Sustainability progress report 2017 - 2020

More than ever, it is simply not enough for companies to say that they care about reducing resource consumption and respecting people across their business ecosystems, they must recognize these as absolute necessities. This is nothing new for Kering. We have been well aware of our socio-environmental responsibility since decades.

Our core strategy of disruptive innovation and value creation through sustainability is driven by our Chairman and CEO François Henri-Pinault’s long-held conviction that Luxury and sustainability are one and the same. This is a certitude that creates value for our Group, our Houses and all our stakeholders.

Kering’s unwavering long-term commitment to sustainability is reflected by our progress towards meeting our ambitions and alignment with climate actions that make a difference. Now, by committing to implement a science-based target on climate to drive these actions so that they are consistent with a 1.5-degree pathway, will be taking another large step forward towards our future.

Luxury & Sustainability Go Together

As leading drivers of change, Kering’s open-source approach to knowledge sharing has helped the adoption of sustainable practices in our industry.

Beyond our own advancements inside the Group, we believe ambitious targets must be set to address the supply chains where we generate the majority of our impacts (over 90%). This is the same for all of Luxury and fashion. Scope 1 and 2 of the Greenhouse Gas (GHG) Protocol are not near enough given the intensifying climate crisis. We need bold leadership that also takes full responsibility for all the impacts upstream in Scope 3 as well. With this in mind, the Kering sustainability strategy starts there- where we source our rawI materials – right through to the manufacturing and production of our goods.

This continues all the way to our stores and clients, where we are also examining consumer use and the ‘end life’ of our products. While we are doing all this, we also know that transparency of reporting on the entirety of our impacts is a fundamental commitment of ours and is crucial to any meaningful successes.

The Story So Far

To ensure that our vision of responsible and ethical business becomes a reality – and to set the highest standards of best practices in the Luxury sector – Kering announced the next phase of our sustainability strategy Group-wide in January 2017.

Under each of the three pillars of Care, Collaborate and Create are a series of targets we set to attain by 2025 reducing our environmental impacts, and advocating for social welfare inside and outside the Group.

Ongoing challenges serve to illustrate where we need unprecedented innovation and industry collaboration. This sometimes also means cross industry collaboration.

Action Speaks Loudest

Three years on from our 2025 sustainability strategy announcement we have been making promising progress, including highlights in all three pillars:

CARE for the planet

Kering reduced the Group’s overall environmental impacts by 14% in EP&L intensity (between 2015 and 2018) and is on a positive trajectory to reach our 40% reduction target by 2025.

Kering reduced the Group’s GHG emissions by 77% in intensity in our own operations* (between 2015 and 2018), and reached 100% renewable energy use in over seven countries, 78% in Europe and 67% covered overall for the Group.

Even further, Kering is on track to meet our 50% science-based target** for GHG emissions, having achieved a 36% intensity reduction (between 2015 and 2018).

As of 2018, Kering became entirely carbon neutral as a Group in our operations and across our sourcing and supply chain, . With a priority of by first avoiding and reducing its our GHG emissions Kering offsets remaining emissions every year through verified REDD+ projects that conserve critical forests, biodiversity and supports the livelihoods of local communities.

In January 2018, Kering developed and open-sourced our ‘Standards for Raw Materials and Manufacturing Processes’ covering best practices across environmental protection, social welfare, traceability, chemical use and animal welfare. The Group has already achieved 68% alignment.

Kering achieved 100% ethical gold purchase for our Jewelry and Watches and is on track to reach 100% sustainable sourcing for other key raw materials by 2025.

Kering attained 88% traceability for our key raw materials, against a goal to reach 100% by 2025. In May 2019, Kering created the first animal welfare standards for luxury and fashion to improve industry practices and catalyze collaboration.

In May 2019, Kering created the first animal welfare standards for luxury and fashion to improve industry practices and catalyze collaboration.

Kering became the first private sector company to partner with The Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES) and to support biodiversity science.

As another first for the Luxury industry, Kering published an integrated report in 2018 for 2017 results. Furthermore, to share the significance of corporate sustainability with the investment community, Kering embarked on a road show in November 2019 specifically geared towards the Group’s Environmental, Social and Governance (ESG) criteria.

