The October Green Guru spotlight is on the Environmental P&L (EP&L), its business implications and how Puma has used it as a strategic tool for creating innovation and achieving business objectives.
Puma, the German sportswear company, redefined corporate sustainability by issuing an environmental P&L (EP&L) in 2011 (for the year 2010) and then following it up with a product level EP&L in 2012. The product level EP&L demonstrates to consumers what products are more sustainable by putting a price tag on the environmental damage caused in their production and use.
So what are the business implications of this development?
Capital Accounting: Puma, with its EP&L, is considered a torchbearer in the drive towards a financial system that includes natural capital - natural capital accounting was a large part of the discussion at the U.N. Earth Summit at Rio+20 last year. It is in the best interest of resource-reliant businesses to start actively managing towards sustainability. Unilever is doing this with its Sustainable Living Plan and Interface is doing this with its Mission Zero.
Government and Trade Policy: The insights provided by natural capital accounting could influence trade policy and possibly other government policy decisions. Puma Chairman Jochan Zeitz highlighted perverse government subsidies that make it more expensive to use sustainable materials, pointing out that if the company were to make its shoes from sustainable materials instead of suede leather, it would cost an extra €3.4 million a year in duties! "Governments have a unique opportunity to incentivize corporations so that they can accelerate their evolution to a more sustainable economy through more sustainable practices and products," he said in an interview.
Sustainable Packaging: To reduce the environmental impact of their products, Puma introduced The Clever Little bag in 2011, which cut down packaging and also transportation related emissions. Other companies who have invested in developing eco-friendly packaging are Dell which is aiming to have 100% of its packaging be sustainable, recyclable and compostable, Stonyfield which uses plant based plastics and has a partnership with Preserve to upcycle its #5 plastic containers into new products like toothbrushes, and Clif Bar which has a partnership with Terracycle to make a range of products from its wrappers!
Extended Producer Responsibility: Puma rolled out the Bring Me Back program in 2012 to reduce waste by recycling used Puma (and non-Puma) products to create new ones. Puma products such as the InCycle backpack will be returned to the original manufacturer in China after collection, who will then produce new backpacks from the recycled polypropylene! Other companies with similar take-back programs are H&M, Patagonia and HP.
It is not easy for a company to make a decision overnight to develop an Environmental P&L, but with Puma’s coalition initiative, more and more companies will be going down this road, and other companies will get at it at different ways, such as the companies mentioned above, and the B-Corp companies mentioned in September’s Green Guru Spotlight. Start a conversation about the EP&L at work, cite some examples and see where it takes you!
Green Guru: Suparna Vashisht, October 2013