2003 Sustainability Report
Linking Opportunity with Responsibility

P&G 2003 Sustainability Report1

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

Table of Contents

This report was prepared using the Global Reporting Initiative’s(GRI) July 2002 Sustainability Reporting Guidelines. The missionof the GRI is to promote international harmonization in thereporting of relevant and credible corporate economic,
environmental, and social performance information to enhance
responsible decision-making. The GRI pursues this mission througha multistakeholder process of open dialogue and collaboration in
the design and implementation of widely applicable sustainability
reporting guidelines. The GRI has not verified the contents of thisreport, nor does it take a position on the reliability of information
reported herein.

on theWeb

CEO Statement
VisionExecutive Summary
P&G Profile
Policies, Organization, & Management Systems
Performance
Environmental
Economic
SocialSustainability In Action
Index
Credits/Contact Information

2
3
4
7
19
42
44
51
54
55
66
70

For further information about the GRI, please visit:
http://www.globalreporting.org

The GRI’s Sustainability Reporting Guidelines were released in
exposure draft form in London in March 1999. The GRI Guidelines
represent the first global framework for comprehensive
sustainability reporting, encompassing the “triple bottom line” of
economic, environmental, and social issues. Twenty-one pilot testcompanies (including P&G), numerous other companies, and adiverse array of non-corporate stakeholders commented on thedraft Guidelines during a 1999-2000 pilot test period. Revised
Guidelines were released in June 2000, and again in July 2002.

on theWeb

Please visit P&G’s corporate Web site for the latest P&G
news and shareholder and career information:
http://www.pg.com

1 Definition from U.K. government report from DETR (Department for the Environment,

Transport and the Regions) – 1998.
Note: Years listed in this report‘s data charts signify the fiscal year ending June 30.
© 2003 The Procter & Gamble Company. All Rights Reserved.
References to trademarked products in this report are to trademarks owned by andregistered to The Procter & Gamble Company.

P&G 2003 Sustainability Report

2

CEO Statement

Responsibility
P&G operates with integrity everywhere we do business. P&G
invests in every community where we live and work. P&G
embraces its responsibilities as a corporate citizen. More specifically,
P&G people embrace our responsibilities. We take them personallybecause they are a reflection of our individual values as well as
those of our Company.
P&G’s commitment to responsibility and integrity is part ofeverything we do.
• We have a responsibility to consumers to ensure P&G products
are safe and will perform as promised.
• We have a responsibility to P&G employees and their families
to provide a safe work place, to treat them with respect andintegrity, and to deal with them in a fair and ethical manner
every day.

months, until our appeal reached the country’s president, whoarranged for the shipment to be released. The cost to P&G’s
business of closing the plant far exceeded the cost of justpaying the bribe, but the cost to P&G’s reputation and values
would have been far greater had we compromised theCompany’s integrity. We took a stand against bribery andcorruption, which we saw as our responsibility to the nation, toconsumers in that country, to shareholders, and to ourselves.
I don’t want to leave the impression that P&G is perfect. No
organization of 98,000 people – across varying languages,
cultures, and backgrounds – should ever think that it cannot
and does not make mistakes. When we become aware ofthose mistakes, we correct them and acknowledge them. But I
can say with confidence that fair dealing and doing what’s
right for the long term are the norm at P&G. It’s how we dobusiness. Every day.

• We have a responsibility to business partners, suppliers, andtrade customers to deal with them openly and honestly.
• We have a responsibility to communities and nations where
we do business to operate within the law, to bring global
knowledge, practices, and experience, and to help makeeveryday life a little better.
We fulfill these responsibilities even when doing so is difficult
or costly. For example, a customs official in a developing
country once blocked the entry of our $250,000 raw material
shipment until a payment of $5,000 was made. P&G’s regionalpresident did not hesitate to refuse the blatant extortion
demand. We shut down the plant awaiting the shipment until
the issue could be resolved. The plant remained closed for four

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

P&G 2003 Sustainability Report3

VisionRewards and Challenges
For the past 15 years, corporate environmental and sustainability
reporting has measured companies’ social responsibility in terms ofwhat they eliminated: waste, emissions, discrimination, workplacesafety risks, and so on. This focus has produced results, andremains relevant but not sufficient. The challenges we face,particularly in the developing world, demand more. Issues such as
safe drinking water, child nutrition and development, sanitation,
and waterborne disease require sustained, breakthroughinnovation. Philanthropy and government aid alone can’t fund thelevel of innovation that’s needed. We need a next-generation
solution – which, I’m pleased to report, P&G is helping to create.
We believe we and other companies can link business opportunity
with corporate responsibility by making consumer products
affordable to more people around the world. We aim to serve
more consumers in developing countries – many of whom havenever had access to products widely available in the developed
world – with products that truly improve their quality of life. At
the same time, we create market-based incentives for the level ofinnovation investment our world’s toughest challenges require.
Real Rewards
For us, 2003 was a year of real progress toward this vision. We
announced a new product that purifies and disinfects polluted
drinking water at a retail cost of about US$.01 per liter. We
designed and developed this product to reduce waterborne
disease in the developing world. Clinical studies in Guatemala by
the U.S. Centers for Disease Control, using P&G’s product, showedthat diarrhea in children was reduced 43 percent through clean
drinking water. This is important because diarrhea is a leading
cause of death among children in the developing world.

of people who now have access to safe drinking water, and casesof diarrhea avoided. In effect, we have direct measures of P&G’s
contribution to the United Nations Millennium Development Goal
to halve the number of people without access to safe drinking
water. Last fiscal year, even with only a few small test and learningmarkets underway, P&G delivered more than 20 million liters ofsafe drinking water to rural and low-income consumers in thedeveloping world.
Big Challenges
The key now is to make this new approach sustainable over time.
We must:• Create new businesses with sufficient scale to fund R&D andmarket development costs.
• Develop new business models appropriate to lower-income,developing-country markets.
• Lower costs to make products affordable in undeveloped
markets that lack large-scale supply chain and distribution
efficiencies that are normal in richer, developed markets.
These are significant challenges, but we’re not alone in our efforts
to overcome them. We are partnering creatively with small, local
entrepreneurs, NGOs, intergovernmental organizations, andnational governments that see the same rewards for society that
we see. We are committed to linking business opportunity andcorporate responsibility in ways that fulfill P&G’s core purpose – totouch lives and improve life for people around the world.

George D. Carpenter
Measuring progress and success in this value-creation approach isstraightforward. As a company, we use traditional businessmeasures of sales, profit, and shipments. For society, our productshipments translate into liters of safe drinking water, the number

Director
Corporate Sustainable Development

P&G 2003 Sustainability Report

4

Executive Summary

P&G 2003 Sustainability Report

5

Executive Summary
Key Sustainability Focus Areas
At P&G, we proactively seek to bring together innovative ideas andresources to create new products and services that improve thequality of people’s daily lives. Our key sustainability focus areas are:
• Water• Health and Hygiene
Our actions are not just profit driven but also progress driven,to ensure a better quality of life for everyone, now and forgenerations to come. P&G is particularly well positioned to do
this because we are in touch daily with the needs of theworld’s consumers.

Major Opportunities and Impacts
Associated with Products and Services
Environmental Protection• Water• Resource Use• Waste Reduction
Social Responsibility• Health• Hygiene• Education
Economic Development• Shareholder Value• Employment• Taxes, Fees, and Contributions

Financial Highlights
Amounts in millions
except per-share amounts

Net Sales
Net Earnings
Basic Net Earnings
Per Common Share

2003$43,377
5,186

2002$40,238
4,352

2001$39,244
2,922

3.90

3.26

2.15

Philanthropic Contributions
P&G and its employees have a long-standing commitment tobeing good citizens and neighbors in all places where we dobusiness around the world. We believe we have a responsibility touse our resources – money, people, and energy – wisely. We show
our commitment through financial support and volunteerism in awide range of educational, health, social service, cultural, civic, andenvironmental organizations to benefit society.
Global philanthropic contributions made by The P&G Fund andCorporate Contributions for the past three years are provided in
the following table:

Total

2003
$84,572,906

2002$77,746,930

2001
Not Available

P&G 2003 Sustainability Report

Executive Summary

Diversity Data – Global Enrollment
P&G continues to focus on diversity as a global strategy andexpects its workforce to become increasingly more diverse. Global
data on enrollment by gender is shown in the following table:
2003
35.5
37.1

Global Enrollment % Female

Management
All Other Employees1

2002
34.6
41.6

Occupational Health & Safety Data
Past three years’ global data on two key metrics for worker healthand safety:
Total Incident Rate
Injury and illness per 100 employees

2003
0.54

Total

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

Total Lost Workday Case Rate

The percentages of minority and female employees in the UnitedStates are shown in the following table:

Total% Minorities
Management
All Other Employees2% FemaleManagement
All Other Employees2

2003

2002

2001

18.0
19.8

16.1
20.3

15.8
18.1

34.8
38.7

34.4
38.0

34.1
38.8

2 Administrative, Technical, and Plant Technicians

6

2002
0.67

2001
0.69

2002
0.27

2001
0.24

Lost and restricted workday cases per 100 employees

2003
0.22

Summary of Violations and Interventions
The following table lists global data on environmental,transportation, and worker health and safety violations andinterventions.
2003
67$154,756

Number
Fines

2002
45
$39,026

2001
63$77,070

Both fines and Notices of Violations (NOVs) have increased this year. Two incidents
account for almost 80 percent of the fines. Both were related to recordkeeping.
Procedures have been reinforced to provide more effective monitoring.

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

Production
Product Shipped
Raw Materials from Recycled Sources
Waste
Generated Waste
Percent Recycled / Reused Waste
Disposed Waste
Solid Waste
Non-Hazardous
Hazardous
Effluents (Excluding Water)
Air Emissions**
Other
Energy Consumption (105 GJ)¶
Greenhouse Gas Emissions** ¶Water Consumption (million cubic meters)
SARA Releases (metric tonnes)***2003 Global Business Unit Detail*

2003

2002

2001

BFC

FHC

BC

HC

SB

17,055
119

16,151
208

15,808
208

3,503
119

9,178
0

1,573
0

1,218
0

1,583
0

794
52%

798
54%

910
51%

428
48%

124
57%

164
60%

43
47%

35
36%

317
9
35
24

304
19
23
20

376
13
36
15

204
1.3
4.4
11.2

40
4.6
6.0
2.9

40
1.9
19.8
3.4

16
1.1
1.1
4.8

17
0
3.7
1.1

758
3,122
85
1,567

706
3,148
85
1,274

717
3,092
88
1,722

487
2,198
55
41

135
444
13
1,008

66
298
13
102

40
113
2
416

30
69
3
0

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

P&G 2003 Sustainability Report

7

P&G Profile

P&G 2003 Sustainability Report

8

P&G Profile
For 165 years, P&G has been providing trusted, high-quality brands
that make every day better for the world’s consumers. The
Company markets nearly 300 products – including Pampers, Tide,
Ariel, Always, Whisper, Pantene, Bounty, Pringles, Folgers,
Charmin, Downy, Lenor, Iams, Crest, Actonel, Olay, and Clairol –in more than 160 countries around the world.
P&G’s worldwide headquarters is located in Cincinnati, Ohio, USA.
The Company has on-the-ground operations in almost 80
countries worldwide and employs nearly 98,000 people.
P&G is a publicly owned company. Its stock is listed and traded on
the following exchanges: New York, Cincinnati, Amsterdam, Paris,
Basle, Geneva, Lausanne, Zurich, Frankfurt, Brussels, and Tokyo.
As of August 1, 2003, there were approximately 1,234,000
common stock shareholders, including shareholders of record,

participants in the Shareholder Investment Program, participants in
P&G stock ownership plans, and beneficial owners with accounts
at banks and brokerage firms.
This is the fifth Sustainability Report for P&G’s worldwide
operations. Data in this report covers the period from July 1, 2002,
through June 30, 2003. Last year’s report covers the July 1, 2001,
through June 30, 2002, time period. Financial information is given in
U.S. dollars.

on theWeb

For more information on P&G’s investor relations,please visit our Web site at:
http://www.pg.com/investors/sectionmain.jhtml

Please visit http://www.pg.com for the latest news and in-depth
information about P&G and its brands.

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

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

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

Beauty Care

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

Pantene, Olay, Head & Shoulders, Cover Girl, Clairol’s Herbal
Essences, Nice ‘n Easy, Natural Instincts and Hydrience, SK-II,
Max Factor, Hugo Boss, Secret, Zest, Old Spice, Safeguard,
Rejoice, Vidal Sassoon, Pert, Ivory Personal Care, Aussie, Lacoste,
Infusion 23, Noxzema, Camay, Sure, Physique, Infasil,
Laura Biagiotti, Muse, Wash & Go, Giorgio, Mum
Always, Whisper, Tampax, Lines Feminine Care, Naturella, Evax,
Ausonia, Orkid

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

Pampers, Luvs, Kandoo, Dodot

Health Care

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

Crest, Iams, Eukanuba, Vicks, Actonel, Asacol, Metamucil,
Fixodent, PuR, Scope, Pepto-Bismol, Macrobid, Didronel,
ThermaCare

Snacks & Beverages

Snacks and beverages

Pringles, Folgers, Millstone, Torengos, Sunny Delight, Punica

Baby & Family Care

Charmin, Bounty, Puffs, Tempo, Codi

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

1837

1840

$1 Million
Net Sales

1850

1860

Regional
U.S. Markets

1870

P&G ProfileP&G 2003 Sustainability Report

9

P&G’s Billion-Dollar Brands

Iams
Iams and Eukanuba provide
dogs and cats with superior
nutrition.

Tide
Tide’s tough cleaning power
gets out laundry stains.

Charmin
People love to squeeze soft
Charmin toilet tissue.

Olay
Women “love the skin they’rein” because Olay keeps it
looking younger.

PanteneHair around the world
shines because of Pantene
hair care products.

Always/Whisper
Women around the world
count on Always or Whisper
feminine protection.

Crest
Crest oral care products bring
beautiful, healthy smiles tomillions of faces.

Pampers
Millions of babies experience
the comfort and dryness ofPampers diapers.

BountyMillions of households use
Bounty paper towels as the
Quicker Picker-Upper.

Ariel
Many millions of clothing
items come clean with Ariel
every day.

PringlesWith Pringles potato chips,
once you “pop” one into yourmouth, you can’t stop.

Downy/Lenor
Laundry feels soft and smells
good because of Downyand Lenor.

Folgers
Millions of Americans wake up
with Folgers coffee every day.

Building for the Future

Incorporated
Company
P&G Brand
Advertising

1880

ProfitSharing

P&G Code ofRegulations

Beginning of P&G
Research & Development

1890

Shortening &Oils Business

1900

1910

CanadaMarketP&G ProfileP&G 2003 Sustainability Report10

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

Corporate Functions covers two main focus areas: 1) upstream
research and development working with new, cutting-edgeknowledge, and 2) corporate needs not covered by GBUs or
MDOs, such as corporate human resources and corporate external
relations, as well as the sales effort called Customer Business
Development.
Global Business Services provides support services to P&G business
units and to P&G employees. These services include accounting
and financial reporting, information technology, purchases,
employee services such as payroll and benefits administration, andworkplace services, including facilities management. P&G is in theprocess of outsourcing some of these services (see page 15).

P&G is organized by Global Business Units (GBUs) that
manufacture and market our products. GBUs are responsible for
spreading product innovations across the Company’s productcategories and geographic markets.
• Fabric & Home Care includes products for laundry, dishwashing,fabric enhancement, and cleaning hard surfaces• Baby & Family Care focuses on paper-based products – tissues,
towels, diapers, and baby wipes• Beauty Care includes cosmetics, hair care products, deodorants,
feminine hygiene products, and fragrances• Health Care includes pharmaceuticals and products for personal
health care, oral care, and pet health and nutrition• Snacks & Beverages products include coffee, juice, and potato
chips, as well as products for use in commercial establishments
P&G’s four core categories – Fabric Care, Hair Care, Baby Care, andFeminine Care – account for nearly 50% of sales and an evengreater percentage of profit.
In addition to GBUs based on product lines, P&G also has Market
Development Organizations (MDOs), which are organized bygeography. MDOs move initiatives to local markets faster, morecreatively, and at less cost. They tailor the Company’s global
programs to local markets and use their knowledge of local
consumers and retailers to help P&G develop market strategies toguide the entire business.
Both the Corporate Functions and Global Business Services
organizations leverage our size to deliver better-quality services
internally, at significantly lower cost.

