Supplier Sustainability

Two female workers discussing sustainability within PPG facilities

We carefully select suppliers that share our commitment to operating more sustainably, and work throughout our supply chain to support continued improvement.

Approximately 96% of PPG's emissions are in the value chain, so we understand the criticality of working with supplier and customer partners. In 2023, we spent over $9.3B with more than 18,000 suppliers globally on raw materials, indirect goods and services and transportation of goods. We have prioritized work with a selection of key suppliers that represent the majority of our upstream scope 3 emissions.

We partner with suppliers to understand their current practices and innovate products and processes that use less energy, produce less waste and avoid negative health impacts on people throughout our value chain. By the end of 2023, we assessed 820 suppliers, representing 63% of spend, against sustainability and social responsibility criteria, including 97% of PPG's key suppliers.

Key suppliers assessed to sustainability and social responsibility criteria

Evaluating supplier practices

Our procurement team has continued to improve our approach to identifying opportunities for improvements in our supply chain. We take a risk-based approach to supply chain management and focus on the industries and geographies most likely to have issues. In 2023, we started using a new supplier monitoring tool to help us understand where environmental, social and governance risks are concentrated along our supply chain. This is the newest in a suite of tools and informational databases that we use to track our spending around the world and understand the ESG practices of PPG suppliers. This leading third party tool helps our procurement team review our entire supply chain's performance across the categories of environmental, labor and human rights, ethics and sustainable procurement practices.

As PPG has grown through acquisition, we have inherited new suppliers that need to be onboarded to our procurement processes. We continued to onboard suppliers into a leading third-party due diligence platform to evaluate suppliers' sustainability practices. In early 2023, we completed the process of integrating Tikkurila suppliers into our vendor management platform, marking the completion of one of our largest integration efforts to date. As of the end of 2023, 820 PPG suppliers have responded to surveys and received ratings from our third-party platform.

Recognizing responsible vendors

Every year, we recognize suppliers for responsible business practices that exceed our expectations with the Excellent Supplier Awards. There were eleven award recipients in 2023. Our procurement, business and functional teams evaluated and awarded suppliers for competitive advantage and value, as well as sustainability and supplier diversity.

Bringing sustainability expertise into our procurement team

As our focus on sustainable supply chain management continues to grow, we have added headcount within PPG to support our suppliers and help build capacity internally. In 2023, we created a new global ESG procurement manager position, responsible for collaborating with our global procurement team to engage and educate suppliers on defining lower carbon feedstocks and raw materials, setting expectations for supplier GHG emissions reductions aligned to our target, and tracking and monitoring supply chain due diligence activities.

For more information about how we approach supplier sustainability, see below.

Data highlights

Average EcoVadis score of suppliers

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	PPG supplier average score	EcoVadis average score
Overall	58%	46%
Environment	62%	46%
Labor and human rights	59%	48%
Ethics	55%	44%
Sustainable procurement	51%	38%

Supplier sustainability audits by region

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Region	On-site audits	Remote audits
Europe, Middle East and Africa	38	21
U.S. and Canada	53	200+
Asia Pacific	48	1
Latin America	30	14

Our approach to supplier sustainability

We expect our suppliers and their subcontractors to fully comply with all applicable laws and to adhere to internationally recognized environmental, social and governance standards. We also expect our suppliers to minimize the negative environmental impacts from their operations and products, and to continuously improve their performance. Our Global Code of Ethics, Supplier Sustainability Policy and Global Supplier Code of Conduct clearly state our expectations for every supplier.

Globally, we work to comply with evolving regulations that impact our operations, and expect the same from our suppliers. These regulations include the Modern Slavery Act of 2015 in the UK; General Data Protection Regulation (GDPR) in the EU; Registration, Evaluation, and Restriction of Chemicals (REACH) in the EU; EU Green Deal regulations; Conflict Minerals Sourcing and other third-party due-diligence screenings for compliance purposes.

We are constantly working to improve our supplier sustainability programs. We benchmark our performance against peers, improve our reporting and program visibility, consistently expand our programs and provide training to our staff. We also create long-term plans on joint sustainability initiatives with third-party organizations to drive future change.

Visibility across the supply chain

Our procurement and sourcing teams use a standard eProcurement (ePro) platform where all global suppliers are registered. Within ePro, suppliers can acknowledge our Global Supplier Code of Conduct, Sustainability Policy, and confirm compliance with data privacy laws as they pertain to any relationship with PPG. Across our operations in the United States and Canada (USCA) and Europe, Middle East and Africa (EMEA) regions, we also use ePro for procure to pay (P2P).

