PARIS — Given that 93 percent of its impact on the environment occurs in its supply chain, Kering plans to work more closely with the food industry, particularly cattle breeders and farmers, to improve its track record in future.
Tabling its first Environment Profit and Loss account, or EPL, at a press conference here Tuesday, Kering pegged the value of its impact on the environment in 2013 at 773 million euros, or $1.03 billion at average exchange rates, with more than half of the tally associated with raw materials.
While that puts the French group well ahead of the global average business, with its impact roughly 45 percent of the mean, chairman and chief executive officer François-Henri Pinault urged other companies to employ the tools it has designed to create more sustainable business models.
“We’re part of the textile industry, which is one of the most polluting industries in the world,” the executive said, stressing the need to scale up efforts by sharing best practices and collaborating with other companies. “It’s my conviction that sustainable business is smart business….Environment Profit and Loss will help us ultimately become a more robust and resilient business.”
The parent of luxury brands including Gucci, Saint Laurent and Boucheron recently teamed up with Swedish fashion chain H&M to test a new recycling technology that separates and extracts polyester and cotton from used garments in order to create new textiles, for example.
Pinault said the assessment of the company’s environmental impact would help it make better decisions, choose better suppliers and drive innovation across the group. That only 7 percent of impacts come from facilities such as stores, warehouses and offices also means looking far beyond a company’s own walls.
Working with PricewaterhouseCoopers, Kering analyzed its 21 businesses, which range from sporting goods firm Puma to watchmaker Girard-Perregaux. While Pinault declined to give a ranking, he noted that Stella McCartney, who does not use animal products, is “far and away the most sustainable brand in the group.”
The EPL account also found that 25 percent of Kering’s environmental impact comes from leather, while 17 percent is linked to cotton. Meanwhile, greenhouse gasses contribute 35 percent of the total impact, versus 27 percent from land use. Air and water pollution, water consumption and waste production are among other measuring sticks, with costs tabulated for such negative effects as respiratory diseases and agricultural loss.
Kering said it studied 578 processes involving 107 materials across 126 countries to understand how damaging its businesses are to society.
Within the supply chain, about 26 percent of the environmental impact is associated with raw materials, versus only 17 percent for manufacturing and product assembly.
“EPL shoes us how we can design and implement solutions that are innovative,” said Marie-Claire Daveu, chief sustainability officer and head of international institutional affairs at Kering.
She noted that organic cotton – used by group brands including Brioni, Alexander McQueen, Puma and Volcom – offers 80 percent savings in environmental impact, with sustainable wool offering a 70 percent reduction and recycled polyester 90 percent.
Using fair-mined gold is another priority, with Kering purchasing 55 kilograms, or 121.3 pounds, last year from Peruvian mines.
Pinault noted Kering routinely prioritizes “clean” suppliers, but these often have production constraints.
“If we want to change things, we have to be proactive,” he said, noting Bottega Veneta and Gucci have developed tanning methods that greatly reduce the use of damaging heavy metals, and that Kering acquired a supplier of precious skins to gain greater control of python farming. “When it’s feasible, we do it,” Pinault said.
Kering tabled its findings ahead of the big United Nations Climate Change Conference, COP21, in Paris, scheduled for Nov. 30 to Dec. 11. It also published a complete report on its Web site, proving this “open-source” tool to encourage other corporations to understand their impact on natural capital.
Commenting on Kering’s EPL, Virgin Group founder Richard Branson called it a “great example for businesses around the world and will help others speed up the transition to a net-zero emissions economy by 2050.”