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Real cost of Puma footprint

Puma recently became the first company to put an economic value on its carbon emissions. The ‘Environmental Profit and Loss Account’  has been described as groundbreaking and estimates not only the high-level cost of all of Puma’s own activities but also those further down the supply chain.

Launching the report, Puma Chief Executive Jochen Zeitz said he wanted it to “serve as a catalyst” to others in the industry to work together to reduce their environmental impact across the supply chain. He said the report would help Puma to develop a "resilient and sustainable business model” and sees reducing carbon emissions as a win-win strategy, benefiting both the environment and business.

Puma estimate that the environmental cost of its GHG emissions in 2010 was £41.7m. This figure is based on an estimated cost of £57 per tonne of CO2 emitted – higher than the market price of carbon (£13/CO2e for EUAs or £1-12/CO2e for VERs). Interestingly its central operations only account for 15% of total GHG emissions, the majority fall at the start of the supply chain when raw materials are derived from natural resources. This highlights that companies who are serious about their green credentials must look at the practices of their suppliers and question whether they can do more to reduce their environmental footprint.

Publishing an environmental “Profit & Loss” account has impressed the UK government, with Puma quoted as a case study in the recent White Paper on the natural environment. The move was also welcomed by those campaigning for greater transparency in how companies report their environmental impact.

The accountancy industry also took note wondering if other companies would follow Puma’s lead and that an environmental impact audit would soon be the norm. Some companies have already done similar exercises, but chosen to focus on specific products, rather than their entire business. For example, PepsiCo worked with the Carbon Trust to measure and reduce emissions for Walkers crisps, looking in depth at the process from raw potato to final packet.  Both approaches have benefits: a high-level view may highlight an area of the supply chain which needs further investigation; a product specific assessment will help identify specific improvements that could be made to production methods.

It is open to question whether putting a £m figure on environmental impact at all is really accurate or meaningful. But picturing what 10 tonnes of CO2 emissions actually means is not easy either. So perhaps producing a figure expressed in more familiar cash terms may help focus the minds of managers and shareholders on reducing carbon emissions, and that can only be a good thing.


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