Following the launch of Positive Luxury‘s 2019 Predictions Report in January, Luxury Briefing met the platform’s Founder & CEO, Diana Verde Nieto to talk about how the luxury industry has changed over the past 18 months, with additional insight on how the market is predicted to change further this year.
This article marks the first in a three-part series of insight pieces for luxury-briefing.com. For the second piece, Fflur Roberts, Head of Luxury Goods at Euromonitor will share her thoughts on how sustainability is changing the way we shop.
What does ‘mindful luxury’ mean to you?
A lot of things we use and consider luxurious today might not exist in the future unless we readdress and change our attitudes to production and consumption. ‘Mindful luxury” will need to be top of mind for brands. Authenticity, quality and sustainability are given characteristic expected by consumers today from brands, especially from luxury ones.
Embedding the principals of sustainability into the brand is the best marketing tool, sustainability creates desire and it’s a competitive advantage
In the last two years, there has been a shift in consumer awareness towards sustainability. What are the major changes you’ve noticed?
According to Havas Media Group’s Meaningful Brands framework, 71 per cent of people globally expect companies to be involved in social or environmental issues. Furthermore, they are more likely to purchase a product depending on the brand’s environmental policy. The fact consumers are reacting to these values is a major change from even a few years ago. People want to buy better and they are not afraid to vocalise their thoughts and vote with their money.
Could you briefly describe the screening process brands go through to be considered for a Butterfly Mark award?
To earn the Butterfly Mark, brands must pass a stringent bi-annual assessment carried out and verified by our sustainability council and institutional partners. Throughout this process, brands are examined from a holistic point of view; looking closely at governance, social and environmental frameworks, community investment and innovation. The first step is conducted via an online questionnaire on sectoral sustainability-related issues and best practice principals. In addition, brands are requested to provide proof point and supporting evidence including policies, codes of conduct, certifications and their public reporting.
To receive the Butterfly Mark, brands must answer positively to at least 70 per cent of the questions across the five areas assessed: Governance, Social and environmental performance, community investment and innovation. Here people can find out more in-depth information about the materiality of the assessment.
The brands that do not meet our criteria are offered a tailored tool-kit including clear recommendations and action points on how to improve in order to re-take the assessment. It’s in our, and the planets’, interest for as many brands as possible to be given the opportunity to better their overall environmental approach and ultimately receive the recognition of the Butterfly Mark.
Our assessment is designed to reflect the self-regulating nature of sustainable businesses. The desired result is to ensure that businesses go beyond achieving a minimum sustainable business standard that is compliant with international and local law and best practice principles while making a tangible positive difference to people in the local communities. We use technology to better our evaluation – by looking at publically available data, we’re able to check the self-reported information
To navigate the complexities of sustainability across various industries we have mapped the sustainability-related issues across both our brand categories and to a product group level, in order to identify common topics and questions.
The assessment is composed of questions relevant to all industries, followed by questions catering specifically to each sector we work with, including Travel & Hospitality, Fashion & Accessories, Jewellery & Watches, Beauty, Premium Drinks and Living.
The completed assessment and awarding of the Butterfly trade mark is not the end of the journey however – our community encourages a continuous commitment and improvement towards the shared goal of sustainability.
What do you consider as the biggest challenges when marrying sustainability and luxury?
Sustainability and luxury have always been two sides of the same coin. Operating a luxury business comes with practicalities, and of course, sometimes there are complexities that make it difficult to put effectively sustainability into practice, but there is no tension between the two concepts: they are not mutually exclusive.
Could you give a couple of examples of the initiatives implemented by brands as part of their efforts to be more sustainable?
Louis Vuitton has always been highly conscious of both respecting nature and embracing talent and craftsmanship, since their first carbon footprint audit back in 2004. The Maison is constantly innovating in order to sustainably reduce their environmental impact. The importance of improving a product’s environmental performance is just as crucial as the customer’s product experience. For example, the Horizon luggage range includes a new, lighter weight version that reduces CO2 impact by 20 per cent per kilometre travelled.
In order to minimise its impact on climate change, Louis Vuitton is committed to reducing its carbon emissions, particularly in regard to product transportation and energy consumption in throughout its offices. This is aligned with LVMH’s Carbon Fund that helps the Maison invest in a variety of initiatives to reduce its energy footprint.
Louis Vuitton’s reinforcement of eco-building policies continues on site, i.e. warehouses, workshops, offices, and its network of stores; in an effort to improve its overall environmental performance.
The brand has also invested heavily in technology to assist with the reduction of energy consumption throughout its operations. For example, choosing the most efficient air cooling and heating systems, installing solar panels and LED lighting across all built areas. Since COP21, Louis Vuitton has also initiated a global programme to switch the lights off in the majority of stores from midnight to 7am.
Furthermore, the brand has successfully reviewed its supply chain operations by selecting its logistics and transportation partners on preliminary environmental criteria based on their ability to create the least CO2 emissions and most effective environmental performance.
They have reduced their CO2 emission in the last seven years from one third to one quarter as a result of the reduction of volume transported, the distance covered between workshops to stores and the selection of the lowest emission fleets for each mode of transportation.
Another example is Biotherm. A pioneer in skin biology since discovering the benefits of Life Plankton in 1952, the French luxury skincare company uses the incredible force of aquatic ingredients in its advanced formulas.
Partnering with Mission Blue’s since 2012, Biotherm launched its Water Lover campaign in 2013, and is actively contributing to the protection of marine areas critical to ocean health and worthy of special protection, called Hope Spots.
By donating to the TARA expeditions Foundation; the first recognised charity foundation dedicated to the ocean you are supporting the development of leading-edge scientific research that is fundamental to our future.
