RETURN ON
SUSTAINABILITY
INVESTMENT
THE COMMERCIAL BENEFITS OF
ESG-LED BUSINESS TRANSFORMATION
IN JULY 2021 Positive Luxury issued in its report The Sustainable Finance Revolution a rallying cry for luxury companies to
urgently adopt ESG principles across their operations and supply chains to secure a future. Yes, we meant a future for nature
and for all people, but equally we meant a future for each luxury business. “Commercial success and profit not only co-exist
alongside climate and social justice – action to commit to and deliver on bold values and targets have been proven to improve
both.” One year later, and the evidence in favour of ESG-led business transformation continues to mount.
KEY DRIVERS
What was once a pre-occupation of the finance & investment industry has become a mainstream concern, with a significant
majority of consumers and employees globally influenced by a company’s ESG credentials.
I am more likely to buy from/work
for a company that stands up for...
80%
Consumers
84%
Environmental
83%
76%
Social
Figure 1: The influence of ESG on consumer and employee behaviour
2
Employees
86%
80%
Governance
Source: 2021 PWC Consumer Intelligence Survey
“We want to do
what’s right for the
world but there
is a competitive
advantage in being
a sustainable
business. We are
profit driven, but
sustainability
helps create that
profit. It turns
out that things
that are good
are also good for
business.”
SUSTAINABILITY VS BRAND
When different age segments (Fig 1) were asked the importance of two key factors when making a purchase, brand name lost
out to sustainability in every segment. The delta between the two factors grows to a staggering 26 points by the time we reach
Generation Z, with only 49% influenced by brand name but 75% influenced by sustainability. For luxury to be relevant to its
growth targets, it must place sustainability at the heart of its culture, products, services and communications.
The luxury industry has provided a masterclass over past decades into the art of brand-building, with intangible brand equity a
key historical driver of market-leading multiples, more often than not derived from revenues. Luxury companies, however, need
to adjust to a new reality. 85% of growth in the global luxury industry is being driven by Millennials and Generation Z (source:
Bain & Company, 2021), whose drivers of purchase preference are very different from all previous generations drawn to luxury
goods and services.
This paper documents in detail why investment of human and financial resources in sustainability, and collaboration with
a luxury industry expert such as Positive Luxury to independently evidence and unlock the full value of those investments,
provide competitive advantage and clear commercial returns in the near- and mid-term.
How do you rate the importance of these
factors when making a purchase?
- Enrique Lax Banon,
White & Blue Capital,
investors in Anya Hindmarch
and The Conran Shop
54%
60%
66%
Brand name of a product
73%
Sustainabilty
75%
71%
61%
49%
Baby Boomers
Generation X
Millenials
Generation Z
Figure 2: The importance of brand vs sustainability influencing purchase. Source: 2021 First Insight, Inc.
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THE EXPERTS
ROSI™ METHODOLOGY:
9 SUSTAINABILITY DRIVERS OF PERFORMANCE
THE NYU STERN Centre for Sustainable Business (CSB) has been a trailblazer researching the correlation between
sustainability and financial performance and making those links explicit to connect the language of CSOs and CFOs (click here
for more details). In partnership with Rockefeller Asset Management, CSB recently examined the relationship between ESG
and financial performance in more than 1,000 research papers published between 2015 and 2020.
SUSTAINABLE BUSINESS IS GOOD BUSINESS
Positive results for investing in sustainability dominate. Very few studies found a negative relationship between ESG and
financial performance.
58%
RISK MANAGEMENT
STAKEHOLDER ENGAGEMENT
OPERATIONAL EFFICENCY
TALENT MANAGEMENT
SUPPLIER RELATIONS
21%
13%
Positive
Neutral
8%
Mixed
Negative
Figure 3: The relationship between ESG and financial performance.
Source: 2021 ESG and Financial Performance, NYU Stern Center for Sustainability Business and Rockefeller Asset Management
THE VALUE DRIVERS
Through their work, CSB has developed a ROSITM methodology and identified nine key drivers which improve – generating
revenue grown, enhanced profitability and/or higher corporate value – when a company includes EGS risks and opportunities in
their strategy and decision-making processes.
MEDIA COVERAGE
CONSUMER LOYALTY
SALES & MARKETING
INNOVATION
Figure 4: ROSITM methodology nine key sustainability drivers of performance.
