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Corporate Social Responsibility in the Fashion Industry: Kering Group

  • Anshika
  • Essays
  • April 5, 2018
  • (0)
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According to McKinsey & Company (Keys et al., 2009), the definition of Corporate Social Responsibility (CSR) has been a debatable topic. However, a working definition constitutes its two primary objectives, i.e. activities that benefit the business and the society. These activities include recognition of principles such as accountability, transparency and engaging in sustainable practices. Kate Fletcher (Fletcher, 2008) states that a?ordable clothing commonly known as fast fashion emulating current luxury trends boosts the idea of disposability and causes wastage, moreover, it requires cheap labour that is easily accessible in developing countries like India and Bangladesh (Moulds, no date). Despite having rules in place, even prominent European and American names like Zara and H&M that deal with a contractor in these countries will not know where the materials came from because of further sub-contracting. False promises made to young girls and children developed into sweatshops and consequently the collapse of a building with five garment factories supplying to global brands killed 1,135 people in Bangladesh (Chandran, 2016). 

Such incidents helped sustainability and supply chain transparency gain significance under the umbrella of corporate social responsibility in the fashion and luxury business. Many corporations have started to note that ethics, respect for the environment, and equality between all stakeholders must always be at the forefront of their strategic values. To be sustainable is the answer to many of the environmental issues of the present world like climate change, depletion of biodiversity, the inadequacy of resources, as well as the ever-increasing population, and its demand. Contemporary consumers have grown increasingly aware of such issues and show eager curiosity to know how, where, when and who made their clothes. The fundamental characteristics of a garment, its production process and the fashion brand's contribution to the environment through business practices is what enables them to be considered a “green” company or designer (Dickson et al. 2009).

THE CASE OF KERING GROUP

The luxury conglomerate Kering Group focuses on three main trademark sectors: Luxury, Sport and Lifestyle. It is a powerhouse of many established brands such as Gucci, Stella McCartney, Balenciaga, Bottega Veneta, Saint Laurent, Alexander McQueen, PUMA and many more (Kering Group, no date).

The determination of sustainable growth is now at every level of Kering's corporate governance. 'Comité Dévelopement Durable' of the Board of Directors is competent in design, planning, and overseeing appropriate green implementation. The firm set up 'Sustainability Technical Advisory Group (STAG)' for the Executive Committee, including seven sta? members. They provide thei

expertise and scientific solutions to Comité Dévelopement Durable. Then 'Comités d’Ethique' monitors the execution of the Ethics code at all stages, including suppliers. And finally, the 'Sustainability Leads' organises and coordinates activities relating to sustainable development in each brand of the group. Overall, fifty people are hired by Kering for the administration of corporate sustainability (Pavione et al., 2016).

The company boosted the practice throughout the organisation by placing targets in place in April 2012, to have them fulfilled by 2016. The report reveals a picture of both, growth and soft points. It has met only 15% of a 100% target to source gold from authorised sources. On the other hand, Kering has reached 99% of its aim to have all the collections free of Polyvinyl chloride(PVC). Keeping in mind the increasing production activities of the group, it has managed to decrease carbon emissions by 11% throughout its chain of suppliers, reducing waste by 16% and water usage by 9% curtailing the target set at 25% (Abnett, 2016). The group set a goal to get 100% of its leather from confirmed sources and achieved only 64%. Similarly, it tried to source 100% fur, crocodile and precious skins from authorised wild populations, and it touched 78%, 91%, and 41% respectively.

Kering invested in France Croco. It is a leading producer of tanned skins which enables Kering to yield crocodile skins for brands such as Bottega Veneta, Gucci, Alexander McQueen and Brioni (Martin Roll, 2017). Although crocodile trade has made significant progress in welfare, the report asserts that only a 'few genuine sources exist that match up to their standards' for precious skins (Abnett, 2016). Still, Kering maintains high standards for the well-being of animals. The company launched Python Conservation Partnership in a?liation with International Trade Center and the International Union for Conservation of Nature. This assists in widely improving the sustainable solutions of the python skin trade in the industry while safeguarding the livelihoods of local civilisations (Mars, 2017).

It also published and distributed an Environmental Profit and Loss account (EP&L) statement that enables to identify and assess the environmental impact of the industrial process, and take actions for change. Kering is the first luxury group that has taken the initiative to be transparent about the e?ects its manufacturing processes have on the planet. However, the shortcoming of the EP&L statement is that it is not as accurate as financial statements and are not recorded separately by each brand but as a whole (Friedman,2015). Therefore, it will be intriguing to see the impact of one brand of Kering as opposed to another. For instance, Gucci, with its large volume of leather products compared to, Alexander McQueen which is more apparel oriented. It comes with a disclaimer that states, "Because of its nature, the E.P. and L. cannot achieve the accuracy of financial results nor can it be subjected to financial audits.” Though, by releasing the EP&L, Kering has urged other luxury groups to take transparency seriously

The group received worldwide recognition due to its extensive plans to carry out sustainability. Luxury conglomerates including LVMH are following the steps of their strategy to slow down the opening of the stores. Instead, The company's approach is to focus on the quality of the store experience o?ered to the clients. In 2015, Gucci spent €2.4 million to switch to energy-saving lights (LEDs) in stores, indicating that Kering allocates substantial costs for sustainable initiatives. The same year, Dow Jones Sustainability Indices (DJSI) declared Kering as a leader in the Textiles, Apparel, and Luxury Goods industry. In January 2016, it became the first luxury group to be in the Corporate Knights’ Global 100 index for most sustainable companies in the world at World Economic Forum in Davos (AmChamHK, 2016).

