 100

97/98

98/99

99/00

GlobalWater Consumption
120
Indexed to 1998/99

Indexed vs. 1990

200

(Production
Units per Cubic
Meter)

100
80
60
40
20

0
Base
Year = 100

98/99

99/00

GlobalWastewater Treatment in Mexico
This year, two new wastewater treatment plants have come online at our facilities in Mexico
City — a paper manufacturing plant located at Apizaco and our Health Care Products plant in
Naucalpan.
•

At the end of 1997, P&G acquired a paper manufacturing plant located at Apizaco, a city in
Tlaxcala State. The due diligence process had disclosed that, prior to P&G’s ownership, there
had been a number of cases when the plant had accidentally discharged wastewater into the
Zahuapan River without the proper treatment. This situation had created a bad image for the
Apizaco plant, especially because the Zahuapan River is the only sizeable river in Tlaxcala, astate known for its extremely arid climate.
As soon as the property was taken over, P&G approved an investment of $4.5 million to
design and construct a new state-of-the-art biological wastewater treatment plant, to ensure
the wastewater discharge to the river not only met the standing regulations but also yielded
70 percent lower biological oxygen demand (BOD) than the permit limits.

•

New environmental regulations on the quality of industrial wastewater
discharges in Mexico City were implemented in 1999, setting up a
maximum biological oxygen demand limit of 200 mg/l. The wastewater
discharge of our Health Care Products plant in Naucalpan was about
five times as large as this new parameter.
In order to ensure compliance, P&G immediately started construction of
additional wastewater treatment facilities to reduce the BOD of our discharge
to 50 percent of the maximum permissible limit. The investment required
for this substantial reduction was on the order of $750,000.

Apizaco Plant, Mexico

Both installations are now completed. Mexico City government officials have been invited totour the Naucalpan facility to witness the fast pace at which P&G complied with the strict
parameters set up by the regulations.

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34

Greenhouse Gas Eco-Efficiency
Eco-efficiency of greenhouse gas has improved this year. The eco-efficiency indexes for ’99/’00 are
three and a half times more production per ton of CO2 emissions since 1990. There has been a shift
from fuel combustion to electrical generation and also a shift away from coal to cleaner fossil fuel.

This year our Sacramento site reduced VOC airemissions from 68 kg/day from the fire pit to
1.8 kg/day by installing a temporary scrubber.
More permanent solutions such as chill-water
condensers are being investigated.
Secondly, to control the 45 kg/day from theseal tank, the site followed a two-step process.
First, it installed an automatic temperature
control to maintain the water temperature in
the seal tank at less than 38° C, which will
reduce methanol emissions. Then, they
installed a disk diffuser to increase masstransfer of methanol to water.
These two projects, at a cost of $30,000, have
reduced the total VOC emissions from 113 kg/
day to 2.0 kg/day.

In addition, the absolute CO2 emissions are stillmuch lower than the 1990 baseline. The decrease
from 1990 resulted from the sale of pulp mills in
the United States and Canada, and the conversionof coal to natural gas in the United Kingdom
and China.

Greenhouse Gas (CO2) Emissions
Indexed vs. 1990

Sacramento Meets
New Air Regulation

400
350
300
250
200
150
100
50
0

Base
Year = 100(Production
Units per Tonof CO2)

97/98

98/99

99/00

GlobalWaste Disposed Eco-Efficiency
Total waste disposed is our key management method to keep waste under control. Total waste disposed iswaste which cannot be reused, recycled, composted, applied to land as conditioners or nutrients or burnedfor energy recovery. Total waste comprises the sum of non-hazardous and hazardous solid waste, plus
effluent measured as COD and air emissions. This measurement has been in effect since 1990.
Our pollution prevention and Design Manufacturing Waste Out programs have saved more than $505
million cumulatively in the past six years, while producing two-thirds of our previous waste.

Total Waste Disposed
Indexed vs. 1990

200

(Production
Units per Tonof Waste)

150
100

Belleville Scrap Savings
The Belleville site, Ontario, Canada, attracted
two new companies into the area to help increase scrap recycling. Through the partnershipthe plant achieved an annual savings equal to$944,492 and increased total revenues
by $114,468.

50

0
Base
Year = 100

97/98

98/99

99/00

GlobalWe achieved this in a number of different ways:• source separating some types of waste on site
• working with new vendors to improve costs• eliminating certain materials from the site

Witzenhausen Plant Continuous Improvement
Witzenhausen’s Tissues & Towel plant has again successfully reduced its disposed waste byapproximately 50 percent and its residual waste cost by 83 percent versus the 1998/99 level.
As a first step, the site improved the waste separation program in the plant, with the involvementof all employees, to get a separated “clean” waste stream, which can be recycled by othercompanies. The next step was to identify the main sources of cost in the plant. As a result of thecontinuing environmental improvements a total of $200,000 in savings was achieved in fiscal
year 1999/00.

