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How François-Henri Pinault Unites Profits and Purpose

The chairman of Kering talks to BoF's Imran Amed about the blockbuster successes of Gucci, Saint Laurent and Balenciaga, streamlining his portfolio and his belief in ‘generous capitalism.’
François-Henri Pinault is the chairman and chief executive of French luxury goods powerhouse Kering, which owns Gucci, Saint Laurent and Balenciaga | Photo: Karim Sadli
  • Imran Amed

LONDON, United KingdomFrançois-Henri Pinault is smiling. We are chatting in the small bolthole in Kering's offices near London's Mount Street from which he manages the French luxury goods powerhouse, which owns white-hot brands such as Gucci, Saint Laurent and Balenciaga.

A meeting with Mr Pinault is always fairly relaxed, with none of the pomp and circumstance that can accompany face time with other bigwig fashion chief executives. He is also clearly a man with a heart, guided by a strong belief in what he calls “generous capitalism.” That’s not to say he is not interested in making money. His searing blue eyes reveal the intensity and drive that have enabled him to transform the company built by his father, the billionaire French businessman François Pinault, into one of the most profitable businesses in the luxury industry.

Indeed, the luxury fashion sector is booming again and Kering has been a big winner of the spoils. A week or so after our conversation, the company announced its first-half results for 2018, reporting record-high recurring operating income of €1.7 billion, up 53.1 percent year-on-year, on revenues of €6.4 billion, up 33.9 percent on a comparable basis, removing the impact of foreign currency fluctuations. (The fashion and leather goods group at arch-rival LVMH, too, registered strong growth, with revenues up 15 percent to €8.6 billion on an organic basis and profit from recurring operations up 27 percent to €2.8 billion. Both Kering and LVMH are outperforming the wider luxury market, which according to Bain & Company will grow by 6 to 8 percent this year.)

François-Henri Pinault | Photo: Karim Sadli.

While several of the group's brands have contributed to Kering's stellar results, 62 percent of revenues and 78 percent of recurring net income were driven by Gucci, the group's star brand, which has been on a winning streak unlike anything the luxury industry has seen since Gucci first reached megabrand status under Tom Ford and Domenico De Sole in the late 1990s. This time around, a new power duo of Alessandro Michele and Marco Bizzarri has transformed Gucci from moribund also-ran into one of the most influential fashion megabrands in the world. Bizzarri has made it clear that his goal is to grow the Gucci business to €10 billion in revenue, surpassing Louis Vuitton, the luxury fashion leader.

No wonder Mr Pinault is smiling.

His father, now 82, founded Établissements Pinault in 1963 as a timber trading company in the French region of Brittany. Over the next four decades he built the business into a highly diversified regional conglomerate, which at one point included Christie’s auction house, Aurora national life insurance and the famed Château Latour winery — as well as retailer FNAC, department store Printemps and mail order business La Redoute.

In doing so, François Pinault became a towering business figure in France. It’s perhaps no surprise, then, that young François-Henri was destined to work in the family business. It was just a matter of when and where. After graduating from HEC, the prestigious French business school, Pinault fils worked his way up from salesman in the timber and building materials division of his father’s conglomerate to chief executive of FNAC and eventually president and chairman of Artémis, the family holding company. In 2005, in search of a more operational role, he was appointed chairman and chief executive of PPR, named after the combined entities Pinault Printemps Redoute, the precursor to Kering.

François-Henri's strategy was to focus the group on luxury goods and lifestyle brands and he slowly shed several of the retail and distribution businesses acquired by his father. For the most part, the approach has been a success. But not everything has gone to plan. Earlier this year, Kering confirmed it was divesting itself of Puma in a bid to transform the company into an integrated pure-play luxury player after making an unsuccessful foray into the sports industry, competing with the likes of Nike and Adidas. The company also recently announced that it is parting ways with Stella McCartney, who will now go it on her own, and is disposing of controlling stakes in Christopher Kane and boardsports brand Volcom.

Now, Pinault is focused on maintaining the spectacular momentum of Gucci, Saint Laurent and Balenciaga, while accelerating growth at Alexander McQueen and revitalising Bottega Veneta under a new creative director — all while building a business where profits go hand-in-hand with a sense of purpose beyond making money, a philosophy he picked up from his time at FNAC.

