In 2016, PUMA implemented some organisational changes and further refined our sustainability strategy to better balance all three dimensions of sustainability; Social, Economic and Environmental, building on our long history of sustainability and our established programmes. We also decided to focus on two strategic priorities:

1) Sustainability and business need to go hand in hand to achieve sustainable business. Therefore, we changed the setup of our sustainability department last year and embedded it into our PUMA International Trading (PIT) entity. We also established an Executive Sustainability Committee on corporate level. With these changes, we have ensured that social, environmental and governance aspects are taken into consideration when we do business; whether as part of the legal framework of manufacturing agreements that define the commercial relationship between PUMA and our suppliers, or as an integral part of the bonus agreements for the PUMA management worldwide.

2) The aim of all our sustainability initiatives is to create maximum positive impact. We have identified two main drivers to achieve this goal: the use of preferred materials for our volume styles and the will to join forces with our industry peers to tackle supply chain related environmental and social impacts. Therefore, we have implemented ambitious material targets and further expanded our role in industry working groups such as the Better Work Program of the International Labour Organisation (ILO) and International Finance Corporation (IFC), or the Zero Discharge of Hazardous Chemicals Foundation to support the creation and implementation of industry-wide solutions.

In support of these priorities, we continue to commit ourselves to the 10 Principles of the United Nations Global Compact and have linked our 10FOR20 Sustainability Targets to the new United Nations Sustainable Development Goals. In 2017, we will focus on our regional stakeholder dialogue events and on implementation our 10FOR20 Targets Action Plan.

The Managing Directors of PUMA SE remain firmly committed to acting responsibly, be it with our own employees, our business partners, consumers, the communities in which we operate, or within our supply chain. For the first time we have included activities of our material and component suppliers into our sustainability-reporting, besides our own impacts and those of our direct suppliers.

We trust in the continued support of our shareholders and stakeholders. Please do not hesitate to contact us with any sustainability-related questions or comments you may have under sustainability@puma.com or provide your feedback to this report on our website.

Sincerely,

Lars Sørensen, Chief Operating Officer

At the end of 2015, we reached the end of our last five-year sustainability target period, which had mainly focused on environmental targets. From 2016 onwards, we have set a broad range of new sustainability targets until 2020, or 10FOR20 Targets, ranging from Health and Safety to Corporate Governance, and from Human Rights to eliminating Hazardous Chemicals.

In 2016, we started implementing our new 10FOR20 Sustainability Targets, which we had set based on our Materiality Analysis, the Environmental Profit and Loss Account, as well as more than a decade of active stakeholder dialogue.  In order to do so, we developed a 10FOR20 Action Plan with the help of our newly created Executive Sustainability Committee and shared this plan with key stakeholders and sustainability experts during the 13th edition of Talks at Banz.

During this process we received very valuable feedback, leading to the adaptation of our 10FOR20 Target on water pollution, which now also includes a reference to air pollution, as well as several amendments to our 10FOR20 Action Plan.

For instance, we discussed to add the topics of Circular Economy and Fair Wages to our Action Plan, following indications of our stakeholders. In the spirit of continuous improvement, we will continue to review our 10FOR20 Targets on a regular basis.

We are convinced that our target-setting is now better integrated into our strategy. While, for example, in the past Health and Safety aspects have been part of the routine of compliance audits since 1999, they never had been measured beyond PUMA’s own entities in terms of injury rates or other key performance indicators. This information is taken into account now. 

PUMA’s 10FOR20 Action Plan is our roadmap towards joint target achievement. Examples from the Action Plan are given in the following chapters.

Our targets are supported by our sustainability management system, which includes a new organisational structure, an updated version of the PUMA Code of Conduct (http://about.puma.com/en/sustainability/standards/coc), new PUMA Sustainability Handbooks (http://about.puma.com/en/sustainability/standards/handbooks), as well as several specialised databases for the collection of social, environmental, health and safety, and governance information.

To expand the reach of our efforts and to create maximum positive impact we have recently added core suppliers of components and materials to our data collection scope. Today, most of those databases – which we often share with our industry peers – are not limited to PUMA’s own entities but now reach deep into our supply chain. We use, for example, a customised version of the sustainability management software Enablon to collect social and environmental performance data of our company’s own sites, but also of our core suppliers engaged in the manufacturing of our products.

Table 1 gives an overview of our target performance. For a detailed summary of our progress towards our individual targets, please refer to the chapter for each target area.


The highest governance body at PUMA in terms of sustainability is the Sustainability Committee at Administrative Board (SE) level. The Board of Management reports to PUMA’s majority shareholder via this Committee. It is responsible for supervising PUMA’s sustainability strategy. The Sustainability Committee convened once in 2016. Current members of the Sustainability Committee are:


The organisational chart in figure 2 shows which functions within PUMA are involved in sustainability topics.