Source: NYU Stern Center for Sustainability Business ROSITM Methodology
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ESG LINKS TO VALUE CREATION
Research from McKinsey & Company, similar to that undertaken by the CSB, examined 2,000 studies
of the impact of ESG proposition on equity returns and delivered almost identical findings to CSB’s
work: 63% of companies demonstrated a positive impact and only 8% negative.
Top-line
growth
WEAK ESG+ proposition (examples)
Increase customer loyalty and value through highly transparent,
credible communication of ESG performance and targets
Lose customers through poor sustainability practices, perceptions of
unsustainable products / services, and/or accusations of greenwashing
or greenhushing
Attract more B2B and B2C customers, and earn a price premium,
with verified sustainable products and services
Become a preferred supplier (suppliers to brands, brands to retailers)
through evidenced sustainable products and services
Through their extensive experience working with companies and investors, McKinsey found that a
strong ESG proposition links to cash flow and value creation in five important ways: top-line growth,
cost reductions, regulatory and legal interventions, productivity uplift and investment optimisation.
Based on McKinsey’s research and our own experience working with luxury companies over the
past decade, this table lists examples of the financial impact of strong and weak ESG performance in
commercial organisations.
STRONG ESG+ proposition (examples)
Cost
reductions
TOP-LINE GROWTH
COST REDUCTIONS
REGULATORY AND LEGAL
INTERVENTIONS
EMPLOYEE PRODUCTIVITY UPLIFT
INVESTMENT AND CAPITAL
ASSET OPTIMISATION
Lose access to resources, impacting continuity of supply through poor
community and labour relations
Generate unnecessary waste and pay correspondingly higher wastedisposal costs
Lower energy consumption
Reduce water intake
Expend more in energy costs
Reduce packaging footprint
Strengthen visibility and therefore continuity and quality of supply
across the value chain
THE FIVE ESG LINKS TO VALUE CREATION
Damage brand perception and purchase preference through loss of
relevancy to B2B and B2C customers
Expend more in packaging costs
Expend more in transit costs
Reduce overstocks, dead stocks, discounts, returns and write-offs
Impair margins via excess stock management and stock write-offs
Regulatory
and legal
interventions
Take a leadership position by complying ahead of deadlines
Suffer restrictions on advertising and point of sale
Avoid costly fines, penalties and enforcement actions
Incur fines, penalties and enforcement actions
Earn government support and subsidies
Divert resources and investment to last-minute compliance efforts
Employee
productivity
uplift
Boost employee engagement and reduce turnover through a ‘lived’
sustainability purpose and progressive employment practices
Lose talent, often to progressive competitors, because of weak
purpose
Attract talent through greater ESG credibility across operations and the
value chain
Reduce productivity due to impact of high leaver and absence rates
Strengthen workforce by embedding sustainability skills and mindsets
within the organisation
Investment
and capital
asset
optimisation
Embed ESG factors into core R&D and other key financial processes
to identify and incorporate future risks and opportunities
Enhance investment returns by better allocating capital for the
long-term (e.g., more sustainable materials, formulations, plant and
equipment)
Avoid investments that may not pay off because of longer-term
environmental issues or changing stakeholder sentiment
Restrict talent pool through low ESG credibility, particularly ‘social
stigma’
Incur high costs of recruitment and other HR administrative costs
Suffer stranded assets as a result of premature write-downs
Fall behind competitors that have invested to be less ‘energy hungry’
Incur disproportionately high costs of ‘catch-up’ investment in R&D
because of poor future-proofing
Lose access to financing or attraction to investors by failing to manage
sustainability risks and opportunities
Figure 5: The Five ESG links to value creation.
Source: McKinsey Quarterly, November 2019, and Positive Luxury
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CASE STUDY:
TOP-LINE GROWTH
MONICA VINADER:
WHERE INNOVATION
MEETS INTEGRITY
Monica Vinader is a demi-fine luxury jewellery
brand, founded by Monica and her sister Gabriela
in Britain in 2007, to create timeless pieces made
to last under the mantra “buy less, wear more”.
