In the run-up to the UN’S COP26 international climate change conference which takes place in Glasgow in November 2021, a detailed case study by Holly Kelsey, a Paris-based researcher in sustainable fashion takes an in-depth look at Kering, one of the world’s luxury fashion brands known for its commitment to sustainability.

Holly Kelsey: the global fashion industry already stands accused of depleting the world’s water resources, polluting rivers and other surface waters with chemicals and adding to ocean microplastic pollution.

This week has seen the launch of a new tool by environmental disclosure platform CDP Water Watch: CDP’s Water Impact Index which reveals the world’s most polluting and water-intensive industries.

According to CDP, the apparel and textile manufacturing sector, financial services, and fossil fuel sectors are having a critical impact on global water resources. A separate report published by the CDP in September 2020 warned that the global fashion and textiles sector is “largely blind” to risks of water pollution. 

In 2019, a report by the Parliamentary House of Commons Environmental Audit Committee - FIXING FASHION: clothing consumption and sustainability warned that the fashion industry is depleting the world’s water resources, polluting rivers and other surface waters with chemicals and adding to ocean microplastic pollution, saying that  “we are unwittingly wearing the fresh water supply of central Asia."

Globally, the fashion sector, consumes an estimated 79 billion cubic metres of fresh water annually, with the growing and production of fibres using up the greatest quantity of water.

Water pollution has been called an ‘invisible crisis’ by the World Bank, and through its excessive water usage, the apparel and textile industry is a major contributor. In 2015 alone, the sector used 79 billion cubic metres of water.

However, some companies in the sector are exemplars of sustainability, setting examples which others should really be aiming to follow.

Kering - committed to sustainability

One of the world’s luxury fashion brands, Kering is seen as an exemplar organisation known for its commitment to sustainability and its efforts to keep sustainability at the forefront of its global business activities. 

Established in 1963, Kering brands include some of the most iconic fashion names on the planet, including Gucci, Saint Laurent, Bottega Veneta, Balcenciaga, Alexander McQueen, Brioni, Boucheron, and Ulysse Nardin.

Headquartered in Paris and with an annual revenue of €13,100 million in 2020, Kering has been charting a path towards more sustainable business practices for over 18 years.

Kering started to assemble a sustainability team and set up a digital environmental reporting platform as far back as 2003, followed by the creation of a sustainability department in 2007 which reports directly to the CEO. The luxury fashion leader now has a team dedicated to sustainability permanently in place led by Marie-Claire Daveu, Chief Sustainability Officer and Head of International Institutional Affairs.

Image: textile samples from Kering's Materials Innovation Lab 

Measures put in place over the last decade by Kering to drive sustainability performance include:

2010 - Attaining sustainability targets is included in criteria for measuring performance and calculating Executives’ bonuses.

2011 - The group publishes a trial Environmental Profit and Loss account (the impact of business activities on the environment.

2012 - Creation of the Sustainability Committee within the Board of Directors.

2013 - Admission to the Dow Jones sustainability world and Europe indices (DJSI). The group was also listed on the CDP climate disclosure leadership index (CDLI) France. Kering also created the Kering Materials Innovation Lab (MIL), a library of sustainable fabric and textile samples. With an archive of 3000-plus sustainable materials, the library serves as a central hub that connects both suppliers and brands to access to materials, processes and technical support that create a circular fashion system.

2014 - Launch of an annual ethics training campaign for the group’s employees highlighting Kering’s commitments in key ethical areas, including environmental protection.

2015 - Kering released their first publication of its Environmental Profit & Loss (EP&L account)

2016 - Kering first announced its 2025 sustainability strategy.

2019 - Kering helped launch the Fashion Pact with President of France Emmanuel Macron

Circularity Ambition - Coming Full Circle

In July 2019, the launch of the Fashion Pact, a global coalition of companies in the fashion and textile industry (ready-to-wear, sport, lifestyle and luxury) including their suppliers and distributors, was given as a mission by French President, Emmanuel Macron to Kering Chairman and CEO, François-Henri Pinault. The signatories have all committed to a common core of key environmental goals in three areas: stopping global warming, restoring biodiversity and protecting the oceans. 

Most recently, earlier this year Kering published Circularity Ambition - Coming Full Circle, a new report outlining the group’s ambition for a holistic approach to circularity. The new report is part of the Group sustainability strategy aiming at rethinking the way it produces, uses and extends the life of resources and products.

A key part of Kering’s approach is shifting its production practices to reduce waste, reduce energy and water use, and to eliminate microfibre leakage and single-use plastics. This includes setting the following series of targets to keep it on track to achieve its aims:

• Zero product destruction;
• 100 per cent renewable energy by 2022;
• Zero single-use plastics by 2025;
• 100 per cent of raw materials to comply with the Kering Standards by 2025;
• Zero microfibre leakage by 2030.

Water identified as key issue in Environmental Profit and Loss account

Water has been identified as a key issue by Kering in its Environmental Profit and Loss account – and the fashion group takes a proactive approach to managing its impacts throughout the extended supply chain. The EP&L account is a natural capital accounting methodology pioneered by Kering and used to quantify the company’s environmental impact in terms of greenhouse gas (GHG) emissions and air pollution, water use and pollution, and waste and land use change.

