Business

Puma first to publish environmental impact costs

Puma chief executive Jochen Zeitz
Chief executive Jochen Zeitz is pushing the sustainability agenda at Puma

Puma has become the world's first major corporation to publish details of the cost of its impact on the environment.

The sports and leisure group said the combined cost of the carbon it emitted and water it used in 2010 was 94.4m euros ($134.3m; £82.8m).

The figure includes the company itself and its suppliers.

Puma said the figures would help it to build a more "resilient and sustainable business model", and prepare for potential future environmental taxes.

Speaking at the launch of the company's environmental profit and loss accounts (EPnL) in London, chief executive Jochen Zeitz said reducing Puma's environmental impact would improve its future performance.

"Sustainability is essential to the health and future of our business," he said.

"The business implications of failing to address nature in decision making is clear - since ecosystem services are vital to the performance of most companies, integrating the true cost for these services in the future could have significant impacts on corporate bottom lines."

Wider interest

Puma enlisted the help of consultancy firm PricewaterhouseCoopers (PwC) and environmental research group Trucost to calculate the impact of its business on nature.

They found the impact of greenhouse gases was equivalent to 47m euros, while that of water use was 47.4m euros.

The company's suppliers made up more than 87m euros of the total.

Mr Zeitz said there had already been interest from other companies, including some "pretty significant corporations", in its findings.

"I hope this will serve as a catalyst for us to work together to reduce our shared impacts across the supply chain," he added.

As a result of the environmental profit and loss calculations, Puma said it would ensure that outsourced processes such as embroidering and printing would be subject to the same environmental and social standards as its own manufacturing processes.

The company has already set a target of reducing its carbon, waste, energy and water use by 25% by 2015.

Mr Zeitz said simply offsetting carbon was not enough: "The primary objective has to be not to emit the carbon [in the first place]".

Puma hopes to publish the results of the next phase of its EPnL, which will include the cost of waste and land-use change, in the autumn.

Charges of hypocrisy have been levelled at Puma over its sponsorship of Formula 1 and Moto GP, but Mr Zeitz told the BBC that his company was actively encouraging participants in these sports to embrace the sustainable agenda.

'Financial returns'

Puma's EPnL is part of a wider move by companies to look at what is called integrated reporting, which looks to incorporate the cost and benefits of environmental and social impacts into financial accounts.

"The reporting process is going through a fundamental change," Alan McGill, partner at PwC's sustainability and climate change department, told the BBC.

"Companies are starting to understand that the sustainability agenda impacts on financial returns."

Like many other business issues, it can help companies generate revenues, minimise costs and manage risks, he said.

Driving the move to incorporate some reflection of companies' environmental impact into profit and loss accounts is the idea that the services nature provides are not infinite, and therefore should no longer be considered as free.

These so-called ecosystem services upon which businesses depend include pollination by bees, flood protection by forests and genetic resources from plants used for live-saving drugs.

As these resources become ever-more scarce, businesses will have to pay to protect them or, in some cases, replace them. In fact, in many cases they will be forced to pay, for example by regulatory instruments such as pollution taxes and higher insurance premiums.

Those companies that are taking action to reduce their environmental impact now, and therefore their associated costs, believe they can gain a competitive advantage over their rivals.

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