May 13, 2021

‘We are facing a new paradigm about how a company’s profit is generated’

8 min read

When asked about her job title, Rossella Ravagli responds with ‘sustainable leader’. The former head of corporate responsibility at Gucci graduated in Statistical and Economic Sciences, and began her career working at certification bodies and several strategic consultancies. From 2008 to 2020 she served as head of corporate sustainability and responsibility at Gucci, where she created a CSR department, defined and developed the company’s sustainability strategy and all the projects and targets related to sustainability. She is a member of the SAI (Social Accountability International) board since 2009 and the author of several articles and publications.

Ravagli explained to The SPIN OFF how she operated within Gucci for the last 12 years and what pillars the fashion and textile industry should concentrate on to become smarter.

From 2008 to 2020 you worked for Gucci and grew a sensibility that didn’t exist before and created and established a Corporate Sustainability & Responsibility Department that also didn’t exist. Could you tell us about this experience?
My first meeting with the company happened a few years earlier during a seminar on CSR where I explained how such themes are central in business managing and what opportunities companies could get by taking a social responsibility and sustainability path. The company asked me immediately to start a path that could help sensitize its top management to these topics. In 2008, they asked me to join the company and work at this project from the inside. I accepted the challenge and worked there for 12 years. One of the first strategic levers I worked on was immediately creating culture and increasing consciousness through training. In the first year I trained about 700 people including managers, employees and workmen and continued with the aim to “bring on board” as many colleagues as possible. It was important to involve all the company’s departments in order to reach a common alignment and make sustainability become a topic for each of them.

With the same approach and passion I involved the value chain from the beginning through training meetings that were fundamental to make culture and knowledge permeate. I then started the building a mapping of the sourcing and productive processes to guarantee traceability and transparency and be clear about all the stakeholders involved in the value chain. I started finding a strategy aligned with clear objectives on people, environment, community, suppliers, a roadmap and an action plan that proceeds through constant measuring. The strategy has evolved through the years by picking emerging challenges like, for instance, climate change, biodiversity, circularity, new development models and becoming always more flexible open and inclusive. People inside and outside the company, the strong support of the CEO as brand and group, the effective involvement of all the stakeholders and the constant measurements together with a good amount of passion, empathy, creativity, integrity, tenacity and determination are values that have accompanied me through the whole journey in the company.

Actress Jane Fonda in Gucci's 'Off The Grid' campaign promoting items made of recycled nylon

Actress Jane Fonda in Gucci’s ‘Off The Grid’ campaign promoting items made of recycled nylon

During the C.L.A.S.S. digital seminar you said that in recent times the fashion industry has evolved significantly and companies started to establish a new business model following a path of “disruptive innovation.” How did that happen? Can you offer any examples?
In the last 20 years we have seen a change of attitude toward sustainable issues and practices. We noticed a change from a defensive approach to a participating optic.

This process was characterized by an acceleration in these last years for the greater attention from the whole worldwide community, including the financial one, and on sustainability from movements fighting against climate change, widely shared aspects that the pandemic made us think of with deeper and stronger attention.

I like to think of this process as a journey. The companies that started facing these aspects when sustainability was not a crucial issue had to manage social priorities related to the value chain, workers’ rights and human rights, and started answering solicitations that made them consider transparency and traceability as important aspects of their own value chain. This remains crucial also today, but differently from the past, today there is more knowledge and a greater awareness of good practices to refer to.

These companies have started sustainability strategies integrated to business and started a dialogue with a vast number of stakeholders to integrate their needs within their strategies. They understood they can change the rules working on the awareness of their social and environmental impact deciding to become even more responsible. Pioneering in this are companies like Patagonia, Kering Group, Gucci and Stella McCartney to mention a few. Another good example is B Team, an organization of a group of visionary leaders willing to better how they lead their business for the good of people and the planet.

Companies have started understanding that to behave virtuously and bring a significant change they have to know their impacts and measure them. Most impactful, for instance, are the extraction and the supply of the raw material and the impact on soil. It is indispensable keeping in mind new criteria of regeneration, circularity, recycling, reduction of resources, process efficiency and social impact. This requires redefining new business models, establishing ambitious objectives that can be reached by finding innovative technology that breaks away with traditional schemes and can help passing from an extractive era to a regenerative one.

