Luxury goods group Kering is used to setting fashion trends with its stable of famous designer labels like Gucci and Stella McCartney. Leveraging its influence as a market leader, the organization aims to set a different trend through incorporating initiatives to tackle social and environmental issues into their business strategies for all their brands
By Leon Lee
Over the past two decades, people have become increasingly aware of the potential negative impact of their actions on the environment and society. As the threats of global warming and other potential catastrophes become more real, they are making changes in hopes of helping the situation and preventing it from getting worse.
In the last couple of years, many corporations have talked about sustainability and doing their part. However, few have taken the issue of sustainability as extensively as luxury goods group Kering has and made it an integral part of their business.
Sustainability is much more than a marketing tool for Kering and its stable of luxury brands such as Gucci, Bottega Veneta, Alexander McQueen and Stella McCartney. Kering’s chairman, Francois-Henri Pinault, made the decision to approach it as a strategic driver to the group and its operations. It is at the core of the business strategy for all their brands.
“The reason why Mr Pinault have pushed sustainability as a core strategic driver for the business is multi-faceted,” Carlo Imo, President of Kering Asia Pacific, explains.
“First of all, we believe it’s going to bring innovation into what we do. To move toward smarter practices requires innovation and outside-the-box thinking. It’s also going to be a source of new business opportunities and cost reductions in term of what we do and what we produce.”
As a leading luxury goods and apparel organization, quality and durability are of utmost importance which links to sustainability.
“In particular to the luxury field, I think we have a major responsibility because we set trends. As an industry leader we influence society hence it is our mission be a change-maker for the environment,” Imo says.
In 2003, Kering established a sustainability department on the corporate level and created an environmental reporting platform. Four years later, a sustainability department was established on the group level and reported directly to the Chairman and CEO of the organization.
Furthering their commitment, in April 2012 Kering set a list of sustainability targets to be achieved by this year, targets which Imo believes might be one of the company’s most ambitious steps in driving sustainability throughout the group.
“It’s a long list of targets we set and committed openly and publicly to work on. They focus on all our supply chain across our brands: raw material sourcing, production process or supplier performance. Those targets are recognized from the very beginning as being particularly serious,” the president explains.
“Because looking at the nature of the targets, you can easily see they really focus on the way we do business and the way we do manufacturing and distributing.”
Some of the targets are to have 100 percent PVC-free collections, paper and packaging materials sourced from forests certified to be sustainably managed with a minimum of 50 percent recycled content and a 25 percent reduction in the company’s carbon dioxide emissions, waste and water usage from the production of products and services.
Ahead of the game
According to a report published in mid-2014, they are making good progress on reaching each of the targets. PVC (polyvinyl chloride) was found in less than two percent of the group’s goods. An overall total of 57 percent of its hazardous and non-hazardous waste were recycled or reused, while waste production by the group dropped by 10 percent. Eighty-eight percent of organization’s paper consumption was either sustainably certified or recycled.
Brands under Kering have been using various technologies and tools to achieve the goals. Fashion designer Stella McCartney is a vegetarian and fierce animal rights advocate so her collections do not feature any fur or leather. Instead, they use organic cottons and wools for their bags, shoes and apparel, relying largely on technology and innovations to develop materials as a replacement. Gucci has been working to develop technology to tan leather without using any heavy metals and to reduce the amount of water consumption during the process.
In 2013, Kering founded the Materials Innovation Lab (MIL) in Milan, Italy to help identify, catalogue and make available sustainable raw materials to all of its brands. In two years, the lab has an archive of over 1,500 samples of certified sustainable fabrics.
“When designers, creative directors and development teams are working on products, they can check with MIL in term of source materials which have been tested and verified by MIL as sustainably viable,” Imo says.
One sustainability target that Kering has already met was the implementation of the Environmental Profit & Loss account (E P&L) across all of its brands. Developed with PricewaterhouseCoopers, the E P&L measures and monetizes the costs and benefits generated by a company’s environmental impact.
