EXPOSING THE TRUTH: TRANSPARENCY TRIGGERS SUSTAINABILITY

Date: 23 November 2018

 

‘We are not a sustainable company -  a message from our CEO’. Last week I received a monthly newsletter in my mailbox from an eyewear company, and by using this headline, the company managed to catch my attention immediately. Usually, I delete most of these marketing emails straight away, but this time around, the unusual message caught my curiosity. What made me wonder, is why a company would present such a negative message about themselves, to the public.

The CEO explained that it took him long, but he now came to the realization, with his current business model, “every happy customer comes at an environmental cost”, since his entire business, from production to shipping, is connected to natural resources. Moreover, the CEO states: “I learned there is no magic bullet to becoming ‘sustainable’. No end-state, no shortcuts. Instead, it’s an ongoing effort of measuring, improving, sharing, and learning throughout the bumpy process towards being sustainable.”

 

Bold moves to stimulate corporate sustainability

His message is tricky but frank. By being honest to his customers and stating that the company is currently not where they aim to be in their transition to become sustainable and a force for good, the CEO creates transparency and accomplishes to create a sense of trust.

Though, this company is definitely not the first company that made this bold move to come clean and create transparency on their (un)sustainable business activities. After being under continuous criticism by activists and the media for several years, Puma realized that ignoring or fighting these stakeholders was no longer a viable strategy. Instead, Puma shifted from a reactive, defensive approach toward a more proactive, strategic stance on corporate social responsibility.

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In 2011, Puma, in collaboration with PwC and Trucost, managed to publish the first Environmental Profit and Loss Account. By doing so, Puma was the first global business that calculated the environmental impact of their business activities and set a true value on the natural resources they used. Six environmental factors, also called Environmental Key Performance Indicators, were used to examine their business and value chain, including carbon emissions, water use, water pollution, land use, air pollution and waste.

Transparency

Transparent business practices for all to benefit

Not entirely surprising, the Puma’s environmental impact was found to be negative. Nevertheless, the company still decided to make this information public and expose themselves. This risky move turned out to be a brave, strategic step of Puma. This innovative form of reporting could have damaged their brand image, but on the contrary, it had the opposite effect on their reputation. It showed that Puma took their sustainability commitments serious and that they were willing to expose their flaws, which creates trust and credibility, as society can hold them accountable on their progress.  

Moreover, by creating transparency for stakeholders through measuring and sharing information regarding sustainability, a company moves away from so-called ‘greenwashing’ or ‘window dressing’ accusations and provides actual proof that a company’s products, policies and aims are environmentally friendly.

In addition, this innovative way of creating more transparency by improving their environmental measurement and reporting process benefited the company in more ways than only an enhanced brand reputation. As transparency requires information on what is happening in the value chain, this goes hand-in-hand with a need for traceability in the value chain, to track and trace raw materials and the impact of the related processes, from its origin to a final product.

 

Mitigating risks and preparing for changing conditions

Puma’s Environmental Profit & Loss account revealed for them where real improvements had to be made to reduce their ecological footprint. Creating transparency and traceability helps a company to identify and assign responsibilities to address these areas that require more attention. Besides, it can help a company in being one step ahead of sustainability hazards, such as evolving scarcity of resources. It gave Puma the opportunity to optimize their value chain sustainability, reduce costs and mitigate risks, which adds to a long-term strategy to be prepared for the future.

 

Sustainability

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According to a well-known quote: ‘All progress takes place out of the comfort zone’. This also applies to the fact that it might be daunting at first, to create transparency to establish sustainable development. Nevertheless, as also embodied in Sustainable Development Goal 9, innovation is crucial for progress on sustainability and demands new ways of thinking, compels change and requires trailblazers and risk-takers that pave the way towards a sustainable future.