Imran Amed: If you’re the son of François Pinault, there’s obviously a sense of responsibility and expectation. Did you always know you would go into the family business?

François Henri Pinault: My father didn’t put any pressure on me. When I was leaving HEC, I told him, “I just want to look at what’s in front of me and I will make a choice,” because I knew that at some point I would try the family business. I did some interviews at the time, with different types of institutions, but the one that was offering me the best opportunities in terms of responsibility was my family’s company. So, I quite naturally decided this is the best choice.

Before starting, I had a conversation with my father to define the rules because I didn’t want to work directly with him. For me, it would have been impossible. So the rule was that I would not report to him, having in mind that, of course, if I was reaching my targets, I could evolve in the company. But I was not to report to him, to make sure that things were nice and smooth, and he respected that very much. I started in 1987.

Sustainability is the new definition of quality. It is inherent to luxury. That’s the new normal.

I never asked for a promotion, but eventually they decided to give me one of the full business units. It was an industrial branch, manufacturing doors, windows, wooden floors, that type of thing. The thing is that part of this branch was undergoing a restructuring. Most of the businesses — there were 10 to 12 different companies — were bought at a bankruptcy. It was all a matter of restructuring.

That was a very brutal deep dive into the world of professional responsibilities, when you have to restructure in places where the unemployment rate is very high. It’s in the interest of the company to save some jobs in another part of the company by closing a unit somewhere. I was even retained for 24 hours by the working council of the company.

IA: Do you mean they held you hostage?

FHP: Not hostage, but I was retained. For almost 24 hours. I came to tell them that I was closing the business.

IA: How did your career progress from there?

FHP: At the end of 1990, they decided to give me full responsibility of the retail B2B distribution activities of the group. It was a bigger company, but it was the only company in the group that was directly built and managed by my father. So, I was very young, dealing with very strong people and very strong personalities that were very loyal to my father. It was quite demanding.

I was always compared: “Your father would have done this; your father would have done that.” But my father never put any pressure on me. It was complicated, but at the end of the day, all went well. I did things instinctively, intuitively. When you have a tough decision to make it’s easier to take the lead, because some people don’t like to take that kind of decision.

IA: Would you consider yourself quite decisive then?

FHP: Yes, because I had to be. It was the only way for me to become the boss, at least in the first half of my career when I was younger than most of the people reporting directly to me. The only way I could strengthen my position was to take decisions. I had to take decisions.

IA: You were lucky to have these very formative, on-the-ground experiences very early on. What did you learn from working with your father?

FHP: One of the key features of our group in terms of management is empowering people, giving them full responsibility. My father was an entrepreneur. That’s the only way he knows how to work and he built the culture of the group around that. Working with people, respecting people, trusting people. The company has always been based on trust. Trust — and of course control, but trust. It’s not something run by the books where you have processes and everything is written down. It’s really empowering to trust people and you, in return, are quite demanding, and of course you do the control afterwards.

In 1997, they gave me FNAC, a pure retail operation: books, CDs, DVDs, computers, electronics. I was discovering pure retail for the first time, coming from the world of B2B distribution and industry. FNAC had very strong values. I really loved running this company because it was not just about numbers and strict performance. It was also about responsibilities, not just towards your employees but also towards the industry they were in.

IA: Eventually you got a call from your father to take over the whole business.

FHP: I never had a discussion with my father, but I knew it would come in the due course of things. In 2003, someone who was very close to my father passed away, very suddenly. And my father was very impacted by that. And you realise how fragile the company could be if it’s not prepared for the next generation. He was 67. He was still young, he never took vacations, working since the beginning. And I was 41.

He asked me for dinner at a restaurant that we love to go together, a real French bistro. The whole dinner was for him to tell me that, “If I were your age, I would like to have the full power.” OK, fine. My only concern was: “But you are still young, what are you going to do?”

It was a surreal dinner where he was worried about me and I was worried about him. And, so, he told me, “I want you to take the lead and become the head of the family office.” And he said, “I don’t believe in two bosses. You have to be the boss. Don’t worry about me. I will find something else.”

On Monday morning, when I went to the office, he had completely emptied it out. He put the stuff that was in my office in his office and put himself in my office. He also gave me the key to his office with a keychain with three golden rings. First one was François, his first name; second was François, it’s me. And the third one, it was blank…

IA: It was his way of asking, who’s going to be the next in line!

