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Product, Service & Design Innovation
Stella McCartney’s First Environmental Profit and Loss Account Reinforces ‘No Leather, No Fur’ Ethos

The Stella McCartney brand reduced the overall environmental impact of its materials by 35 percent in the last three years, whilst enjoying its best business performance since its launch in 2001. The brand announced its first Global Environmental Profit and Loss Account this week, with positive results for 2015 that reinforce its responsibility commitments.

Since 2013, Stella McCartney has been working to measure its impact on natural capital using environmental profit and loss (EP&L) accounting, which places a monetary value on the environmental costs and benefits of a business as generated by direct operations and across its entire supply chain, along with a more traditional profit and loss management tool.

The brand – a joint venture between fashion designer Stella McCartney and Kering – has never used leather, fur, skins or feathers in its products. Through the EP&L, the company says it was able to more directly compare the impact of the alternatives it uses against the impacts of leather use, as well as better manage the impact of its activities through product design, informed sourcing decisions, and manufacturing research and development.

“Over the past three years we have focused heavily on reducing our environmental impact, we are not perfect, but we will continue this effort,” McCartney said. “In addition to researching new ways to reduce impacts, we are also beginning to move towards transitioning away from merely doing less bad, to doing measurable good. We have many exciting projects in the pipeline and are looking forward to sharing them in the future.”

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In 2015, as reported by the Kering Group, the growth of Stella McCartney has been double digits in its retail network for the full year. Sales were up in all product categories, and across all distribution channels. That momentum drove an increase in both recurring operating income and recurring operating margin and delivered the best performance since the launch of the company.

The brand’s 2015 EP&L impact of €5.5 million represents a 7 percent growth in impact over the past three years. Over the same period, its EP&L impact was reduced by 35 percent per kilogram (kg) of material used, resulting in an overall 35 percent reduction in the environmental impact of its materials. In 2013, the average impact per kg of material used was €11.82, in 2014 it was €9.76, and in 2015 it was €7.69. The company says the reductions are largely due to changes made in sourcing.

“Our current EP&L would be most accurately described as an account of our ‘losses’—since all businesses have negative impact on the environment. We are, however, striving to balance our accounts. We are working towards projects and sources that would account for profits while delivering real benefits for the environment,” said CEO Frederick Lukoff.

One example of how the audit system has informed Stella McCartney’s sourcing decisions is its cashmere, which has the highest impact per kg of all of the raw materials it uses – about 100 times that of wool. The company explains that this is because the goats produce a small amount of fiber per year compared to the amount of grassland they require, and that there are other associated problems including desertification due to overgrazing and displacement of endangered wildlife. The brand claims that compared to virgin cashmere, regenerated cashmere has an 87 percent reduction in impact, which is why it has decided to switch to it.

“Fashion is an industry that makes a significant impact on the planet. It's not just cool clothes and trends,” McCartney added. “Every single day, myself and my entire team are challenging ourselves and the industry: what we can do better? Can we be responsible and accountable for what we make and how we make it? Our dream is to improve, but we have to start somewhere in order to progress... so here we are, and this is the start of our journey, and as you can see, we are not perfect but something is better than nothing. I’m hoping to share and encourage the industry to join in, and evaluate its environmental footprint for our future.”