By Andrew Winston
Luxury brands hardly evoke images of environmental sustainability, human rights or wellness, even as those causes have swept through the consumer-products market. But that gap is closing fast, according to a new study, “2016 Predictions for the Luxury Industry: Sustainability and Innovation.”
The study makes a compelling case that sustainability and social responsibility are no longer just incidental to luxury brands—they’re essential. (Disclosure: I’m on the advisory board of one of the industry organizations that produced the study.) The report offers a few key points:
First, the laws are changing. In the UK, the newly enacted Modern Slavery Act mandates that larger companies doing business there publish an annual slavery and human-trafficking statement. A solid majority of UK retailers and suppliers think that their supply chains may involve slave labor.
Second, social norms are changing, starting with high-profile tastemakers. Celebrities, like Leonardo DiCaprio and Mark Ruffalo, are increasingly invested in sustainability. And these stars wield clout in the fashion and luxury worlds. On a larger scale, expectations about corporate ethics are changing across generations: Millennials and Gen Xers in the UK and the US tend to believe that brands need to do more good, not just “less bad.”
Members of these generations are questioning consumption in general—a majority of them say that they’re spending more on experiences than on material things. And they’re driving a “clean-label” trend, asking companies to reveal the full contents and origins of their products. Third, the investment community is waking up to how social and environmental awareness affects the value of consumer brands.
Last year a Morgan Stanley analyst raised the price target on Nike and some other mainstream apparel makers based on their sustainability performance. And finally, nature itself sets limits. Climate change affects water supplies, and certain gems and minerals are growing scarcer and more expensive to unearth.
Some leading luxury brands have long been activists on the sustainability front. Both Tiffany and Forevermark, a De Beers company, have certified their diamonds as “conflict free.” L’Oreal has quietly become a leader on climate change and renewable energy.
An unsustainable jewel or piece of clothing is, in the end, anything but flawless. As we all wake up to that reality, the luxury companies have no choice but to act.
Andrew Winston advises companies on environmental strategy. His most recent book is The Big Pivot.