FHP: This was in 2003. So I left what was PPR to go to Artémis, the family office, at the time. I was moving from running operations myself in different businesses to becoming a head of a mid-sized investment office, not too big. I was suddenly far from the operations, becoming a professional shareholder. And so I took the time to discover the other businesses. I realised I wanted to be involved in the operations, so I decided to take the position of being CEO of the main asset, which was PPR.

François-Henri Pinault | Photo: Karim Sadli

I realise that I [was lucky] to have a father who was so generous in terms of giving me the power. I look at other families where, you know, the founders, they go up until 70, 75, 80, 85 and only then succession arrives. You’re already 65 when you become the head. At the time I didn’t realise it, but now I see it. He did it because I was 40. It was the right decision. I realised later on that it’s very rare, that type of situation.

When I arrived at PPR, the business was huge because it was B2B, B2C and luxury. I took a decision — probably the biggest decision I’ve ever taken — to transform the group from conglomerate to completely integrated group, focusing on the most international business, which I felt was luxury, which was the smallest in size at the time.

IA: And that has shaped the strategy for the group ever since then?

FHP: As I saw it at the time, all those businesses together had no synergy between them. Between B2C, FNAC, retail operations, we also had the historical businesses, supply distributors, we had department stores, and then luxury and still some industry operations, the African division. This was because my father is a builder. He built the group in quite a small geography because at the time the world was not open. It was too difficult to become international. He was finding diversification through the different businesses together. So, the group was very resilient because the business models were very different.

But still, the group was very dependent on western Europe. At the end of 2004, the business had €21 billion of revenues. Seventy-five percent was in western Europe and 55 to 60 percent in France, but across different businesses. This diversity of businesses was giving resilience to the group. When I looked at that, I thought there was another way of playing that resilience, playing that diversity of risk. It’s to go international, but in a much more restricted number of businesses.

This was feasible in 2005 because of the globalisation of the economy. Luxury was already the most international business that we were in. It was already all over the world, through Gucci mainly. The barriers to entry for luxury were also much higher because of the brand component of the business. Whereas with retail operations, it’s more scalable, but the barriers to entry were very low and it was very difficult to internationalise. So, I told the board that I would sell over time the businesses to concentrate on luxury.

IA: How does the vision that you had in your head, when you took the keys in 2003, compare to the actuality of the Kering business today?

FHP: Let’s be very humble. At the time, even though the luxury market was growing at a very decent pace, I didn’t imagine the luxury industry would be as big as it is today. If we wanted scale, we needed to add to the luxury division another leg that would scale. I looked at [the options]. One was cosmetics, but it was already very much concentrated, so it was a bit too late. The other one was sports and so I bought Puma. But then over time, the luxury market grew so fast with the emergence of Asia that you could build a completely scalable company around luxury, and this is how I decided to demerge Puma.

IA: You’ve also made some decisions this year to further rationalise your portfolio. There has been the announcement that Stella McCartney is buying back the portion of her brand owned by Kering, and also the recent announcement that you’re in discussions to do the same with Christopher Kane. What is your vision now as you’re shaping your portfolio for the next 10 years?

FHP: It’s not for the same reasons. We review the portfolio every year, and think about what should be our next move, for instance with Sergio Rossi a few years ago. I don’t want brands competing with each other. And at some point with the growth of almost all of my luxury brands, the shoe category was very well developed in Saint Laurent, in Gucci, even Balenciaga. And Sergio Rossi was there to be the specialist in shoes, but it started to compete with them. Before it is too difficult to manage, I’d rather dispose of it to avoid that that type of situation that could destroy value. So that was why I disposed of Sergio Rossi.

With Stella it was discussion about the older times. At the beginning we were 50/50 because Stella told Domenico De Sole at the time, and she told me in 2005 when I met her, “At some point in time we will have a discussion to see if we stay like this or we do it another way.” And we had those discussions quite regularly. On top of doing business together, we are also close friends.

We had discussions every four or five years with Stella, and last year she said, “Well, I’m thinking about it. What do you think? Is this the right moment?” And I said, “If you want to do it, do it! The brand is significant in terms of size to be a standalone brand and it is very profitable, so it’s feasible. But Stella, you have to have in mind what the group brings, what you won’t be able to get without a group.” At the end of the day she decided to do it and I agreed, no problem. But again, this goes back the 50/50 decision in 2001, it did not come as a surprise and it was not a problem for me.