Building for the Future

Beginning of
P&G Market
Research

1920

SafetyPhilippines
Oral Care
Program and UK
Synthetic
Started Markets
Detergents Business

1930

1940

Tide
Introduced
Overseas
Division

1950$1 Billion
Net Sales

Disposable
First Fluoride Diapers
Toothpaste
Business

1960

P&G 2003 Sustainability Report

P&G Profile
Organizational Structure

11

Health Care
Global Business Units• Business Strategy and Planning• Brand Innovation and Design• New Business Development• Full Profit Responsibility

Market Development Organizations• Market Strategy• Customer Development• External Relations• Recruiting

Central and Eastern Europe,
Middle East,
AfricaBaby &
Family Care

ASEAN, Australasia, India

Beauty CareGreater China
Western Europe
Northeast Asia

North America

Fabric & Home Care

Latin America

Snacks & Beverages

Corporate Functions• Cutting-Edge Knowledge• Transfer Best Practices• Function Work Supporting P&G Corporation

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

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

Toll-Free
Consumer
Hotline$10 Billion
Net Sales

1980

Feminine
Protection
BusinessStatementof Purpose

1990

1st Annual Global
Environment
ReportOpportunity
2000 Award

FutureShares Clairol
1998– Acquisition
2001 2001

2000

P&G ProfileP&G 2003 Sustainability Report

Plant Locations
Plant Name

City

Country

GBU Owner

Plant Name

City

Country

GBU Owner

Akashi
AlbanyAlexandria
AmiensAnaheim
Anchieta
ApizacoAtlantaAuburnAugustaAkashi
AlbanyPineville
AmiensAnaheim
Anchieta
ApizacoAtlantaAuburnAugustaJapan
United States
United States
FranceUnited States
BrazilMexicoUnited States
United States
United States

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

Kansas City F&HC
KuantanKansas City
Kuantan

United States
Malaysia

Fabric & Home Care
Fabric & Home Care

AuroraAvenelAuroraAvenelUnited States
United States

Health Care
Fabric & Home Care

Bangkok
Barquisimeto

Bangkok
BarquisimetoThailandVenezuela

Beauty Care
Fabric & Home Care

Beijing
BeirutBeijing
BeirutChina
LebanonFabric & Home Care
Fabric & Home Care

BekasiBelleville
Binh Duong
Blois
BorispolBrockville
Budapest
Cabuyao
Cairo
Campochiaro
Cape Girardeau
Casablanca
Cayey
ChengduChing-Shui
Chochiwon
ChonanCincinnati
Coevorden
Crailsheim
DammamDover
Escuintla
Euskirchen
Gattatico
Gebze
Goa
Green Bay
Greensboro
Gross-Gerau
GuatireHamburg
HavantHeartland
Henderson
Huangpu
Hub
Hunt Valley
IbadanIowa City
Istanbul
JacksonJeddahJijonaKansas City Coffee

Jakarta
Belleville
Binh Duong
Blois
BorispolBrockville
CsomorCabuyao
Cairo
Campochiaro
Cape Girardeau
Casablanca
Cayey
ChengduChing-Shui
Chochiwon
Ch'onanCincinnati
Coevorden
Crailsheim
DammamDover
Escuintla
Euskirchen
Gattatico
Gebze
Goa
Green Bay
Greensboro
Gross-Gerau
Guatire, Miranda
Hamburg
HavantNorth Sioux City
Henderson
Guangzhou
Karachi
Cockeysville
IbadanIowa City
Istanbul
JacksonJeddahAlicante
Kansas City

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

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

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

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

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

Note: Data as of June 12, 2003

12

P&G ProfileP&G 2003 Sustainability Report

13

Reliance on Third-Party
Manufacturers(percent)

10
9

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

5

2001 2002 2003

Financial Information
The Company reported net earnings of $5.19 billion for the fiscal
year ended June 30, 2003, an increase of 19 percent compared to$4.35 billion in 2002. Results included a charge of $538 million in2003 and $706 million in 2002, related to the Company’s
restructuring program.
Diluted net earnings per share were $3.69 in 2003, compared to$3.09 in 2002, and $2.07 in 2001, including the restructuring
charge impact of $0.39, $0.50, and $1.05 per share, respectively.
Net sales were $43.38 billion in 2003, up 8 percent from last year.
Common share dividends were $1.64 per share in 2003. For the
coming year, dividends will increase to $1.82 per common share,marking the 48th consecutive year of increased common share
dividend payments.

As part of P&G’s initiative to optimize resources to fit a growing
global business and to accelerate innovation and growth, theCompany operates its business through Global Business Units (GBUs),
as described on page 10.
• Fabric & Home Care
• Beauty Care
• Baby & Family Care
• Health Care
• Snacks & Beverages
This organizational structure accounts for why P&G does notprovide employee data, sales, or profits by country. Some countries
may provide this data in reports other than this one.
Net Sales by Global Business Units
Amounts in billions

Financial Highlights
Amounts in millions
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

2003$43,377

2002$40,238

2001$39,244

13,383
2,344
5,186

12,571
2,031
4,352

12,406
1,694
2,922

3.90
43,706
11,475
16,186

3.26
40,776
11,201
13,706

2.15
34,387
9,792
12,010Fabric & Home Care
Beauty Care
Baby & Family Care
Health Care
Snacks & Beverages
Corporate
Total

2003
12.6
12.2
9.9
5.8
3.2
(.3)
43.4

2002
11.6
10.7
9.2
5.0
3.2
.4
40.2

2001
11.7
10.0
9.2
4.4
3.5
.5
39.2

For more financial details, please see P&G’s 2003 Annual Report:
http://www.pg.com/investors/financial_reports/on the annualreports.jhtml
Web

P&G ProfileP&G 2003 Sustainability Report

Stakeholders
The people whose services directly power P&G’s daily activities andlong-term growth – the Company’s employees and its Board of
Directors – are its internal stakeholders.
There are many other people and organizations who haverelationships with P&G, though they do not work directly for theCompany. They may have an interest in Company products andactivities, or they may derive income by doing business with theCompany. These are the external stakeholders.

Consumers,
Consumer Organizations
News Media

NGOs
HealthSocial Service
Education
Environment

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

Stockholders

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

Industry Associations,
Professional Organizations,
Scientific/Medical Communities

14

P&G Profile

Major Acquisitions
Acquisitions accounted for as purchases in 2002-2003 totaled lessthan $61 million.

P&G 2003 Sustainability Report

15

Wella
In March 2003, the Company entered into an agreement to acquire acontrolling interest in Wella AG from the majority shareholders and inJune 2003, the Company completed a tender offer for the remaining
outstanding voting class shares and preference shares.
P&G completed the acquisition of a controlling interest in Wella AG in
September 2003. As a result of these purchases, the Company
acquired approximately 81 percent of the outstanding Wella shares(99 percent of the voting class shares and 45 percent of thepreference shares).
Wella AG is a leading beauty care company focused on professional
hair care, retail hair care, and cosmetics and fragrances, with products
selling in more than 150 countries.

Major Divestitures
Proceeds from the divestiture of certain non-strategic brands andother asset sales generated $143 million in cash flow in the current
year. Some of these divestitures included:• Miscellaneous small Clairol brands in North America• Vicks Throat Drops in Japan• Plant Sales

Plant Divestitures and Closings
P&G’s oldest plant, known as the Ivorydale bar soap plant, inCincinnati, Ohio, has been sold to Trillium Healthcare Products Inc.
Most of Ivorydale’s workforce have become Trillium employees andcontinue making bar soap for P&G. Several dozen workers took
severance packages or moved to other jobs at P&G. The facial clothproduction transferred to P&G-Belleville, Canada.

Restructuring
In 1999, concurrent with a reorganization of its operations into
product-based Global Business Units, the Company initiated amulti-year restructuring program. The program is designed toaccelerate growth and deliver cost reductions by streamlining
management decision-making, manufacturing, and other work
processes, and by discontinuing under-performing businesses
and initiatives.

Outsourcing• P&G and HP (Hewlett-Packard) signed a 10-year, $3 billion contract
under which HP Services will manage P&G’s IT infrastructure, data
center operations, desktop and end-user support, network
management, applications development, and maintenance. Thisaffects P&G’s operations in 160 countries. Approximately 2,000 P&G
employees in 48 countries – mostly from P&G’s Global Business
Services unit – will transition to HP.

The program was substantially complete at the end of fiscal 2003.
The Company will continue to undertake projects to maintain acompetitive cost structure, including manufacturing consolidation,
and workforce rationalization, as a part of its normal operations.

• P&G signed a 5-year, $700 million contract with Jones Lang LaSalle
to provide facilities management and project management for all
P&G offices and technical facilities around the world. Responsibility
covers 60 countries on six continents. Nearly 600 employees from
P&G's Global Business Services unit are transitioning to Jones Lang
LaSalle.

Approximately 21,600 separation packages have been provided
through June 30, 2003. While all geographies and businesses
are impacted by the enrollment reduction programs, a higher
number of U.S. employees are affected, given the concentrationof operations. The changes in net enrollment for the Company
are different from the total separations, as terminations havebeen offset by increased enrollment costs, acquisitions, andother impacts.

P&G ProfileP&G 2003 Sustainability ReportAwards and Recognitions
P&G annually receives recognition for its work, its character, its
brands, and for community contributions. We are highlighting a
few and listing the others.
The National Multiple Sclerosis Society has named P&G its
Employer of the Year.
P&G is recognized for its U.S. efforts to hire and support staff withdisabilities. For example, P&G exceeded federal requirements byproviding handicapped-accessible washrooms on every floor, plus
power door openers at main entrances. In addition, P&G has createdan Americans with Disabilities Act task force to help identify policies
that need to be added or changed to improve workplace accessibility
for handicapped employees. Policies were created regarding office size
and to accommodate service animals and personal attendants for
employees who travel.

on theWeb

For more information on the Multiple Sclerosis Society,please visit: http://www.nmss.org/
Joel Kahn, a 28-year P&G veteran in
the United States, has been named to
the National Council on Disability, aposition requiring U.S. Senate
confirmation. The independent federal
agency makes recommendations to the
President and Congress on disability
policy issues. Kahn is also a member of
P&G’s Americans with Disabilities Act
task force and was named the National
Multiple Sclerosis Father of the Yearin 1991.

16

P&G Chile Recognized for Human Resources Policies
P&G has been working toward becoming a leader in Chile in the fieldof human resources strategies, particularly regarding women. The
Company has been implementing bold, innovative, progressive policies
and encouraging other companies to do the same.
P&G Chile goes well beyond legal requirements and customary
practices. For example, it has:
• Reduced its workweek from 45 to 40 hours (compared to Chile’s
usual 48-hour workweek)• Adopted flexible lunch and working hours• Allowed mothers to work part-time for a year after their babies areborn
Company representatives speak at HR and diversity conferences about
these changes and how they have increased productivity and morale.
In August 2002, P&G was rated No.1 in Chile’s “Best Place to Work”
survey, compiled from a poll of 28,000 workers and information from4,500 companies. The survey measured credibility, respect, benefits,communication systems, etc.
In May 2003, P&G Chile was named one of the “5 Best Companies
for Working Mothers” by Fundación Chile Unido and Ya Magazine.
Eighty companies participated in a survey of flexibility, promotion of
women, child care policies, employee benefits, employee services, andcompany culture.

P&G and UNICEF Partnership in Family Health Recognized
P&G and UNICEF have a long history of partnership in education,
nutrition, health, and water issues. In 2002, the partnership’s
programs for improving family health and development wererecognized at the World Summit Business Awards for Sustainable
Development Partnerships.
P&G Canada Wins Several Reader’s Digest
Most Trusted Brand Awards
A 2002 national Reader’s Digest poll conducted by Ipsos-Reid
determined that the following 16 P&G brands were voted Most
Trusted by Canadians: Tide, Pampers, Cover Girl, Olay, Pepto-Bismol,
Crest, Iams, Bounty, Pantene, Herbal Essences, Clairol, Head &Shoulders, Tampax, Always, Mr. Clean, and Cascade.

U.K. Recognized for Excellence in Consumer Service
P&G ranked as “Best Complaint Handling Organization” this year in
the U.K.’s National Consumer Service Awards, being compared tomore than 100 other companies.
P&G’s U.K. Consumer Relations organization strives to have an expert
answer all consumer calls within 30 seconds. These Consumer
Relations experts are thoroughly trained and can find answers tovirtually all questions about P&G products.
Annual surveys confirm that more than 95 percent of consumers are
satisfied with the way their contact with U.K. Consumer Relations ishandled, and nine out of ten U.K. P&G consumers continue to buy
and use P&G products.

In this award program, organized by the International Chamber ofCommerce and the United Nations Environment Programme, there
were nominations of 120 partnerships in more than 35 countries. The
top 10 programs received awards, and the P&G and UNICEF
partnership was one of an additional 18 partnerships recognized fortheir contributions to sustainable development.
Over the past several years, P&G and UNICEF have worked together
in more than two dozen countries on five continents. These
partnerships have helped improve living conditions for millions ofchildren and their families. Programs have ranged from providing
tuberculosis vaccinations to more than 8 million people in Senegal, tosupporting education programs for 190,000 children in Vietnam, toproviding water and sanitation facilities to more than 32,000 people in
the Philippines.

more
info

For full details,
please click here.

P&G ProfileAwards and Recognitions

Corporate Awards• Awladi NGO Gives P&G Egypt Certificate of Appreciation for
Assistance with Building of Orphanages• Business Ethics Magazine Ranks P&G 4th in Top 100 Corporate
Citizens. P&G has ranked in the top 10 during all four years the list
has been published.
• Center for Development and Population Activities (CEDPA)
Recognizes P&G Egypt for Improving the Lives of Women andChildren• Cosmetic/Personal Care (CPC) Rates P&G 2002 Packager of the Yearfor Innovative Packaging Design• CSRNetwork, a U.K.-Based Consultancy, Ranks P&G’s 2002
Sustainability Report 8th Among the World’s Largest 100 Companies• Dow Jones Rates P&G Market Sector Leader for 3rd Year
• Fortune Magazine Rates P&G 7th on Global Most Admired
Companies List
• Jackson, Tennessee, Plant Wins International Award for Total
Productive Maintenance (TPM) Excellence from Japan Institute of
Plant Maintenance (JIPM)• National Multiple Sclerosis Society Names P&G Cincinnati Employerof the Year in Recognition of P&G’s Commitment to People with
Special Needs• P&G Argentina Receives #17 in Image Ranking by Apertura
Magazine• P&G Augusta, Georgia, Plant Receives Nomination as Manufacturerof the Year from the State of Georgia• P&G Consumer Relations in Russia Named Best by Expertiza
Consumer Broadcast• P&G Costa Rica Wins Best Exporter Award from Exporters Chamberof Costa Rica (CADEXCO)• P&G Italy’s Dash Missione Bontà Campaign Receives Significant
Industry and Trade Ethic Award from GDO Week, a Leading Trade
Publication• P&G Korea Nominated for Award of Corporate Excellence (winner
to be announced by September 2003)• P&G Poland Receives Special Commemorative Medal for Continuous
Support of Special Olympics Program• P&G Turkey Chosen as Most Admired Cleaning Products/Chemical
Industry Company of 2002 by Capital Magazine• P&G USA Visual Communications Design Wins Its 3rd Telly Award,
the Corporate Industry’s Counterpart of the Academy Awards Oscar• P&G Venezuela Recognized as Most Outstanding Personal Care
Company by P&M, Venezuela’s Top Marketing and Advertising
Magazine• PG.com Named Best Corporate Web Site by Best Practices in
Corporate Communications, a Consulting Company Specializing in
Communication Solutions• Pomezia, Italy, Plant Wins International Factory Award Endorsed by
Italian Industry Ministry• Society of Toxicology Recognizes P&G for Best Paper on
Toxicogenomics• Start Magazine Gives P&G 2002 Technology & Business Award inConsumer Goods Category for Innovative Technology• Storebrand Gives P&G Best In Class for Environmental and Social
Performance• World Summit for Sustainable Development Recognizes P&G for
Sustainable Development Partnerships

P&G 2003 Sustainability Report

17

Brand Awards• Ariel Wins 3rd Place in Israel EFFIE Awards• Blend-a-Med, Shamtu, and Pantene Receive Top Honors at Best
Brand/EFFIE Awards in Russia• Clairol and Pampers Sensitive Wipes Receive Golden Arch Award for
Most Innovative and Successful Product Launch of the Year 2002 in
Belgium• Crest Whitestrips Wins Ogilvy Research Award for Being Best
Research-Driven Marketing Success in Last 3 Years• Crest Whitestrips Wins American Graphic Design Award, Sponsoredby Graphic Design: USA• Fairy Dishwashing Liquid Wins 2nd Place in Israel EFFIE Awards• Fairy Wins Brand of the Year 2002 Award in Russia• Febreze TV Campaign Wins Best of Best from Korea Ad Times• Forbes Magazine Highlights Pampers as 1 of 85 World-Changing
Innovations• Harris Poll Rates Tide World’s Most Trusted Name in Laundry Care
• Hugo Boss Wins 3 FIFI Fragrance Design Awards from the Fragrance
Foundation in Germany• Iams Italy Wins Massimo Servakis Award for Innovation in
Communication• Information Resources, Inc. (IRI) Shows P&G Leading Innovation in
the Marketplace with #1 Crest Whitestrips; #4 Crest SpinBrush; #7
ThermaCare, #8 Olay Total Effects; and #9 Clairol Renewal 5x• Middle East Broadcasting Company Gives Ariel’s “This Woman is My
Mother” Program Prize for Best TV Program of the Year
• NyQuil Cough Receives Gold EFFIE Advertising Award – The Only
Over-the-Counter Brand to Win 2 Years in a Row• P&G Argentina Wins 3 Communication Awards from Imagen, aMonthly Magazine Specializing in Corporate and Brand
Communication• P&G Canada Wins Reader’s Digest Most Trusted Brand Award for
Crest, Bounty, Tide, Mr. Clean, Cascade, Pepto-Bismol, Pampers,
Olay, Iams, Head & Shoulders, Herbal Essences, Pantene, Clairol,
Always, Tampax, and Cover Girl
• P&G Kazakhstan Wins Choice of the Year Awards for Always,
Tampax, Pampers, Ariel, Pantene, Blend-a-Med, Secret, Camay, andComet. P&G also named #1 Producer of Hygienic Products in
Kazakhstan for 2nd year in a row.
• P&G Morocco Wins Gold and Silver at Mondial de la Publicité
Francophone for Bonux and Tide Advertising Campaigns• P&G Toronto, Canada, Recognized by Junior Achievement for
Record Number of Volunteers• Pepto-Bismol Wins U.K. OTC Marketing Award• PuR’s Ultimate Water Filtration Pitcher Receives Honorable Mention
in Consumer Products Category at International Design’s (ID) 48th
Annual Design Review• Actonel’s Osteotour Mobile Information and Diagnosis Center for
Osteoporosis Receives Rhumato D’Or Prize During 7th Synovile
Congress in France• Torengos Tortilla Chips Receives Gold Level DuPont Award for
Packaging Innovation
continued on next page

