How do we measure the environmental impact? This has been one of the constant challenges when we refer to other industries than petrochemicals where impact can be somehow measured. Puma, with the support of PwC and Trucost, recently showed the results of its first product level Environmental Profit & Loss (E P&L) accounts which value the environmental impacts of products in euros and cents.
The results compare the environmental impacts from cradle to grave of a conventional shoe and T-shirt with more sustainable alternatives and illustrate how a sustainable approach to production reduces the impact on the environment by a third compared to conventional products. The analysis focused on the environmental impacts caused by greenhouse gas (GHG) emissions, waste and air pollution, as well as the use of natural resources such as water and land along the entire value chain from the generation of raw materials and production processes to the consumer phase when customers use, wash, dry, iron and finally dispose of the products.
What good is such a measurement for? On one hand it brings into sharp focus the debates over commodity pricing, natural resource security and supply. It also challenges conventional business thinking – and consumers’ views – on how we measure and monitor the embedded environmental value and impacts of what we buy. On the other hand, natural resource scarcity and pricing is no longer an academic debate, it is an issue for every business and consumer. Measuring and pricing the impacts is the first step to understanding what we need to do to live within the constraints of our planet. It puts consumer and business buying decisions on the front line of the environmental and resource scarcity debates.
Are consumers willing to pay a significant premium for sustainable goods? I think not. However, when the prices and quality are similar, one may assume that the more sustainable product will fly off the shelf before the others.