35

Social Equity
Philanthropic Contributions
The contributions made by The Procter & Gamble Fund and Corporate Contributions in North America
for the past three years are provided in the following table:
Total

1999/2000$28,292,768

1998/99$27,585,008

1997/98$26,614,350

This year’s total contribution reflects a 2.6 percent increase in spending vs. the 1998/1999 level. In
addition, with the implementation of the Company’s Organization 2005 initiative, we did not compile
global contributions data.
P&G and its employees have a long-standing commitment to being good citizens and neighbors
in all the places where we do business around the world. We believe we have a responsibility tosociety to use its resources — money, people and energy — wisely. We satisfy our financial
commitment through support for a wide range of educational, health, social service, cultural,
civic and environmental organizations.

Diversity Data — Global Enrollment
P&G expects its workforce to become increasingly more diverse. This is a global policy, and programs
are in place for continuous improvement in all regions. Global reporting of enrollment by gender isshown in the following table:
Global Enrollment 1999/2000
%Male
59

%Female41

This global data does not yet include plant technicians in the United States, United Kingdom and
Latin America; more complete data is expected to be available early next year. Global data is being
developed in a new system consistent with the Company’s Organization 2005. Thus, historic global
data is not available for comparison. The percentages of minority and female employees in the United% Minorities% FemaleStates are shown in the following table:
Management
All Other Employees (Administrative, Technicaland Plant Technicians)

1999/00 1998/99 1997/98
15.9
15.8
15.6
18.8

18.5

19.2

1999/00 1998/99 1997/98
33.7
33.1
32.5
39.7

39.9

39.5

Wages
P&G supports paying employees a competitive wage, as benchmarked with other leading companies.
Consistent with our principle of valuing personal mastery, we reward employees for improving theirskills and capabilities.

Benefits
P&G is a recognized leader in employee benefits. The Company’s benefits have been developed to help
protect the financial security of employees. These benefits include comprehensive coverage for healthcare, generous vacation and holiday time, and other work/family balance benefits, including flextime,child-care leave and less-than-full-time schedules.

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36

Industrial Hygiene & Safety
The health and safety of Procter & Gamble employees
are paramount to the principles of the Company.
• Nothing we do is worth getting hurt for.
• Safety and health can be managed.
• Every illness and injury could and should be
prevented.
• Safety and health are everyone’s responsibility.
The Company tracks and reports two metrics forworker safety: total incident rate (TIR) and total
lost workday case rate (LWDC). The TIR includes
all cases that result in loss of consciousness, lost
workdays, restriction of work or motion, medicaltransfer to another job or medical treatment
beyond first aid. LWDC includes all cases that

Total Incident Rate
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
98/99

99/00

The TIR target for sites is to be below 1.5 cases
per 100 employees worldwide. To achieve suchrates, programs to address employee safety, suchas safe behaviors, ergonomics, and confined spaceentry, have been implemented. No target has been
set for LWDC because of our belief that we must
manage incidents that potentially would lead tolost workdays.
The following data are based on criteria established by P&G for use at all worldwide facilities.
The data are representative of all our global sites.

Lost Workday Case Rate

(Injury andIllness per 100
Employees)

97/98

involve days away from work or days of restrictedactivity beyond the day of injury or onset of illness.

Global

0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00

(Lost andRestricted
Workday Cases
per 100
Employees)

97/98

98/99

99/00

Global1999 OSHA Results
The P&G U.S. manufacturing sites and technical centers have accomplished a remarkableinspection record with the federal Occupational Safety and Health Administration (OSHA).
We have gone four consecutive years (1996, 1997,
1998, 1999) without a serious citation. This
performance is indicative of the strong programs
and management systems at P&G.
While everyone at P&G should be proud of our OSHA
record, the most important consideration is that thesites have developed systems that are protecting our
employees, our facilities and our reputation.

37

Economic Development
Global Purchases
Procter & Gamble is a global company employing
over 110,000 people worldwide. We produce ourbrands in nearly 140 plants in 46 countries
around the world. We employ locally and purchase the majority of our raw materials withinthose regions where we manufacture our products.

HS&E Benchmarking
Benchmarking is an important tool to assess andmaintain the health of P&G’s global Health Safety& Environment (HS&E) program. It provides
Corporate HS&E staff with data to verify therobustness of our performance and to identify
improved management and technology approaches.
During the past year, P&G completed a major
HS&E benchmarking study with 11 other multinational companies. This study, which was led by
Pilko & Associates, included Ashland Inc.,
Celanese Ltd., Cognis N.A., Dow Chemical
Company, Du Pont, Eastman Kodak, Millennium
Chemicals Inc., Phillips Petroleum, Rhone-Poulenc
Life Sciences, Rhodia, and Solutia Inc. It involved
a detailed review of HS&E manufacturing andmanagement systems/performance.