What is the DNA of the brand? The brand is symbols, icons — it’s never a style. The style is the interpretation.

What is different today, when it comes to smaller brands, is that as the group is evolving in terms of size, with each brand growing very fast, all of the shared services operations that were happening in the group were at a different scale. And where we were very efficient in nurturing young brands in the early 2000s under the cover of Gucci — Stella McCartney was a start-up, Alexander McQueen was also a start-up, Balenciaga was €35 million in revenue, Bottega was €25 million — it was quite adapted to that.

But those operations grew with the size of the group and we realised that we were not able to bring very strong support to young brands because the organisation was built to deal with brands that are very structured and not just start-up brands. It created some difficulties as the [smaller] brands were much more flexible going directly themselves, dealing with suppliers or in terms of product development. So at some point in this discussion, we asked, “What’s the point of owning a small brand that is not benefitting from the size of the group?”

IA:  Is that the situation with Christopher Kane?

FHP: With Christopher Kane, since the beginning we had the [controlling share] of the brand, but they kept a significant share. We had a discussion and realised that the group isn’t bringing what they thought the group would bring. And we agreed with that. I said, “What do we do?” And Christopher and Tammy said let’s talk about [exiting the group].

IA: Let’s go back to the bigger brands. One of the things that’s really helped to power these brands is the decisions you’ve made around the creative choices, most notably Alessandro Michele at Gucci. How do you get involved in these decisions?

FHP: The first thing I did when I took the decision to change the management and the creative direction of Gucci was to appoint the CEO. So I appointed Marco. I said to him, “Take a month, look at it and let’s talk together about how you see the direction we should take.”

We agreed that if we really want to achieve something with Gucci, we needed to change the creative direction in a significant way… to create a rupture. The best time for Gucci was when it was a real fashion authority. We had lost a little bit of that. If we wanted to come back strongly, we needed to change our creative direction with a completely new vision.

I said, “Marco, the first consequence of that is that we cannot go for existing big names.  So let’s look at someone new.” We didn’t know how to do that, but because of course, as soon as I announced the departure of Frida [Giannini], I had phone calls from everyone [saying]: “You should take this one or this one.” Creative directors were calling me themselves, sending me messages directly or indirectly. We didn’t have discussions with any of the big names.

And then when Marco was introducing himself to all the teams at Gucci, Alessandro came and said, “Can I be a candidate for the position?” And Marco said, “Why not?” And I remember he called me immediately after his first meeting, he said, “François-Henri, I saw a guy, he is like an extra-terrestrial. Can you see him?”

Marco Bizzarri, Francois-Henri Pinault, Salma Hayek and Alessandro Michele | Source: Getty

I said, “Tell him to bring something to show me because I need to see things.” He came to see me in London with a mood board that had everything except clothes. He didn’t talk about accessories or clothes. He was talking about his impressions; what he likes; the type of heart he likes; what makes him very emotional when he does things. And he told me about his understanding of Gucci. What was amazing with him — and this is where we built our way of recruiting designers — was his deep knowledge and understanding of the brand combined with a very strong, personal creative universe. You put the two together, and…

I discovered through that experience that the formula that is overrated is the “DNA” of the brand. Through that term, people imprison themselves. “This is the DNA of the brand, we need to respect the DNA.”  What is the DNA of the brand? The brand is symbols, icons — it’s never a style. The style is the interpretation of something, and if you think that the style of the brand has to be respected, you never move forward.

Look, Gucci was very strong. It was described as: “This is the DNA of Gucci with Tom Ford. Hyper-sexy, empowerment of women, perfect.” That is the opposite of the world of Gucci today, but it is the same brand, the same consistency, the same sincerity. This demonstrates that a brand can evolve radically and still be true to itself. This is very important because some brands are not evolving because of the [false] constraints that are put on them.

IA: Yes, I agree. The world is shifting so quickly now that radical creative disruption is an essential part of the way luxury brands need to respond.

