2002 Sustainability Report

Linking Opportunity with Responsibility

P&G 2002 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.
P&G’s Statement of Purpose
We will provide products and services of superior quality
and value that improve the lives of the world’s consumers.
As a result, consumers will reward us with 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) June 2000 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

A. G. Lafley’s Statement
VisionExecutive Summary
P&G Profile
Policies, Organization, & Management Systems
Performance
Environmental
Economic
SocialSustainability In Action

For further information about the GRI, please visit
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.

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

Note: Years listed in this Report‘s data charts signify the fiscal year ending June 30.
© 2002 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.

2
3
4
7
14
36
38
46
49
51

P&G 2002 Sustainability Report

2

A. G. Lafley’s Statement

There are two important things to know about Procter & Gamble.
First, the consumer is boss. Our business is based on this simple
idea. When we deliver to consumers the benefits we’ve promised,
when we provide a delightful and memorable usage experience,
when we make everyday life a little bit better, a little easier, a little
bit healthier and safer, then we begin to earn the trust on which
great brands are built. Sustaining that trust requires an evengreater commitment because improving lives is not a one-time
event nor is it a one-dimensional challenge; we must provide
products and services that meet the needs of consumers aroundthe world while always fulfilling P&G’s responsibilities as acorporate citizen.
Second, P&G is committed to staying in the lead. Our people areleaders. Our brands are leaders. We have a culture that embraces
leadership – and that leadership culture drives not only businessresults, but also the way we think about social responsibility andsustainability. We look for opportunities where others see only
responsibility. We think and plan for the long term.
Our respect for consumers and our commitment to leadership arereflected in our financial performance. Through clear strategic
choices, operational excellence, and financial discipline, we are
returning to the consistent, reliable earnings and cash growth thatshareholders expect from our Company. These results are getting
P&G back in the lead and are also allowing us to move forward on
longer-term initiatives that we believe may help address crucial
global problems such as waterborne disease, sanitation, cleanwater, women’s health, dental hygiene, and childhood nutrition.
Historically, P&G has marketed its products to more affluent
consumers, predominantly in developed markets. Many of these
longer-term efforts are focused on consumers in the developingworld – consumers with the same expectations for quality of life
but who have far less purchasing power. This presents newchallenges. We must often rethink fundamental assumptions
about how we create, manufacture, distribute, and market new
products. We must find creative new ways to help improve thelives of consumers at many different income levels, in many diverseand different parts of the world. We are doing this. In several
developing countries, we are experimenting to find the best ways
to make beneficial products, such as NutriStar, available to families
no matter how challenging their economic circumstances may be.
Sustainability challenges are not limited to the developing world, ofcourse. We are also focused on using the same kind of thinking to
improve lives and build P&G’s business in developed markets. One
example is our Actonel prescription drug for the treatment andprevention of postmenopausal osteoporosis, which is already a$400 million brand – and growing. Another example is the use of
cause-related marketing to build sales of established brands indeveloped countries, while also generating significant contributions
to help address problems such as tuberculosis and children’s
education in developing countries.
My key point is that we must take seriously our responsibility tohelp raise and sustain quality of life everywhere P&G does
business. We recognize that fulfilling this responsibility is, quite
simply, fulfilling the purpose to which generations of P&G people
have aspired. It is a responsibility we embrace with the sameinnovative spirit, operating discipline, and dogged determination tolead that have characterized this Company for 165 years. We will
not let up.

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

P&G 2002 Sustainability Report3

VisionP&G continues to embrace Sustainable Development as a businessstrategy, as well as a corporate responsibility. We believe we cangrow our business and deliver ever-greater shareholder andstakeholder value by bringing innovations to the marketplace that
address the frustrations and aspirations of consumers at all
economic levels. Strategically, this has led us to focus on water,
health, and hygiene as the areas that most relate to our brands
and core competencies. As we enter our fourth year of pursuingthis strategy, we are now moving from theory to reality, fromconcepts to the marketplace. And our belief is stronger than everthat we can make breakthrough contributions in children’s
nutrition and development, safe drinking water, and the reductionof waterborne disease.
These are areas of global importance. Around the world, children
are suffering from micronutrient deficiencies of iron, vitamin A, andiodine in their diets. The long-term impact is striking. A quarter
million children go blind each year. Workforce IQs are often 10 to
15 points lower in areas where these dietary deficiencies arepresent. Rates of stillbirths and impaired learning and development
are exponentially higher than in other parts of the world.
Last fall, P&G entered the Venezuelan market with NutriStar, afortified drink mix that has been proven through clinical studies tocorrect micronutrient deficiency. While our market experience is still
limited and we have much yet to learn, we are encouraged byconsumers’ response to the product and by our results to date invalidating our sustainable development business model. The
coming year will see the launch of other initiatives.

• We worked with the American Academy of Pediatrics to educate
parents on the need for childhood immunizations.
• We formed an alliance with TechnoServe, a non-governmentalorganization, to help make coffee growing profitable for as many
people as possible.
• We sponsored dental hygiene awareness campaigns with theministries of health in Poland and China.
Partnerships like these are becoming an increasingly important way
P&G does business. In fact, our Chief Executive, A.G. Lafley, hassaid he wants P&G to be a magnet for best-in-class partners. Our
goal is to become the best company in the world at spotting,developing, and leveraging partnerships in every part of thebusiness. This philosophy is becoming a core competency, and it
will make P&G’s Sustainable Development efforts – as well as otherareas of the Company – even more effective and far-reaching inyears ahead.
Our success is being recognized. In 2002, P&G was named theNo. 1 consumer non-durables company in the Dow Jones
Sustainability Group Index for the third straight year. We earned aTop-5 ranking in Business Ethics magazine’s 100 Best Corporate
Citizens for the third year in a row. We ranked third on Fortune
magazine’s list of most socially responsible companies. This
recognition is greatly appreciated affirmation that we are fulfilling
our purpose as a Company – making everyday life better for
consumers around the world.
We are pleased to share with you our progress.

In all our work to date, we have come to appreciate more thanever that addressing issues of water, health, and hygiene is not
something we can do alone. Partnerships have been and remain
integral to our Sustainable Development efforts.
George D. Carpenter• We partnered with the U.S. Centers for Disease Control toconduct clinical studies on waterborne disease in Guatemala.
• We joined forces with UNICEF to launch a marketing initiativethat is funding tuberculosis vaccinations for 8 million children inseveral developing countries.

Director
Corporate Sustainable Development

P&G 2002 Sustainability Report

4

Executive Summary

P&G 2002 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. We focus in the areas of:• 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 Associatedwith 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

2002$40,238
4,352

2001$39,244
2,922

2000$39,951
3,542

3.26

2.15

2.61

Philanthropic Contributions
P&G and its employees have a longstanding commitment tobeing good citizens and neighbors in all the places where we dobusiness around the world. We believe we have a responsibility
to society to use our resources – money, people, and energy –wisely. We show our financial commitment through support fora wide range of educational, health, social service, cultural, civic,
and environmental organizations. Worldwide, P&G has acorporate contributions system that coordinates contributions tolocal communities.
Contributions made by The P&G Fund and Corporate
Contributions in North America for the past three years areprovided in the following table:

Total

2002
$29,587,237

2001$27,503,686

2000$28,292,768

Contributions made by The P&G Fund and Corporate
Contributions globally totaled $77,746,930 in the fiscal year
ending 2002.
P&G’s contributions and community activities are an important partof achieving the Company’s purpose of improving the lives of theworld’s consumers. During the past year, P&G through The P&G
Fund has provided support to more than 1,500 organizations.

P&G 2002 Sustainability Report

Executive Summary

Diversity Data – Global Enrollment
P&G continues to focus on diversity as a global strategy andexpects its work force to become increasingly more diverse. Global
data on enrollment by gender is shown in the following table:
2002
34.6
41.6

Global Enrollment % Female

Management
All Other Employees1

2001
34.5
38.0

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

2002
0.67

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

2002

2001

2000

16.1
20.3

15.8
18.1

15.9
18.8

34.4
38.0

34.1
38.8

33.7
39.7

6

2001
0.69

2000
0.79

2001
0.24

2000
0.35

Lost and restricted workday cases per 100 employees

2002
0.27

Summary of Violations and Interventions
Past three years’ global data on environmental, transportation, andworker health and safety violations and interventions:2002
58$39,026

Number
Fines

2001
73
$77,070

2000
48$13,400

2 Administrative, Technical, and Plant Technicians

Note: These numbers include the recent Clairol acquisition.

Manufacturing Resource & Waste Summary by Global Business Unit (GBU)
TotalsAll units are in thousands ofmetric tons 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 tons)***2002 Global Business Unit Detail*

2002

2001

2000

BFFC

FHC

BC

HC

FB

16,151
208

15,808208

13,936
476

3,652
208

8,426
0

984
0

1,098
0

1,992
0

798
54%

910
51%

879
55%

504
55%

121
57%

59
46%

33
51%

81
50%

304
19
23
20

376
13
36
15

317
12
39
19

196
8.7
7.9
13.3

37
4.7
6.5
3.4

23
3.8
3.8
0.6

14
0.7
0.8
0.4

33
0.8
4.2
2.1

989
3,309
85
1,274

1,068
3,210
88
1,722

1,080
2,983
87
1,858

614
2,365
56
34

195
419
13
831

44
88
4
346

41
95
2
0

94
342
10
63

† 1 metric ton = 1,000 kg = 2,205 lbs.
* BFFC = Baby, Feminine, & Family Care; FHC = Fabric & Home Care; BC = Beauty Care; HC = Health Care; FB = Food & Beverage** 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 by the U.S. Environmental Protection Agency.

P&G 2002 Sustainability Report

7

P&G Profile

P&G 2002 Sustainability Report

P&G Profile
P&G is celebrating 165 years of providing trusted, high-quality
brands that make every day better for the world’s consumers. The
Company markets nearly 300 brands – 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 102,000 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 July 26, 2002, there were 1,004,000 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 fourth Sustainability Report for P&G’s worldwide
operations. Data in this report covers the period from July 1, 2001,
through June 30, 2002. 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 www.pg.com for the latest news and in-depth
information about P&G and its brands.

Key Brands
Global Business Unit

Key Brands

Baby, Feminine, & Family Care
Baby Care
Pampers, Luvs, Dodot, Prima
Family Care
Charmin, Bounty, Puffs, Tempo, Codi
Feminine Care
Always, Whisper, Tampax, Lines Feminine Care,
Linidor, Evax, Ausonia, Orkid
Fabric & Home Care Tide, Ariel, Downy, Lenor, Gain, Cascade, Ace
Laundry, Cheer, Bold, Swiffer, Bounce, Dash,
Dawn, Fairy Dish, Joy, Febreze, Ace Bleach, Era,
Bonux, Dreft, Daz, Vizir, Salvo, Mr. Proper,
Mr. Clean, Flash, Fairy Laundry, Viakal, Dryel,
Alomatik, Ivory Dish, Maestro Limpio, Rindex
Beauty Care
Pantene, Olay, Head & Shoulders, Cover Girl,
Clairol Herbal Essences, Max Factor Cosmetics,
Hugo Boss, Secret, SK-II Skin Care, Zest,
Safeguard, Rejoice, Vidal Sassoon, Clairol
Nice ’n Easy, Old Spice Deodorant, Pert,
Ivory Personal Care, Sure, Camay, Laura
Biagiotti, SK-II Cosmetics, Old Spice Fragrance,
Physique, Noxzema, Giorgio, Muse
Health CareIams, Eukanuba, Crest, Asacol, Actonel,Vicks NyQuil, Metamucil, Vicks VapoRub,
Fixodent, Scope, Pepto-Bismol, Didronel,Vicks/Wick, Macrobid, PUR, Vicks DayQuil,
ThermaCare, Vicks 44, Kukident, Cacit,
Vicks Sinex, Dantrium
Food & Beverage
Folgers, Pringles, Sunny Delight, Millstone,
Punica, Torengos

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

8

P&G ProfileP&G 2002 Sustainability Report

Financial Information
The Company reported net earnings of $4.35 billion for the fiscal
year ended June 30, 2002. Results included a charge of $706
million, after tax, related to its restructuring program.
Core diluted net earnings per share, which excludes the impact ofrestructuring charges and the prior years’ amortization of good will
and indefinite-lived intangibles, increased 10 percent to $3.59 in
2002. In the current year, every business unit delivered net
earnings growth above the corporate objective.
Core net sales were $40.17 billion, up 2 percent from last year.
Excluding an unfavorable exchange rate impact of 2 percent in thecurrent year, core net sales increased 4 percent.
Common share dividends were $1.52 per share in 2002. For
the coming year, dividends will increase to $1.64 per commonshare, marking the 47th consecutive year of increased share
dividend payments.

9

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).
• Baby, Feminine, & Family Care
• Fabric & Home Care
• Beauty Care
• Health Care
• Food & Beverage

Net Sales by Global Business Units
Amount in millions
2002
Baby, Feminine, & Family Care $11,877
Fabric & Home Care
11,618
Beauty Care
8,079
Health Care
4,979
Food & Beverage
3,801
Corporate
(116)
Total
40,238

2001$11,991
11,660
7,257
4,353
4,139
(156)
39,244

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

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

2002$40,238

2001$39,244

2000$39,951

12,571
2,031
4,352

12,406
1,694
2,922

12,483
1,994
3,542

3.26
40,776
11,201
13,706

2.15
34,387
9,792
12,0102.61
34,366
9,012
12,287

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 2002 Sustainability Report

10

P&G’s Billion-Dollar Brands
Pampers
Over 30 million babies
experience the comfort anddryness of Pampers every day.

Tide
Tide cleans more than
32 million loads of laundry
every day.

Ariel
More than 300 million piecesof clothing are washed with
Ariel every day.

Always / Whisper
On an average day, morethan 25 million women use
Always or Whisper feminine
protection.

PanteneNearly 1.7 million consumers
purchase a Pantene hair careproduct every day.

CharminEvery day, 50 million
households in North America
squeeze the soft Charmintoilet tissue.

Iams
Iams and Eukanuba provide
27 million dogs and cats withsuperior nutrition every day.

BountyEvery day, 50 million North
American households use
Bounty paper towels as the
Quicker Picker-Upper.

Folgers
Americans drink 85 million
cups of Folgers coffee
every day.

Crest
A Crest oral care productbrings a beautiful, healthy
smile to over 150 million
faces every day.

Downy / Lenor
They soften and freshen morethan 21 million loads oflaundry every day.

PringlesPeople pop 275 million
Pringles potato chips
every day.

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 2002 Sustainability Report

P&G Profile

11

Major Acquisitions
Acquisitions accounted for as purchases in 2001-2002 totaled$5.47 billion, primarily driven by the Clairol acquisition. They include:
P&G’s Acquisition of Clairol
In November 2001, P&G acquired Clairol and began to integrate
Clairol’s $1.6 billion hair care, hair color, and personal care business
into the P&G Beauty Care business.
This acquisition brings P&G into the fast-growing business of haircolorants and positions P&G for accelerated growth across its
entire hair care category. With the acquisition of Clairol, P&G has apresence in all major segments of the beauty market.
Consumers are the big winners in this deal. Clairol hair colorantand hair care brands are known in the United States and in key
markets around the world. Now consumers can look forward toeven more innovative and broadly available products in the future.
P&G values the tremendous knowledge and experience of the
Clairol organization. P&G will not only build on the strong plans
and commitments Clairol already has in place but also will movequickly to identify the next major opportunity for Clairol, based on
the synergies of Clairol’s popular brands and P&G’s outstanding
capabilities in innovation and global distribution and marketing.

