Have you ever thought about taking a step back and looking at how your business is affecting the planet? One company who has is Kering who sells luxury brands, including Saint Laurent, Stella McCartney and Gucci. They looked at their EP&L (Environmental profit and loss) and decided to do something about it.
But what is the importance of an EP&L? An EP&L assesses how much a company would need to pay for the environmental impact their water consumption, energy use, waste disposal and land use causes to the planet. This also allows them to evaluate the risks their business poses and gives them an opportunity for analysis.
Kering produced their own EP&L and discovered that they may encounter some difficulties involving luxury materials such as silk and cashmere. This is due to the complex nature of producing such luxurious materials. Michael Beutler, Kering’s sustainability operations director states: “Cashmere involves raising goats, mainly in Mongolia and brushing their hair to weave it.” He adds “There is a growing demand for it…but the goats are raised by nomadic goat herders, they take up a lot of land and as they graze the increasing number of goats puts stress on the land.”
This over consumption of land has caused a reduction in grasslands which has caused dust storms across China. These dust storms have led to a lower air quality and affected the production of silk, creating a domino effect; however Kering decided to look at ways of resolving these issues. They have started using fibres taken from off cuts for their Gucci cashmere and significantly reducing the demand for virgin fibres and business costs.
Kering have also looked at using organic cotton which has 80% less impact on the environment and recycled polyester which has an 89% lower impact.
A survey by Supply Chain Management World found that water and energy were named as the top two priorities when executives were asked to identify their biggest concerns regarding the supply chain within the next 10 years.
Highlighting hot spots within the supply chain allows management to see the potential problems. Beutler states: “If you are seeing environmental stress in a particular area you are sourcing from there’s a chance there’s going to be a disruption of some kind either in terms of price or availability.”
In 2014 Asda stated that 95% of its fresh produce was at risk due to rising temperatures and changing weather patterns and estimated that this could equate to a sourcing, processing and logistics risk of £370 million.
Another company which has re-evaluated their environmental footprint is food producer Olam International. They’ve introduced bee friendly farming techniques in the United States and Australia, to protect 2.7 billion bees that pollinate its almond orchards. They also introduce new bees annually which are managed by a professional beekeeper.
Other practices include avoiding use of any insecticide products during pollination periods, applying tree fungicide at night when bees aren’t active and experimenting with growing different trees and crops.
They’ve even gone as far as implementing a control plan for use of neonicotinoids, a pesticide linked to harming the bee population within its palm and coffee plantations amongst its farm suppliers. The code aims to educate farmers in how to use pesticides responsibly and ensure they have access to tools to implement these practices.
In Cochin in India, a small scale chilli farm has been able to cut their pesticide use by over 30% and costs up to 15% using these methods.
However, it seems that this is not a high priority on everyone’s list. In a recent survey on procurement decisions made across Europe and North America, individuals were asked to list the most important indicators by which their performance was measured and surprisingly, or not, depending on your stance; sustainability was far behind other measures.
This could be due to companies not actively being portrayed as an example of good practice. An example of this is French water company Vittel, who paid for an ecosystem service. They paid farmers to avoid polluting water that would be bottled for use. This was nearly 10 years ago and has long been overlooked.
Beutler also makes a good point that with few businesses doing this sort of analysis and actively trying to become more sustainable, the magnitude of the challenge is much greater. An example he gives is that if all of the leather consuming businesses were to join forces they would only represent 8% of the value of the cattle industry.
But there could be good news for potential sustainable businesses and a last piece of hope. The Natural Capital Project has introduced the Natural Capital Protocol to measure the impact on natural capital in a similar way as the Greenhouse Gas Protocol. It aims to support companies in a number of ways by helping them make decisions on the following: risk management, new revenue streams, improving products, value chain innovation and preparing for future reporting and disclosure.