FHP: We are the latecomers in the luxury industry — not as brands, Gucci is an old brand — but with most of the other brands, if you think of Bottega Veneta, it was created in 1966, but what was left from 1966 in 2001? Almost nothing. The brand, in reality, was re-founded by Tomas Maier in 2001.  Balenciaga, of course, it is old with Cristobal, but from 1969 to 1997, the brand had completely stopped. So, in reality there is a heritage, but not to the same extent of the other brands. So when you cannot rely purely on heritage, what do you do?  At the time it was all about heritage and craftsmanship.

The mission of the luxury industry is to show the way. And it’s to take creative risks. I think luxury up to a certain point in the period between 2008 and 2010 forgot that; it became something very much immobile, with a great marketing skill on some points, but things weren’t moving a lot, [we were] forgetting that creativity is the essence of luxury. It’s part of the definition of luxury and this industry has to take creative risks to be relevant. If you stop taking those risks, what’s your purpose in this industry? Nothing, nothing.

And of course everyone talks about creativity, but when I mean creativity, everything has to come from it. So everything has to be encompassed in that creative vision. Not only one category or one sort of product, all the product categories and all the image and all the touchpoints of the company. That’s the vision that we develop inside the group as we [talk about] modern luxury. If there’s no risk, I don’t see how you can sustain the reward.

IA: The reward can be very big. When I saw those first full-year numbers with 50 percent growth at Gucci, a brand of that scale in the billions of euros to grow that quickly, it’s kind of mind-blowing! Were you expecting that kind of impact?

FHP: Not that much. We were expecting to come back on very strong growth, because we had a strong network. One of the key assets of a luxury brand is its distribution network. As soon as you have the right product to distribute, the sales go up immediately. If you look at the size of the distribution network of Gucci and apply reasonable sales density on that network, we have the potential to be much bigger. If we were to have success with our collections, we’d be able to grow for sure.

What was not expected was the structural transformations in the market, the rise of millennials, which had, on average, represented around 30 percent of the market. Suddenly, within two to three years, it went from 30 to more than 50 percent, at least for Gucci, Saint Laurent and Balenciaga. It’s interesting to see that all my successful brands are enjoying the same strength in that age bracket.

What characterises millennials is that they are very much still in the self-expression phase of their life. When you’re 25 and you’ve finished your studies, you are in the pilot seat of life. Plus, it’s a generation that is much more emotional. And when you put out very strong creativity, it could be polarising. You get a lot of attention. The other component of that generation, in terms of art-de-vivre, is that streetwear is a dominant category for them — not the only one, but the dominant category. So if you propose [something] strong, creatively speaking, in addition to what you propose in terms of community — a streetwear category — then this significant result is what you see.

IA: The other thing that really connects with millennials is that they are also seeking purpose and meaning. Going back to your experience at FNAC — where you were part of a business that was performing extremely well, but also a business that stood for something; something that was bigger than just profit — how has that shaped the way you think about Kering, even down to the name that you chose for the group when you renamed it Kering?

FHP: That’s right, that’s right. Well for me, there’s no alternative to that. Everything we started in this field, in terms of non-profit activity, was started between 2006 and 2007 — so very, very early in the process. For me, I cannot consider business without that dimension. A modern corporation has to have that dimension or it won’t last.

IA: Why do you believe that?

FHP: Because it’s an evolution. It’s what I called generous capitalism. Capitalism, per se, pure capitalism, is gone. You cannot sustain that type of behaviour. We need to be in a capitalism that is generous, that is embracing its own social responsibilities towards employees, towards the environment. It’s part of the definition of a corporation. You cannot start a business without that. I really do believe that.

When I decided in 2005 to transform the group into a luxury group, I realised the group was more and more [centred around] women, if only because the vast majority of our customers are women, but also, because our employees are mostly women. That was one thing.

If you really want to have an impact on the planet, you cannot do this alone; alone you won't change anything.

At the same time, I discovered the reality of violence against women. I must say that, for me, before that, I thought it was something that was far away from my own country and was much more in the developing world. I had no real idea of the situation. Then thanks to my wife and meeting different people, I realised the situation, which was absolutely crazy. One woman out of three will be a victim of violence in her life. And it’s the same, poor country or rich country, exactly the same, whatever the social class. In 2006, no one was talking really about that. I thought this is something where a private corporation could really do something.

IA: That’s a pioneering point of view to have. Why should a private company like Kering take a position?

