ENVIRONMENTAL
PROFIT & LOSS (EP&L)
2021 Group Results

2021 EP&L REPORTKEY DEVELOPMENTS FOR 2021
Since 2012, we have been measuring our full environmental impacts as a Group every
year and monitoring our progress in becoming more sustainable using our pioneering
Environmental Profit & Loss (EP&L) accounting. Continuing to integrate its findings
into our day-to-day operational decisions and strategy, we recognize its extraordinary
value in influencing our product design, sourcing decisions, and manufacturing
research and development.
To leverage the EP&L even further, we have continued to enhance and fine-tune its
methodology and scope of coverage. As an example, we have added the downstream
impact of product use and end-of-life to the analysis starting from the 2020 Group
EP&L. We have also strengthened our approach to better cover digital technology andits associated impacts, especially since it is a fast-growing area which is also energy
intensive.
Our ambition at Kering is to ensure that the EP&L is “best in class” and we willcontinue to drive further enhancements in the upcoming years and open source ourmethodology, while reporting on the progress to meet our reduction targets. To support
this ambition, we are accelerating the convergence between financial andenvironmental reporting, especially through:••The alignment of the EP&L production timeline with the financial one, allowing
Kering to publish its 2021 EP&L results together with 2021 financial results
outlined in our Universal Registration Document
The audit of EP&L data and processes by third-party Statutory Auditors, further
ensuring the robustness of the process and the quality of the data

Staying true to our open-source mindset, we are disclosing for the first time not only
the EP&L impacts valued in € but also our absolute eKPI metrics before they have beenmonetized, providing the overall footprint of the Group in terms of GHG emissions(metric tons CO2e), other air emissions (metric tons), land use (hectares), waste
production (metric tons), water use (cubic decameters) and water pollution (metrictons). This provides greater transparency around the Group’s footprint for our many
stakeholders.

WHAT IS AN EP&L?
An Environmental Profit and Loss (EP&L) account is a business management tool
providing an in-depth analysis of the resulting impacts a company’s activities have on
the environment, which also helps decision makers consider this valuable information
alongside traditional financial metrics. Kering’s pioneering EP&L measures and valuesin economic terms the environmental impacts across our own operations and entire
supply chain. In doing so it helps us:•••

Translate environmental impacts into a language business understands
Compare between different types of impact
Facilitates comparison between brands and business units

As a result, we can:22021 EP&L REPORT

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Analyze luxury products from cradle to grave
Identify the most significant drivers of impacts in our business
Understand the impact of everyday decisions
Develop more robust business policies to address the risks and opportunities
presented by environmental challenges
Implement targeted projects concerning choice of materials, or development of
new manufacturing processes, for example
Monitor progress of our sustainability strategy, while forecasting and preparing forthe future
Be transparent with our stakeholders

For more details on our EP&L methodology, see our Methodology paper1.

OUR 2021 GROUP EP&L RESULTS
Within our sustainability strategy we included quantifiable targets to reach by 2025,
under the three themes of CARE, COLLABORATE and CREATE. As an example, acornerstone of CARE is the target to reduce our EP&L footprint by 40% across our
supply chain by 2025, relative to growth, using a 2015 baseline.
Kering’s 2021 Group EP&L is estimated to be € 562M. This includes the impact
of consumer product use and end of life, which represents € 40M.
For the sake of year-on-year comparisons and consistency, we chose to compare andassess 2021 results against 2019 EP&L figures, instead of 2020, due to the various
challenges during the COVID-19 pandemic, including temporary and/or partial closureof production facilities, logistics platforms and store networks in 2020.
On a comparable basis, Kering’s 2021 Group EP&L amounted to € 522M (excluding
impacts related to consumer product use and end of life), decreasing it by 11% in
absolute terms compared to 2019. This result reflects the efficacy of the Group’s
sustainability efforts, which has a key focus on responsible sourcing policies andimproving manufacturing and processing efficiencies, while also seeking optimum
sustainable management of our sites and activities, such as using green energy.
Looking at the bigger picture of the Group EP&L results and achievements, the EP&L
intensity has decreased by -41% between 2015 and 2021, attaining Kering’s EP&L
target 4 years ahead of time2.

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2

Click here for the Kering EP&L Methodology paper
Kering committed to reduce its EP&L intensity by 40% before 2025, with a 2015 baseline.
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Evolution of the EP&L impacts relative to revenue

Revenue: € Million
EP&L Intensity: EP&L € per €1,000 revenue (Intensities based on proforma EP&L results calculatedusing the 2021 methodology, excluding use phase and end of life).
Targeted reduction in EP&L intensity: We have targeted a 40% reduction in our EP&L intensity by
2025, with a 2015 baseline. This trajectory is shown in the chart in dotted line and leads to an EP&L
intensity of 31 (€EP&L/€kCA) in 2025.

