The Sustainable Fashion Academy and partners chose Natural Capital Accounting as the theme for the 2014 GLASA process.
Natural capital can be defined as ‘the finite stock of natural assets (air, water and land) from which goods and services flow to benefit society and the economy. It is made up of ecosystems (providing renewable resources and services) and non-renewable deposits of fossil fuels and minerals (TEEB, 2013b).
While some environmental goods and services can be valued economically (such as timber through its market price), most are not assigned an economic value as it is often difficult to measure and quantify the benefits of natural capital. As a result, natural capital often remains un-priced or undervalued and is hence not managed effectively. In environmental economics, when the cost is borne by third parties, this is referred to as an externality,
Externalities can cause market failures, as the price mechanism does not take into full account many costs and benefits of production and consumption. But by placing monetary values on environmental goods and services it is possible to better assess the value gained from these goods and services. The monetary values mean that companies, governments and other key stakeholders such as investors can start to take environmental aspects into account in everyday decision-making processes, and compare these to other impacts in monetary terms. The Sustainable Fashion Academy and partners identified Natural Capital Accounting as an approach that has the potential to significantly improve the sustainability performance of the apparel industry.
All the 2014 award finalists have broken new ground in this area. The goal of April 23, 2014 was to learn from their leadership, and to identify how to fully integrate this approach in the apparel sector.
To learn more about Natural Capital Accounting, in the right column there are some additional resources.
The Sustainable Fashion Academy, in partnership with the Prince of Wales International Sustainability Unit, have commissioned the environmental data experts Trucost to develop a background white paper exploring the potential of natural and social capital accounting for accelerating sustainability performance in the apparel industry.
A second draft of this paper has been made available here after a global public consultation of the first version. Feedback has been integrated into the second draft which was presented on April 23, 2014, in Copenhagen. A webinar regarding the white paper is also available to download in the column to the right.
The finalists for the 2014 Global Leadership Award in Sustainable Apparel represented the bold leadership required to accelerate change in the apparel industry. Below you can find a brief summary of the important initiatives the various finalists have undertaken. You may also read about their respective organizations in the resources column.
Kering was announced as the 2014 GLASA award winner on April 23, 2014, at an award ceremony held at Odd Fellow in Copenhagen. The jury motivated the choice of Kering as the winner by the following statement:
“When PUMA presented their Environmental Profit and Loss account (E P&L) to the public in 2011, the company single handedly placed natural capital valuation on the agenda for the apparel industry and put forth a bold and inspiring vision for the sector. But thankfully PUMA’s owners did not stop there. The Kering group is currently implementing E P&L’s in its 22 Luxury and Sport & Lifestyle brands, and plans to produce a group EP&L in 2016. This means that the EP&L, which began as an innovative pilot project, has evolved into a concrete management framework and financial tool that will be a benchmark for the entire industry. The jury awards the 2014 GLASA to Kering in recognition of the group’s continuing bold and visionary leadership, and most importantly, for its long-term commitment to following through on what it has started”.
Through the Environmental Profit and Loss (EP&L) approach, the Danish EPA seeks to develop new ways of assessing the value chain of the Danish textile industry, that will support sustainable decision-making on three different levels. On the first level a regional industry analysis will support national decisions made by the industry and government bodies, while the second level provides tailored insights to support strategic decision making at the management level within companies. The third level will provide specific support to designers through product level analysis. All three levels of analysis will be driven by the development of the Danish textile industry value chain EP&L.
Developed by Kering and its brand PUMA, the Environmental Profit and Loss account (E P&L) is a pioneering natural capital accounting and reporting system that places a monetary value on the environmental impacts that result from a business’s activities not only within its own operations but along the entire supply chain. The E P&L provides a full analysis of a company’s footprint in the key areas of water use and water pollution, waste, greenhouse gas, other air emissions and land use which then offers a clearer understanding of the relationship between the business and natural capital. Kering and its brand PUMA published the first E P&L in 2011 for PUMA’s 2010 accounting year and Kering is currently implementing E P&L’s in its 22 Luxury and Sport & Lifestyle brands to consolidate a Group E P&L in 2016.
The term “3D accounting” has been coined by sustainability entrepreneur Ben Ramsden (Pi Foundation/ Pants to Poverty) and refers to three Dimensional Profit and Loss accounting, which includes social and environmental accounting alongside financial. It invokes the notion of a holistic and multidimensional world – not one of flat paged balance sheets. Ben, via the Pi Foundation, is developing an open source triple bottom line profit and loss model (from cotton seed through to post consumer disposal). The 3D P&L project is coordinated by Pi Foundation set up in 2010 with the objective of building socially, environmentally and financially sustainable value chain companies within the agri-textile-garment retail chain. Whilst there are other similar initiatives ongoing within the sector, none are being done with the same level of openness or value chain engagement and all are being developed with a focus on very large businesses.
The Natural Capital Coalition is a global, multi-stakeholder open source platform for supporting the development of methods for natural and social capital valuation in business. The Natural Capital Coalition collaborates to engage key stakeholders from businesses, governments and civil society in order to raise awareness and provide a leading edge forum to shape the future of business thinking and action on valuing natural capital.
The GLASA process aims to mobilize key decision-makers around initiatives that have the potential to transform the apparel industry. That is why the most important activity during the GLASA process is a symposium that takes place in conjunction with the award ceremony. The purpose of the symposium is to leverage insights gained by the award finalists to facilitate new learning, exchange best practices, and propose actions that can harness the award winners’ success so that the global apparel industry and key stakeholders can benefit. The theme of the 2014 symposium was Natural Capital Accounting in the Apparel Industry. Participants included global brands, government representatives, investors, accounting organizations, researchers and advocacy and interest organizations. The symposium was held on April 23, at the beautiful venue of Børsen in Copenhagen.To access presentations from the symposium , please look at the column to the right.
Later on during the evening, the Executive Director of SFA, Michael Schragger, The Minister of Trade in Sweden, Ewa Björling, and the Swedish Embassy in Copenhagen welcomed exclusively invited participants to a prestigious dinner at “Odd Fellow” in Copenhagen on the 23rd of April. The custom-designed dinner was prepared by distinguished chefs from the Nordic region, thanks to the assistance of “Smaka på Skåne”. Following the dinner, the 2014 winner of the Global Leadership Award in Sustainable Apparel, Kering, was announced by Trade Minister Ewa Björling. In conjunction with this, live music performances by Stine Bramsen and Scarlet Pleasure took place. The evening ended with mingle and drinks, in which some of the most respected individuals within the fashion industry in regards to sustainability attended.