CEO Message to Stakeholders 2021

CEO Sustainability Review 2021


Staying sustainable through rapid reinvention

From the standpoint of economic sustainability, the year 2020 began on a high note, with the company well-positioned following a substantial gain in our market share for North American mink skins. But then COVID-19 hit. By March, at the height of the first wave of the pandemic, travel restrictions led us to an unprecedented course of action. For the first time in our long history, we had to cancel our live auction, a major sales event held four times a year that usually attracts up to 1000 attendees, many from abroad.

While this constituted a big financial blow for Saga Furs and our suppliers, we were able to convert this disruptive situation into an innovation with the rapid reinvention of our auction process into a digital online format. We already had some of the functioning technology in place for smaller niche auctions and were able to ramp this up quickly and successfully to create a full online auction, being the pioneer in the fur auction field.

In addition to alleviating revenue losses, the new format now presents a potential new business reality for Saga, in that with a little more technical development we should be able to offer future customers a choice between attending the live auction or participating online and reducing their environmental footprints.

However, in the fur auction business, having in-person experts physically present to inspect our product offering for quality and texture (which varies seasonally) is very important for promoting confidence among buyers. It can also have a significant impact on price differentials. Praise should therefore go to our staff who were able to adapt quickly enough to the requirements of the pandemic to get some in-person buyers from abroad to our subsequent June and December auctions. This was done through a combination of safety protocols and cooperation with the Finnish authorities, and as a result, we were able to run partially attended events that adhered strictly to all legal requirements, while putting the safety of our customers, farmer suppliers and staff first.

During 2020, our whole employee team did their bit by agreeing to a temporary furlough scheme. And I’d like to extend my sincere thanks to them for their cooperation. Unfortunately, a small number of our people were laid off permanently, which constituted the new normal last year for businesses across sectors in Finland and around the world.


Finland outperforms in pandemic management

As a businessperson coming from a farming background myself, I feel qualified to speak to the entire supply chain, including our farmer suppliers. During 2020, we increased the amount of financial support, compared with previous years, extended to farmers for their own business continuity. However, the good news is that Finland, where Saga Furs is headquartered, outperformed other markets in managing the virus, including being the only fur producing country with no COVID cases among fur production animals.

By working with the Finnish authorities, our farmer suppliers and following strict bio-security measures, we also managed to help farmers get regular seasonal workers from neighbouring countries to assist during peak seasons, which was another major achievement last year.


Educating and inspiring our fashion industry stakeholders

Based on our ability to manage the pandemic, our second half financials showed a small return to profitability, although, overall, the year brought an operating loss. However, backed by this slight recovery, we were able to invest our financial resources into continuing the important work of sustaining and inspiring the fashion industry. This was highlighted in the launch of our new Saga Furs Creative Hub here in Finland, targeting multi-stakeholder groups on every aspect of fur artisanship, design and sustainable material use. The Saga Furs Creative Hub, which grew out of what was known for more than 30 years as the Saga Design Centre, based in Denmark, has now been brought much closer to our business core at Head office and has sustainability as the major component of its offering.

Personally, I see the new Saga Furs Creative Hub as an important platform for us to educate and inspire our suppliers, buyers, fashion house customers and designers in promoting confidence in fur as an exciting material and sustainable choice to work with and add to collections.

Inspiring the fashion industry through our annual Fur Vision collection can also be recognised as a major achievement last year. I’m proud to say that during October, we succeeded in rolling out our Fur Vision collections at six major Fashion Weeks in New York, Paris, Milan, Beijing, Tokyo and Seoul. While some in-person rollouts took place with small, invited guest lists, we were also able to take advantage of online opportunities. Prior to the pandemic, we had already been looking for ways to reduce the economic and environmental impact of sending our people and physical collections to so many locations, but now the challenge of pandemic travel restrictions gave us the catalyst to successfully adapt to a more virtual environment. We will continue our digital efforts and paying back to the planet in every aspect.

In 2020, we continued to expand our business and sustainability programs in education, with multiple presentations to numerous design schools in the US, Europe, and Asia. We also continued our cooperation with ISEM, the Fashion MBA school in Spain. Our goal is to expand our educational reach not only to fashion designers but also to business leaders with sustainability front and centre of our programs.


Success in RFID traceability solution

Product traceability continued to be a banner sustainability theme among luxury fashion manufacturers in 2020, which is why I’m pleased to report that Saga Furs has now succeeded in creating its own digital tracing solution for all Saga sourced skins. Using RFID technology, shoppers will soon be able to scan a mobile phone across a RFID tag to get real-time information on the country and farm of origin for Saga sourced skin, or even part of a skin.

This announcement marks the culmination of more than five years of software and hardware research to find a solution robust enough for a fur product to survive the rigours from farm to store, including the fur dressing and manufacturing phases. This is going to revolutionise the way furs coming from Saga will be traced as well as raise the sustainability bar on all other fur providers.


The circular economy as our solid base

In Finland, the fur fashion value chain has a good environmental story to tell. As an example of circular economy, fur production is a textbook case with everything from waste reduction through animal by-products to the reusability and biodegradability of the final fur garments. And it’s worth noting that the Finnish fur industry has been participating in the circular economy since long before the term became a business buzz word.

The most recent nationwide survey of Finnish citizens put 53% in favour of domestic certified fur farming. This is because Finnish fur farming has a revitalizing effect on our economy, particularly in rural areas, as a large-scale employer, and by contributing high per-capita tax revenues in producer municipalities, which go towards childcare, elderly care and schooling.


Leading with sustainability

During 2020, we redoubled our effort and focus on sustainability, including a newly-appointed Head of Sustainability and Corporate Social Responsibility. We have also increased our cooperation with the Finnish Fur Breeders’ Association, FIFUR, particularly when it comes to shared sustainability goals in issues of materiality most relevant to our business.

Saga Furs has a good track record in addressing climate change through our own internal processes. Based on our Code of Conduct, which everyone is required to sign up to, our people are committed to minimising the environmental impact of our business. This includes working to reduce waste and using energy and resources responsibly to cut greenhouse emissions. The company in recent years has invested in a facilities upgrade to energy efficient LED lighting, which is continuing, as well as converting our delivery truck fleet to biogas. During 2020, we introduced a new climate-friendly policy for company cars, with an option for hybrid electric plug-in cars as well as charging stations at work. Saga also sources only renewable green energy for its company-wide heating.

At the time of writing this message, the COVID-19 pandemic continues to inflict human, social, and economic losses around the world. Going forward, 2021 looks set to be tough financially, however, as a company we have set a clear goal for 2021 to get ‘back to black.’ As the new CEO, I have every confidence in our ability to achieve this, thanks to the enduring commitment of our team and the confidence that our suppliers, partners, and customers continue to place in Saga as the sustainable forerunner in the fur industry.


Magnus Ljung, CEO Saga Furs

20 February 2021