Beyond opulence: Luxury industry embracing sustainable practices

luxury industry eyeing sustainability
The luxury industry is redefining opulence by embracing sustainability, transforming market priorities, and meeting the demands of conscientious consumers.

Sustainability adaptation is underway in almost all industries, indicating a growing awareness of the social and ecological impacts of large-scale business practices, the responsibilities of which extends to individual consumer choices as well. Consumer preferences have undergone a significant shift in favour of sustainable goods, particularly in advanced economies, transforming market priorities from an individualistic and utilitarian logic that merely gauges the functional utility of a good, isolated from larger social concerns to a more holistic sensibility that considers social, ethical, and ecological concerns. Businesses worldwide have started to embrace the discourse of sustainability to tap into this changing landscape of consumer behaviour.

In this context, it is worth exploring how the luxury industry, or the domain of conspicuous consumption (to use Thorstein Veblen’s terminology), has integrated sustainability into its market practices. The juxtaposition of “luxury” and “sustainability” may seem disingenuous since luxury is often associated with wastefulness and decadence, which are antithetical to sustainability principles. However, the luxury industry has not hesitated to join the sustainability movement, skilfully reimagining its role in a world that demands a shift away from hyper-consumerism towards deconsumption. As Cyrille Vigneron, CEO and President of Cartier International, puts it, “True Luxury is a response to the deconsumption equation.” This article explores some emerging challenges and potential opportunities for the luxury industry in catering to contemporary consumer choices.

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Sustainability and business challenges

The convergence of business and sustainability raises several challenging questions, the most prominent being whether profitability should be the sole determinant of success in business. The new business model under the sustainability paradigm is guided by the Triple Bottom Line, an ethical framework that emphasises People, Planet, and Prosperity. This approach represents a departure from the previous paradigm, exemplified by the Friedman Doctrine, where business decisions were driven solely by shareholder interests and profit maximisation. Businesses have sought to adapt to this changing terrain by engaging in socially responsible practices and delivering value to various stakeholders, including employees, customers, suppliers, financiers, local communities, trade unions, and government bodies. Prioritising profitability over other relationships in the short term is increasingly being seen as a long-term threat to a company’s existence.

While sustainability has become a widely used buzzword among businesses to communicate these new priorities, there is an urgent need for effective practical implementation. This has become crucial when considering the United Nations Sustainable Development Goals and the 2030 agenda. However, there is still ambiguity about how to bring sustainable business practices under a common regulatory framework to test their credibility and efficacy. A significant limitation is the lack of consensus on how to measure and quantify the impact of a business’s sustainability initiatives due to a lack of standardised evaluation and comparison metrics. This ambiguity leaves room for manipulations, and the phenomenon of “greenwashing” is becoming ubiquitous.

The surge in consumer demand for sustainable products in recent years has given rise to the phenomenon of greenwashing, where businesses employ deceptive marketing strategies to portray themselves as environmentally and socially conscious while engaging in practices that contradict these claims. One major example is Volkswagen, which was accused by the Environmental Protection Agency (EPA) in September 2015 of installing a “defeat device” in cars to manipulate emissions during testing, while promoting their vehicles as environmentally friendly through a “clean diesel” campaign. Volkswagen ultimately admitted to wrongdoing, paid significant settlements, and faced lawsuits. Similar scandals involving premium brands in industries such as jewellery, automobiles, watches, and apparel have also surfaced, exposing exploitative practices, human trafficking, and other illegal activities hidden within obscure supply chains. There is also the reality of biophysical limits that the premium brands especially in jewellery and fashion are waking up to.

An alternative vision for luxury industry

Amidst all these challenges, an alternative vision emerges for luxury brands. Can luxury brands reinvent themselves and embrace sustainability while maintaining the unique marker of their products being opulent and non-essential? Bain & Company, in collaboration with Positive Luxury, released a research paper in 2021 outlining a roadmap for leading luxury brands to become sustainability champions by 2030. They highlight the generational shift in consumption, with Generation Z maturing into adults who prioritise brands that have a positive impact on the environment and society, while distancing themselves from those that do not. It also identifies a crucial goal for the luxury industry’s sustainability journey: transforming the culture and business model of premium brands by making sustainability integral to their strategies, employee and customer management, and economic growth.