P&G ProfileAwards and Recognitions

continued from previous page

Employee/Human Resources Awards• P&G Argentina Ranked #11 Best Place to Work by Apertura
Magazine• P&G Chile Rated Best Place to Work by Great Place to Work Institute• P&G Chile Rated Among 5 Best Companies for Working Mothers inChile by Fundación Chile Unido and Ya Magazine• P&G Chile Rated in Top 25 for Corporate Reputation by CollectMarket Research• P&G China Ranked 3rd in Fortune Magazine (China) Annual Best
Employer Survey• P&G Germany Rated 8th in Best Companies To Work For by Capital
Magazine• P&G Hong Kong Rated 4th Best Employer by Next Magazine• P&G Korea Certified as Company with Excellent Gender Equality
Culture by Korea’s Ministry of Labor, Korean Chamber of Commerce& Industry, and Hankook Daily• P&G Korea Wins Great Workplace Award of Excellence from The
Korean Economic Daily and Eitech Trust Management Institute• P&G Peru Rated 3rd Best Company to Work For by Great Place toWork Institute of Peru
• P&G Philippines Places 2nd in Hewitt Associates 2003 Survey of Best
Asian Employers• P&G Spain Receives IESE-IFREI Research’s Flexible Company Award,
Recognizing Work-Life Balance and Diversity Efforts• Universum Survey 2003 Ranks P&G 5th Best Employer in Western
EuropeFor more information on awards received by P&G, please visit our
Web site at:
http://www.pg.com/about_pg/overview_facts/on the awards_recognition.jhtml
Web

P&G 2003 Sustainability Report

18

P&G 2003 Sustainability Report

19

Policies, Organization, & Management Systems

P&G 2003 Sustainability Report

Policies, Organization, & Management Systems

Societal
Expectations

Guideline Codes

EthicsReligious
Values &Norms

International Core
ValuesICC Rules
on Extortion& Bribery

Law
ICC
Business
Charteron
Sustainable
Development

Reporting

Values

Policies
Principles

Statement of
PurposeUniversal
Declarationon HumanRightsGlobal Sullivan
Principles

OECD
Guidelines forMultinational
Enterprises
Management
Systems
Education

ILO Tripartite
Declaration

Transparency

Rio Declaration on
Sustainable Development

Improved
Standardof Living

OECD Organization for Economic
Co-operation and Development
ICC
International Chamber of Commerce
ILO
International Labour Organisation

Sustainable development is about improving quality of life for everyone, now and for generations tocome. P&G contributes to this directly by providing products and services that improve the lives ofconsumers via health, hygiene, or convenience. Through our activities we also contribute to theeconomic and social well-being of a range of other stakeholders, including employees, shareholders,
communities in which we operate, and more widely, to regional, national, and international
development. In summary, P&G contributes to sustainable development through both what we do andhow we do it.
“How we do it” includes addressing any environmental and socioeconomic issues associated with our
products and services. Our Principles, Values, and Statement of Purpose, which are central to P&G’sorganization, tell us to do this. They act as guidance for the development of our entire organizational
structure, all over the world. They also lead us to a set of management systems and policies applied
across the whole Company.

20

P&G 2003 Sustainability Report

Policies, Organization, & Management Systems

21

Our Purpose
We will provide branded products and services of superior quality
and value that improve the lives of the world’s consumers.

Consumers

As a result, consumers will reward us with leadership sales, profit
and value creation, allowing our people, our shareholders, and thecommunities in which we live and work to prosper.

P&G Values
Leadership
Ownership
Integrity
Passion for Winning
Trust

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

Governance Structure
P&G’s Board of Directors has adopted guidelines for determining
the independence of its board members. At the time of thispublication, 83 percent of P&G’s board members are from outside
the Company.
Corporate Governance Guidelines have existed for a number ofyears and recently were amended. They provide recommendations
on the qualifications for board members regarding their expertisein guiding the strategic direction of the Company. Strategic
direction includes issues related to environmental and social risks
and responsibilities. The Board has several committees, including
Audit, Finance, and Public Policy, to address issues such as the
management of economic, environmental, and social risks,and responsibilities.

P&G
BrandsP&G
PeopleP&G Brands and P&G People are the foundation of P&G’s
success. P&G People bring the values to life as we focus on
improving the lives of the world’s consumers.

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

All shareholders may communicate in writing with the Board of
Directors, and all have the ability to submit proposals in the
Company’s proxy statement pursuant to U.S. Securities andExchange Commission rules. P&G does not have minority
shareholders, as no one entity or group holds a majority position in
Company stock.

on theWeb

To read P&G’s 2003 Annual Report, please click here:
http://www.pg.com/investors/financial_reports/
annualreports.jhtml

Policies, Organization, & Management Systems

P&G 2003 Sustainability Report

22

Our Principles
These are the Principles and supporting behaviors which flow fromour Purpose and Values.

We Show Respect for All Individuals• We believe that all individuals can and want to contribute totheir fullest potential.
• We value differences.
• We inspire and enable people to achieve high expectations,standards and challenging goals.
• We are honest with people about their performance.
The Interests of the Company and the Individual Are
Inseparable• We believe that doing what is right for the business withintegrity will lead to mutual success for both the Company andthe individual. Our quest for mutual success ties us together.
• We encourage stock ownership and ownership behavior.
We Are Strategically Focused in Our Work• We operate against clearly articulated and aligned objectives andstrategies.
• We only do work and only ask for work that adds value to thebusiness.
• We simplify, standardize and streamline our current work
whenever possible.
Innovation Is the Cornerstone of Our Success• We place great value on big, new consumer innovations.
• We challenge convention and reinvent the way we do businessto better win in the marketplace.

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

P&G’s Newest
Board Members
The P&G Board of Directors
elected two new members
in 2003:
Meg Whitman
W. James McNerney Jr.

Meg Whitman
Meg Whitman was elected to
P&G’s Board of Directors,
effective January 1, 2003.

Ms. Whitman’s first job was in
P&G brand management.
Before she became president
and chief executive officer of
eBay in March 1998, her career
included key positions at Hasbro
Inc., FTD. Inc., the Stride Rite
Corporation, the Walt DisneyCompany, and Bain & Company.
Her expertise in brand building,combined with her consumer
technology experience, hashelped guide eBay in the 21st
century economy and hashelped foster a truly global
marketplace.
Ms. Whitman holds a B.A. ineconomics from Princeton
University and an M.B.A. fromthe Harvard Business School.

customer, and shareholder value
makes him an outstanding
board member.

W. James McNerney Jr.
W. James McNerney Jr. waselected to P&G’s Board of
Directors, effective May 1, 2003.
Mr. McNerney’s first job was in
P&G brand management.
Before he became chairman of
the board and chief executive
officer of 3M, his career
included key positions atGeneral Electric and McKinsey &Company. Mr. McNerney’s
leadership in delivering
innovation to build consumer,

Mr. McNerney holds a B.A. fromYale University and an M.B.A.
from Harvard University.

P&G 2003 Sustainability Report

Policies, Organization, & Management Systems

Corporate Governance and Management’s Responsibility
At Procter & Gamble, our actions – the actions of all employees –are governed by our Purpose, Values, and Principles. These corevalues set a tone of integrity for the entire Company – one thatis reinforced consistently at all levels and in all countries. We
have maintained strong governance policies and practices formany years.
We are committed to providing timely, accurate, andunderstandable information to investors. This encompasses:
Maintaining a strong internal control environment. Our system ofinternal controls includes written policies and procedures,segregation of duties, and a careful selection and development of
employees. The system is designed to provide reasonableassurance that transactions are executed as authorized andaccurately recorded, that assets are safeguarded, and that
accounting records are sufficiently reliable to permit the
preparation of financial statements that conform in all material
respects with accounting principles generally accepted in the
United States of America. We maintain disclosure controls andprocedures designed to ensure that information required to bedisclosed in reports under the Securities Exchange Act of 1934 isrecorded, processed, summarized, and reported within thespecified time periods. We monitor these internal controls throughself-assessments and an ongoing program of internal audits. Key
employee responsibilities are reinforced through the Company’s
Worldwide Business Conduct Manual, which sets forth
management’s commitment to conduct its business affairs withhigh ethical standards.
Focusing on financial stewardship. We maintain a specific program
to ensure that employees understand their fiduciary responsibilities
to shareholders. This ongoing effort encompasses financial
discipline in our strategic and daily business decisions and brings
particular focus to maintaining accurate financial reporting throughprocess improvement, skill development, and oversight.
Exerting rigorous oversight of the business. We continuously review
our business results and strategic choices. Our Global LeadershipCouncil is actively involved – from understanding strategies toreviewing initiatives and financial performance. The intent is toensure we remain objective in our assessments, constructively
challenge the approach to business opportunities and potential
losses, and monitor results and controls.
Engaging our Disclosure Committee. Last fall, we formalized aDisclosure Committee, a group of senior level executives
responsible for ensuring that significant business activities andevents are appropriately identified, reported to management andthe Board of Directors, and disclosed, as appropriate.
Encouraging strong and effective Corporate Governance from our
Board of Directors. We have an active, capable, and diligent Board
that meets the required standards for independence, and wewelcome the Board’s oversight as a representative of the23

shareholders. Our Audit Committee comprises independent
directors with the financial knowledge and experience to provide
appropriate oversight. We review key accounting policies andfinancial reporting and internal control matters with them andencourage their independent discussions with Deloitte and Touche
LLP, our independent auditors.
Providing investors with financial results that are complete andunderstandable. The Consolidated Financial Statements andfinancial information are the responsibility of management. This
includes preparing the financial statements in accordance withaccounting principles generally accepted in the United States ofAmerica, which require estimates based on management’s best
judgment.
P&G has a strong history of doing what’s right. We know greatcompanies are built on strong ethical standards and principles. Ourfinancial results are delivered from that culture of accountability,
and we take responsibility for the quality and accuracy of our
financial reporting.

To read P&G’s 2003 Annual Report, please click here:
http://www.pg.com/investors/financial_reports/on the annualreports.jhtml
WebExecutive Compensation
Compensation for executives is based on the principles thatcompensation must (a) be competitive with other high-quality
companies in order to help attract, motivate, and retain the talentneeded to lead and grow P&G’s business; (b) provide a strong
incentive for key managers to achieve the Company’s goals; and(c) make prudent use of the Company’s resources. P&G has an
excellent record of recruiting and retaining employees. It also has
an excellent record of developing executive talent from within, an
achievement few other corporations have matched.
Executive compensation is based on performance against a
combination of financial and non-financial measures, including
business results and developing organizational capacity. In addition,
executives are expected to uphold the fundamental principles
embodied in the Company’s Statement of Purpose, Values, andPrinciples, plus the Environmental Quality Policy. These include acommitment to integrity, doing the right thing, maximizing thedevelopment of each individual, developing a diverse organization,and continually improving the environmental quality of our
products and operations. In upholding these objectives, executives
not only contribute to their own success but also help ensure theCompany’s business, employees, shareholders, and thecommunities in which we live and work will prosper.

Policies, Organization, & Management Systems

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

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

P&G 2003 Sustainability Report24Policies, Organization, & Management Systems

P&G 2003 Sustainability Report

25

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

Diversity Policy
P&G has a strong legacy of ownership, commitment, andaccountability for diversity because we recognize the direct link
between the Company’s success, both short-term and long-term,and engaging the full power of all our employees. We believe afully utilized and diverse workforce creates competitive advantage
and fulfills P&G’s Purpose, Values, and Principles. Our businessleaders relentlessly pursue valuing, trusting, respecting, andleveraging individual differences and inclusion to ensure we are “intouch” with our global markets, customers, and business partners.
Thus, we are more creative and innovative in developing products
and services that improve the lives of the world’s consumers.
Diversity is a fundamental component of P&G’s culture and integral
to our “How to Win” business strategy for success.
Leadership Focus and Accountability
A. G. Lafley, Chairman of the Board, President, and Chief
Executive, holds himself accountable for leading diversity andmonitoring progress in every part of our Company. He also expects
top leadership to hardwire diversity into their business strategies,
establish clear expectations, and demonstrate personalaccountability. This encompasses showing strong, visible
leadership, commitment, and constant focus that includes diverse

leadership and work teams and robust systems for ongoingmeasuring and tracking of diversity progress.
At P&G, top executives conduct in-depth diversity reviews annuallywith organization heads to assess progress and reinforce leadershipaccountability for corrective actions across the business units. The
top 30 officers in the Company have diversity results tied to theirstock options awards, and strong diversity performance influences
top ratings. Diversity action plans are developed in each region of
the world to reflect the greatest opportunity for advancement oflocal diversity strategies.
Talent Support and Development
P&G strives to build a diverse and fully engaged organization byattracting the best talent from around the globe, leveraging thefull talent of each individual through effective assignment andpromotion planning processes, and executing with excellence thecritical systems that affect and support retention of each employee.
We focus on establishing long-term relationships with educational
institutions that have diverse populations of highly qualified
continued on next page

Policies, Organization, & Management Systems
Diversity Policy

P&G 2003 Sustainability Report26

continued from previous page

students. To broaden our candidate base worldwide, we havelaunched Recruitsoft, our first fully global Web-based online
candidate management system. We supplement our baserecruiting efforts by utilizing intern programs, participating in
recruiting conferences, and increased outreach to high school
students. We execute special programs such as INROADS and P&G
Marketing and Finance Summer/Winter Camps to introduce
students to P&G. Additional teams are available to help withefforts to recruit women around the globe and Hispanic, AfricanAmerican, military, and disabled candidates in the United States.
Our foundation systems for ensuring employee retention include
effective first-year orientation/join-up programs, providing a good
match with the first boss, developing coaching/mentoring/
advocacy relationships, high-quality challenging work/career plans,
training (virtual, classroom, and external) and supportive work/lifepolicies and practices. Employee support groups and network
teams exist throughout the organization and contribute strongly toeffective recruiting, join-up, and development efforts. These groups
include women globally and Hispanic, African-American,
Asian/Pacific-American, gay/bisexual/lesbian, and disabled
employees in the United States.
Inclusive Culture
P&G leaders are expected to build an inclusive work environmentthat welcomes and embraces diversity – an environment where
people feel comfortable being who they are, regardless of theirindividual differences, talents, or personal characteristics. This is anenvironment that provides everyone equal access to information,
opportunities, and involvement so each person learns, grows,
excels, and maximizes his or her personal contribution.
Training, policy, and sensing systems are utilized to reinforce
development of an inclusive culture. Focused diversity
training/learning processes are utilized to equip leaders to value
and nurture differences in management experiences, styles ofleadership, and problem-solving/decision-making approaches. All
employees have access to supportive and enabling policies andpractices in the areas of flexible work arrangements, family care,resource/referral services, and personal wellness management toimprove work/life balance and productivity. Employee surveys andculture sensing, as well as the diverse leadership networks, provide
advisory data and learnings to top leadership about how to be
more effective at leveraging local customer/employee practices
and beliefs.
Business and Community Partnerships
Improving lives in the countries and communities in which we
operate is a long-standing P&G value. We are committed tomaking a difference in all our communities – from India to Kenya,
from Canada to Brazil, from France to Australia. Around the world,
P&G and its employees strive to improve lives everyday. This has led
to a focus on building effective business and community
partnerships in areas where we can make a meaningful difference:education, volunteerism to improve the quality of life in ourcommunities, and economic development.

Education is a means of improving quality of life and a pathway tofulfill personal aspirations. P&G supports educational programsfrom pre-school through college through financial contributions
and mentoring/tutoring programs. The volunteer leadership of
P&G employees, who can be counted on to help with virtually
every significant community project, greatly enhances theeffectiveness of our contributions. Through volunteerism, P&G
provides ongoing support, sponsorship, and leadership for many
civic, cultural, and nonprofit organizations across all geographies inwhich we operate. In 2001/2002, the P&G Fund, the Company’s
philanthropic foundation, provided more than $17 million for
educational programs, $12 million for health and human services,and over $7 million to civic, cultural, and public service
organizations that primarily benefit youth, women, and minorities.
P&G is committed to the economic development of minority- andwomen-owned businesses and suppliers around the globe. P&G
has one of the oldest supplier diversity programs in the UnitedStates, spending more than $939 million across nearly 700
minority- and women-owned suppliers. Additionally, P&G provides
continuing leadership in the advertising industry by partnering with
our agencies to refer applicants to each other and help minorities
gain entry into commercial production companies.
Summary
In 2003, P&G’s solid progress in diversity was recognized in manynational surveys: Fortune’s Global Most Admired (#7), Fortune’s
America’s Most Admired (Top 10), Fortune’s Best Companies for
Minorities (Top 50), Executive Women (Top 30), Employers that
People with Disabilities Want to Work For (top 50). P&G global
rankings for best places to work include: Philippines (#2), China(#3), Peru (#3), Germany (#8), Hong Kong (Top 5). We also won
Flexible Company Award for Spain, Working Mothers for Chile(Top 5), and Excellent Company in Fair Employment for Korea.
P&G is committed to being a leader. We want our brands to leadin their categories and our Company to be a leader in our industry
and our communities. Our mission is to be, and be seen as, thebest consumer products company in the world. In order to achieve
our mission, we must be among the best places to work andleverage diversity as a competitive advantage. Our corporatechallenge is to become the most in-touch company in the world.
To be in touch is to practice – and believe passionately in – diversity
and inclusion.

