Positive Luxury is a UK-based consultancy whose mission is to help luxury players “adapt to the new climate economy”. We spotlight five key issues laid out in its annual 2022 Predictions Report: from sustainability concerns in corporate accountability to regulatory changes, consumer targets and innovative business models.
The Rise of Resilience addresses the urgent need for luxury players and consumers to change how and what they consume in light of their environmental impact. “Acting now is no longer about preserving the luxuries we love. It’s about finding alternatives – alternative ways of doing business, alternative means of examining and securing sustainable supply chains and, in many cases, sourcing alternative materials or ingredients that best approximate those that are already disappearing,” notes the report. “Companies that persist in treating climate change solely as a CSR issue, and keep it siloed in their organization – rather than seeing it as a material risk for the business future and embedding it throughout each function of the business – risk repeating classic stories of market failure.”
Diana Verde Nieto, Co-founder and co-CEO of Positive Luxury, tells Luxe Packaging Insight that within the luxury market, the fashion segment has taken the lead. Why is this? “Fashion faces an incredible amount of pressure due to the number of collections they have to produce annually. Beauty, wine and spirits, however, have slower cycles and less seasonality, with a product life cycle that is longer, making them perhaps more sustainable over time.” But this begs the question, she adds, of whether the speed at which fashion is moving is truly necessary. “Shouldn’t brands stop and think about their business models? The pandemic has given fashion the opportunity to reinvent itself, but is fashion going to take that opportunity?” Verde Nieto asks.
In regards to the investment community, Verde Nieto affirms that there is progress in the sustainability realm. “A few years ago, it was about companies setting targets that were vague or with faraway timelines. Today that is no longer enough; senior leadership is accountable, and the board is accountable. Investors want to know that they are investing in a forward-thinking company and not in a stranded asset; that is why I remain optimistic.”
Consumer demand for transparency throughout the luxury product supply chain is explored in The Transparency Revolution, with a focus on fashion. Beyond just selecting to work with ethical suppliers, brands are encouraged to conduct audits systematically, work with a third-party organization to certify their claims (such as Positive Luxury’s Butterfly Mark) and to make their efforts visible to all by mapping and posting their progress online.
Sustainability Legislation Goes Global signals the rise of legislation worldwide that will mean consequences for companies that are not on board in their sustainability agendas. “The future for most companies is an understanding that things that would have been a reputational risk are now becoming a legal risk,” notes the report, which details some impending regulations on both a national and international level. Commenting on the legislative changes in progress from a US persepctive, Reagan Demas, partner at law firm Baker & McKenzie, notes that both big and small players will be held accountable: “Although whatever the taskforce comes out with this year in terms of mandatory disclosures applies only to listed companies, it will flow downhill along the supply chain to companies that do business with listed companies”. In Positive Luxury’s webinar last week dedicated to its Predictions 2022 report, Demas spoke of US President Biden’s executive orders designed to encourage companies to reduce their supply chain and encourage them to produce onshore.
“Social conscience is no longer a youthful fad, it reaches every generation – from Boomers to Gen X, Millennials, Gen Z and Alphas. In fact, Alphas will be to climate change what Millennials were to digital: sustainability natives,” notes Positive Luxury in the introduction to the The Gen Z Myth trend. Research from Kings College London published in September 2021 concluded that “generational attitudes to climate change” regularly reported in the media were misleading, with just a few percentage points between different generations. The gap between consumer attitudes, it found, is more due to factors such as access to wealth or cultural and regional influences, meaning that brands are cautioned to “not tailor their sustainability messaging and products to Gen Z alone.”
Another World is Possible explores the urgency for companies to slow down their “growth at all costs” strategies, and usher in an era (and business models) that encourage measured consumption. Regarding luxury’s stance, the report notes that “while luxury’s quality over quantity ethos is perfect for a slow growth economy, brands don’t always practice what they preach.” To move towards a slower economy - and while the repair and resale trends catching on in the fashion and accessories space are a positive start - the consultancy encourages luxury brands to drive innovative business models “across all brands and markets”. The metaverse, for example, dubbed an “extension of the internet”, is one area that fits the bill, according to Positive Luxury; this is a place where luxury brands can meet and interact with their consumer in novel ways, co-create with them and garner financial growth, but “without seeing double-digital growth in the consumption of natural resources.”
And how does Positive Luxury see premium packaging evolving in 2022? “Packaging, especially in beauty and spirits, is already embracing the less is more mantra in line with consumer demand. A lot of brands are moving towards more minimal packaging that is both more functional and more efficient.” Classic packaging is also evolving more into packaging systems that allow the consumer to use the pack in various ways throughout the product’s lifetime, thus making it functional and not a throwaway item. “There remains significant work to be done, but efforts are underway, concludes Verde Nieto.
Positive Luxury is launching a new initiative this year, the Start-up Accelerator Programme. Tasked with giving support to small, progressive companies and start-ups in the luxury space to help them “embed sustainability in their business models from the start,” the program will select 24 companies in its first year.