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Gucci Looks to Set a New Trend on Carbon Neutrality

The luxury giant will pay millions of dollars every year to offset the emissions it can’t eliminate from its supply chain.
Gucci Pre-Fall 2019 campaign | Source: Courtesy
By
  • Sarah Kent

LONDON, United Kingdom — Luxury's coolest brand, Gucci, is pouring millions of dollars into a programme to become carbon neutral, as scrutiny on fashion's climate impact gains momentum.

The Italian company is in the midst of a ten-year plan to slash its emissions in half by 2025, but it said on Thursday it will go a step further, paying to mitigate the emissions it can’t eliminate across its supply chain in a nod to the seriousness of the current climate challenge.

"We still consider the best option is always to reduce the impact, but at the moment it's impossible to achieve in the time necessary to make sure the planet is not going to burn," Gucci Chief Executive Marco Bizzarri told BoF. "The idea is to offset until we are able to do that."

Last year, Gucci said it offset 1.4 million tonnes of carbon dioxide equivalent at a cost of $8.4 million — a fraction of the €3.5 billion ($3.9 billion) the company generated in earnings before interest, tax, depreciation and amortisation. That money will be split between emissions reduction projects that aim to conserve critical forests and ecosystems that act as carbon traps in parts of Peru, Kenya, Indonesia and Cambodia.

It's a bold move from a company that is positioning itself as a climate leader within the industry. Its efforts are supported by parent company Kering SA. The luxury conglomerate has been tracking and analysing its brands' environmental impact for years. Its chief executive François-Henri Pinault spearheaded fashion's latest sustainability pact, presenting it to the G7 in Biarritz last month. So far, Gucci is the only one among its stable of luxury brands to declare it will be carbon neutral.

We still consider the best option is always to reduce the impact.

Still, as Kering's largest and most successful brand, Gucci has shown that where it leads, others may follow. For many, Bizzarri's withering take-down of fur, which he described as "not modern" in 2017, heralded the start of the latest wave of fur bans across the luxury industry.

The company’s new carbon neutral initiative puts Gucci ahead of many of its competitors on an issue that is becoming increasingly pressing for fashion brands. While the industry has historically avoided political scrutiny, it is now finding itself the target of rising calls for regulation.

Meanwhile, consumers are increasingly critical of fashion's negative environmental impact, especially as high-profile disasters like the recent Amazon wildfires have tangentially embroiled the fashion world. Both H&M and VF Corp., the owner of Timberland, Vans and The North Face, said they would stop purchasing leather from Brazil in light of the environmental concerns highlighted by the fires.

“One thing that is game-changing is that [Gucci is] taking climate action now,” said Elisa Niemtzow, managing director for consumer sectors at non-profit consultancy BSR, noting climate scientists’ prediction that there is only a small window remaining to mitigate global warming if the world is to avoid catastrophic climate change.

One thing that is game-changing is that [Gucci is] taking climate action now.

Still, Gucci faces a delicate balancing act in delivering on its climate ambitions and continuing to enjoy the stellar growth that has turned it into one of luxury's buzziest brands. Kering monitors its brands through an annual environmental profit & loss report, which quantifies the companies' climate impact in financial terms. Last year, the value of Gucci's climate impact rose to €289 million ($318 million), a near 80 percent increase since 2015. On the other hand, the brand's impact relative to growth has been coming down steadily, and declined 8 percent year-on-year.

“There is an elephant in the room,” Niemtzow said. ‘The industry still needs to more proactively address the question of whether we are making too much product and […] can we have viable financial performance, enjoy fashion and make fewer things.”

Bizzarri said he recognises the tension, but argues the situation is more complex. Gucci employs thousands of people and is an important part of the luxury economy.

“The best way to reduce is to close the company, but if I close the company, no doubt I reduce the impact but it has an impact on the other side to people,” he said. The company said offsets are currently the best solution to a tricky problem. At the same time, it is continuing to work hard to reduce its impact outright.

This initiative is a drop in the ocean if nobody else will join what we're doing.

All of the company’s operations, stores, offices and warehouses will run on renewable energy by next year. The ongoing shift away from fossil fuels reduced the company’s emissions by nearly 46,000 tons of carbon dioxide last year — a tangible improvement, if still a fraction of the amount the company still needs to offset. It is working on programmes with its suppliers and manufacturers to reduce their impact too, investing in technologies that will improve operations and working to diminish the amount of waste generated. At the same time, the company is re-evaluating the materials it uses to focus on sourcing the most ethically and sustainably produced fabrics and fibres available.

Gucci is not the first fashion company to say it will go carbon neutral, but it is perhaps the most high profile. Californian footwear brand Allbirds said earlier this year that it would offset its own emissions by paying for projects to reduce the carbon dioxide in the atmosphere, such as tree protection programmes. LA-based Reformation says it has been carbon neutral since 2015, and even sells carbon credits on its website. Gucci has also gone further than many others by taking steps to offset the emissions from all along its supply chain, where most of the industry’s pollution occurs.

Still, for the industry to get on track with efforts to halt global warming, far more action will be needed. Even as conversation and debate around the issue is heating up, progress is stalling, according to a recent report by the Global Fashion Agenda. Even if offsets are no panacea, they are perhaps better than nothing.

“Even as a big company, this initiative is a drop in the ocean if nobody else will join what we’re doing,” Bizzarri said. “We cannot wait to be perfect to act — it’s too late.”

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