2026年时尚业首席财务官报告

BUILDINGFINANCIALRESILIENCETHROUGHSUSTAINABILITY

FashionCFOAgenda2026

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Contents

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4

10

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ExecutiveSummary

CHAPTER1

TheCaseforSustainabilityasaCFOPriority

CHAPTER2

TheCFOistheStrategicCustodianofFinancialResilienceandSustainableValueCreation

CHAPTER3

CFOsMustPrioritiseEffortstoMakeCapitalMostImpactful

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19

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CHAPTER4

CFOsCanDeployCapitalMost

EffectivelyWhenOthersLeanIn

Conclusion

Appendix:ModelAssumptionsforExtendedProducerResponsibilityforTextiles

AbouttheAuthors

References

FashionCFOAgenda2026

3

ExecutiveSummary

Sustainabilityisincreasingly

impactingfashioneconomics9yetexecutiveattentionisdropping.

Thefinancialimplicationsofsustainabilitytopics

areintensifying.Fromextremeweathereventsand

sustainabilityreportingtocarbontaxesandemployeehealthandsafety,sustainabilityisreshapingthe

coststructuresoffashioncompanies.Climate-driven

disruptionshavealreadycontributedtopricespikesofuptotwofoldforcottonandwool,whilefeesassociatedwithtextileExtendedProducerResponsibilitycould

erodenetprofitsbyroughly4%by2030.

Atthesametime,thereareeconomicupsidesto

sustainability:roughly70%offashion-sectorGHG

emissionscanbereducedatalowcostorevenwithcostsavingsandcircularbusinessmodelsforseveralbrandshavedelivereddouble-digittop-linegrowth.

Yet,C-suitefocusinfashionhasshiftedawayfrom

sustainability.Analysesofinvestorrelationsearnings

callsindicatethatsustainabilitymentionshavedeclinedbyroughlyonethirdsince2022ascompaniesfocus

onmoreimmediatepressures—slowinggrowth,AIadoptionandgeopoliticalvolatility.

Thiscreatesafundamentaldisconnectinthe

boardroom:whilesustainabilitymayfeellessurgent,itsfinancialimportanceisgrowing.AndthatputsitatthecoreoftheCFOagenda.

CFOswhointegratesustainability

intofinancecanmasterriskand

costsandunlockvaluecreation.

Inourresearch,mostfashionCFOsreportedthatsustainabilityisnotfullyembeddedacrossthe

organisation,norisitproperlycapturedinfinancialindicatorsandotherperformancemetrics.

Tominimisecostsandmaximisevaluecreation,fashionCFOsmustpartnerwithCSOstoensuresustainabilityisintegratedintocorporatefinance.ForCFOs,this

includesday-to-dayfinancialcontrol(including

reporting,internalKPIsandperformancemonitoring),financialplanning(suchasbudgeting,forecastingandprocurementspend)andstrategiccapitalallocation

(includingM&A,innovationfundsandexternalfinancing).

Whencapitalistight9prioritisingsustainabilityeffortsisamust.

Short-termbudgetpressureistheleadingbarriertoinvestinginsustainability,accordingtoourresearch.

This,combinedwithavastandexpandingsustainabilityagenda,meansthatmostcompanieswillstruggleto

addressalltopics.Focusiscritical.

WeobservefourCFOapproaches,dependingonacompany’ssustainabilitymaturityandambition:

riskmitigator,costoptimiser,commercialdriverand

transformationenabler.Eachcomeswithadistinct

setofpriorities,fromastrictfocusonsustainability

complianceallthewaytofullyembeddingsustainabilityintocorestrategy.

Astheeconomicimpactsofsustainabilitytopics

intensify,brandsmayneedtoshifttheirapproachtostayfinanciallyviable.

TheCFOcanonlysucceedifothersleanin一bothwithinandoutside

theorganisation.