Since its foundations, the company has woven
innovation and integrity throughout its operations
and supply chain through the three pillars of
their sustainability strategy – people, planet, and
community. 15 years on the Monica Vinader Group
has been through multiple rounds of successful
fundraising, enabling it to grow into a global
omnichannel business providing employment
to 265 people. Their ESG performance is wellmeasured and future goals clearly established,
both of which are communicated with impressive
transparency on their website, in their annual
sustainability report and in their publicly available
annual accounts.
Monica Vinader joined the Positive Luxury
community in 2020 and achieved Butterfly
Mark Certification in early 2021, one of a series
of investments the Group made as part of
its ambitious next phase of sustainability-led
transformation. The organisation structure was
modified, with a dedicated General Manager
for Sustainability appointed and two teams set
up for identifying and implementing change – a
Sustainability Steering Committee comprising
C-suite and senior leadership and a Green Team
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of operational experts from across the business.
Acknowledging sustainability is about more than
the environment, they also established a dedicated
team supporting their equality, diversity and
inclusion initiatives.
The Group made the bold move to start using
only recycled gold and silver, reducing carbon
emissions by more than 67% in the process. They
also reduced their use of single-use plastic by
90% and rolled out new packaging, redesigning it
to use less, but more sustainable, materials. Their
packaging is now 100% recyclable and reusable
and contributes 83% fewer GHG emissions.
Through this and other efforts the company is
now carbon neutral, with action firmly focussed
on actual reductions ahead of offsets. They have
increased consumer loyalty with the introduction
of a jewellery recycling scheme and, through a
partnership with EdApp, embraced technology to
provide sustainability education to their office and
store teams. A ‘New from Old’ competition involved
a wider community of brand followers, and an
employer-supported volunteering programme was
introduced.
Amazingly the list of sustainability initiatives goes
on, including additional investment in effective
energy management and measurement systems,
updated supplier codes of conduct to which 100%
of their jewellery and leather suppliers signed up,
and further charitable and fundraising initiatives.
The Group also repaid all previously claimed UK
CJRS (furlough) grants to support the business
during Covid-19 closures. These extensive efforts
to strengthen their responsible business practices
clearly carried costs, both human and financial.
Yet revenues in 2021 grew by 25% versus prepandemic 2019 and, while sales were static and
net profits did drop in the peak pandemic year of
2020, 2021’s profits after tax were the strongest
the company has ever delivered.
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Monica Vinader Revenues
Positive Luxury’s Butterfly
Mark has given us the
opportunity to enter a
community of diverse but
like-minded brands sharing
knowledge and information,
whilst the certification itself
has provided a platform to
communicate more widely
with our stakeholders,
from customers seeking
reassurance that we’re
operating responsibly, to
suppliers and employees
gaining comfort from their
professional relationships.
Monica Vinader
Co-Founder and CEO
Monica Vinader Group revenues grew 124% between its 2016 and 2021
financial years, average annual growth across the five-year period of 17%.
The EBITDA ratio during this period grew from 3% to a healthy 12%, with future expansion
opportunities made feasible by a healthy cash position and balance sheet.
2016
2017
2018
2019
Figure 6: Monica Vinader Revenue Growth 2016-2021
2020
17%
5-year
CAGR
2021
Source: Companies House, HMRC
POSITIVE LUXURY’S TAKEAWAY:
The Monica Vinader Group’s strong sustainability purpose, excellent ESG performance, bold transparency and
demonstrable employee and supplier engagement is clearly providing return on their investments. It’s also enhancing
their corporate reputation, winning them in 2022 The Queen’s Awards for Enterprise in Sustainable Development and
Positive Luxury’s Responsible Luxury Business of the Year Award. Many of their relationships with suppliers have been
in place for more than 10 years and their employee retention rates are high due to their lived commitment to integrity
and innovation. That is why Positive Luxury refers to the Monica Vinader Group as a poster child for sustainable
business. They are a case study in the power of principles, collaboration and commercial conviction.
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CASE STUDY:
COST REDUCTION
MADALUXE GROUP:
INVESTING TIME,
CAPITAL AND PASSION
FOR PURPOSE
Founded by the Scholl-Freede family
in 2010, MadaLuxe Group has grown
to become North America’s largest
distributor of luxury goods from the
world’s most sought-after luxury
brands. In 2021 MadaLuxe Group
joined the Positive Luxury community
and in 12 months have transformed
their organisation, effectively
addressing sustainability risks and
earning Butterfly Mark certification
through a 28-point or 82%
improvement in their aggregated
ESG+ performance between baseline
and final assessment.