2 0 0 0

The top-line conclusions from this study indicatedthat P&G has:
• Strong HS&E performance within this group of
12 companies- Third lowest Injury/Illness Rate for employees- Fifth lowest Lost Workday Rate for employees- Fourth lowest penalties paid (in $/yr per$ billion sales)- Fourth lowest property loss (in $/yr per$ billion sales)• The lowest HS&E operating costs (in $/yr per$ billion sales)• Shifted more HS&E work to site technicians
than any other company. This is the main
reason for our lower costs and need forsimplified training systems• Similar HS&E management systems, though
its approach to information and training
systems is somewhat simpler than the norm
• HS&E performance goals focused on
improvement as compared to breakthroughNet, P&G’s current HS&E situation is quite
positive when compared to these peer companies.
The long-term challenge is to continue delivering
benchmark results. To that end, a similar
benchmarking study will be conducted during
the next year.

S U S T A I N A B I L I T Y

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38Company-Specific Indicators
Environment
Non-Hazardous Solid Waste Disposed
Overall, the non-hazardous waste disposed to landfill, incinerated or treated has increased thisyear, resulting in a lower eco-efficiency. Much of the increase is from construction and demolition
activities. Even though there has been an increase in waste generation, we have continued to savemoney in disposing of our waste. The increase in generated waste is from demolition-type waste,
which is more economical to dispose of compared to other waste. The product-related solid waste
has decreased as have the costs for disposing of our waste.

Non-Hazardous Solid Waste Disposed
Indexed vs. 1990

200

(Production
Units per Ton)

150
100
50

0
Base
Year = 100

97/98

98/99

99/00

GlobalNeuss Designing Waste Out
The Neuss Tissues & Towel facility inGermany, working in collaboration withEngineering and Product Development, hasdesigned waste out of its system. First, thesite started reusing “broke” from a sistersite in Orleans, France, saving valuable andexpensive virgin pulp. Secondly, it changed toprocesses saving an extra 40 tons per year ofwaste going to landfill.

Hazardous Solid Waste Disposed
Globally, the reported hazardous waste has increased due to many international jurisdictions’expanding their definitions of hazardous waste. Hazardous wastes are defined by regional policies andlocal rules and thus vary among regions. In our U.S. sites, a strong focus on reduction, recycling andmaterial substitution has reduced the amount of hazardous waste requiring disposal over the past
three years. To further reduce our risks, the number of approved hazardous waste disposal sites thatall U.S. plants use is limited. Similar programs have been started in many regions of the world.

Hazardous Solid Waste Disposed
Indexed vs. 1990

1200

(Production
Units per Ton)

1000
800
600
400
200

0
Base
Year = 100

97/98

98/99

99/00

Global39

Non-Hazardous Waste Recycled

Waste Recycled
100

60
40
20

0
Base
Year = 100

Air Eco-Efficiency

97/98

98/99

99/00

GlobalAir Emissions
150(Production
Units per Ton)

120

Indexed vs. 1990

Each site monitors total suspended particulates,
volatile organic compounds (VOCs), carbon
monoxide (CO), nitrogen oxides (NOx), andsulfur oxides (SOx). The total amount of air
emissions produced in metric tons per million
production units has increased slightly from lastyear due to a global expansion in the Tissues& Towel business.

(Production
Units per Ton)

80

Indexed vs. 1990

Recycling has been a significant effort within
the Company, to minimize impacts on theenvironment. Over the past three years, therecycling rate has ranged from 56 precent to67percent, and contributed $18-20 million inrevenue annually. Every Global Business Unit,
except Tissues & Towel, had a higher rate ofwaste recycling compared to 1990. For Tissues& Towel, the main reason the rate (waste recycled
per production unit) is so much lower is theacquisition last year of two large plants that use
recycled fiber. The subsequent waste fiber cannot
be recycled a second time.

90
60
30

0
Base
Year = 100

SARA 313 Releases(United States only)

97/98

98/99

99/00

GlobalSARA 313 U.S.

U.S. facilities 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 tons of SARA 313 releases have increased
this year. The reason is three-fold: change ineconomically sensitive feedstock and raw
materials; contamination of one of our raw
materials; and four sites’ exceeding thresholds
for reporting.

2 0 0 0Indexed vs. 1990

2000

(TotalMetric Tons
Released orTransferred)

1500
1000
500

0
Base
Year = 100

S U S T A I N A B I L I T Y

97/98

R E P O R T

98/99

99/00

U.S.

