Puma is doing a trial run on collecting and verifying value chain data from hundreds of suppliers within a year to prepare for reporting under the CSRD/ESRS and align its financial and sustainability reporting timelines.
Puma is the third biggest sportwear brand in the world, making $8.9b in revenue last year, and uses 326 Tier 1 and 2 suppliers to manufacture its products.
In recent years, Puma has collected information from these suppliers at the end of the year to complete its sustainability reports and publish in April, but this timeframe has now changed as the CSRD will require sustainability reports to comes out at the same time at financial reports, which will be in February for Puma.
"One very big challenge is time," Stefan Seidel, Puma's head of corporate sustainability, said. "Financial reporting has 100 plus years of history and you're collecting financial data monthly if not more frequently, so it's relatively simple to report on every year."
"We need to collect [sustainability] data from our supply chain for 2024 in the year 2024 because we must have the report ready by early 2025," he added. "We need to be really fast, and we need to extrapolate for the last two months of the year and then do a rough check in January as to whether the extrapolation was accurate."
Seidel said Puma will do a trial this year to be ready when CSRD kicks in next year. "We will try and align the timeline to our financial reporting timeline without changing the indicators too much so we can really focus on shortening that timeline."
This reporting process involves collecting key datapoints from 80% of Puma's Tier 1 and Tier 2 suppliers through questionnaires and inputting this information into a sustainability data management software system.
The questionnaires collect "energy data, water data, waste data [...] and data on wages, accidents, working hours, collective bargaining agreements and male to female ratios", Seidel explained. These KPIs are then verified, consolidated at a company-wide level and extrapolated for the remaining 20% of the company's key manufacturers and material producers.
A similar system is used at Asics, another sportswear brand which operates on a slightly smaller scale with a revenue of $3.7b last year and 150 Tier 1 suppliers in its value chain. The company uses a "cloud database to collect environmental data from our Tier 1 suppliers", Seiko Inoue from the sustainability and CSR department explained.
For its Tier 3 and 4 suppliers, Puma collects data on their materials consumption and submits it to sustainability software company Sphera, which runs it against a lifecycle assessment database and uses emissions factors to calculate their emissions.
Seidel said: "Obviously, for Tier 3, it would be better to get some primary data like we have for Tier 1 and Tier 2, we're not there yet but we're thinking of expanding into some primary data collection for these companies."
Besides time, Seidel said the key challenges in complying with the ESRS relate to language and the burden put on suppliers that are part of several supply chains.
"If you have your suppliers across the globe, you can't presume that the technical guys and the suppliers from which we're capturing energy or waste data have the level of English required to fill in these complicated questionnaires and answer complicated questions," he said.
The way around this challenge is to have language capabilities inhouse. PUMA supply chain sustainability team has around 20 people across the globe and "for the major sourcing countries, we have local teams that speak the language and are based in those countries so they can translate and onboard the suppliers", Seidel explained.
On the burden on suppliers, he noted that suppliers "are already flagging that brands collect data in a different way".
"It's not pleasant experience for them to respond to all these systems, and report similar but slightly different data points," Seidel said. "Ideally at one point, there could be a solution for the industry so that the suppliers have maybe one or two questionnaires to respond and not 20 or 30."
The Sustainable Apparel Coalition's industry assessment tools, such as the Higg Facility Environmental Module (FEM) which is used by both Asics and Puma, are helpful in that regards, he added.
Seidel said that, although Puma tries to collaborate wherever it can with its industry peers, "it is not always easy; it is also sometimes painfully slow to find smallest common denominator that you can agree on".
"But we really hope that those tools can at one point replace our internal systems," he concluded.
