At Kering, we want to take a leading role in supporting the transformation of our entire industry, Luxury, as it evaluates and reduces its environmental impact. To achieve this vision, we are convinced that we must continually exceed our limits, support our Houses and engage with the entire sector and its stakeholders. Discussions with investors confirm the importance of defining indicators and tools which fully account for a long-term outlook, and the need for Kering to be increasingly transparent and candid when it comes to its own performance. With this in mind, we developed and improved our Environmental Profit & Loss account, or EP&L, over the past decade.

Expressing environmental footprint in monetary terms

Kerning’s EP&L allows us to measure our impact on natural capital throughout our value chain – from the production and transformation of raw materials to the products’ use and end of life – and assign a monetary value to each of these steps. Expressing our environmental footprint in monetary terms, we translate our impacts (GHG, air pollution, waste, water consumption, water pollution and land use) into a shared business language, with a view to facilitating understanding and comparative performance. The EP&L approach goes beyond standard environmental reporting, producing a richer, much fuller picture of the impact of Kering’s activities. The results should not be seen as a liability or a cost for Kering. Rather, they represent a way of assessing the cost to society of environmental changes stemming from the activities of the Group and its suppliers.

Using the EPL tool to inform capital allocation decisions

For Kering and each of our Houses in hard and soft luxury, the EP&L represents a new way of looking at our activities, enabling us to assess the magnitude of an impact for different locations (particularly useful for water availability, an eminently local issue) and facilitate comparisons. Over the past decade, the EP&L has become a strategic tool fully embedded in our strategy and daily operations, allowing our businesses to make informed decisions regarding capital allocation. It reveals areas for improvement where the Group can deploy solutions, using innovative new technologies and materials that significantly reduce the environmental impact from raw materials processing and goods manufacturing.

As we continue to integrate our EP&L findings into our day-to-day operational decisions and strategy, we are seeing positive results and recognize its inherent value to help inform our R&D, product design, sourcing decisions, and manufacturing. To further leverage it, we continuously enhance our EP&L coverage and methodology—starting in 2020, for example, we added product use and end of life to the analysis.

Looking ahead: on target to reduce EP&L footprint by 40% in 2025

Within our sustainability strategy, we include quantifiable targets we aim to reach by 2025. A cornerstone of our environmental pillar is the target to reduce our EP&L footprint by 40% across our supply chain by 2025 and relative to our growth, using a 2015 baseline. We are more than on track on our reduction pathway, having achieved a 33% reduction in our EP&L intensity between 2015 and 2020.

True to its commitments to transparency and the sharing of its practices, Kering publicly discloses its EP&L results, methodology and research work on an open-source website accessible to all.