40

Compliance with Laws and Regulations
There are numerous health, safety and environmental requirements worldwide. Facilities are
subject to emission limits and operating requirements stipulated in these statutes, regulations, laws and permits. It is P&G’s intent tocomply with both the letter and the spirit ofstatutes, regulations, laws and permit requirements. Identified compliance issues are treatedseriously, and all non-compliance matters areresolved as expeditiously as possible.
The past three years’ data on environmental,transportation and worker health and safety
violations and interventions follow:
NumberFines

1999/2000 1998/99
48
46$13,400 $33,250

1997/9854$73,100

A breakdown of 1999/2000 Notice of Violations(NOVs) and Occupational Safety & HealthAdministration (OSHA) interventions follow:
Water based
Air based
Nuisance Ordinance
Paperwork
Worker safety(OSHA US Only)
Total

Number
25
2
2
7

Fines
$4,500$500$7,700
$0

12

$700

48

$13,400

Most water-based NOVs were associated with
the U.S. Clean Water Act and were wastewater
related (e.g. pH, oil & grease) involving sevendifferent sites, all of which discharge tomunicipal treatment systems.
Whenever a facility receives an NOV, Management determines the cause of the non-complianceissue and develops an action plan to prevent its
recurrence. An internal audit group then works
with the business management to ensure that thecorrective action has been implemented. In thecases above, all the NOVs have been resolved.
OSHA interventions included any employee orcontractor related incident that required OSHA
follow-up. Last year’s interventions also included
three routine visits or scheduled inspections. In
2000, we received one serious citation — the firstin four years.

Construction Safety Network Sites
Surpass Industry Benchmark
P&G’s Construction Safety Network is pleased to announce that Network sites
have achieved a Recordable Incident Rate (RIR) of 0.8 for calendar year
1999. This surpasses the 1997 “Best in Construction Industry” benchmark
goal of 1.0 set as a target several years ago. This OSHA-based Incidence Rateis calculated as incidents per 200,000 effort hours (100 full-time employees).
More than 13 million effort hours were expended at network sites during 1999. Only two Lost
Time Incidents occurred, resulting in a Lost Time Injury Rate (LTIR) of 0.03. Of the 40 sites
involved in the Safety Network, 38 sites had no Lost Time Injuries and 22 sites had no
Recordable Injuries. These results compare to a U.S. construction industry average of LTIR 4.0
and RIR 8.8 (1998 U.S. Bureau of Labor Statistics data).
The excellent results outlined above allow us to pool network sites and self-insure Workers
Compensation and General Liability insurance. This has saved $26 million over comparable
commercial insurance rates since inception of the program in 1993.
The Construction Safety Network includes professional Safety Managers from construction contractors active on P&G sites (mainly U.S.). The Network establishes and documents best work practices,delivers Construction Safety Management training, provides a Construction Safety audit team,analyzes incident information, and monitors system results. The Construction Safety Network is
dedicated to an overall objective of zero incidents and has enabled continued improvement for allsites actively involved.

41

Social Equity
Performance Against Internal Standards

The P&G HS&E audit programs are designed toensure compliance with federal, state and local
regulatory requirements as well as corporate
environmental standards and procedures. Audit
findings are reported promptly to the business
management teams, who must address andcorrect all issues in a timely manner.
Audits measure performance against a mandatory set of standards and standard operatingprocedures. The target performance is eight or
better on a 10-point scale.
The results were negatively inf luenced by alarge number of acquisition sites (12) in
Health Care and Tissue/Towel. Each of the newsites has a grace period in which it has to comeup to P&G standards.

Sites with Audit Scores Greater than 8.0
100
80Percent

Audit Programs

The Company takes great pride in making sure thesites are reviewed on a frequent basis. The graphbelow shows percent of sites receiving an audit thisyear. Lower audit scores are attributed to the large
number of new sites joining the Company.

60
40
20
0

97/98 98/99 99/00

97/98 98/99 99/00

HS&E

Fire Protection

Sites Conducting Annual Audits
100
80Percent

P&G’s internal standards go beyond legal compliance and apply to all of its facilities worldwide.
The fundamental philosophy is to have the same
standards worldwide, implemented by trained
professionals at all sites and audited each year
using a consistent, comprehensive approach. The
metrics used are consistent with that philosophy.
Graphs on this page describe the Health, Safety &Environment (HS&E) performance.

60
40
20
0
97/98

98/99

99/00

AuditsCompleted

Establishing Enzyme Handling Industry Standards & Best Practices
Enzymes continue to be a business-building chemical technology with new applications and businessgrowth for P&G and the industry. Though enzyme-containing detergents are assessed to be safe foruse by consumers, the handling of bulk quantities of enzymes at the manufacturing sites still
represents well-documented potential risks to health under particular exposure conditions.
For more than 30 years, P&G has developed vast expertise on handling safely these bulk
quantities. Special dust control technology has been developed as well as a series of strict
operational control procedures, involving all employees, to ensure safe handling of enzymes.
Exposure is monitored by high-volume air sampling and peak exposure monitoring.
Employees undergo regular health surveillance to assure they are suffering no adverse healtheffects and to detect any health effects at a very early stage. All the learnings have been
re-applied worldwide within P&G operations (see Chinese example, following page). In
addition, more recently P&G began sharing its expertise with its larger competitors andwith small and medium sized enterprises to promote safe handling of enzymes throughout thedetergent industry.
Currently, the major part of this information sharing and updating of existing practices — including
recommended OEG’s (Occupational Exposure Guidelines) — is being worked on within AISE, theEuropean Soap and Detergent Industry Association. These new guidelines will be well-aligned with
P&G’s practices and technology requirements and will serve as the basis for global re-application.
This will enable other companies globally to obtain hygiene safety results similar to P&G; i.e., noreported health effects related to the use of enzymes since full deployment of the program.

