Committed leadership, rigorous tools and the right partnerships are combining to transform an industry
Marie-Claire Daveu loves her job. The enthusiasm of Kering’s Chief Sustainability Officer and Head of International Institutional Affairs is palpable. And she has every reason to be happy: this year Kering made it onto the A-List of the Carbon Disclosure Project Climate Performance Leadership Index 2014 and was named industry leader of the Dow Jones Sustainability Indices (DJSI) World and Europe, topping the Textiles, Apparel & Luxury Goods category. They must be doing something right.
The company’s rise to sustainability stardom has been rapid. While many sector leaders have consolidated their position over decades, Kering is a relative newcomer in the sustainability space. But it is fast emerging as a credible trendsetter others would do well to follow.
Headquartered in France, the Kering group holds a string of 22 well-known luxury and sports lifestyle brands—from Gucci and Saint-Laurent to Puma, Qeelin and Bottega Veneta. As parent company, Kering sets group guidelines and provides a platform of support services like IT, finance and logistics to capture operational efficiencies and nurture brand synergies. Through ambitious group targets, teams are encouraged to stretch their thinking and move beyond their comfort zone—part of the dynamic Kering calls ‘empowering imagination.’ The CEOs and creative directors of each brand enjoy ‘freedom within a framework’ to attune their image, positioning, sourcing and production to their distinctive values, heritage and culture.
Strategic direction—the changes shaping future value creation—is set by the group. This is the ‘Kering effect.’ And sustainability is, increasingly, an intrinsic part of this. Kering grasps that a paradigm shift is necessary for the business and is committed to systematically embedding a new mindset and practices across the brands. “It’s a major priority for the group,” Marie-Claire Daveu emphasises. “We’ve built it into every level of the company—from the Executive to the shop floor. To change the paradigm the only way is to include it in our strategy and daily business activity. If you compare our approach with others, we go beyond what we call conventional CSR, which is focused on philanthropy; we do business differently.”
Kering’s mission may be “to help customers express and fulfil themselves through our products,” but the impetus for embedding sustainability is not, essentially, customer-driven. “We think it’s the right thing to do from a business perspective,” insists Daveu; “for us it’s linked to quality.” Equating sustainability with quality—a hallmark of Kering brands—has been a natural fit for the company and pivotal to its uptake across the organisation.
A critical success factor for Kering is unwavering support from the top. “We’re very lucky our chairman François-Henri Pinault is really convinced,” admits Daveu. “The most important driver is without doubt his commitment. We’re in the private sector—the strategy and the vision come from the chairman and the CEO.” Pinault is convinced that sustainable business is smart business, a means of long-term differentiation and competitive advantage. It’s also a stimulant for creativity and innovation—the lifeblood of the fashion industry.
Daveu is emphatic: “Without strong leadership, you cannot implement sustainability in a company.” Her presence on the Executive is proof of how serious Kering is about integration. “If I was not a ‘chief’ (a member of the C-suite) I couldn’t push sustainability on an equal footing with other business priorities. The payback on investment is not the same, it’s not a classical timeframe.” For the past two years the company has also linked CEO bonuses with achieving sustainability targets to underline that sustainability is a big priority for the group.
Blazing a trail with E P&L
As a company with a significant stake in artisanal apparel and accessories, sustainable sourcing of top quality raw materials is vital. Among the jewels in Kering’s sustainability crown from this regard has been Puma’s pioneering Environment Profit & Loss (E P&L). When first launched in 2011, it made waves—for good reason. Developed with help from PwC and British environmental data provider Trucost, this trailblazing methodology monetised Puma’s environmental impacts across the supply chain, highlighting risks and improvement opportunities and revealing what each product line actually ‘cost’ the earth. “E P&L is a way to have a better understanding of the company and manage risk in a smart way,” says Daveu. Kering has set the objective of rolling it out to all its brands by 2016. Already 73% of the group by revenue is applying the methodology and a company-wide statement should be published in 2015.
E P&L isn’t a guarantee of zero-impact, but it leads to a significant mindshift. “What you don’t measure, you can’t manage,” Daveu explains. “You must have a map to know what to implement. E P&L tells us our biggest challenge is to find solutions in Tier 4 to deal with our furthest suppliers—the cotton farming, the cattle ranching. For example with leather, more than 70% of our total impact is in Tier 4. That includes dozens, maybe even hundreds of companies. We have to transform the system.”
The sheer scale of that challenge would be enough to put most companies off—but not Kering. Instead, it is using its influence and reaching out to others who can help bring about whole system change. “There’s a real coherence between our business goals and the need to maintain natural capital,” Marie-Claire Daveu continues. “So we have dialogue with national governments about ecosystems. Everything in our sector—everything we wear—comes from natural resources. If we don’t have cotton, the business can’t continue, so we have a specific responsibility to make the link through our EP&L work.”
