Puma has set new standards in transparency about environmental impact
Many companies set themselves operational sustainability goals. Some have even started to calculate the financial benefits of the efficiency savings they secure along the way. Marks & Spencer’s Plan A, for example, generated a £105m net benefit in 2011-12. But only Puma has openly worked out its exposure to the hidden costs of its environmental impact.
The EP&L’s main benefit is environmental cost control. Puma has identified that most of its environmental impact occurs far down its supply chain, mainly in Asia, where the impacts were assessed at €96m. The greatest environmental cost arises from the production and use of raw materials, for example from the methane produced during cattle farming, and the water consumed during the subsequent transformation of cattle hides into leather
Creative design
Puma chairman Jochen Zeitz says that by being creative in product design and turning to recycled materials, the company can significantly reduce these impacts. “We are now in the process of implementing and internalising initiatives that are aimed at reducing the environmental impacts [that] the raw material sourcing, manufacturing, marketing and distribution of our products cause along Puma’s entire value chain.” The result can be direct cost savings, such as through the use of more efficient cutting techniques that reduce the material wasted during manufacturing.
In terms of reporting, Puma’s annual report (Clever Little Report 2011) includes a description of the EP&L process, but not the figures. The report states: “Although we pay fees to local authorities for services such as the treatment and supply of water, the true costs of natural resources and our environmental impacts remain externalised and unaccounted for.”
Underlying the EP&L is a recognition that pressure is growing for companies to pay directly for their environmental impacts, and that these costs, not found in traditional accounts, pose a threat to the business.
Puma is considering an extension of the EP&L model to cover its social impacts, such as on human rights and supply chain wages. Zeitz has said that this presents a greater challenge than the EP&L because of the difficulty of measuring the social impacts, and Puma has yet to decide how to proceed.
Puma was assisted in drawing up the EP&L by consultants PricewaterhouseCoopers. Tom Beagent, PwC assistant director for sustainability and climate change, says the approach has “garnered a lot of interest. We’ve had a number of conversations with companies that want to do something on this. It’s very cross-sector, not just retail and consumer.” But for now, Puma remains the trailblazer.