Figure 1: Evolution of EP&L proforma, revenue, and target from 2015 to 2021

This result marks an exciting moment in Kering’s sustainability journey. As wecontinue our efforts to become more sustainable as a Group, Kering now has theopportunity to be even more ambitious and define bold targets for the next chapter ofour strategy. In 2021, Kering already initiated this momentum through the revision of
our Climate Strategy3 working towards the Paris Agreement target of limiting global
temperature increase to below 1.5°C and embracing a net-zero vision by 2050. For theupcoming years, we’ll be focusing on innovative science-based work to meet thisambition and to cover the other environmental dimensions in the EP&L: water, land,waste and air pollution while caring for our planetary boundaries.

3 Click here for the Kering Climate Strategy

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EP&L impacts across tiers divided by impact area

Figure 2: 2021 EP&L results across tiers and environmental indicators(both in valued and eKPI figures)

Looking at our impact across our value chain, we can see that the impacts related toour direct operations (Tier 0 – stores, warehouses, offices) are still limited, making up
14% of the total impact. The biggest part of our impacts is related to our supply chain(Tier 1 to 4 assembly, manufacturing, sourcing) representing 79% of our total impacts.
The impacts associated with the consumer use phase and end of life for products arequite limited, accounting for 7% of total impacts and almost exclusively concentrated
in the product use phase.

52021 EP&L REPORTGHG emissions and land use represent our biggest environmental impacts and arerespectively responsible for 37% and 31% of our EP&L footprint. In 2021 and inabsolute figures, they correspond to 2,381,991 tons of CO2 and 299,673 hectares,
driven primarily by leather use.
Leveraging changes across the supply chain is a long-term process and, in many cases,
will not yield immediate results. However, with the vast knowledge gained from the
EP&L, we have shifted our efforts and focus areas. As an example, we have beencreating programs to promote sustainable best practices and innovating across our
supply chain.
Furthermore, since the supply chain is difficult to influence as one Group alone, we arecollaborating with our peers, and across sectors, to drive positive change. As just two
examples, The Fashion Pact and the Watch & Jewellery Initiative 2030 are initiatives
we established that are focused on collaborating with peers and scaling innovativemodels around some of the biggest sustainability challenges in our industry. We
launched the Fashion Pact in 2019 after French President Emmanuel Macron gave
Kering’s Chairman and CEO François-Henri Pinault a mission to bring together theleading players in fashion and textile with the goal of reducing the environmental
impact of our industry. Since then, it has gone from strength to strength, bringing
together more than 250 brands representing more than one third of production volumes
in the fashion and textile industry. In 2021, the Fashion Pact continued to build its
structure and by the end of the year it was supervising a total of 14 projects alreadylaunched or in the process of launching.
Replicating this successful model, Kering launched the Watch & Jewellery Initiative
2030 with Cartier in 2021, with Chanel, Montblanc, Rosy Blue and Swarovski joining
just six months later. Our aim is to bring together the watches and jewellery players towork side by side on a number of ambitious and common goals focused on three areas:building climate resilience, preserving resources, and fostering inclusiveness.

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EP&L contribution of major groups of raw materials and quantity of
consumption

Figure 3: 2021 EP&L impacts (in €EP&L) and quantity of consumption (in kilograms)
by raw material group

On the Group level, amongst the raw materials we use, leather continues to be the major
driver of impacts, followed by animal fibres, such as wool and cashmere, and metals,
such as brass and gold. These last two material categories offer significant possibilities
to leverage impact reduction and change. Proactively making small-scale changes insourcing options, such as replacing materials with recycled alternatives, can result inreal EP&L savings.

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2021 EP&L REPORT

Figure 4: 2021 EP&L impacts by geography and main drivers

NORTH AMERICAEUROPEThe US is an important source of bovine
leather and cotton, as well as gold andprecious skins.

Italy is the main manufacturing location for luxury
brands. Italy, Netherlands, and France are also key
locations for sourcing bovine leather. Whereas Spain is a
key source for lamb leather.

CanadaUnited States

Brazil
SOUTH AMERICASouth America is a key source of
metals used in alloy such as brass
driving water pollution impacts.

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Russia

ASIA

India

China is a key sourcing location for
cashmere, silk, gold and other metals. India
is an important source of cotton for driving
land and water use.

AFRICA
Gemstone mining in South andCentral Africa drives land use
impacts. South Africa also has animportant contribution to oursourcing of sheep and goat, as
does Nigeria.

Australia

AUSTRALIA AND NEW ZEALAND
Australia and New Zealand are
key sourcing locations for wool
and sheep leather, driving land
use and GHG impacts.

92021 EP&L REPORTUNDERSTANDING 2021 VS 2019
The COVID-19 pandemic led to temporary and/or partial closure of production
facilities, logistics platforms and store networks in 2020. It is therefore more consistent
to compare 2021 impacts with 2019. The figures below are presented in a comparable
format, excluding impacts related to a product’s consumer use phase and end of life.