The cornerstone of any company’s
ESG+ performance is a strong
sustainability purpose, aligning its
core identity and actions around
benefitting society in the long-term.
MadaLuxe Group has worked
extensively on strengthening existing
initiatives and introducing new ones
that underpin the three pillars of their
sustainability purpose: respect for
people, respect for the planet and
empowering youth.
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Stemming from the belief that it is the
“Group’s duty and priority to to make
an everlasting positive imprint on this
world” through economic, social and
environmental wealth creation, CSR is
now a permanent item on the
Sustainability Committee agenda and
leadership has committed significant
time and resources to actively engage
and involve their employees, from
community-based volunteering
initiatives supporting underserved
youth in South LA to organizationwide wellness initiatives.
Most of MadaLuxe Group’s
environmental impact comes from
their distribution and shipment of
goods. They have now implemented a
partnership with an innovative
logistics company and internal policy
which supports the transition of
inbound and outbound shipping to be
transported via the lowest impact
methods, wherever possible, which is
key to reducing their transportationrelated carbon emissions and
reducing logistics costs.
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MadaLuxe ESG+ Performance improvement
Investments have included the appointment of in-house sustainability specialist Sarina Tounian,
who joined with a clear remit to accelerate their efforts and rapidly improve their ESG+ performance.
Baseline Assessment
Final Assessment
72
33
63
59
56
46
39
During the certification process, we’ve embedded sustainability into
every aspect and decision of our business, and we worked heavily on
creating and strengthening many different initiatives related to our
ESG+ pillars of sustainability. While our efforts in a short time have
benefited our own operations and local communities, our hope is that
we influence our supply chain to give back in much greater ways.
Adam Freede – CEO and Co-founder, MadaLuxe Group
Sandy Sholl – Chairperson and Co-founder, MadaLuxe Group
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POSITIVE LUXURY’S TAKEAWAY:
Environmental
Social
Governance
Figure 7: Madaluxe ESG+ assessment performance.
16
Source: Positive Luxury 2022
Innovation
Time and again throughout the assessment process, we witnessed MadaLuxe’s leadership “walking the talk”, i.e.,
backing up with tangible actions their belief that the Group has a responsibility to usher in a more sustainable future.
Rather than just a ubiquitous statement on a website page, they have invested time and money to embed innovation
and sustainability at the core of their business. Because of the correlation between a strong sustainability proposition
and strong financial performance, the Group is quickly realising return on investment.
Nor are they resting on their laurels after delivering one of the community’s strongest ESG+ performances to date. An
innovative system to capture mileage and calculate carbon emissions for business travel was recently introduced,
supported by their sustainable travel policy, which encourages employees to question the necessity, frequency and
methods of business travel. We are confident this initiative will reduce the company’s GHG emissions, upskill and
engage employees and reduce business travel as a proportion of operating expenses. Additionally, we are excited by
further technology-led partnerships and innovations currently in development by MadaLuxe, which we believe will raise
standards for packaging and logistics efficiency in the US market and provide direct and indirect financial benefit to the
Group through smart capital investment, reputation enhancement, cost-savings and employee pride. Lastly, the Group
has implemented an Electric Vehicle (EV) Incentive Policy to address the company's individual contributions to their
overall carbon footprint. The policy offers a cash incentive to team members for the purchase or lease of a full EV.
This perk goes beyond the business so that sustainability becomes an integral part of daily living.
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CASE STUDY:
REGULATORY
AND LEGAL
INTERVENTION
THE
SUSTAINABILITY
BENEFITS OF
BELVEDERE’S
BIOMASS CAPTURE
FACILITY
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19
Belvedere Vodka, part of the LVMH group,
represents 600 years of Polish vodka-making
tradition. Belvedere’s distillery, which dates back
to 1910, was the first spirits distillery to receive
a grant from the European Commission to pilot
an ambitious biomass capture facility on site.