P&G 2003 Sustainability Report

Policies, Organization, & Management Systems

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

more
info

For more information,please click here.

27

P&G and TechnoServe Aid Coffee Growers
In recent years, coffee growers in developing nations have experienced
a steady decrease in their incomes because of declining coffee prices.
To address this crisis, P&G has formed a 10-year alliance – now in its
second year – with TechnoServe, a nonprofit organization. The
purpose of the alliance is to help small-scale coffee growers in Latin
America.
In 2002, P&G committed to donating US$1.5 million to TechnoServe.
The money is being used to help create long-term solutions that canmake coffee growing profitable for as many people as possible, suchas by improving the quality of coffee. Solutions for those who may not
succeed at coffee growing include exploring alternative crops.
This year’s funding will be used for these programs:
In Nicaragua• Cooperativa Pueblo Nuevo for business and technical assistance tolaunch a wet-processing mill. This organization is a group of 35
coffee farmers employing more than 300 people.
• Cooperativas Unidas de Mancotal for technical and marketing
assistance. This organization is a group of 200 coffee farmers whopick their own coffee.
• Cup of Excellence. This competition/auction program increases
quality and profits by identifying the best coffees of a harvest
season. The producing farmers receive a premium price when theserare coffees are sold to the highest bidder. Millstone bought its first
lot of Cup of Excellence coffee in June 2003.
In El Salvador• Event expenses for Cup of Excellence.

Millstone consumers are drinking someof the best coffee from Nicaragua’s
Cup of Excellence competition.
This year, three farmers representing
the Jinotega region’s Pagjino coffee
association placed ninth out of 385
competitors. Millstone purchased theircoffee, thus completing the circle: P&G
supports TechnoServe, which supports
coffee farmers through its Cup of
Excellence competition, and P&G buys
some of the winning coffee.

TechnoServe also helps farmers form cooperatives so they can pool
resources to reduce their costs. Further, TechnoServe assists them inmarketing efforts with the objective of selling their coffee athigher prices.

on theWeb

For more information, please visit:
http://www.technoserve.org
http://www.cupofexcellence.org
http://www.PAGJINO.org

Policies, Organization, & Management Systems

P&G 2003 Sustainability Report

28

P&G (Folgers and Millstone) Sustainable Coffee Statement
We recognize the social problems many coffee-growing families facegiven the current situation of global overproduction and low prices.
P&G is committed to help address the underlying social and economic
issues which contribute to this situation, and we work with reputableorganizations that can help provide long-term systemic solutions.
Sustainability Efforts
1. Our most important contribution as a roaster, to help solve theoversupply situation, is to promote demand with better products
and strong marketing programs. Since acquiring Folgers in 1963,
P&G has doubled the volume. We acquired Millstone in 1995 andhave tripled volume since that time. In addition, P&G continues tolaunch products with innovative marketing programs, such as
Folgers new flavored coffee and Millstone organics.
2. P&G is participating in broad industry efforts to create a moresustainable coffee business for all those involved. We are actively
involved in the National Coffee Association’s (NCA) efforts to
identify ways to ensure an adequate, sustainable supply of coffee
in the range of qualities demanded by consumers, while
addressing social and ecological needs. We are participating in key
industry dialogues, such as the United Nations Conference on Tradeand Development/International Institute for Sustainable
Development (UNCTAD/IISD). This group is aimed at developing
research on the feasibility and potential of concrete tools for
implementing an integrated approach to sustainable development
at the global level. We are working with NCA to persuade the U.S.
government to rejoin ICO (International Coffee Organization). In
addition, we are working with McKinsey and TechnoServe on acoffee industry analysis of the coffee situation and examination ofalternative approaches to help address the problems facing thosegrowers affected.
3. We are dedicated to helping farmers today to ensure they have asustainable livelihood.
• To date, we have signed a 10-year alliance with TechnoServe.
This NGO provides assistance to small farmers to help them
become better entrepreneurs.

• Additionally, P&G provides approximately US$10 million per year
in relief efforts such as health clinics and schools. In fact, werecently financed construction of a new school located in acoffee farming area in northern Guatemala and participated in its
dedication.
We also support efforts such as the Cup of Excellence competitions
that promote the host country’s best coffees. The winning coffees are
auctioned at higher prices versus market averages and create a quality
goal for all farmers.
Pricing
We pay prices based on the marketplace and must do so in order tomaintain competitive prices for our consumers. Both the green coffee
marketplace and the marketplace in which we sell finished productto our consumers are very competitive. We purchase high-quality
coffee and must pay a fair market price in order to secure the coffee
we need.

Policies, Organization, & Management Systems

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

P&G 2003 Sustainability Report29

companies handling data on our behalf are required to abide by
our privacy principles.
Our corporate policy implementation is highly regarded around theworld for its focus on the consumer, and we are often asked toparticipate in government panels and symposiums to help
influence and educate others.

on theWeb

For more information on P&G’s global privacy principles,
please visit:
http://www.pg.com/privacyprinciples.jhtml;
jsessionid=3ONIVLDP1G4PXQFIAJ1SZOWAVABHMLHCP&G adheres to U.S./European Union Safe Harbor principles.
For more information, visit:
http://www.export.gov/safeharbor/
In the United States, P&G is an active participant in the Better
Business Bureau OnLine (BBBOnLine) Privacy Seal Program.
For more information about BBBOnLine, visit:
http://www.bbbonline.org/

P&G’s robust privacy program is managed by a Global Privacy
Council. Our first objective is to protect an individual’s personallyidentifiable information as if it were our own. All outside

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

more
info

For more information, please click here.

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

on theWeb

For more information on P&G’s product testing, please
visit: http://www.pg.com/about_pg/science_tech/animal_alternatives/category_main.jhtml

Policies, Organization, & Management Systems

Iams Revamps Animal Research
Early in 2003, a U.S. animal rights group made serious allegations
about an independent research facility contracted to do work for theIams brand. P&G investigated the facility and decided to discontinue
working with it.
The investigation included an unannounced visit to the facility. P&G
concluded that, even though the facility passed U.S. government
inspections, it did not meet P&G standards regarding air temperature,
ventilation, resting beds, and socialization. All 19 animals at thatfacility were relocated to an Iams facility, where they were placed intoa pet adoption program for Iams employees.

P&G 2003 Sustainability Report

30

Iams Pet Imaging Center
The Iams Pet Imaging Center is a state-of-the-art facility capable ofidentifying serious conditions in dogs and cats, reducing the need for
exploratory surgery. The Center opened in Washington, D.C., in 2002
and is sponsored by P&G Pet Health & Nutrition, along withveterinarians and Pro Scan, manufacturer of the Center’s MRI
equipment.

Furthermore, Iams conducted comprehensive inspections of all outsidefacilities hired to do its dog and cat nutritional studies. This major
effort involved independent animal welfare experts plus P&G
researchers, veterinarians, and a group of non-technical employees
who acted as the "eyes and ears" of consumers.
These inspections demonstrated that all the remaining facilities comply
with government regulations and do not put the health of dogs orcats at risk. Nonetheless, we decided to consolidate our pet nutritional
studies at fewer contract facilities and to bring them all up to thehigher Iams standards for care. Compliance with Iams standards andresearch policies will be monitored by an independent Animal Care
Advisory Board, now being formed. Briefly, Iams research policies statethat we will conduct only those dog and cat nutritional or medical
studies that are acceptable for use with humans.
The purpose of Iams’ research is to advance scientific understanding of
dog and cat nutrition. By improving pet nutrition, we hope to improve
pets’ overall well-being.

on theWeb

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

Gabe, a golden retriever who travels throughout West Virginia to train service dogs
used by people with disabilities, was sidelined by a health problem last fall. The Iams
Pet Imaging Center was able to diagnose his infected spinal disc without cutting him
open. Once Gabe received antibiotics, he was able to get back to helping service dogs
and their people.

P&G 2003 Sustainability Report

Policies, Organization, & Management Systems

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

more
info

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

Health and Safety Policy
P&G is committed to having safe and healthy operations aroundthe world. The goals are to protect the lives and health of its
employees and the communities surrounding its operations, aswell as to protect its assets, ensure business continuity, andengender public trust. To accomplish this, P&G will:• Operate facilities safely and ensure processes are safe andhealthy for our employees and the residents of the surrounding
communities. We will accomplish this by following uniform
corporate safety standards around the world. Safe operations
have been a long-standing part of Company culture, reflecting
the belief that our people are our most important asset.
• Construct our facilities so as not to compromise the safety andhealth features designed into them.
• Monitor progress toward our objective of preventing injuries,
illnesses, and incidents. We will continually assess and improve
our safety and health technologies and programs.
• Have every employee understand and be responsible forincorporating safe behavior in daily business activities. Every
employee is trained to work in a safe and healthy manner.
• Have operating standards, practices, systems, and resources inplace to implement this policy.
Climate Change Policy
P&G supports efforts to deal with climate change under the
U.N. Framework Convention on Climate Change. P&G is not anenergy-intensive business, though we understand the potential
impacts of greenhouse gases from our operations. We take energy
conservation and efficiency seriously. We strongly support
continued scientific efforts to understand the causes andconsequences of, and potential remedies for, the negative effects
of climate change.
It is critical that the international community take action to provide
the flexibility essential to minimize negative economic and social
impacts of climate change on countries, individual businesses, andthe general public.
Forest Resources Policy
P&G purchases forest resources – wood fiber and cellulose – to use
in the manufacture of its Baby Care, Feminine Care, and Family
Care paper products. The Company believes that these forest
resources should be managed for long-term viability.
The Company provides suppliers with its requirements regarding
the purchase of wood fiber and cellulose materials.
more
info

To see those requirements, please click here.

31

Millstone Rainforest Alliance Coffee
for a More Sustainable Future
As part of the Millstone brand’s efforts to help build a sustainable
future for coffee farmers, the brand is launching a new coffee thathas been Rainforest Alliance certified.
In recent years, farmers have cleared forests to increase coffee
production. Chemicals and soil erosion from their farming aredestroying wildlife habitats. Now, the Sustainable Agriculture Network,a program of the Rainforest Alliance, provides incentives for farmers toconserve the rainforests. If they meet a strict set of agricultural
standards, their farms receive a seal of approval by which consumers
can distinguish their product.
on theWeb

For more information on the Rainforest Alliance, please
visit: http://www.rainforest-alliance.org

P&G Protects and Grows Forest in Avila Mountain Range
For the past ten years, P&G Venezuela has celebrated the worldwide
Tree’s Day by organizing a powerful integrative event in which
communities, employees, and the government work together to plant
tree seedlings in the fire control zone of the Avilas (a mountain range
located in Caracas).
More than 3,000 trees have been planted throughout the years. This
activity is in conjunction with maintenance of the Fire Protection Zone
created and protected by P&G for 12 years.
In 2003, Venezuela’s National Institute of Parks recognized P&G fororganizing this event and contributing to keeping this important zone
safe from fire.

Policies, Organization, & Management Systems

P&G 2003 Sustainability Report

32

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

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

Open Job Posting System Rolled Out Globally
Two years ago, P&G introduced electronic Open Job Posting in Asia,
following a year later in North America. In 2003, the system is now
functioning throughout the world. All employees can see what
positions need to be filled, everywhere.

For more information on Human Resources,
please click here.

Being able to see this information, employees can share ownership for
assignment and development planning with their managers. Open Job
Posting gives employees a chance to match their skills and aspirations
with jobs across P&G and provides management with access to awider talent pool.

more
info

Employee Self-Service
P&G’s Employee Self-Service program enables employees
worldwide to safely and securely manage their employee data
directly, online, 24 hours a day. Information available toemployees includes:• Pay statement• Tax information• Home address• Stock Options/Future Share accounts• Benefits enrollment
Employee Privacy
P&G respects the privacy of every employee. We are committed toprotecting the privacy of employee data and following all data
privacy laws. Only data needed to conduct business and provide
for the needs of employees will be collected. This data is protectedwith appropriate security systems and used only for intended
purposes. Employees have reasonable access to data that theCompany maintains about them.
Harassment Policy
P&G is committed to providing a harassment-free work
environment. This is the right thing to do not only from a social
perspective, but also from a business perspective because it
enables our diverse workforce to contribute to their highest
potential. We will not tolerate harassment of anyone by anyone –including employees, suppliers, customers, contractors, andagencies. Every employee is expected to be proactive in ensuringthat the work environment is free from harassment of any kind.
Managers of others are responsible for setting clear expectations
for acceptable behavior in the workplace.

The strong relationship between manager and employee becomeseven more important, building on mutual trust, ongoing dialogue, andmutual commitment to joint success.

Go, Give & Grow Addresses Health Needs
P&G’s Go, Give & Grow (GGG) program is in its third year ofcollaboration with the World Health Organization on humanitarian
projects. Go, Give & Grow selects four new graduates from top
Western European universities to work on these projects before
starting their P&G careers.
This year’s participants are working on polio and tuberculosis
eradication in Ethiopia, Nigeria, and India, and on researching
traditional medicine and health care in the Philippines.
They are:Gunilla Johansson – Sweden
Angeliki Bakogiani – Greece

Luigi Zappi – Italy
Judith Elliman – U.K.

The group gets the chance to contribute to a humanitarianorganization and to bring their experiences to P&G when they
start their P&G careers.

on theWeb

For more information on GGG, visit:
http://www.pgcareers.co.uk/index.asp?l1=4&l2=10

P&G 2003 Sustainability Report

Policies, Organization, & Management Systems

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

more
info

For more information on Insurance Systems,
please click here.

Human and Environmental Safety of Our Products
The Product Safety and Regulatory Affairs (PS&RA) organization is
responsible for ensuring that products and packages are safe.
PS&RA is responsible for ensuring that products are safe for
consumers, safe for the environment, and in compliance with laws
and regulations where they are sold. PS&RA also addresses otherenvironmental aspects of products and packages, such as theircompatibility with waste management systems, natural resourceuse, or issues of “perceived safety.”

more
info

For more information on Human andEnvironmental Safety, please click here.

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

33

Worldwide Health, Safety & Environment Systems
at Manufacturing Operations
Health, Safety & Environment (HS&E) is a global communityof resources responsible for ensuring that all manufacturing
facilities worldwide are operated safely and legally; that process
hazards are minimized or eliminated; that health risks are
identified, managed, or eliminated; and that waste from sites isreduced as much as possible. Several thousand employees spend
all or a portion of their time on HS&E management; this totals
more than 1,044 full-time equivalents.

more
info

For more information on HS&E Systems,
please click here.

HS&E Benchmarking
Benchmarking is an important tool used by P&G to assess andmaintain the health of its global HS&E (Health, Safety &Environment) program. Benchmarking provides Corporate HS&E
with data to verify the robustness of our performance and to
identify improved management and technology approaches.
During the past year, P&G has continued to participate in several
benchmarking studies involving other multinational companies
headquartered in the United States and in Europe. Examples ofthese studies include a comprehensive review of HS&E activities at
20 leading companies; another study with 17 companies; HS&E
discussions with 5 European-based companies; and surveys of several
key HS&E topics led by GEMI (Global Environmental Management
Initiative) with a membership of 40 multinational companies.
As a result of this work, we have concluded that when comparedto other leading multinational companies, P&G has:
• Strong HS&E performance
Injury/illness rate for employees – lowest 25 percent
Lost workday rate for employees – lowest 25 percent
Penalties paid (in $/yr per $/billion sales)– lowest 33 percent
Property loss (in $/y per $/billion sales)– lowest 33 percent• HS&E operating costs decreased approximately 25 percent(in $/yr per $/billion sales)• Shifted more HS&E work to site technicians than most othercompanies. This is one of the main reasons for our lower costs.
• Similar HS&E management systems, though its approach to
information and training systems is somewhat simpler than the
average.
P&G’s current HS&E situation is quite positive when compared tothese peer companies. The long-term challenge is to continue
delivering benchmark results. To that end, an in-depth HS&E
benchmark study, involving eight other leading companies, will be
conducted over the next year.

Policies, Organization, & Management Systems

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

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

P&G 2003 Sustainability Report

34

P&G 2003 Sustainability Report

Policies, Organization, & Management Systems

35

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

Europe, Middle East, and Africa

more
info

For a complete list,
please click here.

North America

more
info

For a complete list,
please click here.

P&G Supports Consumer-Led Initiatives in Industry Associations
As a member of the European employers federation, UNICE, P&G led
the effort to develop a statement called “Business Commitment toConsumer Protection and Satisfaction.” It addresses European
consumer confidence, product safety, and dialogue between
consumers and business. The statement is included in a UNICE
brochure issued to mark European Consumer Day.
UNICE membership consists of more than 16 million companies in
Europe, and it is the umbrella association representing 34 industrial
and employers’ federations in 27 countries.

on theWeb

Latin America

more
info

For a complete list,
please click here.

