Richemont’s carbon footprint is relatively small compared to that of energy-intensive industries. As discussed elsewhere in this report, 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 and travel 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.
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 at least 50 %). Data has been collected 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. Richemont uses energy estimations (per m2) to estimate the impact of these locations. The scope of our measurement is estimated at covering operations representing more than 90 % of full time equivalent employees (‘FTE’) in 2013/14 and includes retail outlets, offices, research and manufacturing sites, and distribution centres.
In the year to March 2014, our global CO2 emissions on a comparative basis increased by 20 % in absolute terms to 118 Ktons compared to 98 Ktons one year earlier. The calculation methodology established, in the 2011/12 financial year, was unchanged in the 2012/13 and 2013/14 years. In addition, the Scope 3 was increased, leading to an additional 61 Ktons being reported in respect of third-party freight logistics.
The 20 % increase is comprised of a 22 % increase in buildings-related emissions and an 18 % increase in employee travel-related emissions. The significant increase in buildings-related emissions reflects constructions in manufacturing and distribution, partly offset by the voluntary purchase of renewable electricity in most of our European manufacturing sites and North American distribution operations.
This increase has been achieved against a backdrop of a 10 % increase in sales in local currency terms and a 6 % increase in employees over the same period. A growing proportion of the Group’s supply chain in fine jewellery and watchmaking has been internalised. Such manufacturing processes consume more energy per person than assembly processes, in particular a gold refinery in Switzerland, which was acquired in the second half of the comparative year. At the same time, the expansion of our boutique networks in both floor area and count, and the energy consumed in lighting, heating and cooling such premises, has contributed to overall emissions. Despite our work to promote good environmental practices, the average CO2 emissions per employee (‘average FTE’) on a comparative basis increased by 11 % in the year: from 3.5 CO2t/FTE to 3.9 CO2t/FTE. The Group’s five-year intensity target for buildings related to surface and FTE, whereas the business travel target relate to FTE only. Our targets are for long-term reductions in carbon intensity, therefore the increase in the first year was undesirable.
We aim to reduce our emissions as much as possible and neutralise the rest by participating in offsetting projects. The new Scope 3 emissions will be offset with effect from 2014/15. Our prior year CO2 emissions were offset by a gold mine-related project in South Africa, the support of fuel efficient stoves in Ghana, reforestation in Colombia 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. Moreover for 2013/14, Maisons may choose the offset projects most suited to them from a menu, thus deepening their engagement and promoting both internal and external communication.
Since 2011, an independent assurance report has been provided on the Group’s consolidated CO2 emissions. The 2014 report from PwC was issued on 16 June, and included the logistics developments described above.
The Group participates in the Carbon Disclosure Project’s (‘CDP’) annual data collection process. Richemont’s 2013 submission received the following ratings by the CDP’s assessors: 79 % for disclosure (2012: 79 %) and level B for performance (2012: level C).
|CO2 emissions||Units||2009/10 ||2010/11 ||2011/12 ||2012/13 ||2013/14 |
|Total||1 000 tCO2||63.5||79.3||99.8||98.2||179.3|
|EN16||Scope 1||1 000 tCO2||18.3||20.8||19.3||18.6||18.3|
|EN16||Scope 2||1 000 tCO2||31.5||40.2||49.6||45.2||56.8|
|EN17||Scope 3||1 000 tCO2||13.7||18.3||30.9||34.4||42.9|
|EN17||Scope 3 Logistics
(new for 2013/14)
|1 000 tCO2||-||-||-||-||61.3|
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.
For the first time in 2013/14, our Scope 3 emissions data for freight logistics have been measured. Whilst being far from comprehensive, it encompasses: (i) for watches and jewellery, from the European manufactures to the Group’s distribution centres located around the world; (ii) Net A Porter’s distribution centres to final customers; and (iii) Alfred Dunhill and Lancel. Note that Alfred Dunhill and Lancel were out of scope for the independent assurance report for the 2013/14 year.
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. 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.
Following the preliminary findings from a Screening Life Cycle Analysis of certain watch and jewellery products carried out during the previous year, Richemont has a better understanding of our overall carbon footprint, i.e. the emissions generated by the so-called upstream and downstream activities of our business partners, including the mining of raw materials. The screening analysis findings will be used in other projects linked to product development and environmental efforts beyond our own operations.
The Group’s five-year targets to reduce the carbon intensity (kilo/FTE) of buildings and business travel were first communicated to all Maisons and shared service platforms on 29 April 2013. Each reporting unit is elaborating its own plan to contribute to the achievement of those targets. In the meantime, carbon emissions will continue to be offset through the purchase of certified carbon credits.
Improving energy efficiency forms a key part of our strategy to reduce carbon emissions. We will continue to evaluate the use of ‘green electricity’ contracts where they are available.
The Group is also reviewing the potential to offset and re-invoice the carbon emissions generated by the Maisons’ freight logistics carried out by third parties, which were measured for the first time in the current year.