LVMH’s Antoine Arnault defends incremental approach to emissions

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Antoine Arnault has warned LVMH could start firing suppliers that do not comply with the luxury company’s own sets of environmental standards, rather than commit to reductions in greenhouse gas emissions as some rivals have.

Bernard Arnault’s eldest son, who leads environmental initiatives at the world’s biggest luxury group, said that while sales grew by 48 per cent between 2019 and 2022, LVMH’s emissions from direct business activities — known as Scope 1 and 2 — fell by 11 per cent by cutting back on air transport and reducing energy consumption in its stores and production sites.

However, its so-called Scope 3 emissions, which take into account its entire supply chain, increased by 16 per cent over the period. Scope 3 emissions account for about 95 per cent of the group’s carbon footprint.

“We are pretty good students” when it comes to tackling climate change but expanding the business is the priority, Antoine Arnault said in an interview.

“We are the champions of continued growth and certainly not of decline. I don’t believe that our [competitors] are Marxists at heart. This is our philosophy [and] it suits us,” he said.

“I am ready to respond to all the detractors, to all the criticisms of this self-evaluation. I would give us good marks even if we are never perfect, could do more, could be more engaged,” he added.

While rival French luxury group Kering has set ambitious group-wide reduction targets covering Scope 1,2 and 3 emissions — 40 per cent by 2035 and net zero emissions by 2050 compared with 2021 levels — LVMH has resisted setting absolute goals, preferring to set shorter-term goals to cut emissions relative to growth and focusing instead on greening its supply chain incrementally each year.

Emissions reductions in the luxury sector had been “a mixed bag . . . with some laggards”, said Stéphane Girod, professor at IMD Lausanne business school, with groups such as Kering, Richemont and women’s luxury apparel brand Ports leading the way on reducing direct emissions in recent years.

“The elephant in the room is that with incredible rates of growth, post-Covid, all their Scope 3 emissions have gone through the roof . . . They’re going up because of the pure volumes these companies are selling,” Girod said, adding that “very few companies are prepared to make that sort of compromise”.

LVMH had piloted a number of important initiatives on sustainable agriculture, traceability of raw materials and repurposing materials such as deadbolt fabrics, said Girod. But on emissions targets they have been less pioneering.

“Being the biggest group, the sheer volume and complexity and variety of sectors [at LVMH] makes it more difficult to reduce emissions . . . but LVMH is not as active as Kering has been,” he said. “Kering has been the leader of the pack.”

LVMH, the owner of Louis Vuitton and Tiffany, aims to reduce Scope 3 emissions by 55 per cent for each incremental percentage point in sales growth it records by 2030.

It also wants each incremental growth point to produce half the emissions from energy consumption by 2026, compared with a 2019 baseline.

“There was a very strong increase in turnover [between 2019 and 2022]. We are trying and we have succeeded in de-correlating these two subjects so that we can grow much faster and slow down our CO₂ emissions much more quickly,” Arnault said.

“We have always done things a little differently . . . it doesn’t bother us because we own the decisions we make and above all we believe in data, science and the reality of things, not in some sort of incantations that we could make to clear our conscience,” he said.

“Not everyone likes it, but that’s how it is. And so we will continue to set objectives like those you’ve seen.”

The company is now launching a new programme to tackle its Scope 3 emissions by helping its suppliers to improve their environmental practices, particularly in transport and raw materials.

The group has yet to fire a supplier for failure to comply with environmental standards, but Arnault warned this could happen. “For the years 2023 to 2026, we will see how they improve. But if they don’t play the game . . . we will draw the consequences along the way,” he said. 

However the luxury leader has no ambitions to promote less conspicuous consumption. “Becoming a sort of example of lower consumption, that’s not at all our objective and I don’t think that’s what our customers want either,” he said.