Sustainability in Supply Chains of Luxury Brands

Photo credit: Thorn Yang

Written by Chloé Castel

The raw materials sourcing strategies to face sustainability issues: competitive or collaborative strategies?

Luxury is, by definition, sustainable.

It is a timeless industry which benefits from the very highest craftsmanship and uses the best raw materials. As these materials give birth to the most desirable products, they are the success factors of luxury brands. However, these resources, as any resources, are not infinite and are sensitive to climate change as well as to ethical polemics. Thus, whereas rarity was the biggest asset of luxury industry, it is becoming a threat.

Besides, even if luxury as a whole is not the most polluting industry, it is spotted by international NGOs which reveal uncover processes of the industry. The opacity of its different supply chains is criticized and denounced to the public. While it is assumed that luxury, by its nature, is respectful of the people and of planet, we heard about several scandals related to the raw materials sourcing. Today, luxury brands are working on becoming examples in addressing climate change, corruption and protection of the environment and the people working for them.

As we are noticing more and more communication about sustainability from the luxury groups, we notice as well that, in France, Kering is making sustainability its motto, LVMH sponsored the COP21 and Richemont is still quite quiet about its actions. For few years now, the news articles about luxury are mainly focusing on two topics which are the future of retail and the sustainability; so I started to wonder to what extent the sustainability field could become a new field of competition for the luxury industry in its willingness “to do business for good”. Besides, numerous papers have been written about the different types of supply chains in the luxury industry, about the role of the innovation in the supply chain or about the sincerity of the luxury brands in “going green” but nothing really about the opportunities underlying the sustainability challenges. Thus the purpose of this paper is to explore the kind of actions taken by luxury brands in order to bring transparency along their supply chain and to observe if they are using different strategies to differentiate from each others.

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