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Sustainability as a business model

Sustainability as a business model

Wednesday, 21 September 2022
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Christophe Roulet
Editor-in-chief, HH Journal

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8 min read

Watches and Culture hosted the first Watch Forum on September 13. Themes of transparency, honesty and responsibility emerged from this immensely successful day of debate on sustainability in the watch industry.

“Any talk of watchmaking makes Geneva happy, but this enthusiasm shouldn’t distract us from the environmental issues that are staring us in the face. This summer the effects of climate change were felt across the globe and Switzerland was no exception. It’s essential that we take action, fast. We need to rethink our lifestyles, our production models and our sales models.” With these words from Sami Kanaan, who serves on the City of Geneva Executive Council, the Watch Forum got down to business. Held on September 13 and organised by Watches and Culture for professionals in the industry, the forum addressed numerous aspects of sustainable development at panel discussions led by scientific experts, management consultants, representatives of NGOs, and heads of sustainability and CEOs from watch brands. “We’re here at this first edition of the Watch Forum to share experiences, highlight best practices and trigger the conversations and collaborations that will help us see further,” said Pascal Ravessoud, Co-director of Watches and Culture. “The objective is to direct the industry’s attention towards sustainability and encourage it to take action.”

Pascal Ravessoud co-directeur de Watches & Culture / Photo credit © Loïc Herin

Geneva has every reason to be happy. Watchmaking accounts for 25% of industrial jobs in the canton and represents 60% of its exports, as noted by State Councillor Fabienne Fischer. Data published by the Federation of the Swiss Watch Industry shows an industry in great shape. Over the first six months of 2022, Swiss watch exports increased by 11.9% year-on-year to then progress by 8.3% in July. This bright mood, in a branch whose products are increasingly positioned at the luxury end of the market, draws on a business model that emphasises the long term, as Patrick Pruniaux, at the head of Ulysse Nardin and Girard Perregaux, reminded the audience: “On a global scale, watchmaking is a very small industry. It produces tiny objects which are designed to last, can always be repaired and which, for the most part, are manufactured locally. Its environmental footprint is therefore minimal, but this is no reason not to take risks, as we did at Ulysse Nardin with new recycled materials.”

Some good news

Another type of risk—engendered by climate change, biodiversity loss and threats to the ocean—was discussed at length at the Watch Forum. And the hard truth, confirmed by the floods, heatwaves, droughts and wildfires that raged throughout summer, is that the situation is deteriorating at a much faster rate than predicted. Three decades from now, warming and acidifying oceans will contain more plastic than fish. Species populations have declined by 68% since 1970 and a million species are now threatened with extinction. Already, rising global temperature, currently 1.2°C above pre-industrial levels, have caused irreversible damage. Granted, governments are taking steps to tackle these issues. At last year’s COP26 summit in Glasgow, many signatories of the Paris Agreement announced emissions reductions targets with the aim of securing net zero by mid-century. But as Andrew Prag, Senior Advisor at the OECD, commented, “We are seeing little short-term implementation of these decisions.” This view was echoed by Gérard Bos from the International Union for Conservation of Nature: “We are progressing far too slowly. Without action, the system will collapse.”

Watch Forum 2022 / Photo credit © Loïc Herin

The good news—because there is some—is that steps are being taken within the watch industry. Virtually all the brands leading the way were at the forum to talk about the progress they have made so far in their journey towards greater sustainability. Representing IWC, Chief Marketing Officer and Sustainability Committee Chair Franziska Gsell spoke of how sustainability “is built into everything we do. We started making progress on these matters more than ten years ago, initially focusing on our supply chain. It’s vital that the entire organisation get behind these efforts and, clearly, our action is bearing fruit. IWC is one of the top ten Swiss companies to be declared a great place to work by its staff, and ranks twenty-sixth Europe-wide.” Rolf Studer is CEO of Oris which in 2021 was certified as a carbon-neutral company. “As citizens, we have responsibilities,” he declared. “So do companies. Ultimately, sustainability is an attitude.”

Still a way to go

The benefits of a circular economy were a central theme for Ulysse Nardin and Panerai. The latter developed a pool of a dozen companies willing to produce very small volumes for its Submersible eLab-ID™, which contains 98.6% recycled material. “We intended this project to be totally transparent,” said CEO Jean-Marc Pontroué. “We also want other brands to use this network for their own products, which some are now doing. Panerai aims to use nothing but recycled steel for its watches by 2025.” Another project making its ambitions clear is the Watch & Jewellery Initiative 2030. Launched in 2021 by Cartier and Kering, its currently 25 members are committed to a common core of building climate resilience, preserving environmental resources and fostering inclusiveness. The Initiative’s Executive Director Iris Van der Veken is under no illusion: “There is so much still to do,” she declared. Marie-Claire Daveu, Chief Sustainability and Institutional Affairs Officer at Kering, was emphatic: “Sustainability isn’t optional. It’s how we must do business.”

While the message is clear, it has still to be widely heard. A culture of secretiveness, lack of transparency, problems relating to traceability and certification, absence of diversity in the C-suite and psychological barriers to collaborations are some of the problems the watch industry needs to address if it is to go to the top of the sustainability class. “How many women occupy senior leadership positions in your company?” asked activist and consultant Chiara Condi. “Two? Maybe three? Responding to diversity in markets and among consumers can only happen when diversity exists within companies and at decision-making level.” Kate Cacciatore, Head of Sustainability at FigBytes, echoed these thoughts: “Sustainability isn’t the responsibility of this or that department. It’s not like setting up a new IT system. Sustainability must be embedded in the executive board and driven by humanist convictions.” Speaking on the delicate issue of sourcing precious materials, Marcin Piersiak, Executive Director at the Alliance for Responsible Mining, didn’t mince his words: “You all condemn informal gold and diamond mining but it’s time we stopped looking the other way. These miners are part of the industry, which is why we must work with them and bring them into sustainable supply chains.”

Beautiful and clean

Companies on their sustainability journey can take encouragement from the number of resources available, in particular for collecting measurable data. “Since 2015 we have provided companies with these resources with the aim of transposing the Paris Agreement into measurable standards,” said McKenna Smith, from the Science Based Targets initiative. “This implies transparency if we are to obtain reliable data as well as collective action if we are to obtain and quantify information that is harder to estimate, such as Scope 3 emissions.” Meanwhile, investors are waking up to the competitive advantage gained from socially and environmentally responsible practices. Companies themselves are quick to recognise that sustainability is good for their bottom line and good for the economy as a whole. With this realisation comes a shift away from purely emotional reasoning. Films about endangered species or young activists are great but they are not effective. “The only way to get things moving is to make sustainability a business strategy across the entire organisation, based on quantifiable data and measured impacts,” affirmed Bérengère Ruchat, Chief Sustainability Officer for the Richemont group. For Cyrille Vigneron, President and CEO of Cartier, “the most beautiful product must also be the cleanest.”

Pascal Ravessoud, co-director of Watches & Culture / Photo credit © Loïc Herin

“Transparency, traceability and inclusivity have been the key words throughout this forum. We should leave today with the firm intention to make sustainability a matter of daily importance,” said Pascal Ravessoud in conclusion. The Watch Forum is set to become a yearly event at which to discuss the pressing issues facing the watch industry. This successful first edition will continue over the coming months on the Watches and Culture online platform where original content will add to the debate and encourage more action.

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