By Chrissy Kadleck, Waste & Recycling News
Herzogenaurach, Germany -- If Mother Nature had a bank account, Puma AG would have to write her a big check, one with nine figures.
In November, the German sport-lifestyle company made corporate reporting history by issuing the first-of-its-kind Environmental Profit and Loss Account (EP&L) detailing its financial impact on ecosystems to the tune of Euro 145 million ($196 million) in 2010.
In addition, the PPR Group, Puma's majority shareholder, announced that this economic valuation methodology to quantify a company's environmental impact will be implemented across its luxury and sport and lifestyle brands by 2015.
The undertaking was complex, collecting and validating figures along the global company's expansive supply chain in the areas of greenhouse gas emissions (GHG), water use, land use, air pollution and waste.
The motivation, however, was uncomplicated, said Reiner Hengstmann, global director of sustainability for the maker of footwear, apparel and accessories.
"We are following a principle: 'What you cannot measure, you cannot manage,'" said Hengstmann, who is based in Vietnam but spoke to Waste & Recycling News from Cambodia. "The way of doing business, not just at Puma but everywhere, is not being done in the right way. We take too many things for granted and we don't think about the impact. ... Having now the full financial impact on the environment or the ecosystem services, we can adjust and we can change the way we are doing business."
In setting this benchmark for corporate environmental reporting, Puma has finalised its 2010 numbers to round out earlier released economic valuations of GHG emissions and water consumption that totalled Euro 94 million. The final E P&L revealed Euro 51 million caused by land use change for the production of raw materials, air pollution and waste along its value chain.
The Puma E P&L and associated methodology were developed with the support of PricewaterhouseCoopers LLP and Trucost PLC. Here are some of the noteworthy findings:
• Puma's supply chain is responsible for 94 percent of its total environmental impact.
• More than half (57 percent or Euro 83 million) of all environmental impacts are associated with the production of raw materials (including leather, cotton and rubber) in Tier 4 of Puma's supply chain. The use of leather is the greatest single factor contributing to its impact on land use.
• Only 6 percent or Euro 8 million derive from Puma's core operations such as offices, warehouses, stores and logistics.
• GHGs make up 90 percent of the total impact of Puma's offices, stores and warehouses.
• The environmental impact caused by waste generation (landfill and incineration) is valued at Euro 3 million, representing 2 percent of the total Puma E P&L. More than half of this derives from Tier 1 with some 21 000 tonnes of waste, followed by Tier 2 suppliers with some 8000 tonnes and Puma Operations with some 6000 tonnes of waste. The vast majority of Puma's overall waste is produced in Asia / Pacific where most of Puma's suppliers are located.
Perhaps the most unexpected disclosure was that only 8 million of the Euro 145 million come from Puma's core operations such as offices, warehouses, stores and logistics while the remaining Euro 137 million fall upon Puma's supply chain.
"The biggest highlight and biggest surprise of the E P&L is the impact of our supply chain, particularly in raw materials and the agricultural supply chain," Hengstmann said. "The biggest question is now, how much impact can we have here on the very, very lowest tier suppliers when we are one of thousands of customers who are asking for cotton and asking for leather? How can we change things?"
In terms of raw materials, Puma has introduced a product called Re-Suede made for the environmentally conscious consumer. Comprised of 100 percent recycled polyester fibres, produced by a chemical recycling process that reduces both the energy consumption and carbon dioxide emission by 80 percent compared to the production of virgin materials, the recycled polyester is scrap from manufacturing processes that is repurposed to create the synthetic material. This effort is in line with Puma's goal of manufacturing 50 percent of the international collections using more sustainable materials by 2015.
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