  TARGET DESCRIPTION   Continue and expand PUMA’s Stakeholder Dialogue and Public Non-Financial Reporting in accordance with global standards;
Increase sustainability communication towards consumers.
Relates to United Nations Sustainable Development Goal 17.

Example from the 10FOR20 Action Plan:
  ACTION    Transform country level supplier round tables into regional stakeholder meetings

  KPIs  
Thematic and regional coverage of partnership initiatives
Percentage of suppliers reached via Round Table meetings
Number of consumers reached with sustainability communication
PUMA continues to place strong emphasis on stakeholder dialogue and industry collaboration. Therefore, the PUMA sustainability team works with a number of national and international programmes and engages extensively with stakeholders and experts on a regional and international level.

Our main global industry initiatives include the Sustainable Apparel Coalition, the ILO/ IFC Better Work Programme, the Fair Labor Association, the Zero Discharge of Hazardous Chemicals Foundation, as well as the Apparel and Footwear Restricted Substances Management Group.
Furthermore, we partner with more material specific organisations such as bluesign technologies, the Leather Working Group, the Better Cotton Initiative, and the Forest Stewardship Council. Our global initiatives are supported by regional initiatives like the Bangladesh Accord on Fire and Building Safety, the Indonesia Protocol on Freedom of Association, or working with the Chinese National Apparel and Textile Council on wastewater quality, as well as joining forces with the UNHCR on promoting legal employment for Syrian refugees in Turkey.
In addition, we partner with the German Partnership for Sustainable Textiles and are a member of the World Federation of the Sporting Goods Industry.

Examples of active stakeholder engagement under the lead of PUMA on a corporate level include our Talks at Banz, but also our regional supplier round table meetings, which we opened up for participation of external experts and stakeholders for the first time in 2016. 312 suppliers attended our round table meetings that addressed topics such as relevant legal updates, chemical management and PUMA’s sustainability strategy.

For more information on our stakeholder engagement please visit: http://about.puma.com/en/sustainability/stakeholders. Interested organisations and individuals can also register for our stakeholder communication list by sending an e-mail to 
sustainability.stakeholders@puma.com.

Constant communication with our stakeholders helps us to stay focused on our most material issues.
Therefore, we used the results of our existing Materiality Analysis and our supplier round table meetings as well as ongoing stakeholder dialogue when setting our 10FOR20 Targets to cover all sustainability-related material aspects.
Our most Material Aspects are covered by our 10FOR20 Sustainability Targets as listed below:

Moreover, we also covered the more business-related material aspects within our
Forever Faster brand transition:

September 2016: PUMA’s Sustainability Team meets with suppliers at the PUMAVision Headquarter to discuss current topics.


  TARGET DESCRIPTION     Embed Human Rights across our operations and suppliers. Positively impact the communities where PUMA is present.
Relates to United Nations Sustainable Development Goals 3, 4, 5 and 10.

Examples from the 10FOR20 Action Plan:
  ACTION    Conduct a Human Rights assessment (own entities)
  ACTION    Set up an employee volunteering platform

  KPIs  
Number of employee hours spent on community engagement

Respect for human rights, both at our own company sites and within our supply chain, forms the basis of any sustainability work and programme PUMA has undertaken during the last 15 years.

It is therefore no surprise that our PUMA Code of Conduct refers to Human Rights as a core principle. With the 10FOR20 Targets, we have added a positive community impact dimension to the long-standing compliance aspect.

In order to be able to fulfil our Human Rights target, we have built on the results of our Human Rights screening from 2015 and engaged the expert organisation twentyfifty to help us with conducting a Human Rights assessment. Since most of our work in the field of Human Rights so far has focused on the supply chain, we conducted this Human Rights assessment for our own entities in 2016.


The results of our assessment show that overall we have managed the Human Rights topic well, but it has also identified some weak spots, such as contracted labour or the coverage of Human Rights in our marketing and sponsorship activities. For more detailed results, please refer to figure 4.

On the community engagement side, we have created a guideline for PUMA employees on the type of activities and organisations to support and set up a global platform on the PUMA intranet.  We have  also set up a partnership with Right To Play, an organisation engaged in the support of underprivileged children through sports.
More details on our community engagement programme are covered within the People@PUMA section of this report.

  TARGET DESCRIPTION    Compliance with industry standards / ILO Core Conventions for all core suppliers, including suppliers of finished goods as well as component and material suppliers.
Relates to United Nations Sustainable Development Goals 3, 5, 8 and 10.