Acquisition of Japan’s Leading Automatic Dishwashing Brandfrom SC Johnson
P&G acquired Hi-Wash, Japan’s leading automatic dishwashingbrand, in April 2002.
Hi-Wash has been the automatic dishwashing product market
leader in Japan since its introduction in 1986.
With the introduction of compact, countertop dishwashingmachines, the market for home-use automatic detergent products
has been growing. P&G expects this trend to accelerate in the near
future behind further lifestyle changes, new dishwashing machine
design, and improved dishwashing products.
By acquiring the market-leading automatic dishwashing brand in
the early stages of category development, P&G has a great
opportunity to leverage its leading global technology position,commercial know-how, and strong go-to-market capability tocreate a profitable brand within its Japanese portfolio.

P&G Acquires Fab and Bingo
P&G acquired Colgate’s Central American heavy-duty and superconcentrated laundry detergents business in January 2002. The
acquisition adds the brands Fab and Bingo to the line of products
P&G sells in Panama, Costa Rica, El Salvador, Guatemala,Honduras, and Nicaragua.
This initiative is part of strategic plans to improve the businessthrough a differentiated portfolio of brands that provide superiorvalue and meet a variety of consumer needs.

Major Divestitures
Divestitures accounted for as sales in 2001-2002 totaled$570 million. They include:• Jif• Crisco• CometBuilding 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 Profile

External Recognitions
Following is a list of some of the key awards and recognitions
received by the Company during the past year:
Corporate Awards• American Advertising Federation – Corporate Achievement for
Integrating Multicultural Marketing and Diversity Programs into
Marketing Strategies• Business Ethics magazine – 5th Best Corporate Citizen• Capital magazine – P&G Turkey, Most Admired Company• Chilean Association of Supermarkets (ASACH) – P&G Chile Best
Supplier of 2000/2001• Consumidor Moderno magazine – Best Customer Relations
Service in Brazil• Dow Jones – Market Sector Leader• EthicScan – P&G Canada No. 1 in Corporate Social Responsibility• Fortune magazine – No. 1 Most Admired U.S. Company in Soaps& Cosmetics• Fortune magazine – No. 3 Most Admired Company in Social
Responsibility• Humane Society of the United States – Humane Award for
Making the World a Better Place for Animals• InfoWorld 100 – Recognizing Innovation in IT Architecture in the
Supply Chain• Prime Minister’s Award for Excellence in Community Business
Partnerships – P&G Australia• Society for the Advancement of Socio-Economics – Ranks
P&G Peru Among Top 10 Companies in Corporate Social
Responsibility and No. 1 in Hiring and Training Practices• Teletalk magazine – P&G Germany – 1st Place in Customer Care
• The Mexican Wholesaler Association, The Mexican Association ofElectronic Commerce, The University of Monterrey, Gigante – Allrate P&G Mexico Best Business Partner and Supplier of the Year
• Wall Street Journal/Harris Interactive – Ranks P&G No. 10 on
Reputation out of 45 U.S. Companies Considered• GDO Week magazine – Recognizes P&G Italy’s Dash Missione
Bontà (Goodwill Mission) Campaign with Trade Ethic Award for
Sustainability• Czech Top 100 – P&G rated 4th Most Admired Company in theChemical, Pharmaceutical, and Rubber Industry and Among Top
100 Most Admired Companies in the Czech Republic
Brand Awards• Capital magazine – P&G France Receives Star Brand Recognition
for Pampers• The Chilean Marketing & Advertising Effectiveness Prize – to P&G
Chile for Pantene and Ace• Cosmetic Executive Women – Year’s Best Buy Award for CrestWhitestrips, Cover Girl Outlast, and Olay Total Effects Cuticle andNail Moisture Treatment• Lebensmittel Praxis (German Trade Journal) – Best New Products
and their rankings in their categories – Ariel Hydractiv Color (No.
1), Antikal Spray (No. 2), Alldays Tanga Pantiliners (No. 2), Blenda-Med Complete Plus (No. 2), Pampers Sensitive Baby Wipes (No.
2), Blendi Gel (No. 2)• New York American Marketing Association EFFIE Award – toTampax, Tide, Cascade, NyQuil, Gain for Hispanic advertising
campaigns

P&G 2002 Sustainability Report12• Retail magazine – P&G Poland Product of the Year for Vizir• Stiftung Warentest – Head & Shoulders Best Dandruff Shampoo
in Germany• EFFIE Award – P&G Poland Receives Silver Award for Blend-aMed and Bronze Award for Vizir• European EFFIE Award – for Alldays• Arthur Andersen – Il Sole 24 ORE Customer Satisfaction Award –Presented to Iams in Italy• Prima Baby magazine (UK) – Recognizes Pampers New Baby as a“Best Buy”
• Business Week magazine – Names Pampers as One of Top 100
Brands in the World• Absatzwirtschaft (professional marketing journal) and theGerman Marketing Association – Pringles Wins Brand Award
2001 in Germany• Reader’s Digest Hungary – Rates Ariel and Pantene Pro-V Most
Trusted Brands• Kazakhstan’s “Choice of the Year” – P&G Receives Top Honor
with a Total of Five Awards (Pantene, Pampers, Ariel, Blend-aMed, No. 1 Producer of Hygiene Products)
Employee Awards• Business Today and Hewitt – P&G India Voted One of India’s Best
Employers• Fortune magazine – Top 20 Companies for Minorities• Hispanic magazine – Top 100 Corporations to Work For andCorporate Elite• Korean Management Association – Best HR Practices Award for
P&G Korea• Korn/Ferry International – P&G Peru No. 1 With Best Hiring andTraining Practices• Minority MBA magazine – One of the Best Employers for
Minority MBAs
• Money magazine – 4th for Employee Benefits• National Minority Business Council – Outstanding Corporate
Support Award• Ohio 2001 Minority Business Development Award• Wissenschaftszentrum – Total E-Quality Distinction for Excellent
Equal Opportunity Personnel Policies at P&G Germany• Working Mother magazine – P&G in Top 100 for Best
Companies for Working Mothers
Environmental Awards• BiE Index of Corporate Environmental Engagement – Sector
Leader in Environmental Sustainability• Financial Times – Rates P&G No. 12 Globally for Best
Environmental Practices• Wisconsin Business Friend of the Environment Award to P&G’s
Green Bay Plant

on theWeb

For more information on awards received by P&G,
please visit our Web site at:
http://www.pg.com/about_pg/overview_facts/
awards_recognition.jhtml

P&G ProfileP&G 2002 Sustainability Report

Highlighted Awards
Dow Jones Rates P&G Market Sector Leader for Third YearFor the third consecutive year, P&G was rated a market sector leader
for sustainability in the household products, non-durable sector of the
Dow Jones Sustainability Index (DJSI). This recognition, by anindependent body, is an acknowledgment of the efforts and strategies
P&G has implemented to drive sustainability within its business. It also
recognizes the well-established management principles and systems
that P&G uses to develop, produce, and market products. P&G has
long been a leader in employee benefits, workplace safety,
environmental management of our operations, environmental andhuman safety of our products, ethical business practices, andinvolvement in our communities.
The DJSI is a product of Dow Jones and the SAM Sustainability Groupof Switzerland. The SAM rating system evaluates the sustainability
performance of the 2,000 largest companies in the Dow Jones GroupIndex. Each company is rated on an extensive set of economic,
environmental, and social development criteria, and the top 10
percent are included in the DJSI. As part of each year’s launch, the top
company in each market sector is highlighted, and P&G is one of only
three companies to receive this recognition for three straight years.

on theWeb

13

6th BiE Index of Corporate Environmental Engagement
BiE’s Index of Corporate Environmental Engagement is widely
regarded as the leading benchmark of FTSE-listed companies’
environmental management and performance. This year P&G
achieved first place in its sector, Personal Care and Household
Products, and 13th place overall.
Listed are some of the comments from BiE:
• “Environmental management scores remain exceptionally high, withthe company scoring full marks on all questions. Congratulations.”• “Performance measurement is impressive in all impact areas. BiE
applauds P&G for being able to demonstrate performance
improvement across both the core and selected impacts. The highscores are clearly an indication of the company’s commitment tocontinual improvement.”on theWeb

For more information,
visit www.business-in-environment.org.uk

P&G’s DJSI profile can be found at:
http://www.sustainability-index.com/djsi_world/
pdf/CB/CB_Procter_Gamble_E.pdf

P&G’s Integrated Waste Management Book
Wins Green Apple Award
The second edition of P&G's book “Integrated Solid Waste
Management: A Life Cycle Inventory” won a Green Apple Award forEnvironmental Best Practice 2001. The Green Apple Award is given by
the UK Institute of Waste Management. P&G's book was a National
Gold Winner for education and innovation in the Commerce andIndustry category.
The book describes the concept of Integrated Waste Management
and provides a Life Cycle Inventory computer model that looks at theentire waste management system and predicts its likely environmental
burdens. The aim of the book is to help readers develop moresustainable solid waste management systems.

P&G Uzbekistan – No. 1 Producer of Hygiene Products
On December 14, 2001, P&G received the highest award in
Uzbekistan’s First National “Choice of the Year” competition. Ariel,
Pantene, and Blend-a-Med were all rated No. 1 in their categories. The“Choice of the Year” competition is based on results from a national
public opinion poll.
P&G began operations in Uzbekistan in 1995. Uzbek consumers
recognize the high quality of P&G’s products and the Company’scontribution to the development of culture, health care, and hygiene
education in Uzbekistan.

P&G Canada Ranks Highest in Corporate Social Responsibility
Based on data gathered from EthicScan Canada, P&G scored higher
than a number of its major competitors in the personal care products
industry. EthicScan is Canada’s oldest full-service ethics consultancy
and corporate social responsibility research house. P&G Canada
ranked No. 1 in seven categories, including:• Equity and Family• Community Responsibilities• Management Practices & Consumer Relations• Environmental Performance (tied with Gillette Canada Inc.)• Employee Relations• Progressive Staff Policy• Candor

P&G Peru Ranks in Top 10 in Corporate Social Responsibility
The Society for the Advancement of Socio-Economics, a prestigious
NGO focused on the promotion of corporate social responsibility andfunded by the Kellogg Foundation, ranked P&G Peru among the top
10 companies with social responsibility policies and practices.
The 2001 study, covering more than 150 companies, consisted ofinterviews with top company managers and an assessment of theirpolicies and practices toward the community, the environment,
and employees.

P&G 2002 Sustainability Report

14

Policies, Organization, & Management Systems

P&G 2002 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, whether in terms of health, hygiene, or convenience. Through our activities we also
contribute to the economic and social well-being of a range of other stakeholders, including
employees, shareholders, local communities in which we operate, and more widely to regional,
national, and international development. So P&G contributes to sustainable development both throughwhat we do and how we do it.
How we do it includes ensuring we address any environmental and socioeconomic issues associatedwith our products and services. This is achieved by ensuring that the whole Company works within anagreed set of management systems and policies. Central to P&G’s organization are our Principles,
Values, and Statement of Purpose. These act as guidance for the development of our entire
organizational structure, wherever we are in the world.

15

P&G 2002 Sustainability Report

Policies, Organization, & Management Systems

16

Statement of Purpose
We will provide products and services of superior quality and valuethat improve the lives of the world’s consumers.
As a result, consumers will reward us with leadership sales, profit
and value creation, allowing our people, our shareholders, and thecommunities in which we live and work to prosper.
PeopleValues
P&G is its people and the values by which they live.
P&G People
We attract and recruit the finest people in the world. We build ourorganization from within, promoting and rewarding people
without regard to any difference unrelated to performance. We acton the conviction that the men and women of P&G will always be
our most 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 ofwhere we are going. We focus our resources to achieve leadershipobjectives and strategies. 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 successin mind.

John E. Pepper – Community Leader
John Pepper, Chairman of the Board of Directors, retired from P&G on
July 1, 2002. He will continue to serve as Chairman of the Executive
Committee of the Board until July 1, 2003. Throughout his 39-year
career, Mr. Pepper exemplified P&G’s values, particularly the belief thatthe interests of the Company, its employees, and the communities inwhich P&G operates are inseparable. “The value we build forshareholders,” he once wrote, “doesn’t end with a solid balance
sheet. It’s amplified by our ability to be a responsible corporate citizen
wherever we operate around the world.”
That belief has guided his leadership, as well as his personal actions.
And he has been an example for many. In 1987, he helped launch theCincinnati Youth Collaborative, pulling together people throughout
the Cincinnati community to work on behalf of the city’s youth. He
co-chaired the fund-raising campaign for the new National
Underground Railroad Freedom Center being built in Cincinnati. He
serves on the boards of the Partnership for a Drug-Free America and
The National Campaign to Prevent Teen Pregnancy. He participates on
the advisory council of The Character Education Partnership, a groupdedicated to developing moral character and social caring in America’s
youth. He helped launch Project Hope, a program building schools in

Leadership
Integrity
Trust
Passion for Winning
Ownership

Integrity
We always try to do the right thing. We are honest andstraightforward with each other. We operate within the letter andspirit of the law. We uphold the values and principles of P&G inevery action and decision. We are data-based and intellectuallyhonest in advocating proposals, including recognizing risks.
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 acompelling desire to improve and to win in the marketplace.
Trust
We respect our P&G colleagues, customers and consumers andtreat them as we want to be treated. We have confidence in eachother’s capabilities and intentions. We believe that people work
best when there is a foundation of trust.

rural China, and has led community-building efforts in many otherparts of the world, from Russia to Turkey to Egypt. More recently, Mr.
Pepper helped launch the Global Alliance for Improved Nutrition(GAIN), a creative new partnership to increase access to nutrientfortified foods. This initiative will help the children of the world
become healthier and live productive lives.
Mr. Pepper has long believed in being of service to others. That belief
is a defining characteristic of his personality and a hallmark of his
leadership. He will continue to be a strong, positive influence on P&G
and its commitment to make every day better for people throughout
the world.
John Pepper addresses
the gathering at theUnited Nation’s PublicPrivate Partnership
Dialogue.
Credit: Susan
Markisz, UNICEF

Policies, Organization, & Management Systems

P&G 2002 Sustainability Report17

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.

P&G’s Newest
Board Members
The P&G Board of Directors
elected three new members:
Johnathan A. Rodgers, Bruce
L. Byrnes, and R. Kerry Clark.

After a successful 20-year careerat CBS Inc., Mr. Johnathan
Rodgers was named presidentof Discovery Networks, U.S., in1996. He joined the P&G Board
in July 2001. "Johnathan isrecognized as a leader andinnovator in the masscommunications business. He
has led The Discovery Channel
to new levels of success. In
today’s rapidly changing media
and communications
environment, Johnathan’s 35
years of media experience willbring an important additional
perspective to our board," said
John Pepper, Chairman of theBoard’s Executive Committee.

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 functions,sectors, 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.

In April 2002, Mr. Bruce Byrnes
was elected Vice Chairman of
the Board and a Director of theCompany in addition to hiscurrent responsibilities as
President – Global Beauty Careand Global Health Care.
Mr. Byrnes joined P&G in 1970.
He has held a variety ofmarketing and management
positions. In 1999, he became
President – Global Health Careand Corporate New Ventures,and in 2000 added Global
Beauty Care to his
responsibilities

In April 2002, Mr. R. Kerry Clark
was elected Vice Chairman of
the Board and a Director of theCompany in addition to hiscurrent responsibilities as
President – Global Market
Development and Business
Operations.
Mr. Clark joined P&G Canada in
1974. In 1999, Mr. Clark
became President – Asia, withresponsibility for P&G’s
businesses in Northeast Asia,
Greater China, and ASEAN. In
2000, he returned to the UnitedStates as President – Global
Market Development andBusiness Operations.

