Lorenzo Bertelli on Prada’s Sustainability Strategy

Two weeks ago, Lorenzo Bertelli was standing on the floor of a factory watching old fishing nets turn from waste material to the nylon at the core of Prada’s recent success.

The nearly three-year push to completely overhaul the material used in the Milanese brand’s iconic nylon styles so it is completely recycled has been a flagship project for Prada’s heir apparent and joint marketing and sustainability chief. But it was not without risk.

The decision to mix up the formula for a product line so central to the brand was a bold move at a precarious moment. Prada was just solidifying a turnaround after an ill-fated bet on top-end leather goods resulted in several years of declining profit. Renewed focus on the brand’s nylon accessories and Linea Rossa sub-brand were critical to its revival.

While work on introducing recycled nylon had been going on behind the scenes for some time, as the company prepared to implement the shift in 2019 Bertelli saw an opportunity to also boost Prada’s appeal with consumers by publicising the effort. The first “Re-Nylon” bags launched with a modified logo: Prada’s triangle tipped with an arrow, reminiscent of a recycling sign.

“In a luxury mega brand to date, no one has made such a mega statement,” said Sebastian Manes, buying and merchandising director at British department store chain Selfridges, which launched Prada’s first “Re-Nylon” products in 2020 to an “incredible reaction.” Prada took a core part of its business and redefined and questioned it, “it’s incredibly brave to do that,” Manes added.

Integrating Sustainability into Business Strategy

The son of Prada’s co-chief executives Patrizio Bertelli and Miuccia Prada, Bertelli joined the company in 2017 to lead a digital marketing push, adding corporate social responsibility to his portfolio in 2020. The dual role is intended to groom the executive to take over leadership of the company, which has been ramping up its efforts in both digital and sustainability in a bid to deepen its connection with the next generation of consumers.

Bertelli says a big part of his role is making sure the company’s long-term environmental and social ambitions are fully integrated into its broader strategy and day-to-day operations.

It’s been a growing focus for some time. Prada published a sustainability policy in 2019, shortly before Bertelli formally took on responsibility for the subject. That same year, it announced it would stop using fur and initiated the pivot to recycled nylon. The company completed the transition at the end of 2021 and now sources around 1 million metres of recycled nylon a year.

While the company is still early in fleshing out its broader sustainability plans, it set targets to tackle supply chain emissions for the first time last year, outlining its strategy at the company’s first capital markets day in seven years and adding a sustainability committee to its board. The company’s also planning more initiatives focused on diversity and inclusion and supporting its supplier workforce. It hasn’t yet calculated the final impact of its shift from virgin to recycled nylon, but emissions in the company’s value chain (where most impact takes place) declined 32 percent last year compared to its baseline year of 2019 as a result of lower production volumes and lower leather purchases, according to the company’s latest sustainability report published Friday.

“If we want to be a better company tomorrow, we need to start work today,” Bertelli said. “If I could succeed in doing what my parents were doing in terms of bringing some novelty, some disruption to the sector, it would be amazing.”

How that shapes up is also framed by Prada’s broader growth ambitions. The company is aiming to increase sales by about 12 to 15 percent a year to hit €4.5 billion ($3.5 billion) in annual revenue in the mid-term. Revenue hit €3.4 billion last year, up 8 percent over pre-pandemic levels. Balancing opportunities to improve the company’s sustainability record at the same time as its bottom line is the real challenge that lies ahead for Bertelli.

Leather Alternatives and Resale

One area where that’s already playing out is in conversations around leather, an increasingly hot topic as awareness of the material’s environmental impact and concerns about animal welfare grow (considerations that played into Prada’s decision to drop fur in 2019).

Other luxury labels are also working on the topic as the maturity of next-generation look-alike leather materials improves. Hermès is experimenting with a mushroom-based substitute, while earlier this month Gucci and Balenciaga owner Kering invested in lab-grown leather startup VitroLabs.

Prada is working on its own prototypes and researching scalability, but “the consumer is not ready,” Bertelli said. That’s holding the company back from scaling its experiments.

The executive is more bullish on the opportunity in resale. Prada is looking to use blockchain technology to track products after they are sold, creating opportunities for additional touchpoints with customers and an infrastructure to understand how products might end up getting a second or third life through resale platforms.

“Absolutely I see it as an opportunity, and not something we should see as scary,” Bertelli said. “We’re working for tomorrow to be in contact with those customers that buy secondhand products, not just because we want to sell them certain products, but because we want to tell them the story of the brands that they’re buying.”

While Prada isn’t planning to launch a secondhand store in the near future, there is certainly potential for the company to do resale in its own way, he said, adding that it’s too early to say what that might look like and how much it might contribute to the company’s bottom line.

Fundamentally, Bertelli’s approach is pragmatic.

“If you want to ask me if capitalism is sustainable, the answer is definitely no,” Bertelli said. But “can we use the strength and dynamics of capitalism to engage and speed up the process of establishing a circular economy? Absolutely.”