Examples from the 10FOR20 Action Plan:
  ACTION   Extend audit scope to materials and component suppliers
  ACTION    Measure and manage social KPIs (supply chain)

  KPIs  
Number of Zero Tolerance Issues prevailing at year end
Percentage of worker complaints resolved
Social KPIs 


SOCIAL AUDITING

In the area of social compliance we have made the decision to divide our supplier base into core suppliers, who are responsible for over 80 percent of our business volume, and non-core suppliers, who may be used on a less frequent basis and with lower order volumes.
We continue to assess both core and non-core suppliers for compliance on a regular basis, but focus our own team’s efforts on our core suppliers, while non-core suppliers are covered by third-party auditors.
These freed-up resources have allowed us to expand our assessments deeper into the supply chain. From 2016 onwards, our core suppliers’ list also includes the major component and material suppliers, while we have started to systematically conduct audits further upstream in our supply chain. Those suppliers often have never received any brand compliance audits before. In total 428 factories were audited, some of them more than once, leading to a total of 499 audits conducted in 2016.
For more information on our audit grading system, please refer to our website: http://about.puma.com/en/sustainability/supply-chain/puma-s-auditing-process.
In an effort to reduce multiple brand audits and audit fatigue, we have also started to accept the assessment or audit reports from the ILO Better Work Programme, of which PUMA is a member, but also from other brands as long as they are accredited members of a multi-stakeholder organisation, such as the Fair Labor Association. 30 audit reports from external organisations were accepted (6 percent out of our 499 audits).

The results in table 2 show that our core Tier 1 suppliers have no C and D ratings as a consequence of our long-term engagement and partnership.
The deviation of suppliers in tiers of the supply chain in table 3 demonstrates that most of our Tier 2 suppliers were audited for the first time. Therefore, we are not surprised that the ratings achieved are lower. Similar to our Tier 1 suppliers we will work also with component and material suppliers towards continuous improvement.
We rated seven suppliers with a D rating in 2016. Four out of seven were phased out or not admitted into our supply chain. For the remaining three suppliers we have not yet decided on whether or not to continue our business relations and work on improvements. Another seven C-rated suppliers were also phased out due to low prospects of improvement.

Overall, our supply chain team identified 10 cases of zero tolerance issues in 2016. These cases were mainly related to underpayment of minimum wages, and all of them were satisfactorily resolved.
Since any audit or assessment can only analyze the compliance situation at a given time, we use two other tools to manage and track performance of our suppliers: our Code of Conduct posters include phone numbers and email adresses of our supply chain team, to offer worker complaints channels for all employees of PUMA suppliers. Another tool is the Social KPI data collection from our core suppliers.

Figure 5 gives an overview of worker complaints received in 2016 and the resolution rates.

The numbers show that PUMA has installed a functional grievance mechanism for workers in major sourcing regions. The resolution rate remains stable between 97 and 99 percent for the second year in a row.

SOCIAL KEY PERFORMANCE INDICATORS [S-KPIs]

We believe that focusing on worker complaints and Social KPIs rather than just on “yes/no”-type audit questions will help us and our suppliers to track performance improvements over time and also benchmark suppliers among themselves. 2016 was the second year of data collection for Social KPIs. Therefore, we are still on a learning curve together with our suppliers on how that data is best collected, reported and acted upon. Last year we reported figures from China only. This year, we decided to report on all major sourcing countries.

The results per country are summarized in table 4.

Our first global evaluation of Social KPIs reveals a clear need to promote collective bargaining on the Indian subcontinent and some additional countries. It also confirms persisting challenges in social insurance coverage for China. At the same time it shows that social insurance coverage is rather complete for most other countries and that our core suppliers on average pay more than 20 percent above minimum wage (excluding overtime and bonuses). Including overtime and bonuses this figure increases to 80 percent. Average overtime per week varies from 0.1 hours in Argentina to 15.1 hours in Madagascar. Going forward we will use these Social KPIs to benchmark our suppliers and drive performance over time, creating positive impact on the ground.
Reporting on social compliance would not be complete without referring to existing systemic challenges and dilemmas, which still persist in the supply chains of the apparel and footwear industry in many major sourcing countries, including the supply chain of PUMA. Those are:
Weak enforcement of labour law and social insurance provisions by local authorities
Low minimum wage levels leading to incentives for excessive overtime
Immature industrial relations leading to an anti-union bias of many employers
Insufficient local infrastructure, such as public transport systems
Cultural differences and understanding on how to define good governance
The dilemma we are facing is whether to withdraw from certain, otherwise attractive, sourcing markets in order to avoid these systemic challenges or to stay engaged. We are also trying to improve the situation for the workers in our supplier factories, thus securing very much needed local jobs and supporting the economic development in underdeveloped regions.