FHP: No one was talking about it, governments were embarrassed. And I thought, even a small corporation like us, we can really transform things on that topic if we embrace it. When you find a cause to defend, one that is very close to who you are as a corporation, then you are really well positioned to do something meaningful. And this is why the cause of women [is meaningful] when it comes to Kering, because it’s about who we are.

IA: What are the accomplishments or outcomes that you are most proud of vis-à-vis some of the women’s causes?

FHP: We organised things in threefold.

One is the Kering Foundation, which is really to fight against violence against women. So we bring our reaction to the outside world, help the cause of women and work with agencies that are really out in the field — and things are evolving.

Two years ago, the Kering Foundation contributed to fund the building of The House of Women in Saint-Denis, close to Paris. I met with one of the very few surgeons that specialised in reconstructing victims of female genital mutilation and he explained to me that in a country like France, based on a conservative assessment, 5,000 to 7,000 young girls are mutilated every year. We built a clinic to [help these victims].

That’s the Foundation. At the same time, we have “a status of women at work.” So this is internally where we see there is a lot to be done. It’s about gender parity. It’s about equality of chance. It’s about adapting more processes to the lives of women. The idea is to experiment inside Kering, to be the employer of choice for women. If we are able to attract the most brilliant women because of the environment of work that we propose, the performance would be outstanding. For instance, we want to improve the situation in terms of parental [leave] policy. Of course France is a very advanced country, but we extend the [French policy] all over the world, so 14 weeks of maternity leave or five days of partner leave.

The third pillar is “women in motion,” which is what we do with the movie industry — which is an industry close to the luxury industry of course — where the situation of women is so depreciated that we decided to partner with the Cannes Film Festival to give this issue more visibility.

Francesca Bellettini and François-Henri Pinault | Source: Getty

IA: You referenced the #MeToo movement, which started in the film industry and sparked a reckoning in industries all over the world, including fashion. Do you think the fashion industry has reacted significantly enough to all of the issues that have come up?

FHP: Well, there was some visible change [with some] big names. But wherever it happens in our industry, when you look at the casting firms, model agencies, not much. So, what we did last year with LVMH — The Models Charter — was a first step. The main point was not to say it’s about sexual harassment. But by protecting the models, we avoided some situations related to sexual harassment. To start with, [change] has to be done inside the brands. Inside the brands it’s very clear: people are fired immediately. People can call on an anonymous basis the ethics committee of the group — and most of the calls aren’t about that by the way.

IA: Have you taken any action like that where you’ve had to immediately fire people?

FHP: Yes.

IA: So you think it’s working?

FHP: It’s difficult because what changed in the movie industry was that courageous women decided to talk. We’re not there yet in the fashion industry, but it’s coming up. People now do think that this is unacceptable. It will come for sure.

IA: So, let’s move onto the last topic which is around sustainability. I think where a lot of businesses have a challenge is that they see it as a zero-sum game. So either you do things to help the environment and that necessarily impacts your profit. And, even if they want to do something, it’s such a complex issue, they don’t even know where to start. How did you start thinking about tackling this issue and how did you think about the trade off?

FHP: One thing that I discovered very early on was that if you really want to be sustainable without impacting your profits, you have to start that type of thinking at the very early stages of what you do, which in our industry is at the creative level. If those values are not integrated at that stage, then you will bring them afterwards and this will cost much more.

The first thing I did in 2007 was to personally see each of the creative directors of the group on a one-to-one basis, to discuss this. Their teams said “They will never accept that. It’s a constraint for the designers. Be careful.” And I said, “Okay, fine. I’m going to talk with them.”

And funny enough, they were so happy to have that discussion with me. They were so advanced in thinking and they said, “But I thought the corporation would never go [in] that direction!” So, it was a complete misunderstanding. I remember for instance, when meeting with Tomas Maier, I said, “How would you react if we were to decide to completely get rid the PVC in our industry?” Because I knew that they were using it. And Tomas said, “That’s a great idea!” and in less than a year, he took everything out of Bottega Veneta that was related to PVC.

