Fashion Label Chanel Invests $25 Million in New Climate Adaptation Fund

Chanel is backing a new climate adaptation fund that aims to raise $100 million by 2025 to invest in projects. (Getty Images)
Chanel is backing a new climate adaptation fund that aims to raise $100 million by 2025 to invest in projects. (Getty Images)
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Fashion Label Chanel Invests $25 Million in New Climate Adaptation Fund

Chanel is backing a new climate adaptation fund that aims to raise $100 million by 2025 to invest in projects. (Getty Images)
Chanel is backing a new climate adaptation fund that aims to raise $100 million by 2025 to invest in projects. (Getty Images)

French fashion house Chanel is backing a new climate adaptation fund that aims to raise $100 million by 2025 to invest in projects to promote sustainable agriculture, protect forests and support small-scale farmers in developing countries.

The Landscape Resilience Fund (LRF) was developed by green group WWF and Swiss-based social enterprise South Pole and is starting with $25 million from luxury brand Chanel and $1.3 million from the Global Environment Facility.

An independent nonprofit, the LRF aims to attract a further five to 10 additional investors to help finance small businesses and projects that foster climate-resilient agriculture and forestry practices, and protect natural systems.

Martin Stadelmann, a senior director at South Pole, which will manage the LRF, said it was a pioneering way for a major multinational company to invest in adaptation to climate change.

"As (with) other companies, some of their supply chains are under threat because of climate change," he told the Thomson Reuters Foundation.

One million animal and plant species are at risk of extinction due to humankind's relentless pursuit of economic growth, scientists warned in a 2019 landmark report on the devastating impact of modern civilization on the natural world.

Environmentalists largely blame production of commodities like palm oil, beef and minerals for destruction of forests, as they are cleared for plantations, ranches, farms and mines.

Cutting down forests has major implications for global goals to curb climate change, as trees absorb about a third of the planet-warming emissions produced worldwide, but release carbon back into the air when they rot or are burned.

Forests also provide food and livelihoods, and are an essential habitat for wildlife.

Better conservation, restoration and management of natural areas, such as parks, forests and wildernesses, is seen as key for nations to meet targets to reduce planet-heating emissions and reverse the loss of plant and animal species.

Global annual spending to protect and restore nature on land needs to triple this decade to about $350 billion, a UN report said in May, urging a shift in mindset among financiers, businesses and governments.

Presently, only about 5% of total climate finance goes to adapting to a warmer planet, with most of that coming from public funds, South Pole officials said.

"The fund really targets the 'missing middle' where there is currently no commercial financing," said Urs Dieterich, a fund manager at South Pole and managing director of the LRF.

The fund will provide cheap loans and technical assistance to small businesses that work with smallholders in vulnerable landscapes – such as cocoa or coffee growers and rattan harvesters – and help them access better farming inputs, such as drought-resistant seeds, as well as training and finance.

Repaid loans will be re-invested in other small businesses working on climate adaptation.

Projects can apply online for funding or approach the LRF directly, and will be assessed for their climate change exposure and adaptation plans. Their progress will be tracked by local staff and published in annual reports, fund officials said.

"There has never been a more critical time for the private sector to step up and help close the investment gap needed for effective climate adaptation," Andrea d'Avack, chief sustainability officer at Chanel, said in a statement.

The LRF offers an opportunity to "explore different approaches that could help advance changes in our own supply chain and business practices", d'Avack added.



Japan’s Shiseido Says Annual Profit Plunges 73% amid Sluggish Sales in China

A staff member stands at a booth of Japanese cosmetic brand Shiseido, at the third China International Consumer Products Expo, in Haikou, Hainan province, China April 11, 2023. (Reuters)
A staff member stands at a booth of Japanese cosmetic brand Shiseido, at the third China International Consumer Products Expo, in Haikou, Hainan province, China April 11, 2023. (Reuters)
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Japan’s Shiseido Says Annual Profit Plunges 73% amid Sluggish Sales in China

A staff member stands at a booth of Japanese cosmetic brand Shiseido, at the third China International Consumer Products Expo, in Haikou, Hainan province, China April 11, 2023. (Reuters)
A staff member stands at a booth of Japanese cosmetic brand Shiseido, at the third China International Consumer Products Expo, in Haikou, Hainan province, China April 11, 2023. (Reuters)

Japanese cosmetics giant Shiseido said on Monday its full-year profit slumped 73%, partly due to a drop in consumer spending in key overseas market China, a trend the company expects to continue into 2025.

Shiseido said its operating profit came in at 7.58 billion yen ($49.9 million) in the 12-month period ended December 31, compared with 28.13 billion yen the prior year.

A retailer of high-end personal goods, Shiseido is seen as a barometer for consumer confidence in China, a market the company and its peers have come to rely on for sales growth.

"China's cosmetics market suffered a prolonged downturn, weighed down by a decline in consumer spending and rising household savings amid worsening economic sentiment," the Japanese company said in a statement.

Shiseido said its China sales were down 4.6% year-on-year on a like-for-like basis, excluding the impact of foreign exchange and business transfers, and also forecast a sales decline in 2025.

"We think things will bottom out this year and that we will be able to achieve mature growth from then on," Shiseido President Kentaro Fujiwara said of the China market at a post-earnings briefing with reporters.

On the positive side, the company experienced a 10% increase in net sales in Japan and expects similar growth this year, supported by purchases from tourists.

Poor results in China also dragged down interim earnings reported last week by cosmetics competitors L'Oreal and Estee Lauder.

China's once surging economy has been hobbled by a property crisis, mounting local government debt and rising youth unemployment. Compounding woes for global luxury goods makers has been a shift among Chinese consumers toward domestic brands.

Shares in Chinese beauty brand Mao Geping rose 85% when they debuted on the Hong Kong stock market on December 10, and have climbed further since.

In November, Shiseido launched a two-year action plan to restore profitability and focus on its core brands.

Shiseido's shares have sunk 42% over the past 12 months, compared with a 5.1% gain in the benchmark Nikkei average during the same period.