There is no easy answer to this dilemma. We are convinced that we need to join forces with our industry peers in multi-stakeholder initiatives and with intergovernmental organisations like the ILO in order to see the gradual improvements over time, which also occurred during the development process of most developed countries. Government-led initiatives like the German Partnership for Sustainable Textiles have the potential to further support and accelerate this process.

VENDOR FINANCING PROGRAMME

Continuing our efforts to provide an incentive to suppliers with good compliance and sustainability ratings, the IFC and BNP Paribas offer attractive financing conditions for vendors who have achieved a SAFE A, B+, or B- rating.  In 2016, 19 suppliers from 11 countries joined the programme. The programme received the Supply Chain Financing Innovation of the Year Award, awarded by the Supply Chain Finance Community.

  TARGET DESCRIPTION    Zero fatal accidents at PUMA and at suppliers;
Injury rate below industry average.
Relates to United Nations Sustainable Development Goal 3.

Examples from the 10FOR20 Action Plan:
  ACTION    Expand building safety projects to India and Pakistan
  ACTION    Ensure professional risk assessments are conducted regularly

  KPIs  
Number of fatal accidents
Average injury rate of core suppliers
Percentage of core suppliers covered by building safety assessments
Percentage of core suppliers covered by professional risk assessments

Similar to social and environmental aspects, for the fields of Health and Safety the impact in our supply chain is larger than for our own PUMA entities.
PUMA is actively promoting the health and safety of our own workforce. Data on training and injuries are tracked via our HR management system. Further details can be found in the People@PUMA section of this report.
2016 began with the release of a new and updated handbook on health and safety standards, the formulation of zero fatal accidents targets for both PUMA and our suppliers, as well as the agreement to track injury rates from PUMA and its core suppliers. Those numbers are part of our target KPIs and will be tracked instead of reporting on the number of health and safety violations at suppliers found during our compliance audits.
Sadly, our zero fatal accident target could not be achieved in 2016 as a tragic accident occurred at one of our Vietnamese suppliers in May, leading to the death of a maintenance department worker. He had tried to repair a broken roof unsecured and fell on the concrete floor below. Despite immediate first aid measures and transport to hospital his life could not be saved. The employer provided all mandatory and additional compensation and support to his family.
We took this tragic event as a starting point to the “Zero fatal accidents project” and reviewed the risk assessments conducted by our core suppliers globally. After receiving reassurance that professional risk assessments had already been conducted at all of our core suppliers, we reported on the fatal accident and asked our suppliers to include maintenance work and other non-permanent tasks into their risk assessments in the future. We also re-enforced the need to use personal protective equipment when working at heights and integrated checks on the availability of proper procedures and equipment onsite into our routine audit visits.
Furthermore, we identified road accidents as another potential source for fatal acci-
dents and started to engage with other brands in Cambodia in a working group to improve road safety during employee commuting.

In 2016, we gathered the data related to our suppliers’ injury rates for the first time. We recognise areas for future improvement, for example regarding the considerable range within the results. Our plan is to build further capacities together with the suppliers’ OHS teams on the collection, analysis and use of such important KPIs. We expect to have more robust data in the upcoming years. We will focus on those countries where no injuries or a very high number of injuries have been reported.
One part of our Health and Safety target addresses building safety. Even though PUMA did not source from Rana Plaza, where the tragic building collapse happened in 2013, we joined the Bangladesh Accord when it was launched. In 2016, the Accord on Fire and Building Safety in Bangladesh continued working to prevent fires, building collapses, or other accidents, with reasonable health and safety measures. PUMA factories were faster remediating the findings (85%) than the Accord average (75%). In particular the structural remediation progresses were faster (75%) than the Accord average (52%).
We also looked into expanding our building safety assessments into Pakistan and India. We identified a qualified service provider for those building safety assessments and planned our first assessments in Pakistan, while assessments in India remain a target for the year 2017.

  TARGET DESCRIPTION    Science-based CO2 reduction target to be developed (2016) and implemented (2020).
Relates to United Nations Sustainable Development Goal 13.

