Lara Mastropasqua meets sustainable business champion Jochen Zeitz, the Kering and former Puma innovator fashioning a new way of thinking in the apparel industry.
“I do believe there is a future, in 2050, where we will be able to consume without having a negative greenhouse gas emissions footprint”
LM: Nowadays, ‘sustainable business practice’ is a buzz-term and something most companies are talking about. A vital first step is understanding what their environmental impact is throughout the supply chain. The Environmental Profit & Loss account (EP&L) is something you developed back in 2008, whilst still serving as CEO of Puma. Tell us more about the EP&L and how the idea came to you.
JZ: The EP&L places a financial value on all major environmental impacts along the entire value chain of a business. It helps companies to combine sustainability metrics with traditional business management.
The idea came when I was writing my first book and trying to quantify sustainability at Puma. I thought it was an important step to come up with measurements that would really help us to identify and understand the company’s footprint . We conducted research to find out if anything like that had been done before but couldn’t find anything other than the idea of natural capital accounting. That made no sense to me. Business needs to identify its impacts throughout the entire supply chain. We engaged some consultants and about a year later we had the EP&L.
LM: Did your EP&L results inform your business practices?
JZ: We learned that the majority of our footprint was outside of our own operations. Even if we became the greenest company in the world by going completely solar in our operations and in our stores, or by driving electric cars, the reality was that our own operations represented below 10 per cent of our negative impact. The majority of our footprint existed outside of that, in our supply chain, in the production of raw materials such as cotton, leather, and rubber used to manufacture our products.
In order to reduce our footprint we needed to transform our entire supply chain. Understanding that was a huge first step for us. We then expanded our use of organic cotton, and looked for new synthetic materials that could help us to replace leather.
LM: It’s clear that our planet can no longer sustain current levels of exploitation. Capitalism as we know it – maximum profit for minimum expenditure, is not sustainable. However, sustainability costs money. Companies incorporating ethical business practices such as fair wages, employee benefits, ecological manufacturing, and renewable energy end up with a lower profit margin or a higher-cost product. How can companies, which aim to please their shareholders, apply such radical changes in business thinking?
JZ: I would say you first have to look at innovation that drives change. When Puma first announced that leather had a big footprint, others came forward saying “we have alternative materials that have the same quality as leather that could help to reduce your environmental footprint”.
That’s why publishing the EP&L is important, because it brings transparency. And once you have transparency, once everyone starts highlighting where the specific problems are, new modes of operation, or entirely new businesses can start up with the aim of bringing solutions to the problems. I think that we will see many companies coming up in the future whose products and services will help to mitigate negative environmental impacts.
It may be that today’s more traditional companies are unlikely to go Net Zero, though we can help more of them to move that way by presenting a clear business rationale for doing so. Even if they don’t, however, they at least have the means and possibilities to considerably reduce their footprint.
Yes, sustainability comes at a cost. But it’s an investment just like R&D or marketing. And just like you invest in marketing, you need to invest into sustainability. It’s an investment for the future. And of course you have to consider the consumer, who hopefully appreciates what you’re doing and is willing to buy your product more than other products. For example, if you take a company like Patagonia, or luxury brand Stella McCartney, these companies are trying to do the right thing and I think consumers appreciate that.
I believe that innovation through a consumer-led approach will help us find solutions. And there will also be incentives to support that. For example, the climate agreement recently reached in Paris; these incentives will help spur more businesses to make the investments and changes to become more sustainable.
So yes, when you start addressing sustainability, in the beginning it does cost money. Although efficiencies in energy and other areas also do lead to efficiencies and cost-saving in the long term. So, as Paul Polman [CEO of Unilever] always says – it’s good for business, it’s good for our consumer, hence it’s good for the bottom line.
LM: We’re witnessing a paradigm shift, with more and more people waking up to the fact that business cannot be done as usual. You founded the B Team with other business and policy heavyweights with this in mind. How will the B Team catalyse real change and turn its core philosophy into a global movement?
JZ: We’ve been actively involved in the effort to make the case for business engagement in the Sustainable Development Goals through some of our B Team leaders. We were very active at the COP21 Climate Conference in Paris, meeting with ministers and with decision makers.
We look at ourselves as a positive driver of change. Often businesses are known for negative lobbying, whereas we are advocates of positive change. Basically, we’re promoting more sustainable business practices. This means less short-term thinking, more socially and environmentally driven business models, and offering financial rewards. We are increasing our leadership and we want to turn it into a movement. It’s not just the B Team leaders who are promoting a positive agenda; we’re also bringing in as many companies as we can in many of our new initiatives to promote positive change in business.
Our Net Zero by 2050 initiative encourages more businesses to commit to net-zero greenhouse gas emissions, which will help deliver cleaner air, better health, lower poverty and greater energy security, and is in line with the COP21 target for limiting global warming. We believe this is good for business. At the end of the day, if we don’t have a planet to live on, there won’t be any business left.
LM: We face a fundamental conundrum: on the one hand, excessive consumption and frenetic mass consumerism lies at the heart of global warming and environmental degradation. And yet, the current capitalist system is designed in such a way that the more we consume, the more economies thrive. How do we solve this problem?
JZ: I do believe there is a future, in 2050, where we will be able to consume without having a negative greenhouse gas emissions footprint. I think there will be new and very advanced solutions. There will be new technologies that will get rid of dirty fuels. And that transition is happening now. This means we will be consuming, heating and driving cars in a way that is not polluting and just like for carbon, we will need to find solutions to problems like water, waste, air pollution and land use that protect the biodiversity of our planet.
We will see changes in how we consume food, too. We cannot continue to eat as much meat as we do because that’s problematic. But we will see new companies that will find ways to substitute meat with other protein sources that do not have a negative footprint. I truly believe that we will come up with solutions which are much less impactful on the environment.
Consumption per se doesn’t need to be as bad as it is today if we find means and ways to consume in smarter ways. Megacities will be the future; more people will want to live in cities and that will hopefully give nature the possibility to regenerate. Hopefully we won’t be using as much space for our consumption, giving nature time to recuperate.
I’m not saying we can neutralise our actions, because wherever we walk we leave something behind, but we can hopefully get back into planetary boundaries, bearing in mind that we will be 9 billion or 10 billion people by 2050.
Stephen Hawking just said we have another 1,000 years or so left and then we’ll have to be able to live on another planet because this one won’t be able to sustain us. But we won’t be around to see if he is right and I sure hope he isn’t.
I think everyone can make a difference, and it’s up to each and every one of us to decide on the kind of difference we want to make. No matter where you are and what you do, we can all contribute to a better world. It starts with the way in which we deal with our fellow citizens, and how we deal with nature. Nobody’s perfect, but we can all get better – starting with myself.
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