increasing importance of traceability for the luxury goods ... · quick global overview source:...

BIOTRADE CONGRESS INTEGRATING REDD+BIOTRADE STRATEGIES

December 12th

Session 4: Value chain enhancement

Filippo Nishino - Supply Chain Operations Project Manager & Rossella Ravagli - Head of Corporate Sustainability & Responsibility Gucci

AGENDA 12

• CSR Gucci Strategy

• Analysis of the context

• Partnership Conservation Python

GUCCI’S STRATEGIC PILLARS

“Made with Integrity” as a brand value


Environmental Management System Sustainable Products

HUMANITY ENVIRONMENT

Stakeholders Engagement

Training / Education

Reporting

NGOs, Universities, Trade Unions, Government

Employees, Suppliers, Consumers

Sustainability Reporting, EP&L

ENVIRONMENT

Human & Workers’ Rights Community & Donations Soustainable Products

HUMANITY

CSR

& SUSTAINABILITY

GUCCI’S DRIVERS

GUCCI’S MISSION

GUCCI’S VALUES

Sustainable Products

Human Resources Supply Chain

Management

Environment &

Biodiversity

Community &

Donations

Reporting Training Stakeholders’

Engagement

Human Rights

Gucci CSR Pillars

GUCCI CSR & SUSTAINABILITY LIFE CYCLE POSITIONING

CSR & SUSTAINABILITY PHASES

INFORMAL

CURRENT

SYSTEMATIC

INNOVATIVE

Ethic Code

Social Reporting

Philanthropy

Certifications

Monitor social and

environmental impacts

Stakeholders

engagement

New welfare initiatives

Research of innovative

and competitive solutions

Identify and anticipate

new environmental and

social needs

CSR as a real and

effective strategy to

conduct the business

Occasional Activities

Integration of CSR activities

with corporate strategy

Environmental Profit & Loss (EP&L) Carbon Emissions

Leather - No New land conv. Responsible Skins and Furs Sourcing Minerals & Diamonds Sustainable Sourcing Waste Generated PVC Elimination Toxic & Harmful Substances Elimination Sustainable Paper and Packaging

Environmental Profit & Loss

Evaluating employment conditions

GHGs

Water

Raw materials

Toxics and waste

New business models

Sustainable products

Empowering people and communities

KERING PUBLIC TARGETS - 2016/2020

Some Gucci’s supply chain projects

ENVIRONMENTAL PROFIT AND LOSS … A BROADER SCOPE

Retail

CO2

Water use

Waste

Water quality

Air pollution

Toxics

Land Use

Current

environmental

reporting

Deeper in the supply

chain

Expand

reporting

elements

Raw

Materials

Processing Operations Consumer

use

and

end-of-life

Manufacturing

In scope for E P&L + translate these impacts into cost

(EURO)

In scope for E P&L

Operations Management

Model

In sourcing

Mixed (in sourced & outsourced)

Outsourcing

UE Country Sourcing Strategy Global Sourcing Strategy

(-)

Sup

ply

Ch

ain

& In

no

vati

on

Pro

cess

Co

ntro

l (+)

(+) Quality & Value Perception (-)

SC Footprint Control

Margin Impact

VERY HIGH

VERY LOW

HIGH MEDIUM MEDIUM

LOW LOW

HIGH VERY HIGH

LOW

MEDIUM HIGH HIGH

MEDIUM MEDIUM

Margin Impact

Supply Chain Flexibility

MEDIUM

HIGH

LOW

SUPPLY CHAIN’S ROLE IN FOOTPRINT CONTROL & PERFORMANCE MANAGEMENT


Investments & Leverage



Model

In sourcing


Outsourcing

UE Country Sourcing Strategy Global Sourcing Strategy

(-)

Sup

ply

Ch

ain

& In

no

vati

on

Pro

cess

Co

ntro

l (+)


Margin Impact

VERY HIGH

VERY LOW

HIGH MEDIUM MEDIUM

LOW LOW

HIGH VERY HIGH

LOW

MEDIUM HIGH HIGH

MEDIUM MEDIUM

Margin Impact


MEDIUM

HIGH

LOW


Low SC & Operations control / High quality

perception if communicated

Operating Margin improvement

Medium Innovation capabilities + SC Footprint Control + Margin improvement vs medium

leverage and SC Flexibility

High Innovation capabilities + SC Footprint Control + Margin improvement vs higher leverage and lower

SC Flexibility






Model

In sourcing


Outsourcing

UE Country Sourcing Strategy Global Sourcing Strategy (-

) Su

pp

ly C

hai

n &

Inn

ova

tio

n P

roce

ss C

ont

rol (

+)


Margin Impact

VERY LOW

HIGH MEDIUM MEDIUM

LOW LOW

HIGH VERY HIGH

LOW

MEDIUM HIGH HIGH

MEDIUM MEDIUM

Margin Impact


MEDIUM

HIGH

LOW



GUCCI:

MADE IN ITALY WITH DEEP SC INTEGRATION TO DRIVE SUSTAINABLE GROTWH




Analysis of the contest THE TRADE IN SOUTH-EAST

ASIAN PYTHON SKINS

ILLEGAL TRADE

-There is strong financial incentive for illegal trade in python skins. -Hunters are typically poor and hunt pythons as an additional source of income.