“We are weighing the impact of our operations and supply chain on the environment. It’s very interesting because it’s going to move the way we do business and where and how we structure our supply chain based on environmental concerns such as water and land consumption,” Imo says.
However, rather than being a method of environment reporting, it aids in putting environmental impact into business terminology which can then be used in comparisons and analysis. Kering has made the E P&L methodology publicly available in hopes that other companies would follow suit to measure their actions.
Besides being environmentally sustainable, social sustainability matters to the group as well.
“When we look at sustainability, we look at that in a broader scope so socially for us, gender equality and women empowerment falls into that,” Imo points out. It also serves as a business imperative as women make up 80 percent of Kering’s customers and 60 percent of their employees.
In Asia, they have recently launched a one-year mentoring program, pairing 10 sets of women within their organization. They have partnered with The Women’s Foundation for their advice and experience to develop the content of the program as Kering hopes to help the growth of the mentees’ careers.
“I think the ultimate goal is to make [Kering] an employer of choice for women. That’s what we’ve been working on and that’s one of the key drivers for our HR actions in the region,” Imo reveals.
In other areas, Kering has taken steps to address gender inequality in the movie industry. The group has a five-year partnership with the Cannes Film Festival, and they hosted a series of debates for their Women in Motion series last year. Actress Salma Hayak spoke about sexism in Hollywood and Frances McDormand spoke on pay disparity. The organization hopes events like these will promote more debate and awareness of the issues.
“There were only four women nominated for Best Director for the Oscars and out of them, only one, Kathryn Bigelow has won the Oscars for Best Director in 2010. And in term of top five movie characters most played by women, 89 percent nurse, 81 percent secretary, 57 percent teachers, 53 percent waiters and waitresses and 40 percent cashiers,” Imo says.
“So what that means is that clearly women are massively underrepresented in term of roles. But when we are talking about Women in Motion, we are also looking at the presence of women as directors and producers where their presences in those fields are even more scattered and rare than acting roles.”
In January of this year, Kering announced a new collaboration with the Sundance Film Festival in New York. They will sponsor a fellowship program and provide year-long support such as special training and workshops to six female filmmakers. Imo says the group will also be exploring something in Asia.
In 2009, the Kering Foundation was established with the mission to fight against violence on women. In the United States, the foundation focuses on tackling sexual violence, in Europe it’s female genital mutilation and in Asia, the focus is on domestic violence.
The foundation has partnered with several NGOs in China to support projects to help women who were victims of domestic violence. In Hong Kong, they are looking to do the same with local NGOs.
In order to promote sustainability throughout the group, it is necessary that everyone is clear on the direction of the company throughout the organization. Imo and his team have work out a road map of priorities and actions for the group for the next three to five years. He understands the importance of engaging people to share common objectives, address challenges and overcome them as a team.
“This exercise in working on and rolling out a road map has been extremely healthy because it’s a way to look into the way we operate, what our objectives are, how we relate internally and externally to drive those,” says Imo, who became President of Kering Asia Pacific in December 2014.
His previous experience as an in-house counsel for almost 20 years offered much insight to his current role.
“The role of an in-house counsel, in my view, is horizontal and holistic at the same time. It’s horizontal because you work cross-functional so you work looking at your organization as a whole and it’s also holistic because you need to have the ability to look at and have a helicopter view on the business to assess risk and to advise properly. Those skills are quite important on management,” Imo explains.
The group’s extensive plan on sustainability has resulted in global recognition. Last year, Kering was recognized as an industry leader in the Textiles, Apparel & Luxury Goods sector in the 2015 Dow Jones Sustainability Indices (DJSI) World and Europe for the second consecutive year.
In January of this year, it was named in the Corporate Knights’ Global 100 index at the World Economic Forum in Davos. It was Kering’s first time on the list, and they are the only luxury corporation to be included in the widely-recognized index for the world’s most sustainable corporations.