Who – the protagonist
Philippe Blondiaux, Global Chief Financial Officer for luxury group CHANEL.
What?
In 2020, Blondiaux spearheaded the launch of Mission 1.5⁰, a strategic plan to move the 100+ year old brand toward a net-zero carbon footprint by 2050.
In the same year, Blondiaux also convinced the owners to enter into a sustainability-linked bond agreement, which forced the company to further disclose financial and internal information, hence breaking with its tradition of discretion. Blondiaux had already made headlines in 2018 when CHANEL published its public earnings for the first time in its 111-year history.
Why?
Why does a privately owned, cash-rich company disclose its financial and non-financial information and tie its own hands with sustainability targets?
Mission 1.5⁰ was a blueprint for formalising all sorts of bottom-up initiatives that were already taking place and allocating resources to deliver on the brand’s environmental, social and governance (ESG) imperatives. But would Mission 1.5⁰ be sufficient for CHANEL to really deliver positive impact? What is the role of a CFO in driving a strategic transformation around sustainability? Was the company going far enough to address the social and environmental challenges the luxury industry faced and to lead the fashion, watches and jewellery and cosmetics industries on a sustainable path?
When?
Mission 1.5⁰ was launched in March 2020.
Where?
Throughout its history, CHANEL has been the epitome of luxury, and an engine of both timeless and cutting-edge fashion. The company’s founder, Gabrielle Chanel (better known as “Coco”; 1883–1971) single-handedly dragged women’s apparel from the Belle Époque into the 20th century, after founding CHANEL’s first shop in Paris in 1910.
Currently, CHANEL has a worldwide workforce of nearly 28,000 people and over 300 boutiques.
Key quote
What next?
In 2023, Blondiaux and Kate Wiley, chief sustainability officer, worked together to speed up the transformation of the 1.5⁰ Mission. CHANEL was making headway, but challenges abounded for the brand. Scaling and cascading such a transformation in a highly decentralised organisation presented multiple operational challenges.
What would be the implications for CHANEL’s business model and the way it should lead the three industries in which it operated? How would it secure the transition from a culture of discretion to a culture of transparency when the brand still needed to protect the mystique required to operate in the luxury space?
On the reasons for writing the case…
Stéphane, Vanina and Martin said: “CHANEL is a leader across three luxury sectors and an emblematic luxury brand. It was the first time the brand opened its doors to a case study, so we were very excited.
“Many corporate transformation cases are written from the point of view of the CEO or chief sustainability officer. We found it interesting and pioneering to write a case driven by a chief financial officer in the luxury industry. Traditional sustainability typically does not include either of these points of view.
“Many of the issues addressed in the case can be applied to other industries e.g. how to create a culture of data reporting and rigor to transform operations to be more sustainable, how to choose the right ESG targets, how to place sustainability at the core of strategy, and how to lead a transformation in a complex global organisation with tens of thousands of employees.”
On the case writing challenges…
Stéphane, Vanina and Martin continued: “What really captivated us was the incredible depth of talent and resources that CHANEL invested to formulate and execute Mission 1.5⁰. Finance comes across not just as a constraint but also as the enabler of non-financial performance.”
On teaching the case…
They added: “Our experience with both MBAs and executives has been very positive. The discovery of how to align the purpose, the strategic agenda for sustainability and the different pieces of its execution is illuminating. We are also learning in each session from the ideas of our students and participants about what CHANEL should do next, so the case not only develops the rational side for approaching sustainability (the framework) but also the creative side where students can relate their recommendations to their experiences in other sectors.”
On how students react to the case…
They commented: “Participants are very excited to discover what is going on inside such an iconic brand. They also see the importance of business doing much better on sustainability across the board. They comment on the depth and length of the ‘job to be done’, and they are excited to see that they and everyone in a company can make a contribution toward positive impact.”
On case writing tips…
Stéphane, Vanina and Martin concluded: “When one collects such a wealth of data, one really must be selective on what is kept in and out of the case. The storyline of the case is, therefore, extremely important. Both are linked at the end of the day to the learning objectives.
“It was important when writing the case on CHANEL to have an authentic storyline of its journey towards Mission 1.5⁰, while ensuring the insights presented are applicable across diverse industries beyond the luxury sector.”
Hear from Philippe Blondiaux
Philippe said: “The case with IMD explores one key theme.
“Transforming a supply-chain, transforming a company in general, especially with an objective as ambitious and complex as moving to Net Zero, must be everybody’s responsibility, not just the focus of a few specialists or experts. This is the first message I have tried to pass on, and continue to pass to all the finance employees at CHANEL around the world. They can, they must, all of them, individually and collectively, influence the CHANEL sustainability agenda.
“That’s the sense of the sustainability-linked bond: how can we align our financing strategy to the objectives of the company, and make the cost of this financing dependent on our ability to make progress towards the CHANEL Mission 1.5⁰ climate objectives.
“But the same is valid for our procurement teams, our reporting teams, our cash management teams, our tax teams etc. – each function can, must, and will contribute in their own way.
“I have truly enjoyed working and collaborating with the IMD faculty on this case, a new and enriching experience for me.
“I hope this case will be widely used and useful to students and faculty.”
