Case study: PUMA
PUMA on the
With big business increasingly in the spotlight for its impact the environment, sportlifestyle company PUMA decided to do something about it. With our help, it became the world's first company to produce an environmental profit and loss account (E P&L).
This groundbreaking move puts a value on the eco services PUMA uses, signalling a radical change in the way it will account for its use of natural resources from this point on.
This innovative P&L describes in monetary terms the environmental impacts caused by greenhouse gas (GHG) emissions and water consumption along PUMA's entire supply chain. The first results revealed that the direct ecological impact of PUMA's operations translates to €7.2 million with an additional €87.2 million falling on four tiers along its supply chain. In total, this leads to an overall GHG and water consumption impact of €94.4 million. These costs will serve as a metric for the company when aiming to mitigate the footprint of its operations.
PUMA turned to us after seeing our Sustainability & Climate Change (S&CC) team's work on The Economics of Ecosystems and Biodiversity (TEEB) report and our commentary on integrated reporting. Both are pioneering works that look at how companies can account for their social and environmental impacts in financial terms.
Jochen Zeitz, PUMA's Executive Chairman commented: “I believe that the current business model that originated in the industrial revolution must evolve into a business paradigm that works with nature and not against it. As businesses, we must account for the cost to nature of doing our business and with this E P&L we have taken the first step towards assessing a realistic economic value of PUMA's impact on the environment. Because we can only manage, what we measure. “
Alan McGill, an S&CC partner continued: “This initiative gives PUMA a unique and challenging insight into its supply chain. It's a game-changing development to integrate environmental issues into a business model like this, because it provides a basis for embedding reliance on natural capital into business strategy. Fundamentally, the E P&L analysis is about risk management for both the environment and for the business, because you can't separate the two.”
It's clearly early days for reporting of this nature. Invariably, the smaller the supplier, the harder it is to certify the environmental data, so certain assumptions have to be made. It involves the use of sophisticated modelling techniques and overall accuracy can only improve in the years to come. But what's already for certain is that the environment has at last been valued, and for that alone PUMA should be applauded.