How high fashion keeps up with sustainability

Today's post is about Kering, the French luxury group owning brands such as Gucci, Yves Saint Laurent and more, which has made strides towards being and especially appearing more sustainable in the last decade. One of the ways Kering has shown leadership is by being the first to conduct an environmental profit and loss (E P&L) analysis. In 2011, Puma (back then a Kering brand), was the first company to publish the results of its first E P&L. Specifically, in an E P&L, monetary values are assigned to greenhouse gas emissions, land conversion, water usage and more factors. These are examined along the whole supply chain, starting from raw materials all the way to retail, when the products reach their owner. In their interactive report for 2019, you can see how Kering's impact spreads across the different areas, but also how much impact they had in each country.

Taking Puma's example, the environmental impact of the brand's activities in 2010 were valued at €145 million yearly, and the analysis allowed insights into what exactly caused this. Here, exterior partners along the supply chain were responsible for 94% and of the impact, €84 million came from raw materials, shedding a light on where action should be taken first. Even though Puma acknowledged this was part of their impact, they also stated to have "limited control" over their suppliers and further ties. This is of course true in a direct sense, as Puma cannot dictate how its suppliers operate. However, what executives of large companies often fail to mention is that by choosing among suppliers, they can actually influence how they operate, for instance by demanding higher sustainability standards. In fact, Marie-Claire Daveu, the Kering board member responsible for sustainability, said in an interview last month with the Zeit that because of the short cycles of the fashion industry, Kering changes suppliers all the time, proving that especially the fashion industry should be more proactive in switching to more sustainable partners, since they change them often anyway.

Interview Marie-Claire Daveu (in German)

Download • 251KB

However, much of the impact is caused by more fundamental decisions than who to order from, but depends for instance on which material is used. In this area, Kering is showing its will to change fashion by investing in various startups like Worn Again Technologies, which separates materials woven together in old clothes to reuse them. In general, Kering's responses to counteract its negative impact range from reforestation projects in places where gold is mined in South America, to creating large protected areas to counteract grassing sheep in Mongolia.

What I personally found very interesting is that after Puma conducted this analysis and Kering decided to extend it to all of its brands, five years ago they shared the methodology for the environmental profit & loss analysis publicly and for free, for any company to use. Quantifying sustainability is increasingly becoming important not only for the image consumers have of a firm, but also investors, who want more and more information on compliance and especially innovation targeted at sustainable ways to do business. This way, Kering not only responded to forces in the consumer and financial sector, but sets the tone on how sustainability is reported.

Another, smaller digital innovation that Kering has developed is an app: the E P&L app enables fashion students to digitally experiment with materials for four typical luxury fashion products: a ring, a coat, a handbag and a pair of shoes. Users can combine different materials and regions where these are from and immediately see what their product's impact is right from the start, creating an increased awareness to include the environmental impact right in the development stage of a product.

So, I personally admire the initiative of large and influential corporations which not only engage in single projects for sustainability, but make a contribution to changing the way business success is perceived. Of course, especially in the fashion industry where branding plays a very large role, being at the forefront of something consumers are increasingly worried about, clearly also helps sales. However, Kering has been criticized by Greenpeace to still keep a lot of information to themselves. Being selective on what to be transparent about and what not is probably part of the reason why on the website we featured previously, Good on You, the majority of Kering's brands have a medium rating, despite all the positive efforts we talked about now. In conclusion, I personally see this story as another example of how leading corporations are taking action in moving towards more sustainable business models, while still understandably trying to make the most out of it, also in terms of profit.