P&G 2002 Sustainability Report

Policies, Organization, & Management Systems

18

Policies
These are the policies that support our Purpose, Values, andPrinciples.

Child Labor And Worker Exploitation Policy
P&G does not use child or forced labor in any of our global
operations or facilities. We do not tolerate unacceptable worker
treatment such as the exploitation of children, physical punishment
or abuse, or involuntary servitude. We expect our suppliers andcontractors with whom we do business to uphold the same
standards. Should a pattern of violation of these principles become
known to the Company and not be corrected, we will discontinue
the business relationship.

more
info

For more information,please click for full details.

Competitive Intelligence Incident
In summer 2001, P&G management became aware that theCompany had gained access to some confidential Unilever hair carebusiness information. As soon as this became known, P&G voluntarily
brought the information to the attention of Unilever, quarantined theinformation, and returned the materials. P&G also assured Unileverthat none of the information was used in P&G business plans. After athorough investigation, P&G found that the individuals involved with
the information-gathering activity had violated Company policies, andthey were separated from the Company.
In early September, P&G and Unilever reached an agreement to settle
all issues related to the disclosure of this business information. As aninternal follow-up to this incident, P&G redeployed its Purpose, Values,
and Principles to every employee in the Company.

on theWeb

Downloadable PDF Files

P&G and TechnoServe Aid Coffee Growers
In recent years, coffee growers in developing nations have experienced
a steady decline in their incomes because of declining coffee prices. To
address this crisis, P&G has formed a long-term alliance withTechnoServe, a non-profit organization, to help small-scale coffee
growers in Latin America.
P&G’s $1.5 million donation to TechnoServe will be used to help create
long-term solutions to make coffee growing profitable for as many
people as possible. This will be accomplished by improving the qualityof coffee, exploring alternatives to coffee production, and otherinitiatives.
A. G. Lafley, Chairman of the Board, President, and Chief Executive of
P&G, comments, “Our alliance with TechnoServe is consistent with ouroverall commitment to sustainability and corporate social responsibility.”

Our Values and Code of Conduct
http://pg.com/about_pg/corporate/sustainability/
substain_catmain.jhtml
Guidelines for Vendor Selection
http://pg.com/about_pg/corporate/sustainability/
substain_catmain.jhtml

on theWeb

For more information, please visit
www.technoserve.org
José Adan Lopez (left) and othermembers of a TechnoServe-assisted
coffee cooperative in Nicaragua
processing their coffee beans.

Policies, Organization, & Management Systems

P&G 2002 Sustainability Report

19

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.

on theWeb

For more information on the
Global Sullivan Principles, please visit:
http://www.globalsullivanprinciples.org/

Executive 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

P&G 2002 Sustainability Report

20

Diversity starts with attracting and retaining the best talent aroundthe globe. We work to accomplish diversity through long-term
relationships with educational institutions that have solid
populations of diverse students. To supplement these baserecruiting efforts, we utilize intern programs, participate inrecruiting conferences, and increase outreach to high school
students. We execute special programs such as INROADS, P&G
General Manager Camp, and Winter Finance camps to introduce
students to P&G. This year we created additional teams to help
focus on our Hispanic, African-American, Military Service Academy,and People with Disabilities recruiting efforts. To broaden ourcandidate base worldwide, we have launched Recruitsoft, our first
fully global Web-based online candidate management system.
Critical foundation systems focused on assuring employee
retention include effective first-year orientation/join-up programs,
mentors for all employees, high-quality work/career plans, anddiversity training.
Diversity Policy
P&G has a strong legacy of ownership, commitment, andaccountability for diversity because we recognize its direct link to
the Company’s bottom line and that it leverages the full power of
all our employees. We believe diversity creates competitive
advantage through the relentless pursuit of respecting, valuing,
and trusting differences. Diversity is a fundamental component of
P&G’s culture and integral to our “How to Win” business strategy
for success.
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 works withthe leaders of each business to ensure that they set stretching
diversity goals and meet or exceed them consistently. Areas offocus include active leadership, results accountability, building an
inclusive culture, and marketing to diverse consumers.
Diversity at P&G focuses on leveraging the uniqueness each of us
brings from around the world to fulfill P&G’s Purpose, Values, andPrinciples. Our differences are physical, such as race, gender, andage. They also include less visible differences such as diversity ofthought, nationality, cultural heritage, language, religion, sexual
orientation, disability, leadership style, functional expertise, positionin the organization, and others. We work together to create
advantage through our diversity, bound by our common value ofrespect for the individual and our common goal of improving the
lives of our consumers around the world.
At P&G, top executives conduct in-depth diversity reviews annuallywith organization heads. The top 30 officers in the Company havediversity results tied to their stock options awards. Strong
performance in diversity is required to receive top ratings andpromotions. The annual corporate diversity reviews assess diversity
progress and leadership accountability across the business units.
Diversity action plans are developed in each region of the world
to reflect the greatest opportunity for advancement of local
diversity strategies.

Employee support groups and network teams exist throughout theorganization and contribute strongly to our diversity efforts.
Groups include Hispanic, African American, Asian/Pacific American,
Gay, Bisexual, & Lesbian, and People with Disabilities. These
leadership groups serve as advisory teams to top leadership and as
support to group members.
Externally, P&G provides continuing leadership in the advertisingindustry by partnering with our agencies to refer applicants to eachother and help minorities gain entry into commercial production
companies. P&G is committed to helping minority- and womenowned businesses and suppliers prosper. P&G has one of theoldest Supplier Diversity programs in the United States, spending
more than $939 million with minority- and women-owned
suppliers. This year we will increase our spending on advertising inminority media and use of minorities in advertising. The P&G Fund,
the Company’s philanthropic arm, provides more than $15 million
for educational programs, institutions, and materials each year,with $7 million in 2001 to non-profit organizations that primarily
benefit women and minorities. Many employees are personallyinvolved in volunteer and public service efforts that havewidespread impact on their communities.
P&G’s solid progress in diversity has been recognized in manynational surveys: Working Mother magazine (top 10), Moneymagazine for Employee Benefits (ranked 4th), Fortune magazine(ranked 38th), Careers & the Disabled (top 20), and LATINA Stylemagazine (top 50). P&G India was voted one of the best
employers by Business Today. P&G Taiwan was voted "Most
Admired Company" for the fourth consecutive year, and P&G
Korea was recognized as the “Best Foreign Company in
HR Practices.”
P&G’s ultimate goal is to be the “employer of choice,” where
diversity is leveraged as a competitive advantage.

P&G 2002 Sustainability Report

Policies, Organization, & Management Systems

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.
We believe advertising contributes to sustainable development
through a variety of general and specific ways in the marketplace.
To achieve sustainability through the market, we need effective
competition to drive innovation and increased efficiency.
Competition thrives on advertising, and advertising thrives oncompetition. Competition promotes innovation, which leads tobetter products and services, and more variety and choicefor consumers.
There are also many specific business-building opportunities inwhich advertising can contribute to sustainable development byimproving lives around the world:• Promoting new products and services that can significantly
improve quality of life, such as P&G’s NutriStar drink, which helps
fight micronutrient deficiency in Venezuela. In developing
countries, advertising often also involves health education andawareness raising, such as addressed by P&G’s Healthy Smiles
dental health campaign in China.
• Providing social or environmental messages as part of public
service or corporate campaigns. P&G’s Open Minds campaign
in India, for example, raised public awareness of the plight ofIndia’s working street children while collecting money to fundtheir education.
• Promoting innovative products that have environmental orsocial benefits.
• Promoting more sustainable use of existing products to maximize
environmental or social benefits. For example, the WashRight
campaign, run by P&G and other members of the European
Detergents Association in Europe, promotes correct usage oflaundry products and efficient use of water and energy.
• Communicating the sustainability attributes and performanceof companies and other organizations as the public increasingly
wants to know more about the companies behind products
and services.
Despite contributions to sustainable development, advertising’s roleand effects have been questioned. Advertising has been blamedfor spreading Western lifestyles around the world and for
promoting excessive consumption in developed countries.
Spreading awareness of how other people live is one of theinevitable consequences of the global media revolution. We do not
accept that people in developing countries should be denied abetter quality of life. The first priority of sustainable consumption

21

must be to provide access to adequate consumption opportunities
for everyone. Nearly half the world’s population lives on less than$2 per day; they need access to adequate products and services
that can improve their daily lives.
In developed countries, the idea that advertising fuels overconsumption is also misplaced as advertising cannot make people
buy things they do not want or need. Advertising can inform andinfluence and help consumers make more informed decisions, but
it is consumers who choose how best to improve the quality of
their own lives. Advertisers alone are unable to regulate the overall
demand for goods and services.
However, there are clear responsibilities, as well as opportunities,
for advertisers such as P&G. There is a responsibility to ensure truthin advertising and to ensure that messages are legal, decent, andhonest. We also assume our responsibility to ensure the sensitive
portrayal of all groups in society, including women, children, theelderly, and minorities. For this reason, P&G actively supports truthin-advertising mechanisms and conforms to relevant national codesand guidelines wherever we operate.
The contribution of advertising to sustainable development is
discussed in more detail in the report “Industry as a Partner for
Sustainable Development – Advertising,” which has been writtenby the advertising industry in collaboration with UNEP – the United
Nations Environment Program. P&G helped the World Federationof Advertisers (WFA) and the European Association ofCommunication Agencies (EACA) write this report, which waspresented at the World Summit on Sustainable Development in
Johannesburg, South Africa, in August 2002. P&G is an active
member of WFA and is on the Advisory Committee of UNEP’s
Advertising and Communication Forum on Sustainability.

on theWeb

For more information about sustainability
through the market, visit:
http://www.wbcsd.org/newscenter/reports/2001/stm.pdf

To read “Industry as a Partner for Sustainable Development –Advertising,” please visit:
http://www.uneptie.org/outreach/wssd/sectors/advertising/advertising.htm

Policies, Organization, & Management Systems

Data Privacy Policy
P&G’s privacy objective is to create an environment of trust thatallows people to share information, with confidence, that helps us
better understand and meet consumer needs. We believe inprotecting the privacy of all personal information entrusted to us
by individuals. Everyone who provides information to us isinformed of our policies. P&G respects all applicable national andinternational children’s privacy regulations. Applicable local laws
and regulations regarding data privacy are followed. All outsidecompanies handling data on our behalf are required to abide by
our privacy practices.

on theWeb

P&G adheres to U.S./European Union Safe Harbor
principles. For more information, visit:
http://www.export.gov/safeharbor/

P&G 2002 Sustainability Report

22

Privacy Training
Protecting the privacy of all individuals is a priority at P&G. In February
2002, P&G implemented an innovative, computer-based privacy
training course to ensure all employees know their responsibility
regarding managing personal information held by the Company. Our
overall objective in doing this is to create an environment ofknowledge, confidence, and trust. This encourages people to sharepersonal information with P&G, which enables us to better
understand their needs and to meet them with superior information,
services, and products.
P&G will continue this awareness training for new employees and will
present refresher training to all employees, as needed, to maintain
P&G’s leadership position in the area of privacy.

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/
For more information about P&G’s global privacy policy, visit:
http://www.pg.com/privacyprinciples.jhtml

Animal Welfare
Safety is an essential ingredient of all P&G products as P&G’s firstpriority is the safety of our consumers. All P&G products on themarket have been evaluated through a comprehensive risk
assessment.
P&G also cares about the welfare of animals. We have been able
to reduce, refine, or replace animal testing because of ourincreased use of historical data, the increased sophistication ofcomputer models, and the development of alternative researchmethods. Except where required by law, P&G no longer uses
animals in evaluating the safety of our non-food, non-drug
consumer products. We are committed to the ultimate eliminationof laboratory testing using animals.
The majority of the limited testing we carry out today is for drug
and health care products. We are working to help gain theacceptance of alternatives by governments around the world andto eliminate the need for unnecessary regulatory testing.

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

P&G 2002 Sustainability Report

23

De Wildt Project – Protecting Endangered Species
Iams South Africa is a sponsor of the De Wildt Project, the largest
breeding and husbandry center in the world for the cheetah andAfrican wild dog. Both are on the Endangered Carnivore Species list.
Iams South Africa has sponsored the feeding of wild dogs andcheetah since 1994.
De Wildt currently supplies 35 accredited centers and zoos
internationally. It is funded solely through tourism and corporate
sponsorships.

on theWeb

For more information see
www.dewildt.org.za

Kathy Stitzel, D.V.M. – Champion for Alternative Animal Testing
P&G retiree Dr. Kathy Stitzel has made great strides in alternative
animal testing throughout the world. She has worked withgovernments, scientists, and advocacy groups to move closer to theelimination of animal testing while still maintaining the highest
scientific standards for product safety.
In 1999, she became the first corporate recipient of the prestigious
Russell & Burch Award presented every three years by The Humane
Society of the United States to scientists who are outstanding
contributors to the advancement of alternative research methods.
With memberships and active participation in groups such as theSociety of Toxicologic Pathology, Johns Hopkins University’s Center for
Alternatives to Animal Testing, the U.S. Food & Drug Administration
Science Advisory Committee’s Toxicology Subcommittee, and theOrganization for Economic Cooperation and Development, Dr. Stitzel’s
contribution to animal welfare and alternative testing has gone wellbeyond P&G.

To validate new methods and have them accepted by the various U.S.
regulatory committees, Dr. Stitzel, along with many organizations,actively supported legislation to create a permanent agency known as
the Interagency Coordinating Committee for the Validation of
Alternative Methods.
Dr. Stitzel served on the planning committee of the Fourth World
Congress on Alternatives and Animal Use in the Life Sciences, held in
August 2002. Dr. Stitzel retired in 2002 and remains an active player inthe testing alternatives realm.

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.

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info

For more information on P&G’s
Environmental Quality Policy,
please click for last year’s report.

P&G 2002 Sustainability Report

24

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.

Green Energy Supply for P&G in the UK
Nearly half the electricity used by P&G in the UK is now sourced froma “green” energy tariff – energy made from renewable sources suchas wind and water. The Manchester, London, Havant, andBournemouth sites and the UK head office at Brooklands are now
using “green” electricity.
This makes P&G one of the largest users of “green” energy in the UK.
This has positioned P&G as one of the lowest-cost corporate energy
consumers in the UK while improving the overall environmental profile
of products manufactured at these sites.

Great American Cleanup
P&G’s Young William Cooper Procter Society organizes regularvolunteering events so P&G people can get involved in the community.
The Society’s purpose is “to educate and mobilize P&G employees inthe early stages of their careers to meet the external needs of thecommunity by focused enrollment and active philanthropy.”
The Society organized a Keep Cincinnati Beautiful event for April
2002, in conjunction with the Great American Cleanup. This is thenation’s largest volunteer cleanup program and is sponsored by Keep
America Beautiful. P&G employees participated in beautification
efforts with the Cincinnati Park Board by planting flowers and trees.

on theWeb

For more information visit
www.GreatAmericanCleanup.org

A pedagogical path for children at theSentier des Cabanes, located in a marsh
area in the south of France.

