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Key takeaways:
- Time-sensitive targets being missed. Brands are becoming less ambitious in their sustainability policies, as they fail to reach prior targets in the original time frame. Most notable in these failings are net-zero commitments, where many brands are falling back onto — or failing to reach — the bare-minimum commitments set by the Paris Agreement for 2050.
- Consumer-led circularity takes priority. Brands have historically focused on consumer-facing circularity initiatives, boosting resale and repair schemes in particular. While some brands have adopted novel packaging solutions, plastic commitments have fallen by the wayside and elimination of B2C plastics is still widely prioritised ahead of plastic waste throughout the supply chain.
- Supply chain concerns heighten. Supply chain concerns within the past year from some of luxury’s biggest brands have highlighted the need for drastic improvements across the industry. Transparency and fair wages should be a focus for brands. Despite this, some brands are beginning to make strides.
Luxury begins to backtrack on commitments
ESG progress saw very little movement at the top in the first half of 2024, with Gucci remaining the top brand for its policies for the second year in a row. Competition remained tight with Kering stablemate Bottega Veneta.
While progress is the goal of sustainability, the most recent influx of reporting can best be defined by the lack of this — instead, we’ve seen brands falling short on their previous commitments, highlighting that many have made more ambitious goals than they can realistically achieve within that time frame. For the Vogue Business Index, brands are assessed on information held in the public domain — which is not always consistent with the real progress being made; our methodology allows us to quantitatively assess where brands have revised their targets.
In H1 2023, a quarter of brands were aiming to be carbon neutral by 2030, with this now reduced to 10 per cent of brands just over a year later. The majority of brands are now looking to meet the bare minimum requirements of the Paris Agreement, which states companies have to be net zero by 2050. The likes of OTB Group and Capri Holdings have quietly removed more ambitious targets. The former had previously stated a net-zero target for its internal operations by 2030, with a target for its entire value chain by 2050, having now reduced the ambition of its internal operations goals and revised its group targets for 2050, with the latter removing its previous net-zero targets entirely.
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One potential reasoning for this change, where it is seen across the industry, could be due to how the industry operates, placing suppliers under financial pressure to achieve goals quickly — often with little or no support from the brands they’re supplying. Despite this reversion on targets, 75 per cent of luxury brands within the Index have goals approved by the Science Based Targets initiative (SBTi), with Mulberry and Chanel most recently having their targets validated in April 2024.
Yet, while brands love to highlight new and ambitious goals, there is a distinct lack of accountability from luxury fashion companies when falling short of their targets — or worse, abandoning them altogether. No companies within the Index have openly admitted to reverting to longer lead times, nor have they given reasons for these changes. Companies such as Ralph Lauren and VF Corp have included safe harbour statements within their reports, protecting them against falling short in their forward-looking statements. While this perhaps indicates that companies anticipate this challenge when initially setting their goals, it could be argued that it’s more responsible for brands to acknowledge this, with ambitious targets naturally being very difficult to achieve.
Unsurprisingly, as companies feel the economic pinch, protective instincts are kicking in. It’s a problem that supersedes the fashion sector. Unilever attracted considerable criticism upon the announcement of its scaled-back sustainability goals in April 2024, prompting Greenpeace UK’s head of plastics Nina Schrank to say the company should “hang its head in shame”. A lack of transparency on such failings could be seen as a form of greenwashing in itself.
With new legislation spanning everything from forced labour and deforestation to greenwashing and digital product passports, brands need to invest in all areas of sustainability. Companies should invest early in steady, consistent change — and avoid overpromising. Changes in leadership in the past six months at the likes of Burberry, Mulberry, Marni and Fendi, to name a few, could see sustainability deprioritised further as financial difficulties become a top priority.
Internal circularity needs luxury’s attention
Net zero is not the only target where luxury fashion is demonstrating stagnancy.