Examples from the 10FOR20 Action Plan:
 ACTION    Extend large-scale climate change projects in supply chain
 ACTION    Switch to LED lights and smart air conditioning systems for own sites

  KPIs  
Direct CO2 emissions from own entities (Scope 1)
Indirect CO2 emissions from own entities (Scope 2)
Indirect CO2 emissions from manufacturing and transport of goods (Scope 3)

During the United Nations Climate Change Conference in Paris in 2015, PUMA committed to setting a science-based CO2 emission target. This means that we have accepted our fair share in the enormous work that is required to hold the increase in the global average temperature to well below 2°C above pre-industrial levels.
Since achieving such a science-based target is a long process, we have decided to set an interim reduction target of 3% (in line with the corresponding science-based target option) for direct CO2 emissions, indirect emissions from electricity and district heating as well as indirect emissions from manufacturing and transportation of goods for 2016.
At the same time, we have worked on setting the science-based target and met with expert consultancies and civil society organisations to better understand which methodology to use. We plan to finalise our Science-based emissions target in 2017.
During the target-setting process, we once more realised that the CO2 footprint of our own offices, stores and warehouses worldwide is only a small fraction of the emissions caused further down in the supply chain, be it through transportation of goods from Asia to our main markets in Europe and the USA, from the final manufacturing of goods mainly realised in large factories in Asia, or from the extraction and processing of the materials used in our products.Our 3% target was achieved in relative terms for direct emissions (Scope 1) due to a more efficient car fleet. Emissions from electricity and district heating (Scope 2) per turnover remained more or less stable, while emissions from transportation of our goods decreased. This decrease can be attributed to a lower emission factor for sea freight. Most of our shipments are carried out by our partner Maersk Line, who operates a fleet of ships with lower fuel consumption than the industry average. Emissions from our Tier 1 manufacturers also decreased as a result of our SAVE capacity building project on resource efficiency as well as a general trend in the industry to realize energy savings.
Therefore, we have continued to focus on our large-scale suppliers in Asia and support them in improving their energy efficiency, starting to move from fossil fuels to renewable energy. We have finished our large-scale resource efficiency programme SAVE (http://about.puma.com/en/sustainability/supply-chain/resource-efficiency) with encouraging results. According to the final project report, the SAVE project helped to decrease the CO2 emissions from the 35 participating suppliers in total by over 40,000 tons per year. This figure equals approximately the total annual CO2 emissions of all PUMA offices, stores and warehouses worldwide (Scope 1 and 2).

1. Figures include PUMA-owned or operated offices, warehouses and stores. Outsourced warehouses and franchised stores are excluded.
2. Data includes extrapolations or estimations where no real data could be provided.
3. Excludes on-site generated and consumed energy as well as energy produced on-site and sold to the grid.
4. Includes own production sites in Argentina. All other production is outsourced to independent supplier factories; some warehouse operations are outsourced to independent logistic providers; franchised stores are excluded.
5. Store data is derived from exemplary stores in each country and extrapolated to cover all stores;
methodological changes over the last 3 years do influence results.
6. PUMA uses own methodology for CO2 accounting, with reference to the GHG protocol, but only reports CO2 emissions, not CO2 equivalent emissions.
7. PUMA uses own methodology for CO2 accounting, with reference to the GHG protocol, but only reports data from business travel, transportation of goods as well as from production of Tier 1 suppliers under Scope 3 emissions.

In 2016, we set up our next big resource efficiency and renewable energy programme in Vietnam, partnering with the International Finance Corporation, IFC. The programme will focus on ten PUMA core suppliers with large energy consumption and CO2 footprint and contain detailed energy efficiency assessments as well as feasibility studies for implementing renewable energy at each supplier.
In addition to our work within the supply chain, we have stepped up our efforts for our own entities and moved 50 stores from conventional lighting to LED lighting. Through this, we are saving approximately 20 percent of those stores’ energy consumption. With the further roll-out of the new store concept, we expect to see those savings positively impacting our Scope 2 emissions. We have also planned to install state-of-the-art LED lighting concepts and thermal insulation into the newly extended Headquarter building in Herzogenaurach, Germany. Once completed, the building will provide several additional charging stations for electric cars, supporting our target of further reducing the average emissions from our PUMA car fleet by switching to electric or hybrid cars where economically reasonable.


  TARGET DESCRIPTION    Zero Discharge of Hazardous Chemicals from our supply chain by 2020.
Relates to Sustainable Development Goals 3, and 6.

Examples from the 10FOR20 Action Plan:
  ACTION    Phase out the use of Perfluorinated Chemicals (PFCs)
  ACTION    Explore alternatives for Volatile Organic Compounds (VOCs) in adhesives and PU materials

  KPIs  
Number and pass rate of RSL tests
Percentage of styles without PFC
VOC Index for shoes

