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Kering Open-Sources EP&L Methodology

Kering logoMore than 93 percent of Kering’s environmental impact falls within its supply chain, according to its Environmental Profit & Loss (EP&L) Methodology and 2013 Group Results. The EP&L is the company’s monetary valuation of the environmental impacts across its operations and supply chains.

Kering, the French luxury goods holding company owner of Alexander McQueen, Balenciaga, Brioni, Gucci, Puma, Volcom and other luxury, sport and lifestyle brands has made its seven-step EP&L methodology publicly available in an open-source format to support the development of corporate accounting of natural capital and the Natural Capital Protocol (NCP), an initiative that aims to transform the way businesses operate through understanding their impacts and dependencies on natural capital. The NCP will be published in 2016 and will provide guidance on how companies can measure and value different types of impacts and dependencies for different business applications.

The EP&L is a new way of estimating the cost to society of the changes in the environment resulting from businesses’ activities across the entire supply chain, Kering says. 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 and its suppliers. It is not related to financial results or reporting.

Other results from the 2013 Group EP&L include following:

  • Within Kering’s supply chain, 26 percent of the environmental impact is associated with raw material processing (tier 3). 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 Kering’s total impact, 35 percent comes from GHG emissions, 27 percent from land use, 25 percent comes from leather and 17 percent is linked to cotton. 

In response to the EP&L analysis, Kering has been focusing its efforts on more sustainable production of key raw materials, developing solutions for improved manufacturing processes, and implementing actions to enhance efficiency in its stores and facilities, as well as in the transport of goods.

Puma released the world’s first EP&L in 2011.

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