Italian luxury fashion house Prada is stepping up its sustainability drive by trying to lower its carbon footprint, using more recycled nylon and looking for alternatives to leather.
In fiscal year 2020, Prada scored below its peers on environmental issues and lagged on governance, ESG scores compiled by Bloomberg showed. Since then, there has been progress.
“We are B minus for CDP at the moment and we want to become an A as soon as possible,” said Lorenzo Bertelli, Prada’s head of corporate social responsibility, referring to a non-profit group that measures the environmental impact of companies.
“We expect to improve our score already this year.”
Mr Bertelli, 34, who is next in line to be chief executive, is the son of Patrizio Bertelli and Miuccia Prada, who together transformed the Milan-based company into one of the world’s most recognisable fashion brands.
He joined Prada’s board of directors in 2021. He’s also a member of board-level committee focused on environmental and social sustainability issues.
Prada has moved to burnish its sustainability credentials in recent years. In November 2021, Prada said it would use more low-impact materials in its products and packaging as well as lower greenhouse gas emissions as part of a carbon-neutrality push.
While sustainability scores are “fundamental” for evaluating corporate greenness, they can fail to capture the nuances of individual business models, Mr Bertelli said, while attending a conference in Lisbon on sustainability and ocean preservation, co-hosted by Prada and Unesco.
That applies to the assessment of modern slavery in Prada’s supply chain, he said.
“We produce almost all our products in Italy, compared to big companies of the fast fashion which produce abroad,” Mr Bertelli said.
“Already the fact that you produce in Italy should be counted for sustainable impact.”
In 2019, Prada issued the luxury industry’s first sustainability-linked loan, an instrument that offers a lower interest rate if certain sustainability targets are met, thereby saving the issuer money.
Prada arranged that €50 million ($52.1m) loan with Credit Agricole. It arranged a similar €75m loan with Japanese bank Mizuho in 2020. Both loans were linked to targets for more green, energy-efficient stores, employee training and the use of regenerated nylon in products.
A third loan, arranged in February 2021 with UniCredit, raised €90m and is linked to the regeneration and reconversion of production waste as well as to boosting Prada’s share of self-produced energy.
“We are progressing positively towards each of the targets,” Mr Bertelli said. “At the moment, the group doesn’t need more loans, as we have a positive cash flow.”
Mr Bertelli was in Lisbon to champion Sea Beyond, a programme that aims to raise awareness about ocean preservation among secondary school pupils.
The project is supported by revenue from Prada Re-Nylon, a collection of bags for men and women launched three years ago. The products are made from nylon yarn obtained by recycling discarded plastic collected from landfills and oceans. Since the end of 2021, Prada has converted all the production of virgin nylon into regenerated nylon.
Prada says its scientists are now trying to invent other eco-friendly materials, especially as a younger generation of buyers demand more sustainable products.
But leather — a mainstay of Prada’s handbags, jackets and shoes — is not that easy to substitute.