Kering: How a Global Luxury Group Becomes a Sustainability Leader
Kering, a global luxury group with an array of major brands from Gucci to Saint Laurent and Bottega Veneta, some 29,000 employees and annual revenues exceeding €10 billion, has positioned itself as a world-class leader in sustainability. Under the guidance of its Chairman and CEO, Mr. François-Henri Pinault, who is deeply committed to embed sustainability in all of Kering’s “maisons” (brands), a very ambitious 2025 Sustainability Strategy has been developed, based on three pillars:
- CARE about Kering’s impact on the planet, on climate change, on natural resources;
- COLLABORATE for the good of Kering’s employees, suppliers and clients;
- CREATE pioneering ideas to safeguard our rich heritage and empower future generations.
We got together with Marie-Claire Daveu, Chief Sustainability Officer and Head of International Institutional Affairs since 2012, in charge of the Group’s institutional affairs, has been tasked with translating Mr. Pinault’s vision into realities.
As a French national, and,a graduate of the French National Institute of Agronomy and the University Paris-Dauphine, Marie-Claire Daveu has had extensive experience in the public sector before joining Kering, notably in the French Ministry of Ecology where she served as chief of staff to French politician Nathalie Kosciusko-Morizet from 2007 to 2012.
You have a clear and articulated strategy to guide your work: the 2025 Sustainability Strategy, “Crafting Tomorrow’s Luxury”. How did this strategy come about, what was your role in building it? Why the 2025 goal date?
Why 2025? Because we think that to implement a concrete action plan, to change the paradigm and to achieve significant results, it takes time. That’s why it’s important to have an exact definition about where we want to go in the next 10 years. Of course, we have also defined intermediate steps and targets along the way. And we are committed to publicly share our progress every three years with our stakeholders because we think that transparency is key.
With our CEO François-Henri Pinault participating himself, we met all the executive committees in our “maisons” and we also met all the designers and their teams to establish our 2025 Sustainability Strategy together. And we applied a holistic approach, covering both the environmental and social sides. This work encompasses our efforts inside and outside the company, and along the entire supply chain.
For François-Henri Pinault, sustainability is essential, it’s crucial for ethical reasons and for business reasons. He has given us a clear vision of where we need to go. He wants Kering to be the leader in sustainability. This means assigning goals to build a more eco-efficient business model and because we are who we are, as a luxury player, we help set the trends in fashion and lifestyle . Luxury has a specific responsibility to push the boundaries in sustainability to influence the entire industry.
What about your second pillar, the social one, to “collaborate for the good” of your employees and suppliers?
For the social pillar internally, one of our key topics is working to engage our employees on gender parity. We want to be certain that we achieve gender parity for all functions, for all positions and at every level of the company. Empowering women is a key topic for us and we also aim to quickly fill the gaps between men and women’s salaries.
In the supply chain, it’s of course different but not so much. First, we put in sustainability clauses for new supplier contracts and work closely with historical suppliers to ensure they are meeting the criteria laid out in our Kering Standards. It is essential to have clear discussions with them to share a clear diagnosis about where they are and of course how we can push them or support them to achieve the necessary progress.
We often find that what is needed is disruptive innovation. That’s why I focus a lot of attention on working with startups and also investing in R&D with universities. You need innovation and new solutions to make substantial changes to the conventional systems. We work, for example, with the London College of Fashion where we have jointly developed the first MOOC dedicated to sustainability and luxury fashion, among other initiatives. Similarly, we work with other universities around the world, such as Tsinghua University in China and Parsons in the US. We need to have this type of cross-fertilization between experts, NGOs, academics, and others to identify new action.
Regarding the third pillar of your strategy, the one for “creating pioneering ideas to safeguard our heritage” and future generations, can you comment?
The last pillar is more linked with what we call “new business models”, driven in part by disruptive innovation. To accelerate our strategy and reach our goals we know that we need to develop new approaches and solutions to a number of our challenges. And again, what we wanted to do with this strategy was to translate our overall vision into realistic yet ambitious targets. That’s why we decided upon the target to reduce our environmental footprint by 40 percent in our own operations and across the entire supply chain by 2025 and our greenhouse gas emissions by 50 percent, and we also wanted to be a leader in animal welfare.
The topic of animal welfare goes a step beyond the first pillar of “Care” for our planet and climate change, but it is a topic we have been paying attention to for a long time. We wanted to define leading industry standards and we are implementing them everywhere in our business and promoting them externally.
One thing that was great and helped us in our work was the fact that the steering committee for our 2025 Sustainability Strategy was also the executive committee of the Group. So we have a complete commitment from the top and that’s really important. It helps to define and lock the strategy and targets into place.