P&G France – Foundation for Seashore Protection
In 1992, P&G France created the P&G Foundation for Seashore
Protection through a unique partnership with the Conservatoire duLittoral, the French government seashore protection agency.
The P&G Foundation for Seashore Protection, which celebrates its
10th anniversary in 2002, renews its program for an additional five
years with a focus on “managing the seashore in a sustainable way.”
The Foundation has two key missions: funding and development ofenvironmental research, and helping the Conservatoire publicize its
accomplishments. The Foundation’s many contributions include
scientific research, university theses, workshops, publications, creationof a teaching center for schoolchildren, and the Conservatoire
Web site.
P&G donates approximately $150,000 yearly to the Foundation, as
well as investing its human resources, skills, and expertise.

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25

Organizational Structure
Our organizational structure makes it easy for innovation to flow across the enterprise and around theworld, to learn directly from consumers as early as possible, and to profitably commercialize the best
ideas and innovations quickly.
Global Business Units (GBUs) transfer product innovations across categories and geographic markets.
Market Development Organizations (MDOs) get initiatives to local markets faster, more creatively, andat less cost. Our Global Business Services (GBS) and Corporate Functions organizations leverage oursize to deliver better-quality services internally at significantly lower cost to the Company. We designed
our organization to be global and local at the same time – a paradoxical challenge that we believe is
key to our future success.
Health Care
Global Business Units• Business Strategy and Planning• Brand Innovation and Design• New Business Development• Full Profit Responsibility

Baby, Feminine,& Family Care

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

Central and Eastern Europe,
Middle East,
AfricaASEAN, Australasia, India

Beauty CareGreater China
Western Europe
Northeast Asia

North America

Fabric & Home Care

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

Latin America

Food & Beverage

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

Policies, Organization, & Management Systems

P&G 2002 Sustainability Report26

Joaquín Zepeda – A Leader in Sustainable Development
As a chemical engineer from the Universidad Autónoma de Mexico,
Joaquín Zepeda joined P&G in 1966, in Mexico, as part of Latin
America Research & Development. During his 35-year tenure at P&G,
he worked in several locations and professional areas, such as
Exploratory Surfactant Development, Brand Management, Professional
Relations, Professional & Regulatory Services, and Environmental
Safety. In 1998, Mr. Zepeda helped our organization move from
Environmental Quality into Sustainable Development.
Some of his outstanding contributions have been:• Vice president Soaps and Detergents Association, Mexico• President of Perfumes and Toiletries Association of Mexico• President of the Committee on the Environment of CANACINTRA
and CONCAMIN (Federation of Industrial Chambers)• Founder and president for three years of “Iniciativa” GEMI (Global
Environmental Management Initiative). Led the enrollment of othercompanies and founded the organization in Mexico.
• Led development, with other industries, of the Industry Sustainable
Development Organization in Venezuela (IEVA-CEVEDES)• Led formation of the Latin American countries’ Industry Associationsfor Solid Waste• Formulated industry positions on and led successful resolution of
debate on topics such as Green Seals and extended producer
responsibility vs. integrated solid waste management
Lessons to share, from Joaquín Zepeda:“P&G, the best possible university you can go to.”“We have a great opportunity to focus on the bottomof the pyramid, to make business, yes. But also to help
these people enter into the economy of the worldand help them improve their lives.”

Haile Mehansho – Making a Difference
Haile Mehansho experienced poor nutrition firsthand, as a child inrural Eritrea, Africa. Because of his early experiences, he developed avision for improving the nutritional value of the world’s food andwater supplies. He became a talented P&G chemist and has taken
extraordinary steps toward that vision by spending 15 years at P&G
working to develop products to solve problems such as stunted
growth and impaired mental development. His pioneering work on
NutriStar has improved nutrition in Venezuela.
Mr. Mehansho has received eight patents, several of which are alreadyin products making a difference in people’s lives. UNICEF and USAID(the U.S. Agency for International Development) have recognized andsupported Mr. Mehansho’s work.

Policies, Organization, & Management Systems

P&G 2002 Sustainability Report

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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.

more
info

For more information on Human Resources,
please click for last year’s report.

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

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info

For more information on Insurance Systems,
please click for last year’s report.

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
employees to contribute to their highest potential. This maximizes
the competitive advantage of our diverse workforce. We will not
tolerate harassment of anyone by anyone – including employees,
suppliers, customers, contractors, and agencies. Every employee is
expected to be proactive in ensuring that the work environment isfree from harassment of any kind. Managers of others are
responsible for setting clear expectations for acceptable behavior in
the workplace.

Go, Give & Grow – An Unrivaled Learning Experience
Last year we introduced the Go, Give & Grow program for new P&G
employees. It is a natural extension of P&G’s social commitment to thecommunity. Under this program, new college graduates intending tojoin P&G are given a chance to “Go” to work on community projects,“Give” to the community, and “Grow” their skills – all before officiallystarting their P&G jobs.
This year’s Go, Give & Grow participants are Lucy Morgan,
Stop Tuberculosis Partnership, Geneva; Elaine Gardiner, Roll Back
Malaria Campaign, Geneva; and Gareth Maguire, Polio Eradication
Project, Ethiopia. They worked for six months on a variety of essential
programs that will help improve life in local communities.

on theWeb

For more information on their progress, please visit:
http://www.pgcareers.com/about/ggg/diaries.asp

P&G 2002 Sustainability Report

Policies, Organization, & Management Systems

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 about products and packages, such as theircompatibility with waste management systems, natural resourceuse, or issues of “perceived safety.”

more
info

28

Worldwide Health, Safety & Environment Systems
at Manufacturing Operations
Health, Safety and 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 1,178 full-time equivalents.

For more information on Human andEnvironmental Safety, please click for last year’s report.
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info

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please click for last year’s report.

HS&E Benchmarking
Benchmarking is an important tool to assess and maintain thehealth of P&G’s global Health, Safety & Environment (HS&E)
program. It provides Corporate HS&E staff with data to verify therobustness of our performance and to identify improved
management and technology approaches.

P&G Inside Out
In February 2002, stakeholders mixed with senior P&G managers andemployees during a first-ever European event held at P&G’s Fabric &Home Care European Technical Center in Brussels.
Eighty invited guests attended P&G Inside Out to hear business leadersand project staff talk about the need for innovation in today’s
products and transparency in today’s business.
Besides talks, the event included tours of the Technical Center and thenearby Mechelen plant. But the heart of the event was an exhibition
showcasing science and innovation in P&G’s products and highlighting
P&G’s external partnerships, such as the EU, the Confederation of
Family Organizations in the EU, and UNICEF.
Inside Out built better understanding with a wide range of key
stakeholders: government, suppliers, customers, consumer andindustry associations, academics, NGOs, media, and ourBrussels employees.

During the past year, P&G has continued to do HS&E
benchmarking, facilitated by Pilko & Associates, with othermultinational companies such as BASF, BP, Celanese Ltd., Dow
Chemical Company, Du Pont, Eastman Kodak, Shell Chemicals,and Solutia Inc. Benchmarking involved a detailed review of HS&E
manufacturing and management systems and performance.
The top-line conclusions from this study indicated that P&G is in
the upper part of this peer group for HS&E costs and resourcing,and in the middle part of the group for HS&E performance.
Specific conclusions on our performance are:• Middle of group for Injury/Illness Rate for employees• Middle of group for Lost Workday Rate for employees• Lowest penalties paid (in $/yr per $ billion sales)• Middle of group for property loss (in $/yr per $ billion sales)• Lowest HS&E operating costs (in $/yr per $ billion sales)
P&G shifted more HS&E work to site technicians than any othercompany. This is the main reason for our lower costs and need forsimplified training systems.
We have similar HS&E management systems, though ourapproach to information and training systems is somewhat simpler
than the norm.
Our HS&E performance goals are focused on improvement ascompared to breakthrough.
Overall, P&G’s current HS&E situation is quite positive whencompared to these peer companies. The long-term challenge is tocontinue delivering benchmark results.

Policies, Organization, & Management Systems

P&G Belleville Hospital Donation
P&G’s Feminine Care plant in Belleville, Ontario, Canada, pledged one
million Canadian dollars (almost $650,000 USD) to the Belleville
General Hospital – the single largest donation P&G Canada has madeto a non-profit organization.
The plant was able to link P&G’s safety program and its cost savings tocommunity investment. It did this by pledging to donate to thehospital and workers any compensation savings resulting from reduced
injuries. It was highly motivating for plant employees to be able to giveback to their community through improved safety behavior.
The safety program included loss analysis, behavior observation,
feedback systems, higher safety standards, and safety training. As aresult of these programs, the manufacturing site achieved 2.7 million
hours without a lost-time injury, which equaled $1 million (CAN)
in savings.
P&G’s donation established the P&G Family Center at Belleville General
Hospital, a maternal and child care unit designed to improve the livesof newborns, mothers, and older children for years to come.

P&G 2002 Sustainability Report

29

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 2002 Sustainability Report

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30

Principal Industry & Business Associations
P&G holds membership in many industry, business, and environmental associations whose activities are
related to the Company’s. Below are recent changes.

Europe, Middle East, and Africa
In 2002, P&G joined the Pet Food Manufacturers Association.

more
info

For a complete list,
please click here.

The EU Committeeof the American Chamber of Commerce (AmCham)
The EU Committee of AmCham, headquartered in Brussels, Belgium,
represents to European policy makers the views of European
companies of American parentage. It brings together practitioners
from different companies active in different sectors and operating
across Western Europe to discuss a variety of European policy andlegislative subjects that affect business in Europe. This includes
environmental legislation, social policy, consumer policy, fiscal affairs,
EU expansion, and trade. Regular publications, such as the EU
Environment Guide and the Consumer Affairs Guide, are highly
regarded by stakeholders as practical, insightful information andguidance for those interested in EU policy.
The EU Committee provides a unique forum for dialogue between
business and policy makers, including NGOs. Corporate members who
operate in both the United States and Europe are in a unique position
to build bridges between regulators in both the United States and theEuropean Union. The vision is that the debate and exchanges may
eventually contribute to a more harmonized business environment
between the United States and Europe.
The subject of sustainability has been high on the agenda of the EU
Committee of AmCham. P&G was one of the corporate members
contributing to the creation of a task force set up to offer practical
input to the European Commission and Parliament on the increasing
importance of sustainable development in the European Union.

North America
In 2002, there were no changes since last year.

more
info

For a complete list,
please click here.

United States Council for International Business
The United States Council for International Business was founded topromote a world trading system. The organization has more than 300
multinational companies, law firms, and business associations as
members. The Council helps shape international policy issues. It also
provides critical information about international policy and regulatory
issues to its members. With affiliates throughout the world, members
have access to a vast network of expertise.

Latin America
In 2002, there were no changes since last year.

more
info

For a complete list,
please click here.

Asia
In 2002, there were no changes since last year.

more
info

For a complete list,
please click here.

Worldwide
In 2002, there were no changes since last year.

more
info

For a complete list,
please click here.

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P&G 2002 Sustainability Report

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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 formal meetings. This could be, for example, a
reception for the immediate neighbors, where information on thepast year and plans for the new year are discussed. P&G ensurescontinuity in community interaction by meeting regularly with local
authorities to update them on plant news. In the neighborhoodsof many P&G operations, the Company cooperates with andsponsors local events, so the whole area benefits from thepresence of a P&G site.
P&G recognizes the importance of improving the quality of life in
our local communities, and we support local initiatives andencourage employee involvement. The most valuable community
support we provide usually involves not only writing a check but
also taking advantage of the intellectual capabilities and energy ofP&G people. We look for areas where we can make a significant
long-term, systemic difference. This leads us to focus heavily on
education and health, with special emphasis on youth. It also leads
us to build alliances with strategic partners to achieve a better
result than we could alone. We look to our people in the area towork with their local communities and government officials tolearn where we can make the biggest difference.
In addition, P&G employees and retirees have a long tradition ofvolunteer involvement in the communities where we live. We lend
a hand to those in need. We pitch in when disaster strikes. We
support the arts. We support education. We invest our resources –and ourselves, through tens of thousands of volunteer hours – inour neighborhoods around the world.

NGOs: Local - Regional - Global

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info

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Scientific Community

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info

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A.D.O.P.T. – Actively Doing Our Part Together in Cincinnati
Our Statement of Purpose says that P&G will be a Company thatenvisions prosperity for the communities in which we live and work.
A.D.O.P.T. –Actively Doing Our Part Together – is P&G’s response to
the challenge of making our headquarters city – Cincinnati – a greatplace to live and work for all citizens. Through the A.D.O.P.T. program,
every employee can create positive change in the city and in theregion surrounding it.
P&G believes that the health of Cincinnati’s downtown is important toour quality of life. This includes its businesses, its entertainment andculture, its special events and festivals, and its commerce, such as
shopping and hotels.
What happens in the city affects everyone in it, including P&G.
Unresolved community issues can affect P&G’s ability to conductbusiness in Cincinnati. Over time these issues challenge our ability to
attract and retain top talent.
Coming together as a city, region, business, and individuals, we canbuild a community in which we all thrive.

P&G 2002 Sustainability Report

Policies, Organization, & Management Systems

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.

32

Book: “Desarrollo y Calidad de Vida”(Development and Quality of Life)
Written by Carlos Sabino, edited by the Center for the Diffusion of
Economic Thinking – Venezuela, sponsored by P&G Latin America
This book presents a positive and optimistic view of development andthe fundamental benefits to modern life. Modernity and development
are the only tools we have to confront poverty. It is unthinkable tocombat poverty without producing wealth, and to produce wealth it isnecessary that we create conditions to make the poor productive.
The book discusses how development can be achieved within theparticular environment of Venezuela and Latin America. It says
development is a process based upon a few simple fundamentals:• The will to improve and change• Liberty of commerce and production• Legal and judicial security• Representative and responsible governments
Mr. Sabino’s book notes that none of these factors can be excluded
from the equation. They are all necessary conditions.

Iams and the MIRA Foundation Help Make the Worlda Better Place for the Blind and Physically Challenged
For the past 10 years, Iams has been a special partner of The MIRAFoundation, an organization in Quebec, Canada, that trains guide
dogs to assist blind and physically challenged people. All services
offered by MIRA are free to those receiving the trained dogs.
Every year, Iams donates more than $90,000 worth of Eukanuba dog
food to help feed the dogs in their kennels and training facilities.
In 2002, Iams donated $152,000 toward construction of the
Eukanuba Center, a new housing project specifically designed forpeople with motor deficiencies. This facility is where future service dog
owners – paraplegics, quadriplegics, and people with multiple sclerosis
and muscular dystrophy – will live while training with their service
dogs. The dogs are trained not only to guide people but also to
execute special skills such as reaching for keys and opening doors.

on theWeb

To learn more about MIRA, please visit:
http://www.mira.ca/contenta/introa.html

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Consumers
At P&G, we have declared, “The consumer is boss!” We arecommitted to meeting the needs of our consumers by providing
products that improve their lives. We embrace and promote
this mindset throughout the development and marketing ofour products.
We set out to delight consumers by bringing to market new
products and product improvements that genuinely meet theirneeds better than ever before. 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 product screening to ensure safety andcompliance with all relevant legal requirements, P&G market
researchers appoint panels of consumers to try the products andanswer the key question: Do these products better meet consumer
needs in practice? Based on what consumers tell us in these earlytrials, the test product may be rejected or adapted and improved.
Our commitment to our consumers does not stop there. When
our products reach the market, we want to hear what consumers
have to say about them. Toll-free phone numbers on our packages
make it easy to contact us. Via our Consumer Relationsorganization, we learn a great deal from the more than 5 million
consumers worldwide who contact us each 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 withproducts – delights or, less fortunately, disappointments. Based onwhat consumers tell us, we make decisions to retain features ofour products that consumers like, make improvements where
necessary, and address specific issues such as difficulties withpackaging or with product availability in their local store.
Consumer calls give us critical early indications about consumer
acceptance of our new initiatives as well as valued feedback about
established products. What these callers tell us has influenced our
product development, packaging, the way we manage direct
marketing and promotions, the way we communicate with
consumers to enable them to get the very best from our products– and more.
We listen carefully to consumers’ views on important topics suchas animal testing and waste management. You can find moredetails about our efforts in these areas elsewhere in this report.