CAPTIVE BREEDING

The cost of breeding, feeding and maintaining skins to reach slaughter size appears much higher than the market price.

TRACEABILITY

There are currently discussions at international level, i.e. CITES, about the need for a traceability system.

SUSTAINABILITY

A number of attributes make these species resilient to high levels of harvest (for example, large numbers of pythons are slaughtered before they reach sexual maturity).

ANIMAL WELFARE

Three common methods of python slaughter are in use: -Decapitation (Malaysia); -Brain destruction (Indonesia); -Suffocation (Viet Nam).

Source: The Trade In Southeast Asia Python Skins – International Trade Centre

THE “PYTHON CONSERVATION PARTNERSHIP”

A COLLABORATION LAUNCHED AT THE END OF NOVEMBER 2013 BETWEEN:

WITH THE AIM OF

KERING AND GUCCI THE INTERNATIONAL TRADE CENTRE (ITC)

INTERNATIONAL UNION FOR CONSERVATION OF NATURE

(IUCN SSC Boa & Python Specialist Group)

contributing to the improved sustainability of the python trade and helping facilitate

industry-wide change

THE PROGRAMME OF RESEARCH OVER THE NEXT THREE YEARS WILL FOCUS ON FIVE KEY AREAS: 1) Monitoring wild capture to improve sustainable

sourcing 2) Differentiating between captive-bred and wild

animals through innovative technology 3) Developing and promoting the highest standards

of animal health and welfare 4) Exploring ways to improve captive breeding 5) Better understanding the impacts of the python

trade on local livelihoods

The data and findings will contribute to the Convention on International Trade in Endangered Species of Wild

Fauna and Flora (CITES) process, which supports a framework for countries to manage their trade in

endangered species such that it contributes to local livelihoods and does not threaten the survival of species

in the wild


WHY WE CAN MAKE A DIFFERENCE

SCIENTIFIC DATA

the PCP will be the first time that scientists, trade

experts and the private sector collaborate to

collect the information needed upon which we

can base recommendations for improving the trade

ANIMAL WELFARE AND TRACEABILITY

It would be possible

monitoring the sustainability of wild animals caught and

verifying the source of the pythons and the

treatment of the animals

LOCAL COMMUNITIES

This will help hundreds of people of people in

rural communities that are able to earn a living

from their natural resources. This is

significant especially for countries like Indonesia where there may be few

opportunities for alternative employment

INDUSTRY CHANGE

The partnership will facilitate change

through supporting the CITES process; working

with and supporting Range State government

authorities


CAPTIVE BREEDING VS. WILD HARVEST

CAPTIVE BREEDING

can contribute to the sustainability of the trade,

and should be linked to supportive actions towards enhancing wild harvested pythons and livelihoods. .

The key is to offer a diversity of sources of precious skins, while ensuring biological sustainability of the

species in the wild. The final aim is to preserve the

resource and its natural habitats

CAPTIVE BREEDING operations should be complementary to wild

harvest

WILD HARVEST

contrary to many people’s beliefs, maintaining a

sustainable wild harvest is actually very important –

the key is to create a balance between captive-

bred and wild-caught pythons so the benefits can be spread among

stakeholders, while still maximizing python

conservation

In both cases it is very important to ensure that the animals are

treated humanely

ENFORCE GUCCI’S COMMITMENT TRACEABILITY INNOVATIVE MATERIALS INCREASE VISIBILITY OF SUSTAINABILITY INITIATIVES

PROACTIVE APPROACH TOWARDS OUR CLIENTS

NEXT CHALLENGES

THANK YOU !

BIOTRADE CONGRESS INTEGRATING REDD+BIOTRADE STRATEGIES

December 13th

Session 5 -b: Importance of traceability Systems

Filippo Nishino - Supply Chain Operations Project Manager & Rossella Ravagli - Head of Corporate Sustainability & Responsibility Gucci

AGENDA 13

• Overview & Strategy

• Impact on our Business Model (SC&O)

• Case Study on Tracebility


“Made with Integrity” as a brand value


Environmental Management System Sustainable Products

HUMANITY ENVIRONMENT

Stakeholders Engagement

Training / Education

Reporting

NGOs, Universities, Trade Unions, Government

Employees, Suppliers, Consumers

Sustainability Reporting, EP&L

ENVIRONMENT

Human & Workers’ Rights Community & Donations Soustainable Products

HUMANITY

CSR

& SUSTAINABILITY

GUCCI’S DRIVERS

GUCCI’S MISSION

GUCCI’S VALUES

CUSTOMERS’ PERCEPTION ON RESPONSABILITY

Customers are interested to learn more about the initiative of the companies in CSR

Trace-ability

Luxurious Sustainabi

lity A product

driven approach

Whole purchasing process

Differentiated

customer focus

Engagement

Relationship building

Sharing, behavioral change

Traceability can promote increased

consumption awareness of sustainability in

general

Survey insight:90% percent of

consumers find increased material origin information

will add value.

