As luxury fashion brands start to act on sustainability, they could do more to disclose details of what’s happening in their supply chains


As luxury fashion brands start to act on sustainability, they could do more to disclose details of what’s happening in their supply chains

With the growing buzz about ethical sourcing and “going green”, luxury fashion brands finally seem to be catching on. Consumers are faced with a new influx of luxury brands’ sustainability initiatives. But are these efforts more a case of style over substance?

Take LVMH, the world’s largest luxury fashion company and owner of brands including Louis Vuitton, Givenchy, Fendi and Marc Jacobs. In June, it asked students at New York’s Fashion Institute of Technology to take the Bike in Style challenge to design the most stylish cycling clothing and gear. The contest aimed to support New York mayor Michael Bloomberg’s efforts to promote cycling in his city – and showcase LVMH’s commitment to the green cause.

Or take Italian fashion label Gucci’s cause-related marketing effort to raise money for children affected by HIV/Aids. Since 2005, through the Gucci Campaign to Benefit Unicef, Gucci stores in more than 20 countries have donated a percentage of their sales from designated products to support programmes for children affected by the virus in sub-Saharan Africa. Gucci is one of Unicef’s largest international corporate supporters, with its commitment reaching more than $5m.

While these efforts are noteworthy steps for the luxury sector, there is a conspicuous silence from brands when it comes to social and environmental issues in their own operations.

“Historically, luxury has never been conscious nor careful about the environment,” says Mimma Viglezio, Gucci Group’s executive vice-president for global communications. “There has always been the wrong assumption that sustainability and beauty were two opposed concepts,” she says.

The fashion industry is now understanding that it has a duty to behave responsibly towards the environment, Viglezio says. This “can only add to the durability of our products”, she adds.

“I think that the word ‘ethical’ is quite a difficult one to incorporate into an industry built on emotional feelings about buying into products,” says Suzy Menkes, fashion editor of the International Herald Tribune newspaper. “High fashion seems to be picking up the idea of responsibility very late. But all retail sectors are hyper-aware of consumer-driven demands and changes, and there is no doubt that a generation is growing up which asks questions about how and where their clothes were made.”

Supply chain taboos

Dana Thomas, who was European editor of former upmarket business monthly Condé Nast Portfolio, says: “It’s not seen as terribly elegant or chic to be worrying about how to dispose of your trash or talk about human rights.”

Thomas, author of Deluxe: How Luxury Lost its Luster, says there is a “big secret” in luxury fashion. She explains: “They want consumers to think their products have all been made by Geppetto in his workshop in Florence. So they’re not going to talk about their workers in China, Romania, Turkey or North Africa, which would soil their image. And then as a consumer you would ask, ‘Why am I paying such a high price when someone is getting pennies to make it? What’s the luxury in that?’”

Jem Bendell, a corporate responsibility consultant, says it is hard for luxury brands to talk about poverty and exploitation in supply chains. “There’s an easier win-win in terms of positive branding when it comes to the environment,” he says.

Neil Kearney, general-secretary of the International Textile, Garment and Leather Workers’ Federation (ITGLWF), points to the elusive nature of the luxury industry as a major factor behind their relative silence. “Luxury brands run their internal operations like they do their stores: with security men at the doors. Everything is done behind the curtains,” he says.

Another reason luxury brands have avoided discussing their human rights impact is because, until about a decade ago, most brands made all their products in Europe, where workers are protected by unions and strong labour laws. Luxury brands still primarily source from Europe, while high street brands have moved production to poorer countries outside of the continent, says Ben Eavis, head of corporate social responsibility for Burberry. “With that move came attention from NGOs, trade unions and consumer groups, who were pushing on the ethical trading element and creating more exposure of those [high street] brands,” he explains.

Price means ethics?

As many luxury brands have grown and demand for the “it-bag” rises, they too have shifted some production to developing nations to cut costs. This has prompted people to question how factory workers in luxury supply chains are being treated. “For consumers there is the growing notion that if I’m paying this premium price for this product, I as a consumer expect that luxury brands will take care of the ethics behind it,” Eavis says.

Kearney agrees, but adds: “It seems, though, that the higher the price of the garment, the worse the conditions [for workers].”

According to Kearney, in production for the most expensive labels there is little or no attention to working conditions by the label in question, and workers are often left with no protection, fired if they question management decisions or consider joining trade unions. “Without this protection they are at the mercy of the employer as far as wages, working hours and other conditions are concerned, resulting in low pay, long working hours and generally abusive treatment,” says Kearney.

Thomas says that to keep production in Europe and so retain the “Made in Italy” or “Made in France” label, some luxury brands have resorted to working with clandestine factories in places like Prato, just outside of Florence, Italy, where illegal immigrants, often from China, are paid a pittance and work terrible hours in terrible conditions.

But the blame cannot be placed entirely on the brands themselves. Consumers’ growing demand for luxury goods also plays a role. “In the end there is a lot of deception in the luxury fashion business,” Thomas says. “We contribute to that as consumers because we want something because it has the fancy logo and to show it off, rather than because it’s a well made, high quality product made by artisans. It’s about supply and demand. So luxury brands have to rely on the supply chain method and churn them out.”

Labour disputes

The ongoing case involving Desa, a Turkish supplier of leather goods for companies including Prada and Mulberry, which fired workers suspected of unionising, is just one case among thousands of worker abuse in the luxury industry.

Both the lower and higher Turkish courts have upheld their ruling in favour of the workers. Yet, according to Kearney, Prada has not once responded to the case in spite of repeated approaches by the ITGLWF. Mulberry has since started to cooperate and joined with members of the Ethical Trading Initiative, a UK-based multi-stakeholder project to improve supply chain labour conditions, in a four-way effort to resolve the case. “Because of Prada’s silence we have the clear impression that it resulted in a slow response from Desa to uphold the courts’ decision. Prada is essentially operating on the basis of ‘see no evil, hear no evil’,” Kearney says.