But the action plan for every brand may vary. If you are Gucci or Boucheron and you have to reduce your environmental footprint by 40 percent, the issues and priorities aren’t the same: It’s more linked with gold if you are Boucheron, and more linked with leather or cashmere if you are Gucci, Brioni or Bottega Veneta, as an example. While the result will be the same, the paths to get there differ.
Your methodology transcends the world of luxury products, in particular you have established Environmental Profit and Losses accounts (EP&Ls) for all your brands annually to create a Group EP&L, first testing out the EP&L approach in 2011 on your then brand Puma. There is a remarkable diagram showing your Group EP&L results, and can you take us through the EP&L journey?
This type of natural capital accounting approach makes sense because as a business you need a clear diagnosis about where your environmental impacts are and if you don’t, you are not able to define the right programs and initiatives that will help reduce them. When we are speaking about the EP&L, we attach a monetary value to each impact area (GHG emissions, air and water pollution, water consumption, waste, and land use) whereby it’s a common language and an easy comparison between different units and measurements. This enables managers to easily identify the areas in the business to focus on and take the necessary actions that are the most efficient for impact mitigation, but also the most efficient economical path. This is the key.
Our methodology is well defined because we developed it with support from PWC and several NGOs and top experts in the field. Our first success was to have a credible methodology, which was quite important because we were pioneering this approach as a tool to use operationally in a business. The second, is that we have a map that tells us what we have achieved and where the potential is to achieve more. We have decided to continue to develop the EP&L and its scope from when we sell our products to our clients until the end of life of the product. So now we are focused on defining the methodology for the second chapter in the life of the product. The EP&L will then be able to show a full 360° approach for a product’s life cycle.
Also, we have the feeling that this methodology could be very useful not only in our sector but for other sectors. We have open-sourced our EP&L methodology and although I can’t disclose the names of the companies, we have more and more people interested in using EP&L. Already we have contributed our methodology to create the Natural Capital Protocol, which is being adopted by dozens of companies across different industries.
It is also globally recognized and the EP&L concept has traveled all the way to China: not only Western but also Chinese companies that are interested in environmental issues will be able to use this kind of approach. What makes it so interesting is that it’s not so complex and people can see very quickly, “I made a good decision” or “if I changed this supplier or that sourcing region I will significantly reduce my products’ raw material impacts”. It’s really operational and results-driven. That’s why it’s so useful.
What do you see as the main challenges for the future?
The main challenge is not only for Kering, and the entire business community, but also for the whole planet. After COP 21, people have become more and more conscious about the issue. We do not have, at a global level, all the necessary solutions, but only some of the solutions that we can implement, so it’s a question of speed. If we take, for example, climate change, we need to move at a rapid pace to avoid going over 1.5 degrees Fahrenheit. For me, it’s really a matter of sharing the facts and realities with people so that they are spurred on to move quickly. Now is not just the time to talk anymore, it’s the time to implement and to implement in depth everywhere.
Regarding sustainability inside of Kering, I don’t see it as much as a “challenge” as such but rather as a commitment. We only need to continue to deepen and strengthen this true commitment to sustainability from all our CEOs in all our maisons, and from all our designers in all our brands, to carry on driving the sustainability agenda forward. The goal is to keep the same level of commitment and the challenge is to find new and disruptive innovation to maintain the momentum. And globally, the challenge is for all businesses to recognize the need to put sustainability at the top of their agendas and make it their main priority. Sustainability should not be something in the periphery of a business strategy, it should be placed at the very core of it.
What are you looking for and what did you take from the Economist Sustainability Summit?
For this kind of important event, what is interesting for Kering and the luxury sector is to meet other people from other industries – for example, from the food industry and from energy industry. I think we have to work not only in a transparent manner but to be able to have a collaborative approach if we want to take care of the issues at the very end of the supply chain which can often be shared by different industries. So we need to have cross-fertilization between sectors and implement solutions together.
Another very important benefit from this kind of event with The Economist, is that it brings together CEOs, CIOs, CSOs and people who are in top management roles. There is much “food-for-thought” here and unique approaches, which they can bring back to their own companies. So I think for us it’s really interesting not only to speak to people already convinced about sustainability or to speak with people within our sector, but really to have a bolder approach and different platforms to discuss sustainability.
Social media also has a key role to play, to raise awareness and to share best practices. If you are a large company, you are able to invest in R&D as an example. When you are a small company, of course it’s harder to finance this, and it’s our responsibility as larger companies to share our knowledge and learnings. That’s why everything we develop around sustainability at Kering is open-sourced because we know that we won’t be able to change the paradigm alone. We need to scale up the solutions to our sustainability challenges with others in order to promote widespread adoption and to influence change. Again, I believe we don’t have a choice: if we don’t do this, the issues around sustainability will not be solved. But I am optimistic. You have to be optimistic because if you’re not optimistic, nothing will be done and nothing will change.