Kering: Blazing a Trail in Sustainable Luxury

The fashion industry became the world's third-largest manufacturing sector after the automobile and technology. However, this industry was also notorious as the second-largest water-consuming sector, a top-ten emitter of greenhouse gases, and consumer of raw materials. Dyeing and finishing textile products resulted in 20% of global water pollution and consumption. Fundamentally, it took about 700 gallons of water to produce one cotton shirt and about 2,000 gallons of water for a pair of jeans, equivalent to one person drinking eight cups of water per day for three-and-a-half years and ten years, respectively. Washing garments released 16 times more microfibers than plastic microbeads from cosmetics. In terms of the raw materials used in the supply chain, clothing, footwear, and household textiles ranked the fourth highest category after food, housing, and transport in the EU (see Exhibit 1). Greenhouse gas emissions from textiles production reached 1.2 billion tons of carbon dioxide annually, exceeding international flights and maritime shipping combined. The clothing industry's environmental impact could even worsen as consumer spending in emerging countries and regions increases (see Exhibit 2). The concepts of luxury and sustainability seem to be at odds with each other. People kept skeptical about the source of raw materials of the luxury goods, complained the waste that occurred from production, and criticized the superfluous consumption. However, more and more premium brands and luxury maisons focus on activities that benefit the planet and society. Hermes started using mushroom leather as a sustainable leather alternative while Chanel issued its first public bond linked to sustainability objectives. Prada also partnered with Italian yarn producer Aquafil to launch a new regenerated-nylon made of recycled plastic collected from landfill sites and oceans. Gucci claimed carbon neutrality in their own operations and across their entire supply chain; it aimed to use 100% renewable energy by 2022. Stella McCartney increased the amount of recycled polyester in production, which had a 75% lower carbon footprint and 90% less water usage than virgin polyester. Could luxury and sustainability coexist? If so, how should companies and brands design their strategy accordingly?