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The reflective quarantine

Interview with Eleonora Rizzuto, Director of Sustainable Development of the Bulgari Group and LVMH Italy

by Alberto Adobati, Expert on Communication. Member of Idea Diffusa CGIL and expert of CTS OpenCorporation

In the past few months a virus has been able to extend its infection chain very quickly, turning into a multinational virus and reaching the global dimensions of a pandemic. Today, for all of us, nothing is as it was before.

The consequences for multinational companies, their supply chains and their workers can only be assessed in the future and on the basis of the evolution of the health emergency still underway in many countries. But this is precisely what the OpenCorporation Observatory has focused on, namely the analysis of the changes underway and the new scenarios that are emerging. We are in fact living in a transitional phase that will lead us to a new normality, so today more than ever there is an opportunity to make multinational companies more transparent, inclusive and accessible.

During the lockdown phase we had the opportunity to meet with many representatives of the nearly 600 multinationals who, starting from the end of June, have been invited to integrate, verify and correct the pre-filled information from the OpenCoporation databases to refine and compare their ratings on: Social Dialogue, Working Conditions, Corporate Social Responsibility, Financial Management, Diversity and Social Inclusion, Corporate Policies on Accessibility, Environmental Sustainability, Fiscal Impact and Transparency. Many new features have been introduced in the OC 2020 corporate assessment form, including the dialogue with Business Human Rights, the map of subsidiaries with georeferencing and the corporate tax impact indicator. The coming 18th December 2020 is the date set for the third edition of the OpenCorporation Day, where the OpenCorporation 2020 ranking will be presented and the changes underway will be discussed.

Today we would like to share what emerged from the interview conducted during the quarantine phase with Eleonora Rizzuto, Director of Sustainable Development of the Bulgari Group and LVMH Italia, part of the LVMH multinational company  which today leads the OpenCorporation ranking ahead of ENEL and Allianz. Ms. Rizzuto is also President of Aisec – Italian Association for the development of the circular economy – and National Objective 12 UN Coordinator for ASviS – Italian Alliance for Sustainable Development. With her, therefore, we had the opportunity to reflect both on the impact of the pandemic on the fashion and luxury goods supply chain and on the prospects and new priorities of sustainable development and the circular economy at the Covid 19 test.

Ms Rizzuto, what were the initiatives taken by LVMH in Italy, in the first two months of the lockdown, with a view to sustainability?

Several actions were taken promptly and for two main reasons. The first is related to the Group’s sustainable approach, which in case of emergencies such as these wants to be at the forefront by putting in place concrete actions and resources, as evidenced by the attention to sustainability even under normal conditions, as the OpenCorporation rating can confirm . On the other hand, we believe that any multinational company that positions itself in high-end products must guarantee all-round sustainability, even more so at a time of pandemic.

The first interventions were carried out thanks to the coordination between brands and local authorities with speed and commitment, but also with the creativity typical of our sector and the “made in Italy” approach applied to doing concrete things.

We can summarise the initiatives in two broad categories. Monetary contributions one hand: for example, Bulgari supported the Spallanzani Hospital in Rome, immediately after isolating the virus, by donating a 3D microscope. There have also been many donations to other hospitals, to the Red Cross, to the Italian Civil Protection, to voluntary associations. A characteristic linked to the territoriality of the interventions, also in favour of small businesses and small municipalities, giving continuity to the relationships already created in the past and with the social fabric of the areas in which the Group operates. One example in this sense: the  Venezia DFS, the so-called “Fondaco”, took part in the implementation of the hospital beds in Venice, a city already very much affected by floods and then by the tourism blockade.

The other category is to act on the product, in line with the future of strategic philanthropy. To date we had few cases of donations made thanks to the sale of a product, while now, for example, Acqua di Parma, already very attentive to the traceability of the ingredients of perfumes and creams, within just a week has invented a platform, #StayHome, an actual campaign for donation, similar to the launch of a product. In just a few days they collected 100 thousand euros which were donated to the Lombardy Region. What is changing, also thanks to the use of technology, is the possibility of using artificial intelligence and innovation for philanthropic purposes, with the client who is also a donor at the same time. And they can decide whether to buy a product that already has a separate part of the price allocated to a traceable donation, or make a direct collateral donation upon purchase.

What impact can the pandemic have on the luxury fashion industry and when can we expect it to resume normal operations?

The quarantine situation has been dramatic, and not only at the level of big brands, with lost revenue and a drop in turnover in the sector estimated at minus 30/40% in the first four months of the year. But with problems that extend to the related industries, to the small realities that live off the orders of the big brands, each of which may have as many as five or six thousand suppliers. Each of these smaller ones is in danger of disappearing, so governmental interventions in support of employment and possible relocation where it is no longer possible to reopen are fundamental.

If there were three months of stoppages, the multiplier to recover previous productivity levels could be five: in other words, a real recovery could only come after 18 months from the beginning of the health emergency. Such a wide range imposes a strong response, no one can be left behind, no suppliers and no workers in the supply chain, but many markets have really slowed down or stopped for a long time.