*Kering reduced the Group’s GHG emissions by 77% in intensity in its own operations (offices, stores, warehouses, owned industrial sites) between 2015 and 2018.

**Kering has a Science-Based Target (approved by the Science-Based Target initiative) to reduce all its GHG emissions from a 2015 baseline by 50% by 2025 related to Scope 1 and 2 and controlled Scope 3 (upstream transportation and distribution, business air travel, and all fuel and energy associated emissions).

COLLABORATE with people

Kering is far ahead to ensure women are well-represented in the Group at all levels. As of 2019, women accounted for 50% of the Group’s managers, 63% of the total workforce, 33% of our Executive Committee members and 60% of our Directors, making Kering one of the CAC 40 companies with the highest proportion of women in senior management positions.

Kering implemented a progressive global Parental Leave policy covering standards around maternity, paternity and adoption across all employees in close to 50 countries.

Kering developed and implemented a Charter for the well-being of models and also committed to only working with models over 18.

Kering empowered women in the regions of its supply chains through micro-loans, skills training and education.

Kering created the first MOOC (massive open online course) dedicated entirely to sustainability and Luxury fashion with the London College of Fashion. It was also translated into Chinese; more than 33,500 learners from 150 countries have participated at no cost.

Kering created the “IFM-Kering Sustainability Chair” with the Institut Français de la Mode in Paris.

Kering continued to preserve Luxury know-how and craftsmanship by supporting the next generation of craftspeople, whereby the Group had 20 plus programs set up as of 2019.

Kering launched the Fashion Pact to convene the leading players in fashion and textiles around key environmental issues. There are currently 59 signatories, representing around 250 brands to date and equaling more than 30% of the industry.

CREATE new business models & innovations

Kering launched the ‘K Generation Award’ in China with Plug and Play to identify promising change-making startups and technologies in Greater China, and continued to scout in startups around the world.

Kering established the Sustainable Innovation Lab (SIL) for Watches & Jewelry and scaled up the Kering Materials Innovation Lab (MIL) to support the design teams with a library of 3800 sustainable fabrics.

Kering created innovative financing mechanisms, like the Kering Ethical Gold Platform, to support the shift to sustainable raw materials.

Kering set up a series of pilots across the supply chain including traceability technologies, low-impact alternative materials and manufacturing processes, like mushroom leather and eco-dyeing. Beyond pilots, the Group scaled up innovations whereby metal-free tanning was used for around 24% for collections at the end of 2019.

Kering focused on new ways to reuse its materials and integrate recycled and regenerated options into product offerings.

Kering launched a partnership on regenerative agriculture as a first for the fashion industry and is focusing on promoting innovative solutions in the Group’s supply chain.

Kering created a “Digital EP&L” to provide unprecedented transparency for stakeholders and open- sourced the underlying data to provide Luxury and fashion players insight into the complexities of their own environmental impacts.

Kering collaborated on industry-wide efforts to advocate circularity and launched an international survey to understand consumer use and product end-of-life, in order to then extend the EP&L methodology to a circular, full life-cycle for products.

Looking Ahead & Rising To The Challenge

While we are on track to meet many of our 2025 sustainability targets, others remain a challenge particularly in areas where we need unprecedented innovation and industry collaboration. Indeed, we are spurred on by what we have achieved so far towards these targets but we are not under any illusions.

Significant work remains to be done. Work we’ll approach with optimism and in the same spirit of adventure that has brought Kering to our leadership position in our industry.

For Kering, we want to demonstrate the transformative power of business for change, not just for our iconic Houses and across everything Kering touches, but also far beyond.

Making Sustainability Fashionable For The Future

The business of fashion is huge – both in terms of its economic value and environmental impact. But let’s not forget, fashion with its influence and power is in a position to lead  – and influence – inspiring climate action.

And as one of the world’s largest industries, changing the direction of the apparel and textiles industry juggernaut could have a significant impact on our planet’s future. Kering has set a deep foundation to continue to work towards this long-lasting change and for our collective future.