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42Site Leadership Training

Sites with Qualified Leaders
100
80

Percent

Another key indicator of system capability is thepercentage of sites with trained and qualified
leaders. Leadership candidates train on-site for an
extended period prior to attending a week-longinternal school where their knowledge and ability
to handle special situations are assessed.
Only then are candidates considered qualified.
Currently, more than 70 percent of sites
worldwide have leaders qualified by Corporate/
GBU staffs.

60
40
20
0

97/98 98/99 99/00

97/98 98/99 99/00

HS&E

Fire Protection

Enzyme Handling in China
When P&G started enzyme handling in China in 1994, the local detergent industry did not haveeffective guidelines available for the handling of bulk enzymes. The industrial and occupational
experts paid very little attention to safe enzyme handling.
P&G has taken the initiative to sponsor a Chinese industrial program on enzyme hygiene. The
purpose is to provide education and technical support on good practices for handling enzymes
to the Chinese detergent industry. As part of the program, we conducted an industrial survey
on airborne dust and enzymes in plants in addition to providing training to local manufacturers on the measurement of enzyme exposure. Additionally, we share P&G’s experience with
Chinese experts on occupational hygiene to help them understand health effects of enzyme
exposure and develop control measures in the detergent industry.
All these efforts are leading to the development of guidelines for the Chinese detergent
industry on handling enzymes, which will greatly improve the protection of workers in theentire detergent industry.

43

Economic Development
Technology Donations, Fiscal Year 1999-2000
P&G’s Technology Donation Program, began in October, 1999, gives patented technologies to universities and research institutions. The Company donates technologies that no longer fit into its strategicplans but would have great commercial potential when academically developed. Universities andresearch institutions can continue the research effort. Through technological development, they learn;
through commercialization, they grow. And the world benefits. Following is a synopsis of some of thetechnologies, which have sustainability implications, that were donated this past fiscal year:
Technology
Enhanced Paperboard Technology

Recipient
Western Michigan University

Sustainability Contribution• reduces wood fiber requirement by 25 percent.
• can be fabricated for any paperboard

application and many wood substitutions.
• strength and moisture resistance of

Smoothies-PPS Technology(Protein Particle Stabilization)

Mid-America Commercialization
Corporation/
Kansas State University

standard paperboard at about 10 to 15
percent lower weight.
• enhanced paperboard costs 10-15% lessthan standard.
• offers shelf-stable, nutritious milk/juice
beverage products• reduces manufacturing costs ofshelf-stable Smoothie beverages, making
these nutritional products more affordable
for consumers.

Letter from Gordon Brunner on Technology Donations

A

t P&G, innovation is our cornerstone. Each year, we invest more than $1.7 billion in researchand development — the largest amount among consumer-products companies worldwide. As aresult, we now have more than 27,000 patents — and we’re granted 3,000 more each year. That’s
about 10 every day. That’s terrific output and represents a powerful technical portfolio.
Through our Global Licensing group, we’re identifying and donating non-strategic technologies to universities which can more fully develop their potential. Of the 25,000 patents we currently own, we
commercialize fewer than 10 percent of them. Said another way, we have assets of tremendous valuethat the world is not fully realizing; we simply invent more than we can commercialize by ourselves.
Since last October, we’ve made three technology donations to well-deserving institutions. We first
donated a rapid prototyping process for plastic packages and parts to the Milwaukee School ofEngineering. Next, we donated our proprietary Enhanced Paperboard Packaging Technology to WesternMichigan University. And, more recently, we donated our Smoothies-Protein Particle Stabilization(PPS) beverage technology to the Mid-America Commercialization Corporation for the benefit of Kansas
State University and other cooperating institutions. Each of these donations included rights to our
U.S. and global patents, and all of the intellectual development that we’ve already invested in them.
It’s exciting to think that these donations allow all of our technologies to reach their fullpotential, even if no longer in P&G hands. Further, each of these technology donations will foster
development work at universities and research institutions, deliver whole new revenue streams to
the universities and develop important new technologies that may never be commercialized
otherwise. Also, the donations will give next-generation scientists and researchers real-world
experience. Finally, there are tax benefits for our shareholders.
There are many examples of how P&G’s talent reaches our community. Technology donations are
yet another example. Through technology donations, we have found a new way to contribute P&G’s
money, people and energies for the long-term benefit of society and education. And that feels good.
Just ask the inventors!
Gordon F. Brunner
Chief Technology Officier

