PUMA: Environmental Profit and Loss Account
08 February 2012
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Key Findings include:
The total monetary impact of PUMA's direct and supply chain operations was valued at EUR 145 million.
The greatest impacts are from the use of water and the generation of greenhouse gas emissions, at EUR 47 million each.
The conversion of land for agriculture for key raw materials such as leather, cotton and rubber is the third greatest impact at EUR 37 million.
Other air pollution affecting acid rain and smog and the impacts of waste are less significant at EUR 11 million and EUR 3 million respectively.
Just 6% (EUR 8 million) of the impacts arise in PUMA's own operations, with a further 9% (EUR 13 million) caused by their direct suppliers (Tier 1). This leaves 85% of the impact outside what can be considered areas in which we have direct control or influence.
Tier 4 (impacts from the production of raw materials) accounts for 57% (EUR 83 million) of PUMA's total impacts. This stage of production is a hugely important determinant of the quality and desirability of PUMA's products but also the aspect most distant from their own operations and influence.
The Footwear lines generate the greatest environmental impact indicated by the impact per EUR 100 of sales. The monetised environmental impacts from footwear are EUR 6.7 per EUR 100 of sales, Apparel EUR 4.1 and Accessories EUR 2.9 per EUR 100 of sales. The high impact of Footwear is caused by the materials and processes involved in creating PUMA's products.
PUMA's environmental impacts occur mostly in the Asia / Pacific region (66%, EUR 96 million) where the majority of their supply chain is based. More than 40% of the environmental impact in Asia / Pacific is from water use which is driven by the concentration of cotton farming and fibre, yarn, thread and fabric mills in the region. In addition, the high concentration of supplier factories in the Asia / Pacific region means that more than 60% of GHG emissions and other air pollution, and almost all of PUMA's waste, is generated here.
At PUMA we understand the importance of healthy ecosystems to the future of our business and also recognize that we have to be accountable, ethical and responsible to our environment. Towards the end of 2009 we embarked on a journey to develop an enterprise and supply chain-wide view of our environmental impacts in monetary terms, so that we could take these impacts into account strategically and embed them in our business decision making processes.
All business operations and supply chains depend on nature for services such as fresh water, clean air, healthy biodiversity and productive land. PUMA’s Environmental Profit and Loss Account (E P&L) is the first attempt to measure the immense value of these services to a business, and the true costs of a business’s impacts on nature.
Why did PUMA develop the EP&L?
PUMA believes that businesses should account for and, ultimately, pay for the cost to nature of doing business. These costs do not currently hit the financial bottom line, but could easily do so in the future, for example, as a result of new government policy, environmental activism, consumer demand, growing scarcity of raw materials, or as a direct consequence of escalating environmental degradation.
PUMA developed the Environmental Profit and Loss Account (E P&L) to help identify and manage these risks, while simultaneously sharpening their focus in pursuit of new and sustainable business opportunities. A challenge for all companies is to build an increasingly sustainable and resilient business model while also delivering multiple competitive advantages. PUMA aims to be the world’s most desirable and sustainable Sportlifestyle company and the E P&L is one of the principal tools by which they hope to gain the information and insight required to set the strategy to achieve this.