PUMA claims breakthrough in environmental reporting

Sportswear giant PUMA recently claimed a to have made a breakthrough in green reporting, stating it had become the first global firm to show in monetary terms the true cost to the environment of providing products for its customers.

The company launched the initial results of its first financial assessment of costs of its entire business – including supply chain – on the environment in London this afternoon. The ‘environmental profit & loss account’ is being heralded as a world first and is based on a new methodology that enables the company to assess the financial cost of the environmental impacts caused by greenhouse gas (GHG) emissions and water consumption along its supply chain and operations.

The methodology was developed with the help of PricewaterhouseCoopers (PwC) and environmental consultancy Trucost. It has been launched through PPR Homes, a sustainability initiative launched in March by PUMA’s parent company PPR.

“Currently, the value of the resources used and any costs associated with environmental impacts are not fully included in the prices paid for products and this assessment represents an unprecedented move by PUMA to address this and better report the more holistic performance of its business,” said Alan McGill, partner, PwC sustainability and climate change.

PUMA outsources the majority of its production, and its impact on natural resources and environment is significant because of the raw materials it uses and the processing methods and manufacturing it employs.

Cotton, one of the raw materials PUMA uses, is produced in regions where water is scarce and where the business risk, in case of crop failure, is higher because the cotton producers are not paying for the real value of water in those regions.

Similarly, when it comes to emissions, current mechanisms have failed to put a price on carbon that represents the real economic impact of GHG emissions.

For example, PUMA’s methodology values CO2 at €66 (£58) a tonne, compared to a current carbon price of around €15 (£13) per tonne. PUMA’s measurement results in a GHG emissions value of €47 million (£41 million) for 2010.

“Businesses can’t create products without using natural resources. PUMA has taken an extraordinary first step, effectively holding a mirror up to its supply chain, showing its dependencies on natural capital so that they can be tackled from the first design concept to the shop shelf,” added McGill.

McGill said PUMA’s new method of reporting was an “emerging field” but one that was likely to accelerate “extremely quickly”.

Ian Powell, PwC UK chairman and senior partner, described it as offering a “glimpse” into the future of corporate reporting. “[It] enables management to take more informed decisions about the resources used in production and give consumers a far better picture than ever before of what goes in to manufacturing and delivering a product.”

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