The Sustainability Race

MILAN-Fellow French conglomerates Kering and LVMH Moët Hennessy Louis Vuitton have gone to head-to-head for years – neck and neck on revenues and expanding their realm by jockeying for the jewels of the luxury world.  

Today, with the Amazon ablaze and hurricanes angrily destroying entire communities, their race for a more sustainable future is ON more than ever. Both conglomerates are stepping up their game in a major way. 

On the eve of LVMH’s press conference to unveil its new sustainability initiatives, Kering revealed Tuesday that it is committed to becoming carbon neutral across the board and throughout its entire supply chain. 

“It’s about time. It is a bit of a race, but I can’t see this as anything other than positive,” said Giusy Bettoni, the founder of the C.L.A.S.S. Eco Hub, which specializes in integrating a new generation of smart values into fashion, products, and businesses.

Kering’s marquis brand Gucci also went public with its carbon neutral plans earlier this month.

Carbon neutrality is a term used to describe the process of eliminating carbon emissions altogether or balancing out an entity’s carbon emissions by saving carbon emissions elsewhere. 

According to the Sustainability Luxury Report released by HSBC last year, “the luxury sector is not causing huge threats” to the environment compared to other apparel sub-sectors. Both LVMH and Kering have been working towards sustainability since 2012.

LVMH developed its LIFE (LVMH Initiatives for the Environment) program in 2012. HSBC said that the program’s main goal was to protect the environment through four pillars: products, supply chain, CO2, and sites. These goals were originally slated to be achieved by 2020. Among the objectives: reducing its CO2 emissions associated with energy consumption by 25 percent; improving water consumption, energy usage, and waste production between 2013 and 2020. In addition, LVMH chose the Better Cotton Initiative for cotton and the Leather Working Group for the tanneries to certify its procurement. It has also been a member of the Responsible Jewellery Council since it was founded in 2005.

Kering has been concentrated on improving innovation and transparency and originally aimed at reducing greenhouse gas emissions from its operations by 50 percent and from its supply chain by 40 percent. Between 2012-2016, Kering achieved an 11 percent reduction in CO2 emissions, 16 percent reduction in waste, and 19 percent reduction in water consumption, according to HSBC. It also implemented chrome-free and metal-free tanning processes across the group.  Kering also wants to ensure traceability of key raw materials at 100 percent by 2025.

“We have to re-engineer, if we really want to change how we do business. Leadership takes vision, and my vision for modern luxury can’t be separated from my vision for a sustainable business. I want Kering to be a catalyst for change. We need to act together,” said Kering CEO François-Henri Pinault, who received the Green Carpet Visionary Award at the Green Carpet Awards on Sunday.  

Last month, Pinault presented a sustainability pact at the Group of 7 summit in Biarritz which included 32 signatories, among them vanguard companies like Nike and fast fashion retailers like the H&M Group and Inditex. Luxury companies like Chanel and Prada, which now holds an annual sustainable conference in conjunction with Yale and Milan’s Politecnico University, also signed. Though the pact is not legally binding, these companies agreed to a variety of targets including eliminating disposable plastic packaging by the end of the next decade. Kering's competitor LVMH did not sign the pact.

When it comes to who is getting there faster, it’s hard to tell, said Bettoni.

“LVMH and Kering have very different business models,” Bettoni said, noting that LVMH also has wine and spirits brands and the beauty chain Sephora under its umbrella.  

LVMH did ink a deal with perhaps the most ethical luxury brand on the market – Stella McCartney – to “further develop her brand.” LVMH did so after Kering SA and McCartney split, as she bought back her 50 percent stake in her brand. Details of this deal will be released this month.  

“A decisive factor is that she was the first to put sustainability and ethical issues on the front stage, very early on and build her House around these issues. It emphasizes the LVMH Group’s commitment to sustainability,” CEO of LVMH Bernard Arnault explained. 

In Paris today, LVMH’s Dior installed 164 trees at the Spring/Summer 2020 show to demonstrate Maria Grazia Chiuri’s commitment to the environment and her concern over the wildfires in Siberia and the Amazon. LVMH joined President Emmanuel Macron and the G7 initiative by contributing 10 million euros to help fight the wildfires that are ravaging the Amazon.  

It’s still early days to determine whether transitioning to a sustainable model translates into revenue growth. “It does send a message and consumers value that. It’s important for revenue growth,” Bettoni said, adding that some people will call it “greenwashing.”

But Bettoni dismissed that assertion. “I think that applies to brands who launch these token projects. These are real strategies. You don't just say you're going completely sustainable by 2025 and then decide not to follow through.” 

Kering’s statement today and LVMH’s press conference tomorrow coincide with Monday’s UN Climate Action Summit, where environmental crusader Greta Thunberg’s emotional speech went viral. The teen, implored leaders to safeguard the planet for – not just future generations – but this generation.

“I shouldn't be up here. I should be back at school on the other side of the ocean,” Thunberg said, holding back tears as she shamed world leaders for their slow call to action.

“People are dying… the eyes of all future generations are upon you. And if you choose to fail us, I say we will never forgive you.”


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