Exclusive-Procter & Gamble to disclose more details about wood-pulp audits, investors say

By Jessica DiNapoli

NEW YORK (Reuters) – Procter & Gamble (NYSE:) has promised a group of shareholders it will disclose more details about how it audits wood-pulp suppliers, the investors told Reuters, after shareholders pushed the maker of Charmin toilet paper for years to source forest products more sustainably.

The world’s biggest consumer products maker has previously said it performs audits but provided little information about them. Logging’s impact on the environment has raised scrutiny of P&G and other major pulp users. 

The next step is for P&G and the investors to discuss specifics of what the company will now disclose, said Andrew Shalit, a shareholder advocate at Green Century. Shalit sees such disclosures as important to helping environment-minded investors evaluate their holdings in P&G and other companies that buy pulp, particularly from Canada’s ecologically sensitive forests.

The maker of Bounty paper towels said this month it guards details of its global supply chain for competitive reasons.

Green Century wants clarity on P&G’s supply chain to set an example for other companies that rely on Canadian pulp, such as Home Depot (NYSE:), in which Green Century also invests, Shalit said.

“We think it will benefit P&G for the depth and rigor of their oversight to be better understood by investors,” he said.

Home Depot did not respond to a request for comment.

“We agreed to share additional information to reassure consumers of the thorough and robust steps we are taking to protect forests for future generations,” a P&G spokesperson said, adding that the information would be available in mid-2025. “It is important to note that P&G aims to protect primary forests, and that for every tree used in our paper products, at least two are regrown.” 

The company relies on third-party certifiers, such as the nonprofit Forest Stewardship Council, to ensure its wood pulp is sourced sustainably. But a Reuters investigation this year found the certifications do little to stop clear-cutting of forests that absorb carbon and slow climate change.

P&G made the commitment for greater disclosure after Green Century and other investors holding nearly $1 billion in shares collectively planned to put forward a resolution about the company’s forestry practices at its annual meeting earlier this year, Shalit said. Major P&G shareholders Robeco, BNP Paribas (OTC:) Asset Management and AXA Investment Managers were also involved in talks with P&G, he said. 

“By relying on an increasingly fragile ecosystem, companies expose themselves to sourcing risks,” said Peter van der Werf, Robeco’s head of active ownership. “This is why we encouraged P&G to explore how its vision for fiber resilience could be strengthened in the long run.”

“These enhanced disclosures should provide investors with a clearer understanding of the role P&G is playing,” said Adam Kanzer, head of stewardship, Americas, at BNP Paribas Asset Management.

AXA declined to comment. 

P&G has previously made similar commitments and last year dropped a pledge to avoid forest degradation, saying it was simplifying language. The company says it only purchases wood pulp from tree plantations and woodlands managed to produce lumber. 

DISAGREEMENT OVER CANADA

Green Century still wants P&G to reduce its reliance on pulp from Canadian forests because the investment firm sees them as under threat from decades of logging, Shalit said. 

“They disagree and aren’t setting a goal of reducing reliance,” Shalit said. “That’s an ongoing point of discussion.”

P&G buys 3% of all wood pulp produced in Canada, according to its website. A top reason environmentalists object to P&G’s reliance on wood pulp is because toilet paper and paper towels are discarded after one use. 

In its agreement with investors, Cincinnati-based P&G also said it would invest $20 million in developing wood-pulp alternatives from 2025 to 2030 and recommit to protecting Canada’s untouched forests, Shalit said.

That investment represents a fraction of the $860 million P&G spends annually buying pulp for its North America toilet paper and paper towel business, based on an estimate from TTOBMA analyst Fraser Hart. 

P&G also agreed to disclose more about its Canadian lobbying practices.

Rival Kimberly-Clark (NYSE:) said this year it would aim for its products to be made without any wood pulp from untouched or naturally regrown forests.