Withinthecompany,boardbuy-in,strongCFO–

CSOalignmentandcapabilitybuildingacrossthe

organisationarecritical.Externally,collaboration

withpeerstoadvancecollectivefinancing,greater

incorporationofsustainabilitymetricsinassessmentsbyfinancialinstitutionsandimplementationof

policiesthatreduceriskandimprovetheeconomicsofsustainabilityareneededforCFOstosucceed.

Theshiftisclear:sustainabilityisnowoperational,materialandmeasurable.WhiletheCSOsetsthedirection,theCFOenablesexecution.

FashionCFOAgenda2026

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CHAPTER1

TheCaseforSustainabilityasaCFOPriority

SustainabilityinFashionisLosingAirtime

Sustainabilityisreceivinglessexecutiveattentionthanitdidjustafewyearsago.Slowinggrowthiscontributingtothattrend.

Theapparelmarketisforecasttogrow2%–4%peryear(CAGR)between2023and2028,asteepdropfromthe7%–14%CAGRduringthepost-COVIDrebound.1Asaresult,executivefocushasshiftedtowardsmanagingtheimmediatemarginandbudget

pressures.Ininvestorcommunications,forexample,tariffs,marketvolatility,geopoliticaltopicsandAIhaveincreasedinprominencesince2022whilementionsofenvironmentalandsocialtopicshavedeclined.(SeeExhibit1.)

Thereducedairtimedoesnotmeanthatsustainabilityefforts

areatastandstill,butitdoessignalarisk.Currentmomentumislikelyinsufficienttoaddresstheproblem.Considerthefashionindustry’sclimatefootprint(between2-8%ofglobalgreenhouse-gasemissions),2wastegeneration(ascant1%ofclothingis

recycledintonewgarments)3andsocialchallenges.Companiesareunderpressuretomeetexistingcommitments(>50%ofthe

world’slargestfashionbrandshavetargetsverifiedbytheScienceBasedTargetsinitiative)4andcomplywithrapidlytightening

regulatoryrequirements.Failuretoaddressthesechallengeswillcomeatacost.5

AboutOurResearch

Thisreportisgroundedindeepengagementwith

morethan30CFOsandseniorexecutivesfromleading

fashionbrands.ThisCFOconsultationincludedin-

depthinterviewsanddetailedwritteninputcovering

sustainabilitystrategy,keybarriers,capitalallocation,

governanceandthefinancialtoolsusedtosteerprogress.

InadditiontotheCFOconsultation,findingspresentedherearebackedbyanalysisofmorethan150fashion

brands,includingtheirearningscallsandfinancial

approachtosustainabilityaswellasfinancialmodelling,casestudies,literaturereviewsandexpertinterviews.

Exhibit1

TradeandGenAItopicsareontherisewhilesustainabilitytopicshavedeclined

Shareofearningscallsmentioningatopicatleastonce,averageofQ1–Q4for2022and2025

Topicsofhighinterest

Profitability

Growth

Revenue

Supplychain

Pricingand

promotions CapitalallocationMarketing

0%50%100%

-1%

0%

-1%

-1%

-1%

0%

-3%

20222025

Topicswithgreatestriseinrelevance

GenAIᵃ

Traderestrictions andtariffs Artificialintelligence

ElectionsDeflation

ForexvolatilityFinancialreturns

-

mm489%

145%

90%

44%

14%

12%

50%100%

0%

Topicsrelatedtosustainability

Environmentalsustainability Socialresponsibility Corporategovernance

-27%

-31%

-44%

50%100%

0%

Significantincrease(morethan30%)Moderateincrease(5%to30%)

Nochange(+/-5%)

Moderatedecrease(-5%to-30%)

Significantdecrease(morethan-30%)

Sources:BCGmarketsensingtool;BCGanalysis.

Note:Includeslarge,mid,andsmallcapcompanies;n=143;numberofanalysedtopics=45.ᵃFor2022earningscalls,nomentionsofGenAI.