ThermaCare HeatWraps Launch in the United States
ThermaCare HeatWraps are now available in drug, massmerchandise, and grocery stores in the United States. ThermaCareis a new wearable, air-activated heating pad that provides at least
eight hours of continuous low-level heat therapy. ThermaCare
provides pain relief 52 percent better than acetaminophen and 33
percent better than ibuprofen (the active ingredients in Tylenol andAdvil) for acute low back pain. ThermaCare goes beyond pain
relief to provide deep muscle relaxation and increased flexibility.
Three different types of ThermaCare HeatWraps are available fortreating low back pain, neck-shoulder-arm pain, and menstrual
cramps. The American Physical Therapy Association endorses
ThermaCare HeatWraps. In addition, ThermaCare is the official
back pain therapy of two major golf tours – the PGA Tour and the
Senior PGA Tour – and the official topical heat therapy of the
National Athletic Trainers Association.

NutriStar In Venezuela
Venezuela, like most developing nations and the majority of thirdworld countries, shows a high prevalence of nutritional deficiencies
that affect child development. In response to this problem, P&G
launched NutriStar in Venezuela in September 2001. The productis a fruit-flavored drink powder fortified with Creciplus. Creciplus
contains micronutrients to combat what has been named “Hidden
Hunger” – deficiencies of micronutrients such as iron, vitamin A,
and iodine. NutriStar provides 13 vitamins and minerals important
for the optimal development and growth of children.
We are providing this nutritionally fortified powder at anaffordable price and have made it available in Happy Meals soldat McDonald’s.
The initiative has been complemented by the formation andlaunch of the Alliance for Health and Nutrition in Venezuelan
Children. The P&G Nutrition Science Institute, Fundación Bengoa,
the Venezuelan National Institute of Nutrition, the Venezuelan
Health Ministry, UNICEF, and expert nutritionists are membersof the alliance. The purpose is to build awareness of the needfor micronutrients.

on theWeb

More information can be found at:
http://www.nutristar.com/

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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.
P&G Supports SETAC Asia/Pacific Symposium 2001
The Society of Environmental Toxicology and Chemistry (SETAC) held
an Asia/Pacific Symposium in Kanazawa, Japan, in November 2001.
More than 180 people participated from Asia, the United States, theUK, and Germany. In addition to supporting the event financially, P&G
designed the event’s Risk Assessment/Governmental Policy
Symposium. Global speakers included experts from government(Japanese Ministry of Environment, Chinese State of Environmental
Protection Agency), universities (Kyoto University, Japan, and Universityof Cincinnati, USA), and industry (P&G and Arch Chemicals).
Discussion centered on advancements in the areas of risk-based
environmental safety assessment and environmental regulations in the
Asia/Pacific region.

Sharing Fabric & Home Care Science and Product Safety
Through P&G’s new Western European Fabric & Home Care “Sciencein the Box” Web site, the Company shares with the public productformula and ingredient safety information, research and development
methodologies, and human and environmental safety approaches.
With our stakeholders, we have identified the need for more
openness and transparency about what we do and how we do it.
We have listened to the need to share our data and to suggestions
for designing our Web site. We will continue to take into accountnew needs and new wishes from our stakeholders. The Web site
provides people with the opportunity to learn that our products are
based on sound science and are safe for humans and the environment(we minimize negative impact as much as we can), that we are asound science-based organization, and about the chemistry behind
everyday cleaning.

on theWeb

For more information, please visit:
http://204.71.35.9/home.html

Participants were enthusiastic about P&G’s efforts in Direct Discharge
Environmental Risk Assessment and Development of Predictive
Environmental Models applying the Geographic Information System.
P&G continues to be an active participant in SETAC in the area ofenvironmental protection.

Policies, Organization, & Management Systems

Shareholders
Shareholders are important stakeholders at P&G. P&G has
1.3 billion shares of stock outstanding. These shares are owned
by large institutions and mutual funds, retirement programs,
individual investors, and employees throughout the world.
Approximately 50 percent of our shares are held by individuals,
with nearly 20 percent held by employees and retirees. We work
to increase the value of P&G stock for all our shareholders in avariety of ways, including growing the Company’s sales andearnings each year.
Our measure for tracking our success for shareholders is Total
Shareholder Return (TSR). TSR measures how much value ourinvestors receive as a result of owning P&G stock. We track TSR
against 29 companies in similar industries, such as consumer
goods, health care, and beauty products. P&G tracks performance
to compensate key managers based on how well they increase
shareholder value. Our Shareholder Relations team is available
every day to answer questions, listen to shareholder feedback, andprovide perspective on Company decisions.
Corporate Governance and Management’s Responsibility
Procter & Gamble is committed to doing what’s right. Our actions– the actions of all employees – are governed by our Purpose,
Values, and Principles. These core values set a tone of integrity forthe entire Company – one that is reinforced consistently at alllevels, in all countries, internally and externally.
Importantly, this extends to our accounting and financial reporting
responsibilities. We understand our responsibilities to investors. As
part of this, we are committed to providing accurate andunderstandable financial reporting. This encompasses:
Maintaining a strong internal control environment. Our system ofinternal controls is designed to provide reasonable assurance thattransactions are executed as authorized and accurately recorded,
and that assets are safeguarded. We monitor these controls
through self-assessments and an ongoing program of internal andexternal 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 with the highest ethical standards.
Focusing on financial stewardship. Even before the events that haveshaken investor confidence, we had implemented a program toensure employees understood their fiduciary responsibilities toshareholders. This ongoing effort encompasses financial disciplinein our strategic and daily business decisions and brings particularfocus to maintaining accurate accounting processes throughprocess improvement, skill development, and oversight.

P&G 2002 Sustainability Report

35

Exerting rigorous oversight of the business. We continuously review
our business results and strategic choices. Our Global LeadershipCouncil is actively involved, from understanding strategies toreviewing key initiatives and financial performance. The intent is toensure we remain objective in our assessments, constructively
challenge the approach to business opportunities and potential
issues, and monitor results and controls.
Encouraging strong and effective Corporate Governance from our
Board of Directors. We have an active, capable, and diligent Board.
We already meet the standards being proposed for independence,
and we welcome the Board’s oversight as a representative of theshareholders. Our Audit Committee is composed of independent
directors with the financial knowledge and experience to provide
appropriate oversight. We review key accounting, financial
reporting, and internal control matters with them and encourage
their independent discussions with Deloitte & Touche, ourexternal auditors.
Providing investors with financial results that are complete andunderstandable. The consolidated financial statements and financial
information found in our annual report are the responsibility ofmanagement. This includes preparing the financial statements inaccordance with generally accepted accounting principles in the
United States of America, which necessarily requires estimates
based on management’s best judgment. Our independent auditing
firm, Deloitte & Touche, has audited our financial statements andhas expressed an unqualified opinion that they are correct. We arecommitted to providing timely, accurate, and understandable
information to investors.
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.

on theWeb

To read P&G’s 2002 Annual Report, please click here:
http://www.pg.com/content/pdf/01_about_pg/
01_about_pg_homepage/about_pg_toolbar/
download_report/annual_report.pdf

P&G 2002 Sustainability Report

36

Performance

P&G 2002 Sustainability Report

37

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.

Process for Data Collection
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.
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.
Acquisitions and Divestitures
All facilities that operated during the fiscal year, including recently
acquired Clairol, reported data. The Clairol acquisition did notmaterially change any of our performance data. For divestitures,
wastes and emissions are estimated for the last year in which
they operated.
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. We focus in the areas of:• 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 Associatedwith 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, toreduce or prevent this whenever possible.
P&G aims to provide social and economic benefits that improve
the lives of the world’s consumers. We do this by providing
innovative technologies that represent value. We provide
employment in our communities, support the local and national
economies through taxes, contributions, and purchases, andincrease shareholder value. By providing products and informationon their appropriate use, we improve the health and hygiene ofconsumers through more effective and better-value products.

Performance

P&G 2002 Sustainability Report

38

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 2001-2002

Energy 98.9 million GJ

95.29%
Finished Product

Raw Materials& Packaging

Materials for Recycling/Reuse
2.55%

Non-Hazardous
Solid Waste 1.79%

Hazardous
Solid Waste 0.11%

Air Emissions 0.12%

Water Emissions 0.14%

Manufacturing Resource & Waste Summary by Global Business Unit (GBU)
TotalsAll units are in thousands ofmetric tons 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 tons)***2002 Global Business Unit Detail*

2002

2001

2000

BFFC

FHC

BC

HC

FB

16,151
208

15,808208

13,936
476

3,652
208

8,426
0

984
0

1,098
0

1,992
0

798
54%

910
51%

879
55%

504
55%

121
57%

59
46%

33
51%

81
50%

304
19
23
20

376
13
36
15

317
12
39
19

196
8.7
7.9
13.3

37
4.7
6.5
3.4

23
3.8
3.8
0.6

14
0.7
0.8
0.4

33
0.8
4.2
2.1

989
3,309
85
1,274

1,068
3,210
88
1,722

1,080
2,983
87
1,858

614
2,365
56
34

195
419
13
831

44
88
4
346

41
95
2
0

94
342
10
63

† 1 metric ton = 1,000 kg = 2,205 lbs.
* BFFC = Baby, Feminine, & Family Care; FHC = Fabric & Home Care; BC = Beauty Care; HC = Health Care; FB = Food & Beverage** 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 by the U.S. Environmental Protection Agency.

Performance
Environmental

P&G 2002 Sustainability Report

EnergyEnergy efficiency has significantly improved this year. This was abroad-based improvement in all business units. We have also fixeda mistake in the calculation for the eco-efficiency* index; insteadof being ten times as eco-efficient, we are closer to six. This had noeffect on the actual reported energy use values.
The results are shown in actual value by business unit and alsopresented in an eco-efficiency format. Our eco-efficiency is almost
six times our 1985 energy use, measured as production units per
gigajoule (GJ).
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 reduction.
* Eco-efficiency data used throughout this report are based on the framework
developed by the World Business Council for Sustainable Development.

To learn more, please visit: http://www.wbcsd.com/
on theWeb

Witzenhausen Plant Energy Improvements
Germany’s Witzenhausen Family Care plant has implemented several
energy-related projects resulting in a total energy savings of
35,700,000 kWh for gas and 1,740,000 kWh for electricity. These
projects reduced greenhouse gas emissions by 20,000 metric tons. As
the first paper products plant in Germany to be built with a closed
water and energy loop, Witzenhausen has been geared for energy
savings from its beginning.
Gas consumption reduction has resulted in savings of 18,300,000
kWh per year in the papermaking area and 3,600,000 kWh per year
in the tissue production area. Changes were made to the drying
portion of the papermaking process, enabling the drying of paper felt
to be optimized. The resulting paper felt requires less energy to beconverted into finished tissue products.
The biggest part of the energy savings involved using steam
condensate to heat the ceiling of the papermaking area. Thiseliminated the use of natural gas for heating.
Electricity consumption was reduced by 180,000 kWh per year
through a system monitoring peaks in electricity usage. At peakconsumption times, up to 10 different electrical systems can be
automatically shut down for short periods to save energy. Use of“smooth start-up” and frequency inverters on certain energy-intensive
equipment has lead to considerable energy savings.
These examples of energy reduction follow a pattern ofsignificant contributions to environmental improvement by the
Witzenhausen plant.

Energy Eco-Efficiency

Energy Consumption(global production units / gigajoule,indexed vs. 1984-1985)(by GBU, 105 GJ)

544
456

1,080 1,068

466

2000 2001 2002
Fuel

988

2000 2001 2002
Electricity

39

BFFC

F&HC

BC

HC

F&B

P&G 2002 Sustainability Report

Performance
Environmental

Western Europe Distribution Strategy
Historically our distribution networks in Western Europe were primarily
country-based. Today we have a comprehensive Western Europe
Distribution Strategy and are implementing a network of Regional
Distribution Centers to support growing customer requirements fordelivery of a broader range of products with increased flexibility andresponsiveness. The full product range is available for delivery tocustomers’ warehouses within 24 hours of P&G’s receiving an order.
Advantages are:
1. Environmental: Distances driven by our trucks are reduced byapproximately 10 million kilometers per year due to• optimum siting of Regional Distribution Centers• increased ability to more fully load trucks because they now carrya multiproduct assortment• an increase in shipments going direct to customers fromP&G plants
2. Improved service performance, which will lead to increased
availability of products on supermarket shelves and increased sales
for P&G and its customers
3. Logistics cost savings of more than $25 million for P&G

Cabuyao Fabric & Home Care Plant
Moves to Recycled Paper for Shipping Containers
In fiscal year 2001-2002, the Cabuyao Plant (Philippines) converted all
its Fabric & Home Care shipping containers from kraftliner to testliner
material. Testliners are made primarily from recycled paper and are lessexpensive than kraftliners, which come mostly from imported virginpulp. This has resulted in benefits to the local environment and cost
reductions for P&G.

Philippines Mr. Clean
Detergent Bars

40

A Life Cycle Inventory for Pampers Packaging Innovations
The environmental improvements of Pampers’ packaging innovations
have been quantified by a Life Cycle Inventory covering resource
consumption (energy, water, raw materials) and environmental
emissions (airborne, aqueous, solid waste). This Inventory complies
with ISO (international trade) standards, and results demonstrateoverall environmental improvements in all Life Cycle Inventory
parameters:• An 80 percent reduction of packaging material weight per diaper• A decrease in energy consumption by 44 percent, in water usage by
72 percent, and in raw materials by 73 percent• CO2 from fossil and renewable sources decreased by 78 percent.
SO2 and NOx decreased significantly, by 73 percent and 93 percent
respectively.
• The water emission indicators COD (chemical oxygen demand)and BOD (bio-chemical oxygen demand) decreased by more than
97 percent.
• Total solid waste generated along the entire life cycle decreased by
79 percent.
• A sensitivity analysis assuming alternative waste treatment scenarios(100 percent landfilling, incineration, or recycling) confirmed that theenvironmental improvements of Pampers packaging were achieved
predominantly due to material innovations.

P&G Australia Becomes a Signatory
to the National Packaging Covenant
The National Packaging Covenant is Australia’s voluntary nationalframework for minimizing and managing the environmental impact ofconsumer packaging and household paper. As a member of the
National Packaging Covenant, P&G Australia has created an action
plan with these objectives:• Ensure that all P&G products sold in Australia conform to or exceed
the provisions of the National Packaging Covenant and its
Environmental Code for Packaging• Review local operations in terms of the environmental impact of
packaging and paper, and undertake improvements if needed• Contribute to the improvement of post-consumer waste
management• Facilitate knowledge transfer between P&G Global and Australian
packaging/environment stakeholders

on theWeb

P&G’s Action Plan is accessible on the Web at
http://www.packcoun.com.au/ap_procter.doc

P&G 2002 Sustainability Report

Performance
Environmental

41

Water
Sites began tracking the consumption of water four years ago. Water use has decreased, resulting in
the eco-efficiency’s going up 10 index points this year. Efforts that began a year ago to reduce water
consumed have started showing results.

