Luxury group Kering is adopting the mantle of sustainability, and has ambitions to transform its own business at every level – and change the entire industry in the process.
In the heart of Paris’s chic Rive Gauche district, rue de Sèvres glints in mellow autumn sunshine. Cars whizz along the street, past the glamorous doors of luxury department store Le Bon Marché and bustling cafe terraces, towards the stone gatehouse and charcoal-coloured doors of number 40, behind which lie the grand headquarters of luxury group Kering.
The renovated 17th-century hospital complex, the vaulted stone offices, courtyard gardens, beehives and a “green” meeting space filled with foliage embody Kering’s values: heritage and tradition, combined with sharp modernity and a growing focus on sustainability.
Driven by Marie-Claire Daveu, chief sustainability officer since September 2012, Kering is embedding an all-ecompassing strategy into the structure of the business.
We have a specific role to play when we are in luxury: we set the trends
“We have a specific role to play when we are in luxury: we set the trends. We have to contribute to changing the industry paradigm,” says Daveu when she meets Drapers in her office, where the walls are neatly lined with books, research files and pots of honey from the Kering beehives.
“It’s important for Kering to put in place a more eco-resilient business model, but also to support the industry becoming more sustainable.”
The luxury juggernaut, led by François-Henri Pinault, owns some of the world’s best-known and bestselling luxury brands, including Balenciaga, Alexander McQueen, Saint Laurent, Gucci, Bottega Veneta and Brioni. It also owns jewellery and watch brands, including Boucheron and Girard-Perregaux.
Until late March 2018, Kering also owned a majority stake in luxury, ethically focused womenswear label Stella McCartney.
Kering is an international financial heavyweight. In the year to 31 December 2017 revenue rose 25% year on year to €15.5bn (£13.74bn), EBITDA rose 49.4% to €3.4bn (£3.1bn) and operating income rose 56.3% to €2.95bn (£2.62bn).
The momentum has continued: for the six months to 30 June 2018 Kering’s overall revenues jumped to €6.4bn (£5.71bn) – a rise of 33.9% on a comparable basis. Operating income rocketed by 53.1% to €1.77bn (£1.57bn) in what Kering chairman and Pinault called a “dazzling” performance.
Before joining Kering, Daveu worked for the French government in the field of social responsibility for 12 years. She joined Kering to work on an international level.
“I met Pinault and was very impressed with his commitment to the field of sustainability,” she says. “His vision was putting sustainability at the core of the business strategy and [making] sustainability a cultural value. He asked me to transform his vision and his commitment into something concrete and operational.”
More than 90% of our environmental impact is linked to our supply chain
Although Kering has had a sustainability department since 2003, Daveu has given it a more active role. For example, the Environmental Profit and Loss (EP&L) tool measures the costs and benefits of the company’s environmental impact using a methodology based on scientific studies and research.
“EP&L is the starting point for us,” says Daveu. “You can implement greater actions if you know really where your impacts are. It’s a way to measure our environmental footprint – not only in our own operations but in the entire supply chain. You can go beyond the classical approach of sustainability.”
The project began in 2015 and the results for 2016 showed group EP&L cost of €858m (£759.7m). The latest report, published in August, estimated a 2017 group EP&L cost of €482m, and said: “Relative to turnover, the EP&L intensity decreased between 2016 and 2017 by 10% from €48 to €44 [£42 to £38] EP&L per €1,000 [£877] of revenue).”
Another key focus of Daveu’s work is the group’s 2025 strategy, launched in 2017, which lays out detailed environmental and social targets and quantitative commitments. The targets centre on three pillars: “care”, “collaborate” and “create”.
“Care” relates to the environment. Goals include reducing the group’s environmental footprint and greenhouse gas emissions by 40%, and reaching full supply chain traceability.
“Collaborate” focuses on the workers in the supply chain, preserving “savoir-faire” traditions and skills, and encouraging gender parity at all levels.
“Create” encourages innovation by training future generations in sustainability and fostering “disruptive” innovations to help Kering meet its wider targets. These targets include the impact of the entire supply chain.
As for the sustainability department, we try to be sparring partners for the brands
“More than 90% of our environmental impact is linked to our supply chain,” says Daveu. “Suppliers have a key role to play if we want to reduce our environmental footprint.
“We want full traceability. Traceability is key because it is a tool: if you want to reduce your environmental footprint you have to know where your materials are coming from.”
Kering is aiming for 100% transparency by 2025 and is on track to reach 95% by the end of 2018.
Meet Marie-Claire Daveu at Drapers Sustainable Fashion on 14 March 2019
Kering’s Marie-Claire Daveu is on our star line-up of sustainability champions speaking at Drapers Sustainable Fashion – our unmissable new event that will bring together the most sustainable brands and retailers, trailblazers and unicorns, disruptors, progressive thinkers and pioneers to discuss what we can do and why change is not optional.
The group’s entire portfolio of brands have the same targets and work towards them independently.
“They don’t always have the same issues for all the brands: Gucci and Boucheron will not have the same challenges,” says Daveu. “The actions they have to implement may be different, but the target is the same.”
