Has your luxury brand developed its Sustainability or ESG policy?
In recent years, there’s been a raft of government policies both nationally and internationally to encourage companies to act responsibly and ethically on environmental, social, and corporate governance (ESG) issues.
There have been a number of successful marketing campaigns launched and flagship products developed by brands striving to demonstrate their ESG credentials.
However, there have also been a number of high-profile cases of greenwashing; where brands convey false or misleading information regarding their environmental practices.
How can luxury brands be more ethical and sustainable?
Many luxury brands have struggled to understand ESG, what it really means for their business, and how they can incorporate these important facets into their processes and policies.
We’ve recently become part of the Positive Luxury Sustainability Network. Positive Luxury is a standard (butterfly mark) awarded to luxury brands who can demonstrate that they are on an ESG journey. A benchmark that helps the world understand the value your business puts into your corporate responsibility.
They look at the whole business ecosystem and consider the impact on both working practices and the environment, delivering a roadmap to help drive the right results.
So if you’re feeling overwhelmed by ESG policy, Positive Luxury is a great place to start your journey towards becoming a ‘green’ luxury brand.
Why should luxury brands develop an ESG policy?
There’s no escaping climate change and there’s an increasing awareness of the importance of social issues such as inequality and human rights. To ignore these factors would be to go against the tide.
Fundamentally, a robust ESG policy makes good business sense and is the right thing to do:
Between now and 2030 both the EU and US are developing comprehensive legislation that all brands will need to adhere to. The US is focusing on employment rights and the EU on the environment.
Indeed, some of this legislation has already kicked in. There’s a famous case of large shipments of cotton being held by US customs. Part of the consignment originated from a Uyghurs Muslim area in China. The US has deemed products developed by Uyghurs as forced labour and therefore stopped the entire shipment.
This particular consignment was bought by a luxury US brand, which used an intermediate to source and package the product for shipment. The challenge was that they didn’t know the 30+ suppliers that went into that consignment, nor could they easily find out. The goods were stopped at US customs and the onus was on the brand to prove the origin of the product.
So brands will now not only be encouraged to look at ESG but they’ll be forced to comply with the new legislation. This will create a step change to help meet net zero goals while also improving the working conditions for millions around the world. However, this potentially has a significant impact on costs and business practice.
Businesses that embrace this change in ESG practice will be able to take competitive advantage; changing their business in a mannered and timely approach, allowing cost implications to be spread in the P&L over the next seven years to 2030.
The risk for businesses that fail to do this is highlighted in our example, above.
Businesses that ignore these changes will face a shock to their working practices (perhaps products being stopped at the border), they might be fined for not meeting the new legislation, or they risk losing market share to their competitors who acted more quickly.
This could force a knee-jerk reaction that the business hasn’t planned for, hitting the P&L without being forecast, changing investments, growth plans, and wider business goals.
Of course, rushed decisions have the potential to unravel further down the line if the solutions to the crisis have not been planned effectively.
3. Breeding the right behaviours
Publishing your ESG strategy is a clear commitment to customers, suppliers, and your workforce that your business, from the top down, is dedicated to the practices and policies you’ve outlined.
It might be that supply chains, working practices, and the consumption of raw materials need to change in order to align with new legislation.
However, being clear in your ESG practices could – in turn – encourage suppliers to update their own in order to win/retain your business.
ESG is just as important to your employees as it is to your customers.
Helping all who work for the business realise the commitment from the board down to changing and meeting the new standard is imperative. But more than this, it could help to recruit and retain the best talent too.
Customers want to know how your business is acting to meet your corporate governance responsibilities.
While Positive Luxury isn’t the only benchmark – having its butterfly standard associated with your business is a clear sign for all to see that you’re committed to this journey.
“The Butterfly Mark is the mark of real change, for a world that desperately needs it. We award it only to brands meeting higher and higher standards for people and nature. Each one has to undergo a comprehensive assessment built on the foundation of international agreements, global frameworks and standards, and even potential upcoming legislation. And every two years, they have to do it all over again. The bar is forever rising, but our brands keep rising to meet it. Progress over perfection, difficult work over easy wins, and transformation you can trust. That’s what our mark symbolises.” – Positive Luxury
Summarising the need to be a greener luxury brand
The focus on ESG is becoming much sharper over the next seven years as the US and EU force businesses to act and change both environmental, social, and corporate governance policies.
The question is how quickly your business is able to adapt and how you communicate your ESG strategy to strengthen your luxury brand positioning?
At Giant Leap we are committed to this course of action not only through being part of the Positive Luxury Network, but also helping the brands we work with on this journey.
Across the media space, we have developed compelling campaigns to help elevate the brand’s dedication to its sustainability goals. This includes social, CRM, publication, and wider media campaigns to help luxury brands communicate this to their cohorts. Informing customers, suppliers, and staff of their vision and impact.
To find out how we can support your luxury brand’s sustainability and ESG objectives, contact us today.