Climate change

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Context

Richemont’s carbon footprint is relatively small compared to that of energy-intensive industries. As discussed above, whilst we do not see climate change as a significant area of direct risk for the Group at present, we recognise that managing the issues arising from climate change helps us to reduce our energy costs. Accordingly, our policy is to focus on reducing our own carbon emissions.

We measure our emissions each year and aim to reduce them. As the business is growing in absolute terms, we purchase ‘carbon offsets’. This has been our practice since 2008. We raise awareness of the cost of these offsets by re-invoicing the cost of carbon credits to each Maison within the Group. This approach allows a financial cost to be placed on carbon, which helps drive performance improvements, as does the motivation of employees in general.

Our approach

Carbon footprint

We calculate our carbon footprint based on the internationally recognised Greenhouse Gas (`GHG´) Protocol of the World Business Council for Sustainable Development (`WBCSD´). This protocol is the internationally accepted template for accounting and reporting on GHG emissions.

The data covers our subsidiary companies where the Group has management control (defined as a shareholding of greater than 50%). Data has been collected through our financial control function as an integral part of our approach to business reporting. Data is not always available for some smaller retail outlets, in particular where we operate from shared sites. The scope of our measurement is estimated at covering operations representing 94 % of full time equivalent employees (`FTE´) in 2011/12.

In the year to March 2012, our global CO₂ emissions increased by 26 % in absolute terms to 99.8 Ktons compared to 79.3 Ktons one year earlier. The 26 % increase is comprised of an 15 % increase in buildings-related emissions and a 43 % increase in employee travel-related emissions. The significant increase in travel related emissions reflects a number of factors: (i) a 30 % increase in the distance travelled by air; (ii) a 9 % increase for the ‘uplift factor’, which takes into account the impact of air traffic control routes and taxiing; and (iii) greater precision for the class of travel for long-haul flights. Other factors had a less material impact.

This increase has been achieved against a backdrop of a 29 % increase in sales and a 14 % increase in employees over the same period. Moreover, a growing proportion of the Group’s supply chain in fine jewellery, watchmaking and eyewear has been internalised. Such manufacturing processes consume more energy per person than assembly processes. The expansion of our boutique networks, and the energy consumed in lighting, heating and cooling such premises, has also contributed to the increase in emissions in absolute terms. Nevertheless, our work to promote good environmental practice means that the average CO₂ emissions per FTE have only risen by 10 %: from 3.70 CO₂t/FTE to 4.06 CO₂t/FTE.

We aim to reduce our emissions as much as possible and neutralise the rest by participating in offsetting projects. Our prior year CO₂ emissions were offset by a gold mine-related project in South Africa, the support of fuel efficient stoves in Ghana, and other projects linked to zero-carbon energy in Indonesia, India and China. To raise awareness, the centrally-purchased carbon offsets are re-invoiced to Richemont’s individual Maisons based on their reported GHG emissions.

Since 2011, an independent assurance report (current report) has been provided on the Group’s consolidated CO₂ emissions.

Key definitions are:

Scope 1: Direct GHG emissions from sources that are owned or controlled by the company. It includes energy use from buildings and emissions associated with the vehicles we operate.

Scope 2: Indirect emissions associated with purchased electricity, heat and steam.

Scope 3: All other indirect emissions that are a consequence of the activities of the reporting company but occur from sources owned or controlled by another company. We have measured emissions resulting from the usage of private cars and the mileage from the use of commercial airlines for business travel.

The Group participates in the Carbon Disclosure Project (‘CDP’). Richemont has reported its CO₂-related information to CDP since 2007 and the most recent ratings are described above.

Other emissions and discharges

The Group does not collect data regarding ozone depleting substances, NO, SO or other significant air emissions. These are not material to the Group’s businesses. Similarly, the Group does not collect data regarding the weight of waste by type and disposal method. As described above, the Group’s manufacturing facilities are located in Switzerland and elsewhere in Western Europe, where environmental controls are rigorously enforced.

No significant spills have been brought to the Group’s attention in the context of either the environmental or health and safety reporting processes. Similarly, the Group has not been subject to any material fines or non-monetary sanctions for non-compliance with environmental laws and regulations.

Case studies

• IWC employee engagement
• Jaeger-LeCoultre – employee transport