Evaluating a company's impact (the case of EssilorLuxottica)

This week’s read time: 3 minutes

You are reading Green Digest Impact, a weekly newsletter that provides in-depth analyses of companies’ environmental and social impact.

OUR APPROACH

Central to our narrative is the principle of double-materiality, which recognizes that a company's impact is twofold: it affects both the environment and society at large, and in turn, these external factors influence the company's financial and operational performance.

While traditional ESG assessments focus on the latter, we aim to examine companies' direct impacts on these factors. In pursuit of this, we introduce a unique scoring system that quantifies a company's impact.

The insights and analyses presented in Green Digest Impact are brought to you by a partnership between Green Digest and Impaakt, a Swiss-based impact data provider. Contact Impaakt here to explore how they can assist you.

THIS WEEK’S COMPANY

EssilorLuxottica

This week we dive deep into EssilorLuxottica’s environmental and social impact.

EssilorLuxottica is the global leader in the design, manufacture, and distribution of ophthalmic lenses, optical equipment, and eyewear, including both prescription frames and sunglasses. Headquartered in Paris, France, and Milan, Italy, the company was formed in 2018 through the merger of two industry giants—Essilor International, a leader in ophthalmic lenses, and Luxottica Group, known for its iconic eyewear brands.

Some interesting facts:

• EssilorLuxottica owns brands like Ray-Ban, Oakley, Persol, Vogue Eyewear, Oliver Peoples, and Costa Del Mar, while it designs and manufactures frames for brands such as Prada, Chanel, Versace, and Giorgio Armani.

• The company holds a 36% market share in Europe and 47% in North America, making it the biggest player in the industry. If you’re wearing any glasses right now, there’s a high chance that they’re made or sold by them.

COMPANY’S IMPACT

EssilorLuxottica’s overall impact score

EssilorLuxottica has a general impact score of +0.94 (on a scale from -5 to +5). Its impact is spread across 9 UN Sustainable Development Goals (SDGs) and 9 topics, split between positive and negative analyses.

In the socio-economic sphere,

as the global leader in eyewear and vision care, EssilorLuxottica serves over 700 million customers in 150 countries, playing a vital role in health, safety, performance, productivity, self-expression, and societal inclusion. The company’s R&D efforts, with over 12,000 patents and 1,873 designs, drive global innovation, exemplified by breakthroughs like Crizal® Prevencia®, the first clear lens to block harmful blue light and UV radiation, improving eye health for millions of people. Between 2013 and 2022, EssilorLuxottica has also ensured access to sustainable vision care for 110 million people in underserved communities through its initiatives.

Although the company’s prices of prescription glasses are cheaper compared to competitors, it holds a near-monopoly in the global eyewear market and has leveraged its dominance to increase prices. In 2021, it was fined over €125 million for controlling and imposing prices from 2005 to 2014, limiting opticians’ ability to offer discounts, set competitive prices, or promote products online. This restricted customer access to better deals and ensured EssilorLuxottica maintained tight control over both supply chains and market prices.

Environmentally,

EssilorLuxottica emits over 4.1 million tonnes of CO₂ equivalent annually, equal to the emissions of over 809,000 homes’ electricity use for a year. The company also uses more than 8.3 million m³ of water annually, 61% in medium-high, high, or extremely high water-stressed areas. Additionally, it generates approximately 116,000 tonnes of waste (recycles 57% of it), and its end-of-life waste from used products amounts to an estimated 20,000 tonnes annually.

_{*The impact score is current as of October 2024 and may be subject to changes as it is continuously updated.
**You can find details about the scoring methodology here and the information sources here.}

ESG VS IMPACT SCORE

What is EssilorLuxottica’s ESG rating?

For comparison, EssilorLuxottica has an AA rating in MSCI's ESG evaluation.

However, ESG Ratings from MSCI ESG Research are designed to measure a company’s resilience to financially material ESG risks and they provide a window into one facet of risk to financial performance. They measure how effectively companies manage ESG risks, not their impact on these factors.

SCORES BY SDG

EssilorLuxottica’s impact scores by SDG

Positively (and by weight), the company scores the highest in the Good Health and Well-being SDG (+3.04), followed by Partnership for the Goals (+2.76), and Decent Work and Economic Growth (+2.68).

Negatively, the company scores the worst in the Peace, Justice, and Strong Institutions SDG (-3.47), followed by Responsible Consumption and Production (-2.54), and Clean Water and Sanitation (-3.15).

*the analysis takes into account the weight of the SDGs

CONCLUSION

Materiality Map & Final Words

So, EssilorLuxottica’s key social and environmental impact lies in …

its pivotal role as the global leader in eyewear and vision care, serving over 700 million customers across 150 countries. Through its wide range of products and innovative solutions, EssilorLuxottica improves eye health and enhances the quality of life, fostering productivity, societal inclusion, and self-expression.

However, the company’s market dominance has raised concerns. Despite offering relatively affordable prescription glasses, the company’s near-monopoly has allowed it to control prices, restrict competition, and limit customer access to discounts. Environmentally, the company’s operations generate over 4.1 million tonnes of CO₂e annually and consume significant water resources, with a notable portion drawn from water-stressed areas. While EssilorLuxottica recycles 57% of its waste, the end-of-life disposal of used products remains an environmental challenge.

EssilorLuxottica’s overall impact score of +0.94, reflects a balance between its positive contributions to vision care and innovation, alongside the challenges associated with market control and environmental impact.

If you’d like to delve deeper into EssilorLuxottica’s impact, you can explore it here.

If you'd like to learn more about the scoring methodology, you can do so here.

Do you have a specific company you'd like us to cover? Send your suggestions to [email protected]

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