Eco-Chic: Sustainability in the Luxury Sector

The world of luxury is synonymous with timeless quality, rich heritage and artisan craftsmanship. Big name brands such as Chanel, Hermès, LVMH and Kering are known across the globe and the luxury fashion market alone is projected to generate revenue of over USD 145 billion globally in 2024 according to Statista Market Insights.

The luxury market is not without its challenges, however. With issues linked to the climate crisis, such as excess consumption and waste, green shaming and increased regulation, the industry faces many of the same challenges as other industries in the transition to a more sustainable future.

Solving the issues that the sector faces is both a challenge and a necessity as consumers themselves show signs of wanting more sustainable goods. London Business School’s most recent Think Ahead thought-leadership event, therefore, brought together Dr Dafna Goor, Assistant Professor of Marketing at LBS; LBS alumna Emma Bruni (MBA2020), Supply Chain Director at Burberry; and Amy Nelson-Bennett, CEO of Positive Luxury to discuss the ways in which consumers and business can align to make the move from conspicuous to conscious consumerism. Moderating LBS’s ‘Eco-Chic: Sustainability in the Luxury Sector’ event was Amy Nguyen, an independent consultant and writer.

Transparency and traceability have come to the forefront in recent years and an audience poll at the event put supply chain strategy at the top of the list for important sustainability initiatives that luxury fashion brands should focus on. Some 27% of the audience selected this option, above the second highest choice at 24%, which was linked with reducing overproduction and promoting mindful consumption. Investing in the innovation, development and use of sustainable materials was also considered to be important (18%), as was adopting circular business models like repair, resale and rental to minimise waste. 17% of the audience selected this option, ahead of ensuring fair wages and ethical labour practices (14%).

Because the central tenets of the luxury industry are quality, bespoke and non-commoditised production, craft, durability, exclusivity, and investment purchases, it should be a natural fit for building a business model around doing less and doing it better. That doesn’t mean to say that it will be easy, however. Businesses will need to have a long-term perspective, know what the path to sustainability looks like, share that vision and be honest about the work they need to do. Businesses will need people in place who are constantly pushing the agenda and going beyond the minimum of what needs to be done.

Technology has been and will continue to be a great enabler, helping material innovation and biotech and allowing for greater transparency. While there are a lot of great start-ups working on solutions, there aren’t yet any at the scale that some of the larger luxury houses require. Nevertheless, digital platforms and QR codes that allow customers to see how a product was made and sourced, for example, give credibility and build trust with customers who want to see that assets are sourced responsibly, made the right way, and that workers in the supply chain are treated in the right way.

Digital product passports are also a great way to carry the customer along, taking them along the entire product journey to after care support. Plus, having information in a QR code has a positive impact in terms of the reduction of packaging waste.

Technology also has a valuable role to play in terms of risk assessment. Having satellite technology which helps companies to look at historical data and future projections to see where raw materials might become at risk allows businesses time to plan and adapt, something which is essential in the face of the climate crisis.

While the discussion covered a wide range of topics from the rising role of circular business models to certification, net positive impact, and the impact of sustainability on profit margins, the top three takeaways were:

Set clear targets and build sustainability into your organisational structure to reach those targets. Empty claims may backfire.

Don’t let your sustainability team become a compliance team. Drive genuine change by ensuring that you have a cross-functional team working on sustainability; include people with technical expertise.

Embrace storytelling; get creative directors talking about the creative challenge in creating more sustainable products at design stage. The more emotional your story is, the more effective it is.

If you want to learn more about the topics discussed, including strategies for successful marketing and the role luxury brands can play in educating citizens about sustainability, the highlights are captured in a short YouTube video.

You can also learn more about whether high-end brands can balance indulgence and responsibility by reading Dafna Goor’s latest article for Forbes. She also examines another side of luxury consumption in an LBS Why podcast where she talks about her research findings on the links between luxury consumption and imposter syndrome.