Many brands within the Index have adopted some form of circular solution within the past few years, with consumer-facing and revenue-generating initiatives such as resale having been of highest priority to brands. However, rental and resale initiatives slowed this year, with no new brands engaging in either business model within the past six months. While the repairs market has historically shown its own struggles in scaling, brands are beginning to make some headway, with 69 per cent of Index brands now offering repair services compared to 60 per cent in Spring 2023. Established repair players are seeing positive expansions of existing programmes. In 2023, Coach returned to reporting year-on-year repair growth, seeing over 63,000 Coach products repaired globally, Bosideng witnessed a 124 per cent year-on-year increase in its self-service repair mini programme and, similarly, Hermès reported a 13 per cent increase in repair interventions or services. Deemed the second easiest topic to make progress on by almost two-thirds (62 per cent) of sustainability leaders, growth in repairs may be a result of lower barriers to entry.
Circular solutions to plastic packaging are often introduced as small-scale trials, often on limited product ranges due to resource and investment priorities. Alternative strategies integrating post-production material are emerging, however. Hugo Boss tested using leftover materials for clothing hangers, while Diesel and Marni (OTB-owned) adopted recycled material hangers and Brunello Cucinelli launched a project to create recycled packaging from fabric scraps. Yet, this innovation has limited impact when so many brands continue to use plastics. Nearly half (48 per cent) of brands have yet to commit to a timeline for phasing out all plastic packaging, with no further progress observed since last spring.
As with carbon targets, brands have also quietly adjusted their plastic policies. Despite eliminating single-use plastics in retail stores, Canada Goose’s original target to eliminate single-use plastics that cannot be recycled in brand-controlled facilities and offices by the end of 2022 has shifted. Now, the brand will only target eliminating new single-use plastic purchases by the end of 2025, making it difficult to determine the extent of elimination. Similarly, Hermès’s 2023 sustainability report quietly scaled back its original target of 100 per cent of single-use plastic elimination by 2030 to eliminate 100 per cent of unnecessary single-use virgin plastics by 2030.
The Ellen MacArthur Foundation — to which 20 per cent of Index brands are signed up, signalling their support for a circular economy — said signatories of its Global Commitment are collectively using the same amount of virgin plastics that they were at the start of the initiative, with just 27 per cent of businesses on track to meet their goals by 2025. Targets vary across committed Index brands, with the majority — including Capri, VF Corp, Dolce Gabbana, Hermès and Canada Goose — focusing on or exclusively targeting single-use plastic elimination. Prioritising single-use plastics may be a step in the right direction, yet it could afford brands the opportunity to overlook wider plastic elimination. Quality degradation means there are limits on the number of times a plastic can be recycled, while the process itself may be energy-intensive. Meanwhile, there is no common definition of single-use plastics, leaving room for flexibility within policy, while most brands focus on B2C plastic elimination ahead of B2B. By contrast, the LVMH Group aims for zero virgin fossil fuel-based plastic packaging by 2026, while LVMH-owned Stella McCartney has pledged to eliminate virgin plastic by 2025. For LVMH, it’s uncertain if this policy is solely for their consumer packaging, or whether this encompasses their supply chain.
With 2025 fast approaching, most brands need to do more to ensure they are prioritising not just consumer-facing circularity initiatives, but also making sure these are embedded within packaging initiatives from manufacturing to consumer distribution.
Supply chain concerns heighten in 2024
2024 has been notable for supply chain concerns within luxury fashion. Nearly three-fifths (57 per cent) of Index brands say they ensure that workers in the supply chain are paid at least minimum wage. Yet, exploitative supply chain conditions linked to luxury suppliers were revealed earlier this year. Such findings shed light on the gap between some brands’ codes of conduct and the exploitative strain of “business as usual” on supply chain workers.
Despite drastic improvements needed at a company-wide level, some brands are making meaningful strides in enhancing their social and environmental standards in existing policy. Mulberry has become the second Index brand to achieve B-Corp certification with a score of 87.1, surpassing Chloé, the first brand to attain certification, at 85.2. For brands to achieve B-Corp status, they must reach a total score of 80 across five areas — governance, workers, community, environment and customers. Mulberry’s governance exceeded the top-scoring range by 0.3 points, driven by a strong performance in ethics and transparency metrics and new legal measures introduced post-certification.
