There is no doubt that Puma’s environmental profit and loss accounting is the most interesting thing to hit non-financial reporting for years, but it’s still not perfect
Jochen Zeitz seems to have extraordinary energy. Few global environment events have been allowed to pass of late without Puma’s sport-loving executive chairman –soon to turn 50 – popping up. And if he’s not there in person, then everyone is talking about him.
Zeitz has done something exceptional. He’s made accountancy interesting. Forget talk of accumulated appreciation or earnings price ratios. “Environmental calories” is how he likes to put it. “We’re used to calories on the side of our cereal box,” he tells Ethical Corporation. “Why not on our shoes and clothes too? [Then] compete on that basis for a race for less calorie usage.”
The feasibility of such a race is growing. One year ago, Puma launched its innovative environmental profit and loss analysis (EP&L). Now we have the second version. The big difference is the scope. First time round we got an aggregated sense of the environmental costs related to a range of selected footwear and clothing styles. Now, we have product-specific numbers.
So, for example, we know that the environmental impacts of Puma’s biodegradable InCycle Basket shoes come in at a very precise £2.47. The real wonks can dig further still. Greenhouse gas emissions make up £1.41 of the total. Air pollution (£0.84) and water (£0.49) comprise most of the rest.
Impact at a price
The average punter will probably be content just to compare like with like. The eco price tag for Puma’s conventional suede shoe, for instance, comes in at £3.60. “We are basically able to tell the consumer that it has 30% less impact,” Zeitz says. “That’s not been done before.”
The system isn’t without its outstanding questions. The first is relativity. One product might boast better sustainability than another, but better doesn’t necessary mean sustainable. “It’s not clear if everyone wore those shoes, we’d live on a sustainable planet or not,” says David Bent, head of business strategies at London-based environment group Forum for the Future.
The second big question mark surrounds strategy. How does monetisation of environmental externalities affect decision-making? After all, this is hypothetical accounting we’re talking about here. Not a single pound or penny from the EP&L crops up in Puma’s formal financial balance sheet.
Zeitz is characteristically quick in responding. An EP&L isn’t a guarantee of zero-impact, he concedes. We should see it instead as a means of navigating the “eco noise” out there. What the EP&L offers the consumer is a clear idea of a product’s holistic impacts. It thereby separates, as Zeitz puts it, “the talkers from the walkers”. Were it to be universally adopted, then competitive pressure would presumably push companies to become increasingly sustainable. At present, from one company to another, it’s a guessing game.
As for strategy, Zeitz insists that the EP&L has led to a “significant mind shift” within Puma. “People are now asking the right questions,” he says. By “people”, he means everyone from procurement folk to product designers. Each department within Puma now has its own specific sustainability performance targets linked to the EP&L. Although Puma’s chairman admits that change won’t happen “over night”, he promises a more sustainable portfolio of products by this time next year.
The biggest challenge of all is persuading others to join in. Zeitz says “many companies” are interested in adopting Puma’s methodology. To prove it, he’s pledging news of an alliance of fellow reporters early next year. An EP&L club: there, just what a sustainability champion wants for his 50th birthday.