Asia

more
info

For a complete list,
please click here.

Worldwide

more
info

For a complete list,
please click here.

For more information, please visit UNICE at
http://www.unice.org

Policies, Organization, & Management Systems

P&G 2003 Sustainability Report36

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

ReCrear & P&G Argentina – Taking Care of the Environment,
Working for the Future
P&G Argentina has been working since 1998 with an NGO called
ReCrear, which promotes sustainable development via educational
programs focused on water quality improvement and the sustainable
use of ocean and river resources.
P&G Argentina supports these two ReCrear programs by financing
materials and activities:• Coastal Cleanup (for the Ocean Conservancy), an annual ReCrearevent to clean up beaches. ReCrear integrates the cleanup with an
educational program teaching ways to reduce the impact of daily
activities by reducing trash generation and by recycling. More than
25,000 people have participated, collecting more than 40 tons ofsolid waste.
• Save Our Planet, which encourages students to think about thecomplexity of environmental issues and to avoid damage to theecosystem. Schools receive instructional materials and can log onto
the interactive Web site http://www.savatumundo.org.ar. In fact, theprogram is part of the official curriculum for schools in the Buenos
Aires province. Some 20,000 children per year participate.

In addition, P&G employees and retirees have a long tradition ofvolunteer involvement in the communities where we live. We lend
a hand to those in need. We pitch in when disaster strikes. We
support the arts. We support education. We invest our resources –and ourselves, through tens of thousands of volunteer hours – inour neighborhoods around the world.

NGOs: Local - Regional - Global

more
info

For more information,please click here.

Scientific Community

more
info

For more information,please click here.

P&G Geneva and Le CARELe CARE is a Swiss organization helping men and women in Geneva
who are homeless, have mental health problems, or are simply downon their luck. Le CARE provides daily activities, an opportunity tosocialize, and a hot meal for anybody who is in need.
On an average day, between 5 and 15 dogs and puppies accompany
their owners to Le CARE. Often these well-socialized and healthy dogs
are the owner’s only friend and companion; providing a bond and areason to live.
To better assist the dogs and their owners, we are providing a
Eukanuba meal to each animal that comes in with its owner. Training
and materials are provided to Le CARE personnel to make sure thecorrect food (according to age, breed, and size) is provided andowners are made aware of pet nutritional needs.
P&G Iams people visit the center biweekly to provide advice on dog
nutrition, general pet care, behavior, and basic training.
Visitor comments on the Iams programs at Le CARE are very positive,
and the program has encouraged owners to visit more often.

Policies, Organization, & Management Systems

P&G 2003 Sustainability Report37

Reach, Distribution, and Livelihood Program
In the Philippines, P&G has found a way to create jobs and to get
products to consumers who haven’t been able to buy them.
Bringing together two problems and one solution, P&G created theReach, Distribution, and Livelihood program. “Reach” and “Distribution”
refer to bringing products to people who live in remote areas orwhose local stores are too small or inaccessible to receive stock.
“Livelihood” refers to poor families who welcome additional income.
In the Reach, Distribution, and Livelihood program, P&G distributes
product to mothers of school-age children, along with sales
equipment such as uniforms and rolling bags. The women receive a
5 percent commission when they sell product to small stores. They
augment family income and make it possible for their neighbors to
buy P&G products.
Five months into the program, 580 jobs have been created, 28,000
additional stores sell P&G products, and distributors supplying thewomen are making 1 percent margin.

Partners for the Future Foundation
Through the Partners for the Future Foundation, part of Korea’s
American Chamber of Commerce, P&G and its employees areworking to aid the unemployed in Korea. Partners for the Future
provides funding for job training and scholarships for theunemployed and for needy students who otherwise would be unable
to train for jobs.
Every P&G Korea employee has volunteered to make a monthly
contribution to Partners for the Future. In addition, the Company ismatching the employees’ donations. The contribution is expected tototal US$20,000 this year.

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

Distributors’ vans bring products to thewomen, who carry them to small
retailers in rolling bags.

Policies, Organization, & Management Systems

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

P&G 2003 Sustainability Report38

managers responsible for product development, marketing, andmanufacturing listen to consumers describing their delights anddisappointments with our brands. The Web site is a library of
selected and edited consumer calls, letters and e-mails. (Privacy
guidelines are strictly adhered to.)We listen carefully to consumers’ views on important topics
such as animal testing, waste management, and others. Moredetails about our efforts in these areas are elsewhere in this report.

Living It! in Brazil
In Brazil, low-income households account for 76 percent of the
population. At least half their income goes into consumer goods. P&G
understands these households need to get the best value they can for
their expenditures. But P&G also recognized that it needed to gain abetter understanding of these consumers before truly being able tomeet consumer needs in this large population segment.
P&G Brazil staff decided that to understand these households, theyneeded to live in them. They partnered with Brazilian food industry
leader Sadia to implement the Living It! program. Under Living It!,P&G staff lived in low-income Brazilian homes for two weeks, trying tobetter understand family and community life.
As a result of Living It!, we are working on new products anddistribution systems as well as better ways of communicating with ourconsumers.

Policies, Organization, & Management Systems

Combined Stakeholder Dialogues
P&G convenes workshops, inviting scientists, regulators, and NGOs
to come together to discuss specific issues and attempt to reach acommon understanding. P&G gains invaluable experience fromthese types of interactions. These dialogues also hold great
promise for frank discussions in the future.
Shareholders
Shareholders are important stakeholders at P&G. There areapproximately 1,234,000 common stock shareowners, including
shareholders of record, participants in the Shareholder Investment
Program, participants in the P&G stock ownership plans, andbeneficial owners with accounts at banks and brokerage firms, asof August 1, 2003.
We work to increase the value of P&G stock for all ourshareholders in a variety of ways, including growing theCompany’s sales and earnings each year. Our Shareholder Services
team is available every day to answer questions, listen to
shareholder feedback, and provide perspective on Company
decisions.

P&G 2003 Sustainability Report

39

P&G Exhibits at World Water Forum III
P&G sponsored an exhibition booth at this year’s global Water Expo,
held in Japan. The objective of World Water Forum III is to raiseawareness of critical water issues, stress the importance of watersupply, and obtain support from government and municipalities..
Visitors to P&G’s booth learned about:• “Smart Laundry” – demonstrating the benefits of High
Concentration Washing, which gets clothes clean while conserving
water.
• Benefits of detergent to improve the consumer’s life while
maintaining a safe water environment• An environmental risk assessment tool named after Japan’s
Tamagawa River. Visitors learned how to use the computer
simulation program to assess detergent’s impact on water quality.
When the Tamagawa Model receives data such as population in an
area, the number of sewage treatment plants there, and water flow
rate, it calculates the concentration of chemicals within 1 kilometer.
The program mathematically simulates how detergents dilute in riverwater and how the ingredients degrade. P&G lets the public use theTamagawa Model free of charge. Japan’s Soap and Detergent
Association has adopted it as a tool to evaluate pollution risks.

There are several ways to get in touch with Shareholder Services:E-mail us at shareholders.im@pg.com.
Call for financial information at 1-800-764-7483 (call 1-513-9459990 outside the United States and Canada).
Speak to a Shareholder Services representative at 1-800-742-6253(call 1-513-983-3034 outside the United States and Canada). They
are available Monday through Friday, 9 a.m. - 4 p.m. EST.
Write to The Procter & Gamble Company, Shareholder Services
Department, P.O. Box 5572, Cincinnati, OH 45201-5572

on theWeb

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

P&G’s Geneva Headquarters Turns Inside Out
In April 2003, P&G’s European organization continued down the roadof increased openness and transparency with its second “Inside Out”
event, held at its Geneva Headquarters.
More than 150 guests from business, universities, internationalorganizations, and NGOs, as well as media and opinion leaders, werewelcomed at P&G’s Geneva Business Center. Throughout the day P&G
expressed its commitment to more dialogue and transparency as a“must” to meet the needs of its consumers and stakeholders.
During the event, P&G’s business leaders and employees in Europe
shared their enthusiasm and commitment to external focus through aVisitors to P&G’s booth at Japan’s Water
Expo learned about water issues andwhat they can do to help.

number of talks, workshops, and an extensive exhibition explaining
the science, innovation, and passion behind P&G brands across its
whole business spectrum.
Paul Polman, Western European President, summed up the day: “Bysharing more about what we do and what we stand for as a
Company, we can build trust, grow sustainably, and get on with ourNo. 1 job – improving the lives of the world’s consumers.”

P&G 2003 Sustainability Report

Policies, Organization, & Management Systems

Stakeholder Feedback
P&G asked Business for Social Responsibility (BSR) to analyze our 2002
Sustainability Report and to solicit feedback from a number ofCompany stakeholders. BSR requested interviews with individuals
from 12 organizations, and 8 agreed to provide input. Also,
representatives from each of BSR’s program areas – Community,
Environment, Human Rights, and Governance/Accountability –reviewed the report and provided their feedback.
Responding to a list of questions created by BSR and P&G, thereviewers made these comments:• They were uniformly pleased that the report articulates the meaning
and impact of sustainable development for the Company, tying
P&G’s initiatives to our core business in a document that is visuallypleasing and colorful.
• They appreciated the report’s environmental and diversity data, andmany sought similar data on the full range of issues covered in thereport.
• The most frequent criticism was the lack of clear description of theCompany’s business objectives related to sustainability, as well as
consistent metrics to measure success in achieving the objectives.
• Reviewers strongly suggested that the report directly and humbly
identify challenges the Company faces, describe sustainable
development policies and implementation and accountability
processes, and articulate a stakeholder engagement strategy forcontinually soliciting external feedback on P&G’s performance.
• They acknowledged that, though many of these components may
currently exist, the report is not organized in such a way as tohighlight them.
• Reviewers were universally appreciative of the opportunity to provide
feedback and regarded the Company’s openness to stakeholder
feedback on the report as a leadership practice.
As a result of this feedback, P&G has started to address the issue
areas highlighted in the current report. We have
• Better stated the business objectives and measures of oursustainable development efforts (see page 3).
• Outlined the challenges ahead of us in our journey to embracesustainability (see page 3).
• Included additional data on social and economic issues, though westill are working on ways to measure the effectiveness of our efforts
in these areas.
• Reorganized the policies and management system area to show
how these are connected.

40

P&G has issued a Sustainability Guidelines for Vendor Relations
booklet and has updated the booklet called Our Values and Policies(see page 24) to tie it more closely to sustainable development. Thesebooklets articulate standards we expect of our vendors and ourselvesin terms of respecting the people and communities we deal withduring the course of our business. P&G draws on recommendations
from experts to develop the policies and processes in these booklets.
On our plate for the near future is developing a more structured
stakeholder engagement process. We also would like to better explain
how our Purpose/Values/Principles, our policies, and our management
systems fit together.
For more information, please visit: http://www.bsr.org
on theWeb

Policies, Organization, & Management Systems

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

P&G 2003 Sustainability Report

41

cleaning product ingredients in Europe (Human and Environmental
Risk Assessment – HERA – (http://www.heraproject.com);
evaluations of “High Production Volume Chemicals” in the UnitedStates and Organization for Economic Cooperation andDevelopment (OECD); assessments of flavors, fragrances, andcolorants by European and U.S. cosmetic products associations;work in Canada to implement renewed chemicals legislation; thepromotion of risk assessment via the U.S. Alliance For Chemical
Awareness (http://www.chemicalawareness.com) and theAmerican Chemistry Council; and development of a targeted risk
assessment approach in Europe, via the European Center for
Ecotoxicology and Toxicology of Chemicals (ECETOC), an industrysponsored research organization (http://www.ecetoc.org).
In addition, we are actively promoting the responsible production
and use of chemical products, and better information sharing withthe public. For example, we are working with the European soap
and detergent industry association (AISE) to provide consumer
guidance on how to use detergents properly (Wash Right
Program), as well as formulation improvements. Last year, welaunched a P&G Internet site (http://www.scienceinthebox.com) tohelp inform consumers and stakeholders about the science andsafety behind our European cleaning products. This site isreceiving over 10,000 hits monthly, and we are exploring how it
might be expanded.
From a policy standpoint, we continue to believe that chemicals
management programs should be based on:
1. Efficient risk-based priority-setting processes that use hazard data
and basic exposure information together to identify issues ofpotential concern, followed by practical risk evaluations thatanalyze chemicals in a tiered fashion to resolve such issues.
2. Risk management decision-making that combines information ona chemical’s risks, benefits, and costs with an understanding ofsocietal concerns; the risks, benefits, and costs of alternatives;
and the use of appropriate precautionary measures.
3. Communications that provide meaningful and relevant safety
information to stakeholders, such that they can makeknowledgeable decisions.
These policies are the foundation of what we do internally, as wellas what we promote across government and industry. Internally,
they are enabled by collaboration between Research &Development, Product Safety and Regulatory Affairs,
Manufacturing, External Relations, and management. Our efforts
also often go beyond safety and risk to include product lifecycle
issues such as energy and resources use and waste management.
Collectively, we believe these activities and policies enable
continued progress toward sustainability and enable us to provide
safe, effective products that improve lives.

P&G 2003 Sustainability Report

42

Performance

P&G 2003 Sustainability Report

43

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

Key Sustainability Focus Areas
At P&G, we proactively seek to bring together innovative ideas andresources to create new products and services that improve thequality of people’s daily lives. Regarding sustainability, we focus in
the areas of:• Water• Health and Hygiene
Our actions are not just profit driven but also progress driven, toensure a better quality of life for everyone, now and for generations
to come. Our extensive consumer research related to our brands
also helps us identify ways we can best address sustainability.
Process for Data Collection
P&G’s data collection systems have been in place for many years.
They are designed to be simple enough so that the people closest
to the work, regardless of location, can use the tools. This
simplicity enables the Company to collect data and update systems
annually at a relatively low cost. Each business unit is responsible
for accuracy and consistency of its data.
All data are reported on a global basis. In order to achieve
consistency and to ensure a common understanding throughout
the organization, employees are trained in how to report anddocument data. Metric units and English are used as the businesslanguage, backed up with local translations, where needed.
Acquisitions and Divestitures
All facilities that operated during the fiscal year reported data. Foursites were shut down, and two were sold. The emissions fromeach were prorated based on the number of months operated.
There were no new sites acquired during the year.

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

P&G 2003 Sustainability Report

44

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

Manufacturing Material Flows 2002-2003

Energy 75.8 million GJ

95.56%
Finished Product

Raw Materials& Packaging

Materials for Recycling/Reuse
2.29%

Non-Hazardous
Solid Waste 1.78%

Hazardous
Solid Waste 0.05%

Air Emissions 0.13%

Water Emissions 0.19%

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

Production
Product Shipped
Raw Materials from Recycled Sources
Waste
Generated Waste
Percent Recycled / Reused Waste
Disposed Waste
Solid Waste
Non-Hazardous
Hazardous
Effluents (Excluding Water)
Air Emissions**
Other
Energy Consumption (105 GJ)¶
Greenhouse Gas Emissions** ¶Water Consumption (million cubic meters)
SARA Releases (metric tonnes)***2003 Global Business Unit Detail*

2003

2002

2001

BFC

FHC

BC

HC

SB

17,055
119

16,151
208

15,808
208

3,503
119

9,178
0

1,573
0

1,218
0

1,583
0

794
52%

798
54%

910
51%

428
48%

124
57%

164
60%

43
47%

35
36%

317
9
35
24

304
19
23
20

376
13
36
15

204
1.3
4.4
11.2

40
4.6
6.0
2.9

40
1.9
19.8
3.4

16
1.1
1.1
4.8

17
0
3.7
1.1

758
3,122
85
1,567

706
3,148
85
1,274

717
3,092
88
1,722

487
2,198
55
41

135
444
13
1,008

66
298
13
102

40
113
2
416

30
69
3
0

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

Performance
Environmental

P&G 2003 Sustainability Report

Energy Consumption(by type, 105 GJ)
717

706

758

EnergyEnergy eco-efficiency*, as measured by production units per
gigajoule (GJ), improved 1 index point. Improvements were
throughout the business units.
Results are shown in absolute value by business unit and alsopresented in eco-efficiency format. Our eco-efficiency is more than
53 percent greater than in 1990.
As part of our ongoing efforts to minimize losses, the Company
does a loss analysis at the site level. Losses are defined as anything
not shipped out the door as product, including energy used. Whenenergy is identified as a major loss at a site, it receives intense
focus for loss reduction.

2001 2002 2003
Fuel

Electricity

Energy Consumption(by GBU, 105 GJ)
717

As indicated in the table’s note on page 44, energy consumption
numbers have been restated. Conversion units have been changed
to be consistent with U.S. Department of Energy guidance in its
1605 reporting scheme.
* Eco-efficiency data used throughout this report is based on the framework
developed by the World Business Council for Sustainable Development.

on theWeb

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

706

758

2001 2002 2003
Baby & Family Care Fabric & Home Care
Beauty Care Health Care Snacks & Beverages

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

153

152

142
100

1990 2001 2002 2003

Water
P&G sites began tracking their consumption of water four years
ago. Water use has stayed the same this year, resulting in theeco-efficiency going up 16 index points due to increased
production. Efforts to reduce water consumed have started
showing results. Between 2002 and 2003, one of our larger sites
in Cincinnati, Ohio, moved from Snacks and Beverages to Beauty
Care. This changed the shape of the bars but didn’t change thewater consumption.
Water Consumption Eco-Efficiency

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

126
99

88

85

85

110

2001 2002 2003

2001 2002 2003
Baby & Family Care Fabric & Home Care
Beauty Care Health Care Snacks & Beverages

45

P&G 2003 Sustainability Report

Performance
Environmental

Neuss, Germany, Water Reduction Project
At P&G’s Family Care site in Neuss, Germany, engineers created an
innovative way to recycle water and the chemicals in the water. It wasa joint project with the local government, which provided a full refund
for the project costs by waiving effluent fees.

