P&G Commits to Transparency in Wood-Pulp Sourcing

By Jessica DiNapoli
NEW YORK (Reuters) – Procter & Gamble (NYSE:PG) has pledged to a group of shareholders that it will provide more details regarding its audits of wood-pulp suppliers. This follows years of pressure from investors advocating for more sustainable sourcing of forest products by the maker of Charmin toilet paper.

The world’s largest consumer products manufacturer previously stated it conducts audits but offered limited information about the process. The environmental impacts of logging have drawn increased scrutiny toward P&G and other significant pulp consumers.

Andrew Shalit, a shareholder advocate at Green Century, mentioned that the upcoming step is to discuss specifics about what the company will disclose. He views these disclosures as vital for environmentally-conscious investors evaluating their investments in P&G and other companies purchasing pulp, especially from Canada’s ecologically sensitive forests.

P&G, which also produces Bounty paper towels, has indicated it keeps global supply chain details private for competitive reasons. Green Century aims to clarify P&G's supply chain to set a precedent for other companies that depend on Canadian pulp, including Home Depot (NYSE:HD), in which Green Century also invests.

According to a P&G spokesperson, the company agreed to share more information to assure consumers of the extensive measures taken to safeguard forests for future generations. The additional details are expected to be available by mid-2025. The spokesperson also noted that P&G strives to protect primary forests, and for every tree used in its paper products, at least two are replanted.

P&G relies on third-party certifiers like the nonprofit Forest Stewardship Council to ascertain its wood pulp is sourced sustainably. However, a Reuters investigation revealed that certifications have minimal impact on preventing deforestation, which plays a crucial role in carbon absorption and combating climate change.

P&G's commitment to greater transparency followed plans by Green Century and other investors, holding nearly $1 billion in shares, to introduce a resolution concerning the company’s forestry practices at its annual meeting earlier this year. Major shareholders such as Robeco, BNP Paribas (OTC:BNPQY) Asset Management, and AXA Investment Managers participated in discussions with P&G.

Peter van der Werf, Robeco’s head of active ownership, cautioned that reliance on a fragile ecosystem exposes companies to sourcing risks and encouraged P&G to strengthen its vision for fiber resilience. Adam Kanzer, head of stewardship, Americas, at BNP Paribas Asset Management, echoed that enhanced disclosures would offer investors a clearer understanding of P&G's role.

P&G has made similar commitments in the past, previously retracting a pledge to avoid forest degradation, claiming it was simplifying its language. The company insists it only sources wood pulp from tree plantations and sustainably managed woodlands.

DISAGREEMENT OVER CANADA

Nonetheless, Green Century continues to advise P&G to lessen its dependence on pulp sourced from Canadian forests, which the investment firm considers threatened due to prolonged logging. Shalit stated, “They disagree and aren't setting a goal of reducing reliance,” noting that this remains a topic of ongoing discussion.

P&G accounts for 3% of all wood pulp produced in Canada, as per the company’s website. Environmentalists argue against P&G's reliance on wood pulp primarily due to the single-use nature of toilet paper and paper towels.

As part of its agreement with investors, P&G also committed to investing $20 million in developing wood-pulp alternatives from 2025 to 2030, as well as recommitting to protecting Canada's untouched forests, according to Shalit.

This funding represents a small fraction of the estimated $860 million P&G spends annually purchasing pulp for its North American toilet paper and paper towel segment, according to TTOBMA analyst Fraser Hart.

P&G also agreed to disclose further information regarding its lobbying practices in Canada. In contrast, rival Kimberly-Clark (NYSE:KMB) announced it aims for its products to be made without any wood pulp sourced from untouched or naturally regrown forests.