Kering provides sustainable raw materials to all its brands through the Materials Innovation Lab (MIL) in Milan founded in 2013. By 2015, the lab had a catalogue of more than 1,500 samples of accredited sustainable materials. They partnered with Worn Again which strives to secure materials like cotton and polyester by recycling used textiles to create new garments. On a similar note, Balenciaga set an example for the same by using 1000 metres of fabric already in stalk to produce the collection of tote bags (Pavione et al., 2016). Besides this, leather and fine leather are obtained only from subsidiaries to prevent ecosystems from turning to pastures and also use 88% of their paper and packaging from verified sources.

Gucci developed a procedure to tan leather without the use of heavy metals that results in 30% reduction in water consumption and 20% less use of energy. However, the label tags of Gucci leather bags do not proclaim such. The Chief Sustainability O?cer at Kering, Marie-Claire Daveu focuses on sustainability being a business policy for the organisation and not a marketing strategy. She continued to emphasize that it is only the actual stakeholders like the investors, the employees and the executives that have to be assured of Kering's commitment to sustainable business practices (Avins, 2015). This is validated as no investing company wants their name attached to an environmental mishap or a human catastrophe like the factory collapse at Rana Plaza in Bangladesh (Avins, 2015). Furthermore, Italian brand Bottega Veneta is working on a method of traceability at every level of the leather acquisition. Up until now, the brand has got the certificate of traceability by the independent body ICEC that confirms the origin of the leather used in the production of bags (Pavione et al., 2016). Then there is Alexander McQueen using organic cotton for his creations and the animals rights enthusiast, Stella McCartney who does not use any fur or leather in her work. Alternatively, she uses organic cotton and wool, also depending on new technology to innovate and replace traditional materials (AmChamHK, 2016).

Another initiative Clean By Design' is introduced by the conglomerate for further development of the supply chain in association with Natural Resources Defense Council (NRDC). This program aims to diminish the total environmental carbon footprint of water and energy in the textile plants (Mars, 2017). In an interview with Hu?ngton Post, the CEO of Kering, François-Henri Pinault, said, ”I am actually convinced that sustainability or “doing good” creates value by o?ering ne

business development opportunities and stimulating innovation. I also believe that we will be more successful in the traditional business sense because we are becoming more resilient as a business in preparing for future challenges, like climate change (Mars, 2017).” Although all brands of the group have to follow the ethical practices given by their authorities, they also have objectives carried out individually to run a sustainable business. Therefore, some brands may have stronger credentials in sustainability than other brands. For instance, sustainability is the driving force of Stella McCartney while Saint Laurent does not give it considerable importance.

More recently, Kering remains committed to its ‘2025 Strategy’ which directs the company to accomplish the 3 C's. First, to Care about its e?ect on the environment and preserve natural resources. Second, to Collaborate with other forces to benefit the employees, suppliers and clientele by instilling equality between all genders. Lastly, to Create programs that encourage the future generations and retain its empowering heritage (Kering, no date; Martin Roll, 2017). It is, hence, thoughtful yet strategic of Kering to partner up with London College of Fashion’s Department for Sustainable Fashion, so together they can disseminate the significance of ethical processes among the future leaders of the fashion industry.

 

CONCLUSION 

A study on the leading players in the fashion industry ascertains that Corporate Social Responsibility is beneficial for customer retention and loyalty as it plays an indispensable role in the value proposition and securing competitive advantage in the industry (Corbellini & Marafioti, 2013). If an apparel company violates its customer's expectations of CSR, it impedes their loyalty and gives them a reason to switch to another brand and will be illegal through breach in policy.

Kering's overall approach is deeply rooted to grow an alliance between fashion and sustainability for the future across all its brands. Within this structure, each brand redefines the idea of luxury quality by taking note of the environmental interests at hand in each particular case. Though the company shows progress in minimising supply chains, still, it must know all its manufacturers and make regular appointments to ensure e?cient contact and communication. The representatives must be alert to identify indications of sub-contracting, especially if the factory does not have enough workers for the required output. Additionally, some companies use CSR as a mere marketing tool in their reports and therefore, customers cannot blindly believe them. Kering holds valuable credentials from verified authorisations that help gain the trust of the users. Henceforward, it could further attempt to get certified by the Non-Profit B Lab as a B Corporation that reaches meticulous standards of social and environmental enforcement (BCorporation, no date).

The Company should use any opportunity to contribute to not only financial but also social and environmental areas of their business. Beyond this, luxury groups are the epitome of innovating traditional methods and are leveraged to direct the industry towards a sustainable future.

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