46

reused in the drying process to offset use of well water. Other uses of
the reused water were for cooling water, sealing water for pumps,
and cleaning nozzles. The filtrate caught on the filter was reused in
the feed stock. The project reduced chemical oxygen by 20 percent
and water usage by 35 percent. It yielded a benefit for theenvironment as well as cost savings for the Company.

The project entailed adding a 40-micron polyester mesh filter on the
discharge of the plant’s paper machine. The resulting clean water was

Emissions, Effluents, and Wastes

Greenhouse Gas Emissions(thousand metric tonnes by GBU)

Greenhouse Gas
Every company in every sector of the economy has a role incontrolling greenhouse gas emissions. While P&G is not an energy
intensive company, we are stepping up to do our part. P&G iscommitted to energy efficient programs, and we participate involuntary programs.

3092 3148 3122

P&G’s eco-efficiency of greenhouse gas has increased by 19 index
points. Each point represents the amount of product leaving ourplants per metric tonne of CO2 emissions. The main reasons forthis year’s improvement are less reliance on coal burning and theoverall efforts to reduce energy usage.

2001 2002 2003
Baby & Family Care Fabric & Home Care
Beauty Care Health Care Snacks & Beverages

In addition, absolute CO2 emissions are much the same as lastyear. A slight correction has been made in CO2 conversion factors
to be consistent with U.S. Department of Energy 1605 guidance.
The other major change in reporting was to follow the WBCSD
protocol.* This involves how acquisitions and divestitures arehandled in determining the base. For example, sites that are sold
are removed from base year emissions.
* Protocol data used throughout this section is based on the framework developed by
the World Business Council for Sustainable Development.

on theWeb

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

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

186

192

Climate R.E.S.O.L.V.E.
P&G is pleased to be an active participant in Climate R.E.S.O.L.V.E.
(Responsible Environmental Steps, Opportunities to Lead by Voluntary
Efforts), an ambitious and unprecedented initiative by some ofAmerica’s largest companies to voluntarily control greenhouse gas
emissions that have been linked to global warming.
Climate R.E.S.O.L.V.E. was developed by The Business Roundtable inresponse to President Bush’s challenge to the business community tovoluntarily pursue operational improvements that will help reduceoverall greenhouse gas by 18 percent by 2012.

211

100

P&G and other companies participating in Climate R.E.S.O.L.V.E. havepledged to develop innovative and cost-effective methods for
mitigating greenhouse gas emissions and to apply their best
management thinking to minimizing the risk of climate change while
fostering continued economic growth.

1990 2001 2002 2003
on theWeb

More information about Climate R.E.S.O.L.V.E. can befound at: http://www.brt.org

Performance
Environmental

P&G 2003 Sustainability Report

Total Waste for Disposal
Total waste for disposal is our key management measure to keep
waste under control. Total disposed waste comprises the sum of
non-hazardous and hazardous solid waste, plus effluent measured
as COD and air emissions. It excludes recycling waste. Thismeasurement system has been in effect since 1990.
Our disposed waste had a 13 point increase in eco-efficiency. Thisis mainly due to much less demolition waste and ongoing efforts
to reduce waste in all areas.

Unique Way to Recycle
Taiwan’s Ching-Shui plant, with its extensive recycling operations, has
found a unique and creative way to recycle paper sludge and fibers.
The plant recycles sludge and fibers into paper “money.” These small
squares of yellow paper, printed with red Chinese figures, are sold inpacks. Consumers burn these papers in religious shrines to pay homage
to Buddha. In a society with limited wood by-products, this practiceconserves resources while supporting a local custom. Instead of paying
for handling the sludge, the Ching-Shui plant gains income by sellingthe sludge, yet still complying with local environmental regulations.

Waste Disposed Eco-Efficiency

Waste Disposed(global production units per metric tonne of waste,indexed vs. 1990)
195
182(by type of waste)
440
366

142

2001 2002 2003

47

385

2001 2002 2003
Solid Waste Non-Hazardous
Solid Waste Hazardous
Effluents Air Emissions

Waste Returned to Process or Market
The percent recycled was nearly the same (54 percent versus 52
percent), while revenue increased from $20 to $22 million.

Waste Recycled or Reused(percent of waste)

51

54

Diapers and Batteries, Closing the Loop
P&G’s Cabuyao plant in the Philippines scored a “win” for theenvironment by effectively managing its scrap diaper wastes and usedlead-acid batteries.
The plant did this by sending 700 metric tonnes of diaper line scraps
to a local cement plant to be reused as supplementary fuel. In
addition, the plant donated batteries from trucks and heavyequipment to a local environmental NGO for recycling.

52

These waste disposal plans not only freed up valuable storage areas
for the plant, but they also demonstrate that alternative and less costly
waste management options are available when responsible
stakeholders join hands in closing the loop.

2001 2002 2003

P&G 2003 Sustainability Report

Performance
Environmental

Non-Product Output to Land – Non-Hazardous
Overall, the non-hazardous waste disposed to landfill has
decreased this year, resulting in a 13 index point increase in ecoefficiency. There has been considerably less demolition waste thisyear, and other waste reductions have been made. P&G continues
to find innovative recycling methods.

48

Albany Plant Landfill Reduction
The Albany, Georgia, USA, Baby and Family Care plant installed a newsludge dewatering system at a cost of $1 million. The project reduced
over 2,300 tons (a 52 percent reduction) that previously went tolandfill. It also saved on energy, fresh water used, and maintenance.
Plus, it eliminated the need to use a Bounty parent roll as a filter
medium, allowing the material to be used in finished product. The
project pays out in less than a year and a half.

Non-Hazardous Solid Waste Eco-Efficiency(global production units per metric tonne,
indexed vs. 1990)
171

184

129

2001 2002 2003

Hazardous Solid Waste Disposed
Hazardous waste has decreased (shown as higher eco-efficiency).
The major reduction was from three plants, but all for different
reasons. One site eliminated the source, another found a way torecycle, and the third reduced the number of cleanups associatedwith its processes.
Hazardous wastes are defined by regional policies and local rules,
so they vary from region to region. In the United States, a strong
focus on reduction, recycling, and material substitution has
reduced the amount of hazardous waste requiring disposal overthe past three years. To further reduce risk, the number of approved
hazardous waste disposal sites that U.S. plants can use is limited.
Similar programs have been started in many regions of the world.

SARA 313 Releases (United States only)
U.S. P&G 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 purpose of thisdocumentation (referred to as section 313) is to report publicly thereleases and transfers of a set list of hazardous chemicals.
The amount of SARA 313 releases has increased after three yearsof decreases. The increase was related to production increases atsites that use these chemicals.

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

Hazardous Solid Waste Eco-Efficiency(global production units per metric tonne,
indexed vs. 1990)
1,143

1,722

1,567
1,274

680
491
2001 2002 2003

2001

2002

2003

Performance
Environmental

Air Emissions
Each site monitors total suspended particulates, volatile organic
compounds (VOCs), carbon monoxide (CO), nitrogen oxides (NOx),and sulfur oxides (SOx). The total amount of air emissions released
has increased 20 percent, resulting in a lower eco-efficiency. Higher
air emissions translate to lower eco-efficiency due to the units
being production (stat units) per metric tonne of emissions.

P&G 2003 Sustainability Report

Air Emissions Eco-Efficiency(global production units per metric tonne,
indexed vs. 1990)
169
137

126

2001 2002 2003

Effluents to Water
Wastewater COD (chemical oxygen demand) went up morethan 50 percent, resulting in a much lower eco-efficiency. The
reduction in eco-efficiency was in part due to a one-time special
cleanup at a large site. This was part of a sewer separation project.

Wastewater COD Eco-Efficiency(global production units per metric tonneof COD, indexed vs. 1990)
276
205
170

2001 2002 2003

Safe Drinking Water
The PuR brand in the Philippines worked with various organizations on
the island of Cebu to increase awareness of the importance of safe
drinking water.
Working in partnership, PuR and the local government of Cebu
declared August 2002 as Water Safety Consciousness Month. Public
service announcements on safe water aired on radio and TV. In
another partnership, PuR and the National Confederation of Barangay(groups of neighboring villages) Health Workers educated mothers on
contaminants and methods of ensuring clean water. Collaboration by
PuR and the Water Resource Center of the University of San Carlos
produced a symposium on improving access to clean drinking water.
Guests included representatives from the U.S. Centers for Disease
Control and from the P&G Health Sciences Institute, as well as former
Philippines Health Secretary Juan Flavier.

Asian Sites Reduce Wastewater
Two wastewater projects – at the Bangkok, Thailand, and Shiga,
Japan, sites – reduced wastewater strength while saving water.
Treated wastewater was beneficially reused for fire protection andfor watering the lawn.

49Performance
Environmental

P&G 2003 Sustainability Report

50

Percent of Sites
with Audit Scores > 8.0
Audit Programs
P&G’s internal standards go beyond legal compliance and apply to
all its facilities worldwide. The fundamental philosophy is to havethe same standards worldwide, implemented by trained
professionals at all sites and audited each year using a consistent,
comprehensive approach. The metrics used are consistent withthat philosophy. Charts show the performance of Health, Safety &Environment (HS&E) and Fire Protection.
P&G HS&E audit programs are designed to ensure compliance withfederal, state, and local regulatory requirements as well as
corporate environmental standards and procedures. Audit findings
are reported promptly to the business management teams, whomust address and correct all issues in a timely manner.
Audits measure performance against a mandatory set ofstandards and standard operating procedures. The target
performance is eight or better on a ten-point scale. HS&E results
have decreased slightly from last year, while Fire Protection
performance has increased.
The Company reviews its sites on a frequent basis. The chartshows percent of sites receiving an audit this year.

Compliance with Laws and Regulations
There are numerous health, safety, and environmental
requirements worldwide. Facilities are subject to the emission limits
and operating requirements specified in these statutes, regulations,laws, and permit requirements. It is P&G’s intent to comply withboth the letter and the spirit of statutes, regulations, laws, andpermit requirements. Identified compliance issues are treatedseriously, and all non-compliance matters are resolved as
expeditiously as possible.
The following table lists global data on environmental,transportation, and worker health and safety violations andinterventions.

Number
Fines

2003
67
$154,756

2002
45$39,026

2001
63$77,070

Both fines and Notices of Violations (NOVs) have increased thisyear. Two incidents account for almost 80 percent of the fines.
Both were related to recordkeeping. Procedures have been
reinforced to provide more effective monitoring.
A breakdown of the NOVs and U.S. Occupational Safety & HealthAdministration (OSHA) interventions follow:

77 80

83

83

85

75

2001 2002 2003
HS&E

2001 2002 2003
Fire Protection

Percent of Sites Conducting
Annual Audits

77

81

81

2001 2002 2003

Water-Based
Air-Based
Solid Waste-Based
Paperwork
Transportation-Based
Worker Safety (for U.S. OSHA, the number is 0)
Total

Number
38
20
0
1
8
0
67

Fines
$3,275$129,031$900$0$21,550$0$154,756

OSHA Experience
Over the past decade, our safety performance has continued to
improve on a global basis. In the United States, where we areregulated by the Occupational Safety and Health Administration(OSHA), our experience has been consistent with the global trend.
Over the past six years, we have averaged only $141 per year in OSHA
penalties and received only one serious citation. We have not had any
penalties in more than two years. This is one indicator of ourcommitment to employee health and safety.

P&G 2003 Sustainability Report

Performance
Environmental / Economic

Environmental Liabilities
P&G is subject to contingencies pursuant to environmental laws
and regulations that may require the Company, in the future, totake action to correct the environmental effects of prior
manufacturing and waste disposal practices. Accrued
environmental liabilities for remediation and closure costs were
$34 million and $39 million on June 30, 2003, and 2002,
respectively. In management’s opinion, such accruals areappropriate, based on existing facts and circumstances. Current
year expenditures were not material.

51

P&G Norway Supports WWF
In the summer of 2003, P&G Norway partnered with WWF Norway,
an independent and private global organization focused onconservation of animals and plants, to raise funds for environmental
protection in Norway. Consumers entered a contest via entry forms
found in stores that sell Pampers, Alldays, Always, and Tampax.
Winning consumers donate their P&G-funded prize of NOK$10,000(US$1,400) to a WWF project of their choice. Through consumers andstores, P&G donated NOK$300,000 (US$42,000) to WWF.

on theWeb

For more information, please visit: http://www.wwf.noPilar Plant Receives Environmental Recognition
Argentina authorities gave P&G a diploma for being anenvironmentally responsible company.

Economic

on theWeb

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

Economic Development
Innovation is P&G’s cornerstone. More than $1.5 billion is invested
annually in research and development – the largest amountamong consumer product companies worldwide. We have morethan 28,000 patents worldwide, and we average more than one
new patent per day.
These intellectual assets are of tremendous value to P&G. But
some are not being fully realized; we invent more than we cancommercialize. Through our External Business Development &Global Licensing group, we continue to identify non-strategic
proprietary technologies which, when developed to their fullpotential, can yield sustainable revenue sources and bring
important technologies to the market that enhance the lives of theworld’s consumers.
Through technology donations, universities and other not-for-profit
research institutions can receive these off-strategy, yet highly
valuable, patents and technology know-how, and provide theresearch and development needed to bring them to commercial
reality. P&G is excited to see these technologies reach their fullpotential. Each donation fosters applied research development
work at universities and research institutions and can eventually
deliver new revenue streams to the universities through outlicensing and/or start-ups. As part of the donation, P&G receives a
tax benefit for our shareholders.

Financial Highlights
Amounts in millions
except per-share amounts

2003
Net Sales$43,377
Net Earnings
5,186
Before-Tax Earnings
7,530
Total Assets
43,706
Basic Net Earnings
Per Common Share
3.90
Dividends Per Common Share
1.64

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

2001$39,244
2,922
4,616
34,387

3.26
1.52

2.15
1.40

P&G 2003 Sustainability Report

Performance
Economic

52

Technology Donations, Fiscal Year 2002-2003
Through P&G’s technology donations, we contribute valuable patents, seed money, time, and resources
to U.S. universities and research institutions for the enhancement of education and the long-term
benefit of society. These nonprofit groups can continue the research efforts, providing a venue fordevelopment of potential new products and technologies. Listed is an overview of technologies
donated last year, along with their sustainability implications.

Technology

Recipient

Sustainability Implications

Absorbent Surface Grafted
FibersInstitute of Paper Science andTechnology

A tissue-towel product with significantly improved
absorbency while retaining strength and softness

Cancer and Viral Therapy

University of ArizonaFoundation

A series of compounds that would be used totreat cancer, HIV, and hepatitis C

Enzyme Modified Cellulosic
FibersNorth Carolina State University

An enzyme treatment that will allow fibers intissue-towel products to become more flexible,
comfortable, and soft

H2 Antagonist

Boston University

Simple mouth rinse which prevents and treats
periodontal disease

Healthy snack food

Mid-America
Commercialization
Corporation

Healthy and delicious snack food that fits the U.S.
Department of Agriculture’s “Health Pyramid”
profile and has a satiety effect while alsosatisfying a craving for a sweet or savory snack

Sulfur Dye Protection

University of Nebraska

Treated sulfur dye textiles that will retain theirdyed properties when laundered specifically with
Tide with Bleach

Termite control

University of Florida Research
Foundation

Effective and inexpensive termite bait station thatcan be used by a homeowner to eliminate termite
invasion, thereby protecting the structure of thehomeTextile Dyeing

North Carolina State University

A superior, economical reactive textile dye that
also offers environmental benefits to the dye
manufacturer and dye house

Global Purchases
P&G is a global company. We produce our brands in more than
115 plants in 43 countries around the world. This year, P&G
purchased more than $26 billion in materials and services tomanufacture and market our products. We employ locally andpurchase the majority of our raw materials within those regions
where we manufacture our products. Our purchasing professionals
understand and participate in both global and local markets toacquire the materials and services required to make our products.

Performance
Economic

P&G 2003 Sustainability Report

Supplier Diversity Program
In 1972, P&G established a minority supplier program to identify
and work with minority-owned businesses. Today, the Supplier
Diversity Program has nine full-time people dedicated to this work,with sponsorship from two Company executives.
As America’s population moves toward greater percentages ofminorities, companies must ensure the economic health of thesepotential consumers. These suppliers provide a strong economic
engine that helps build the minority community.
P&G’s Supplier Diversity purchases during fiscal year 2002-2003 in
the United States will exceed $950 million, accounting for about 8
percent of P&G’s total U.S. spending.

420
411
401
547
661

865
939
949
960

(amounts in millions of dollars)

225
282

P&G Sets Supplier Diversity Goal
to Spend $1.5 Billion Annually by 2005
P&G continues a steady commitment to economic inclusion forminority- and women-owned businesses by pledging to spend $1.5
billion annually by 2005. By doing business with diverse suppliers, wegain key insights into consumer behavior and preferences as a valueadd to the high-quality services our suppliers are already providing.
P&G is a member of several strategic organizations dedicated to
expanding supplier diversity development, including the National
Minority Supplier Development Council, the U.S. Hispanic Chamber ofCommerce, and the Women’s Business Enterprise National Council.