PUMA is a founding member of the Zero Discharge of Hazardous Chemicals Foundation (ZDHC) and the Apparel and Footwear International Restricted Substances List Management Group (AFIRM).
As such, we have always believed that a lasting positive impact in the field of chemicals management within the supply chain can only be reached if we closely cooperate with other brands and buyers, but also with the chemical industry.
Last year, we discarded our own PUMA Product Restricted Substances List in favour of the industry RSL developed by the AFIRM Group. At the same time, we stepped up our efforts to implement the Manufacturing RSL developed by ZDHC.
Furthermore, we have invited our partner bluesign technologies to join all our supplier round table meetings on a global scale to promote the bluesign bluefinder tool as a potential solution, while supporting suppliers in using MRSL compliant chemicals.
To ensure that our Tier 2 and 3 factories maintain a good chemical management system and adhere to our environmental standards, we regularly conduct environmental audits at suppliers that do wet processing. We could increase the number of audits from 12 in 2015 to 18 in 2016. Additionally, we have covered 9 of our material suppliers by the bluesign system, and 18 leather suppliers that are certified by the Leather Working Group, which were therefore not additionally audited by PUMA on environmental standards.
We have continued to track RSL compliance of the materials used for PUMA production and executed random tests on finished products level to ensure no harmful chemicals were added during the production process.
Figure 7 shows that the failure rate of test reports in the database is about 4% across all divisions based on 3,028 RSL test results. When failures were found in RSL tests, we worked with our suppliers to identify the root cause and to eliminate any contamination before the material was approved for PUMA production.
Furthermore, our material teams worked on the elimination of Perfluorinated Chemicals (PFCs) used in water repellent finishes in line with our target to phase out the use of PFCs completely by end of 2017.
Materials with a water repellent treatment represent 9 percent of our total apparel material volume of 44,282,374 yards. We will replace 88 percent of our water repellent materials with PFC-free alternatives during production in 2017.  Some of these materials are still under development to ensure stable performance during bulk production. This represents 27 percent of all PFC materials.

As of end 2016, we have not been able to develop PFC free alternatives for 12% of our water repellent materials. We will continue to use PFCs until we have found alternatives that can fulfil our performance requirements and our target to be PFC free.
For our Footwear and Accessories products we are equally working on the replacement of PFC-based water repellent finishes with trials and testing to achieve the best possible performance which can meet PUMA’s and our customers’ requirements.
Another chemical that came into focus last year was dimethylformamide (DMFa). DMFa is widely used in the production of polyurethane materials and coatings, thus it can be found within the PUMA supply chain.
We have started to look into alternative PU solutions and aim for a first pilot project with water-based PU in 2017. We have also added the increase of DMFa-free PU materials used in our production range as one of our material targets.
We reconfirmed our long term strategic target of reducing the amount of VOCs used in footwear production after hitting below 25g per pair VOC consumption for the first time in 2015. In 2016, we could lower the value to 21.2g per pair. For the next five years, we plan to further reduce the VOC consumption per pair of shoes significantly, setting our new  target to 15g per pair.

  TARGET DESCRIPTION    Industry good practice for water consumption and effluent treatment is met by 90 percent of PUMA core suppliers with wet processing facilities. Industry good practice for air emissions is met by 90 percent of PUMA core suppliers.
Relates to United Nations Sustainable Development Goal 6.

Examples from the 10FOR20 Action Plan:
  ACTION    Ensure regular wastewater testing at relevant suppliers
  ACTION    Support the development and adaption of an industry wastewater standard

  KPIs  
• Percentage of wet processing suppliers covered (by production volume)
• Percentage of suppliers meeting good practice standards for water (good practice for air not defined yet)

The textile industry has been highlighted as a major source of water pollution by several NGO reports in recent years.
At PUMA, we have identified our core suppliers with wet processing facilities (typically dyeing mills and tanneries or vertically integrated suppliers) and asked those suppliers to conduct wastewater tests at least annually. The results of these tests are shared with the public on the web-based platform of the Chinese NGO Institute of Public and Environmental Affairs (IPE).
While in 2015 wastewater tests were done at 33 factories, in 2016 we could increase this number to 44 factories with a total of 61 sampling points. Sampling points include incoming water, wastewater before and after treatment as well as sludge samples. The factories that participated in our water testing programme are located in Bangladesh, China, Indonesia, Thailand, Turkey, Taiwan and Vietnam.
The tested parameters cover conventional parameters like BOD or COD, as well as substance groups that are listed in the ZDHC Manufacturing Restricted Substances List (MRSL).
The test results show that four out of 14 substance groups could not be detected at any supplier. The other 10 substance groups could partly still be detected at different sampling points. Factory compliance rates for detected substances varied between 84 to 98 percent.
The results of the wastewater tests are frequently updated on our website (http://about.puma.com/en/sustainability/environment/zero-discharge-of-hazardous-chemicals).
Besides our ongoing individual supplier water testing programme, we felt a strong need for industry alignment on a unified wastewater quality guideline. Such a document would not only harmonise the expectation from brands towards suppliers and avoid multiple testing, but also enable comparison of data.
Therefore, PUMA took a leading role within the ZDHC and proposed to setup a wastewater standard for the apparel and footwear industry in 2015. After a year of extensive research and stakeholder consultation within the newly founded wastewater quality focus area, the ZDHC wastewater guideline was published in November 2016 (http://www.roadmaptozero.com/programme/wastewater-quality/). PUMA has adopted the guideline and participates in the respective pilot testing by ZDHC.
To reduce the air emissions on factory level, for 2017 we plan to take a closer look into the development of a guideline on air emissions, preferably also within a coordinated industry approach. For many years we have been working on the reduction of volatile organic compounds (VOCs) in the manufacturing process and in our end products, as explained in the chemicals target section.