Brands from Gucci to Stella McCartney are therefore piloting sustainable leather and wool traceability and certification projects with NGOs like the Rainforest Alliance and Nature Conservancy (see box). A new multi-year programme with the International Trade Centre—a specialised agency of the United Nations—will support monitoring and sustainable management of the Madagascan Nile crocodile trade. And a five-year partnership with the Centre for Sustainable Fashion at London College of Fashion will incubate sustainable innovation.
The sky’s the limit
To link vision, strategy and operations, in 2012 Kering set itself 10 ambitious 2016 targets across 8 categories, linked to its E P&L findings: thus “100% of leather from domestic livestock within Kering’s products will be from responsible and verified sources that do not result in converting sensitive ecosystems into grazing lands or agricultural lands for food production for livestock by 2016.” It’s a pattern that’s repeated from precious skins and furs to responsible and verified leather, to gold, diamonds, paper and PVC. But once you get to 100%, what’s next?
“Thinking about what a sustainable Kering looks like is never-ending. We have to continue to become more and more sustainable—each time you find something new about your product, your process, which you can do better. We have to continue to reduce environmental footprint, set trends as a fashion company, push our peers, push other sectors…” If anyone can do it, Marie-Claire Daveu can. Before joining Kering, a career highlight was co-creating the Grenelle de l’Environnement—a successful national multistakeholder consultation process to achieve environmental policy consensus in France.
Whole system change? Pourquoi pas.
Kering At a Glance*
A world leader in apparel and accessories, Kering runs a stable of powerful Luxury and Sport & Lifestyle brands including Gucci, Saint Laurent and Puma.
- Employees: 35,000
- Brands: 22
- Reach: 120 countries
- Directly operated stores: 1,149
- Recurring operating income: €1,750 million
- Revenue: €9,748 million (33% Sport & Lifestyle, 67% Luxury)
- Revenue by region: 33% Western Europe, 31% Asia Pacific, 19% North America, 10% Japan, 7% other countries.
*all figures for 2013
Warm Fuzzy Feeling
Launched with the Autumn 2014 collection, the new Stella McCartney range of Luxury SustainableWool knitwear is a first for a luxury brand.
Originating from Patagonia in Argentina, the fully traceable wool and has been produced in accordance with new sustainability standards developed by global conservation organization the Nature Conservancy and local partner Ovis XXI, with the aim of conserving—and actively restoring—15 million acres of endangered grassland ecosystem undermined by a century of grazing.
The partnership is pushing the boundaries of sustainable materials in the luxury market, using a global sustainable grazing protocol to ensure economically viable sheep ranching without negative environmental impacts.
In 2013, PUMA launched two new Cradle to Cradle Certified™ BASIC collections of lifestyle apparel, footwear and accessories. Dubbed “InCycle,” the collection of re-issued iconic PUMA styles is a market first in its sector. To achieve certification, PUMA had to innovate across the full product lifecycle, including choice of cotton, dyestuffs, and end-of-use design. PUMA won a New Innovator Award from the Cradle to Cradle Product Innovation Institute for its InCycle Collection.
Sustainability Leadership Timeline
- 1996 Group’s first Ethics Charter
- 2003 creation of Sustainability department at corporate level & establishment of environmental reporting web platform
- 2004 PPR chairman signs Diversity Charter
- 2005 Deployment of Code of Business Practices & creation of Ethics and Corporate Social Responsibility Committee (ECSRC)
- 2006 Definition of Group sustainability commitments
- 2007 Creation of Group sustainability department, represented on Executive Committee & reporting directly to the Chairman. Definition of 7 strategic sustainability priorities for 2008-2010
- 2008 Group membership of UNGC. Launch of PPR Foundation for Women’s Dignity and Rights
- 2009 Redistribution of updated Code of Business Practices to all Group employees
- 2010 launch of PPR Innovation & Sustainability Awards. Sustainability criteria included in performance evaluations of PPR group leaders. Adoption of Charter of Commitments on quality of life at work and prevention of work-related stress for employees of PPR group in Europe
- 2011 Launch of PPR HOME, new initiative and organisation dedicated to sustainability. Publication of first E P&L account by PUMA. Formalisation of strategic ‘Gender Equality in Leadership’ programme
- 2012 Commitment to ambitious 2016 sustainability targets for Group brands. Creation of a Sustainability Committee within the Board of Directors
- 2013 Creation of Kering Materials Innovation Lab, dedicated to research and development of sustainable and innovative fabrics. Listed on the DJSI World and Europe and ranked top-performing luxury and apparel company in Climate Disclosure leadership Index, France. Launch of Python Conservation Partnership in collaboration with IUCN and ITC. Update and redistribution of Kering’s Code of Ethics to all Group employees & reinforcement of Group ethics organization. PPR CFWDR becomes Kering Corporate Foundation with extended mandate 2013-2018 & new slogan: ‘Stop violence. Improve women’s lives’.
Andrea Spencer-Cooke and Fran van Dijk are Founding Partners of One Stone Advisors, a global sustainable business consultancy and certified B-Corp.clothing Gucci Kering leisure Management spotlight Puma