Puma scales up environmental profit and loss reporting to a product level

Sports giant Puma will next year unveil a coalition of companies that are prepared to develop ground-breaking work on creating an environmental profit and loss account (EP&L).

The news comes as Puma chairman, Jochen Zeitz, announced that the company has for the first time taken its EP&L down to a product level, which will demonstrate to consumers what products are more sustainable by putting a price tag against the environmental damage they do.

Zeitz said he was sharing the knowledge the company had gained in order to scale up change.

"We want to expand our learnings and tools to simplify the methodology and gradually roll out more products that are covered by the EP&L," he said. "We are willing to share the knowledge to get this to the next level.

"We will be working with other organisations and I will be taking on that challenge to get some positive momentum. It will not happen overnight and is a marathon, not a sprint.

"But there is a lot of interest. Some companies are developing EP&Ls quietly and some have already committed themselves. In 2013, we will be able to announce we have around a dozen companies that will be pretty representative of sectors and impacts."

The latest iteration of Puma's EP&L is to compare a soon to be launched biodegradeable sports shoe and T-shirt, against its more conventional equivalents.

By measuring the impacts from cradle to cradle, the company has been able to establish that developing more sustainable products is in fact making a positive difference.

What the company found, for example, is that the environmental impact of its new InCycle shoe is nearly a third less than its conventional suede shoe and equivalent to €2.95, or 3% of the retail price.

The environmental cost of T-shirts is much higher; 17% of the retail value for traditional cotton, compared with 12% for the biodegradeable version.

However, much of that benefit would be lost if the biodegradable shoes and T-shirts at the end of their life ended up in landfill or were incinerated.

Zeitz said: "By showing environmental costs in euros and cents, our new Puma product EP&L visualises the environmental impacts Puma products cause and makes comparing products in terms of sustainability easy for everyone. It therefore serves as a powerful assessment tool for comparing the sustainability of different products.

"As the calorie and nutrition information table on your cereal box helps you compare the dietary impacts of one breakfast choice to another, our new Puma product EP&L helps you to judge whether one shoe or shirt is more environmentally friendly, but also to engage our customers and help them make better and more sustainable choices.

But will consumers actually be bothered by price tags showing the environmental cost of their goods, if it does not actually affect the price they pay for the products?

Zeitz believes it will have an impact. "Many of our customers do care about the environment but they may be confused by lots of labels, but this will change once we have standardised the calculation and put a tag on every product."

By looking at every aspect of a product's life, from the sourcing of raw materials and their manufacture, to their use and disposal, Zeitz says environmental benefits will now be much more transparent and quantifiable, and that certain myths will be able to be debunked.

For example, companies using leather often trumpet the fact that they use less water in its manufacture then synthetic fibres. But Zeitz says that when you look across the board, it is clear that leather production is a lot more damaging overall.

Zeitz also criticised governments for perverse subsidies that make it more expensive to use more sustainable materials, pointing out that if the company switched its suede shoes from leather to more sustainable materials, it would cost an extra €3.4 million a year in duties.

"I call upon governments to start supporting companies to use more sustainable materials in their products instead of continuing with antiquated incentives, such as import duties on synthetic materials that are in principle much higher compared with those placed on leather goods regardless of the environmental footprint," he said.

"Governments have a unique opportunity to incentivise corporations so that they can accelerate their evolution to a more sustainable economy through more sustainable practices and products."

Zeitz admitted this would be a difficult task because the leather industry would fight such changes, and is therefore going to work with other companies and interested NGOs to try to put pressure on regulators.

"There is a huge opportunity, now that we have visibility on our true impacts, to change incentives. There are bodies out there that will help and support us. A lot of industry is very traditional in their thinking and there are lobbyists out there who do not want to see change.

"I will be involved in seeking to take this beyond one company and try to start scaling the impact by working with other business leaders to stop damaging subsidies.

"We will start positive lobbying. We are open to anyone who is ready to work in a constructive way. This needs to happen with business, as the private sector has a responsibility and we should take that seriously."

The enormous support for the company's EP&L has taken Zeitz by surprise. While the company only launched its initiative last November, it has been a talking point around the world, including at this year's Rio +20 conference.

"I am very pleased and feeling positive," says Zeitz. "I always saw the huge potential and have received an incredibly positive response. There is nobody that I have heard that says this is nonsense."

This content is brought to you by Guardian Professional. Become a GSB member to get more stories like this direct to your inbox