Rigorous certifications can provide additional consumer confidence in living wage schemes along the supply chain, such as Mulberry’s Living Wage Employer commitment. This boosted confidence is essential, as no brands who say they offer a living wage explicitly outline how this is assessed along their supply chain. Brands’ wage-related claims are important, as 67 per cent of consumers consider it important that brands provide a living wage for workers within their supply chain.
While the widespread adoption of digital product passports will give brands further traceability over their supply chains, it will give them less room to hide against this type of criticism. With mounting legislative and consumer pressure, blockchain technologies must be coupled with concrete mechanisms to ensure transparency beyond the industry standard of factory audits and codes of conduct. Burberry, Ralph Lauren and VF Corp are among the few Index brands implementing hotline services to ensure the fair treatment of workers within the supply chain. Burberry leads in transparency, reporting figures on the number of workers covered, calls made per annum, and the percentage of issues addressed — 77 per cent of all complaint calls in H1 2024 were addressed. The hotline also offers guidance on workers’ rights, well-being, and confidential support.
As important to consumers is diversity and inclusion at 67 per cent. This edition, we took a closer look not just at brands with a policy on diversity and inclusion, but also at how they monitor the progress of such schemes. We found that 86 per cent of brands have a diversity and inclusion policy, yet just 67 per cent of brands monitor the progress of these.
Within gender equity, just 53 per cent of brands have a policy to close the gender pay gap. The most notable development in this space this year is Valentino, which has reduced its gender pay gap to below 10 per cent, certified under Italy’s National Recovery and Resilience Plan (PNRR).
This social and economic squeeze in the interest of profit margins comes at odds with ambitious brand-set targets in the decarbonisation journey. Increasing demands to reach net zero without meaningful collaboration and investment with suppliers to overcome current “transactional relationships” will act as a barrier to required transformative change.
How Stella McCartney became an activist brand within LVMH
Stella McCartney is LVMH’s top performing brand within ESG, coming in at third place for the pillar, behind Kering’s Gucci and Bottega Veneta. Brands within the Index are assessed at both company and brand level, meaning brands within large conglomerates benefit from the policies of their parent companies, while brand-level incentives drive differences between brands that sit in the same conglomerate.
Although many brands within larger conglomerates rely on company-level reporting, Stella McCartney also reports at brand level. This allows the brand to be more ambitious than its parent company when setting its targets for the future. For example, LVMH has not set a timeline for its net-zero commitments, while Stella McCartney aims to reach net zero by 2040.
The brand scores ahead of the Index average on each segment of policy tracked within the Index — environmental policies, labour equality, social impact and accountability — while being ranked the second most sustainable brand in the eyes of consumers. Louis Vuitton takes the lead here, with 40 per cent of consumers considering it a leader in sustainability, despite weaker policies than Stella McCartney and brands within the Kering portfolio. While policy is not necessarily equivalent to progress, Stella McCartney’s impact on next-gen materials is difficult to dispute, most notably eschewing animal textiles such as leather, fur and down for the likes of grape-derived Vegea, Savian and BioPuff. However, some collections utilise plastic-based materials and recycled polyester, with the brand holding no policy to solve the problem of microfibre shedding.
Beyond this, Stella McCartney has co-founded the SOS Fund, a $200 million investment fund aiming to support early-stage companies in developing sustainable materials, ingredients, energy and supply chains. As such, Stella McCartney herself has become a leading voice within sustainability, with the brand co-hosting the launch of Ellen MacArthur’s 2021 report, ‘A New Textiles Economy: Redesigning Fashion’s Future’. She also acts as an advisor on sustainability to Bernard Arnault and LVMH’s executive committee. While there is much that LVMH needs to do to catch up with leading conglomerate Kering’s policies, Stella McCartney could be helping to pave the way for the group.
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