How green are luxury companies ?

By Fiona Harvey, Environment Correspondent, FT.

Luxury companies must do more to justify their value in an increasingly resource-constrained and unequal world.” That was the conclusion of a report by WWF, the conservation charity, into the environmental sustainability of luxury products, published last November. The report found that “despite strong commercial drivers for greater sustainability, luxury brands have been slow to recognise their responsibilities and opportunities”.
When WWF graded some of the best-known luxury brands according to their environmental performance, none received higher than a C plus. L’Oréal, buyer of the Body Shop, topped the list, scoring more than 60 points out of a possible 100 on various green and social sustainability criteria. Close behind came Hermès and LVMH, then Coach. Tiffany scored a D plus to rank fifth, but Bulgari and Tod’s merited only an F.
None of the companies were available for comment at the time of going to press.
Why is it that environmental concerns have been so low on the agenda for luxury groups? Other companies have shown much more interest in going green, partly out of growing consumer concern. Havas, the advertising company, recently conducted a big survey of green concerns of more than 12,000 people in several countries. It found that about three quarters would prefer to buy from a greener company.
“It’s very surprising that companies that are supposed to be so quick to pick up on fashions have been so slow to come to the table,” says Solitaire Townsend, chief executive of Futerra Sustainability Communications, who has worked with brands such as L’Oréal and Estée Lauder on improving their green credentials.
She says consumer brands much lower down the scale have picked up on green concerns much sooner: “You get more of a sense of the environment movement if you walk into Tesco than into Bergdorf Goodman.”
Part of the reason for this reluctance to embrace a green agenda may be that in the past the environment and luxury would have made uneasy bedfellows – environmentalists have traditionally had a dowdy image, preferring home-grown and home-made goods to brands.
Another reason may be that it is hard for luxury brands to adopt green principles – Ms Townsend notes, for example, that high-end cosmetics companies tend to differentiate themselves by using elaborate packaging. That plainly contravenes the principles of environmental economy – to use as little resource and create as little waste as possible.
Conspicuous consumption can also mitigate against environmental good citizenship. Paris Hilton’s favourite drink is said to be Bling Water, in glass bottles covered in small crystals, for an eye-watering $40 a pop. The bottles may be advertised as reusable, but the materials and the cost of transportation still take a toll in terms of carbon footprint. It also contrasts sharply with the desire of environmentalists to wean people off bottled water.
Yet there are reasons why luxury brands can identify with environmental goals. Luxury brands increasingly seek to connect with consumers’ desire for authenticity and there is little more authentic than natural materials. Being environmentally-friendly can be a luxurious form of consumption – bespoke pieces crafted from natural materials command a premium price.
Roy Tam makes eco-furniture in Dorset. Wood, he points out, is environmentally sound as it contains carbon absorbed from the air as the trees grew. He uses young wood that has not been dried in a kiln from local, small trees. His corporate customers “are almost all eco-minded” now, he says, while domestic customers are looking for good designs first but are attracted by eco-credentials.
There is even a practical side to environmental goods in a luxury setting. Yachts and plush homes are among the highest status symbols available and both could benefit from being greener. Stephen Voller, chief executive of the fuel cell company Voller Energy, says many of his customers are owners of mid-size sailing yachts in the 40ft-55ft class, costing from about £250,000 ($494,000) to £500,000.
These are usually equipped with lead acid batteries for power while sailing. But changing them is “every skipper’s nightmare”, says Mr Voller. The usual option is to run the engine or a generator. “Both are noisy, cause significant vibration within the boat and produce unpleasant smells. They are also fuel inefficient when used this way,” he says. For these reasons, an environmentally-friendly fuel cell is a greener and cleaner luxury option.
Environmentally-friendly homes – with options such as green roofs, water recycling and renewable heat and power – are also a hit in the luxury home market, says Julian Brooks, managing director of GreenMoves, an estate agent website. “There are more high-end eco homes than mid-range or low-range homes,” he says. It is easier for property developers to target the high end of the market with eco features, he adds.
WWF concludes that luxury and the green agenda can be reconciled, and that high-end brands can adhere to environmental principles while selling high-value goods – and indeed must do so in order to satisfy people’s increasingly green consciousness. “Luxury is about being and having the very best. Products that cause misery or environmental damage, now or in the future, are no longer considered by affluent consumers to be best in class. Such products do not feel luxurious to the more ethically and environmentally concerned consumers of today.”
Copyright The Financial Times Limited 2008