Water Consumption Eco-Efficiency

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

110
100

86.9

99

2000 2001 2002

Greenhouse Gas
Though the sheer eco-efficiency of greenhouse gas has increased
only slightly this year, the eco-efficiency indexes for 2001-2002
show extremely good results: P&G increased by three fold theamount of product leaving its plants per metric ton of CO2
emissions from its plants, compared to 1990. The main reason is
the shift from fuel combustion to electrical generation and also
from fuel oil to natural gas.
In addition, absolute CO2 emissions are still much lower than the1990 baseline. The decrease from 1990 resulted from the sale ofpulp mills in the United States and Canada, and the conversion ofcoal to natural gas in the United Kingdom and China.

84.9

2000 2001 2002
BFFC

Emissions, Effluents and Wastes

88.1

F&HC

BC

HC

Green Bay Plant Wins Friend of the Environment AwardIn May 2002, P&G was given the Friend of the Environment Award.
Presented by the Wisconsin Environmental Working Group, an affiliate
of Wisconsin Manufacturers & Commerce, the recognition was in thearea of pollution prevention.
The award was for the installation of an innovative heat recovery
exchange system. The environmental impact of the new system
has been significant. The Company is conserving more than
11,000 U.S.tons of coal and 32 million cubic feet of natural gas
annually. Air emissions and landfill use, as well as thermal pollution
discharge, are reduced.

Greenhouse Gas Emissions Eco-Efficiency

Greenhouse Gas Emissions(global production units per metric ton of CO2,
indexed vs. 1990)
384
359 371(thousand metric tons)
7,431

2,983 3,210 3,309
100

1990 2000 2001 2002

F&B

1990 2000 2001 2002

Performance
Environmental

P&G 2002 Sustainability Report

42

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. This measurement has been in effect since 1990.
Our disposed waste numbers have gone down by more than 72,000 metric tons, resulting in a
40-point increase in eco-efficiency. This is mainly due to much less demolition waste and ongoing
efforts to reduce waste in all areas.
Our pollution prevention and Design Manufacturing Waste Out programs have saved more than$500 million cumulatively in the past decade while reducing waste by one-third.

Waste Disposed Eco-Efficiency

Waste Disposed(global production units per metric ton of waste,indexed vs. 1990)(by type of waste)

182
160

439.5
387.0

142

2000 2001 2002

365.6

2000 2001 2002
Solid Waste Non-Hazardous
Solid Waste Hazardous
Effluents Air Emissions

Waste Returned to Process or Market
Even though the actual quantity of recycled/reused material
went down 30,000 metric tons, the percent recycled was higher(54 percent versus 51 percent), and the revenue achieved
increased from $15 to $20 million.

Waste Recycled or Reused(percent of waste)
55

51

54

Euskirchen, Germany, Develops Better Rinse Water Disposal
The best way to discharge rinse water from the production of baby
wipes with lotion at the Euskirchen, Germany, plant was to dispose of
it in the local municipal sewage plant.
A chemical institute was consulted to analyze the rinse water to makesure it wouldn’t disturb the process at the treatment plant. The
analysis indicated we could discharge the effluent into the treatment
plant, but only with a maximum concentration of 0.01 percent of thenormal wastewater intake. Technical and organizational systems were
installed to ensure the concentration stays below the limit. A qualified
transportation company was hired to carry the rinse water in tanktrucks to the treatment plant.
Working with government authorities, P&G obtained a special permit
to discharge the rinse water at the treatment plant. This new process
has resulted in a savings to the environment, and also to P&G, at anannual rate of $44,000.

2000 2001 2002

P&G 2002 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 42 index point increase in ecoefficiency. There has been considerably less demolition waste thisyear, and other waste reductions have been made. The sites’ waste
management costs have decreased; the increase in revenues (from$15 million to $20 million) from recycling operations was part ofthe decrease.

Non-Hazardous Solid Waste Eco-Efficiency(global production units per metric ton,indexed vs. 1990)
171
152
129

43

Clairol Plant Recognized by U.S. EPA
National Environmental Performance Track is a leadership programadministered by the U.S. Environmental Protection Agency (EPA). It is
designed to recognize facilities that consistently meet legal
requirements and have implemented high-quality environmental
management systems.
P&G’s Clairol plant in Stamford, Connecticut, USA, has beenrecognized by the EPA for its high-quality environmental management
systems and its commitment to continuous improvement. As a
Performance Track charter member in 2000, the plant made acommitment to improving its environmental performance over athree-year period. In 2001, the Stamford plant achieved its three-year
reduction commitment in Energy and Water Use and Greenhouse
Gases Emission and is on track to meet the Hazardous Wastes
reduction by 2003.
The EPA is making changes (expected first-set finalization in 2003) in
its regulations that will reduce paperwork and streamline requirements
for Performance Track members. These changes are designed toachieve better environmental results at less cost.

2000 2001 2002
on theWeb

Hazardous Solid Waste Disposed
Reported hazardous waste has increased (shown as lower ecoefficiency) due to many international jurisdictions’ expanding theirdefinitions of hazardous waste. Hazardous wastes are defined byregional policies and local rules, so they vary from region to region.
In the United States, a strong focus on reduction, recycling, andmaterial substitution has reduced the amount of hazardous waste
requiring disposal over the past three years. To further reduce risk,
the number of approved hazardous waste disposal sites that U.S.
plants can use is limited. Similar programs have been started inmany regions of the world.

Hazardous Solid Waste Eco-Efficiency(global production units per metric ton,indexed vs. 1990)
703

680
491

2000

2001

2002

To learn more, please click on:
http://www.epa.gov/performancetrack/program

Integrated Solid Waste Management Workshop
Held in Saudi Arabia
P&G and the Arab Network for Environment and Development
organized a workshop on Integrated Solid Waste Management(ISWM). The workshop was held on Earth Day – April 22, 2002 –under the auspices of the president of the General Directorate ofMetrology and Environmental Protection in Saudi Arabia. This was thefirst time such a workshop had been held in Saudi Arabia. Dr. Forbes
McDougall from P&G gave two presentations that explained theconcept of ISWM and Life Cycle Assessment. In addition, he provided
a demonstration of IWM-2, a P&G-developed life cycle computermodel for solid waste management systems. This approach generated
outstanding interest by delegates, who saw it as a way to achievesustainable solid waste management systems in Saudi Arabia.

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 33 percent, resulting in a lower eco-efficiency.

P&G 2002 Sustainability Report

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

132

2000 2001 2002

Effluents to Water
Wastewater COD (chemical oxygen demand) went down morethan 30 percent, resulting in a much higher eco-efficiency. The
reduction was in part due to the divestiture of several wastewaterintensive sites.

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

154

170

2000 2001 2002

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 this section(referred to as section 313) is to report publicly the releases andtransfers of a set list of hazardous chemicals. The amount of
SARA 313 releases has decreased for the third year in a row,even though the number of chemicals being reported has
increased due to expanded regulation.

SARA 313 Releases(global total metric tons released or transferred)
1,858

1,722
1,274

2000 2001 2002

44

Performance
Environmental

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.
The P&G HS&E audit programs are designed to ensure compliancewith federal, 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 of standards
and standard operating procedures. The target performance iseight or better on a 10-point scale. Results have improved slightly
from last year even though the number of individual sites receiving
audits this year has decreased.

P&G 2002 Sustainability Report

45

Percent of Sites
with Audit Scores > 8.0
77 80

77

83

83

66

2000 2001 2002
HS&E

2000 2001 2002
Fire Protection

Percent of Sites Conducting
Annual Audits
89
77

81

The Company takes great pride in making sure the sites arereviewed on a frequent basis. The chart shows percent of sites
receiving an audit this year. Even though a number of new sites
have joined the Company, we achieved an increase in thepercentage of sites conducting annual audits.
2000 2001 2002

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 past three years’ data on environmental, transportation, andworker health and safety violations and interventions follow:
2002
2001
2000
Number
58
73
48
Fines
$39,026$77,070$13,400

A breakdown of 2000/2001 Notices of Violations (NOVs) and
U.S. Occupational Safety & Health Administration (OSHA)
interventions follow:

Number
Water-Based17
Air-Based
13
Solid Waste-Based
2Paperwork
2
Transportation-Based
8
Worker Safety (for U.S. OSHA, the number was 14) 16
Total
58

Fines
$100
$8,000$174$0$30,000$752$39,026

Both fines and NOVs have decreased this year, as many of theissues regarding transportation of hazardous materials havebeen resolved.
Most water-based NOVs were related to pH, COD, and TOC
measurements involving nine different sites, all of which discharge
to municipal treatment systems.
Fines related to transportation of hazardous materials havedecreased from $70,000 to $30,000. This is good progress, butmore work is needed. Plans continue to be implemented.
OSHA interventions included any employee or contractor incident
that required OSHA follow-up. Last year’s interventions also
included one routine visit. We have not received a serious citation
since 2000.

P&G 2002 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 on June30, 2002, were $39 million. In Management’s opinion, suchaccruals are appropriate, based on existing facts andcircumstances. Current year expenditures were not material.

46

Bekasi Plant Recognized
for Wastewater Treatment
Indonesia's Bekasi plant is one of 60 companies receiving an award
from Jakarta Province for staying within their wastewater discharge
limits for the full 2001 calendar year. The plant treats wastewaterusing biological processes, without the use of chemicals except for pH
adjustment and sludge handling.
As part of the awards ceremony in July 2002, the Bekasi plantparticipated in an exhibition presenting information on how an
operation can be environmentally friendly.

Visitors to the Bekasi plant's exhibitionbooth included the deputy governor of
Jakarta Province and Miss Indonesia.

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 $1.7 billion is invested
annually in research and development – the largest amount among
consumer product companies worldwide. We have more than
27,000 patents, and we average 3,000 new patents each year.
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 Global Licensing group, we identify
non-strategic proprietary technologies, which when developed totheir full potential can yield sustainable revenue sources.
Through technology donations, not-for-profit universities and otherresearch institutions can receive these off-strategy, yet highly
valuable patents and technologies and provide the R&D needed tobring them to commercial reality. P&G is excited to see thesetechnologies reach their full potential. Each donation fosters
applied research development work at universities and research
institutions and can eventually deliver new revenue streams tothem through out-licensing 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

2002
Net Sales$40,238Net Earnings
4,352
Before-Tax Earnings
6,383
Total Assets
40,776
Basic Net Earnings
Per Common Share
3.26
Dividends Per Common Share
1.52

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

2000$39,951
3,542
5,536
34,366

2.15
1.40

2.61
1.28

P&G 2002 Sustainability Report

Performance
Economic

47

Technology Donations Fiscal Year 2001-2002
Through P&G’s technology donations, we contribute valuable patents, seed money, people, and energy
to U.S. universities and research institutions for the long-term benefit of society and education. These
groups can continue the research efforts, providing a venue for development of potential new
products and technologies. Listed is an overview of technologies donated last year, along with theirsustainability implications.

Technology

Recipient

Sustainability Implications

Capillary Channel Filmand Fiber Technology

Clemson University
Research Foundation• Significantly improves moisture removal andabsorption in feminine hygiene, adultincontinence, and baby diaper products• Delivers antibiotics through wound-care dressing

Cationic Bleach Activators

North Carolina State University• Strengthen the bleaching power of hydrogen
peroxide used in the preparation of raw
cotton and other fiber

Colonic Delivery Technology

Mayo Clinic• Delayed-release capsules designed to dispense
drugs in the colon to treat colon diseases

Hair Depilatory Technology

Textile Research Instituteat Princeton University• Gentle hair removal technology that can beleft on the skin without irritation

Pulsed Air Drying

Institute of Paper Scienceand Technology• Significantly reduces energy use in papermaking processes

SILA Smart PowerManagement System

University of Illinois• Long-life batteries that efficiently transfer
power/energy on demand, with minimum
power loss and voltage conversion loss

Skin Pigmentation Control

Children’s Hospital Medical
Center, Cincinnati• Reduces pigmentation loss resulting fromburns, skin grafts, wounds

Global Purchases
P&G is a global Company. We produce our brands inapproximately 130 plants in 45 countries around the world. This
year, P&G purchased more than $25 billion in materials andservices to manufacture and market our products. We employ
locally and purchase the majority of our raw materials withinthose regions where we manufacture our products. Ourpurchasing professionals understand and participate in both global
and local markets for the materials and services required to makeour products.
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 andinitiatives. Technology improvements, as well as standardization of
manufacturing and other work processes, allow the Company tostreamline its operations resulting in the consolidation of
manufacturing activity and various business processes.
Separation packages were predominantly voluntary and were
formula-driven, their value based on salary level and years ofservice. Approximately 16,600 separation packages were
provided through June 30, 2002. While enrollment reduction
programs impact all geographies and businesses, a higher numberof U.S. employees are affected, given the concentration ofoperations in the United States. Net enrollment for the Company
may decline by less than the total of separations, as terminations
will be offset by increased enrollment at certain sites, acquisitions,and other situations.

Performance
Economic

P&G 2002 Sustainability Report

FINCA & P&G – Promoting Economic Development
FINCA (Foundation for International Community Assistance) is a nonprofit organization providing micro-credit to the very poor in 20
developing countries in Latin America, Africa, and the Newly
Independent States (NIS, formerly Soviet Union). Using the “village
banking” method to provide loans without collateral, FINCA gives thepoor an opportunity to start or expand their own businesses, which
generates additional income and savings to keep their children alive,
nourished, healthy, and able to attend school. The payback on FINCA
loans is more than 97 percent. FINCA has recently been selected byWorth magazine as one of the 100 best charities in America.
Innovations occur as micro-finance institutions create strategic allianceswith NGOs or companies offering to donate services such as businessskills, health care, nutrition advice, water and sanitation, housing,schooling, human rights counseling, literacy training, and conflict
resolution. It is here that FINCA provides a unique opportunity for P&G
to deliver new learnings and tap into resources to reach the “bottomof the economic pyramid.”

Supplier Diversity Program
In 1972, P&G established a minority supplier program in the
United States 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. Minority suppliers provide a strong economic
engine that helps build the minority community.
P&G’s supplier diversity purchases during fiscal year 2001-2002 in
the United States have exceeded $900 million, accounting forabout 8 percent of P&G’s total U.S. spending.

420
411
401
547
661

865
939
950

(amounts in millions of dollars)

225
282

P&G visited FINCA’s Guatemalan operations in May 2002. P&G has
funded the formation of five new village banks in Guatemala. We
are working with FINCA to identify ways to collaborate and use thevillage banking networks for establishing or improving the distributionof products such as NutriStar that will improve the quality of
consumers’ lives.

on theWeb

To learn more about FINCA, please visit:
http://www.villagebanking.org/

P&G Sets Supplier Diversity Goal
to Spend $1.5 Billion Annually by 2005
P&G continues a steady commitment to economic inclusion ofminority- and women-owned businesses by pledging to spend $1.5
billion annually with them by 2005. This makes P&G eligible to join
the Billion Dollar Roundtable sponsored by Minority Business News
U.S.A. in conjunction with Women’s Enterprise magazine.
“With minority populations of today quickly becoming the majority ofthe population of tomorrow, we see a competitive advantage inincreasing our business with entities that reflect our country’s diverse
consumers,” says Daryl Hodnett, group manager of P&G’s Supplier
Diversity Development organization. “By doing business with diverse
suppliers, we gain key insights into consumer behavior andpreferences as a value-add 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.