FashionCFOAgenda2026

5

SustainabilityisBothFinanciallyMaterialandIncreasinglyIntegraltoBusiness

Performance

Sustainability-relatedtopicsincreasinglycomewithmajor

financialimplicationsforfashioncompanies.Theseinclude

risingcostsandrisksbutalsoopportunitiesforexpandedvaluecreation.(SeeExhibit2.)

•Unavoidableandsemi-variablecosts:Non-discretionary

sustainabilityexpensessuchasregulatoryandcompliance

costsareincreasing.ForCFOs,thistranslatesintorecurring

Defining‘Sustainability’

Inthisreport,wedefinesustainabilityinlinewiththe

UnitedNationsAllianceforSustainableFashion

,6whichencompassessocialissues,suchasimprovementsin

workingconditionsandremunerationforworkers,aswellasenvironmentalones,includingthereductionofthe

industry’swastestream,anddecreasesinwaterpollutionandcontributionstogreenhousegasemissions.

andmeaningfulcostexposureratherthanone-offcompliancerequirements.Forexample,ExtendedProducerResponsibility(EPR)schemesfortextiles,whichimposefeesoneveryproductputonthemarket,aregainingtractionglobally.⁷OuranalysisindicatesthatEPRfeescoulddrivea1.1%COGSincreaseand4%netprofitdecreaseforalargemassfashionplayerby2030.(See‘DeepDive1’,p.8.)Meanwhile,withoutmitigatingaction,

Therewasatimewhenyou

wouldn’thaveameeting

withouttalkingabout

sustainability.Nowthe

dominanttopicisAI–butthatdoesn’tmeaneffortshave

sloweddown.Thefocushasmovedfrom'if'to'how'–howwebalancesustainability

prioritieswithinbudgetpressure.

–MargaritaSalvans,CFO,Mango

carbonpricingcouldhavesignificantimpactsonprofitabilityinthecomingyearsiffashionismoreexplicitlytargetedin

scope.8

•Financialrisksandearningsvolatility:Environmental

andsocialrisks,includingextremeweathereventsand

labourandhumanrightsissues,areincreasinglycausing

operationaldisruptionsandreputationalrisks.Thesehavealreadycontributedtopricespikesofuptotwofoldin

keyrawmaterialssuchascottonandwool,withreported

productiondeclinesandqualityimpactsacrosskeysourcingregions.9(SeeExhibit3.)Theresultingunpredictabilityis

furtheramplifiedbyshiftingpoliticalpriorities–forexample,changesinsubsidiesthatincentivisetheconversionofland

Exhibit2

Sustainabilityeffortscanminimisecostsandrisksandcreatevaluecaptureopportunities

Illustrationofsustainabilityrelatedimpactsonbusinessvalue

+

+

+

+

-

-

WhatCFOsmustminimise,planfor,andmanage

WhatCFOsshouldmaximiseenable,supportand

gatekeep

Businessvalue

(Baseline)

123456

Businessvalue

(Withsustainability-relatedimpacts)

!

$

DownsideprotectionValuecapture

1

2

Unavoidableandsemi-variablecosts:

Compliance,transitionandcapex

pressures(e.g.,EPRfees,reporting

andaudits,ITandprocessupgrades,manufacturinganddigitalinvestments)

Financialrisksandearningsvolatility:

Input,climate,socialandreputationalrisks(e.g.,rawmaterialvolatility,supplydisruption,labourdisputesandhumanrightsviolations,litigation,stranded

assets)

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4

5

6

Operationalefficienciesandcostreduction:

Energy,processanddesignsavings(e.g.,energy

efficiency,waterusereduction,wasteminimisation,improvedmaterialutilisation,eco-designefficiencies)

Toplinegrowthandinnovation:

Newbusinessmodelsandsustainableproducts

(e.g.,resaleandrental,subscriptionmodels,circularproducts,next-genmaterials)

Valuation,financing,andcapitalaccess:

Costofcapitalandfundingopportunities(e.g.,creditterms,valuationimpact,greenbonds,

sustainability-linkedfinance)

Indirectvaluecreationandsynergies:

Talent,reputationandknock-oneffects

(e.g.,talentattractionandretention,employee

engagement,brandloyalty,operationalandsupplychainvisibility)

Sources:Expertinterviews;GFA;BCGanalysis.