Their efforts in implementing the project earned
the company the Material and Manufacturing
Innovation of the Year in Positive Luxury’s 2022
Awards. Belvedere Vodka joined the Positive Luxury
community and was first Butterfly Mark certified
in 2013. We spoke to Mateusz Pastka, Electrical
Engineer, and a key member of the project team at
the Belvedere Vodka Distillery in Poland.
“It’s been a very challenging project to implement
but we are extremely proud of the results
accomplished.”
At first, we cooperated with different universities
and scientists in Poland to trial the technology in
controlled environments and ensure efficiency in
burning biomass. Constructing the biomass facility
itself was also quite challenging as it required a
lot of logistic coordination: the boiler room came
from Sweden, our generator is made in England,
the heat system from Poland. We had to manage
several working teams and cooperate as a group.
It was ultimately thanks to the commitment of all
the people involved that we were able to finalise
everything in the set timing.
Today, not only have we reduced our energy
CO2 emissions by 80% but we were also able to
significantly improve our energy efficiency. We source
60% less energy from the external power grid and
with time we will also be able to provide to the external
networks the green energy produced in house.
20
Today, not only we’ve
reduced our energy CO2
emissions by 80% but
we were also able to
significantly improve our
energy efficiency. We source
60% less energy from the
external power grid and with
time we will also be able
to provide to the external
networks the green energy
produced in house.
Mateusz Pastka – Electrical Engineer,
Belvedere Vodka
POSITIVE LUXURY’S TAKEAWAY:
Belvedere is now at the forefront of manufacturing innovation, generating 100% renewable energy and optimising the
biomass facility to deliver a 95% reduction in energy CO2 emissions and be carbon neutral by the end of 2022. While
the project clearly required the commitment of significant internal resources for a lengthy period, it was made financially
possible by a grant from the EU.
Government-led funding programmes are available in most major markets, many awarded specifically to businesses
investing in green technologies which increase energy efficiency or reduce carbon emissions, and the majority
target start-ups and small businesses. Suppliers within the luxury industry focussing on sustainability-led material,
manufacturing or logistics innovations; luxury brands with their own manufacturing facilities; or those companies
interested in technology-based solutions to sustainability opportunities, are best-placed to benefit from these
programmes. Having pre-established, tangible ESG credentials – like those Belvedere Vodka gained from LVMH’s
group sustainability resources and its partnership with Positive Luxury – will strengthen a company’s chance of
successfully receiving a grant or loan, as will a company’s ability to outline clear project goals that can be measured.
If government-led programmes aren’t available to your company or your application isn’t successful, there are
a growing volume of impact funds and investors looking to support high-potential companies pursuing ESG-led
innovations to drive positive impact and financial health.
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CASE STUDY:
EMPLOYEE PRODUCTIVITY
UPLIFT
REI: ALIGNING EMPLOYEE
WELLBEING WITH POSITIVE
FINANCIAL OUTCOMES
REI Co-op (REI) is a speciality gear
and outdoor apparel retailer and the
USA’s largest consumer co-op, with
a growing community of 20million
co-op members. As a purpose-led,
member-owned co-op the company
is renowned for its high-performing
employee base and low turnover rate
compared to less purpose-driven retail
competitors. REI undertook a study
with NYU Stern CSB in 2020 to better
understand whether its investments in
an embedded sustainability strategy
and a strong sustainability-focused
culture led to higher employee
engagement and, by extension,
higher employee retention and overall
higher employee satisfaction.
Sustainability, inclusive of
environmental and social issues, is
core to REI’s brand. It is embedded
into the new employee hiring
process, features prominently on
career boards, new candidates
are made aware of commitments
before applying and it is consistently
communicated in employee
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engagement materials. In 2019, REI
employees received two paid ‘Yay
Days’ that allowed them to go out
and play. They also launched their
#OptOutside campaign; in addition
to closing for Thanksgiving (normally
a peak trading day in the US retail
calendar), REI employees also
received an additional paid day off on
Black Friday to spend time outdoors
with family and friends.
Using CSB’s ROSITM methodology
to quantify the direct and indirect
impact, CSB found that REI’s total
benefit from enhanced productivity
was $13million in 2019. The reduced
hiring and turnover costs amounted to
a benefit of $27million that year, while
the cost to the company associated
with Yay Days and #OptOutside was
$6million. This in-depth analysis
illustrated that in 2019 REI yielded
$34million in net benefits from
increased productivity and retention,
up from $25million in 2018 and
representing circa 5% of their total
payroll.
