WWD: How does a manufacturing-based industry such as fashion reconcile growth with sustainability?
Marie-Claire Daveu: A few years ago, François-Henri Pinault [chairman and chief executive officer of Kering] put sustainability at the heart of our strategy. It’s something strong that you find at every level in the company, from the raw materials through to our finished product. At the same time, we are quite successful at [the bottom line]. So I think that gives you a concrete example.
WWD: As part of François-Henri Pinault’s commitment to the environment, Kering has become very invested in sustainable innovation.
M-C.D.: Sustainability can mean additional costs but also savings. With the knowledge that emerges while seeking solutions, most of the time, these solutions are very innovative, so you are becoming more efficient and more sustainable. We believe it’s a fact that sustainable design is smart business.
Take the example of energy. When you are implementing some key solutions to reduce your consumption of energy, at the beginning it’s an investment, it costs money. But after a few years, you are able to [produce more efficiently]. It’s an investment, so you have to accept a different kind of payback that is not exactly the traditional payback. But at the end of the day it’s great for your business.
I would like to add the fact that today, sustainability is not at all an option, it’s a necessity. We are speaking about the most important issues like climate change, loss of biodiversity, resource scarcity — you can’t continue to develop your business if you don’t pay attention to this. So it’s more than only reconciling growth and sustainability. It’s the fact that to even have a business to continue to develop, we need to change the paradigm.
WWD: You’re talking grand-scale interconnectivity.
M-C.D.: As previously mentioned, we embody sustainability in our comprehensive strategy. We try really to implement and to deliver with outstanding results of the triple-bottom line.
Our clients expect the most desirable product, including regarding its social impact and environmental footprint. When they buy luxury, they buy what we call a perfect product in a 360 approach. It’s really important. Also, thinking about the long term, putting sustainability at the heart of the strategy is a way to stimulate innovation, to stimulate creativity. And our creativity is important in our operation and in our company.
WWD: Not all top-tier management is far-sighted. Considering the triple-bottom line — people, planet, profits — is it realistic for most companies not to consider the profits first?
M-C.D.: For me, the triple-bottom line is not an option. It’s the only way for growth. It’s something that we are living on day-to-day, under our sustainability strategy for 2025.
Because if you don’t, if you are not successful on the financial side, you won’t be able to implement key actions on the environmental side, on the social side. But if you don’t implement [the social and environmental] side, you will be successful only for the short term.
Also, today investors and analysts are asking more and more questions about sustainability. They are more and more interested in the triple bottom. They don’t use the word sustainability, but they are asking questions with the risk management approach. So it’s interesting to see that these kind of people are really involved and the triple-bottom line also.
WWD: That’s great, but are you at all skeptical about the willingness, especially of public companies, to put the environment ahead of, or even equal to, profits and shareholder return?
M-C.D.: There is no position of sustainability versus shareholder. Public-company value relies on the capacity to be profitable, and also to satisfy its customers and to prevent risk. Again, sustainability implies innovation, long-term strategy and customer satisfaction. When we are speaking about sustainability, expectation is fast-growing among NGOs. But also for government and customers. If you don’t anticipate and make the link, you will meet serious difficulties.
Another thing that’s very important, [an aggressive sustainability program] is also very good to attract and retain the best talents inside Kering. That’s true also for other companies, so for public companies, it’s important to have this kind of approach.
WWD: I hadn’t thought about talent acquisition and retention. So interesting.
M-C.D.: When you are an employee, you are also a citizen, and a person is a person. People want to find some meaning to their jobs, and they want to work for a company that pays attention to people and to the planet because pollution all over the world is a reality. Resource scarcity, it’s a reality. When you see what is happening with global warming and the loss of biodiversity, people want to work for companies where it’s really key. So if you want to attract the best talent and if you want to keep them, it’s really a competitive advantage.
Then, when you think about your customer and the next generation of customers, Millennials and Gen Z, they are more and more involved in sustainability and are more and more demanding that companies [be transparent] about their concrete actions about sustainability on the environmental side but also on the social side.
WWD: A number of people have addressed the influence of the consumer.
M-C.D.: Yes. It’s happening all over the world. It’s not only a question asked by people in Western countries. In Asia, above all in China, people in our sector are becoming very sensitive to the sustainability issue. They ask us some questions about the environment; they ask some questions about animal welfare.
When you are in luxury and something is very important [to the customer], it’s key. Now, with social media, people are really aware about the issue. They want to be active and to buy products made paying attention to the planet and to the people. And it is very true for Gen Z and Millennials.
WWD: At some point do major companies have to address the issue of overproduction — their own overproduction, not just the other guy’s?
M-C.D.: I believe we as businesses can develop a more inclusive growth model, where we are reducing our environmental impacts and protecting biodiversity.
This doesn’t have to automatically mean producing “less” — it’s about producing “better.” So that all along the supply chain sustainable best practices are in place, and where we source sustainably. We also need to think differently about using new natural resources and focus on creating a circular economy, where we reuse raw materials. And even going beyond this, so that we can make a positive contribution by committing to systems that mitigate climate, like regenerative agriculture. We have a partnership with Savory Institute, for instance. At the same time, we need to innovate new solutions to many of the unsustainable traditional business models.”
WWD: Still on overproduction, this industry is very nurturing of new talent and young businesses with mentorships, businesses competitive prizes, etc. But more companies ultimately mean more product being produced in what seems like an already saturated landscape. Thus, are those two concepts — nurturing nascent businesses and lessening fashion’s overall environmental footprint — at all antithetical?
M-C.D.: The reality is that the majority of the world’s economic system is based on capitalism, so it’s a business model where competitive markets and new companies can thrive. But in this same environment I believe that we can shift to a “conscious capitalism,” where these two concepts — nurturing new businesses and lessoning the overall footprint — are not in conflict. Where they can coexist and we can create new, more sustainable business models — a business model that is transparent, responsible and ethical. It’s about “doing good” and embracing new ways of doing business to create value for the environment and society.
WWD: While there’s much to be done, overall you sound optimistic about broader corporate attention to environmental issues.
M-C.D.: When I see the difference between now and a few years ago…we have met more and more progressive [attitudes]. So that’s the first thing.
Take the example of climate change. Now everyone is concerned about the consequences. I feel the question is more about the speed of implementing key actions. I will be very tough, but I will tell you that if a company doesn’t implement concrete action on sustainability, I don’t know the timetable, but this company won’t be able to survive. So it’s really a necessity.
In luxury, we have the feeling that because we set the trends it’s also a responsibility for us to open source our best practices and to support other companies and other sectors. If companies don’t move on this topic they won’t survive because there is no choice.
Now everyone has to act very quickly and in coordination and with the public sector. We need business leaders and the public sector to work together if we want to change the paradigm. We are not speaking about incremental progresses. We are speaking about changing the paradigm. You have to be sure that everyone will be involved.
It’s not a question of reconciling [growth with sustainability]. It is, if people want to continue to exist, they have to contribute to changing the paradigm.