FashionCFOAgenda2026

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Exhibit3

Extremeweathereventsandthesocialagendainfluencepricevolatilityof

naturalfibres

Two-yeardrought

Multi-yeardroughtinAustraliaaffectedhay

DroughtintheUS,

monsoonsinlndiaand

Lowvolatility

ModeratevolatilityExcessivevolatility

Selectedevents:inlndia,cut

cottonyieldsandgrainsupplyand

importrestrictionson

ledtofarmersreducingthenumberofsheep

Chinareducedcotton

supply

Cotton

China

Datanotavailable

USA

lndia

Datanotavailable

Wool

NorthAustralia

Datanotavailable

SouthAustralia

Datanotavailable

WestAustralia

Datanotavailable

2012201320142014201520162017201820192020202120222023202420252026

Exhibit4

20%ofsupplychainemissionsforfashioncanbeabatedwhilesavingcosts

Supplychainemissionsforfashionsplitbyabatementcosts(%,2030)

100%

80%

60%

40%

20%

0%

~30%canbeabatedathighercosts(EUR20−EUR100+/tCO2e)

Recycling(useofrecycledfibers),switchtobiofuels,renewablebiomassandelectricalheatfortextileandsyntheticproduction,switchtoBEVtrucks,switchtosustainablefuelsinshipping

~50%canbeabatedatlowcost(~EUR10/tCO2e)

Switchtorenewablepowerforsynthetics,production,andmore,nature-basedsolutionsinagricultureandgrasslands

~20%canbeabatedwithapositivebusinesscase(<EUR0/tCO2e)

Modalshift(roadtotrains),materialwastereductioninprocesses,HVACprocessefficiency,smartroutinginitiatives,solarpowered

irrigationsystemsincottonproduction,processchanges(e.g.,

switchingtodrytechnologies),improvedprocessefficiency(e.g.,inspinning,sewing)

Source:TexProSourcinglntelligence;BCGanalysis.

Note:Graphshowsperiodsofexcessivepricevariability(i.e.,pricevariabilitythatexceedsapre-establishedthreshold).

Sources:UpdatedfromWorldEconomicForumandBCGreportTheSupplyChainOpportunity,January2021;BCGanalysis.

towardsfoodproductionratherthannaturalfibres.Forfinanceleaders,theresultisincreasingcostandearningsvolatility

andadditionalpressureonworkingcapital,inventorylevels,contingencyplanning,andsupplierdiversification.10

•Operationalefficienciesandcostreductions:

Asgreentechnologiesmature,theynotonlyoffer

environmentalupsidesbut,inmanycases,alsogenerate

costsavings.About20%offashion-sectorgreenhouse-gasemissionscanbereducedthroughactionsthatcomewitha

positivebusinesscase.(SeeExhibit4.)Theseactionsincludeimprovementstoenergyefficiencyandreductionsinmaterialwaste.Atthesametime,asmuchas70%ofemissionscan

beabatedataverylowcost,estimatedatbelowEUR10permetrictonneofCO2e-forexamplebyswitchingtorenewablepowerinproduction.Whilethedirectcostsavingsaremost

oftencapturedbysuppliers,brandscanindirectlybenefitfromthelowerproductioncostsandlowerexposuretocarbon

pricing.

•Toplinegrowthandinnovation:Sustainabilityinitiatives

canbecomepowerfulenginesofgrowth,differentiationandresiliencethroughdiversificationofincome.Forexample,

second-handfashionhasoutperformedtheoverallmarket

amidthecurrentslowdown11andisprojectedtogrowat10%CAGRfrom2025to2030.12Similarly,lower-impactmaterialssuchascertifiedorganiccottoncanattractnewconsumer

segmentsandtherebytapintonewrevenuestreams.ln

children’sclothing,forexample,customersaremorewillingtopayfororganicor‘chemical-free’alternatives.13