“As for the sustainability department, we try to be sparring partners for the brands,” she says. “We’re here to really support them, and also to push them. We have put in place a sustainability review. Every year we have a meeting with the CEO and the top team to ensure that everyone cares about their commitments, talks about any obstacles and progress they’ve made during the year.”
Alexander McQueen spring 19
All team leaders at Kering have a percentage of their qualitative bonus linked to reaching their sustainability targets. “Everywhere in the matrix we have sustainability,” says Daveu. “So at the end of the day, we are sure we can put movement into the brands.”
More than 50 people work directly in sustainability at Kering, and there are experts throughout the business, including on the board, the executive committee at corporate level.
Gucci is pioneering in its approach to sustainability. It banned fur from its spring 18 collection onwards and its “Gucci Equilibrium” website details the Italian house’s approach to all aspects of sustainability, from textile innovations to social justice.
Daveu acknowledges the targets are challenging: “If we put at scale all the pilot projects we are working on today, we know we would only reduce our environmental footprint by 20%. If we want to fill the gap between 20% and our target of 40%, we need to find disruptive innovations that will really change the way that we are doing things.”
We need to find disruptive innovations that will really change the way that we are doing things
To this end there are pilot schemes and projects throughout the business. Kering has been part of the “Fashion for Good Plug and Play” accelerator programme since its launch in March 2017 and supports sustainability-focused clothing start-ups.
The group also works with non-governmental organisations in Mongolia and New Zealand to develop sustainable supply chain production models for wool and cashmere.
Kering is also working to remove heavy metals, which have a toxic impact on soil and groundwater, from the tanning process of leather.
“Tomorrow we’re spending the whole day in Italy, meeting people who own and work in tanneries to discuss with them about the heavy metal-free processes, and to push them to really implement that and explain to them why it is key for them and why it is key for us,” she says.
Other innovations include the Materials Innovation Lab, near Milan: a collection of 3,500 textile samples to encourage design teams to consider new and sustainable textiles while maintaining product quality.
Sustainability is change management – you have to push people to think in a different way
“When you try these pilot projects you have to make sure that, at the end of the day, you have the same quality,” says Daveu. “We are in luxury and people expect products that are perfect. Perfect by design, perfect in quality, perfect in the standards of raw materials.”
From a shelf in her office Daveu proffers two bags: a Balenciaga motorcycle tote and a hot pink Gucci handbag – both of which are made with leather free of heavy metals. She says with pride that no one, not even an expert, would detect a difference in quality.
Kering’s approach has won praise from outside observers.
“They are leading in terms of luxury sustainability,” says Orsola de Castro, co-founder of sustainable fashion campaign group Fashion Revolution. “They’re not afraid to talk about it, which is a step in the right direction. There is also a willingness to put their money where their mouth is, and they are innovating in areas faster than others.”
Rather than seeing sustainability as a cost barrier, Daveu positions it as a driver of positive development: “In Kering we don’t speak about cost, we speak about investment,” she says. “Sustainability is change management – you have to push people to think in a different way. If a company sees sustainability only as a regulation or a constraint and a cost, that is not sustainability.”
You can implement greater actions if you know really where your impacts are
Daveu also stresses the importance teaching others and sharing knowledge to drive wider change. All the Kering Standards – detailed guidance on social, environmental criteria and raw materials – are open sourced and available for all to access, as is the methodology of the EP&L.
In February, Kering announced a partnership with the London College of Fashion to offer a free, online course in sustainable luxury fashion.
More than 10,000 students registered for the first intake of the course in April. The second edition began this month.
“[Kering] sees the importance in collaborating with researchers and educators to make real and lasting changes,” says Gabrielle Miller, researcher at the Centre for Sustainable Fashion at London College of Fashion. “The partnership has enabled us to bring about demonstrable change in education, nurturing the skills, capabilities and mindsets needed for graduates to take on roles as agents for change.”
Daveu admits the task ahead is vast: “It’s never finished when it comes to sustainability. You can always continue to improve. All the targets are first to reduce our environmental impacts, and then to create positive externalities. There is never an end – you have to continue to progress.”
It’s never finished when it comes to sustainability. You can always continue to improve
She is optimistic about the changes beginning to ripple through the industry, and believes consumers are increasingly holding brands to account for failing to act on promises – a phenomenon she calls “greenwashing”: “Customers expect more and more from business leaders and the companies to implement sustainability.
“Citizens are really aware and understand that pollution, climate change and everything could have an impact on their health. Businesses have a specific duty to do something and include sustainability in their responsibilities.”
Social media is key: “It stimulates brands to really do key actions and not only greenwashing. If you are ‘greenwashing’ and something that reveals that appears on social media, it can very quickly destroy your brand.”
Diana Verde Nieto, co-founder and CEO of sustainability certification body Positive Luxury, agrees: “Customers are less forgiving of luxury brands if they find out brands are not doing the best for the environment. CEOs of businesses are looking at sustainability now, as it is something is expected by consumers.”
Daveu concludes: “It’s critical to implement sustainability and fight climate change to ensure it is not too late for the planet we leave for our children. It’s very important for every business, every company and every sector to say that sustainability is not optional: it is a necessity if we want to develop and continue our businesses. There is no future without it.”