Image: cotton harvesting 

Kering describes the EP&L as a “model of how companies can account for their impact and dependency on natural capital.” It enables the company to identify risks and vulnerabilities (including around climate change) across its vast global supply chains and to prioritize its actions.

“We need open-source solutions and collective action”

Kering has also ‘open sourced’ the EP&L methodology so other companies can use it to gain a more accurate understanding of their own specific dependencies and risks.

The fashion group also acknowledges that taking steps as an individual organisation is not enough to bring about change, saying in the report:

“This is about working together, not just for our brands at Kering but as an industry. We need open-source solutions and collective action. The Fashion Pact, which launched in 2019 – a global coalition of companies to stop global warming, restore biodiversity and protect the oceans – was a first step towards taking responsibility for the impact of our industry as a whole.”

Kering has been actively engaging both suppliers and supply chain actors on chemical management, providing operational support and building capacity. This includes using the Manufacturing Restricted Substances List (MRSL), which covers hazardous substances that can potentially be used in manufacturing and discharged into the environment, to help provide guidance to their suppliers and manufacturers.

In 2019, the Group developed and implemented a MRSL specific audit methodology to verify supplier’s compliance to the MRSL and to support supply chain progress towards compliance.

Water consumption and water pollution - 2 of 6 key performance indicators assessed in EP&L

Kering will also measure the success of supplier engagement on its Environmental Profit &Loss (EP&L) water pollution indicator against the target of reducing its EP&L account by 40% by 2025.

Specifically, water consumption and water pollution are 2 of the 6 key performance indicators assessed through the EP&L. The indicators are based on 44 different metrics, including heavy metals, nutrient pollutants or organic chemicals which are measured to determine the Key Performance Indicator on water pollution.

In 2019, Kering publicly released its Kering standards, which contain guidelines, among others, on water management of raw materials production and manufacturing processes in Kering’s operations and its supply chain.

The Kering Standards, which consist of 5 key principles - traceability, social welfare, environment, animal welfare and chemical use - rank each raw material used by Kering in its manufacturing processes. The Standards define the relevant sustainable standards for raw material sourcing, including requirements to limit water impacts.

Collaboration with supply chain to mitigate impacts on water environment

Other steps Kering is taking to mitigate its impact on the water environment include:

• Working closely with the Natural Resources Defense Council Clean by Design programme, which looks at water pollution and carbon emissions across the industry, to improve outcomes in its textile mills. Clean by Design (CBD) is a green supply chain efficiency program which calls upon multinational apparel retailers and fashion brands reduce the environmental impacts of their factories abroad.
• Addressing the problem of microfibre fragmentation from textiles as part of the circular economy’s key commitment to protect ecosystems.
• Collaborating on a pilot scheme to filter out microfibres.

Kering joined the Clean by Design initiative in 2015 and introduced the programme to a number of its suppliers with what it describes as “impressive results”. NRDC applied the programme to the luxury industry, and to the European market, for the first time with a tailor-made Kering Clean by Design programme rolled out across the Group’s main dyeing, printing, weaving and yarn spinning supplier.

Initially working with 25 Italian mills who are among Kering’s key suppliers, each mill went through a resource efficiency audit, from which an individualised action plan was drawn up for to improve the mill’s current management, maintenance, and processes, whilst also implementing new technological improvements.

According to the report, working hand-in-hand Kering and the suppliers have to date initiated over 150 energy and water efficiency improvements with an average 2.5 years’ return on investment.

As part of its ongoing commitment to increase collaboration across the industry, in February 2021, Kering joined forces with other brands in partnership with the Apparel Impact Institute(Aii) to bring Clean by Design to a further 20 Italian manufacturers. Kering says in its report:

“We aim to invite more luxury brands to join us in this collaborative “Made in Italy” effort, as it is a challenge that needs to be met across the industry. We cannot do this alone, but we will lead by example.”

The fashion group has included water-specific targets as part of its sustainability goals. It also intends to create a Supplier Index of Sustainability to ensure Kering Standards for key raw materials and processes are 100% implemented by its suppliers by 2025.

Detailed Water Security submission in 2020 to CDP

Most notably, since 2015 Kering has also submitted environmental data to the CDP, the leading non-profit organisation who run a global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. CDP takes the data in its annual reporting process and scores companies and cities based on their journey through disclosure and towards environmental leadership.

The only luxury group on the CDP ‘A List’ for climate change, Kering’s detailed Water Security 2020 submission runs to some 55 pages in total. While the Group’s direct water consumption through its offices, retail stores etc has a low direct environmental impact, in contrast its indirect use through its extended supply chain and for the production of its key raw materials is assessed as important.

CDP is currently in the process of colecting as yet unpublished data from organisations on their water use for 2021 - Kering has already made its submission.