2 0 0 0S U S T A I N A B I L I T Y

R E P O R T

44Historically Underutilized Business Program

Millions $In 1972, P&G established a minority supplier program in the United States to identify and work withminority-owned businesses. At that time, P&G spent $44,000 with six minority suppliers. In 1981,
the Company assigned its first full-time manager to lead and develop this effort. Today, theHistorically Underutilized Business (HUB) Program is staffed by six full-time employees who
provide minority suppliers with the following assistance:• An equal opportunity to do business with P&G.
• Coaching and feedback.
• Financial support, where it is needed.
HUB Spending• Matches between P&G buyers and qualified
600
suppliers.
• Timely payment.
500• Realistic and understandable
400
specifications.
• Development of additional opportunities
300
with other P&G vendors, including both200
supplier and strategic alliance opportunities.
100

P&G’s purchases from minority businesses in the
United States have grown from $76 million in
fiscal year ’88/’89 to $548 million in fiscal year
’99/’00 (exceeding our goal of $540 million).
The target for ’01/’02 is $600 million, which
would account for approximately 6 percent of our
U.S. spending.

096/97 97/98 98/99 99/00 01/02
TargetFinal Year-End HUB spending is $548 million, a 23 precent increase vs. ’98/’99.

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.
Capital costs for 1999/2000 were $68 million (up from last year’s $44 million ) to ensure compliancein our facilities. This included the purchase and construction of pollution control equipment such aswastewater pretreatment systems and air emission controls.
HS&E total costs for operating existing sites in 1999/2000 were $192 million (This does not include
the $18 million in revenue gained from recycling activities.)

Environmental Liabilities
P&G is also subject to contingencies pursuant to environmental laws and regulations that in
the future may require the Company to take action to correct the effects on the environment ofprior manufacturing and waste disposal practices. Accrued environmental liabilities for
remediation and closure costs on June 30, 2000, were $47 million. In Management’s opinion,such accruals are appropriate based on existing facts and circumstances. Current year
expenditures were not material.

45

Sustainability in Action
Key Sustainability Focus Areas
P&G’s sustainability focus continues to be Waterand Health & Hygiene. We have chosen these two
major areas as they are applicable across all sevenof the Company’s global business units and are
the core drivers for sustainability, economic development, social equity and environmental protection. While P&G intends to focus on Water and
Health & Hygiene, the Company will not forget
its long tradition of:

•
•
•
•
•

Doing what is right for consumers, employees,
shareholders and communities where it operates.
Building sales and profit growth in a sociallyand environmentally responsible manner.
Increasing diversity within its workforce.
Contributing to a more educated population.
Maintaining high standards of health, safety
and environmental protection for its products
and operations throughout the world.

Open Minds ProgramA

ccording to UNICEF, in India only 55 precentof children complete primary education,
about 60 percent of schools have only
two teachers, and about 15 percent ofschools are single-teacher schools.

Across Australia, ASEAN and India,
some 79 million girls aged 6-11 and61 million boys do not go to primaryschools. In India, every child outsideschool is a potential child laborer, deprived of hisor her right to education and self-development.
In November, 1999, P&G and UNICEF launchedOpen Minds, a special program targeted to support and educate children across seven countries
in ASEAN/India. Across the region, P&G targets
to raise up to $5 million over the next three years
to help children develop and grow to realize theirfull potential.
• In Vietnam, Open Minds will support education programs.
• In Thailand, it will provide lunch to needy
schoolchildren.
• In Indonesia, it will provide nutrition to undernourished children.
• In Singapore and Malaysia, it will build
schools for disabled children.
• In the Philippines, it will provide computers
and teaching aids in schools.
• And in India, it will send working children
back to school.

2 0 0 0For every large-size pack of Vicks VapoRub,
Whisper, Ariel Powder Compact, Head & Shoulders
and Pantene purchased by consumers November,1999 to January, 2000, P&G, on behalf of theconsumers, contributed the cost of one day’s educationof a working child to the Open Minds fund. P&G
planned to raise a minimum of $250,000 for Open
Minds in India in these three months.
Several external stakeholders joined us in these
efforts. The customer and supplier partners of
P&G pledged their support for this project.
Saatchi & Saatchi Advertising provided thecreative materials, and P&G’s media partners(several satellite TV channels) also extended
their support to communicate the cause ofOpen Minds to the general public. Not to beleft behind, the employees of P&G voluntarily
contributed one day’s salary (about $7,500)
towards the Open Minds fund.
Open Minds resulted in a 30 percent increase involumes sold versus a year ago, and raised about$265,000 to support nine projects across India
that benefited about 20,000 children. Open
Minds is a cause-related marketing initiative thathelps us contribute to building a strong andprosperous community through this investment
in education for children.
For more information on Open Minds
please visit:www.open-minds.org.

