Sustainable Luxury

Study question: “What do you think about the idea of “sustainable luxury”? Under which conditions, if any, do you think it makes sense for a luxury brand to communicate socially responsible actions? Use examples to illustrate your opinion.”

The luxury segment itself, its definition, and its customers have changed after the financial crisis (2007 to today). As stated in the article “Understanding the post-recession consumer ” the majority of buyers are more thoughtful, demand simplicity, call for ethical business governance, and - particularly in the long run - prefer green and ethical consumption.

To understand this change also in luxury consumer behavior is a decisive factor for leading luxury brands successfully in the future. This is particularly true if these brands want to retain their old consumer base in Europe and the US. (According to current research by Bain and Company, EUR 75 bl. of the EUR 212 bl. in international sales of luxury product in 2012 are still made in Europe. )

But not only the consumer behavior is changing - particularly luxury product producers realize that it is increasingly important to maintain a sustainable and ethically responsible supply chain. Producing companies can make sure to minimize risks on one side, but also adapt to changing legislation upfront that asks companies for more detailed information and responsibility on the other.

Secondly, better organized and more sustainable business operations can have massive financial benefits: On one hand, this can save operative expenditure e.g. more energy and resource efficient. And on the other hand, it can concrete influence the value of a company and its share prize. Today, all large pension and insurance funds have very strict sustainable investment criteria. That means, they can only invest into companies with sufficient sustainability ratings.

If we have a glance on the sustainable ratings of the three largest European luxury companies - LVMH, Compagnie Financiere...