The paper proposes several strategies for a company to become a sustainability trailblazer in the luxury sector:

Redefining purpose: Shifting from a marketing approach based on craftsmanship and scarcity to an ethico-aesthetic project that emphasises beauty and goodness for both people and the planet. This entails prioritising authenticity, consistency, and transparency in hiring, performance assessment, pay structures, and training.

Decoupling growth from volume: Cultivating circular business models through resale and rental, customising products for consumers, and utilising technology and AI tools to identify local demand centres in cities and optimise outdated inventory.

Enhancing supply chain transparency: Leveraging technological advancements, such as blockchain, the Internet of Things (IoT), robotic process automation, and data science, to make supply chains visually accessible to luxury shoppers, allowing them to verify the socio-ecological impacts of their activities.

Maximising environmental and social commitments: Taking bold initiatives to achieve net-zero emissions targets, embracing self-generating energy sources like wind, solar, and biomass, and prioritising inclusivity by improving representation of communities in the company workforce and boardrooms.

Creating economic value from sustainability: Viewing sustainability as a long-term contributor to cash flow rather than a mere additional cost. This can be facilitated through tax benefits for companies aligning with national goals to reduce greenhouse gas emissions, as well as incentives for investments in regenerative agriculture, reforestation, and community programs.

By embracing these strategies, luxury brands can navigate the path to sustainability, aligning with consumer expectations and making a positive impact on the environment and society. Several new luxury brands have emerged from India, positioning themselves as potential leaders in sustainable luxury. IVAR, founded by Ritika Ravi, is a fine jewellery brand gaining international recognition for its commitment to ethical fashion and sustainability. Another trailblazer in sustainable luxury from India is Limelight Diamonds, the country’s leading lab-grown diamond brand, founded by Pooja Sheth. Lab-grown or CVD (Chemical Vapour Deposition) diamonds are known for mitigating many of the social and environmental impacts associated with traditional diamond mining.

These brands have adopted sustainable sourcing strategies, prioritised supply chain transparency, implemented circular business models, promoted inclusivity, and empowered communities. They have also outlined comprehensive action plans to achieve net-zero targets and increase the use of renewable energy sources throughout their supply chains. This indicates that the winds of change are beginning to blow in the world of sustainable luxury, with India demonstrating significant potential to initiate further initiatives.

Challenges ahead

However, despite the potential for visionary and transformative business models rooted in sustainability, the luxury industry still faces a major challenge in implementation: its consumers, although increasingly driven by social and ecological consciousness, remain some of the largest contributors to global emissions and account for a far greater carbon footprint than lower-income consumers. The UN’s Emission Gaps Report (EGR, 2020) highlights that the top 1% of income earners worldwide account for 15% of global carbon emissions, underscoring the urgent need for significant lifestyle changes among the wealthiest individuals to bridge the emissions gap effectively. Recent studies also suggest that increased usage of social networking sites (such as Instagram) is positively correlated with higher levels of conspicuous consumption among the youth, driven by social norms, envy and comparison.

Especially within the global neoliberal order, where austerity is shifted from individuals to states (encouraging individuals to spend and consume more while limiting public spending and welfare measures by states), engineering a shift from profligate and conspicuous consumption to frugality and responsible consumption becomes particularly challenging. In fact, the pressing question today is whether any effective solutions to the climate crisis can be achieved within the existing politico-economic order that sustains unsustainable growth and irreversible ecological damage. Justifying visions of transformation or alternative imaginations requires faith in the power of ideas and reform, as well as a collective will to resist and hold accountable entities that pose threats to the global commons through their unethical and unsustainable practices.

(Nikhil Seethi is a researcher, affiliated with Global South Colloquy. Satyabrat Sukla is Assistant, Communications and Design, at the Indian Institute for Human Settlements.)