FashionCFOAgenda2026

•Valuation,financingandcapitalaccess:Sustainability

leadershiphasbeenshowntobeassociatedwithhigher

valuationsandenhancedaccesstocapital.14Forexample,

recentdatafromCDP15showthatclimateleadersforapparelhave14%highermarketcapitalisationthanlaggards.16

Inaddition,financialinstitutionsaremovingbeyond

sustainabilityasabroadtopic,assessingriskswithgreater

granularityacrossclimate,water,supplychains,labourandmore.Consequently,togainaccesstobetterfinancingterms,companiesareexpectedtoconductquantitative,financially-groundedassessments,includingcrediblecontingencyandclimatetransitionplans.17

•Indirectvaluecreationandsynergies.TheCFOconsultationrevealedthatsustainabilityalsobringsbenefitsthatcanbe

trickytoquantify.Forexample,acompany’ssustainability

recordcanimpactbrandequity,employeeengagementas

wellastalentattractionandretention,especiallyforyoungeremployees.Furthermore,sustainabilitycangeneratesecond-orderbenefits.Forexample,robusttransparencyandreportingcanstrengthenoversightofsupplychainsandinternal

operations,enablingadditionalnon-sustainability-relatedcostsavingsandvaluecapture.

SustainabilityisNowaCFOMandate

Astheairtimeforsustainabilitydeclinesandthedirecteconomicimpactoncompanyfinancialsincreases,afundamentalshiftis

takingplace.Sustainabilityisevolvingfroma‘highvisibility’topictoanoperationalandfinancialdisciplinetoensurecompany

resilience.Asaresult,itmustbeembeddedacrossallareasofthebusiness,particularlywithinthefinancefunction.

SeveraltrendsarereinforcingsustainabilityasaCFOpriority.

Sustainabilityresponsibilitiesareincreasinglymovingfrom

centralisedteamsintocorefunctions,includingfinance.At

thesametime,sustainabilityoversightandimpactevaluation

increasinglyrequirecapabilitiessuchasdatamanagement,

tracking,forecastingandcapitalallocation–areastypically

withinthepurviewofthefinancefunction.18And,finally,theCFOrolehasevolvedtoencompassoverseeingnotonlyfinancebutalsooperationsheavilyinfluencedbysustainabilitysuchasrisk,capitalallocationandlong-termvaluecreation.19

Asaresult,theCFO,inadditiontotheCSO(orotherleadof

thesustainabilityfunction),isacrucialstakeholderinensuringsustainabilityeffortsdelivermaximumfinancial,environmentalandsocialimpact.

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Sustainabilitysharpenshowwerunthebusiness.Whenyoustartmeasuring

impact,youuncoverinefficiencies.

Therealcostisn,tonlyemissions;it,salsotheoperationalwastetheyreveal.

–AdamKarlsson,CFO,H&MGroup

FashionCFOAgenda2026

8

DEEPDIVE1

ExtendedProducerResponsibilityforTextiles

ExtendedProducerResponsibility(EPR)fortextilesisalegislativeframeworkthatshiftsend-of-lifecoststofashioncompanies.

UnderEPRschemes,producerspayfeesonproductsplacedonthemarket.IntheEU,MemberStatesmustestablishtextileEPRsystemsbyApril2028.Otherjurisdictions–includingUSstatessuchasCaliforniaandcountriessuchasCanada,India,Kenya,ChileandSouthKorea–aremovinginthesamedirection.20Assystemsmature,EPRfeesareexpectedtorisetoreflecttherealcostsofcollection,sortingandrecycling–withthepotentialtoerodealreadystrainedindustrymargins.

QuantifyingtheExposure

WhileEPRfeesinmanycountriesarenotyetfinalised,the

ultimatecosttocompaniesmaybesignificant.Considerthe

impactonamass-fashionbrandwithUSD5billion–USD10

billioninrevenue(200million–400milliongarmentssoldper

year)acrossEU(50%),theUSA(30%)andAsia(20%).Annual

EPRfeescouldhituptoUSD60millionby2030,assumingfull

implementationacrosstheEUandpartialimplementation

acrosstheUSAandAsia.(Seeexhibitacross.)Thistranslatesintoanestimated1.1%increaseinCOGSanda4%reductioninnetprofit.(SeeAppendixfordetails.)