P&G Supports Cincinnati’s Empowerment Zone
In P&G’s corporate headquarters city of Cincinnati, Ohio, there is an“empowerment zone” – a geographic area receiving federal funds forbusiness and workforce development. P&G looks for opportunities toprovide work for businesses in the Zone.

Supplier Diversity Spending

93 94 95 96 97 98 99 00 01 02 03

53

Our ongoing commitment toinvesting in minority- and womenowned business enterprises has
resulted in increasing
expenditures. During the 1990s,
P&G spent more than $4 billion.
Fiscal year 2002-2003
expenditures will exceed $950
million dollars.

This year, P&G made a $30 million commitment to award business,over the next three years, to Valu-Pac. This minority-owned company
is constructing a manufacturing operation in the Empowerment Zone.
For P&G, Valu-Pac’s new facility will fill bottles with liquid and dry
Beauty Care products. This work will require Valu-Pac to create
between 150 and 200 new jobs.

Performance

P&G 2003 Sustainability Report

54

SocialWages
P&G supports paying employees a competitive wage, as
benchmarked against other leading companies. Consistent with
our principle of valuing personal mastery, we reward employees for
improving their skills and capabilities.
Benefits
P&G is a recognized leader in employee benefits. The Company’s
benefits have been developed to help protect the financial securityof employees. These benefits include comprehensive coverage forhealth care, generous vacation and holiday time, and otherwork/family balance benefits, including flextime, child care leave,and less-than-full-time schedules.
Site HS&E Leadership Training
A key indicator of HS&E system capability is the percentage of sites
with trained and qualified leaders. Leadership candidates train onsite for an extended period prior to attending a week-long internalschool where their knowledge and ability to handle special
situations are assessed. Only then are candidates considered
qualified. This year, the percent of sites with qualified leaders has
increased slightly. The number of sites with leaders qualified in Fire
Protection has stayed the same.

Percent of Sites
with Qualified Leaders
73 73

77
66

71

72

Industrial Hygiene and Safety
The health and safety of P&G employees are paramount in 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 have been prevented.
Safety and health are everyone’s responsibility.
The Company tracks and reports two metrics for worker safety:
total incident rate (TIR) and total lost workday case rate (LWDC).
TIR includes all cases that result in loss of consciousness, lost
workdays, restriction of work or motion, medical transfer toanother job, or medical treatment beyond first aid. LWDC includes
all cases that involve days away from work or days of restrictedactivity beyond the day of injury or onset of illness.
The TIR target for sites worldwide is fewer than 1.5 cases per
100 employees. To achieve this rate, programs to address
employee safety – such as safe behaviors, ergonomics, andconfined space entry – have been implemented. No target has
been set for LWDC because of our belief that sites must manage
incidents that potentially could lead to lost workdays.
The following data is based on criteria established by P&G for use
at all worldwide facilities and is representative of all our
manufacturing and technical centers worldwide. This year’s total
incident rate declined to .54 incidents per 100 employees
while the lost workday cases has decreased to .22 cases per
100 employees.
Total Incident Rate
(injury and illness per 100 employees).69
2001 2002 2003
HS&E

.67
.54

2001 2002 2003
Fire Protection

HS&E Program Costs
There are two aspects of Health, Safety & Environment (HS&E)
program costs:• Capital costs for new HS&E equipment• People and operating costs for existing facilities
Capital costs to ensure compliance at our facilities for 2002-2003
were $20.1 million, slightly less than the previous year. This
included the purchase and construction of pollution control
equipment such as wastewater pre-treatment systems and air
emission controls.
HS&E total costs for operating existing sites in 2002-2003 were$173 million. This is about $2 million less than last year.
Operating cost does not include $21.8 million in revenue gained
from recycling.

2001 2002 2003

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

.24

.27

.22

2001 2002 2003

P&G 2003 Sustainability Report55

Sustainability in Action

P&G 2003 Sustainability Report

56

Sustainability in Action
In order for societies to develop and sustain themselves, their people need to be healthy and educated.
Because of technologies developed for its products, P&G has expertise in health, especially regardingchildren and women. For example, P&G’s research, decades ago, into calcium in water led not only tobetter laundry products but also to breakthroughs in treatments for bone conditions and dental health.
Improving the health of children helps ensure that the next generation can further the progress madeby the current generation.
The Company also has a long-standing interest in education, which is critical to the advancement ofdeveloping nations. In developed nations, education creates a qualified workforce able to maintain andimprove the economic health of the country.

Purifying Water – Saving Lives
The need for clean water is one Phil Souter had seen firsthandduring his travels. Working at the P&G technical center in
Newcastle, U.K., in collaboration with Jean Wevers and his groupin Brussels, Belgium, on a laundry product, he had an idea: Could
not the same technology used in almost every laundry product act
as a “dirt magnet” for drinking water? This technology isfrequently employed in municipal drinking water treatment plants.
So why not develop a simple, effective, and affordable in-hometreatment product? Thus, PuR Purifier of Water was developed.
The striking visual results from the first prototype further convinced
Phil and the PuR team that this little sachet could be a successful
consumer product. The compelling nature of the test results,
coupled with the clear-cut consumer and humanitarian needs,gave them all the encouragement needed to overcome any
hurdles encountered along the way.
For more information on PuR, please visit our Alliances section on
page 62.

“Watching people drinking out of some of the water sources we’ve tested reallybrings home the importance of what we are trying to achieve. The first time I actually
saw people treating their water with our product in their own homes in Guatemala
will always stand out as a special memory. It really helps focus your mind on theend benefit you are working towards and strengthens your determination toachieve it, especially as the humanitarian potential of this type of technology is soabundantly clear.”– Phil SouterSustainability in Action

P&G 2003 Sustainability Report

57

Women’s Health
P&G is in the forefront of bone research and has developed a breakthrough drug – Actonel – which
can halt osteoporosis and, if treated at an early stage, even reverse it. Osteoporosis often leads to hip
fractures, which can have complex health effects, even resulting in death.
In Canada, for example, it is estimated that 27,000 people – mostly women – will suffer a hip fractureassociated with osteoporosis during 2003. Of these, more than 5,000 will die. Osteoporosis is a similar
problem in the United States and Europe as well. Studies on both continents show that the vast
majority of women who suffer hip and spinal fractures don’t get tested for osteoporosis and don’t
receive medicine to prevent further fractures.
P&G initiates and cooperates in stakeholder programs to help both women and their doctors
understand osteoporosis and what can be done to treat it.

OSTEOPOROSISCanadian Quality Circle Project
P&G’s Actonel brand has developed a unique partnership with the
Osteoporosis Society of Canada, the Ontario College of Family
Physicians, the University of Manitoba, several prominent
osteoporosis experts, and Aventis Pharma on the Canadian Quality
Circle Project to better understand and address any barriers to the
optimal treatment of osteoporosis.
Based on an earlier Quality Circle model initiated in Germany, theCanadian Quality Circle Project will help educate physicians
through a state-of-the-art disease management approach. The
objective is to help doctors identify gaps in patient care within theirindividual practices and in their communities, learn about the latest
treatment guidelines and develop strategies to manage patientswith osteoporosis more effectively.
The Canadian Quality Circle Project group hopes that earlier andmore widespread diagnosis and treatment of osteoporosis will
prevent significant numbers of hip and spinal fractures and thus
save lives.
Make Osteoporosis Matter
The garden of P&G’s Cincinnati headquarters was the site of aJune event designed to educate women about osteoporosis. The
Make Osteoporosis Matter (MOM) event was sponsored by P&G
and Aventis U.S., which have joined in an osteoporosis education
effort called The Alliance for Better Bone Health.
The highlights of the festival-style event were free osteoporosis
screenings and gift bags containing P&G health and beauty
products. Through exhibits and experts, attendees received
information about exercise, risk factors, and diet.

Awareness is Love
Because of its general interest in women’s health, P&G became
involved in a program to educate minority women in the UnitedStates about early detection of breast cancer. Lower-income
Hispanic and African-American women have the highest breast
cancer mortality rates in the United States due to late diagnosis.
But if breast cancer is detected early enough, a woman’s chance ofsurviving five years is 95 percent.
Partnering with the Susan G. Komen Foundation, P&G created theAwareness is Love program. It featured Breast Cancer AwarenessDays throughout Texas. At these events, minority women without
health insurance received cancer screenings as well as a kit
including instructions on performing a self-exam, information on
myths and facts about breast cancer, and a video CD withinspirational messages from Latina singer/songwriter Soraya.
Soraya, who has been treated for breast cancer herself,
has appeared at activities sponsored by P&G and the Komen
Foundaton, spreading the message about the importance ofearly detection.
The Awareness is Love program also provided retailers withinformational literature, called “Mamagrams,” to be given free
to patrons.

on theWeb

For more information on the Susan G. Komen
Foundation, please visit: http://www.komen.org/

Sustainability in Action

P&G 2003 Sustainability Report58

Children and Their Families: Raising the Next Generation
P&G has a great deal of expertise to offer in the area of children’s health and education. This isespecially important in parts of the world where children do not receive the nutrition and health carenecessary for proper growth and development nor the education needed to participate fully inthe workforce.
Furthermore, P&G participates in programs that assist families and elderly people who lack thefundamentals of a safe and comfortable life.
Steps Toward a Healthy Future
P&G funds and participates in various programs to give children a good start in life.

Pampers Partners with the Syrian Ministry of HealthPampers has partnered with the Syrian Ministry of Health in along-term effort to improve the health and development of Syria’s
infants and young children. Pampers is the first private diaper
brand to work with the Syrian government in this area.
The effort, begun in July 2002, involves improving services at
Syria’s national health care centers plus educating parents.
At ten major health centers in Damascus and Aleppo, P&G has
refurbished the buildings and provided needed medical
equipment. Company funding has allowed the Ministry of Healthto provide up-to-date training for health center staff. P&G also
donated toys for the waiting areas.

Langfang Children’s Village
In China, P&G’s Beijing Technical Center is partnering with
Langfang Children’s Village, which cares for some of China’s mostneedy little citizens. The Langfang Children’s Village takes in “atrisk” orphans, provides medical and surgical treatment, and cares
for them in a family atmosphere until they can be adopted.
The Beijing Technical Center recently donated six washingmachines plus more than 250 cases of Pampers. In addition to thismaterial support, the Beijing Technical Center donates its humanresources, with several employees regularly making the one-hourtrip to Langfang to help with projects, bring donations, and playwith the children.

All ten centers now have resident “Pampers ladies” who give
advice on baby care and breast-feeding as well as diaper samples.
Additionally, in a short-term effort with the objective of reaching
90 percent of parents with children under 4 years old, Pampers
joined with the Syrian Ministry of Health in the National
Vaccination Campaign. Between October and December of 2002,
Syrian parents saw billboards, posters, and television advertising
about vaccination. They also were given cards to record theirchildren’s vaccination histories.

Iams & Clairbois Lancy Partnership
The Iams ClairBois partnership demonstrates the benefits of pettherapy by bringing Talisker, a Bernese Mountain Dog, and hishuman friends from P&G Iams to ClairBois Lancy to visit all thechildren in the home.
ClairBois Lancy is one of three ClairBois homes specifically devoted
to disabled children in Switzerland. ClairBois Lancy provides a
specially adapted home and school that caters to the children’svaried lifestyle and educational needs.
The benefits of pet therapy are well established in many countries,
particularly the United States and the U.K. However, in Switzerland
there are very few animal-assisted therapy programs.

Sustainability in Action
Children and Their Families: Raising the Next Generation

Fairy Dish Liquid Helps Fight Against Hunger
Spain’s Fairy Dish Liquid and the NGO “Acción Contra el Hambre”(Action Against Hunger) partnered together to fight hunger inAfrican countries. The campaign was called “Ahora Fairy da para
un plato más” (Now Fairy gives for one more plate). The “plate” isthe equivalent of one meal.
One meal was donated to a hungry child for each bottle of Fairy
sold in Spain during a two-month period. The meals contained theexact quantity of nutrients necessary to restore an undernourishedchild to a “no-death-risk” situation.
The Fairy Dish Liquid brand and consumers donated more than 4.5
million meals to these needy children.

P&G 2003 Sustainability Report

59

Safeguard Hand Washing Program
Mexico’s Safeguard bar soap has been running a multi-element
campaign to promote hand washing among children. Hand
washing has been demonstrated to have a significant impact inhelping to reduce diarrhea and the spread and frequency of
infectious diseases. The program operates as a partnership, with
Safeguard providing expertise and materials while counting on its
media, government institutions, and education partners toreach people.
Nationally known newscaster Lolita Ayala, who has a foundation
for underprivileged children, endorses the overall campaign.
Safeguard donates a portion of sales to the Solo por Ayudar Fund.
The campaign employs these partners:

Crest Healthy Smiles 2010
Hundreds of thousands of American children received dental
services in February on the first Give Kids a Smile/National
Children’s Dental Access Day. This nationwide effort for children
from low-income families is sponsored by the American Dental
Association, P&G’s Crest Healthy Smiles program, state and local
dental societies, and thousands of individual dentists.
On Dental Access Day, children received free oral health education,screening, and treatment services. Importantly, the program aims
to increase awareness of the vast amount of untreated dental
disease among American children.
P&G created the Crest Healthy Smiles 2010 program three years
ago, with the goal of improving the oral health of at least 50
million American kids by the year 2010.

on theWeb

For more information, please visit:
http://www.cresthealthysmiles.com/• Mexico’s Institute of Social Security, which is using its
infrastructure to distribute materials on hand washing. The goalof this portion of the program is to reach more than 2 million
rural residents during the first 12 months. If Safeguard can reachthis goal with good results, it plans to expand the program toreach 11 million people.
• More than 2,000 Mexican radio stations, which have beenrunning information on hand washing.
• Mexico City’s Children’s Museum is featuring an interactive
computer game about bacteria that children can use at its mainsite and also in its traveling show.
• A puppet show promoting good hygiene to more than 80
percent of first-grade students in three cities, as well as in
Merida’s most popular plaza.

Sustainability in Action

P&G 2003 Sustainability Report

Building a Better Educated Population
Supporting education is a top priority for P&G. The Company believes its efforts in education can help
build a better future for everyone.
I Can Learn
In Greece, private schools are benefiting from an I Can Learn kit
developed by Bonnie Miller, wife of the U.S. Ambassador to
Greece. The Greek Ministry of Education endorses the educational
materials kit. The kit helps teachers and parents recognize thesymptoms of learning disabilities and attention deficit disorder.
The program is limited to private schools as all educational material
for public schools in Greece is solely produced and distributed by
the Ministry and sponsorship by private companies is not allowed.
P&G’s sponsorship involves financial support for the development
and printing of the I Can Learn material and provides assistance incommunication, marketing, and training.

HOPE Schools
In Pakistan, many children in city slums and rural areas cannot
afford to go to school or do not have access to a school. This
results in a high illiteracy rate.
Seeing a way to make a significant improvement in this area, P&G
worked on a school development project with a Karachi-based
NGO called HOPE (Health Oriented Preventive Education). A key
HOPE activity is running home-based schools providing basic
education to children who can’t otherwise get it.
P&G financing made it possible for 10 new schools to open andfor 13 existing home schools to continue. All 23 schools are called
P&G HOPE Schools.
A key teaching in P&G HOPE Schools concerns the health benefitsof safe drinking water and good hygiene. Through education,
significant reductions have occurred in the incidences of diarrhea,
impetigo, and respiratory diseases.

A school boy reciting a poem for theinaugural ceremony of the P&G HOPE
Schools project.

Junior Achievement
P&G’s Toronto office provided a record number of volunteers –133 – to Junior Achievement (JA) this past year. JA volunteers
teach business skills and life skills to school children.
Reaching over 1,700 students in 67 classrooms, P&G Toronto’s
volunteers have been involved in these JA programs:• Economics of Staying in School, featuring activities that lead
teenagers to conclude “staying in school makes cents.”• Diversity, focusing on the value of diversity in the workplace, athome, and in school.
• The Company Program, in which high school students learn
from a team of six P&G mentors about operating a company,
from incorporation to liquidation. The program includes skills
such as communication, problem solving, team building, time
management, basic accounting, and creativity.
A further commitment to JA includes providing a P&G employee
to the JA Board of Directors as an active member.
P&G Toronto has worked with Junior Achievement since 1994.
This work has earned awards for individual students as well as
national and regional awards for the Company.

60

P&G 2003 Sustainability Report

Sustainability in Action
Building a Better Educated Population

61

Champilá School
P&G’s commitment to education has become critical recently in
Guatemala, where declining coffee prices have threatened coffee
farmers’ livelihoods. P&G’s coffee brands – Folgers and Millstone –have identified an important way they can help the next
generation there.
A community of coffee farmers in Huehuetenango has a newschool, thanks to a partnership among Folgers and Millstone, alocal NGO called FUNRURAL (Fundación para el Desarrollo
Rural/Foundation for Rural Development), and Waelti-Schoenfeld
Coffee Exporters.
The Folgers/Millstone financial contribution was used forconstruction and equipment costs and to operate the school
during its first two years. FUNRURAL is overseeing the school’s
operation during this period. Waelti-Schoenfeld managed
construction. A local farm owner donated the land. The
community ultimately will become responsible for the school’s
operation.