The Group is keenly aware of its water use - as part of its new sustainability strategy, water dependency is set to decrease through water efficiency, innovation and sourcing programs put in place to reach the 40% EP&L reduction target by 2025.

Looking ahead, future water dependency is expected to be more significant in Kering’s indirect operations than its direct operations - its main water consumption and pollution impacts, as measured through EP&L results, lie in the upstream part of Kering’s supply chain, i.e. raw material production and processing.

At the same time, Kering has also identified water impacts from climate change as a source of potential negative impacts on key raw material availability, prices and quality.

The company also takes proactive steps to engage with its suppliers on water issues, asking them in turn to report back on their water use, risks and/or management information.

As part of the EP&L, in 2014 Kering surveyed over 1,000 of its key suppliers - 76 % of its supply base - to collect environmental data and KPIs (including water use and water pollution) from product assembly to raw material producers, including silk farms, textile factories, sheep farms and tanneries.

Kering has been in the process of updating this data collection and analysis during 2020.

Its CDP submission states:

“Consistent with previous years, data analysis conducted for Kering’s 2019 EP&L results showed that 93% of Kering’s environmental impact, including water footprint, was attributable to activities within its supply chain.”

Kering sustainability achievements recognised in world’s benchmarking sustainability indices

The company’s sustainability achievements have been recognised in a number of the world’s benchmarking sustainability indices, including:

• 2020 Dow Jones Sustainability World Index (DJSI World) and the 2020 Dow Jones Sustainability Europe Index (DJSI Europe) for its sustainability performance for the eighth consecutive year.
• CDPs 2020 Climate A List
• FTSE4Good

In addition, Kering also ranked top in the Business of Fashion’s inaugural BoF Sustainability Index published in March 2021 both in overall performance and in terms of reducing water use and eliminating harmful pollution.

The Group is keenly aware of the importance of water resources and potential exposure to water- related risk, including consumption and pollution, via the indirect operations of its complex extended supply chain.

Luxury fashion sector is "particularly sensitive" to climate change including impacts of water stress

According to Kering’s CDP submission, the luxury sector is particularly sensitive to climate change because it relies on high-quality raw materials and materials that come from natural and agricultural systems that are often limited geographically and can be particularly vulnerable to climate variations, including impacts of water stress.

“In other words, the fundamental value proposition of luxury fashion brands—that use rare, high-quality materials—is at risk in the face of climate change”, the submission says. “Price increases in the raw materials triggered by climate change and water-related events (e.g. droughts and floods) could represent significant increases in production costs and consequently negative impacts on operations.”

Water policy embedded in Group’s 2025 sustainability strategy

Kering’s water policy is embedded in the Group’s 2025 sustainability strategy released in 2017 and its Kering standards (open-sourced in 2018) - which are still up to date. They cover the entire Group, and include goals and performance standards for both operations and supply chain.

Kering’s sustainability strategy is aligned with Sustainable Development Goal 6 and describes Kering’s water-related commitments such as a 40% EP&L reduction by 2025 (including 2 of the 6 key indicators: water consumption and water pollution), chemical use reduction, water-efficient innovation (such as chrome-free tanning) and promotion of sustainable design through EP&L and Kering standards open-sourcing.

The EP&L methodology, based on the international initiative Natural Capital Protocol, shows that water use and pollution from business activities can have a wide range of impacts (e.g. disruption of ecosystem services through eutrophication, competition with local community needs, or adverse human health impacts), and can give rise to significant risks in respect of the availability and quality of water in various parts of the world.

Sustainability strategy aims to foster collective action on water management

The strategy also aims to foster collective action towards water management, such as:

• Clean by Design program spearheaded by NRDC that aims to reduce the environmental footprint of textile manufacturers through the organization of energy-water audits.
• Zero Discharge of Hazardous Chemicals initiative - Kering has been a signatory member since 2016.
• Kering Standards, a suite of industry-leading sustainability standards for manufacturing processes and raw materials, describe Kering’s water dependency (fashion companies rely on agricultural production for their raw materials), business impact on water and linkage to climate change, and contain water management guidelines for its suppliers (e.g. organic certification requirements for cotton, or water-efficient extractive guidelines for gold).

Importantly, Kering has embedded board level oversight within the organization - the Chairman of the Board and CEO of Kering is also a member of the board level Sustainability Committee which oversees water-related strategy and issues.

Marie-Claire Daveu, Kering’s Chief Sustainability Officer, is directly responsible for the water strategy.

Launching the report, Circularity Ambition - Coming Full Circle, Marie-Claire Daveu, Chief Sustainability and Institutional Affairs Officer, Kering commented:

“At Kering we already take our approach to circularity very seriously, along with our responsibility to accelerate change. But we know there is more work to be done. This is the time to consolidate our mission for circularity across all our brands and share their progress, as well as collaborating on issues that affect the industry as a whole - from microfibre pollution to increasing efficiency and reducing waste at textile mills and suppliers. Changing the system is energizing, too. We are identifying bold opportunities for a fresh generation of businesses to integrate a culture of regeneration, repair and real change.”

Click here to download Circularity Ambition - Coming Full Circle