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46®

Actonel and the Impact
Of OsteoporosisOsteoporosis, a disorder that weakens bones, iscommon among older adults, particularly
postmenopausal women. It is a disease that isreaching epidemic proportions. According to the
U.S. National
Osteoporosis Foundation, more than 50
million Americans
may be affected byosteoporosis over the
next century. It isestimated that 40
percent of American
women will suffer anosteoporosis-related fracture in their lifetime. In
the United States, expenditures for osteoporotic
and associated fractures totaled an estimated$13.8 billion in 1995 alone.
P&G developed Actonel® for the treatment andprevention of postmenopausal osteoporosis (PMO)
and glucocorticoid-induced osteoporosis. Resultsfrom five studies presented at the World Congress
on Osteoporosis in June, 2000, showed thattreatment with Actonel® consistently reduced theDash Missione Bontà
Ospedale AmicoD

ash is a reliable partner in helping Italianfamilies with laundry problems; in fact, Dashconsistently helps to solve social issues related tofamilies and children.
In 1999, Dash dedicated its
efforts in Italy to a fundraising project, Missione
Bontà Ospedale Amico, aimed
at improving the quality oflife for children in Italianpediatric hospitals, consistent
with the UNICEF principles for hospitalqualification. The whole project has beenhandled in conjunction with ABIO (Association
for Children in Hospitals), an organization
that, for 20 years, has given help to
hospitalized children and their parents.
The funds raised have been invested to provide
28 Italian pediatric hospitals with more comfortable rooms, equipment and other facilities
which can improve children’s quality of life. It
also trained 1,400 new ABIO volunteers.

risk of spinal fractures in just one year across apatient population with varying degrees ofosteoporotic disease severity. The rapid effects
demonstrated by Actonel® — the only therapy
proven to significantly reduce vertebral fracturesin just one year — is particularly important inlight of new data showing that nearly 20 percent
of untreated women with postmenopausal
osteoporosis who suffer a spinal fracture will
fracture again within just one year, even if they
are taking supplemental calcium and vitamin D.
Patients with vertebral fractures also have nearly
double the risk for fractures at other sites.
To date, 15 countries worldwide have agreed
to recognize the approval of Actonel for thetreatment of established PMO to reduce therisk of vertebral fractures, for the preventionof osteoporosis in postmenopausal women atincreased risk of osteoporosis, and to maintain or
increase bone mass in postmenopausal women
undergoing long-term glucocorticoid treatment.
This means that Actonel® can really improve thequality of life for a large number of people aroundthe world.

47

P&G Posyandu Program Helps
Malnourished Indonesian Children

Indonesia’s economic crisis, which started in
1997, has had a devastating impact on thechildren. Many families can no longer afford theproper food to feed their children, leading tosevere malnutrition. Millions of children are malnourished, and hundreds die every day. Failing to
get proper nutrition at critical stages of development means that these children will grow up withirreversible mental and physical damage which islikely to trickle down through several generations.

Being a Company with a strong commitment toimprove the quality of life in communities aroundthe world, P&G responded to this immense social
issue by creating a P&G Posyandu program.
Essentially, a Posyandu is an integrated healthand nutrition outpost. Children who come to ourPosyandu are weighed every month so that their
physical growth can be monitored regularly. In
this way, malnourished children can be identified early, and appropriate treatments can begiven. The mothers are also given the necessary
health, hygiene and nutrition counseling toenable them to provide proper care for theirchildren. To supplement all these, the children
are given nutritious food, immunizations andmedical examinations.
The Posyandu program began in November,
1999, and is currently in operation at two
different locations. One serves the community
at our Bekasi plant and the other at ourDistribution Center. Every month thesePosyandus take care of 700 to 800 children.
It is the largest and first-ever Posyandu in the
country run by a private-sector company.
The Posyandu program would not have come alive
without thestrongsupportof P&G
employees
serving as
volunteers.
These
volunteers
form thebackboneof theprogram.
P&G volunteers distribute nutritious food.
They give
their personal time, one Saturday morning every
month, to run the Posyandus. Their dedicationand enthusiasm have been apparent throughout;starting with 50-plus volunteers, their number
has now tripled. Their spouses and relatives cometo help, too. This is a true reflection of their dedication to ensure that those unfortunate children, thefuture of this nation, receive adequate nutritionand health care to allow them to grow and develop
properly. It is a manifestation of P&G employees’
strong commitment to make a difference in thecommunity where they live and work.

Ace Gentle Bleach — Winter in KosovoTo give assistance to the victims of the Kosovo
war, during the toughest winter this land has
ever known, was the objective of the 1999 Ace
Gentle fundraising campaign.

damaged during the fighting and allowed
thousands of families and refugees to at least
have a roof on their house to face winter.

