Socially valuable business
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Luxury brands are undergoing a makeover; they are becoming responsible and socially conscious. Partly because the luxury customer now demands increasing accountability and transparency. The mature customer is sated with material goods and seeks meaningful connections with brands beyond simply flashing status and wealth. Millennials, particularly, both celebrities and regular buyers, now demand that the brands they endorse should reflect their values and lead the way to a better world, whether through sustainable production methods or socially evolved practices.
British actor Emma Watson’s “He For She” campaign for gender equality, alongside her involvement with the Green Carpet Challenge to bring sustainable fashion centre stage, shows that this segment is driving the trend towards a brand experience through its values and actions, not just its products.
Simultaneously, new laws and the harsh reality of physical constraints to raw materials mean that brands can no longer turn a blind eye to their supply chain. In 2015, the UK passed a Modern Slavery Act that obliges companies doing business in the country to publish annual reports on the human element of their supply chain. Such laws are designed to drive greater transparency as they shine light on areas that are not directly controlled by the brand.
Currently, more than 70% of retailers and suppliers in the UK believe that there is some amount of human slavery in their supply chain. Similarly, increasing demand for raw materials, from natural fibres and leathers to precious stones and metals, is clashing with dwindling supply. Climate change and water shortages mean that brands have to be careful about sourcing, respectful of processing methods, and impact on communities and human rights. Luxury can no longer afford to fall short, for both practical and image-related reasons.
None of this is easy to manage. Luxury brands, however, have another compelling reason to champion socially responsible business practices. And that is, the very meaning of luxury: to be the best in its category. Luxury by definition means the ultimate in quality, in design, in standards of behaviour.
Kering SA, with brands such as Saint Laurent and Gucci, has put in place an ambitious environmental profit and loss methodology that tracks the environmental footprint of all its brands and quantifies the impact of its business, with the aim of not just offsetting them, but eventually creating a positive impact. Making the data quantifiable and comparable means that companies have a stronger business case to adopt responsible practices, not just in production processes, but starting from design all the way through packaging, retail and communication. Kering has made its methodology public on the principle that best practices should be shared for greater good.
But piggy-backing on buzzwords without substantive groundwork can backfire, as Chanel discovered when its 2016 couture collection, touted as “ecological” because of the use of wooden sequins, recycled paper, cork-soled shoes and presented in a miniature garden setting, attracted as many sceptics as admirers for its “greenness”.
However, Chanel has credibility in creating social value in other ways: the venerable fashion house has long supported artisan-driven enterprises such as milliner Maison Michel, embroiderer Lesage and Scottish cashmere maker Barrie. Helping these niche firms flourish not only reinforces the pool of highly specialized skills necessary for Chanel’s core couture business, but also helps preserve artisanal firms important to local heritage and jobs. The smaller firms are not tied to Chanel, but are free to work with other luxury houses, including its rivals. Whether one sees this as an act of cultural magnanimity or a smart business move, Chanel is clearly a winner on both counts.
All of which means that each brand must find social causes that speak to its values to be authentic and credible. Swiss watch company Vacheron Constantin supports rheumatology research not just as a worthy cause, but because rheumatory disorders, which affect millions of people worldwide, are particularly debilitating for watchmakers who need very precise control of their hands to work at a microscopic level.
“New luxury” brands of the last decade are keyed in to this ethos. Belgian designer Bruno Pieters set up avant garde fashion label “Honest by” with the aim of complete transparency. Available online, it shows where materials come from, how much they cost, who made the product, where it was made and—crucially—how much money everybody earns along the supply chain, including Pieters himself.
Luxury plays an important sociological role in its ability to generate desire. Through their access to influencers, and the influence of their own visibility, luxury brands can lead individuals and communities in the formation of more reasoned and responsible practices.
Rachna Joshi Nair, co-author of Real Luxury: How Luxury Brands Can Create Value for the Long Term and co-founder of strategy consultants Nair-Safir, is based in Paris.
Fine Print will run viewpoints on luxury and design from different writers every week.