A commitment to protecting the world’s climate and environment is central to IWC Schaffhausen’s corporate philosophy. The Swiss watch manufacturer has been working steadily on reducing its carbon dioxide emissions, with impressive progress, and since summer 2007 IWC has been certified as a climate-neutral company. Alternative energy along with innovative manufacturing technologies have helped lower carbon dioxide emissions by 90 per cent. The company optimises energy consumption, using heat recovery systems, residual heat from wastewater, and a combination of cooling and heat pumps to generate heat or cold alternately, or even simultaneously. An additional system, which makes use of groundwater, provides an alternative means of heating and cooling the company’s premises and production facilities. Since 2007, the company’s electricity needs have been covered entirely by green hydroelectric energy and IWC has also installed a system that recycles rainwater to flush toilets.
IWC also makes voluntary payments to compensate for emissions that cannot be eliminated entirely. The funds generated through this initiative help fund environmental projects in developing and emerging nations.
IWC developed a scheme aimed at fostering environmental awareness among its employees and rewarding those who make individual efforts to reduce their own CO2 footprint. Financial incentives are offered to encourage employees to use public transport, buy cars with lower CO2 emissions and to use alternative energy sources and energy-saving technologies within their homes. Employees are also able to calculate their personal CO2 emissions on the IWC intranet and even compensate for excessive use through payments to a climate-related project. IWC supports selected institutions worldwide helping children and adolescents growing up in difficult circumstances, such as the Laureus Foundation. In addition, the brand has long-established partnerships with organisations working against climate change and environmental damage, including the Cousteau Society and the Charles Darwin Foundation.
An ambassador for good causes, dedicated to protecting and preserving the environment and with a pioneering spirit in the company’s blood, IWC brings the tradition of Swiss craftsmanship and their own 140-year heritage firmly into the 21st century.
What are the key findings from Positive Luxury’s 2019 Predictions Report and how are you communicating these to the brands you work with, as well as the wider consumer audience?
The 2019 Predictions Report covers a lot of different areas and looks at sustainability from a holistic point of view. It highlights the two most disruptive conditions for business, particularly within the luxury sector, as being climate change, and the attraction and retention of both talent and consumers.
The global challenge of climate change has led companies to invest in innovation, whether on materials or new business models, in order to increase their climate risk resiliency. Brands who confront this challenge are provided with the opportunity to change the narrative and drive disruption from the inside out. A business can evolve from being a company to being part of a movement interested in our world and future generations.
To confront the challenges with attracting and retaining talent, brands need to appeal to a new age-less demographic that is united by values and a desire for purpose – in the report defined as ‘Generation Less’. The Generation Less mind-set represents how our world has changed and the set of values that all ages have adopted as a result. They are socially and environmentally conscious and seek convenience, personalisation, work-life balance, experiences and are choosing to work for companies who reflect their values and can prove their positive impact on our world.
What is the ‘Generation Less’ attitude to consumerism?
This year we are working to promote the notion of quality over quantity – less is more – which we hope will be the reigning ideology driven by Generation Less. They value time and are mindful not to waste it. They choose to spend their money on things that delivery quality and emotional fulfilment. They want to live better, buy better and do better. Generation Less is more conscious of their spending than previous generations before them, but are willing to pay more for the best.
I think that the extreme wealth divide that have come to characterise today’s world is unsustainable and I believe that we will see a shift in many markets towards stealth wealth – and, as a consequence, to much less conspicuous forms of consumption and social signalling.
The new reality is that luxury consumers really only care about the brands that have created value for them in the last 24 hours – or made a longer lasting impact through positive actions and impact. Our report revealed that nearly 50 per cent of consumers show an intent to buy after viewing a brand’s value-led communication which highlights the point that values will lead the conversation going forward.
In an interview for Luxury Briefing in 2017, you said that ‘brands are doing more behind the scenes than they might let on but there isn’t enough attention from the media shining a light on brands’ endeavours.’ Is this still the case?
This is certainly still the case, as systemic change within a business can take a long time: it is like changing the engine of a Boeing 747 mid-flight!
I think most brands have improved overall, but I think there is still a tendency to focus on perfection instead of all the small steps brands are taking in order to reach their goal. We strive to help our brands communicate positive stories, encouraging them to adopt a circular and interactive communication paradigm.
Today, good communication is a two-way dialogue as consumers now expect to be part of the conversation, and even co-create with brands. Those companies who adopt this new approach of sharing the good – and the not so good – instead of only general claims and achievements, will benefit in the long-term. For example,
At last year’s Positive Week event in October we celebrated the brands making a difference and the resounding takeaway from speakers such as the Director of Sustainability at Hermès and the Founding Partner of Generation Investment Management was that sustainability is now non-negotiable – it is expected, assumed and in demand from the modern-day consumer. Today, people are not passively taking information on, they are increasingly interested in what makes a company responsible and are seeking out the information.
What are you hopeful about in regard to sustainability, coming into this new year?
Sustainability is transversal instead of vertical – it is applicable to every industry and across all product levels. So, in the same way, digital has revolutionised industries, I hope sustainability will do the same: and this year and beyond will be a more positive place because of it.
2019 is set to be a hugely exciting time for Positive Luxury and sustainability as a whole, as we expand in the US and France Positive Luxury in the USA and France mid-March, expanding our reach and positive impact while holding our spot as the leading sustainability trust mark in the luxury industry.
We will continue to drive the conversation around sustainability and encourage even more brands to join the movement and shared goal of sustainability. We want it to become a lot easier for consumers to navigate sustainable brands and shop with confidence. We have an overview of all our continuously growing community of brands on our website.
As our Predictions Report details, “Consumers are sceptical of companies and their motives, yet at the same time consumers are seeking ways to reinforce their belief system and their connectivity to a community” – and this is where the Butterfly Mark comes in.