Supplier Diversity Spending

93 94 95 96 97 98 99 00 01 02

48

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 2001-2002 results
exceeded $900 million.

Performance

P&G 2002 Sustainability Report

49

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.
Diversity Data – Global Enrollment
P&G continues to focus on diversity as a global strategy andexpects its work force to become increasingly more diverse. Global
data on enrollment by gender is shown in the following table:
2002
34.6
41.6

Global Enrollment % Female

Management
All Other Employees1

2001
34.5
38.0

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

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

2002

2001

2000

16.1
20.3

15.8
18.1

15.9
18.8

34.4
38.0

34.1
38.8

33.7
39.7

2 Administrative, Technical, and Plant Technicians

Philanthropic Contributions
P&G and its employees have a longstanding commitment tobeing good citizens and neighbors in all the places where we dobusiness around the world. We believe we have a responsibility
to society to use our resources – money, people, and energy –wisely. We show our financial commitment through support fora wide range of educational, health, social service, cultural, civic,
and environmental organizations. Worldwide, P&G has acorporate contributions system that coordinates contributions tolocal communities.
Contributions made by The P&G Fund and Corporate
Contributions in North America for the past three years areprovided in the following table:

Total

2002
$29,587,237

2001$27,503,686

2000$28,292,768

Contributions made by The P&G Fund and Corporate
Contributions globally totaled $77,746,930 in the fiscal year
ending 2002.
P&G’s contributions and community activities are an important partof achieving the Company’s purpose of improving the lives of theworld’s consumers. During the past year, P&G through The P&G
Fund has provided support to more than 1,500 organizations.
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. Currently, more than 70 percent of sites worldwide haveleaders qualified by Corporate/GBU staffs. The number of sites
with leaders qualified in Fire Protection has increased.

Note: These numbers include the recent Clairol acquisition.

Percent of Sites
with Qualified Leaders
70

73 73

2000 2001 2002
HS&E

68

66

71

2000 2001 2002
Fire ProtectionPerformance
Social

P&G 2002 Sustainability ReportIndustrial Hygiene & Safety
The health and safety of Procter & Gamble employees areparamount 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 .67 incidents per 100 employees
while the lost workday cases has increased to .27 cases per
100 employees.

50

OSHA – Outstanding Worker Safety Record
P&G’s commitment to excellent health and safety programs continued
in 2001. The Company had no serious citations from the U.S.
Department of Labor’s Occupational Safety and Health Administration(OSHA) and no dollar penalties for the year. We have achieved thisperformance level in three of the last five years and have not had aserious citation during this period.

Ivorydale Plant Recognizedfor Excellent Construction Safety Performance
In November 2001, industry peers recognized Cincinnati’s Ivorydale
plant for its excellent construction safety performance. The
Construction Users Round Table presented Ivorydale with a CISE
(Construction Industry Safety Excellence) Award in the “ongoing plant
operation” category. The Construction Users Round Table is anassociation of leading corporations in the United States promoting
safe and cost-effective construction methods. Members are recognized
for their achievements. At the time of this award, Ivorydale had
approximately 11.5 million effort hours without a lost-time incident.
On May 22, 2002, Ivorydale celebrated the 12 million hours mark.
This represents 19 years of continuous work with the current
construction contracting organization. It is equivalent to 316 people’s
working 19 years without a lost-time incident.

Total Incident Rate
(injury and illness per 100 employees)

.77
.69

.67

2000 2001 2002

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

.35
.24

.27

2000 2001 2002

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 2001-2002
were $34.3 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 2001-2002 were$175 million. This is about $5 million less than last year due mainly
to efficiencies from fully integrating various HS&E disciplines.
Operating cost does not include $19.7 million in revenue gained
from recycling.

P&G 2002 Sustainability Report

51

Sustainability in Action

P&G 2002 Sustainability Report

52

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

Globalization and the Environment –A Perspective from John Pepper
During my career at Procter & Gamble, I have been in very close
contact with business, governments, and individuals outside, as
well as inside, the United States. I’ve spent many years of volunteer
effort working on behalf of improving education and health carein the United States and abroad.
This experience has helped shape my core beliefs on globalizationor, as I define it, “accelerating integration of economies andsocieties around the world, focusing on people and theenvironment in which we live.”
These convictions start from the belief that the highest right forevery person is the right to receive health care and education, andto live in a country which affords him or her the freedom of
choice, stability, and a sufficient rule of law to achieve his or
her potential.
The deeper understanding and increased relationships amongpeople which integration has produced must be looked to as a key
factor in promoting the desperately needed peace in this world.
Businesses such as P&G have both the responsibility andopportunity to make the world a better place even as we grow ourbusiness. We must provide products and services of value topeople, provide good jobs for employees, and pay taxes forinfrastructure, in a way that respects the world in which we live.
We serve consumers and succeed financially through our brands.
We’ve developed products to reduce cavities by more than half,

reduce diseases through better hygiene, prevent osteoporosis, andmake everyday life easier. We recognize that good basic healthcare is fundamental to the development of society and individual
children. We have established cutting-edge practices in the areasof employee safety and job satisfaction. We’ve worked withgovernments to help educate children, a crucial point indevelopment anywhere.
But what has made P&G a place worthy of a lifetime of effort has
been what we can do for the people and the communities inwhich we live. We have a responsibility to use our resources for the
long-term benefit of society as well as for P&G.
These convictions are the foundation for what P&G has done inwhat we call globalization.

Sustainability in Action

P&G 2002 Sustainability Report

Health
P&G Taiwan –Making Every Woman’s Life Better
P&G Taiwan started the Six Minutes Protect A Life cancer
prevention campaign in 1995. Campaign results have beenoutstanding, with 95 percent of target women made aware thatearly detection of cervical cancer can be achieved by a Pap smear
test. In 1997, cervical cancer, which used to be the fifth-leading
cause of death among Taiwanese women, dropped to sixth for the
first time. Also, the testing rate climbed from a meager 6 percent
in 1996 to an impressive 52 percent in 2001.

The minister and officers of the Taiwan
Department of Health, womenlawmakers, and independent
foundations actively joined P&G
Taiwan’s 2002 Six Minutes Protect A
Life campaign.

Recognizing these outstanding achievements, the Department of
Health invited P&G Taiwan to assist in promoting breast cancer
prevention, based on our successful and sustained contributions incervical cancer prevention.

P&G Hong Kong Commits
to Lower Cervical Cancer Rates
P&G Hong Kong has partnered with the Hong Kong Cancer Fundsince 2001 to promote awareness of cervical cancer – apreventable disease that is the fourth-leading women’s cancer inHong Kong.
This year’s program focused on educating women about the valueof regular Pap smear screenings and providing incentives to bescreened. P&G sponsored the first-ever TV commercial on thesubject, released a press announcement, and sponsored a travelingexhibition in Hong Kong. Nearly 2,000 free Pap smears were
offered to women. The HK SAR government has supported theprogram with its pledge to implement a country-wide screening
program by the end of 2003.

Avanzando Con Tu Familia(Getting Ahead With Your Family)
Avanzando Con Tu Familia (Getting Ahead With Your Family) is
P&G’s multicultural program for Hispanic communities in the
United States and Puerto Rico. Launched in 1999, the program
offers tools and information to help families get ahead byenhancing their quality of life. It encompasses education (formal
and vocational), health, home, and traditions.
Through Avanzando, we’ve formed strong relationships with key
Hispanic stakeholders including SER, Jobs for Progress, League ofUnited Latin American Citizens (LULAC), National Council of La
Raza (NCLR), and the Hispanic Scholarship Fund.

Representatives from P&G Hong Kong,
the Hong Kong Cancer Fund, the Hong
Kong government, and the Chinese
University of Hong Kong have joined
together to break barriers so women
will go for Pap smears.

We have partnered with each of these organizations to bring a
number of health and educational programs to the community,
including founding two SER/Avanzando Community Learning
Centers. We’ve promoted the power of reading among Hispanic
children by expanding LULAC’s Young Readers’ Program to six
new communities. We’ve joined forces with NCLR to promoteawareness of the State Children’s Health Insurance Program to
reduce the alarming number of Hispanic children without
health insurance.

53

Sustainability in Action
HealthDu Soleil dans les Murs
Du Soleil dans les Murs (Let the Sunshine In) is an innovative causerelated marketing operation aimed at collecting funds for the
housing program of the Fondation de France, one of France’s
leading charity organizations. The Fondation distributes funds
among local associations whose mission is to help families in
distress improve their living conditions. More than 300,000 Frenchfamilies live in unhealthful homes. More than $500,000 was raisedin 2001, benefiting 40 associations involved in housing
rehabilitation, do-it-yourself materials renting, and furniture storage
programs. Du Soleil dans les Murs was renewed in 2002, with thegoal of becoming a long-term program. P&G France employees
are personally contributing to its success, be it through extra fundraising events or through in-store animations increasing consumer
participation in the program.

P&G 2002 Sustainability Report

54

Kimchi Festival(Making Kimchi of Love with P&G)
Making Kimchi of Love with P&G is an annual event to help theless fortunate in Korea and to give foreigners residing in Korea achance to experience Korean culture while helping the community.
About 100 people from P&G, the U.S. Embassy, the Korean
government, the American Chamber of Commerce, international
women’s associations in Korea, as well as other volunteers
participated in the event held October 30, 2001. Kimchi is a
traditional Korean dish consumed during the winter season.
Participants made kimchi to be donated to about 20 charity
centers, orphanages, and homes for elderly people.

La Liga Contra el Cancer
P&G has had a 15-year relationship with La Liga Contra el Cancer(The League Against Cancer) in Miami, Florida, USA. Through thisprogram, P&G has donated approximately $2.5 million to La Liga.
A health van valued at $250,000 was donated to the group in
May 2002. Used to educate families about cancer prevention andmedical breakthroughs and to share testimonials from cancer
survivors, the van will be a “vehicle of hope” in the community.

The Osteoporosis European TourP&G’s Actonel External Relations team started an exciting projectcalled The Osteoporosis European Tour. The tour kicked off in
October 2001 in Rome, Italy, as part of World Osteoporosis Day.
The tour features the OsteoTruck, an impressive mobile diagnosis
center providing on-the-spot ultrasound bone measurement
testing, information, and referrals to local specialists. P&G
Pharmaceuticals and the International Osteoporosis Foundation
sponsor the OsteoTruck. The tour includes a photographic display
depicting the devastating effects osteoporosis can have on lives.
The Osteoporosis European Tour will visit more than 50 cities
across Italy, France, the UK, Hungary, Switzerland, Belgium, Spain,
Portugal, and Germany.

City of HopeIn April 2002, P&G participated in the Caminos al Exito (Road to
Success) event sponsored by the City of Hope Food Circle Industry,composed of Southern California food retailers. City of Hope is a
non-profit organization dedicated to research and treatment ofcancer and other life-threatening diseases. Caminos al Exito was
focused on the Hispanic population. P&G worked with City of
Hope Food Circle Industry members to create two days of in-store
activities that brought in donations. The expo offered messages on
education, health, and financial topics, as well as samples of P&G
products. P&G sponsored the Mujeres de la Esperanza (Women of
Hope) Awards Banquet on the eve of the expo to recognize several
prominent Hispanic women and cancer survivors.

Sustainability in Action

P&G 2002 Sustainability Report

55

Children’s HealthHygiene-educ.com
Hygiene-educ.com is a P&G education site jointly developed withFrance’s Institut Pasteur to promote hygiene education amongchildren and generate interest in better hygiene.
The Web-based program aims to:• Educate children between 5 and 10 years old to become“hygiene ambassadors” and educate their parents about goodhygiene practices• Raise the awareness of children and their parents about invisible
germs they come into contact with every day
Teachers select course level (basic, medium, or reinforced), and theinformation is presented through exercises and practicaldemonstrations. In addition to teaching materials, the site also
includes three interactive games to present hygiene in an
appealing and fun way for children.
Hygiene-educ.com is currently online in French and English and willsoon be available in Spanish, German, and Italian.

on theWeb

http://www.hygiene-educ.com

Babies First
Babies First, a unique partnership among P&G’s Pampers Parenting
Institute, Wal-Mart, and the American Academy of Pediatrics, wascreated in 2000 to educate parents and caregivers about children’s
health and safety needs.
The Babies First October 2001 campaign informed parents about
the importance of early childhood immunizations. Brochures on
the theme “Immunize – Your Baby’s Worth It” were prominently
displayed in Infant & Toddler departments at Wal-Mart stores in 11
countries. As part of this campaign, the partnership provided
complimentary Child Health Record booklets for parents to record
their children’s illnesses, doctor’s visits, and immunization records.

The Pampers Institute
The Pampers Institute is an international network of child careexperts committed to understanding babies’ development andhealth. The Pampers Institute was launched in the United States in
the fall of 1996, followed recently by Western Europe and Japan.

In March 2002, the focus of the Babies First event was on theimportance of communication. The “Take Time to Talk” message
was delivered through several brochures offered to shoppers in
Wal-Mart stores and addressed by celebrity spokespeople in morethan 20 U.S. television markets.

Pampers.com, the online home of the Pampers Institute, waslaunched simultaneously to provide insights and information toparents. Pampers.com offers information on all aspects of baby
care. It includes news and parents’ experiences. By linking parents
to a global network of pediatricians and child development
experts, Pampers is working to build stronger families.

It is estimated that Wal-Mart weekly attracts nearly 10 million
parents who have children under age 3. The Babies First
partnership provides an opportunity to reach out to Wal-Mart
shoppers to deliver an educational service on children’s health andsafety concerns.

The global Pampers Institute covers many areas of children’s healthand development, such as dermatology, psychology, nutrition, andmobility. The Pampers experts have worked in maternal andpediatric health care and advocacy roles and are affiliated with key
maternal/child health organizations in their respective countries.

on theWeb

http://www.pampers.com/

Sustainability in Action
Children’s HealthPampers Educates Parents
on Children’s Hip Joint Development
Many people in the Czech Republic believe that cloth diapers are
the only type to use to ensure healthy development of the hip
joint. However, normally developed babies can safely use
disposables. Further, cloth diapers increase the workload forparents and are often less comfortable for babies.
In May and June 2002, two state television stations presented an
educational health series on orthopedics aimed at improving thequality of life for parents and their children. The Pampers brandpromoted one part of this series. It covered child orthopedics,
specifically the hip joint. Dr. P. Dungl, a child orthopedics expert
who is the chief physician of the Orthopedic Clinic of the Instituteof Postgraduate Medical Education and the First Medical Faculty of
the Charles University, presented information.

P&G 2002 Sustainability Report

56

Learn to Change the WorldThe P&G civics education program Learn to Change the World
was created in 2002 by P&G Romania. Targeted to children ages
13 and 14, the program’s objective is to educate children to
become good citizens with positive attitudes about caring andcommunity involvement.
The program introduces concepts related to civics education
through class discussions. P&G employees volunteer as mentors to
help children identify and develop projects with high impact in thecommunity. With P&G’s financial support, they implement thoseprojects. Examples of projects this year are Sunday classes
organized by teens for younger children in the neighborhood;
Parents’ School, classes for parents on how to communicate with
their children; and refurbishment of neighborhood playgrounds.

