AN INTERVIEW WITH JOCHEN ZEITZ, SUSTAINABILITY DIRECTOR AT KERING

Three years into developing the Environmental Profit and Loss Account (EP&L) [1] Jochen Zeitz, former CEO at Puma and Director of the sustainable development committee at Kering Group (holder of a number of luxury and sporting brands such as Puma, Gucci and Fnac), shared with us some managerial principles that business leaders require to move their organizations towards a long-term prosperity model.

Resilient business models, long-term prosperity as a marker of true economical progress and inclusive management practices, i.e. facilitating cross-industry collaboration, are the cornerstones of the Living Economy model, which serves as the backbone of Worldwatch Institute Europe's forthcoming report Business Innovation in a Living Economy.

by Elena Niculae

Mr. Jochen Zeitz, everyone knows that the EP&L was the result of your efforts to move Puma into a more sustainable paradigm. Where did you get the idea of an EP&L? What was your motivation behind this initiative?

Because I felt that in order to really try and make a business sustainable you need to measure and visualize your true impact on the environment and the EP&L does just that, it defines the impacts and puts them in relation to each other and that was necessary in order to really define and target sustainability.

I got the idea while I was writing my book[2] and I consulted a few people, different researchers, to see if anything similar has been done before and most of them said no. We were trying to find the people in the company that we felt could possibly undertake the challenge to define an environmental profit and loss for Puma, we ended up with few persons – Trucost and PwC – and then we put them in charge with that project and they delivered in two stages the final result.

What kind of support did you get from your colleagues at Puma or in the Kering group (formerly PPR)?

The Puma team and the representative from PPR understood that this was a tremendous opportunity, to really re-define how sustainability can be measured, so even if there was a bit of reluctance in the beginning, people then saw the opportunity later on.

I had the support within the company; initially, when you do something revolutionary it takes some time for people to get their heads around it but I think the core people in the organization saw the opportunity and went forward with it. Institutionalizing something like EP&L in the organization of course takes time and energy, and not everyone understands what you are trying to accomplish. The Kering Group as a holding of which I was the CSO as well, basically adopted the EP&L as a standard also for the other brands, so there was offered very strong support from the top of the holding company.

Are we talking about a business case for EP&L at the moment?

It depends how you define a business case; if you talk about short-term profit maximization there is no business case because sustainability requires investment if you really want to change things. So the business case is a long-term business case, and it requires taking responsibility for your environmental principles, either looking at it as a risk or as an opportunity to innovate and come up with new ideas that ultimately excite the consumer to use more sustainable products. So at the base of the business case is something that requires a long-term perspective. If you redefine how we look at the bottom line from a long-term perspective there is a business case.


Photo credits: Puma SE

And how did you convince your suppliers to work with you on this long-term initiative?

Well, sustainability is non-negotiable and we need to start working on the biggest impact business has on the environment in order to have long-term [prosperity] and that was something that was key and embedded in the vision and the mission of the company - to be sustainable. Also, that was something all our suppliers needed to embrace. We have an annual supplier meeting where we define key goals and we are working [on developing sustainable] initiatives along with them and that was really something where we said, “This is who we are and this is what our suppliers have to work with in the future”.

What is the potential of the EP&L to change industry practices?

If you want to measure sustainability I don’t see a better way of doing that than through EP&L. It is something that is very valid for any business, and if you want to have a properly measured sustainability analysis done then EP&L is a fantastic tool to deliver. Actually, there’s potential to ultimately integrate this in business reporting, but more importantly as a tool which can be broken down to really establish measures for quantifiable impact and solutions to mitigating those impacts and measures that are based on the results of an EP&L. That can be done throughout the entire supply chain and throughout any function within the organization.

Is industry collaboration relevant in this discussion?

I think it’s absolutely important and vital that we collaborate and cooperate across businesses. There is no need to compete when it comes to defining measures and tools that help us to become more sustainable. We can compete in terms of having more sustainable products but when it comes to really defining and implementing those tools we should collaborate so that we can ultimately share great ideas and make our eco-system more sustainable through partnerships. Through partnerships we ultimately work for the sustainability movement going forward. We can’t accomplish that if everyone sort of “cooks their own soup” – it will be very difficult.

What about top management commitment?

The fuel maintaining EP&L is leadership, without it it’s not going to happen. There needs to be total commitment from the top management to follow through, to implement, and to get people to deliver based on the EP&L.

[True leadership means] thinking out of the box and thinking out of the traditional economical paradigm of short-term profit maximization and taking responsibility for your impact, visible and invisible, and basically lead your business into a new future that is based on a different way of doing business in the non-traditional sense, looking at the business in the longer term. That requires leadership because up to this point the businesses are being incentivized of conducting themselves in typical paths and patterns.It takes leaders to break out of that paradigm and think ahead of what the business of the future needs to look like and lead the organization against traditional roadblocks, against the traditional way of doing business.

As a co-author to a book on culture and values embedded in the management style, what is your advice to business entrepreneurs that juggle between the bottom line imperative and sustainability challenges?

We all have to have a strong ethical foundation and values that ultimately help us to be good business men and women and ethics very much has its root in spirituality and religion. It was important to me to understand myself, my consciousness, my sub consciousness better in order to become a better human being and a better business man. If we understand ourselves, our environment and the people around us I believe it can also make us better business people. Making our businesses and our life style more sustainable also requires a balanced approach to how we do business, whether you do that through spirituality, through psychology, or philosophy or something else, it’s up to everyone. Looking at the world in a spiritual way was something that helped me to understand my business better.

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The interview has been recorded as part of Worldwatch Institute Europe's Living Economy research project where Puma's EP&L is featured as one of nine European cases illustrating sustainability as a driver for business innovation. WWIE's report Business Innovation in a Living Economy will be launched at the European Parliament on June 4th.

Notes:

[1] EP&L is a method of valuating ecosystem services focused on five main areas: water, energy, waste, air pollution and land use. The methodology pioneered by Puma S/E aims at measuring the real costs inflicted through business activities on the natural capital, by combining supply chain use of natural resources with economic valuations.

[2] “Prayer, Profit and Principles - Monk and Manager in dialogue” (2010) with Anselm Grün, Benedictine Monk