Prada’s director of financial media relations, Andrea Gaudenzi, says that since August 2008 there have been six independent audits at Desa’s facilities, including one instructed jointly by Prada, Mulberry and Debenhams. They all found that there were no restrictions of freedom of association, working conditions were safe and wages were in line with laws and regulations.

With regard to the August 2008 dismissal of Desa employees, Gaudenzi says Prada has been working with the factory’s management and international auditors to inspect issues raised by the unions. She says: “We urged Desa to communicate proactively to the market their position and all the efforts done to improve procedures and communications toward employees.” She says Prada was “not entitled” to communicate on behalf of Desa.

Gaudenzi adds: “My opinion as a communication professional is that [the ITGLWF] led by Neil Kearney understood that they had great potential in attacking Prada because it’s so visible.”

Despite appearances of in inertia in parts of the industry, Jem Bendell says there has been a “paradigm shift” in the strategic thinking of many luxury brands on sustainability, particularly in the past two years. Bendell points to an increase in their budgets for sustainability initiatives, including the creation of departments, managers and reports, as signs of a growing commitment to these issues. Greater public attention on the part of the fashion media has also been a driver of change.

“Two years ago we could not have guessed that the two most prestigious luxury conferences of the year would both be about sustainability; it just wasn’t a priority,” Bendell says. Those conferences were the International Herald Tribune Sustainable Luxury Conference in March and the Financial Times Business of Luxury Summit in June.

There are some luxury brands that stand out in their more holistic commitment to responsible business, including changes to their internal operations and their public support of environmental and social causes. Burberry, for example, has had an ethical trading policy in place since 2002 and has also made it public, which is not yet a ubiquitous industry practice. Its core set of globally applicable labour and environmental standards is based on international human rights standards and aligned with guidelines of the ETI.

Burberry’s nine-person global corporate responsibility committee manages all social, ethical and environmental matters related to the brand’s global operations. Burberry’s Eavis meets with the company’s chief executive and chief financial officer every three months.

Most notable is the high level of transparency for a luxury brand. Unlike other companies, virtually all of Burberry’s corporate responsibility efforts are detailed on its website, and it does not shy away from addressing human rights. “We hope to lead by example and to be transparent about what we do. That is the difference between companies that are serious about looking at their business and operations and trying to act responsibly, versus those who are looking at corporate social responsibility as a PR exercise,” Eavis says.

Burberry does not stand alone in its attention to corporate responsibility. Others such as French conglomerate PPR (formerly Pinault-Printemps-Redoute), which owns Gucci, established an ethical charter in 1996 to promote transparency throughout its operations. At the International Herald Tribune’s sustainability conference, François-Henri Pinault, chief executive of PPR, highlighted the company’s goals to cut greenhouse gas emissions and integrate social and environmental criteria into the selection of suppliers.

Gucci recently established its own corporate responsibility division within its global communications department. The group is finalising its sustainability framework, which will identify a set of standards for each brand.

Performance gaps

While these policies are notable, luxury brands do not publically disclose the performance of their suppliers, including violations, against these codes. Such disclosure is an increasingly common practice among high-street brands. A major reason for this difference is that within high fashion there is still a significant element of secrecy behind which suppliers each brand uses, as suppliers are the artisans that give luxury brands their competitive advantage.

More worrying, however, is the case of those luxury brands that still do not have strong corporate responsibility policies and do not properly review their suppliers, leaving cases of worker abuse veiled and unresolved.

For now, many luxury brands retain an air of mystery around their corporate responsibility efforts. This highlights the central difficulty these brands face as they try to maintain an elusive quality while addressing rising demands for more transparency about their global operations.

“Major changes in global communications and awareness about sustainability and its challenges mean that the notion of luxury is changing,” Bendell says. Working out how to respond to this “changing conceptual landscape” is the key strategic issue facing upmarket fashion, he says.

Bendell cautions against generalising about the luxury industry. But there is agreement that the only way to see a dramatic shift in how luxury brands operate is through exposure, just as the high-street brands were pushed to address these issues. “The only way there will be a big change is if someone calls them on it and [they get] busted,” Dana Thomas says.

Menkes adds: “Nobody is perfect, and certainly not the luxury industry. But I like to think that the good example set by a few companies may spread more widely.”

Looking down on the environment

French group PPR’s financial backing of Home, a documentary illustrating the state of the planet through aerial footage of over 50 countries, for many sums up the luxury industry’s approach to the environment.

The film, by French photographer and environmentalist Yann Arthus-Bertrand, aired in 127 countries on World Environmental Day, June 5.

According to PPR, which owns Italian fashion house Gucci, the film intends to “foster a wider and shared understanding of the issues facing the planet and to prompt a wider awareness of corporate social responsibility issues”.

All profits will be donated to, a green campaign group founded by Arthus-Bertrand. The greenhouse gas emissions from the film’s production were offset through funding for clean development projects organised by French carbon offset provider Action Carbone.

Critics say PPR’s involvement shows that luxury brands are more comfortable with consumer-facing projects, rather than making real changes behind the scenes to environmental impacts of their own operations.

“It is a great PR strategy, but intends to draw attention to climate issues,” explains Mimma Viglezio, executive vice-president of global communications at Gucci.

She explains: “The support of the film Home is only one of the steps the company is taking to raise awareness. It is important that large brands with great brand recognition highlight issues, such as climate change, to their consumers and public.”

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