P&G decided to be actively committed andavailable to a humanitarian program, to provide
strong and concrete solutions to an extremely
serious problem, hoping to attract the attentionof humanitarian aid.
The funds raised have been used to help supply
the United Nations High Commission for Refugees
with 2,500 “shelter kits” for distribution to the
Kosovo population. The shelter kits contained
equipment necessary for repairs to homes

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Fairy Liquid Antibac (AB) and UNICEF — Vaccination Campaign In Senegal

A

ntibacterial and disinfectant householdproducts like Fairy AB, used in conjunction
with good washing/cleaning habits and practices,
are playing an important role in helping to control bacteria in the developed countries. However,infectious diseases still constitute a primary
threat to public health (at a significant socioeconomic cost) in many parts of the world.
In March 1999, the Iberian Fairy Liquid brandsought a humanitarian program that fit with
its technology and equity. A vaccination campaign was the answer. However, we wanted an
initiative that would be meaningful from thesocial point of view. We also wanted support of
relevant health authorities.

We found many reasons to choose tuberculosis(TB) from the World Health Organization’s(WHO) list of vaccine-preventable diseases:• TB is an infectious disease caused by a bacteriathat is spreading rapidly in many parts of theworld. WHO has classified it as a Global
Emergency. The figures are concerning:- The estimated global incidence of TB is 7.9
million cases per year, of which 2.6 million
prove fatal (1997);- TB is the leading infectious killer of youth
and adults;- Someone gets sick from TB every four seconds, and someone dies every 10 seconds;- TB kills more than 100,000 children eachyear; 1 percent of the world’s population is
infected with TB each year, and one-third of
the world’s population is infected with the
TB bacillus. Thirty million people could die
from TB in the next 10 years.
• WHO is monitoring this epidemic and helping
countries around the world to improve their TB
control programs through regional and national
vaccination campaigns.

••

One single dose of BCG (Bacillus Camille
Guerin) vaccine provides life immunity in mostcases, and it only costs about 10 cents! WHO
recommends that all countries with a highincidence of TB infection immunize babies
with a single dose of BCG vaccine at or soonafter birth.
UNICEF is responsible for implementing
vaccination campaigns for infants and has
the right infrastructure already in place inmost countries.

UNICEF-Spain agreed to work with us on a vaccination program in Senegal, one of the poorest
countries in the world with a high incidence of
TB. The idea was simple but powerful: We buy
one dose of BCG vaccine per bottle of Fairy AB
sold, and UNICEF will ensure that one child isvaccinated. The donation was to providing atleast 1 million vaccines. The initiative was wellaccepted not only by Spanish and Portuguese
consumers who understood that they were making
a difference in fighting the disease, but also by
the trade who actively supported the campaign
with in-store visuals (like the one shown below).
We succeeded in tripling the initial objective injust three months, and three million vaccines were
finally shipped to Senegal.
We are now ready to initiate the second
vaccination campaign. Other countries arealso developing plans to implement similar
humanitarian projects. This demonstrates ourcommitment to helping find ways to bringvalue to our shareholders and contribute to theprosperity and well-being of the overall society.

49

P&G Turkey’s Earthquake ReliefIn August, 1999, Turkey was rocked by a major earthquake. Many people and businesses wereaffected by the disaster, including our own employees, their families and P&G’s facilities.

Following the first shocks, P&G Turkey cooperated with the National Foundation for the Protection ofChildren to establish four child care centers and to provide food, Prima diapers and Orkid catamenials.
P&G Turkey also cooperated with the Turkish Infection Foundation to send three truckloads of Ace
bleach with spraying equipment. P&G Turkey’s parent company donated $500,000 to disaster relief
through the American Red Cross.
To aid our own employees and their families, P&G Turkey provided monetary support and opened tents
at the Gebze paper plant’s garden.
Finally, P&G employees from all over the world voluntarily donated $30,000 to the “Life Project,”which is organized by the Turkish Education Volunteers Foundation.

P&G Philippines Works with UNICEF on Water SanitationB

eginning in 1997, P&G Philippines partneredwith UNICEF to provide better water access
to 87,000 people in the Philippines. P&G and
UNICEF collaborated with local government units
to build community water facilities in 10 areas
over a period of three years. The water facilities
include showers, toilets, laundry areas andpublic wells.
The National Health and Hygiene Program is
an alliance with the
Department of
Education, Culture
and Sports;
Department of
Health; KBP, anassociation of media
broadcasting networks,
the Philippine
Association of
Medical Technologists;
the Philippine
Hospital Association;
the Philippine
Medical Association;and UNICEF. The
program aims to
reduce the incidence of hygiene-related diseases
through proper hygiene. As such, the program
highlights the importance and practice of the

2 0 0 0Three Steps to Good Health (handwashing,bathing and keeping the surroundings clean) in
school curricula and community visits.
The Three Steps to Good Health are recognized as
the simplest yet most effective way to prevent
diseases such as cholera, diarrhea and typhoid
fever. But practice of these hygiene habits ishampered because of limited access to safe water.
Studies show access to tap water and artesian
wells is only 39
percent and 54
percent, respectively.
The rest of the
population get theirwater from surface
sources such as
rivers and streams.
To date, P&G
Philippines and
UNICEF have built a
total of 236 toilet
facilities and 40
water supply
systems that service
11 communities
and 25 schools across the nation. Another 132
facilities are scheduled to be completed within theyear 2000.

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