Champilá School brings an opportunity
for better education to the children ofcoffee farmers.

Before Champilá School was built, children in this 80-family
community had to walk more than ten miles to go to school.
Because of the distance, many of the children attended
sporadically. Now, in their own community, they have a 143-square
meter school with three classrooms equipped with desks,
chalkboards, books, and other school supplies.
For more information on our coffee initiatives, please see pages
27, 28, 63.

Ariel/Awladi Partnership
Some 250 orphaned and homeless boys in Cairo, Egypt, soon will
have a place to live, thanks to a partnership between P&G’s Arieldetergent and the Awladi (My Children) NGO. Ariel has donatedhalf a million Egyptian pounds (approximately US$82,300) for
construction of a four-story facility to house the boys. The project is
intended to take those boys off the streets, protect them fromabuse, and provide them with new opportunities, a safe and clean
home, care, education, and vocational training.
The home is expected to be ready in spring 2004. It increases
Awladi’s housing capacity for children by 75 percent.
To help raise funds for future expansions of Awladi facilities, P&G
is also running a public awareness campaign on the organization’s
efforts.

Ariel One-Classroom Schools Project
Demonstrating its commitment to educational initiatives thatprovide direct support for the country’s educational system, P&G
Egypt has undertaken an agreement with the Egyptian Ministry of
Education to build 50 one-classroom schools throughout theEgyptian countryside over a ten-year period at the rate of fiveschools per year.
The project is focused on bringing education to areas where it ismost needed, with emphasis on educating girls who have been
unable to attend regular schools and to help them catch up on
education they have missed. Subjects taught at the schools range
from home economics to language, reading, and writing, andinclude basic skills that will better equip the girls to face theeveryday challenges of life and improve their standard of living.
To date, 15 schools have entered full operational mode.

Sustainability in Action

P&G 2003 Sustainability Report

62

Alliances
P&G commonly works with nonprofit organizations, governments, NGOs (nongovernmentalorganizations), educational and research institutions, and other companies in community service andpublic health projects. These alliances often make it possible to achieve goals that no one entity could
achieve on its own.
In developing countries, alliances can improve product accessibility for low-income consumers. P&G isworking within these alliances to bring low-income consumers products they can afford and that can
improve their lives.

PuR Purifier of Water
P&G’s Health Sciences Institute has developed a product to help
more than a billion people in developing nations who don’t havesafe drinking water at home. P&G is collaborating with the U.S.
Centers for Disease Control and Prevention (CDC) and theInternational Council of Nurses (ICN) to test the product and bringit into use.
PuR Purifier of Water is a small packet of specially combined
ingredients similar to those used in large-scale water treatment
facilities. Mixing the contents of one packet into ten liters of water
separates dirt and other contaminants from the water withinminutes. The water is then filtered through a cloth. PuR works
better and more economically than tablets and filters that havebeen on the market for home use.
In CDC trials conducted in Guatemala, PuR reduced diarrheal
illnesses by 40 percent by removing pathogenic bacteria, viruses,and parasites from water. When widely available, supplies will be
provided at cost for emergency relief operations. The International
Rescue Committee already has purchased enough to make 3.5
million liters of drinking water in Iraq.
“We estimate that 5,000 children die every day because ofdiarrheal illness,” says Steve Luby, M.D., a CDC medical
epidemiologist. “If we can get people to use products like PuR todecontaminate water in their homes, we can reduce the incidenceof diarrhea and illness and save thousands of lives.”

Day Care Network of Eschborn
P&G recognizes the home responsibilities of working parents andtries to help them achieve a comfortable balance between family
life and business life.
P&G has been doing this in Eschborn, Germany, by working withother companies and with local authorities to improve the local
child care infrastructure.
This alliance, called the Day Care Network of Eschborn (NET e.V.),
has developed a Web site with resources for parents, employers,
companies, local authorities, and child care providers. P&G
financed 30 percent of the Web site’s development costs.
The local minister of social affairs, speaking about projects such as
the Network alliance, said they “correspond to the intention ofregional governments focusing on family politics – aiming for
better compatibility of job and family.”The Day Care Network continues to meet regularly, with theobjective of ensuring continued support for and improvements to
its services.

on theWeb

For more information on NET e.V, please visit:
http://www.net-e-v.de/Because of the global need for and proven health benefits of clean
drinking water, the P&G Health Sciences Institute, the CDC, andthe ICN have joined with 20 other organizations to establish theInternational Network to Promote Safe Household Water
Treatment and Storage. In addition, the ICN and the P&G Health
Sciences Institute are educating nurses and populations in thedeveloping world about the health benefits of treating water andstoring it safely.

on theWeb

For more information, please visit:
http://www.pghsi.com/communications/pur.htm
Photo Credit:
Adilson Moralez

Sustainability in Action
Alliances

Nordic Partnership
WWF in the Nordic countries and the Danish think tank Monday
Morning have partnered with 17 leading Nordic companies,
including P&G Nordic, to form the Nordic Partnership. The
Partnership’s objective is to make sustainability a rewarding way to
do business. Partnership members identify barriers to sustainability
and ways to overcome them. Member companies are working
with NGOs and experts to make sustainability fundamental to theway they conduct business.

on theWeb

For more information, please visit:
http://www.nordicpartnership.org

USAID
P&G recognizes the social problems many coffee-growing families
face, given the current situation of global overproduction and low
prices. P&G is committed to helping address the underlying socialand economic issues contributing to this situation, and we want towork with reputable organizations that can help provide long-term
systemic solutions. USAID (the United States Agency forInternational Development) has been pivotal in working toward
this objective.

P&G 2003 Sustainability Report

63

Ariel Washing Stations
P&G Egypt’s Ariel detergent brand is working with the Egyptian
Ministry of Health and the Italian Aid Agency to change washinghabits in rural Egypt. The goal is to prevent the spread of waterborne diseases such as schistosomiasis (bilharizia) and fasciola.
These diseases are common in the Nile Valley, with its stagnant
bodies of water. People contract the diseases when they wash
laundry, eating utensils, and food in rivers and canals.
The partnership has been running a test of “washing stations” in
the Nile Delta village of Tiba. Each washing station, which pipes inclean water, consists of 20 sinks, a washroom, clotheslines, and awastewater treatment unit.
Village residents are enjoying washing and socializing at thewashing stations. As a further inducement to come to the washingstations, P&G is providing free Ariel detergent packs.
Research is showing a progressive decline in waterborne disease in
Tiba. The Egyptian government is considering introducing washingstations nationwide.

Less than two weeks after P&G’s initial contact with the USAID
mission in Guatemala, the FUNRURAL (Fundación para el
Desarrollo Rural/Foundation for Rural Development) NGO was on
board, and the school project was in the works.
Waelti-Schoenfeld Coffee Exporters and a local farmer who
donated land were also part of this alliance.

Sunny D 3x3 School Program
Sunny D and the Spanish Basketball Association (SBBA) havedesigned a Spanish school sports program to promote the sport ofbasketball. This is the third year for the program.
Over the past three years, more than 11,000 schools haveparticipated, including 100 schools for handicapped children. Morethan four million students, ages 6 to 18, have taken part with thehelp of 20,000 physical education teachers.
The physical education teachers are provided with a Sunny D 3x3
kit, containing a CD-rom with exercises and rules, as well asgames, basketballs, and posters.
The program is completed in 3 stages:• Learning and training• Internal championships• Regional tournaments in the 52 provinces

P&G 2003 Sustainability Report

Sustainability in Action

64

Disaster Relief
P&G people feel fortunate, and they are eager to help when others suffer misfortune. P&G’s resources,
including the talents and energy of its people, often are helpful at times of crisis. Here are a few ways
P&G and its people have contributed to disaster relief over the past year:

P&G Joins the Fight Against SARS
Thousands of medical workers in Beijing have been risking theirhealth, and even their lives, during the SARS (Severe AcuteRespiratory Syndrome) epidemic. The SARS fight has been stressful
not only to those fighting the epidemic and caring for SARS
patients, but to their families as well.
Wanting to make this challenging time a little easier for thefamilies, P&G employees at the Beijing Technical Centervolunteered on weekends to assemble more than 10,000 gift
packs of P&G products. The gifts arrived at medical workers’
homes in advance of China’s Labor Day holiday on May 1.
Elsewhere in the region – in Taiwan, in Hong Kong, and in China’s
mainland outside the capital – P&G supported governments andthe medical community by donating respiratory ventilators andSafeguard soap products to hospitals, printing educational
pamphlets, providing public service announcements, andproducing training films on preventing the spread of SARS.

P&G Donates Media Time To Red Cross
When a tornado devastated the Tennessee town where P&G
makes Pringles potato chips, P&G found itself both a victim and an
aid provider at the same time.
The tornado did millions of dollars’ damage to P&G’s Jackson
Plant, which is the area’s second-largest employer. Getting theplant functioning again wasn’t just a matter of making potato
chips; it also was a matter of keeping people employed andkeeping P&G a vital asset in the community.
While the Jackson Plant was repairing its roof and the collapsed
southern end of the building, the Company also worked on ways
to help the surrounding community. P&G made a $125,000
general donation to the Red Cross and also provided truckloads ofproducts. Then the Company decided to add to this donation bybuying the Red Cross $2 million in advertising time to help it
rebuild its Disaster Relief Fund.
And, confident that Pringles production would be back to normal
by summer, P&G committed to donating 5 cents to the Red Cross
Disaster Relief Fund for every can of Pringles sold in July.

P&G Algeria Assists Earthquake Victims
When an earthquake struck northern Algeria in May, “we wanted
to act fast, and to reach as many needy people as possible,” says
P&G Algeria Commercial Manager Egons Plavnieks.

Jackson Mayor Charles Farmer said of P&G, “They take care of
their employees, and they send a strong message to thecommunity that they're here to stay.”

P&G asked the Red Crescent how best to help. The Red Crescentdirected P&G to the city of Boumerdes, about 50 km (31 miles)
from the capital, Algiers. Boumerdes was at the epicenter of the
6.8 quake and suffered thousands of deaths. Thousands more
people became homeless.
“The Red Crescent advised us that the survivors in Boumerdes
desperately needed our products,” says Plavnieks. “Additionally,
there was a critical need for a means to distribute them. The Red
Crescent didn’t have trucks to carry the supplies.”
P&G quickly moved a large quantity of shampoo and feminine
pads from its distributor’s warehouse to Boumerdes, bringing somecleanliness and comfort to the survivors.
“I will never forget the expressions on people’s faces – how happy
they were to receive our gift of P&G products,” says Human
Resources Manager Issam Haouari.

A tornado struck P&G’s Pringles plant inJackson, Tennessee, last spring.

Sustainability in Action
Disaster Relief

P&G 2003 Sustainability Report

Dish Liquids Continue to Save Birds
When there’s an oil spill, animal rescue groups around the worldcommonly use P&G’s dishwashing products to clean wild birds.
Dawn, Dreft, and Fairy Liquid effectively remove oil, yet are gentle
on birds’ delicate feathers and skin. Bird rescue professionals savethe lives of thousands of oil-soaked aquatic birds each year by
washing them in dishwashing liquids donated by P&G. Animal
rescue groups and P&G have been working together on bird
rescue operations for more than 20 years.
This past year, around the globe, there have been a number of oil
spills from transporter ships. P&G has donated dishwashingproducts for bird rescue. For example, in Belgium, P&G sent 200
liters of Dreft to rescue centers cleaning sea birds weighed downby oil from a sunken auto carrier in the North Sea. P&G also
provided a large number of towels and cloths to dry and warm
the birds.
The number of major oil spills has decreased dramatically in recent
years. Decades of experience have raised the success rate forrehabilitating oil-soaked birds from 3 percent to 90 percent.

on theWeb

For more information on the Save a Duck program,please visit:
http://www.homemadesimple.com/saveaduck/

Credit: IBRRC (International Bird
Research and Rescue Center)

65

P&G 2003 Sustainability Report

66

Index
GRI#

Index Listing

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

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

32
88, 9, 13
10, 11
10, 1112
8
8
5, 8, 13
8

Report Scope
2.10
Contact person
70
2.11
Reporting period
1, 8
2.12
Date of most recent report8
2.13
Boundaries of report (countries/regions, products/services, divisions/facilities/joint ventures/subsidiaries) and specific limitationsof scope
8. 10, 13
2.14
Significant changes in size, structure, ownership, or products/services that have occurred since the previous report15
2.15
Basis for reporting on joint ventures, partially owned subsidiaries, leased facilities, outsourced operations, and other situations
that can significantly affect comparability from period to period
43
2.16
Explanation of the nature and effect of any restatements of information provided in earlier reports
44
2.17
Decisions not to apply GRI
N/A
2.18
Criteria/definitions used in any accounting for economic, environmental, and social costs and benefits
5, 6, 43
2.19
Significant changes from previous years in the measurement methods applied to key economic, environmental,
and social information
N/A
2.20
Policies and internal practices to enhance and provide assurance about the accuracy, completeness, and reliability thatcan be placed on the sustainability report40, 43
2.21
Policy for independent assurance
N/A
2.22
Means to get additional information and reports about economic, environmental, and social aspects of theorganization’s activities
1, 8, 24, 51, 70
Structure & Governance
3.1
Governance structure of the organization, including major committees under the board of directors that are responsible
for setting strategy and oversight of the organization.
3.2
Percentage of impendent board directors
3.3
Process for determining board expertise
3.4
Board-level process for overseeing sustainable management
3.5
Linkage between executive compensation and achievement of the organization’s financial and non-financial goals
3.6
Organizational structure and key individuals responsible for oversight, implementation, and audit of economic,
environmental, social, and related policies
3.7
Mission and value statements
3.8
Shareholder mechanisms to provide information to Board
Stakeholder Engagement
3.9
Basis for identification and selection of major stakeholders
3.10
Approaches to stakeholder consultation
3.11
Type of information generated by stakeholder consultations
3.12
Use of information generated by stakeholder engagements
3.13
Explanation of whether and how the precautionary approach or principle is addressed by the organization
3.14
External developed, voluntary economic, environmental, and social charters, sets of principles, or other initiatives
to which the organization subscribes or which it endorses.
3.15
Principal memberships in industry associations
N/A = Not applicable. P&G only reports on data that is relevant to the business. It does not collect data that is used solely for the sustainability report.

21, 2321
21
21
23, 25
10
21, 22, 24
21

36, 37, 39
36, 37, 39
40
40
41
25
35

IndexGRI#

P&G 2003 Sustainability Report

Index Listing

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

67

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

28, 31, 33, 53
5, 19, 25, 27, 28, 29,
30, 31, 43, 51, 52, 53, 55
15
23, 33, 34, 50
NA

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

5, 13, 14, 51
P&G reports data by global business units.

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

52
NA

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

54

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

6, 44
6, 44

EnergyEN3
EN4

Direct energy use
Indirect energy use

6, 44, 45
6, 44, 45

Water
EN5

Total water use

6, 44, 45

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

Major impacts on biodiversity

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

IndexGRI#

P&G 2003 Sustainability Report

Index Listing

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

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

68

Page(s)6, 44, 46
We do not use ozone depleting substancesin our manufacturing operations.
49
47, 4849
6, 50

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

6, 44, 50

We report globally. Please see page 6.
NA. We do not track this data.

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

While employees are free to join a union,
the Company does not track this data.
Policy and procedures involving information, consultation, and negotiations with employees over changes in thereporting organization’s operations (e.g. restructuring)
15

Health & Safety
LA5Practices on recording/notification of occupational accidents/diseases
50
LA6
Description of formal joint health and safety committees comprising management and worker representatives andproportion of workforce covered by any such committees
33
LA7Standard injury, lost day, and absentee rates and number of work-related fatalities
6, 44, 50, 55
LA8Description of policies/programs (for the workplace and beyond) on HIV/AIDS
No policy at this time.
Training/Education
LA9
Average hours of training per year per employee by category of employee

We do not track this information.

Diversity/Opportunity
LA10
Description of equal opportunity policies or programs, as well as monitoring systems to ensure compliance andresults of monitoring
6, 24, 25, 32, 53
LA11Composition of senior management and corporate governance bodies, including female/male ratio and otherindicators of diversity as culturally appropriate
6 - Please see our Annual ReportSocial Performance Indicators – Human Rights
Strategy/Management
HR1
Description of policies, guidelines, corporate structure, and procedures to deal with all aspects of human rights
relevant to operations, including monitoring mechanisms and results.

24 - Please view our
Values and Policies; 27

P&G 2003 Sustainability Report

Index

GRI#

Index Listing69

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

Freedom of Association
HR5
Description of freedom of association policy

24 - Please view our
Values and Policies

P&G recognizes the Global Sullivan Principles
which support voluntary freedom of association.
See page 25.

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

27

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

27

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

27, 28, 36, 37

24

Political Contributions
S03
Description of policy, procedures/management systems, and compliance mechanisms for managing political lobbying
and contributions
S04
Awards received relevant to social, ethical, and environmental performance24
16, 17

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

33, 38

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

33, 38

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

29
29

P&G 2003 Sustainability Report70

2003 Sustainability Report
Global Editor

Janice Tarter, U.S.A.

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

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

DesignAndy Ruttle, Ruttle Design Group, Inc.,
Cincinnati, Ohio, U.S.A.

The report team thanks all the individuals throughout the world
who contributed information, stories, and data to this report.

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

on theWeb

P&G’s 2003 Sustainability Report can be found at:
http://www.pg.com/sr