By Elisa Niemtzow, Sequoia Lab Principal.
2011 marks an exciting year in luxury goods. After years of being singled out for lackluster social and environmental performance, luxury brands are recognizing the benefits of going green, and are starting to talk about it. Backtrack four years ago to the release of WWF-UK’s analysis of the luxury goods industry, and things looked bleak. For example, Tiffany scored a D+, PPR a D, and L’Oréal a C+.
This year, Tiffany launched its well-received sustainability website, detailing the responsible business practices that have made it a sector leader. PPR unveiled the first complete annual environmental profit and loss account for its brand Puma, committing to extend the practice to all of its brands, including iconic luxury houses Gucci, Balenciaga, Yves Saint Laurent and Bottega Veneta by 2015. Finally, L’Oréal pleasantly surprised more than just one sustainability expert at its inaugural global stakeholder forums this year.
Like other business sectors, luxury brands still face a lion’s share of challenges. In September, the Ethical Consumer Research Association (ECRA) in the U.K. lambasted leading designer clothing companies in its special report Style Over Substance, at the height of the “killer” sandblasted jeans problem involving brands such as Armani and Dolce & Gabanna.
For sure, there’s a lot of work to be done.
However, in reading the ECRA report, many companies received criticism for lack of available information, and ECRA assumed the worst. Dig a little deeper and I’m convinced that better things are brewing beneath the surface. Secrecy, after all, is a hallmark of the industry, which protects its craftsmanship and its margins like a mother bird her eggs.
I used to manage wholesale at Chanel, one of the most coveted brands out there (and one of the most searched for names on the internet). Online videos will take you backstage at December’s Paris-Bombay runway show, but you’d be hard-pressed to find much corporate information on this very private company.
Because of their glamorous role front and center, we expect the best from luxury brands (and that creates a special risk for them if customer perception of good business doesn’t match reality). But, as luxury brands begin conversations around sustainability, they face the same challenges as their non-luxury counterparts. Since I don’t have the space here to discuss all these questions, I’ll focus on that last one, i.e., how do you talk to customers about your social initiatives without detracting from key brand messages?How do you communicate on your sustainability journey, essentially a work in progress, without becoming a target for criticism or losing control of the dialogue? How does a corporate executive support sustainable consumption while meeting ever-increasing sales targets? How do you talk to customers about your green or social initiatives without detracting from key brand messages?
The question of how to communicate on CSR themes to customers comes up frequently with my consulting clients these days. Fortunately, luxury brands have the potential to excel in this arena. They know how to create universes – whether that’s stores, fashion shows, websites or ads – which are on brand, make you dream, aspire, and ignite all your senses.
First, let’s start with a CSR-focused ad campaign gone a little wrong.