As the world becomes more conscious of the importance of sustainability, luxury brands are taking note. Embracing sustainable practices is not only good for the environment, but it also shows that these brands are committed to overall well-being. From using recycled materials to investing in renewable energy, luxury brands are setting a new standard for the industry.
Why luxury brands are embracing sustainability
Luxury brands are starting to realize that sustainability and luxury go hand in hand. Self-indulgent luxury is not necessarily a contradiction, but rather a luxury that leads to overall well-being. This shift in thinking around sustainability is leading to significant advances in the industry, such as the introduction of recycled leather and the use of renewable energy at hotel properties . Learn more about the benefits of sustainability for luxury brands in this article from Forbes .Luxury brands are making efforts to improve the way they run their businesses. The following examples were compiled from industry sources such as Forbes and Fortune , as well as our own research.Luxury brands are investing in renewable energy In June of this year, American Express announced that the company would be taking part in SolarCity’s PowerUp Rewards program, which allows customers to earn rewards by providing SolarCity with roof space for solar installations. In partnership with Tesla, customers who want to get involved can buy a solar power system with a discount off their next Model S or X purchase.Luxury brands are looking to sustainability as a competitive advantage
As luxury brands realize the importance of sustainability, they are looking to incorporate sustainable practices into their business practices. Luxury brands are making efforts to improve the way they run their businesses. The following examples were compiled from industry sources such as Forbes and Fortune , as well as our own research.Luxury brands are investing in renewable energyIn 2016, Chanel opened a sustainable store in Milan that showcases the use of renewable energy and recycled materials . In addition to the use of natural light and ventilation, the store utilizes LED lighting and rainwater collection. It is also the first Chanel store to be carbon neutral.
Bottega Veneta Launched in 2007, Bottega Veneta’s subsidiary Venezia Accessory Company uses high-quality hand-crafted leather products that are designed in Italy and produced in China. Through this partnership, customers can earn rewards by providing space for solar installations at their homes.
How luxury brands are redefining what it means to be sustainable
The idea of luxury being synonymous with waste isn’t new, but there is a growing movement towards redefining luxury. Brands that have made sustainability a priority are not only reducing their carbon footprint, but also improving the lives of people around the world. This includes supporting local artisans in regions where they operate, providing job opportunities and training for people who need it most, and creating products that don’t contribute to climate change and other environmental issues .
Take L’Oreal’s Rainforest Alliance Certification Program , for example. In 2016, the company announced that it would be joining the board of directors at Pará Nature Conservancy, a Brazilian environmental NGO dedicated to the preservation of Amazonian rainforests. As part of its commitment to sustainability, L’Oreal has developed a program that both protects the forest and encourages sustainable harvesting practices.
Brands are looking beyond the bottom line
Companies spend millions of dollars each year on research and development to develop new products and improve existing ones. However, according to some business experts, there is a much more effective way for companies to increase their profits.
“By focusing on the long-term growth of a brand’s customer relationships, brands can create significant additional profit,” says Jason Dorrier, Director of Customer Advisory Services at the Center for Generational Kinetics (CGEN). “The most profitable strategy a brand can employ is to focus on its customers instead of itself.”
One of the best ways luxury brands are using their resources to benefit people and the planet is by investing in research and development aimed at solving social and environmental issues.
What are the benefits of sustainable luxury for overall well-being?
This study investigated how luxury brands are engaging with sustainability, and what that means for overall well-being. These findings were based on a review of the literature and six case studies, including market research conducted among luxury consumers in Singapore, China, the U.S., and the UK .
The benefits of sustainable luxury for overall well-being include:
Having a sense of purpose.
Helping to create a more just and equal society.
Improving the wellbeing of local communities and the environment.
What are the key drivers of sustainable luxury?
According to this study, the key drivers of sustainable luxury include:
Creating a positive perception of the brand.
Using sustainable practices in all aspects of business, including manufacturing, purchasing, distribution, waste management, and product design.
Offering a range of products and services that meet customers’ needs.
Using technology to reduce the environmental impact of products and services.
How can luxury brands increase the sustainability of their operations?
Following are a few recommendations from this study for how luxury brands can ensure the sustainability of their operations:
Use only sustainable materials in product design.
Use technology to reduce the impact of manufacturing, shipping, and waste management.
Employ employees who are knowledgeable about and have a passion for sustainability.
Train managers and staff on sustainability issues.
Educate customers about the importance of corporate social responsibility.
Incorporate more renewable energy into their facilities.
Source : Lux Research A recent Lux Research study commissioned by ASIPP found that, in 2020, 59% of luxury consumers said they would be willing to pay a premium for a product that is socially and environmentally responsible.
“Brands have an unprecedented opportunity to positively impact the lives of their customers, but only if they are willing to think outside the box and take risks,” says Michael Bove, Director of Consulting at Lux Research. “By supporting research on social and environmental issues, brands can demonstrate a genuine desire to make a difference and build sustainable, long-term relationships with their customers.”
How can luxury brands become more sustainable?
