Puma Puts Financial Value on Environmental Impact

Puma is the first company in the world to put a value on the ecosystem services it uses to produce its sports shoes and clothes. In a huge leap for CSR, the company has published an economic valuation of the environmental impacts caused by greenhouse gas emissions (GHGs) and water consumption along its entire supply chain. It plans to become even more ambitious by integrating both its  social and economic impacts. Puma belongs to parent group PPR, which owns brands from Gucci to Stella McCartney. Both company and parent group made it clear that the current system of manufacturing is responsible for degrading the planet’s eco-systems and needs to go through a fundamental change.

Puma’s creation of the environmental profit and loss account shows that its direct ecological impact of its operations equals to £6.2m and an additional £74.7m falls upon its entire supply chain. Jochen Zeitz, chairman and CEO of Puma and chief sustainability officer at PPR, said: “The E P&L statement is an essential tool and a shift in how companies can and should account for and, ultimately, integrate into business models the true costs of their reliance on ecosystem services and PPR Home will encourage and collaborate with the industry to adopt this tool. “

The new P&L was developed by PricewaterhouseCoopers and Trucost, based of a value per tonne of carbon dioxide at £57 and an average water value of £0.69 per m3. The analysis involved looking at all impacts ranging from raw material production, such as cotton farming and oil drilling, to processing, involving leather tanneries, the chemical industry and oil refining.

The biggest impact was found at the point where raw materials are derived from natural resources, such as the cultivation and harvesting of cotton and cattle ranching. The next stage in developing a triple bottom line accounting system will take place this autumn, when Puma includes additional environmental key performance indicators such as acid rain and smog precursors, volatile organic compounds, waste and land use change.

Puma plans on tackling the social factors of sustainability such as fair wages, safety of working conditions by enabling the development of an Environmental and Social P&L account as its next step. The final step will be to value the social and economic benefits from Puma’s operations through the creation of jobs, tax contributions, philanthropic initiatives and other value-adding elements. These benefits will then be offset against the environmental and social costs to complete the P&L statement.

The company has made a commitment to share the results of the E P&L with other industry players and corporations to help create a common standard. Not only is this a detailed life-cycle analysis, it is finally a system that puts the environmental cost on a product. It is indeed an ambitious undertaking but it has potential to become industry standard as it is already being touted as  the latest in environmental reporting.

Akhila is the Founding Director of GreenDen Consultancy which is dedicated to offering business analysis, reporting and marketing solutions powered by sustainability and social responsibility. Based in the US, Europe, and India, the GreenDen's consultants share the best practices and innovation from around the globe to achieve real results. She has previously written about CSR and ethical consumption for Justmeans and hopes to put a fresh spin on things for this column. As an IEMA certified CSR practitioner, she hopes to highlight a new way of doing business. She believes that consumers have the immense power to change 'business as usual' through their choices. She is a Graduate in Molecular Biology from the University of Glasgow, UK and in Environmental Management and Law. In her free-time she is a voracious reader and enjoys photography, yoga, travelling and the great outdoors. She can be contacted via Twitter @aksvi and also http://www.thegreenden.net

One response

  1. Its a good initiative taken by PUMA to mitigate the social problems. Inorder to offset the degradation of ecological balance other social activities are taken up. Its really funny to see that purely profit organisations are eyeing to become social entreprise. there are loads of ifs and buts…

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