How does biodiversity loss, climate change and human rights affect your business? How does Pandora address these impacts?
A few years back, when crafting a new growth strategy for Pandora, we decided that sustainability had to be at the centre of our vision.
We defined three pillars on which we want to build our transformation: Climate Change, Circularity, Inclusion and Diversity.
We see climate change as the number one challenge for business in the future. Since 2020, we have used 100% renewable energy to craft our jewellery and have set very ambitious targets of cutting our carbon emissions by 50% by 2030 (including all 3 scopes) and achieving Net-zero by 2040. As of 2023, we have reached -27% (vs 2019 base) in our emissions in absolute terms while our revenues have grown 28%. We are on the right track.
We envision circularity as the main lever to achieve our sustainability targets and deeply decrease our impact on biodiversity. This is crucial for the transformation of our business. We decided to shift all our gold and silver sourcing to certified recycled metals. At the end of 2023, we have successfully been sourcing 100% recycled silver and gold through suppliers certified by the Responsible Jewellery Council’s Chain of Custody. It saves 2/3 of emissions for silver and more than 99% for gold. It obviously also has a lot of positive effects on our biodiversity impact. Likewise for the stones we use: as of 2023, we only source lab-grown diamonds, and other man-made stones, such as cubic zirconia. The carbon footprint of our lab-grown diamonds is only five percent of that of a mined diamond. We of course make sure we source from suppliers using only 100% renewable energies and follow the strict standards of the RJC.
Our final pillar on Inclusion and Diversity is also important. We have a target to reach gender parity in our senior management teams by 2030. We also include this vision in our marketing so that it reflects the diversity of the world.
This gives us a clear strategic framework to achieve our sustainability goals. We are on path but it is a constant effort. 25% of our management incentive programs are tied to sustainability targets, so everyone keeps these objectives on their front burner. We have also tied all company financing to our sustainability goals. We have put in place a system where our bank loan rates decrease when we deliver on our sustainability targets.
We see that Pandora is ambitious on its targets and rather successful on its road towards them. As you are opening new facilities in Vietnam this year, refurbishing stores and expanding your retail network, how do you foresee keeping up with these targets?
That is the challenge! But there is no excuse for not delivering on climate targets. The positive learning is that we have done it in the first years: we have grown our revenues while reducing our footprint. We just need to keep growing our efforts. We’re confident we’re on the right track, but that doesn’t mean that we will decrease emissions every year. There will be bumps in the road, but our global trend is on track. We keep a close look at all the possible initiatives, innovations, and practices that can counter our potential increases in emissions.
We know a lot more can be done to use renewable energy across the whole value chain, of transportation, of packaging or point-of-sales material. We started with the big contributors like raw materials. Now we can tackle the other ones.
Can you share some lessons learned from implementing circular economy principles or sustainability issues in your strategy?
I believe Pandora using only recycled silver and gold and embracing circularity principles in our production has been the major shift to reduce our impacts both on climate and biodiversity. This approach can be expanded to other materials and other aspects of the business. As our distribution is mostly through our own stores, we also retrieve unsold pieces and remelt them. It is very different from textiles for example. We do not end up with stacks of unsold pieces that we discard. Circularity already existed in the way our surplus is dealt with.
The first lesson is that sustainability is an unavoidable logic that needs to be implemented wherever possible. The other lesson is that to get things done, you need to work closely with your partners and suppliers. It took us four years to transition to sourcing 100% recycled silver and gold, because we had to involve our whole supply chain. It takes time, commitment and efforts to collaborate towards a common goal. This is the key: to have a long-term vision and cooperate with every stakeholder.
You also have to be prepared to pay a premium and absorb it in your margins, as we do for our silver and gold. It is an investment that we are willing to make because it serves a long-term goal and our vision of a sustainable business model.
Finally, you have to be alert to innovations that can change the game, such as lab-grown diamonds, for example. In this case, if produced the right way with renewable energy, it is not only more affordable for the final customer, but also much more sustainable for nature.
Do you foresee the theme of consuming less, whether at the production or the consumer level, as an important component of Pandora’s strategy in the future?
It comes down to what it is we need to achieve. We already need to reduce our footprint and mitigate the climate risk, which can happen in various ways. One way is the decision not to consume which to some extent, is very necessary on a global scale. Another way is to try to manufacture your products so that they have minimal footprint. Both ways will lead you to lower your impact. I believe the world cannot depend on just one solution. It will probably need a combination of both approaches. Currently, at Pandora, we are doing everything we can to reduce our impact. We believe we are showing a path towards the future of luxury with our products that have a very small footprint but doesn’t compromise on quality, materials or craftsmanship.
Why did you join the Watch & Jewellery Initiative 2030 ?
We felt it was aligned with our quest to implement a more sustainable business model. We saw the initiative as a great way to contribute to the industry’s transformation. It enables us, and everyone else, to share our learnings, and to help enlist more companies on the road to sustainability. The WJI2030 seemed like the perfect coalition to expand the sustainability agenda and help it mature. At the end of the day, it is not so much about what one company does, but what all companies, from every sector, do together. It is not about competition but about collaboration if we want to move the agenda forward.