The case
Who – the protagonist
Philippe Blondiaux, Global Chief Financial Officer for luxury group CHANEL.
What?
In 2020, Blondiaux spearheaded the launch of Mission 1.5⁰, a strategic plan to move the 100+ year old brand toward a net-zero carbon footprint by 2050.
In the same year, Blondiaux also convinced the owners to enter into a sustainability-linked bond agreement, which forced the company to further disclose financial and internal information, hence breaking with its tradition of discretion. Blondiaux had already made headlines in 2018 when CHANEL published its public earnings for the first time in its 111-year history.
Why?
Why does a privately owned, cash-rich company disclose its financial and non-financial information and tie its own hands with sustainability targets?
Mission 1.5⁰ was a blueprint for formalising all sorts of bottom-up initiatives that were already taking place and allocating resources to deliver on the brand’s environmental, social and governance (ESG) imperatives. But would Mission 1.5⁰ be sufficient for CHANEL to really deliver positive impact? What is the role of a CFO in driving a strategic transformation around sustainability? Was the company going far enough to address the social and environmental challenges the luxury industry faced and to lead the fashion, watches and jewellery and cosmetics industries on a sustainable path?
When?
Mission 1.5⁰ was launched in March 2020.
Where?
Throughout its history, CHANEL has been the epitome of luxury, and an engine of both timeless and cutting-edge fashion. The company’s founder, Gabrielle Chanel (better known as “Coco”; 1883–1971) single-handedly dragged women’s apparel from the Belle Époque into the 20th century, after founding CHANEL’s first shop in Paris in 1910.
Currently, CHANEL has a worldwide workforce of nearly 28,000 people and over 300 boutiques.
Key quote
What next?
In 2023, Blondiaux and Kate Wiley, chief sustainability officer, worked together to speed up the transformation of the 1.5⁰ Mission. CHANEL was making headway, but challenges abounded for the brand. Scaling and cascading such a transformation in a highly decentralised organisation presented multiple operational challenges.
What would be the implications for CHANEL’s business model and the way it should lead the three industries in which it operated? How would it secure the transition from a culture of discretion to a culture of transparency when the brand still needed to protect the mystique required to operate in the luxury space?
Author perspective
On the reasons for writing the case…
Stéphane, Vanina and Martin said: “CHANEL is a leader across three luxury sectors and an emblematic luxury brand. It was the first time the brand opened its doors to a case study, so we were very excited.
“Many corporate transformation cases are written from the point of view of the CEO or chief sustainability officer. We found it interesting and pioneering to write a case driven by a chief financial officer in the luxury industry. Traditional sustainability typically does not include either of these points of view.
“Many of the issues addressed in the case can be applied to other industries e.g. how to create a culture of data reporting and rigor to transform operations to be more sustainable, how to choose the right ESG targets, how to place sustainability at the core of strategy, and how to lead a transformation in a complex global organisation with tens of thousands of employees.”
On the case writing challenges…
Stéphane, Vanina and Martin continued: “What really captivated us was the incredible depth of talent and resources that CHANEL invested to formulate and execute Mission 1.5⁰. Finance comes across not just as a constraint but also as the enabler of non-financial performance.”
On teaching the case…
They added: “Our experience with both MBAs and executives has been very positive. The discovery of how to align the purpose, the strategic agenda for sustainability and the different pieces of its execution is illuminating. We are also learning in each session from the ideas of our students and participants about what CHANEL should do next, so the case not only develops the rational side for approaching sustainability (the framework) but also the creative side where students can relate their recommendations to their experiences in other sectors.”
On how students react to the case…
They commented: “Participants are very excited to discover what is going on inside such an iconic brand. They also see the importance of business doing much better on sustainability across the board. They comment on the depth and length of the ‘job to be done’, and they are excited to see that they and everyone in a company can make a contribution toward positive impact.”
On case writing tips…
Stéphane, Vanina and Martin concluded: “When one collects such a wealth of data, one really must be selective on what is kept in and out of the case. The storyline of the case is, therefore, extremely important. Both are linked at the end of the day to the learning objectives.
“It was important when writing the case on CHANEL to have an authentic storyline of its journey towards Mission 1.5⁰, while ensuring the insights presented are applicable across diverse industries beyond the luxury sector.”
Protagonist perspective
Hear from Philippe Blondiaux
Philippe said: “The case with IMD explores one key theme.
“Transforming a supply-chain, transforming a company in general, especially with an objective as ambitious and complex as moving to Net Zero, must be everybody’s responsibility, not just the focus of a few specialists or experts. This is the first message I have tried to pass on, and continue to pass to all the finance employees at CHANEL around the world. They can, they must, all of them, individually and collectively, influence the CHANEL sustainability agenda.
“That’s the sense of the sustainability-linked bond: how can we align our financing strategy to the objectives of the company, and make the cost of this financing dependent on our ability to make progress towards the CHANEL Mission 1.5⁰ climate objectives.
“But the same is valid for our procurement teams, our reporting teams, our cash management teams, our tax teams etc. – each function can, must, and will contribute in their own way.
“I have truly enjoyed working and collaborating with the IMD faculty on this case, a new and enriching experience for me.
“I hope this case will be widely used and useful to students and faculty.”
