Ethical Performance
inside intelligence for responsible business


Puma unveils new-style profit and loss accounts

June 2011

Clothing giant Puma has published the first results of an innovative environmental profit and loss account, revealing heavy impacts from emissions and water externalities at the bottom of its supply chain.

In what the company is billing as a ‘corporate reporting breakthrough’, Puma developed the results with PricewaterhouseCoopers and Trucost, quantifying its supply chain’s greenhouse gas (GHG) emissions and water use in terms of economic impact.

The findings reveal that raw material production had the biggest impact on emissions and water consumption.

The ‘fourth tier’, or first stage, of the supply chain, including cotton production and oil drilling, accounted for 36 per cent of Puma’s total GHG costs, or 254.5 kilotonnes of carbon dioxide.

On water, the same stage of the supply chain accounts for more than half the company’s total impact. The combined environmental cost of the two impacts is estimated at €41.4million ($58.4m, £36m).

Puma’s own operations, excluding its supply chain, accounted for 15 per cent of the total GHG emissions analysed, and just 0.001 per cent of water consumption. These impacts have been valued at €7.2m.

PwC said the data will give Puma a ‘detailed understanding of the implications of decisions on the environment, enabling better positive actions to be taken to deliver commercial benefits and safeguard the natural assets businesses depend on’.

Richard Mattison, chief operating officer of Trucost, said: ‘Reporting a company’s use of natural capital and impacts on ecosystems and biodiversity is vital as these costs are already impacting businesses. Natural resources are becoming scarcer and more costly, and natural systems are not providing the protection from floods, storms and droughts that they once did.’

The sustainability auditing commentator Adrian Henriques said there were some disappointing aspects of the exercise. He noted that the report showed an ‘expectation that sustainability somehow involves netting off gains (such as financial profit) against losses (to the environment or society)’.

He said: ‘This sounds very logical, until you realize that this is exactly the thinking of orthodox economists. And it has led us to the desperate situation we are in today.’

The first results are part of the first stage of the profit and loss account. Stage two will present figures for social impacts such as working conditions, communities and health and safety. Stage three will cover more purely economic matters such as tax payment and job creation.

Similar reporting has been attempted in the shape of a ‘triple bottom line’ report, notably by the brewer Bulmers.

The ‘economic impact’ of Puma’s emissions was calculated using a global value for the social cost of carbon. Although no figure is universally agreed on, Puma applied a value of €66/tonnes of carbon dioxide. Water impact was calculated at €0.81 per cubic meter.

Puma | Global | Reporting

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