  TARGET DESCRIPTION    Use sustainable material alternatives for PUMA’s key materials: cotton, polyester, leather, polyurethane and cardboard.
Relates to United Nations Sustainable Development Goals 12, and 15.

Examples from the 10FOR20 Action Plan:
  ACTION    Increase bluesign® certified polyester usage to 50 percent by 2020
  ACTION    Increase Better Cotton Initiative fibre volume to 50 percent by 2020

  KPIs  
Percentage figures for each material

Lifecycle studies as well as the Environmental Profit & Loss Account show that the majority of the environmental impact for our products occurs during the raw material creation and processing phases. While the data on social impact is less complete, exposure of hotspots such as child labour in cotton farming or forced labour practices during cattle ranching indicate that the raw material stage has also a very significant social impact.
We have therefore set targets for certifications of our main materials, namely cotton, polyester, leather as well as paper and cardboard between 50 and 90 percent of the production volume as shown in table 8. By doing so, we have focused on leading industry standards.
In addition to these materials, we are also targeting the phase-out of hazardous solvents in the production of polyurethane. However, for this material we need to conduct further research before a percentage target can be set.
Table 8 shows a strong increase in the sourcing of BCI cotton and bluesign® certified polyester for apparel, in line with our interim targets. Accessories also hit the interim target of 20 percent bluesign® certified polyester with a slight increase. For footwear, our LWG medal-rated leather goal for 2020 was over-achieved in 2016 for the second year. We are also confident to reach our paper and cardboard goal of 90 percent recycled and/or certified material by 2020 despite a 7 percent decrease from 2015. Where we still struggle is on the traceability of leather as well as the usage of water-based polyurethane. We have therefore decided to focus on those two material targets with dedicated projects for 2017.

 

 TARGET DESCRIPTION    Continue to report on the EP&L every year under the lead of Kering.
Relates to United Nations Sustainability Development Goals 7, and 12.

Examples from the 10FOR20 Action Plan:
  ACTION    Regularly publish updated PUMA EP&L data
  ACTION    Introduce industry aligned product sustainability tools for design and development

  KPIs  
Annual EP&L values for PUMA

After PUMA piloted the EP&L in 2011, our majority shareholder Kering has taken over the EP&L, further developed the methodology and expanded the EP&L to the entire Kering Group. Kering has regularly reported on the EP&L results, published the EP&L methodology as an open-source tool in 2016, and even developed an EP&L mobile phone app. For more information on Kering’s EP&L activities and the group’s results, please visit www.kering.com/en/sustainability/epl.
As announced last year we have been shifting our focus and target from the corporate level more towards the production level.
Based on our 10FOR20 Targets we will now report again on our PUMA specific progress towards gradually lowering the EP&L value by using more sustainable raw materials, promoting resource efficiency practices in our supply chain and, last but not least, integrating sustainability considerations back into product design and development processes.
For an overview of the environmental KPIs of PUMA entities and its core Tier 1 suppliers, please see table 9.
Together with data on our material consumption and manufacturing locations, these figures form the basis of the PUMA EP&L.

Looking into the EP&L data of our Tier 1 suppliers (where products are manufactured), the energy, water, waste and CO2 impact of our Accessories products could be decreased. For the newly added data for footballs no comparison can be made this year. Regarding the impact of our Footwear products, the amount of energy and water per pair has increased, while we can see a reduction in the CO2 emissions and waste. The cause for this significant reduction is partly referable to a lower CO2 emission factor used for 2016 calculations.
For Apparel the amount of waste per piece was stable compared to last year, while we can see an increase in water and energy consumption and CO2 emissions. The reason for the increase is partly based on the higher number of suppliers that we could include this year that had never been involved in environmental data collection or alike projects before.
Since the EP&L study showed us that a major environmental impact can be found at fabric and component supplier level, we have started to include those suppliers in our environmental data collection.
To be able to understand the impact of different types of materials, we have split the data into factories producing leather and textiles. The results are shown in tables 10 and 11.

