Puma Debriefs Methodology of Environmental Accounting

Sports brand Puma published a detailed report describing the methodology behind its groundbreaking Environmental Profit and Loss Account (E P&L) completed last year.

The E P&L is a groundbreaking effort to monetize the value of ecosystem services used across a company’s entire supply chain. Puma found that cost to be EUR 145 million for the year 2010. Of that amount, only EUR 8 million resulted from Puma’s direct operations, while the remaining EUR 137 million was attributed to supply chain activities.

The report also includes a regional breakdown of Puma’s E P&L results and a comprehensive illustration of the drivers of Puma’s environmental impacts and how they were measured, as well as an overview of the benefits of the E P&L as a tool for strategy, management and communication.

Puma says future developments for the E P&L initiative include expanding the accounting methodology to include the full cradle-to-grave-product lifecycle. The current scope of the project is a ‘cradle-to-gate’ analysis. For products like footwear, which has relatively limited impacts associated with its use phase, this truncation may be a reasonable estimation, Puma says. But for apparel, which may demand frequent washing and perhaps also ironing, significant impacts are not covered under the current scope.

Puma plans to publish its next E P&L statement at the beginning of 2013 and is currently developing solutions to reduce environmental impacts occurring further down in the supply chain, where it has far less influence because individual suppliers may be shared by many companies. For that reason, Puma has called on other companies and policymakers to follow its lead.

“Placing a monetary value on our impacts - on natural services - has helped to illustrate the potentially negative impact depleted ecosystems can have on a business’ future performance,” writes Jochen Zeitz, Executive Chairman of Puma and Chief Sustainability Officer of parent company PPR. “It is common practice in the corporate world that this ‘inherent’ value of nature is not defined and integrated into a company’s accounting. Some corporations believe that businesses solely rely on financials and are driven by their ‘bottom lines.’ However, even those concerned only about bottom lines - and not the fate of nature - must now begin to realize that the sustainability of business itself depends on the long-term availability of natural capital.”

Bart King is a PR consultant and principal at Cleantech Communications.