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.
Overall, the Group’s activities have a very low direct exposure to the impact of climate change. The production of high quality goods is concentrated in Switzerland and their distribution is spread around the world. Nevertheless, the Group CSR Committee has considered this matter and has not identified weaknesses in our business model which would be worsened by gradual temperature changes, cases of extreme weather conditions or growing water scarcity. Similarly, the supply of precious raw materials, which is largely controlled by international mining enterprises, metal refiners and gemstone cutters and polishers, is not expected to be disrupted by gradual changes in the natural environment. Richemont has not quantified the financial risks associated with climate change.
Notwithstanding these considerations, we continue to carry out robust energy audits across our businesses and seek to respect the most demanding environmental standards when building new manufacturing facilities. In this way, we play our part in minimising our energy consumption, provide agreeable working spaces for our employees, and thus contribute to the long-term sustainability of our business.
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 2014/15 and includes retail outlets, offices, research and manufacturing sites, and distribution centres.
In the year to March 2015, our global CO2 emissions on a comparative basis increased by 16 % in absolute terms to 137 Ktons compared to 118 Ktons one year earlier. The calculation methodology established, in the 2011/12 financial year, was unchanged. In addition, the Scope 3 was increased, leading to an additional 66 Ktons being reported in respect of third-party freight logistics (2014: 61 Ktons).
The 16 % increase is comprised of a 12 % increase in buildings-related emissions and an 21 % 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 1 % 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. 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 10 % in the year: from 3.9 CO2t/FTE to 4.3 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 year was undesirable.
We aim to reduce our emissions as much as possible and neutralise the rest by participating in offsetting projects. The Scope 3 logistics emissions indicated below are not offset. Our other 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. Our 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 2015 report from PwC was issued on 16 June 2015, and included the logistics developments described above.
The Group participates in the Carbon Disclosure Project’s (‘CDP’) annual data collection process. Richemont’s 2014 submission received the following ratings by the CDP’s assessors: 75 % for disclosure (2013: 79 %) and level C for performance (2013: level B).
|Total||1 000 tCO2||79.3||99.8||98.2||179.3||202.4|
|EN16||Scope 1||1 000 tCO2||20.8||19.3||18.6||18.3||20.0|
|EN16||Scope 2||1 000 tCO2||40.2||49.6||45.2||56.8||65.5|
|EN17||Scope 3||1 000 tCO2||18.3||30.9||34.4||42.9||51.2|
|EN17||Scope 3 Logistics
|1 000 tCO2||-||-||-||61.3||65.6|
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.
Since 2013/14, our Scope 3 emissions data for freight logistics has been measured. Whilst being far from comprehensive, it encompassed: (i) for watches and jewellery, from the European manufactures to the boutiques (retailers and wholesalers) located around the world; (ii) Net-A-Porter’s distribution centres to final customers; and (iii) Alfred Dunhill, Chloé, Lancel, Peter Millar, Purdey and Shanghai Tang.
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, 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.
Our key energy usage relates to fuels, natural gas, electricity and heat that the Group consumes for the buildings and vehicles it operates. Electricity continues to be the most significant energy source. Our energy use increased by 6 % in the year to March 2015. To provide context, in the same period, Group sales increased by 1 % in local currency terms and the overall surface area of our buildings also increased.
In the context of the Group’s wider energy policy, the Maisons and distribution platforms are encouraged to switch to so-called ‘green electricity’ whenever possible, i.e. electricity generated from renewable sources such as hydro, solar or wind. In 2015, 36 % of the Group’s purchased electricity was ‘green electricity’ (2014: 35 %; 2013: 35 %; 2012: 23 %). In absolute terms, the Group’s green electricity consumption increased to 62 GWh.
|Total energy consumption||GWh||202||212||215||225||238|
|EN3||Direct energy consumption||GWh||44||37||37||37||31|
|EN4||Indirect energy consumption||GWh||158||175||178||188||207|
Our Maisons have taken measures to limit their energy consumption. The reported consumption levels above reflect both the level of trading, business acquisitions and the building of new manufacturing facilities in Switzerland, partly offset by the initiatives taken by our Maisons and the Group’s distribution platforms.