Restarting the production sites is different from doing the same in offices, and even within each company there are peculiarities according to regional regulations and  the orders that need to be processed. As for the automotive sector, we focus on emptying the warehouses and then reopening the production sites. The textile and leather sector has managed to restart production almost immediately, for at least 30/40% of production capacity, also for stock maintenance needs. While in the offices we find the most innovative approaches in the development of new balances, with incentives for remote working or in any case a mixed working mode with rotating inputs (and here the dialogue between the social partners is fundamental to establish new rules), which can allow to achieve even greater efficiency than before, and in compliance with the needs of workers, which seems desirable. There are of course also welfare initiatives to balance private and working life, to cope with the new scenario that is emerging, but thanks to the extended quarantine period now the need for “physical presence” seems outdated at all levels of the hierarchy.

Will you be able to guarantee safety at work in this new context?

First of all, there was an acceptance of responsibility to transform the supply chains that could be converted, starting with the production of masks for those who work in the textile industry to cope with the lack of availability throughout Italy. There were also interesting examples of circular economy applications such as that of alcohol not used in perfumes which was transformed into disinfectant gel, and then donated it to the Civil Protection department.

All of this is also made available to personnel within the LVMH group during the reopening of sites, with masks and disinfectants available to all workers at the entrance, together with other security devices such as thermal scanners and protective devices for shoes. Once we have ensured the first level of security for the staff, we plan to stagger the staff alternately and respect the minimum distance of one meter and even more, in addition to providing continuous training on how to manage the situation. Spacing, the application of remote working and the obligation of security devices are cornerstones to allow the reopening of productive activities.

Can the quarantine phase and the resulting family needs have an impact on gender difference in the workplace?

Historically, the reconciliation of family needs has found in the part-time formula the most widely used solution, with a clear predominance of the female population. Maybe this pandemic will help to see the phenomenon with new eyes, such as transversal remote working solutions and an increased contribution of the male population to childcare at home. Despite the fact that even culturally the burden is primarily on the mother, many hope for and note a trend towards equality.

How do you think social dialogue and bargaining will evolve?

They will include new content, with the union also having to deal with the management of remote working, with control and security measures even on the smallest companies where worker representation is not always present, and so on. It is desirable that trade unions take strong positions, and together with the employers’ associations, take measures that can be monitored and effectively implemented in the workplace. Now more than ever before, they need to focus on health and safety issues that affect all occupational groups and need to start writing a new chapter of union relations, and do so very quickly.

Within the fashion and clothing supply chain, how does the Italian scenario look compared to the international one?

This is a challenge as well, to bring back some supply chains that were outside Italy or outside Europe. Global business is changing and with it the entire supply chain, with short range production and new proximity chains: we are beginning to witness this phenomenon not only in the clothing sector but also, for example, in the agricultural and food industry. Many entrepreneurs have already decided to move back production from abroad to Italy, also to support national employment and the country in general.

Thinking of the 2030 Goals, in your capacity as the UN Goal 12 National Coordinator for ASviS, do you imagine that priorities will evolve or shift in any way?

There are many implementations of the 2030 agenda that were not so clear in 2015. We can make two macro-considerations. The first, regarding method: it is no longer possible to think of an internal governance of a national system in which inter-ministerial coordination on the various economic, social/welfare and environmental issues is not foreseen. This governance presents a very difficult challenge but it certainly is the true turning point. The other aspect concerns the possibility of seizing new opportunities that are opening up to ensure sustainable models of production and consumption. Let us give a concrete example thinking about the price of oil, which has recently reached unprecedented downward peaks. This drop imposes a question: do subsidies to fossil fuels still make sense or, at least in part, they can be devolved to sectors that need development, with the emphasis on the implementation of the circular economy?

Speaking of circular economy, is the pandemic more of an opportunity or a danger?

Here we find very different schools of thought. Some people see this moment as interesting, especially in the food sector with new good practices already being implemented, while in other sectors there seem to be signs of fatigue caused by the stoppage of some production activities.

There is no lack of reasons for concern, starting from one of the central elements of the circular economy represented by the dematerialization of production, i.e. without using new materials and recovering those already in circulation. From this point of view, the lockdown phase has certainly not helped: if the Plast Mix is not used by the ceramic industry because it has stopped, for example, the Plast Mix must finally be disposed of and sent to the landfill or incinerator. Another example: the toy industry has a high component of recycled plastic, but the slowdown in the industry risks generating accumulations that are difficult to dispose of.

A further risk factor is education on sustainable consumption and consumer education, for which awareness levels have been raised in recent years. But now, with the reopening of bars and restaurants, are we sure that attention is being paid to recycled or plastic-free plastic? The first signs do not seem very encouraging, the focus at least momentarily seems to have slackened at least in part, also in terms of willingness to pay more for truly sustainable products.

A wish for the coming months on the subject of the circular economy?

That the reopening of productive activities makes it possible to act on the training of the producer and the consumer, and improve press communication, in order to start again in a virtuous way. I hope that there will be a growing emphasis on initiatives such as that of March 11th by the European Union, which has launched an update of the circular economy plan with precise rules on packaging, as well as on plastic free products and producer responsibility for durable products.

Negotiation between trade unions, associations, politics, citizens, consumers: this is the recipe that is needed and that I hope for. The circular economy does not have the capacity to self-fulfill itself; instead, it needs precise political planning. We therefore need to combine support measures in the start-up phase, such as 110% eco-bonuses for home renovation, with similar circular economy projects to encourage both producers and consumers.

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