Ultimately,thecostofEPRtoanindividualbrandisdrivenbymultiplefactors.Revenueconcentrationinmarketssuchasthe

EUthatareimplementingEPR,largevolumesoflow-priceditems,andhard-to-recycledesignsallincreaseexposure.21(Continuedonnextpage...)

EPRfeesanddecreasesinnetprofitcanbesignificant,especiallyformass-fashionplayers

Example:EPRcostforalargemassfashionplayer

Costexposureforacompanywith~USD5B–10Binsales(USDM)

~60-120

Europe(50%ofsales)USA(30%ofsales)

~30-60

Asia(20%ofsales)

2-4

3-6

~20-40

~14-30

2-4

18-36

~4-8

~1-3

24-47

FullrolloutacrossEUfollowingWFDa

PartialEUrollout

FullrolloutacrossEU9USAandAsiab

202620272028202920302035

PartialrolloutacrossUSAandAsiab

Sources:WRAPTextileEPRStatusreport;RevisedEUWasteFrameworkDirective(2025);BCGanalysis.ᵃWasteFrameworkdirective.

2030impactonP&L

~1.1%

increaseinCOGS

~4%

decreaseinnetprofit

USD0.15

averageEPRfeeforgarmentsinscope

ᵇEPRdeploymentpossible,drivenbyEPRmomentuminotherproductcategories,buttextileEPR

FashionCFOAgenda2026

DEEPDIVE1(continuedfrompreviouspage)

MitigatingtheImpact

AlthoughEPRexposurecannotbeeliminated,itcanbereduced.Topreparefortheinevitableimpacts,CFOs,CSOsandother

C-suiteexecutivesneedtoworkcloselytogethertoprepare,

monitor,mitigate,strategiseandshapetextileEPR.Indoingso,itispossibletocaptureadditionalbenefitssuchasincreasedtransparencyandenhancedopportunitiesforcostreductions.

Intheshortterm,brandscanreduceEPRcostsbyadjustingtheirproductmixtowarditemsthatarerewardedmorefavourably

underecomodulatedfeestructures.Eco-modulationisa

mechanismtofurtheradjustfeestorewardcircularorlower

impactdesignswhilepenalisinglesssustainableones.Whilethefinaldetailsofhoweco-modulationwillworkarebeingdiscussedintheEUa,currentexamplesoffeaturesthatmayleadtolower

feesincludedurability,recycledcontentandeasyrecyclability.

Inpractice,thiscouldencouragebrandstoadaptproductdesignandportfoliomix,forexamplebydevelopingmono-material

garments,increasingrecycledcontentandreducingtrims.

Inthelongerterm,costscanbereducedbylimitingthevolumeofgarmentsneedingend-of-lifetreatment,includingbyscalingnewbusinessmodels,forexample,rental,repair,resaleanddesigningforlongerproductlifetimes.

KeyactionstoprepareandmitigateimpactsoftextileEPR

1

2

3

4

5

Prepare>

Monitor>

Mitigate>

Strategise>

Shape

(optional)>

Ensurestreamlinedreportingandrobust

product-leveldatainfrastructuretosupportEPRcompliance

Assessandmonitorcategory-andregion-specificexposureandmarginimpact

Developshort-andlong-termleverstoreduceexposure(e.g.,eco-modulation,portfolioshifts,newbusinessmodels)

DecidehowtomanageunavoidableEPR

costs(absorb,passontoconsumers,passontosuppliers)

Engagewithindustry,policymakersandPROstoshapeEPRsystemsandpushforharmonisedstandards

Sources:Expertinterviews;BCG.

