How Luxury Can Save Itself – And Save The Planet, Too
Positive Luxury’s Predictions Report comes at a pivotal time in a decisive decade. Co-founder and co-CEO, Diana Verde Nieto, explains the key findings.
The 2020s have been heralded as the ‘climate decade’ and humankind’s final chance to preserve the planet for future generations. Positive Luxury’s annual Predictions Report is essential reading for anyone looking to stay ahead of how these challenges will impact the luxury industry.
This year’s report reflects the current mood of both great hope and great uncertainty. It confronts the myths surrounding a generational divide on sustainability and makes an impassioned call for the necessity of transparency. It also contains insights from industry experts on how global legislation will impact business, provides a vision of a luxury sector that uses nature as an ally and not an antagonist, and presents inspirational business models with which to invigorate the world of luxury.
There is, undoubtedly, a lot to take in, but below we’ve summarised the key findings.
The Gen Z Myth
Luxury brands have for years assumed that it is Gen Z and millennials driving conscious consumption. However, climate change, inequality and a planet linked by dangerously weak supply chains mean a social conscience is no longer the preserve of the young.
The media might lavish attention on youthful figureheads such as Greta Thunberg as symbolic shorthand for the concerns of Gen Z, but it would be an error to mistake this for a genuine generational divide. In fact, the report reveals that older people are more likely than the young to feel that acting in environmentally conscious ways is likely to make a difference.
In other words, consumers motivated by environmental and social issues come from every generation and background – by making assumptions about entire segments of the population, brands risk alienating the very people they need to reach.
From Transparency to Accountability
2021’s Fashion Transparency Index revealed that most major fashion brands (99%) do not disclose the number of workers in their supply chain who are being paid a living wage. Make no mistake, though: transparency legislation is coming.
The EU’s supply chain law will come into force in 2022, insisting that it is the responsibility of the state, rather than the private sector, to protect human rights and the environment. Similar legislation is underway in Australia, Canada, Norway, the UK and, potentially, the US.
According to Ayesha Barenblat, founder and CEO of pressure group Re/Make, which campaigns for a more transparent and accountable fashion industry, this is a good start – but only a start. “Transparency is a first step, not the end point,” she says. “True transparency needs to sit at the executive level and be ingrained in the company culture and operations. Perhaps ‘transparency’ as a term isn’t enough – it’s been co-opted by brands. Maybe the better word is ‘accountability’.”
Insider insights on global legislation
Not everyone, however, can wait for new laws to come into effect. Consumers are getting savvy about ways to use existing laws to apply pressure to improve the environment and working conditions. The future for most companies is to think that issues that would formerly have been a reputational risk are now becoming a legal risk.
For instance, a series of laws exists at state level In the US that have been used for years by people suing companies for matters such as workplace abuses. Now plaintiffs and advocacy groups are using them creatively to expose companies that greenwash or make incorrect statements about their supply chains on the grounds that they are deceiving the consumer.
The lesson here is that luxury business can’t just wait for legislation, it must go above and beyond compliance to anticipate what is coming. What’s more, local legislation requires local knowledge. More than ever, international brands need expert partners to guide them.
Resilience vs. Adaptation
Companies that persist in treating climate change solely as a corporate social-responsibility issue in 2022 – rather than a material risk for the future of a business – will fall behind this year. 2022 is no longer the beginning of the decade that prepares for climate adaptation – it is the year to take real action to protect, replenish and rewild what we have left as extreme weather events become the new normal.
Kering, the French luxury group, published a study in 2015 of six threatened raw materials: silk, extra-fine cotton, vicuña wool, cashmere, sheep and lamb leather, and cow leather. If luxury consumers are to continue to enjoy products made from these, luxury brands need to mix resiliency with adaptation, not only to stave off environmental change, but to prepare a response to the changes that are already happening. It is not enough to decrease negative environmental impact: positive impacts must be created.
‘Another world is possible’ – Arundhati Roy, Booker Prize-winning author
In November, the international Climate Governance Initiative (CGI) called on board directors across the world to place the climate transition at the heart of corporate strategy. To be truly sustainable, businesses must learn to decouple growth from unfettered production and consumption.
In theory, luxury’s quality-over-quantity ethos is perfect for a slow-growth economy. But brands don’t always practise what they preach. According to Vogue Business: ‘The sustainability performance of the (clothing) industry is just not catching up with the pace of growth. Even if we pull all the levers, we will be very far from having a sustainable industry by 2030.’
In 2022, restructuring business models with sustainability in mind will become incentivised. Social bonds – used for projects that promote improved social welfare and positive social impact for vulnerable, marginalised or disadvantaged populations – grew significantly during 2021, while green bonds are predicted to hit $1t by the end of 2022.
To be successful in the coming decade, luxury brands must reimagine themselves from the ground up, invest in innovation and rethink what growth means. The planet will not sustain a culture of constant expansion – and perhaps the metaverse provides the opportunity to craft an alternative reality and an alternative future. Swift action is needed, but luxury business can make a tangible difference in accelerating the transition to a new climate economy.
For the full report, CLICK HERE.
Continue reading Fox Quarterly…
What Matters Most: Inside The UHNW Mindset