After turning the ailing PUMA into a €4 billion global powerhouse, Zeitz thought he would try to save the world.
Jochen Zeitz, the German entrepreneur and former chief executive of sportswear brand PUMA who pioneered natural accounting, is one of the world’s most talked-about chief executives.
When the company was on the verge of bankruptcy and posting annual revenues of €200 million, 30-year-old Zeitz was appointed to PUMA’s top job.
Within a year he had turned it into a profit-maker once more, and over time into a €4 billion annual sales empire, one of the top three brands in the sportswear industry worldwide.
After a 20-year stint as chief executive he stepped away from running daily operations to take on a different role at luxury goods group Kering, the owner of PUMA and brands such as Gucci, Stella McCartney and Balenciaga.
As a director of Kering and chair of its sustainable development committee, Zeitz has more time for what has become a real calling – championing environmental sustainability and pushing like-minded executives to improve their business practices.
He is the architect of the environmental profit and loss (EP&L) account that puts an asset value on nature – and thus a monetary value on a business’s impact on the ecosystem.
By giving the environment a financial value, Zeitz discovered that the everyday actions of making sports gear and shoes meant PUMA would face enough charges to decimate earnings if he had to pay up.
These “ecosystem services” directly support luxury goods makers like Kering, which produce and process raw materials such as leather, cotton and rubber.
Clearly, raising cattle to produce leather uses water and requires land to be cleared, which affects plant and wildlife species.
Factor in the number of hectares (and what the land could have yielded for meat-producing cattle), then include the chemicals used by tanneries.
Calculated this way, manufacturing Gucci shoes and bags becomes tricky for an environmentalist.
Far from receiving negative shareholder reaction, Zeitz’s controversial approach has won him international accolades for taking the bold move of disclosing the EP&L.
Similarly, he believes this will be positive for companies that want to disclose their environmental costs as a first step in finding solutions to reduce their impact across the whole supply chain.
Finding a leather alternative is the holy grail for Kering, but Zeitz is asking companies not to wait until they have a solution to their most unsustainable products.
Instead, they should start investing in projects that reduce their total environmental footprint.
He is not about pointing fingers at investors, politicians or anyone else. The idea of an EP&L came about as he worked on a book, Prayer, Profit and Principles.
While writing a chapter on sustainability, he decided to explain it by looking at himself. “What could I influence the most? The clear answer was that all I can influence in my life is business,” Zeitz says.
“There was a lot of discussion about sustainability at the time, but I figured it’s important to really know if you’re doing the right thing. I thought I knew how to make PUMA more sustainable as a business. It’s not hard to visualise the impacts, but what do you address first: carbon, land use, water pollution or waste?
“I didn’t quite understand because there was no tool that allowed me to put everything into a simple, one-page summary that would tell me where our impacts actually were.”
He looked at everything that was published on sustainability and could not believe no one had tried to do an EP&L. “That’s what I had to do,” Zeitz says.
“Business now understands that it’s part of the problem and if it continues using the natural resources of the world unsustainably, they’ll run out. Having such a huge impact on society, business leaders should take responsibility for their actions just as politicians and consumers do.”
Zeitz remains optimistic, but acknowledges some of his optimism could be premature.
“We are doing things today in business we never thought we would do 10 years ago and the same will be the case five years from now. Changes are hard to predict. These tipping points and cultural shifts don’t happen overnight.”
Clearly companies talk about environmental responsibility, but are they moving fast enough to reduce their adverse impact on the planet?
Are investors prepared to reward companies for putting environmental sustainability at the top of corporate agendas, perhaps at the expense of meeting quarterly profits?
To this end, Zeitz co-founded The B Team with British businessman Sir Richard Branson.
The B Team’s creed is that the world is at a critical crossroads and it’s up to business people to push for reforms that will make businesses more socially responsible.
Since business has caused many of the world’s environmental problems, it is incumbent upon them to come up with solutions.
Importantly, the 14 corporate chiefs who have joined The B Team have pledged to practise what they preach in their own companies.
Zeitz expects real change can be made through bringing together the leaders from major corporations around the world because they have the wherewithal to make decisions quickly and get things done.
Zeitz co-founded The B Team with British businessman Sir Richard Branson.
“Can 14 business leaders change the world? No. Can they become a positive voice that will be heard? I would say, yes. You’ve got to start somewhere,” Zeitz says.
“We needed visibility to start off, which means getting high-profile people on board who can pick up the phone and use their contacts to help get things done.”
Zeitz says he and Branson were very selective in the way they chose the initial group of executives for the B Team.
“They’re not just a group of people who have made a lot of money – all of them have done pretty amazing things in their business lives. They’re people who are trying to use their influence in business to try and change things.”
To Zeitz, The B Team is supporting some very practical initiatives – accounting for profits through adjusting for environmental and social impacts, more equitable executive pay and creating better business leaders for the future.
His EP&L is a big part of that. Passion, energy leadership and just “sticking with it” have driven Zeitz throughout his business life and it is no different for his current crusade.
“If someone really wants to change things for the better, he or she will ultimately accomplish it. That’s what it will take for sustainability strategies to work and that’s why I started The B Team.”
Zeitz is also a member of the TEEB (The Economics of Ecosystems and Biodiversity) advisory board.
Five years ago he established the Kenya-based non-profit Zeitz Foundation of Intercultural Ecosphere Safety.
At his 20,000ha Kenyan home, Zeitz is working with the community to restore the local area.
B Team leaders
Shari Arison US-born Israeli businesswoman and philanthropist
Kathy Calvin president and chief executive of the United Nations Foundation
Arianna Huffington founder of The Huffington Post
Mo Ibrahim founder of Celtel and the Mo Ibrahim Foundation
Guilherme Leal co‑chair of Natura
Strive Masiyiwa chairman of Econet Wireless
Dr Ngozi Okonjo-Iweala finance minister of Nigeria; former World Bank managing director
François-Henri Pinault CEO, Kering
Paul Polman CEO, Unilever
Ratan Tata chairman emeritus of Tata Group
Zhang Yue chairman of Broad Group Professor Muhammad Yunus Bangladeshi banker and Nobel Peace Prize recipient, professor of economics
Honorary B Leaders, representing People and Planet
Mary Robinson former president of Ireland
Dr Gro Harlem Brundtland former UN secretary-general, former president of Norway
B Team Founders Circle
Derek Handley (founding CEO), New Zealand entrepreneur
Strive Masiyiwa, founder of Econet
Joann McPike, founder of Think Global School
Blake Mycoskie, founder of TOMS Shoes
The Rockefeller Foundation
The Tiffany & Co Foundation
Virgin Unite (initial incubator of The B Team)