9

FashionCFOAgenda2026

CHAPTER2

TheCFOistheStrategic

CustodianofFinancial

ResilienceandSustainableValueCreation

CFOsCanLeverageFinancetoMakeSustainabilityaReality

TheCFO’sroleinsustainabilityiscrucial,andfundamentally

differentthanthatoftheCSO’s.CFOsadduniquevalueby

embeddingsustainabilitydirectlyintotheiroperations.By

leveragingtheirexpertiseinfinancialrigor,dataownership,

organisationaloversightandcapitalgatekeeping,CFOscan

ensurethatinitiativesdeliversocialandenvironmentalbenefitswithoutneedlesslysacrificingfinancialperformance.Indoingso,theybuildtheconnectionbetweensustainabilityandfinance,

creatingtheincentivesandmomentumneededformeaningfulprogressandlong-termresilience.

ThereisaGapBetweenAmbitionandIntegration

MostoftherespondentsinourCFOconsultationrated

sustainabilityasveryimportantorcriticaltocompanystrategy.However,fewreportedthatsustainabilitywasfullyintegratedacrosstheirorganisation,includingfinance.

Theimplicationsarematerial.Withoutfinancialintegration,

sustainabilityeffortsaresignificantlylesslikelytosucceed.22Costsareabsorbedratherthanactivelymanaged,risksareaddressedreactivelyandupsideopportunitiesremainuntapped.

Sustainabilityisnottreatedasastandalonebusinessdecision.It,sembeddedinourwayofworking.

–MiaZhou,CFO,eBayUK

10

FashionCFOAgenda2026

IncorporatingSustainabilityIntoDay-To-DayFinance

Toensurethatsustainabilityisprioritised,monitoredandfinancially

enabled,CFOsmusthardwireitintoallareasoftheirremit.Thisincludesday-to-dayfinancialcontrol,annualfinancialplanningandlong-term

deploymentofstrategiccapitalallocation.(SeeExhibit5.)

Exhibit5

SustainabilitymustbeintegratedacrossallCFOareasofresponsibility

Foundational

Advanced

FinancialControl

Day-to-dayaccounting,datagovernance,

complianceandregulatoryreporting,

internalperformance,KPIs,treasuryand

investorrelations

•Sustainabilityreportingandtransparency

•SustainabilitymetricsinBUKPIs

•Sustainabilityintegrationintoinvestorcommunications

•EnvironmentalP&L(EP&L-stylemodels)

•Sustainability-linkedbonusstructures

FinancialPlanning

Annualbudgeting,forecastingand

riskmodelling,investmentapproval

thresholds,procurementspend,product

marginsetting,pricingdecisions

Mechanismsforintegratingsustainability

•Cleardecisionframeandstandardisedbusinesscasesforsustainability

•Greencapexcarve-outsinannualbudget

•Sustainabilityprocurementinitiatives

•Subsidiesandsupportschemes(e.g.,formoresustainablematerials)

•Sustainabilityrisk(includingclimate,water,social)scenariomodellinginFP&A

•Internalcarbonpricing(e.g.,carbonshadowpricingandinternalcarbonfees)

•Sustainability-adjustedIRRorhurdlerates

StrategicCapitalAllocation

Amulti-yeartimelineforM&A,innovation

fundsandprograms,pilots,newbusiness

models,bondsandloansissuance,

supplychaintransformations

•Marginalabatementcostcurve(MACC)creation

•SustainabilityKPIsininvestmentstrategyandevaluationsofcurrentinvestmentsandfinancing

•Sustainability-adjustedvaluationmodels,businesscaseorportfoliostrategy

•Sustainability-linkedfinancemechanisms,earn-outsordebtcovenants

•Blendedandconcessionalfinance

Source:BCGanalysis.

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DEEPDIVE2

BetterDecision-MakingThroughFinance-LinkedSustainabilityData

Since2015,Kering’senvironmentalprofitandlossstatement(EP&L)hasquantified

andassignedamonetaryvaluetoenvironmentalimpactssuchascarbonemissions,

wateruse,pollution,waste,andlanduse