Feed Children for Better Education –P&G Thailand
Four million needy schoolchildren across Thailand eat insufficientlunches, resulting in lower learning abilities. Feed Children for
Better Education, a three-year program led by P&G and theMinistry of Education, was established to provide funds for schools
to purchase materials to grow their own food. Children withproper food will have greater learning capabilities and a better
quality of life.
P&G donated 1 percent of sales volume during a two-month
period. With donations totaling more than $1.5 million, help canbe given to more than 2,200 schools, or 530,000 needy children.
P&G’s Child and Health Award
In 2002, P&G Greece established an annual grant of nearly$22,000 called the Child & Health Award. The Award’s goal is tosupport young pediatricians who wish to pursue original scientificresearch in the field of pediatrics in Greece. Members of an
independent committee of pediatric university deans rate
candidates’ research proposals individually.
The Child & Health Award complements two similar awards
previously established by P&G Greece in the fields of dentistry
and gynecology.
Menarche Education Programfor Elementary School Students in Japan
Through P&G’s Menarche Education Kit, more than 370,000
5th-grade girls in registered schools in Japan received book bags
containing samples of Whisper, as well as educational booklets forthemselves and their parents. A Book for Girls helps elementary
school girls understand the physical changes their bodies will be
undergoing and improves their self-esteem. A Booklet for Parents
helps parents to understand and prepare their children as they
enter puberty.

The P&G team presented the Child &Health Award to Dr. A. Zellou and Dr.
A. Kotawis.

Sustainability in Action
Children’s HealthP&G 2002 Sustainability Report

57

Give Kids the World –Making Dreams Come True
Imagine a place where all your meals are served in a gingerbreadhouse, where a rabbit named Clayton is mayor, where you eat ice
cream anytime you want, and where Christmas is celebrated
every Thursday.
Sounds too good to be true? For children with life-threatening
illnesses, Give Kids the World is just this place.
A 51-acre non-profit resort near Florida’s Walt Disney World,
Give Kids the World provides dream vacations for terminally ill
children and their families. Families receive private
accommodations in the “village” and receive the “royaltreatment,” which includes the thrill of visiting Walt Disney World,
Universal Studios, and Sea World.
Since 1986, Give Kids the World has made more than 50,000
wishes come true. P&G’s corporate program has donated products
to the village, in addition to $1 million in proceeds from productpurchases and retailers’ matching funds. Tide has raised $1 million
through its NASCAR race car sponsorship. These fund-raisingefforts allow the village to operate year-round to host families freeof charge.

Give Kids the World winner Vanessa
Alvarez poses with Tide’s Winston Cup
driver Ricky Craven in front of the Tide
racing car.

Hope for the Flowers
Every spring, P&G Korea has an annual charity campaign, Hope for
the Flowers. The campaign helps children suffering from cancer.
In addition to donating $77,000 in medical support, P&G held ablood donation event for P&G employees and consumers.
Donation certificates collected throughout the campaign weredelivered to children suffering from cancer. Certificates were used
to buy proper medication at an affordable cost.
Forty elementary school children participated by baking cookies
with their parents. Cookies, filled with the bakers’ good wishes,
were delivered to hospitalized children.

A Helping Hand to Grow
Un Aiuto per Crescere – A Helping Hand to Grow – is the new
Missione Bontà initiative for children in difficult conditions in Italy.
The program is promoted by Dash, the leading P&G laundry
detergent in Italy.
Dash has funded at least 30 projects proposed by volunteer
organizations and evaluated by a commission of experts chaired by
the director general of UNICEF Italia.
After the success of previous Missione Bontà initiatives, this new
campaign reaffirms Dash’s social commitment. It offers soundeconomic support to volunteer organizations working forunderprivileged children. Un Aiuto per Crescere aims to support
those organizations that guarantee a network of solidarity each
day throughout Italy. All children, and particularly those who areless privileged, need our attention, trust, and encouragement –precisely what Un Aiuto per Crescere is designed to provide.
In June 2002, Dash’s Missione Bontà received an important ethics
award for its commitment to helping local communities and future
generations. The award, presented by one of the leading trade
publications in Italy (GDO Week), recognizes corporate sustainable
development programs in Italy and abroad.

Sustainability in Action

P&G 2002 Sustainability Report

58

UNICEF and P&G
Give Kids a Fresh and Caring Start –P&G and the U.S. Fund for UNICEF
P&G and the U.S. Fund for UNICEF are making a difference in the
lives of children around the world. Through the Give Kids a Fresh
and Caring Start initiative, Americans are invited to purchase any
Dawn or Downy product during September and October, with aportion of sales – up to $300,000 – benefiting children aroundthe world.

P&G and UNICEF Together
Support Children of Pakistan and Afghanistan
In March 2002, P&G donated $100,000 to UNICEF Pakistan. The
funds will be used to operate various social development andeducational programs. These programs improve the lives ofPakistani children and Afghan refugee children by reducing
common diseases through heightened awareness of goodhygiene habits.

P&G will also work with the U.S. Fund for UNICEF through a$200,000 grant to support Trick-or-Treat for UNICEF’s educational
curriculum, which encourages young Americans to learn about
concepts that affect children around the world. In all, P&G’s
participation in this year’s Trick-or-Treat for UNICEF campaign
represents a significant increase from the previous two years,
helping UNICEF and its partner organizations make significant
strides toward improving the lives of children around the world
through health, education, nutrition, protection, and emergency
relief programs.

Also, in January 2002, P&G launched its first-ever E-philanthropy
campaign. A secure Web site allows P&G employees to makepersonal donations to help UNICEF’s worldwide efforts. By visiting
the Web page, P&G employees learn about P&G’s partnership with
UNICEF, gain knowledge of UNICEF’s worldwide operations, andmake contributions.

In 2001, Dawn’s Clean Up for Kids campaign donated $550,000
to the U.S. Fund for UNICEF, helping to immunize 1.1 million
children against polio.

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Alliances
Safeguard Partners With the CDC
to Fight Disease In Haiti and Pakistan
Improving the health of people in developing countries has long
been recognized as an important component of sustainable
development. Better hygiene contributes to better growth, better
learning, and ultimately, to better economic development.
Safeguard antibacterial soap partnered with the U.S. Centers for
Disease Control & Prevention in Pakistan and Haiti to clinically
document the benefits of good hygiene in helping to reduce theincidence and/or severity of several diseases, such as impetigo andfilariasis, common in hot, humid environments. Results of thesestudies have shown the health benefits of daily bathing with anantibacterial soap such as Safeguard.

P&G Pharmaceuticals Teams Up with GMP
to Study Novel Diabetes Treatment
In April 2002, P&G Pharmaceuticals entered into a $24 million
alliance with GMP Companies Inc., located in Florida, USA.
P&G and GMP will collaborate on research of a therapy called
Ingap Peptide. Ingap Peptide has the potential to encourage
production of insulin by the pancreas. Insulin is crucial tomaintaining blood glucose levels. It is hoped that the therapy willtreat the underlying cause of diabetes mellitus, a chronic lifethreatening disease for which there is currently no cure. The
successful development and commercialization of the drug
would greatly improve the lives of patients currently requiring
insulin injections.

P&G and the Syrian Minister of Health
Improve Lives of Mothers and Children
In July 2001, P&G signed a cooperation agreement with the Syrian
Minister of Health to improve services provided for mothers andchildren at five main health centers in Damascus. P&G will
participate in medical staff training (midwives and nurses), as wellas provide education for mothers of young children. TV campaigns
sponsored by the Minister of Health and Pampers will provide
education on baby care and health-related issues.
Plans are in place to expand the program to other health centersand hospitals. Through this program and with P&G’s donation ofequipment to maternity wards in public hospitals in Syria, mothers
and children will receive better health care.

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Community Support
P&G Employees Around the World
Volunteer for Habitat for Humanity
Habitat for Humanity International is a non-profit organization
dedicated to providing simple, decent, affordable homes forpeople who otherwise could not fulfill their dream of homeownership. Habitat homes are being built in many countries whereP&G people live and work. P&G people around the world havecontributed their time, effort, and skills to help make homeownership a reality for low-income families.

on theWeb

To learn more about Habitat for Humanity, please visit:
http://www.habitat.org/

Jimmy Carter Work Project 2001
The Jimmy Carter Work Project is one of Habitat for Humanity’s
largest annual projects dedicated to eliminating substandard
housing and homelessness from the world. In August 2001, theProject took place in four Korean locations simultaneously.
Through the efforts of 9,000 volunteers, including former U.S.
President Jimmy Carter, 120 homes were built.
P&G Korea donated $27,000. Forty employees volunteered for the
Women’s Build, where women accomplished all building processes.

P&G Volunteers Build Home in Poland
Volunteers from P&G Brussels Fabric & Home Care spent a week
in Poland building Habitat homes. Building affordable housing for
low-income families provides more than a house. It provides ahome where families can enjoy modern conveniences such as
running water, a healthy living environment, and separate rooms
for separate activities – conveniences often taken for grantedby others.

U.S. Family Care Helps Build Homefor Single Mother and Four Children
Elaine is a single mother of four children. On September 15, 2001,
a team of Habitat for Humanity volunteers from U.S. Family &Home Care broke ground for her new home. The volunteers
included P&G employees and their families and friends. Working
40 shifts of four hours each, they completed the house in
December, using a Family & Home Care grant of $53,000 to help
pay for building materials.

P&G Philippines Group Builds Five Houses
The Charity Fund of Employees of Procter & Gamble Philippines
Inc. is a non-profit association dedicated to the social, economic,
health, and environmental well-being of the needy.
In 2001, the Charity Fund combined employee contributions witha matching donation from the Company to make a gift to Habitatfor Humanity. Additionally, employee volunteers built five houses.

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Disaster Relief
Earthquake Survivors Rebuild Their Lives,Thanks to P&G Employees Worldwide
In January 2001, the Kutch district of western India suffered theworld’s worst earthquake. Thirteen thousand people died, andhundreds of thousands were left homeless. The situation was
worse for people living in hamlets. The government cannot get aid
quickly to these remote places, unreachable by roads and notconnected to electricity.
P&G collected more than $90,000 from employees in India andaround the world. These funds were deployed in conjunction with
the NGOs Swayam Shikshan Prayog and Samerth. Rather thandonate the money to short-term assistance, P&G based the relief
project on developing women’s groups for long-term sustainable
development in communities in the Kutch district.
P&G brought in experienced people to help the women build
earthquake-resistant homes. Four community centers for women
were built in the hamlets, providing infrastructure for primaryschools, health centers, and women’s micro-credit savings groups
that fund entrepreneurial opportunities. One year after theearthquake, the new homes, the savings groups, and schools in
the community centers have given the women in Kutch a reason
to stay in their hamlets and not leave in search of new shelterand occupations.
The director of Swayam Shikshan Prayog says, “Unlike other
donors, P&G has uniquely contributed by building community
assets, which will ensure long-term development of the affected
communities. It is due to P&G’s genuine ownership, commitment,
and follow-up that the Community Resource Centers have been
built at a fast pace.”

Gira Concert Series
Explosión Musical was a summer concert series held in key
Hispanic markets in the United States. P&G brands Pantene,
Secret, Sunny Delight, Head & Shoulders, Pringles, Always,
Physique, Zest, and Crest communicated with Hispanic teenagers
through music to encourage them to remain in school.
The program included six concerts with the hottest Latin American
performers, an online campaign, in-store promotions, and a
motivational school program, METAS, with the theme “By taking
small steps, you’ll reach great goals.” The METAS program hasreached more than 200,000 Hispanic students in 128 schools
across the United States.
After the tragic events of Sept. 11, 2001, P&G changed the nameof the concerts to Gira Musical (Musical Outings). The New
York/New Jersey-area concert became a benefit called America
Unida (One America). The Gira Musical team partnered with
Telemundo television, local Hispanic radio stations, and Six Flags
Great Adventure amusement park to hold a forum to help
Hispanic teenagers express their feelings in a positive manner.
Concertgoers signed a mural dedicated to Sept. 11 victims. All
donations collected went to the American Red Cross.

on theWeb

For more information, please visit:
http://espanol.yahoo.com/docs/promo/giramusical/

Sustainability in Action
Disaster Relief

The Power of P&G People
P&G and its employees around the world responded quickly tohelp survivors and victims’ families after the tragic September 11
terrorist attacks on New York’s World Trade Center and the U.S.
Pentagon in Washington, D.C. Here are just a few examples of theways employees helped victims and each other through thishorrific event:
P&G contributed $2 million to the United Way’s September 11
Fund. Other donations included $250,000 to the American Red
Cross, P&G products valued at $1.45 million (Vick’s VapoRub,
ThermaCare, Bounty, etc.) for relief workers, more than $10,000
worth of Eukanuba dog and cat food to feed search-and-rescue
dogs as well as pets left stranded by the disaster, and respirators,
gloves, masks, filters, and batteries. Portable brewing stations
serving Millstone coffee were set up for relief workers.
Employees at the Green Bay, Wisconsin, plant donated 111 pintsof blood in a single day. Cincinnati’s Winton Hill Technical Center
donated $1,130 to the Clear Channel Relief Fund to assist policeand firefighters in New York City and Washington, D.C. Employees
throughout Cincinnati donated $20,500 to the American Red
Cross, United Way, and other relief funds.
Several technicians at the Sunny Delight plant in South Brunswick,
New Jersey – who also provide volunteer emergency services andheavy rescue operations within their local communities – were on
stand-by following the attacks on the World Trade Center. Though
they saw limited service because of the large number of relief
workers already at the disaster site, their units remained available
should the New York Office of Emergency Management require
their services in the days ahead.
More than 2,000 gift bundles filled with Dawn, Mr. Clean,Febreze, and Bounty were distributed through the Saatchi &Saatchi advertising agency to people who needed them most.
The Sunny Delight/Wal-Mart Strongest Kid in America contest
finals were scheduled in New York City when the disaster
happened. Priorities immediately shifted. Employees of P&G andThompson Murray, the advertising agency, worked to calmfamilies, arrange meals, secure transportation, and locate
needed medications.
P&G’s Travel Services personnel implemented a 24-hour support
line for the more than 300 P&G employees stranded worldwide
after the attacks. Critical information was supplied to travel
agencies and employees to assist with getting these employees
back home. Within a few hours of the attacks, our U.S. Consumer
Relations organization set up emergency phone lines for use by
P&Gers and their families who had concerns about employees intransit to or within the United States. Human Resources worked tolocate employees and reconnect families.

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2002 Sustainability Report
Global Editor

Janice Tarter, USACore Report Team Javier Arevalo, Venezuela
Bea Buyle, Belgium
Paul van der Mensbrugghe, Belgium
Charles Peng, Japan
Win Sakdinan, Canada
Chris Smith, UK
Robin Tollett, USA
Pam Wright, USA
Keith Zook, USA
Consultant

Zheng “Clara” Tao, Kenan Flagler
Business School, USA

Copy Editor

Jan Sherbin, Cincinnati, OH, USA

DesignAndy Ruttle, Ruttle Design Group, Inc.,
Cincinnati, OH, USA

The report team thanks all the individuals throughout the world
who contributed information, stories, and data to this report. A
special thanks goes to Keith Zook for his valuable time,
perspective, and advice.

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

on theWeb

P&G’s 2002 Sustainability Report can be found at:
http://www.pg.com/sr