More than 75% on all other types of

extra product information

Traceability has the potential to be effective pre, during and post

purchase

Traceability focus can be differentiated from engaged

to disengaged customers

Activation and engagement of

luxury customers

Transparency in the whole process and a 360°view of the production is highly appreciated

Environmental risks are

a growing concern

amongst global experts

and customers

1,000

500

250

100

50

Fiscal

crisis

Extreme consumer

price volatility

Slowing Chinese

economy Corruption

Terrorism

Unlikely Likely Very likely

Regulatory

failures

Asset price

collapse

Geopolitical

conflict

Extreme energy

price volatility

Exp

ecte

d im

pact (B

illio

n U

SD

)

Likelihood over next 10 years

Environmental risks

2009 2011

Climate change

Flooding

Storms and cyclones

Air pollution

Water security

Biodiversity loss

Economic and geopolitical

risks 2011

Source: World Economic Forum Global Risks Report (2009 – 2011)

QUICK GLOBAL OVERVIEW

Source: Global Demographic Trends - Finance & Development, September 2006; How To Feed the World 2050 (FAO)

Very high Male/Female ratio (which suggest female infanticide /neglect of female newborns or selective aborting)

People in less developed countries aged +60 are expected to exceed 12- to 24-year-olds by 2045 (same phenomenon occurred in developed countries in the late 1990s)

9.1 billion pepole in 2050 In 2050 about 70% of world’s population will be urban compared to 49% today

In order to feed the world’s population – which will become larger, more urban and richer - FAO estimates that food production has to increase 70% circa for 2050 (annual cereal production will need to rise c.a. 3 billion tonnes from 2.1 billion today and annual meat production will need to rise by over 200 million tonnes to reach 470 million tonnes).

80% of the necessary food production increases would come from improvements in yields and cropping intensity and 20% from expansion of arable land. Distribution of arable land is concentrated mainly in LATAM and Africa. Water sources are also unevenly distributed Climate change and mainly increased biofuel

production represent major risks for long-term food

security

SC&O VALUE CREATION PRINCIPLES

WEIGHTS ON CRITICAL KEY SUCCESS FACTORS CHANGES DYNAMICALLY AND HAVE TO BE ASSESSED CONTINUOUSLY IN THE SC&O BUSINESS MODEL AND STRATEGIC PROJECT PIPELINE

SC&O → MARKET DRIVEN APPROACH Consumer’s perception and though CRM plays a fundamental role. The ability that SC is able to respond and react to different consumer’s demand, within given constraints (i.e. design, performance of products, costs etc) is a highly valuable asset

SC&O → SC FOOTPRINT CONTROL

Push

Pull

Back - end

Front - line

FROM: *Nice to Have *Additional Cost *“Made In…”

High

Low

SC&O → VALUE CREATION ROLE

FROM: *Pure Operating Activity *Cost efficiency

TO: *Must Have (anticipated through Kering) *Investment / Competitive Advantage *“Made with…”

TO: *Also marketing&communication role *Also ”Quality of Costs”

SUSTAINABILITY AFFECTS BRAND IMAGE

Water

Water

Will consumers

associate the things they

buy with the images they

see?

Either negatively…

Migrant Labor?

Biodiversity

Endangered species and deforestation?

Economic Well-Being

Gucci’s supply chain projects DEFORESTATION FREE LEATHER

a beautifully crafted range of handbags made

from Amazon leather which sets new standards in traceability and ecological certification


BOVINE LEATHER TRACEABILITY PROJECT

Study the leather supply chain of Gucci and develop a traceability strategy to establish the country of origin of the leather used in each product, allowing Gucci to communicate these findings with confidence both internally and to external stakeholders” To map out the various levels of transparency achievable with cost/integrity implications highlighted with each option To examine various marking systems and their potential impact on cost/hides To examine how the introduction of a traceability system will affect the working patterns of the various parties in the chain.


ENVIRONMENTAL PROFIT AND LOSS

An Environmental P&L account is a

means of placing a monetary value on the

environmental impacts along the entire

supply chain of a given business

First EP&L to be published by 2016 on 2015 data


ENVIRONMENTAL PROFIT AND LOSS … A BROADER SCOPE

Retail

CO2

Water use

Waste

Water quality

Air pollution

Toxics

Land Use

Current

environmental

reporting

Deeper in the supply

chain

Expand

reporting

elements

Raw

Materials

Processing Operations Consumer

use

and

end-of-life

Manufacturing

In scope for E P&L + translate these impacts into cost

(EURO)

In scope for E P&L

THANK YOU !

increasing importance of traceability for the luxury goods ... · quick global overview source:...

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