Luxury Brands and Sustainability – The challenges and solutions | Retail law | Browne Jacobson (2024)

This article was first published by Fashion Capital in October 2022.

The fashion industry has a mountain to climb when it comes to sustainability. More than 8% of greenhouse gas emissions come from the apparel and footwear industries, and approaching three-fifths of all clothing ends up in incinerators or landfill within a year of being made.

In many ways, it could be argued that purchasing from luxury brands is a more sustainable choice, as the garments are designed to last, and pieces such as coats, watches and other wardrobe and accessory staples are often worn by customers for decades (and, particularly for watches, are passed down in families). Contrast this with fast fashion brands, where the pieces are (whatever the brands may say) intended to be worn only a handful of times before being discarded for something new.

Sustainability is already a key factor in the consumer’s decision to purchase, and is likely only to increase in importance in the future. Whilst for customers of fast-fashion brands, price may (particularly during a cost of living crisis) trump sustainability, consumers of luxury brands are not as price-sensitive. Consumers are now more conscious of their impact on the planet and want to feel that the brands they are buying from are making genuine efforts to ensure that their products are made ethically and with environmental responsibility in mind.

While one luxury brand has been a trail-blazer in sustainability for decades, most luxury brands have in recent years made concerted efforts to ensure their products and operations are more sustainable. One of the big challenges for luxury brands in becoming more sustainable is the fact that some of the materials commonly used by luxury brands (particularly fur, leather and other skins) raise obvious ethical and environmental concerns. Many luxury brands are now partnering with innovative developers of new materials to create bio-textile alternatives to leather, plastic, and fur, such as the well-publicised mushroom leather and lab-grown fur. Knitwear brands are upping the amount of recycled wool and cashmere in their products. At the other end of the production journey, many brands are selling or donating leftover fabrics and yarn so they can be used rather than discarded, and some have made new designs out of previous seasons’ stocks. Many have made commitments to reduce their carbon footprint and emissions and are reconsidering the packaging and transportation of their products. Particularly in the beauty industry, the lack of recyclable packaging has been a problem for many years.

Just as importantly, luxury brands are having to look at their supply chains – how and in what conditions their products are designed, made and moved around the world, and how to reduce the environmental impact of that chain. Those that own their own factories are able to put measures in place to make their production more sustainable, but for those that don’t, the answer lies in the brands imposing clear and measurable sustainability requirements on their suppliers and monitoring and auditing to ensure that suppliers comply with those requirements. The EU has proposed a Corporate Sustainability Due Diligence Directive which, once implemented into national law, will impose requirements on certain EU (and even some non-EU) brands to have robust procedures in place to identify and prevent or mitigate negative environmental impacts arising from their operations and supply chains.

Finally, various luxury brands have ventured into the resale market by partnering with reputable luxury resale platforms such as TheRealReal and Vestiaire Collective. The challenge for luxury brands with resale is retaining as much control as possible over the resale process so that the brand is not damaged by unauthorised resale or counterfeit products. Partnering with reputable luxury resale platforms to ensure the products are authenticated is one way the brand can do this – it is more practical for the brand than developing its own resale programme.

Luxury brands have at their core the allure of purchasing something timeless and built to last. With that foundation, and by entering into considered partnerships with third parties to develop new materials and participate in responsible resale programmes, luxury brands can be part of a more sustainable industry.

Luxury Brands and Sustainability – The challenges and solutions | Retail law | Browne Jacobson (2024)

FAQs

What are the biggest challenges for luxury brands? ›

Return of Experiences and Global Downturn Risk

In recent years, consumers have been prioritizing spending on travel, dining out, and live events over physical goods. This shift poses a significant challenge to the luxury fashion market as people are choosing to create memories rather than buy luxury items.

How are luxury retailers taking on sustainability? ›

More than 160 brands have signed up to non-profit The Fashion Pact, which pledges to reach net-zero carbon emissions by 2050, have 50% renewables in their own operations by 2025, and 100% by 2030 – with around a third of members already achieving the target in 2020.

Are luxury brands really sustainable? ›

As long as those involved in luxury supply chains aren't paid living wages, materials are not sourced responsibly, and parts of the industry remain shrouded in secrecy, the sector just can't be considered sustainable.

How do luxury brands affect the environment? ›

Luxury brands, with their global reach and high demand, contribute significantly to environmental degradation. They also contribute to social impact with their mostly opaque supply chains, cultural appropriation, and the marketing of unattainable lifestyles to promote overconsumption.

What are the challenges faced by LVMH? ›

LVMH faces challenges from currency fluctuations, potential weak consumer discretionary spending due to inflation, and uncertainties in the U.S. market, but its broad brand portfolio and strong leadership offer a buffer.

What are the challenges faced by Gucci? ›

Despite the introduction of new products into stores, Gucci faces a daunting market landscape in China characterized by economic uncertainties, faltering real estate and stock markets, and reduced spending by foreign investors.

Is Louis Vuitton actually sustainable? ›

LVMH's fashion and leather brands contributed 60% to its Scope 3 emissions in 2021, by far the most of any business group. At Louis Vuitton, the shift to recycled and environmentally certified raw materials already has contributed to a 25% reduction.

Which brands are most sustainable? ›

IKEA. IKEA is a brand fully committed to sustainable practices and has set ambitious goals to become climate positive by 2030. To do so, it'll have to reduce more greenhouse gas emissions than the entire IKEA value chain emits. As the business continues to simultaneously target growth, this is challenging.

Is Gucci unsustainable? ›

Sustainably made—Gucci's environmental impact: 22/49

Following what we explained about the materials Gucci uses above, here are some stats on its sustainable material progress up to 2022: The quantity of products made from recycled or organic cotton: 74% Organic, recycled, or responsibly sourced wool and cashmere: 60%

Why do luxury brands destroy their products? ›

Why do brands destroy excess stock? For luxury brands, destroying unsold stock is one of the most cost-effective way to avoid devaluing their image. Luxury fashion is a status symbol, so burning excess inventory – as opposed to selling it at a discount – maintains the brand's sense of exclusivity.

What are the threats to the luxury market? ›

The luxury goods sector is in a prime position to grow despite the prevailing geopolitical and economic headwinds, and participants will want to make the most of opportunities – but the bribery, corruption and fraud risks inherent to the sector are all too apparent.

How do luxury brands survive recession? ›

Luxury brands can offset declines in sales in one market by expanding into new markets. Invest in marketing and advertising. Luxury brands need to invest in marketing and advertising to keep their brands top-of-mind with consumers. Be prepared to make tough decisions.

What is a key challenge for luxury brand managers? ›

Maintaining brand exclusivity and prestige

Brand exclusivity is crucial in the luxury industry and requires careful brand management. Luxury managers must ensure that their brands remain exclusive by controlling the distribution and pricing of their products and services.

What are the challenges faced by Prada? ›

Indeed, of all the major luxury brands, Prada seems the most exposed to the countervailing market forces — weakening demand in Greater China, slowing global tourism travel, changing consumer behaviour in the digital age — making it the basket-case of the luxury sector.

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