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3. Chandra Mouli
Research Analyst
Beroe-Inc.
Dialing in from:
India
Host
Anup Agrawal
Engagement Manager
Beroe-Inc.
Dialing in from:
India
Moderator

5. Environmental externalities- putting in perspective
USD 7 Trillion
38% GHG
25% Water use
7% Air Pollution
5% Other Pollution
5
1% Waste Generation
24% Land use

6. But… there is a hope..
Sustainability
Innovating around sustainability is the key to tactical to strategic transformation
6

7. But… there is a hope..
Business Sustainability Evolution
Concerns
Organizational Thinking
Values Created
Business As Usual
Economic
Tactical
Shareholder value
Business Sustainability 1.0
Three Dimensional
Tactical
Refined Shareholder Value
Business Sustainability 2.0
Three Dimensional
Tactical
Triple Bottom Line
Business Sustainability 3.0
Starting with sustainability challenges
Strategic
Continuous value creation
7

8. What we’ll cover today
8
Innovating through Sustainability
Opportunity – What and Whom?
E P&L: The Tool
Case Studies & Take Away
Conclusion

9. What’s the push and pull
Opportunities
Threats
There is a substantial push and pull for the sustainability driven innovation
9
•50% of the environmental costs attributed to the supply chain; huge potential to improve triple bottom line for procurement
•Several Environmental tools
•Enabling Innovation; moving from tactical to strategic; discrete to continuous
•Studies suggesting strong links of sustainability to innovation
•Companies unable to adapt quickly to gaining environmental policies and regulations
•Companies incurring large money drain due to heavy fines
•Close to 64 countries establishing significant climate & energy legislation; Estimated 17000 and more regulations
•Risks increase as we move down the supply chain
•Huge financial savings; more benefitted from their supplier carbon reduction activity

10. Opportunity for whom??
It is an opportunity for all those who
Set sustainability targets
Set a commitment time
Located in those regions where there is a policy push
Matured supply chain
Organizational structure in place
10

11. Focus
Screen and develop
See
Generate
Rank and Execute
Sustainability…Innovation : Connecting the dots
Improved Bottom Line
Creating Differentiation
Innovation
Sustainability Measures
Environmental Profit and Loss Account
?
Through E P&L
11

12. Process explained through PUMA case study
Offices, Warehouses, Logistics, Shops, Business travel, IT
Shoe manufacturing, Apparel manufacturing , Accessory manufacturing
Outsole and insole production, textile embroidery and cutting , adhesive and paint production
Leather tanning, cotton weaving and dyeing, petroleum refining
Cattle rearing, cotton farming, rubber plantation, petroleum production, others
12
Company operations
1
Tier-1
2
Tier-2
3
Tier-3
4
Tier-4
5

13. Mapping footprint throughout supply chain
PUMA Operations
Manufacturing
Production
Processing
Raw Materials
13

14. Quantify cost of environmental impact
83.5
GHG Emissions
538
SOx , NOx emissions
2,00,000
Other Particulates emissions
12000
Land use
12
Water use
44
Incineration
110
Landfill waste
Total Impact: USD 145 Million
14

15. Key takeaways for the companies
PUMA E P&L results by Regions
PUMA E P&L results by PUMA operations & tiers of supply chain
0
10
20
30
40
50
60
70
80
90
100
Puma
Operations
Tier 1
Tier 2
Tier 3
Tier 4
Total
Percentage
24%

10%

66%

15

16. Key takeaways for the companies
PUMA E P&L results by environmental indicator
PUMA E P&L results by business line
Footwear
Apparel
Accessories
0
10
20
30
40
Water use
GHGs
Land use
Other air pollution
Waste
Analysis
Operations and tier-wise
Region wise
Business line wise
Environmental indicator wise
16

17. What next- Innovation ??
Innovation : PUMA developed compostable sneaker called “Incycle”
The sneaker has an 87% smaller impact if composted at the end of use
-87%
+97%
Compostable material, substantially cutting its end-of-use impacts
-48%
Reduced energy for more energy efficient manufacturing
Environmental impact
Materials
Energy
17

18. What next- Innovation ??
Innovation : PUMA developed compostable sneaker called “Incycle”
Water
Reduction of water use; more efficient to make; with 21 liters per pair
Sustainability leader
Reduced cost to human well being
Enhanced PUMA’s reputation as a sustainability leader. Saved 20 Million Pounds from P&L
Potentially increased environmental net benefit of USD 1.14 per pair of shoes if 100% is recovered and composted
-51%
18

19. Measuring E P&L
Set the Boundary
1
Map impact categories to supply chain functions
3
Quantify cost of environmental impact
5
Determine drivers of environmental impact
2
Measure environment impact parameters
4
E P&L
19

20. Ford motors
What did Ford achieve?
Ford Motors
Lear Corporation
Bayer Material Science
Reduction in annual petroleum usage
Significant reduction in CO2 emissions
Supply security
Shielded against policy risks
Better supplier selection
Supplier Y
Supplier X
Soy based Poly-urethane seat
20

21. McDonalds
What did McD achieve?
McDonalds
Aria Diaries
Crossland tankers &
Gray and Adams
Fuel savings
Labor savings
Less emissions
Shielded against policy risks
Better supplier selection
Supplier Y
Supplier X
Combinational trailer
21

22. Why environmental profit and loss accounting?
Measure the Impact by monetizing it
Better decision making
Steering
business
efficiently
Manage
risks
Transparency with stakeholders
22

23. E P&L nevertheless…
Calculated guess work
01
Cradle to gate approach
02
Apple to orange comparison
03
Ignores less important environmental attributes
04
23

24. Sustainability: Beginning not the end
Sustainability Targets
START
24

25. Sustainability: Beginning not the end
Sustainability Targets
START
25

26. Change in approach
26

27. Change in approach
27

28. Conclusion
No low hanging fruits Shrinking supplier margin
28
E P&L

29. Conclusion
No low hanging fruits Shrinking supplier margin
29
E P&L