(Bloomberg) -- Italian luxury fashion house Prada SpA is stepping up its sustainability drive by trying to lower its carbon footprint, using more recycled nylon and looking for alternatives to leather.

In fiscal 2020, Prada scored below its peers on environmental issues and lagged on governance, according to ESG scores compiled by Bloomberg. Since then, there’s been progress.

“We are B minus for CDP at the moment and we want to become an A as soon as possible,” said Lorenzo Bertelli, Prada’s head of corporate social responsibility, referring to CDP, a nonprofit group that measures the environmental impact of companies. “We expect to improve our score already this year.”

Bertelli, 34, who’s next in line to be CEO, is the son of Patrizio Bertelli and Miuccia Prada, who together transformed the Milan-based company into one of the world’s most prestigious fashion brands.

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Bertelli joined Prada’s board of directors in 2021. He’s also a member of board-level committee focused on environmental and social sustainability issues.

Prada has moved to burnish its sustainability credentials in recent years. In November 2021, Prada said it would use more low-impact materials in its products and packaging, and lower greenhouse gas emissions as part of a carbon-neutrality push.

While sustainability scores are “fundamental” for evaluating corporate greenness, they can fail to capture the nuances of individual business models, Bertelli said in an interview Tuesday while attending a conference in Lisbon on sustainability and ocean preservation co-hosted by Prada and UNESCO.

That applies to the assessment of modern slavery in Prada’s supply chain, he said. “We produce almost all our products in Italy, compared to big companies of the fast fashion which produce abroad,” said Bertelli. “Already the fact that you produce in Italy should be counted for sustainable impact.”

In 2019, Prada issued the luxury industry’s first sustainability-linked loan, an instrument that offers a lower interest rate if certain sustainability targets are met, thereby saving the issuer money. Prada arranged that EU50 million ($52.1 million) loan with Crédit Agricole. It arranged a similar EU75 million loan with Japanese bank Mizuho in 2020. Both loans were linked to targets for more green, energy-efficient stores, employee training and the use of regenerated nylon in products. 

A third loan, arranged in February 2021 with UniCredit, raised EU90 million. It’s linked to the regeneration and reconversion of production waste, and to boosting Prada’s share of self-produced energy.

“We are progressing positively towards each of the targets”, Bertelli said. “At the moment, the group doesn’t need more loans, as we have a positive cash flow.”

Bertelli was in Lisbon to champion Sea Beyond, a program that aims to raise awareness about ocean preservation among secondary school students. The project is supported by revenue from Prada Re-Nylon, a collection of bags for men and women launched three years ago. The products are made from nylon yarn obtained by recycling discarded plastic collected from landfills and oceans. Since the end of 2021, Prada has converted all the production of virgin nylon into regenerated nylon.

Prada says its scientists are now trying to invent other eco-friendly materials, especially as a younger generation of buyers demand more sustainable products. But leather -- a mainstay of Prada’s handbags, jackets and shoes -- isn’t that easy to substitute.

“Today, there is no solution in place for scaling back real leather,” said Bertelli. “There are fake leathers but that’s different. The culture is changing, but it will take time.”

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