From Purpose to Impact: The Evolution of Sustainability and Ethics in Luxury
Diana Verde Nieto, co-founder and co-CEO of Positive Luxury, explains the key ways that brands can demonstrate their commitment to sustainable and ethical impact.
A sense of purpose in business is nothing new and, in the past, it was understood that all successful businesses had a responsibility to society.
In 1883 Sunlight Soap was launched in the UK by James and William Lever with the purpose of bringing cleanliness within the reach of ordinary people. When World War I broke out in 1914, Lever Brothers agreed to re-employ all its workers on their return and, while they were away fighting, give allowances to their dependents. Many modern businesses see this kind of social purpose as incompatible with the demands of modern capitalism – but not all.
In their paper ‘Organisational purpose: the construct and its antecedents and consequences’, Victoria Hurth, Charles Ebert and Jaideep Prabhu define purpose as ‘an organisation’s meaningful and enduring reason to exist that aligns with long-term financial performance, provides a clear context for daily decision making, and unifies and motivates all their stakeholders’. Purpose directs teams and companies to pursue objectives with a strong intention to serve the wellbeing of others, as well as their shareholders. This is very much in line with the principles of sustainable development, where it is essential to meet the needs of today without compromising the prospects of future generations.
But how do luxury brands meet a ‘need’ when their products are not, strictly, ‘needed’?
For the last century, the answer has been purpose. Luxury brands have long understood that their customers are buying into something much bigger than just a product; they are buying into a club, a name, a brand and what it stands for, a shared vision and set of values. Take luxury watch brand Patek Philippe as an example, with its tagline of ‘You never actually own a Patek Philippe. You merely look after it for the next generation.’
We see this sense of purpose in the fashion world too: Louis Vuitton founded the business at the dawn of the modern travel era and was on a perpetual mission to explore new horizons, propelled by an innovative spirit, boundless creativity, and unparalleled savoir faire that is still present in the company’s DNA today.
In other words, luxury consumers have always bought into purpose. However, as we move into the future, purpose is evolving into the notion of ‘impact’. Impact is the bedrock of brand purpose. In order to have impact, brands need to act and demonstrate that their actions have a positive effect on the environment, their employees and suppliers, the bottom line and society at large. Purpose without impact will be seen as meaningless by the next generation of luxury consumers.
In order to meet consumer expectations when it comes to sustainability, luxury brands are already required to take action in ways that are measurable and transparent – and the pressure from consumers to deliver this will only increase. There are three key ways for brands to demonstrate their commitment to sustainable and ethical impact. The first way is simple: they need to do the work and be transparent about where they are on their sustainability journey. In practice, this looks like brands placing sustainability at the heart of their business, reshaping their strategy around sustainable principles, taking action and disclosing their progress. This process will build trust with consumers 100 per cent of the time.
Secondly, consistent behaviour is essential. Too many brands make sustainability a part of their purpose, only to jettison it when an unsustainable or unethical opportunity for profit presents itself. Many supposedly sustainable brands released NFT collections in the last year, despite the minting of NFTs being unsustainable; the common ‘Proof of Work’ method of minting NFTs uses the same amount of electricity as an average American household over almost nine days. Consumers are more educated than ever and actions like this will cause them to lose trust in a luxury brand.
Finally, another way to build trust is through certification. With increasing pressure for transparency and environmental disclosure, third-party verification can play a crucial role in mitigating reputational risk and instil confidence across all stakeholder groups, consumers, employees, investors and suppliers.
As an example, the Butterfly Mark certification, developed by Positive Luxury, is awarded to luxury brands, retailers and suppliers that meet the highest standards of verified ESG+ (environment, social and governance) performance. To be certified, a company must achieve a minimum 50% on each of the E, S and G pillars and display commitment to sustainable innovation by achieving a minimum 50% overall score.
Becoming Butterfly Mark-certified equips a brand with robust climate and social insights and performance measures, to ensure they continue to mitigate risk, drive sustainable economic growth, deliver positive social and environmental impact and be equipped to tell their sustainability story, underpinned by facts. Certifications like the Butterfly Mark allow brands to confidently communicate their impact without the risk of ‘green washing’ accusations, therefore building trust with consumers.
As consumer expectations continue to look beyond purpose and onto impact, luxury organisations will have to adapt. They will have to go beyond consumers and proactively manage trust with employees, suppliers and partners. Remember that this is a multi-media, multi-polar and multi-stakeholder world that is interconnected, interdependent and transparent in a way that it has never been before.
What’s more, brands will have to integrate trust strategies across the business, whether in R&D, sales or back-office functions. They will have to introduce processes to measure impact efforts and outputs, tracking delivery for stakeholders and levels of trust as rigorously as finance or HR track their performance. They will have to embed trust in company culture.
The future of luxury will be about understanding that purpose is no longer enough. Much like the Lever brothers did with their Sunlight Soap way back in 1883, luxury brands will have to follow purpose up with action.
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