We maintain a third party due-diligence tool to help identify and manage potential high-risk suppliers throughout the supply chain. We assess our key raw material, indirect, and logistics suppliers, and high-risk suppliers throughout the value chain. Critical suppliers are identified based on our total procurement spend, while high-risk suppliers may be identified based on geographic position, industry and other factors. We evaluate and monitor suppliers based on these criteria each year to gauge current or potential risks present in our value chain.

PPG works with a leading third-party ratings organization that assesses responsible practices of more than 60,000 companies worldwide, to evaluate the sustainability of suppliers across our supply base. The organization evaluates suppliers across four key segments:

Environment: Energy consumption, product use, customer health and safety, and biodiversity
Labor and human rights: Employee health and safety, working conditions, child labor, forced labor, human trafficking, diversity, discrimination and harassment
Ethics: Corruption and anticompetitive practices
Sustainable procurement: Supplier environmental and social practices

Suppliers receive a scorecard which provides an overall corporate social responsibility performance rating, and allows them to benchmark their performance against peers in the same industry. Our procurement organization uses these insights to make sourcing decisions and drive improved supplier performance within these four pillars.

We collaborate with external partners to incentivize broader systemic action in particularly high-risk geographic areas and industries. As an example, we are founding members of the Responsible Mica Initiative, which aims to enable a responsible and sustainable mica supply chain in India and Madagascar.

Monitoring supplier performance

Our procurement organization works across our departments, regions and businesses to identify, assess and audit potential and existing suppliers on an ad hoc or scheduled basis.

Suppliers are selected for audits based on an assessment which may include factors such as business impact, supply chain risk, product category, supplier development, quality requirements and sustainability performance. We evaluate suppliers on criteria which may include:

Product and process reviews
Production process: formulations, packaging and shipping
Financial stability
Quality systems: key controls, inspection and testing, abnormality reporting and continuous improvement
Human rights and regulatory performance
Environmental, health and safety performance
Contamination prevention
Other: training, industry-specific certifications, sustainability processes and contingency plans

Suppliers that perform well are moved to or maintained in PPG's approved supplier pool. Low scoring suppliers may be placed on a performance improvement plan and face temporary suspension or discontinuation of business, depending on the audit findings.

Supplier diversity

Our Supplier Diversity Program aims to increase opportunities for diverse suppliers, and ultimately drive PPG spend to qualified diverse suppliers. Our company and communities benefit when we provide equal opportunities for diverse suppliers to compete for our business.

Our Supplier Diversity Program supports this effort by working across four focus areas:

Data and technology: Building data systems and capabilities within PPG to identify qualified suppliers and enhance reporting
Operational program elements: Ensuring that qualified suppliers are included in sourcing projects and supported as needed
Resources to drive results: Facilitating leadership and end user awareness, support and collaboration
Effective outreach: Reaching out to qualified suppliers via memberships, events and benchmarking efforts

The diverse supplier program applies to the USCA region of PPG, primarily in the United States. It is supported by our Procurement Center of Excellence, which helps identify tools, suppliers and best practices to share across the program participants. To be considered for the Supplier Diversity program, suppliers must meet requirements laid out by certifying entities and government agencies. Qualifying suppliers include U.S. owned and privately held businesses that are owned by veterans, minorities, members of the lesbian, gay, bisexual, transgender and queer (LGBTQ+) community, people with disabilities and women.

Engaging with suppliers

Each year, we also recognize suppliers whose performance consistently exceeds our expectations with our Excellent Supplier Awards. Suppliers are nominated based on quantitative and qualitative criteria, including commercial value, innovation, service, sustainability, quality and compliance. We recognize suppliers based on competitive advantage and value, sustainability and supplier diversity. Learn more in our Excellent Supplier Awards overview.

In addition to helping suppliers evaluate and improve their sustainability performance, we collaborate to improve our own. We are increasingly gathering detailed information on the sustainable attributes of the raw materials used in our formulations and identify products that contain bio-based materials, recycled content and lower toxicity chemicals. Discussions with our largest suppliers regarding areas of collaboration on sustainable raw materials will continue to increase as we look to improve the sustainability of our products. Expanding the information available to our procurement teams helps us manage the environmental and social impacts of our procurement decisions. Other examples of supplier sustainability engagement include asking suppliers to provide more environmentally conscious products, recycling packaging used to ship materials to our facilities and offering more fuel-efficient transportation services.