Have our aspirations changed? Are we seeing evidence of a different consumerism where luxury brands no longer symbolise waste, exploitation and environmental harm?
‘Luxury’ can be attached to almost every consumable aspect of our lives.
Fashion, jewellery, cars, cosmetics, apartments, home appliances and even chocolates.
As media and social media has cast its spell, all of us have undoubtedly been caught in the luxury aspiration trap.
But how things have changed in a short 12 months.
Global brands are now faced with a turning tide in attitude as well as threats to consumption levels. The pandemic and its catastrophic economic consequences have meant that many cannot simply afford to entertain expensive products anymore.
Moreover, many of us are looking to go deeper into what truly matters. We’re now deeply concerned about the dire consequences of unnecessary consumption for the health of our planet.
According to a recent report by Oxfam and the Stockholm Environmental Institute, over 25 years between 1990 and 2015, the world’s wealthiest one percent accounted for more than twice the combined carbon emissions of the poorest 50 percent.
During this period, the richest 10 percent blew one third of our remaining global 1.5C carbon budget, compared to just four percent for the poorest half of the population.
Annual emissions grew by 60 percent between 1990 and 2015. The richest five percent were responsible for over a third (37 percent) of this growth.
These stats demonstrate not only the disparity between rich and poor but how a wealthy lifestyle lived without any consideration for its wider impact can have a catastrophic impact on the world around us.
According to Tim Gore, Head of Climate Policy at Oxfam and author of the report:
“The over-consumption of a wealthy minority is fuelling the climate crisis yet it is poor communities and young people who are paying the price. Such extreme carbon inequality is a direct consequence of our governments and their decades long pursuit of grossly unequal and carbon intensive economic growth.”
Luxury Brands and Negative Impact
So what behaviours or extravagances account for this overconsumption? Well, the lives of the rich can negatively impact the environment in different ways.
Many luxury vehicles offer low numbers of miles to the gallon with higher emissions. Even electric vehicles have a major challenge when it comes to the lithium extraction/mining process, supply chain activity, then the aftermath of dealing with battery waste.
Fashion’s green credentials have been poor for many years. Figures from the World Economic Forum show the fashion industry produces 10 percent of all humanity’s carbon emissions and is the second-largest consumer of the world’s water supply. The luxury side of the market maybe less responsibility for this – top-end goods usually have a longer shelf life and repeated use when compared with fast fashion – but action is still needed. Without it, the sector could account for a quarter of the world’s carbon budget by 2050.
Flying by private jet is also one of the most harmful habits for the wealthy to indulge in. A 2019 report showed that UK private jet travel alone contributes approximately one million tonnes of CO2 emissions annually. This is roughly equivalent to the amount a total of 450,000 cars would create in the same period.
Despite this, recent research indicates there has been a shift in how luxury goods are perceived, both by their providers and manufacturers as well as consumers.
With younger buyers such as millennials and Generation Z consumers now behind 85 percent of global luxury sales, their expectations for luxury brands to be aligned with their values around the health of both the planet as well as their pursestrings is increasingly important.
Luxury firms are also increasingly concerned about sustainability, according to a new poll by McKinsey for British luxury collective Walpole. Of the UK luxury firms they surveyed, nine out of ten said sustainability was now a priority.
With this in mind, let’s consider how some top luxury brands are responding to the environment and going greener.
Back in 2019, Chanel was one of 32 fashion brands, alongside Ralph Lauren and Prada, to sign a new pact aimed at reducing environmental impact. The pledge aimed to emphasise sustainability as well as combat greenhouse gases.
Since then, Chanel has gone even further by issuing a €600m bond whose terms are linked to its sustainability goals. Managed by BNP Paribas, the bond is a new type of debt known as a sustainability-linked bond.
This is a way in which businesses can finance themselves by tying any repayments to meeting green targets. It is different to traditional green or sustainability bonds. In these scenarios, any funds raised need to be invested back into a specific green project.
Interestingly, if Chanel fails in its green endeavours and does not successfully cut emissions, then the company will have to pay a premium when the bonds mature. It is thought that bond proceeds will also be used to fund sustainable projects including investing in startups looking to develop alternative materials to plastics or leather. So the company is approaching its environmental role via a two-pronged attack.
Jaguar Land Rover
British luxury car manufacturer Jaguar Land Rover (JLR) has set the sustainability bar high for its rivals by recently announcing its new ‘Reimagine’ commitment to the planet: by 2025, all JLR cars will be electric.
Alongside this, the manufacturer has unveiled new green endeavours to ensure it is a net-zero carbon business by 2039 with an aim of investing £2.5bn annually to help it meet these new targets.
By the end of the decade, JLR is aiming for 100 percent of Jaguar sales and 60 percent of Land Rover sales to be fully electric. In the next five years, Land Rover will welcome six pure electric variants as it continues to be the world leader of luxury SUVs.
According to JLR, “sustainability that delivers a new benchmark in environmental and societal impact for the luxury sector is fundamental to the success of Reimagine”.
Jaguar is not alone within the world of luxury vehicles in looking to redefine how they confront their environmental responsibilities. Other car manufacturers looking to adopt greener processes and attitudes include Bentley and Porsche. The latter’s Porsche Cayenne E-Hybrid has four hybrid-specific drive modes (e-power, hybrid auto, e-hold and e-charge), and produces up to 50 percent less pollutants than the average vehicle powered by petrol.
The Bentley Bentayga Hybrid is Bentley’s first step towards electrification and their most efficient automobile ever with a CO2 emission of just 79km.
Tiffany & Co.
No luxury lifestyle is complete without diamonds or perhaps gold jewellery. But the traditional mining for these precious materials, then the energy-intensive process involved in their production can have a significant carbon footprint.
Some brands such as Tiffany & Co have begun taking their environmental commitments very seriously with a pledge to provide complete transparency on the origins of their products. In cases where provenance is unknown – such as heritage stones that predates this new policy – Tiffany will provide confirmation that the diamond was sourced with industry leading practices.
According to Anisa Kamadoli Costa, chief sustainability officer at Tiffany:
“We have long been committed to diamond traceability and going above and beyond industry norms to promote the protection of the environment and human rights. A transparent journey of responsible sourcing reflects the many positive and far reaching benefits along every step of the diamond supply chain.”
Elsewhere, Alrosa, the world’s largest diamond miner, says it will spend $466m on improving its environmental footprint by 2024, including using lower-emission mining machines and managing waste. According to the company, 86 percent of its electricity comes from renewable sources, demonstrating the effectiveness of the policies it has put in place.
There is strong evidence that there is a contraction in demand across most products and services given economic conditions.
But there is also evidence of increased demand for sustainably and responsibly sourced products. Where price points are at a premium but the advocacy is being driven by a new type of aspiration – the pursuit of being able to leave a greener footprint on the planet and to be seen to be doing so. When congruent – this advocacy is extremely powerful. The new ‘to be seen’ will be based not on just what you wear, what you live in or drive but what that product or asset symbolises in terms preservation of resources. Luxury is on a path of reinvention.