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Experts Evaluate PUMA's EP&L
December 18th, 2012
Sportswear brand PUMA released a report outlining the opinions of a group of experts brought together to evaluate the company’s ground-breaking Environmental Profit & Loss (EP&L) accounting.
PUMA and its parent company PPR published the first–ever EP&L in November 2011, calculating the environmental impact for greenhouse gas emissions (GHG), water use, land use, air pollution and waste, generated through the operations and supply chain of PUMA, which was valued at €145 million in 2010.
The EP&L is considered a key first step in the development of a natural capital accounting framework, and PPR brought together experts from academia, industry and NGOs to critique the process and its viability for broader industry adoption.
Overall, the experts unanimously agreed the concept of the EP&L was a step in the right direction and confirmed the process as a logical way to frame environmental issues for business. The panel said the current EP&L methodology was viewed as appropriate to support strategic decision making, provide insight into natural capital risks faced by business, highlight potential opportunities and act as a basis to communicate a company’s impact on the environment to stakeholders. However, they noted additional insight could be provided by extending the analysis to a cradle-to-grave, or even to a cradle-to-cradle level.
The panel also suggested some technical areas where the methodology could be improved, such as increasing the amount of primary data on which the EP&L is based to reduce uncertainty. As is, the results rely significantly on estimation techniques such as environmentally extended input-output (EIO) modeling and sourcing location information limited to the country level.
On the big-picture level, the experts said the largest challenge for the business community will be understanding how best to standardize the principles and the approach to producing an EP&L and facilitating widespread adoption.
“Without the drive of business leadership, the EP&L as an approach is unlikely to be used by more companies unless a more accessible methodology is developed for companies that do not have strong support from the senior executives,” the report states. “Standardization of the EP&L approach should help broader adoption of the EP&L concept.”
In addition, the report suggests that EP&L needs to align with other efforts and work as part of a bigger strategy, such as those promoted by the International Integrated Reporting Council, the World Business Council on Sustainable Development’s Reporting Initiative, and national-level initiatives such as Wealth Accounting and the Valuation of Ecosystem Services (WAVES).
In related news, The Economics of Ecosystems and Biodiversity (TEEB) for Business Coalition officially launched in Singapore last month with a focus on the research and development of methods for natural capital accounting.
@Bart_King is a freelance writer and communications consultant.