Figure 5: 2021 EP&L results, showing relative influences of changes since 2019 proforma results

TYPE OF ACTIVITY

CHANGEREASON FOR CHANGEOPERATIONS+ €25.5MILLION

MANUFACTURING- €19.1MILLIONRAW MATERIALSPRODUCTION AND
PROCESSING- €69.6MILLION

Increased investments and opening of new stores
explain the growth of T0 impacts compared to 2019.
Impacts related to manufacturing are nearly constant
between 2019 and 2021. Nevertheless, our programs to
support suppliers in transitioning to low impact
solutions, such as Clean by Design are contributing to
the improvement of manufacturing footprint between
these two years.
Our continued efforts around sourcing strategies andsustainable material procurement have been driving the
reduction of our footprint linked to raw material
production and processing. The total raw material
volume used was stable between 2019 and 2021.

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A key priority underlining our 2025 Sustainability Strategy continues to be focused on
reducing the impacts of the raw materials we use in our products. To support our efforts,
basic principles and guidelines on responsible sourcing, known as the Kering
Standards4, were defined in 2012. These principles were revisited in depth andextended in 2017 to give fuller details of the Group’s raw material sourcing andmanufacturing process requirements. They cover the key materials used by the Group,
representing more than 95% of purchasing volumes, namely leather and precious skins,
fur, wool, cotton, silk, synthetic fibers, paper, wood, plastic, feathers and down,
cellulosic fibers, gold, diamonds, colored gemstones and silver, and include theGroup’s main production processes, namely tanning, the various stages of textile
manufacture and leather work.
The Kering Standards follow “best practices” and criteria imposed by the Group andadhered to by our suppliers in five key areas: traceability, use of chemicals, social
impact, environmental impact and animal welfare, describing the minimum
requirements for Group suppliers in each of these five areas, as well as the moredemanding requirements that suppliers will have to meet by 2025.
As a first in the luxury industry, the Kering Standards are public and can be downloaded
in English, Italian and French from the Group’s website.

Figure 6: Changes in raw material impacts in the supply chain since 2019 proforma results

On top of applying these ambitious standards across our supply chain, Kering started
to invest beyond our own regions of operations. As agriculture is one of the main
drivers behind our environmental impacts and is currently a major driver of biodiversity
loss and climate change, we want to support the transformation of agriculture from a‘problem’ to a powerful nature-based solution. To achieve this transformation, Keringand Conservation International launched the Regenerative Fund for Nature, with

4 Click here for the Kering Standards

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the aim of transforming 1,000,000 hectares of crop and rangelands into
regenerative agricultural spaces over the next five years.
On the one hand, the Fund seeks to show how nature, climate change and livelihoods
can change for the better, thanks to transforming agricultural practices. On the other, it
strives to support new more sustainable supply chains and sourcing approaches in the
fashion industry by upscaling quality and quantity of regenerative raw materials.
Lastly, the Fund ultimately aims to provide concrete outcomes in terms of biodiversity
and climate change, while at the same time supporting animal welfare and rural
livelihoods by deploying the latest scientific tools and methods.
In practice, our Regenerative Fund for Nature will provide grants to farming
communities, project leaders, NGOs and other stakeholders who are ready to test, proveand scale regenerative practices, which focus on working in harmony with natural
ecosystems. The first grantees we announced in 2021 are a diverse and powerful
inaugural portfolio, each project standing out for innovative approaches. Overall, theprojects, focusing on cashmere, cotton, leather, wool, represent 840,000 hectares which
will ultimately be transformed into regenerative agricultural spaces, engaging andsupporting 60,000 people around the globe.

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2021 EP&L RESULTS

Société anonyme(a French corporation)with a share capital of € €498,771,664––
Registered Office:40 rue de Sèvres - Paris 75007
552 075 020 RCS Paris––
Tel.: +33 (0) 1 45 64 61 00––
April 2021

@KeringGroup
Kering@kering_official@keringgroup13

2021 EP&L RESULTSDISCLAIMER
The Environmental Profit & Loss (EP&L) account issued by Kering is the
product of a methodology developed by Kering to measure the impact of an
economic activity on the environment, applying financial metrics. The EP&L
is one among other manifestations of Kering’s commitment to protect theenvironment and leadership in sustainability. As such, Kering aims to sharethe methodology and tool hereby published with the general business
community so as to make sure they will be improved and benefit to otheractors in their own efforts to minimise the impact of their own industrial andeconomic activities on the environment.
Because of its nature the EP&L cannot achieve the accuracy of financial
results nor can it be subjected to financial audits. For any financial
information about Kering, readers should refer to Kering’s Universal
Registration Document and other published information (regulated
information disclosed as such).
As a result, the EP&L in no way reflects nor has any impact on Kering’s past,present or future financial performance. In particular, the EP&L does notcreate any liabilities, implied costs or any rights to offset any amounts
contained therein, nor does it trigger any provisions and neither does it resultin any off-balance sheet commitments.
Finally, Kering makes no express or implied warranty or representation in
relation to any information or data contained in the EP&L. Therefore, noneof Kering or its representatives will have any liability whatsoever innegligence or otherwise for any loss however arising from any use of the
EP&L or its contents or otherwise arising in connection with this presentationor any other information or material comprised in or derived from the EP&L.

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