At the recent International Herald Tribune Conference on Luxury there was renewed attention directed to the creation of “eco-luxury” and “ethical-luxury” brands. These terms might seem like a stretch (or even oxymorons) to some, but luxury brands, which currently base their appeal on exclusivity, status and celebrity, can’t afford to ignore well-informed, well-off customers who demand higher standards of environmental and ethical responsibility. These customers are fast becoming vital markets.
Glitz and glamor isn’t enough
For today’s luxury brands, it will take some real work to fit “luxury” onto the same value platform as “ecology” and “ethical.” That’s because ecology and ethics are radically different avenues of value creation than glitz and glamor. Thus, the industry needs a revised brand approach to take this next step. The good news is that iconic luxury brands themselves hold the key to a successful transition.
The risk: luxury brands disrupted from below
What’s clear to me is that the luxury industry must take this transition seriously. If it can’t forge a deeper connection with the values that underpin environmental and social responsibility, luxury brands face a real threat of being disrupted from below—by a new form of luxury that uses ethics and ecology to make “traditional” luxury brands irrelevant.
The luxury industry has been totally transformed once, from small, family-owned workshops into a global marketing machine. There’s no law that says it can’t be transformed again.
Luxury brands don’t have the luxury of time
One thing is certain: luxury brands are on the clock. They don’t have the luxury of time to slowly and opaquely evolve their commitments to ethics and ecology. They are now being held accountable for their actions, just like the Gap’s, Nike’s and Levis’ of the world have been for decades. The world is waiting to see how passionate and creative luxury brands can be when the human condition and the environment are at stake.
A luxury scorecard
Shortly before the IHT conference a unit of the World Wildlife Fund published an in-depth social responsibility scorecard on the top ten publicly traded luxury firms, ranking them on 50 criteria in four categories: environment, human rights, corporate governance and stakeholder relations. The results were not pretty. The highest corporate grade was a C+ (received by three firms), while two firms received F’s. The full survey is worth reading. For a summary, see the Financial Times account.
The bottom line is that luxury firms, paragons of product quality and taste, must now become paragons of social responsibility. From brands of world-class excellence, one would expect no less.
Not a masquerade
Granted, it will take definite brand innovation for brands traditionally associated with self-indulgent elites to become brands of ecology and ethics. For luxury brands to gain credibility in these areas, their commitments (and actions) must be the real deal, not a masquerade. This would rule out commitments richer in words than deeds. If luxury brands appear to be faking their new commitments, they may be viewed as counterfeit, potentially falling to the same level as the shameless replicas that haunt their own business.
Let’s now see what the IHT conference produced.
“We need to replace hollow with deep”
From the IHT report:
The luxury industry, a booming business for the last 20 years, is positioned well for continuing spectacular growth – Bernard Arnault, chairman of LVMH, predicted a doubling in the next five years to €300 billion – but needs to heed the growing ethical concerns, particularly of younger consumers in Western markets, industry leaders said Wednesday.
Arnault and the next speaker, the designer Tom Ford, also gave strong emphasis to what is being called “ethical luxury” – the products that define their owners or wearers as people with human and ecological consciences.
Arnault said the trend was increasingly noticeable among the younger customers in the more saturated markets of the West, who, he said, seek discretion, while consumers in emerging economies still favor the pursuit of the ostentatious.
I especially liked this quote from Tom Ford:
Ford summed it up starkly: “Luxury is not going out of style. It needs to change its style.” He added, “We need to replace hollow with deep.”
A model for “going deep”
A brand that intends to demonstrate deeper commitments to social and environmental issues will be expected to adopt specific program measures to define and achieve its goals. These would answer the question: As a brand, how can we lead in the effort to advance ecological and social responsibility?
At a minimum, typical measures would include:
- A statement of principles, or a charter,
- Goals and objectives
- Codes of conduct for the brand and its suppliers
- Executive responsibility
- A means to work with customers, partners and suppliers to achieve the new aims.
These can’t be produced overnight, of course, but they’re needed to make ecological and ethical commitments a core component of the brand—so the brand can make a (legitimate) stand.
For now, a shallow start
The quotations cited above indicate that the luxury industry—as represented by those quoted—may initially intend to “go deep” by a succession of fairly shallow steps. The emphasis seems to be more on appearance than substance.
For example, it appears that “ecology” and “ethics” are being framed as style attributes to the brands themselves, rather than practices deserving real commitments for the companies behind the brands. It’s as if the products would be tweaked to represent ecology and ethics—using design, naming, creative promotions and associated campaigns—while the industry itself carries on with business as usual.