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- 11 Jan 2016
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The Cost Of Sustainability For Luxury

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Sustainability has become more than a buzz word and is now an enviable component for any luxury business looking for traction with the new generation of wealthy – but this credible advantage comes at a price.

In her book ‘The End of Fashion’, journalist Teri Agnis states that the proliferation of large retail stores around the globe has boosted designers’ marketing and branding efforts, subsequently (and ironically) leading to what she calls ‘the death of fashion’. Today, commercial districts from Australia to Austria carry many of the same labels. So what distinguishes one fashion brand from another, in a world of such homogeneity?

The surprising answer could be: sustainability.


 Sustainability is an opportunity. It creates long-term value for stakeholders & it is optimistic, not constricting 


Analysts such as Linda Greer predict that when given a choice between similar clothing items, sustainability will be the deciding factor tipping consumers over to choosing an item with demonstrable eco-credentials over one that lacks them.

Ms. Greer pointed out that companies including Target, Gap and Levi’s have taken strides forward by altering their production chains in China to work with textile mills using dramatically reduced amounts of water and chemicals.

Whilst some companies argue that such measures are nice in principle but too costly to implement, Greer argues the concept was sold to these profit-first manufacturers as an opportunity to “tighten up the ship” – apparently, such investments pay themselves off in a matter of a few years, eventually leading to cost-savings, less waste, and ultimately giving brands a competitive edge in a saturated market.


 Taking such action has an upfront cost, but it seems to pay off in the battle of the brands 


Such results haven’t been overlooked by François-Henri Pinault, head of the Kering group. “Sustainability is an opportunity. It creates long-term value for stakeholders and it is optimistic, not constricting,” he asserted in an opening statement at a talk at the Parsons The New School for Design on April 2, 2015.

Indeed, Kering has aimed to increase its market share by undertaking various measures to make all of its brands more sustainable, from the creation of its Material Innovation Lab, which produces 1,500 different textiles for fashion brands to choose from (including leathers that are far more eco-friendly than their mainstream counterparts), to ensuring all packaging is made from recyclable, eco-friendly materials.  

Sure, taking such action has an upfront cost, but it seems to pay off in the battle of the brands: as the consumer Brand Passion Index indicates, when rated for sustainability and ethics, Kering received very high marks – 96% in net sentiment and a passion ratio of 72.


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IWC Aquatimer Chronograph Edition Galapagos Island, in partnership with the Charles Darwin Foundation


On the other hand, after a social media outcry raged about its cruel crocodile skinning practices, Hermes received one of the lowest scores on the Brand Passion scale; in fact, it was rated as the most loathed of the three big luxury houses.

Dolce & Gabanna has also suffered negative publicity after being outed by Greenpeace as being one of the lease transparent fashion houses; in fact, they even lost a top executive who quit in favour of taking a job at Land’s End due to the latter’s more sustainable business approach.

Georges Kern, CEO of the Richemont luxury watch company IWC understands the importance of transparency, stating that ‘a company in the luxury goods industry is expected to manufacture sustainably, be socially committed and provide good working conditions for its employees: buying a luxury item should make you feel good. We (IWC) have adopted that strategic approach to the subject of sustainability and are now communicating more about our projects outside the company’.


 Luxury watch company IWC understands the importance of transparency 


Such communication is important not only to consumers, but to investors. Kern states that while most companies are focused on presenting reports that present their quarterly results in the best light, this could be short-sighted.

What investors really want to know is what long-term corporate strategy is in place, and how that will affect their long-term investments. He recommends that information about short-term investment potential be replaced with ‘Integrated Guidance’ that emphasises future-forward briefings centred around human, natural, financial and social capital.  

Its information worth knowing: as the Economist points out, ‘companies with their eye on their ‘triple bottom line’ outperform their less fastidious peers on the stock market’.  Having a reputation for sustainability also leads to increased positive press and social media shares, all of which can easily translate into sales.


 Profit considerations aside, many industries including fashion simply cannot afford not to change for the greener 


No wonder Genfound investment says that potential investors are now asking core questions about sustainability, including: How can I mobilise capital in order to price carbon? Does my pension plan incorporate sustainability as a key consideration? Will my company’s operational viability be challenged by natural resource scarcity?

This latter point is important. Profit considerations aside, it’s important to acknowledge that in a world of dwindling  resources, climate change threats and deepening insecurity, many industries including fashion simply cannot afford not to change for the greener.

In order to optimise business in the future, companies will need to behave and think differently, adopting a regenerative approach into their business models; it is in their best interest to inform investors and consumers that they’ve done so.

Perhaps Mr. Pinault sums it up best when he says: “Sustainability is everybody’s business.”





To further investigate the luxury and sustainability on Luxury Society, we invite you to explore the related materials as follows:

- Luxury VS Fast Fashion: Live Battle Or Blurred Lines?
- Luxury Fashion & The Great Fur Debate
- The Issue With Ethics, Fashion & Luxury


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Positive Luxury is the award winning company behind the interactive Trust Mark and an official Luxury Society Knowledge Partner. Through the use of cutting-edge technology, the company continuously evaluates, communicates and improves the sustainability reputation of luxury lifestyle brands, transforming the way they engage with people. Positive Luxury currently works with over 200 luxury and lifestyle brands.

www.positiveluxury.com