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Date: 2024-06-13 Page is: DBtxt001.php txt00013274

Environmental Accounting

Kering Releases EP&L Methodology to Encourage Wider Adoption of Natural Capital Accounting


Peter Burgess

Kering Releases EP&L Methodology to Encourage Wider Adoption of Natural Capital Accounting

Image credit: Kering

Today, Kering released the results of its Environmental Profit and Loss Account (EP&L) — measuring the environmental footprint of its operations and across supply chains — and released the methodology as an open-source tool to encourage other corporations to clarify their impact on the environment. Kering is sharing this work to support the development of corporate accounting of natural capital, and the Natural Capital Protocol, a cross-sector industry initiative developing a global methodology for environmental accounting.

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Through the EP&L, Kering — parent company of Alexander McQueen, Balenciaga, Gucci, Puma, Volcom, and other luxury, sport & lifestyle brands — analyzed its impact on natural capital from raw materials to product delivery, including logistics and retail locations. The company says this assessment illuminated the cost of various activities, enabling better decision-making. In doing so, Kering was able to reduce its impact and respond to changes in its supply chain, including fluctuations in raw material quality and availability.

“Kering is sharing our EP&L work as transparency and collaboration are needed to scale solutions which will help solve problems of scale, like the depletion of natural capital,” said François-Henri Pinault, Chairman and CEO of Kering. “Our EP&L has already served as an effective internal catalyst to drive us towards a more sustainable business model. I am convinced that an EP&L, and corporate natural capital accounting more broadly, are essential to enable companies to acknowledge the true cost on nature of doing business. It highlights where there are environmental impacts and also business opportunities, to then enable informed strategic decision-making that will underpin a more resilient business in the face of current and future environmental challenges resulting from climate change.”

The Kering EP&L Methodology and 2013 Group results report, with the support of Kering’s brands and PwC, outlines a seven-step process to help companies create an EP&L. The report also presents the consolidated Group EP&L results based on 2013 data and highlights key actions taken so far by the Group and its brands to mitigate its impacts on natural capital.

Kering says the EP&L report is unrelated to financial results or financial reporting. Rather, it’s is a new way of estimating the cost to society and the environment resulting from business activities across the supply chain. Environmental impacts are measured through greenhouse gas emissions, water use, water and air pollution, waste production and land use changes linked to Kering’s operations (retail, offices and transport) as well as those of its suppliers, from raw materials through to manufacturing.

The 2013 Kering Group EP&L account revealed the following:
... 93 percent of the environmental impact falls within the supply chain, and over 50 percent of the impact associated with raw material production (Tier 4 suppliers).
... Within the supply chain, 26 percent of impact comes from raw material processing (Tier 3), while manufacturing and product assembly (Tiers 1 and 2) accounts for 17 percent of the total impact.
... 7 percent of the impacts are associated with Kering’s operations including retail (Tier 0).
... Of the total impact, 35 percent comes from GHG emissions and 27 percent from land use, and
... 25 percent comes from leather, while 17 percent is linked to cotton.

If Kering operated and sourced as a typical company of its sector, its EP&L would have been 40 percent higher. Kering is outperforming its sector in terms of reducing its footprint and, further, Kering's environmental impacts are less than 45 percent of the global average business based on comparative turnover.

In response to the EP&L analysis, and as part of its overall sustainability commitment, Kering has been focusing on sustainable production of key raw materials, developing innovative solutions for improved manufacturing processes, and enhancing efficiency in its stores and facilities, and transport of goods.

“The EP&L analysis provides us with critical new insights into our business — highlighting where we can design and implement innovative solutions to mitigate our environmental impact, while creating new business opportunities,” said Marie-Claire Daveu, Chief Sustainability Officer and Head of international institutional affairs. 'At Kering, we believe that it is important to be transparent with our peers and stakeholders as it is only through collaboration that we will be able to scale sustainability solutions and make a difference beyond our own business and supply chains, for society and nature more broadly.'

Kering is working to reduce its footprint from a variety of angles: In April, the Group partnered with with H&M and Worn Again, a textile upcycling company, to create a circular resource model for textiles.
Caitlin Kauffman is Sustainable Brands' acting Editorial Assistant. She recieved her Bachelor's in International Relations and Peace and Conflict Studies from CU Boulder. She has written for several publications including Sierra Magazine and O.A.R.S. As a women's health educator she… [Read more about Caitlin Kauffman]

by Caitlin Kauffman
May 19, 2015
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