Some companies have revolutionized their strategy analyzing most critical aspects. Some changed the source of their raw materials as coming from fossil sources, and, like for the denim industry, tried to reduce their consumption of energy and water. The luxury world, instead, started launching collections made with recycled and regenerated materials, an aspect that until a few years ago was considered impossible. In reality now it’s clear for everyone that nothing is impossible.

Designer Stella McCartney is considered a pioneer in the field of sustainability (photo: Stella McCartney s/s '21 collab with artist Yoshitomo Nara)

Designer Stella McCartney is considered a pioneer in the field of sustainability (photo: Stella McCartney s/s ’21 collab with artist Yoshitomo Nara)

Our next step will be from purpose to action,” you said. And you also explained that the culture of awareness has been fundamental in bringing a new awareness inside the company and transferring to consumers a sense of the goal why they purchase. Could you mention any actual example?
We are now facing a new paradigm about how a company’s profit is generated. Larry Fink, CEO of Black Rock, in his letter to CEOs speaks about “a sense of purpose,” which brings a significant change of perspective: from shareholders’ capitalism to stakeholders’ capitalism. It’s a “call to action” to companies that are “recalled” to have a “purpose” and demonstrate that economic performance is satisfying also by giving a positive contribution to the society, and in the long run the companies with the best performance incorporate a social purpose in their activities which is as important as the social one. It also becomes a differentiating element in terms of competition with other companies.

Consumers like Millennials and Gen. Z ask companies to be protagonists in changing the world and solving urgent problems like climate emergency, inequalities and the right to health and education, all central themes each company is asked to answer and put into play its reputation for.

Passing to action means understanding what strategies companies have to put into action to transform values into actual action for a fairer future and to pursue a common good.

There are different models for passing from “purpose” to action: the UN Global Compact, the Business Roundtable or the “Plan B” can encourage companies in making this change.

Most crucial today are an organization culture, a sustainability strategy integrated with a business strategy with SDG (Sustainable Development Goals) objectives and a roadmap to pursue, measure and better them with the passing of time, a good reputation, good relations with internal and external stakeholders and trained, informed and motivated workers.

Within your speech you said that in recent times our relationship with nature has to change from a “domination” one to a “participation” one. Could you explain how?
Nature has no idea of waste: everything is useful or necessary for someone else. It becomes indispensable to recover our relationship with nature and give back what has been taken from it. Investing in conservation projects and regenerative agriculture projects are solutions we cannot do without. From science, we learn that the planet needs one thousand billion of trees to eliminate the carbon dioxide that is in the atmosphere. The passage from the extracting era to the regenerative era will be the driver for present and future sourcing practices.

What are the main sustainable approaches that companies have taken?
Some have enacted more structured paths, others started dedicated projects or dedicated collections. Many of them grew to a more mature consciousness. Italy is based upon excellence of fashion and craftsmanship. It hosts historical companies that promote sustainable and innovation practices to lower significantly their environmental impact. I think of denim manufacturers who developed biodegradable stretch denim, or jeans made with organic cotton, 100% recycled cotton or upcycling projects recovering and reassembling leftover archive fabrics. Other good practices include the recovery of waste fabrics like silk, wool, cashmere and cotton. Other companies have entirely converted their productive systems in a circularity optic. It’s a revolution that is leading to a change in sensitivity and is and will be involving all the players who operate in this sector that will be protagonists and part of the solution.

What pillars will be founding the future evolution of companies referred to sustainability?
The time we are living is one of the most challenging ones after WWII and the Covid-19 pandemic showed the frailties, and the social and the economic inequalities of our global systems.

The leaders of every sector will be in front of a decisive crossroad, have to pick this historic opportunity and decide how to invest and work in order to re-equilibrate the world for everyone’s advantage. The world will have to be perceived as a common good, beyond personal interests and single business.

As heard during the last DAVOS World Economic Forum, companies are starting to consider themselves responsible toward their stakeholders and understand that by increasing their transparency they will have better performances in the long term. CEOs, more than ever, understand it is indispensable managing their business with a “purpose” and act coherently.

At the same time they have much more data and instruments at their disposal to better understand what is their impact and consequently for implementing their responsible strategies. Therefore, it is indispensable for them confronting with common measuring framework that are internationally recognized that integrate effectively financial metrics with ESGs (Environmental Social and Governance) to create the shared value.

Within a holistic vision, traceability, transparency, circularity, regeneration, innovation, cross-sector partnerships and collaborations, wellness of people, equity and inclusion are and will be the main ingredients of the new business models. There will be no prosperity without social justice, as social justice will have to play a central role in present and future strategies.

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