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Jochen Zeitz, CEO, Sport & Lifestyle, PPR and executive chairman, Puma – Traditional accounting is no longer adequate

Here’s another excerpt from the Dec/Jan edition of Ethical Corporation. It’s a cracking Christmas issue. See more about it here. I helped write some of the questions. Perhaps your CEO ought to read his responses.

C-suite interview: Jochen Zeitz, CEO, Sport & Lifestyle, PPR and executive chairman, Puma – Traditional accounting is no longer adequate

Jochen Zeitz is chief executive of the Sport & Lifestyle Group within the French clothing and luxury goods group PPR, and he is PPR’s chief sustainability officer.

Zeitz talked with Ethical Corporation’s Steven Wilding. Additional reporting by Oliver Balch.

Ethical Corporation: PPR counts a number of high profile brands within its portfolio. How are you trying to integrate sustainability across all of these?

Jochen Zeitz: Every one of our brands has a clear vision in mind: to contribute to a more sustainable business model. My role is to engage a framework for implementing sustainability for all our brands, as well as supervising its implementation. This is something that I am personally very much focused on, together with my PPR Home team. [PPR Home is PPR’s sustainability initiative.

Ethical Corporation: Puma has set itself tough sustainability targets for 2015. What’s your thinking behind these?

Jochen Zeitz: First of all, we want to be more efficient in terms of reducing our impact on the planet. So we have targets for reducing Puma’s CO2, energy, waste and water consumption by 25% by 2015. It’s not all about efficiency, though. We want to be more effective too. That requires innovating through our products and services, as well as through our production processes. We’re trying to find new sustainable solutions rather than just being more efficient with what we’re already doing.

Ethical Corporation: How do you convince your investors of the value of sustainability?

Jochen Zeitz: It’s something that can also stimulate sustainable growth, not just growth per se. In that sense, sustainability is part of the story we are constantly telling investors. Not everyone believes this is the right way to go, but as a corporation we want to be part of a new paradigm – a paradigm that moves towards a sustainable way of doing business. That’s fundamental to Puma’s strategy – as well as PPR’s – and in the long run we think it will be good for our business.

Ethical Corporation: Puma has taken a lead in trying to cost out its environmental impacts. What’s the motivation for this?

Jochen Zeitz: Traditional accounting is no longer adequate for the challenges that we face given the planet’s finite resources and levels of environmental degradation. As corporations, we need to start internalising these impacts. That’s the reason we’ve created what we call an EP&L [environmental profit and loss] account. We can overlay this with our normal financial accounting. The basic idea is to value our environmental impact and our use of nature’s services in monetary terms. Until now, nobody has ever had to pay for these. Now, we can visualise the impact we are having on the environment in dollars and cents. That enables us to start mitigating [our impacts] and to find solutions that minimise these costs.

Ethical Corporation: It’s a bold experiment. How accurate would you say the final valuations are?

Jochen Zeitz: It’s obviously a process and we are the first to do it. Our methodology is very clear and we are transparent with our methodology. In terms of the final figures, we’ve been very conservative. So far the feedback has been incredibly positive. People seem to believe this is the right way to go. The EP&L also opens up our approach for discussion with other industries and with other companies. That helps us to evolve and improve our methodology. Let’s now hope that others will follow suit.

Puma: environmental footprint

Total turnover: €2,706m

Total environmental impacts: €145m

Core operational impacts: €8m

Supply chain impacts: €137m

Tier 4 (raw materials) impacts: €83m

Greenhouse gas emissions: €94m

Land use: €137m

Air pollutants: €11m

Waste generation: €3m

Source: Puma EP&L (November 2011)

(Zeitz is also executive chairman of PPR-owned Puma, having served 18 years as chairman and chief executive. In 2010, he introduced an ambitious sustainability plan at Puma that aims to reduce carbon emissions, energy and water use and waste by 25% by 2015.

Zeitz also invented and oversaw the introduction of an innovative environmental profit and loss account, first published by Puma in May 2011. He has since announced that an environmental profit and loss account will be implemented across PPR’s Luxury and Sport & Lifestyle brands by 2015.)

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