Luxury is finally waking up to ethics and global warming,

Whether or not there is a global recession in 2008, the year will be a crunch one for luxury brands, as their success in entrancing a broader consumer base has made them far more susceptible to market jitters.

While the luxury houses’ corrective strategy has been to focus on the less capricious super-rich – epitomised by Hermès’ move from handbags to helicopters – their discreet investigations into wider consumer aspirations have become almost forensic. The recent buzz term “experiential luxury” has already been replaced by “luxury service culture”, while the once-exciting come-on “limited edition” has already been refined into “customisation”. But undoubtedly, the most noticeable label being dangled in front of luxury consumers is “ethical” – once regarded as so counterintuitive it was tactfully swept under the carpet.

“The Gucci years are over,” proclaims Tom Ford, who made his name creatively directing that company through the ostentatious 1990s. “Consumers, at least in the West, are now demanding ethical luxury. People want to demonstrate their environmental or social consciences – they are no longer fashion victims who covet items because they see a celebrity owning them. They still want and desire fine things. Luxury is not going out of style; it needs to change its style. The industry can no longer be propelled purely by logo-driven marketing. Luxury used to mean hard-to-find. Then it became hardto- miss. We need to replace hollow with deep.”

In fact, ethical luxury is itself becoming pretty hard to miss. Not only has a flurry of outfits sprung up to pamper the environmentally conscious high-spender – such as the UK’s cashmere-to-candles purveyor Bamford & Sons – long-standing names are bombarding consumers with their green credentials. Take the jewellery sector. Tiffany & Co.’s website makes a big deal of the environmentally sensitive ways the company sources its materials. Laurence Graff, chairman of Graff Diamonds, says getting rid of so-called conflict diamonds is not sufficient and that his company is “conducting environmentally conscious job-creating production in Botswana”. And an Association for Responsible Mining has been established to meet the growing demand for “ethical gold” and sustainably mined minerals.

Those seeking an appropriate environment to display their ethical baubles are positively spoilt for choice. Reassuringly expensive hotels – a sector in which many high-end brands are dabbling in “luxury service culture” – ceaselessly trumpet their environmental initiatives; business-class airlines parade their carbon-offsetting policies; and cars whose marques represent prestige seem increasingly eager to flaunt their hybrid status. Last year, the Monaco Yacht Show – hardly a berth for the Rainbow Warrior crew – bought carbon offsets to pay for wind turbines and other energy-saving schemes. And – in the West, at least – emporia racks from Armani to Zegna quietly rustle with organic cotton, nettles and hemp. Explaining the boom in fur sales, Silvia Fendi interestingly offers: “It is sustainable and lasts forever – the ultimate green material.” Meanwhile, entrepreneurial Los Angeles designer Linda Loudermilk – who has become a sort of Martha Stewart for the Whole Earth Foods set – has created a Luxury Eco stamp to “certify” the most responsible brands for a range of products.

There is no doubt that for the luxury giants, ethical image is increasingly important. Deeper Luxury, a report by the World Wildlife Fund, certainly ruffled some feathers last December. LVMH, Hermés and L’Oréal scored most highly – but as poorer-ranking companies were quick to point out, no established methodology was used.

All signs suggest that by ostentatiously pursuing ethical policies the luxury firms are already improving their bottom lines. A survey by marketing and research analyst TGI last autumn indicated that consumers will spend around €350bn on green products this year. New Yorkbased Luxury Institute’s Wealth Report says: “70% [of high-income American adults]... seek out brands with superior environmental records.” James Lawson, of London-based luxury-sector analyst Ledbury Research, says: “We’ve found consistently that the wealthy are increasingly concerned about environmental issues – 72% of those who earn more than €135,000 a year express interest in this area.”

“People want to be, and brand themselves as, part of this movement,” says Mike Hughes of the Martin Agency, a marketing outfit that works with Gore’s Alliance for Climate Protection. “They feel better about showing up in a hybrid Lexus than an ordinary one.”

And this is most definitely a movement, not a fad, insists Chris Sanderson of London-based Future Laboratory. “The ‘new mass affluents’ are using their wealth to support brands that have a values agenda. The same better-educated consumers that want to know the provenance of what they are eating are now making the same demands of luxury purchases. They want transparency. At the same time, there is a new generation of very committed people trying to do good things within their companies.”

Sanderson believes it is significant that Gucci’s new chief executive, Robert Polet, joined from Unilever’s food arm. He says that while companies such as Wal-Mart and Unilver have raised the ethical bar, it is one the luxury goods companies are well equipped to vault. “Many ethical values are inherent in luxury houses anyway; there are artisan producers, small-scale producers and privately-run family concerns, often using sustainable materials. The only new thing in the equation is savvy marketing.” Written by Boyd Farrow.