Mazars présents our study, ‘Reinventing Luxury – Ethics as value creation’, which sheds light on the current dynamics in the luxury industry and how companies are using ethics to build value.
The study highlights businesses that look to incorporate sustainability when making strategic decisions, in an effort to build sustainable business models and focus on ethical practices at work. The emergence of new brands built around sustainability and ethics disrupts traditional value chains and brings luxury closer to social entrepreneurship.
The study is based on 112 companies in the industry, and seven federations, covering the sectors of leather goods, fashion, jewelry, watchmaking and fur.
3 key questions to shift to a new future
Through the analysis of these practices, the study answers several questions:
- What incentivizes the industry players to evolve?
- What is the impact on the value chain?
- What are the strategies? How do we identify the different ecosystems
Three main strategies to account for luxury companies' sustainable practices
The partnership approach (towards ethics) widens the scope of responsibility in the luxury industry. It allows for created value to not only be redistributed to shareholders and employees, but also clients, suppliers, subcontractors, and local communities.
Rethinking the supply chain, preserving the environment and local manufacturing regions, respecting the workforce and improving working conditions, and considering new customer expectations produce three main strategies:
- Risk management
- Social entrepreneurship
Four categories of practices
Based on analysis of over a hundred brands, the most representative assessment of practices has enabled the study to determine four dimensions which provide an examination of ethical initiatives.
- The supply of raw materials: The luxury sector consumes scarce resources. It tries to preserve the reproduction of these materials or to find alternatives. Recycling, upcycling or innovative materials are key sustainable drivers in the value chain.
- The environment and the local region: The players in the sector are committed to lowering negative impacts to protect the environment and to promote intangible local assets of the territory.
- The work force and social conditions: Whether the workforce is highly qualified or activities in the value chain involve extensive division of labor, paying attention to working conditions, trades and training are paramount.
- Respecting the consumer: longevity or refurbishing is a key aspect in assessing a luxury product’s quality and ethical impact. Transparency in the manufacturing processes is of growing concern.