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Accounting for Environmental Benefits in the Environmental Profit and Loss

July 09, 2016 |

Accounting for environmental benefits in the environmental profit and lossTo date, the Environmental Profit & Loss (EP&L) has primarily been used as a means to evaluate the negative impacts of a business on the environment. In addition to the ‘Losses’ of an EP&L, there is also the potential for ‘Profits’ where a business works with its supply chain to deliver benefits to society.

The objective of this paper is to set out an accounting framework to integrate such positive contributions into the EP&L. We do not consider how we measure and value, but rather how we integrate and account for ‘Profits’ alongside ‘Losses’ in an EP&L context. In doing so, there are a number of challenges that need to be overcome, including defining:

  • What the appropriate baseline should be; if this is to be defined on a project basis, how do we link these net benefits with the broader EP&L analysis (which is gross)?
  • How to attribute impacts to Kering, particularly where our actions deliver benefits beyond our direct value chain
  • Defining rules for additionality and leakage
  • Setting out best practice for trading off between impacts and locations. Is ‘no net loss’ meaningful across a multi-national value chain? How do we define rules for ‘offsetting’ Losses with Profits?

Supplied by: Kering

Download the report (pdf): Accounting for environmental benefits in the environmental profit and loss

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