Puma is widening its ability to identify and manage supply chain risks

Puma is widening its ability to identify and manage supply chain risks

Tougher and more regular supplier audits and the phasing out of hazardous chemicals form part of Puma’s new sustainability strategy – but the company admits it still has to work to do on the use of recycled materials.

In the sustainability section of the German sporting goods business’s 2014 annual report, Puma distinguishes between three "dimensions of sustainability": economic, social and environmental, and says it is "shifting our sustainability targets to improve transparency, clarity and co-ordination, and focus on the most impactful issues our business is facing".

Through majority shareholder Kering, Puma has joined forces with Verisk Maplecroft to put into practice an assessment method designed to widen the company’s ability to identify and manage supply chain risks.

The framework uses 17 different global risk indices, plus maps clustered into four main categories of social, political, economic and environmental risks.

This, says Puma, boosts its own environmental and social audit data, and helps it to define and set sustainability targets.

In practice, that means – among other things – that Puma is committing to calibrate its Code of Conduct and standards against International Labour Organization (ILO) conventions, as well as the "highest international standards and local regulations in both the social and environmental areas".

The report adds: "At the least, our direct and indirect supply chain partners will have to pass a minimum rating standard prior to our authorisation to produce for Puma, which is non-negotiable.

"We expect key suppliers to attain good ratings in accordance with our standards, and that all manufacturing partners commit to long-term improvement of their social and environmental performance."

In 2014, Puma rolled out a new factory audit system aligning its supplier rating tool with the ILO’s Better Work assessment and the FLA Sustainable Compliance Initiative tool.

The new system requires an initial assessment, then a follow-up after a certain interval – depending on the grade achieved, with a lower grade requiring a faster re-inspection, and the maximum period between audits set at two years.

"Depending on the severity of any issues found in the first audit, however, re-audits may be scheduled already after two to six months to ensure rectification of non-compliance issues found," Puma said.

"If factories are repeatedly rated C or D, and do not implement immediate improvements, the business relationship is terminated or not even commenced."

Puma is quick to point out that it had no business relationship with the owner of the collapsed Rana Plaza building in Bangladesh, but highlights the implementation of its own building safety project following the disaster.

Designed to serve as an entry-level inspection for facilities in the Asia region and supported by an external project expert, 53 Asia Pacific suppliers were asked to join the project in 2014.

Some 26 factories had been inspected in Vietnam and China by the end of 2014, and all of them had passed inspections and accepted improvement recommendations. Puma intends to finish the project in 2015.

From an environmental standpoint, the company has renewed pledges on the use of sustainable leather via Leather Working Group-certified tanneries, and vowed to continue its ban on the use of PVC (polyvinylchloride) in all Puma group branded products.

Now it has also pledged to phase out the use of poly-fluorinated hydrocarbons (PFCs), banning the use of long-chain PFCs from 2015, and aiming at the complete elimination of PFC usage by the end of 2017.

But there is clearly work still to be done in the use of environmentally friendly raw materials: Puma admits its use of recycled polyester and organic cotton was "significantly reduced" in 2014, which it blames on "significantly higher raw material prices and limited possibilities to market their environmental benefits".

According to figures in the report, Puma’s use of conventional cotton rose from 64% to 95% in 2014 (versus 2013), with organic cotton falling to just 5%; meanwhile, virgin polyester usage rose from 54% to 80% over the same timescale, with recycled polyester falling from 22% to 4%, and Bluesign polyester slipping back from 24% to 16%.

Puma has promised to tackle the issue this year, saying: "Over the course of the year 2015, we will work on our cotton strategy to ensure both environmentally and financially more sustainable cotton options for our volume products."