But of course, in the process of doing this, there were situations where times get tough, where I say, okay, guys it costs a little bit more. The thing is that we are not engineers. We’re not specialists of sustainability in a luxury company. So, it’s difficult for us to find that perfect solution that fits the corporation’s targets and fits the sustainability targets, but when we’re facing a tough situation like this… What is our mission? It is to find ways to make sure that the sustainable solution can be viable, economically speaking. What can we do to lower the cost and keep the sustainability targets? It’s a completely different mindset. People are very excited about this.

If you stop taking those risks, what's your purpose in this industry? Nothing, nothing.

It creates a very strong push for innovation when you think like this. I remember, for instance, in Boucheron when we said, how can we use more and more ethical gold? We can, but it’s 25 percent more expensive. A regular corporation would say, “Okay, maybe one day but not now, it’s too soon” and you stop. Whereas at Kering we say, “Okay fine. That’s the situation. Now let’s put our creativity and our imagination to use on how we can lower this 25 percent. Let’s understand why it’s 25 percent. What can we do to lower it? We lowered it to two, three percent. I think at the end of 2020 we’ll be at 100 percent ethical gold.

In the first few years I had to push myself very strongly. I had to put in place an incentive for that, but now it’s part of the culture of the group. I don’t have to push. Today, the brands come to me and say “this is what we did.” Wow. I didn’t even ask for that. When Marco came to me last September with Alessandro and said, “We’ve decided to stop fur!” I’m so happy about that. I didn’t ask. Now it’s coming from the brands.

IA: You’ve set very ambitious targets for 2025 to cut carbon emissions by 50 percent and reduce Kering’s environmental impact by at least 40 percent. What are the greatest challenges that you face now in achieving those targets?

FHP: Making our targets public is something we started in 2012. At some point with [chief sustainability officer] Marie-Claire Daveu, we said we're going to make them public.  Some people said, "Don't do that, we won't achieve them."

But it’s not the stock market. We have to set an ambition and we’ll do our best to reach those targets. The probability that we won’t reach a target is very high, but at least we try. And I guarantee you that we will achieve more than if we were not to make them public. When we released the first results, some of the targets were not met, but for instance, with the 50 percent reduction [in carbon emissions], we know how to reduce roughly half of that. The other ones we don’t know and it would have to come through innovation, creativity, imagination [and] working in networks with young companies, because otherwise there is no way we can achieve that.

IA: Do you think consumers care about that stuff?

FHP: With the new generation it’s the normal. If you stay as we were a few years ago, you will be abnormal. So, it’s not to be better than the rest. This is just the new normal. I don’t expect people to praise me about that, but I would be punished if I don’t do it. That’s for sure.

IA: And finally, the other criticism that you hear from people in the environmental sector is that when companies pursue strategies like this, it’s really about greenwashing. How do you respond to that kind of criticism?

FHP: I agree, that’s a big danger. At the beginning, I said to the team, “Okay, we’re going to go in that direction, but I don’t want any communication because I don’t want to be accused of greenwashing. We do things because that’s what we believe is right. I don’t need to communicate what I think is right. It’s only my own concern.”

For the first two to three years, we didn’t communicate at all. But then, I remember a discussion with [chief executive of Puma] Jochen Zeitz and he was saying, “It’s amazing what Kering has achieved in such a short period of time. And you know what? You have a responsibility to influence others to do at least part of what you do. And the only way to do that is to communicate. It’s your responsibility.” He was calling that the “leadership responsibility” of the group. If you really want to have an impact on the planet, you cannot do this alone; alone you won’t change anything.

And this is where we changed our vision. Okay, now we’ve got to communicate and be completely transparent on what we do, for example, sharing all our findings when we did the Environmental Profit & Loss. It has cost us millions to put in place a methodology and it’s free for the community. That’s part of the vision. And the communication, at least when it comes to Kering, is absolutely linked to that, to influence all those corporations to move in the right direction and to also give them the [information] if they want. We have developed techniques to get rid of heavy metals in the tanning process. It took us three to four years at Bottega and Gucci to find this. This is available to everyone who wants to use that.

Sustainability is the new definition of quality. It is inherent to luxury. That’s the new normal. And it’s also part of the duties that we have as luxury brands — not only to show the way in terms of creative thinking and creative innovation, but also in terms of sustainability. You cannot make 30 or 40 percent profit if you don’t do that at least.

This interview has been edited and condensed for length and clarity.

This article appears in BoF's latest special print edition.

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