An Environmental Profit and Loss Account (EP&L) places a financial value on environmental impacts along the entire value chain of a business to help companies combine sustainability metrics with traditional business management.
Traditional approaches to environmental impact measurement provide a variety of metrics. For land use it is hectares, for carbon and other pollutants it is tonnes and for water it is cubic meters. This makes it difficult to compare the relative contribution of environmental impacts to the overall impact of a company or a product. Valuing environmental impacts in financial terms solves this problem by providing an overarching metric to assess risk and opportunity across operations, products and supply chains.
A proxy for nature's invoice
Though companies pay fees for services such as water abstraction, energy use, waste disposal and land use, the true costs of these environmental impacts are usually externalized and unaccounted for. An EP&L assesses how much a company would need to pay for the environmental impacts it causes, providing a shadow price for risk and opportunity analysis. Trucost pioneered the valuation of environmental impacts with companies and international organizations. We draw on our environmental economics expertise and factor in a wealth of scientific and peer reviewed literature to derive valuations that complement the business strategies and risk horizons of our clients.
Trucost can help you to:
- Compare the environmental costs of different raw material inputs, processes, locations, suppliers and product life stages
- Understand opportunities to optimize company operations, supply chains and products in line with global resource availability and environmental cost
- Identify financial risk from natural resource constraints and regulatory frameworks
- Provide transparency of environmental performance to business managers, customers, investors and stakeholders
PUMA Environmental Profit & Loss Account
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Managing product sustainability
Managing supply chain sustainability