The global population is expected to reach 10 billion by 2050. With the world’s current consumption rate of resources, many believe that the planet is reaching a point of no return. Many luxury brands have taken notice and are using sustainability as an opportunity to create more positive social impact. The Economist recently recognized sustainable luxury as an industry worth $44 billion. Given its size, this number represents just a fraction of the overall market. There is significant room for growth , and by taking the following steps, luxury brands can become even more sustainable:
“It’s not enough to merely talk about sustainability. Sustainable luxury is a meaningful concept, one that consumers are beginning to take seriously,” says Michael Bove. “Those who are able to execute on sustainability at the highest levels will gain a strong competitive advantage.”
What challenges do luxury brands face when trying to be sustainable?
The world’s most affluent consumers are looking for sustainable luxury. A new report from Lux Research examines the strategies and initiatives that luxury brands have implemented to meet this demand, and provides key insights into how these strategies align with overall sustainability goals. The report finds that luxury brands are taking a number of different approaches to sustainability, with a variety of impacts on well-being. Some approaches promote greater sustainability while others have a more mixed effect . To meet the growing demand for sustainable luxury, brands will need to balance multiple competing factors.
The report also explores various sustainability issues, including the impact of mass production on some practices (e.g., fair trade certification), the role of social responsibility in influencing consumers’ perceptions of sustainability, and which markets have the highest expectations for sustainable practices from luxury brands. While China is currently the largest market for luxury goods, it also exhibits distinct differences in environmental and social expectations as well as other cultural factors that are important to consider when evaluating sustainability strategies.
How can luxury companies reduce their carbon footprint?
Given that luxury consumers prioritize the purchase of environmentally-friendly products and services, it is essential for luxury brands to consider the impacts of their operations on the environment. The challenge, however, is that many of the emissions associated with producing and transporting luxury goods are not fully reflected in their prices.
The carbon footprint of a brand’s supply chain is an important metric for evaluating a company’s sustainability performance. The carbon footprint of a product can be measured in a number of ways, including the greenhouse gas emissions associated with the entire lifecycle of that product. In this report, we consider the carbon footprint of each individual component of a luxury brand’s supply chain to provide additional insight into how sustainable practices are implemented at the most local level.
Using data from the company’s database, we estimate the carbon footprint of roughly 50 luxury brands based on the value of their products and the average distance these products are shipped from their manufacturing locations.
By comparing these carbon footprints to the average emissions per product of each component of the supply chain, we can determine how sustainable a given brand is relative to its peers. We also examine how these carbon footprints vary by location, such as country of origin and distribution center.
The report shows that compared to the average of its peers, Apple is the most sustainable luxury brand in terms of carbon footprint. The company’s operations are relatively carbon-intensive but offset by the energy efficiency of its products. Overall, Apple’s carbon footprint is roughly 78% lower than the average of its peers. Other high performers include Bose, Patagonia, REI, and The North Face.
Among luxury brands with a global presence, the report finds that Gucci has the lowest carbon footprint (by far), while LVMH’s brands, such as Louis Vuitton and Christian Dior, have much higher carbon footprints. These differences in carbon intensity between brands are primarily due to differences in product design.
While individual products can have significant impacts on their own, the carbon footprint of a brand’s entire supply chain is significantly impacted by the size of its distribution network. The average carbon footprint of a “best-in-class” brand is larger than that of the average luxury brand. Brands with smaller distribution footprints tend to perform better than those with large ones.
The report also reveals patterns in the specific products that drive the largest carbon footprints. For example, while leather is generally an expensive material to produce, it has a particularly large impact on a brand’s carbon footprint relative to other materials. The very high carbon footprint of Gucci’s signature handbags is largely due to the use of leather and ostrich skin.
However, because ostrich leather does not generate significant greenhouse gas emissions during the lifecycle of a product (when compared to other luxury leather options), Gucci has been able to achieve a relatively low carbon footprint by including ostrich leather in smaller items such as wallets and belts.
When brands choose which materials to use, they should keep in mind the lifecycle carbon footprint of the products they design.
What does the future of sustainable luxury look like?
Right now, luxury brands are racing to increase their use of sustainable materials, manufacturing practices, and distribution methods. What will sustainable luxury look like in the future? Will it be about materiality or impact? Will a “luxury for all” approach work for everyone? The answer to these questions will have a significant impact on the long-term sustainability of the industry .
By 2025, it is expected that total e-commerce sales will reach US$1.5 trillion. This presents a new opportunity for luxury brands to become more accessible and relevant to a global audience. By transforming their supply chains and changing how they design and distribute their products, luxury brands can ensure that the future of sustainable luxury meets the needs of an ever-growing market.
Methodology The Sustainable Luxury Report was created by Deloitte Research in collaboration with 100 Resilient Cities and the U.N. Sustainable Market Chain (UNSMC). The report is based on a global survey of more than 200 senior luxury decision makers and analyzes the current state of sustainable luxury and its potential to transform the industry.
The Sustainable Luxury Report surveyed leaders at the executive, director, and partner levels within 10 countries (Argentina, Australia, Brazil, China, France, Germany, India, Italy, Mexico, and the U.S.). A total of 105 individuals participated in the online survey between March 15 and April 15, 2020.