ENVIRONMENT

The purpose of our environmental efforts is to ensure that PUMA and its suppliers are in full environmental compliance and any negative impact on the environment is minimized. Over the last 10 years, PUMA did not incur any environmental violations or fines known to us. Ultimately, we are aiming for a positive environmental impact of PUMA and our supply chain on the environment.

ENVIRONMENTAL MANAGEMENT AT PUMA’S OWN ENTITIES

We conduct energy efficiency audits every four years at our own entities with the next audit cycle coming up in 2023. Compulsory in the European Union, these audits help us identify energy-saving opportunities at our offices, stores and warehouses and roll them out on a global basis.

In 2022 we went a step further and achieved an ISO 14001 Environmental Management certification for our headquarters and published a stand-alone environmental policy. We also compiled an environmental handbook specific to our own offices, stores and distribution centers, which was published in early 2023. We continued our global data collection and management for our own entities and set up a quarterly subsidiaries call to allow for peer learning and good practice sharing. These calls are also used to re-emphasize our sustainability strategy and goals with our PUMA countries worldwide.

The progress towards those goals is reported in the individual chapters of this report.

ENVIRONMENTAL MANAGEMENT IN THE SUPPLY CHAIN

As far as our suppliers are concerned, our PUMA compliance audits (detailed in the Human Rights section) contain a dedicated section on environmental and chemical compliance. For example, during each audit we inspect environmental permits, waste management, and effluent treatment plants.

PUMA has moved from individual brand chemical and environmental audits to the use of industry-wide tools, such as the Higg Index Facility Environmental Module (FEM) 3.0. PUMA requires an annual external verification of the self-assessment FEM modules. This external verification may be completed by approved verifiers from PUMA’s internal team, other credited brands, or third-party organizations on the approved list from SAC. 100% of verification inspections are announced.

PUMA’s Environmental Performance Rating System is based on the ratings developed from the factories’ Higg FEM scores verified by SAC approved verifiers: A, B+, B-, C and D. The minimum passing grade from the environmental perspective is 40% (i.e., only A, B+ and B- ratings are passable) and C and D are failure ratings. This rating system was presented during supplier and sourcing team meetings in 2020 and was implemented gradually during 2022. Our environmental handbook has been updated accordingly. This rating system was included in our vendor supplier scorecard along with social and chemical ratings.

Further data on the environmental performance of PUMA and our suppliers can be found in the Climate and Environmental KPI sections.

The Higg FEM assesses:

• Environmental Management Systems
  • Energy use and greenhouse gas emissions
  • Water use
  • Wastewater
  • Emissions to air (if applicable)
  • Waste management
• Chemical Management (FEM chemical module is explained under the Chemical section of this report)

Since 2020, we have communicated to our core factories our expectation to improve their score by setting up annual goals and using our new grading system. In 2021 and 2022 we facilitated training sessions conducted by FEM experts. This training was compulsory for low-performance factories to attend and for those not familiar with this industry tool. Then we closely monitored to make sure the factories would complete the verification of their self-assessment in a timely manner.

During 2022 we organized customized training sessions by FEM experts. The training sessions focused on how to improve Higg FEM scores on low performing areas for each region, preferably in the local language. We also facilitated entry level training sessions for factories that are new to Higg FEM.

In 2022 we continued our journey with Higg FEM for our core Tier 1 and Tier 2 factories. Out of a total of 147 core factories targeted for FEM, 142 factories have completed verification of their FEM entries of 61%. Two core factories were not in scope since one factory relocated and did not have any 2021 data to complete its FEM. Another factory closed in September 2022.

We have set a target to achieve a 10% increase of the average verified score from 2021 (the goal was to reach 59% FEM score). We exceeded this target by achieving an average FEM score of 61%. It's not only the average score, but improvements are also visible in all the sections of Higg FEM as compared to last year. The PUMA average FEM score is higher than the industry median in each section.

As in 2021, we continued our close tracking of factories in 2022, to ensure the factories would complete their verifications in a timely manner. We saw the positive impact of our continued efforts to scale up cleaner production and renewable energy projects, climate action training, chemical projects, chemical management training and wastewater treatment training on the FEM scores of factories which had joined these programs. For 2023 we have communicated a goal of an average FEM score of 64% to core suppliers.

Overall, our core factories have a score above 60% on wastewater, water, greenhouse gases and energy, and environment management systems. This is aligned with our focus and work for many years – the highest score increase is in the setting of targets and improvement plans.

We see topics like chemicals, air and waste as a key focus. In 2021 we conducted a risk assessment for chemical and waste and identified actions to be taken in the coming years. PUMA, as one of the signatory brands under ZDHC, follows up closely on the development and the progress of ZDHC air emission standards and guidelines and will apply in the supply chain as applicable, once details are available.

In 2022, for the first time at PUMA, we rolled out FEM/Facility Environmental Foundation (FEP) to non-core factories in our top three sourcing countries (Vietnam, China and Bangladesh) and the factories which are participating in the PUMA Vendor Financing Program. The purpose is to create a supplier scorecard, not only for our core factories, but also for non-core factories. A total of 66 factories were selected, out of which 49 factories followed the FEM route, while 17 factories adopted the FEP route, which is a lighter version of FEM. Out of 49 FEM factories, 47 have completed verification and out of 17 FEP factories, 16 have completed verification. Notably, most of our non-core facilities that had a verified FEM achieved an A or B rating and only 1 factory recorded a D rating.