 

 TARGET DESCRIPTION   Maintain and run a state-of-the-art Compliance Management System (including anti-corruption measures).
Relates to United Nations Sustainable Development Goals 8 and 16.

Examples from the 10FOR20 Action Plan:
 ACTION   Increase participation rate in Kering’s ethics training
 ACTION   Introduce an anti-corruption clause in the PUMA Code of Conduct

 KPIs 
Percentage of PUMA employees trained on anti-corruption

PUMA is a sports company operating on a global scale. We are aware of the financial risks and potential reputation damages which can occur, if employees or business partners do not keep to laws and guidelines.
Non-compliance is an issue that can arise in every function of business and in every country in which we do business.
As a particular problem, PUMA has identified corruption law and cartel law violations.
The risk level can vary from high to low, depending on business function and country. Therefore, PUMA has joined the Kering Compliance Programme, established in 2015, in order to prevent corruption and cartel law violations.
As a member of the UN Global Compact, PUMA has committed itself to its ten principles of the contract. Especially Principle 10, stating that companies must take action to prevent all shades of corruption, blackmail and bribing, is of elevated importance.
Fighting corruption is not only the most important point in our Compliance Programme, but also a reoccurring topic in talks with NGOs – for example at our annual “Talks at Banz”.
To stress PUMA’s commitment to fighting corruption even further, we integrated the topic into the updated version of our Code of Conduct in June 2016. The Code of Conduct is a substantial pillar of our company and an essential part of our business relationships with suppliers.
At PUMA, we mostly discuss topics related to our Compliance Management System on the PUMA SE company level within the framework of our “Risk & Compliance Committee”. This Committee consists of members of the senior management – for example the PUMA SE Managing Directors. All PUMA initiatives that are related to compliance are presented to main governance bodies (Managing Directors of PUMA SE, Audit Committee, and Administrative Board) for approval.
Next to our complaint system for employees in the supply chain, PUMA also maintains a world-wide hotline for external issues.
The most important points on our company ethics, compliance and expected behaviour agenda are summarised in the PUMA Code of Ethics. PUMA CEO Bjørn Gulden has communicated the current version of the Code of Ethics which, amongst other things, covers rules about hospitality and gifts to employees (including Managing Directors of our subsidiaries and at PUMA SE) on a global level. The document can be found on our company intranet and also on the PUMA website: http://about.puma.com/en/sustainability/standards/coe.
The PUMA Code of Ethics is updated on a regular basis.
Together with our majority shareholder, Kering, we have added a company-wide Learning Programme to the Code of Ethics in order to sensitise our employees for company ethics and corruption. In 2016, the following key aspects were defined: anti-corruption, behaviour at work, secrecy of business information, and environmental protection.
As a sponsor of the campaign, PUMA’s CEO has advertised the E-Learning Programme 2016 to all PUMA employees. Globally, every employee is encouraged to participate in the E-Learning Programme. The attendee rate for 2016 was 97 percent. The aim for the future is to continue to reach this high level of participation. Our medium-term goal is to sensitise our supplier companies and their employees.

Corporate Sustainability is in the middle of a revolution; we are seeing more and more convergence as brands agree on industry-wide requirements, and cooperate to push environmental and social standards deeper into the supply chain via, for example, the Higg Index. Secondly, cloud-based technology coupled with governmental legislation concerning the public’s right to information is putting live information on the screens of “green consumers” all over the world. We are therefore moving away from an “audit and report” compliance model to a “performance management” model based on industry agreed standards. At PUMA we have taken the opportunity to launch our “10FOR20” Targets in order to embrace this development. We have clearly defined objectives based on the United Nations Sustainable Development Goals with an action plan for each one of them and recognised international partners, who could help us to achieve them.
On an operational level, we have strived to focus our efforts wherever possible to create maximum positive impact on the community and the environment in which we operate. Our internal teams work on capacity building programmes with our core Tier 1 and Tier 2 suppliers on topics like Women’s empowerment, the legal integration of Syrian refugees into our supply chain in Turkey, renewable energy projects, waste elimination, and water and wastewater management. In addition, we have taken concrete steps to ensure that viable alternatives to high environmental impact materials are gradually introduced into our products; such as cotton sourced as Better Cotton, bluesign® certified Polyester, tanneries validated by the “Leather Working Group”, and FSC® compliant paper sources.
Sustainability is firmly at the heart of PUMA‘s business thanks to the continued enthusiasm and hard work of our employees and key stakeholders.

 

1 G4-18, G4-22, G4-24, G4-25, G4-26, G4-27
2 G4-18, G4-24, G4-25, G4-26, G4-27
3 G4-18, G4-19, G4-20, G4-21, G4-22, G4-24, G4-25, G4-26, G4-27