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Last week’s announcement that Tapestry is acquiring Capri Holdings — which owns Michael Kors, Versace and Jimmy Choo — was positioned as a move to build a US conglomerate that can compete with European luxury heavyweights. As fashion consolidates further, where does that leave sustainability efforts and ambitions?
For some, the $8.5 billion deal signifies an industry that continues to prioritise profit over sustainability, renewing doubts about the strength of fashion’s commitment to the planet. Others are optimistic: merging offers a way for companies to level up their sustainability efforts by sharing resources and learnings.
“I think that M&A in the fashion and luxury sector will go hand in hand with upward adjustment in ESG and sustainability practices, rather than adjusting down to a common denominator,” says Luca Solca, senior research analyst at consultancy Bernstein. “Introducing sustainable and responsible practices to the environment and society costs money and effort. Hence larger scale and higher efficiency from M&A such as Tapestry and Capri provides a useful platform to up the ante on ESG.”
Upward adjustment is not enough, counters Geren Lockhart, independent consultant, and CEO and co-founder of “profit-for-purpose” apparel brand Canava. She’s unconvinced that the scale and efficiency enabled by companies merging together will result in the degree of supply chain transformation necessary to tackle the climate crisis and other environmental challenges.
“The outsized impact we have combined with the lag we have behind other sectors makes our progress feel like baby steps when we need to be leapfrogging to catalyse true impact,” Lockhart says. She sees M&A deals as economics-driven decisions that treat sustainability as a side conversation — but fashion cannot meet its climate goals without drastic changes to how it operates, which is not what mergers and acquisitions are designed to do. “I think we are learning that traditional maths — grow or perish — and more-is-better are all concepts that have landed us where we are. We need to be thinking about how systems intersect, and from a 30,000-foot financial view the concept of consolidating to invest could work. But, moving a cruise ship is much more restrictive and time consuming than moving 10 large sailboats.”
Tapestry, which owns Coach, Kate Spade and Stuart Weitzman, has been outspoken on sustainability. Coach has a range of initiatives — from leather sourcing to this year’s launch of a new sub-brand Coachtopia — that could hold promise if they are allowed to scale across the company, and do not remain pilot projects within a business that doesn’t otherwise change. The theory is that by acquiring Capri Holdings, Tapestry can bring Versace, Jimmy Choo and Michael Kors up to speed in all the areas it’s already working towards.
“I think that now, Capri being folded into this, they are going to reap those benefits and will be able to help scale sustainability in a way that perhaps Capri has not been able to do thus far,” says John Bartlett, director of fashion for executive studies at Parsons School of Design. “I think this merger is actually very positive because Tapestry has been so transparent about the work that they’re doing and very honest about the challenges.”
Tapestry declined to comment for this story and Capri did not respond to a request for comment, but the press release announcing the deal said that the combined company “will be well-positioned to advance a comprehensive and impactful ESG strategy focused on a shared mission to drive progress toward a more sustainable, equitable, and inclusive future”.
The sub-brand flips the design process on its head, starting with scraps and working its way backward. It’s a bid to transform the brand’s supply chain.
It’s too early to know whether or how — or how quickly — Tapestry will expand its existing initiatives to Capri’s brands. One of Tapestry’s most notable efforts is a partnership with the World Wildlife Fund to boost traceability of the leather value chain in Brazil, aimed specifically at combating deforestation in the Amazon — a problem that contributes heavily to leather’s climate and biodiversity footprint but is overlooked by the majority of fashion’s sustainability work on leather. A key question to watch in the next few years will be whether that partnership succeeds in creating a certification standard for “deforestation and conversion-free” leather — and whether that enables Tapestry’s existing brands, as well as Versace, Jimmy Choo and Michael Kors, to transition their supply chains to use certified deforestation-free leather.
However, M&A deals are not typically known for driving improvements in a supply chain. Historically, they’ve had a reputation for creating the opposite effect, says Canava’s Lockhart.
Where there is potential for positive impact is in a larger company’s ability to use its leverage to drive sustainability-focused innovation and adoption of renewable energy or next-gen materials. The new, larger Tapestry could use its size to get more access to mycelium leather, for instance, she says.
Bartlett, of Parsons, agrees, with potential for impact in two areas in particular. “I believe that these larger companies can get behind and move the needle on sustainability through education and by investing in development of next-gen materials. Those are two areas where a large company can really affect change,” he says.
Making products more efficiently, though, doesn’t amount to the systemic change that researchers say is needed — slashing actual emissions, for example, rather than pledging vague net-zero goals for the future, and decoupling profitability from product volumes and natural resource consumption. “Did sustainability have a seat at the board table? I don’t think sustainability had a vote,” says Lockhart. She says mergers are typically more about margins, and making the economics work for brands that have struggled to do so.
"For systemic change, all actions of a company require worker centric and ecology centric policies including job descriptions, criteria for bonuses and pay raise," says Lynda Grose, chair of fashion design at California College of the Arts and co-founder of the Union of Concerned Researchers in Fashion. “Mergers are usually motivated by growth-centric policies — growth in number of units sold and often at the expense of other values.”
Correction: John Bartlett s title is director of fashion for executive studies at Parsons School of Design, not director of Parsons as previously stated.
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