The world’s largest jewellery brand Pandora is placing sustainability at the cornerstone of its ‘Phoenix’ growth strategy and even tying bonuses for top management to environmental targets to incentivise progress.The shift dates back to 2020/21 when Pandora overhauled its business strategy to focus on crafting high-quality jewellery for the mass market and becoming the most desirable brand in the accessible luxury jewellery market, globally.“If you rewind to 2020/21, the company was in the middle of overhauling the business strategy and setting out a growth strategy. We decided back then that sustainability was to be a key component,” Mads Twomey-Madsen, Pandora’s SVP of global communications and sustainability, told Inside Retail. Sustainability was embedded in every part of the brand’s Phoenix growth strategy, from financing to the entire supply chain.“We felt we had to do something quite radical. Rather than picking a middle-of-the-road approach, we decided to help lead the pack because that would be a good way to future-proof our company,” Twomey-Madsen said.“We set them high. Some of the targets were not just what happens inside of our four walls, it’s everything in the value chain,” he added.Pandora completed its shift to exclusively sourcing 100 per cent recycled silver and gold for all its jewellery in December 2023 — well ahead of the 2025 target it had set.“The circularity piece is important, the main raw materials are the main costs of emission. Focusing on that, we launched into this big plan to transition to exclusively using recycled silver and gold,” Twomey-Madsen said.Pandora is the first global brand to complete such an undertaking. Recycled silver has a carbon footprint one-third the size of mined silver and recycled gold emits less than 1 per cent of the carbon emissions of mining new gold.Financial incentivisationUnlike many retailers, Pandora has tied its sustainability targets to financial incentives to ensure they remain a top priority in the business.“If you look at our banking loans, and all of our banking arrangements, the interest is tied to sustainability. If we do well, we pay less interest – if we don’t do as well we pay more interest. It’s built into the dynamics and logic of how the company operates,” Twomey-Madsen said. “Then we took it into our incentives programs. How we incentivise or award bonuses to our top management is based on sustainability,” he added.Pandora’s Phoenix strategy outlines three key sustainability priorities: creating a low-carbon business, circular innovation, and an inclusive, diverse and fair culture.The retailer is on track to meet its target of halving its greenhouse gas emissions by 2030 and last year, its emissions were down 27 per cent compared to its 2019 baseline. Pandora anticipates its emissions to increase this year, due to the construction of a new facility in Vietnam, alongside the expansion and refurbishment of the Pandora store network.Twomey-Madsen said that Pandora has always taken sustainability into account even before many business leaders were talking about ESG. “Our founders [Per Enevoldsen and Winnie Enevoldsen] made some important decisions in terms of how our products are manufactured and where it’s taking place – the facilities and everything. The things we deal with today, but without the whole discourse we have around it,” Twomey-Madsen said.Lab-grown diamondsPandora’s recent foray into lab-grown diamonds is part of its broader mission to reduce its environmental and social impact. But Twomey-Madsen noted that the brand didn’t make this shift until it felt the quality and price point were in a good range for its customer segment.“Lab diamonds are nothing new,” but they offer “a very different brand proposition,” he said.According to Twomey-Madsen, lab-grown diamonds presented an opportunity for Pandora, long known for its charm bracelets, to enter the market in a new way.“We have grown from being focused around the charms and bracelets which was like the origin of Pandora,” he added.“What we offer is a new way of looking at diamonds, as a certain expansion of the market to people that would not consider buying diamond jewellery before.”In 2021, the business launched its first lab-grown diamond range in the UK. Now, it sells lab-grown diamond collections across 700 stores in Australia, the US, Canada, the UK, Mexico and Brazil and will continue to roll them out into other markets.Ethical diamondsA big factor for Pandora is the sustainability of lab-grown diamonds.“If you grow lab diamonds in the right way, they can have a carbon footprint that is a fraction of a mined diamond. So we chose to do that,” Twomey-Madsen said. According to him, lab-grown diamonds produce about 5 five per cent of the carbon emissions of a traditionally mined diamond. He also pointed to the ease of tracing the origins of lab diamonds for ethical reasons, compared to naturally mined ones. “That was important to us,” he said, noting that Pandora terminated its mined-diamond business when it chose to pursue lab-grown.“From the beginning, we decided to only purchase diamonds made with renewable energy and that’s where we are today,” Twomey-Madsen added. Pandora’s pieces are hand-finished and designed to empower self-expression and remain culturally relevant.Pandora’s total revenue for its lab-grown diamond collection reached $9.1 million with like-for-like (LFL) growth of 87 per cent in the first quarter of 2024.