POSITIVE LUXURY’S
TAKEAWAY:
REI may be a very large $3billion+
company but its sustainability-led
culture and specific activities within
its employee wellness programme
are well within the reach of all luxury
businesses regardless of size. And
a 5% reduction in personnel costs,
whatever the company’s level of
turnover, is a very meaningful benefit. If
leadership demonstrates genuine intent
and has the discipline to follow-through,
providing purpose to your employees is
one of the quickest and most effective
routes to realising financial return on
your sustainability investment.
Vividly illustrated by PWC Consumer
Intelligence survey illustrated in Figure
1 of this paper, more than 80% of
employees wish to work for a company
that has a strong ESG proposition.
Employees want purpose and show far
greater loyalty to those who provide it.
The payroll of medium and large
companies accounts on average
for 30% of net revenues. In small
companies the percentage is much
higher. The opportunity to better
manage one of the largest areas (if not
the largest) of a company’s cost base
is significant. A 5% saving in personnel
costs would significantly improve
profitability or free up investment for
value-generating activities. Providing
a sustainability-led purpose and
building from that a healthy culture
prioritising employee wellness and
learning, development and progression
opportunities for all is, quite simply, the
fiscally responsible thing to do.
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CASE STUDY:
INVESTMENT & CAPITAL
ASSET OPTIMISATION
NIKE: SUSTAINABILITY &
INNOVATION THROUGH
FLYKNIT TECHNOLOGY
Nike is the world’s largest supplier of
athletic footwear and apparel, with
innovation a founding principle. Their
sustainability strategy dates back
to the 1990s when the company
faced widespread public criticism
over labour practices in contract
factories. Having identified that
its greatest impacts across the
value chain were within materials
and manufacturing, 10 years of
research and 200+ prototypes led
to their launch of Flyknit in 2012,
a fundamental breakthrough in
sustainable innovation reducing the
amount of materials used and cutting
waste by 80%. While conventional
shoe production requires cutting
and sewing multiple materials
together, the Flyknit process weaves
strands of yarn together to form
one seamless upper. The process
allows for engineering down to the
millimetre.
In the first four years on the market,
Nike saved 3.5million pounds of
water and diverted 182million plastic
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bottles from landfills by switching
to recycled polyester in all Flyknit
shoes.
The highest performing running
shoe at the time of its introduction,
Nike subsequently applied the
manufacturing method to other
shoe lines including training,
football (soccer), basketball, golf,
and lifestyle, reaching 500 global
Flyknit-related patents for technology
and design – successfully turning
social and environmental risks from
challenges to opportunities. At the
time of the research by NYU Stern
CSB in 2016, it was estimated that
Flyknit accounted for $1billion of
Nike’s $30billion full-year revenues.
Their 2020 Impact Report illustrated
that by changing how its shoes
were made via more sustainable
product design and supply chain
processes, Nike improved companywide profit margins by 0.25% (almost
$50million).
POSITIVE
LUXURY’S
TAKEAWAY:
You don’t have to be
a huge global brand
or have massive R&D
resources at your
disposal to innovate
through sustainability.
Smart new materials
and lower-impact
manufacturing
processes are being
introduced or, in the
case of luxury revived,
every day. By applying
a sustainability lens,
luxury brands can
partner with suppliers
to use more recycled
and sustainable
materials, create
leaner manufacturing
processes and
increase supply
chain efficiency.
These efforts
and the resulting
products resonate
with consumers –
driving retention
and attraction. They
build enormous pride
among employees,
and cement highly
productive longterm relationships
between brands and
suppliers. Every party
in the value chain wins,
from cutting floor to
consumer.
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CONCLUSION: KEY TAKEAWAYS
RECOGNISE THE
OPPORTUNITY
ESG AND FINANCIAL KPIS
ARE INTERDEPENDENT
LISTEN TO EVOLVING DEMANDS
OF YOUR STAKEHOLDERS
PURSUE NOT JUST
SUSTAINABILITY, BUT
ALSO TRANSPARENCY
TAKE A LEADERSHIP POSITION
“Luxury brands must make bold, definitive statements that embrace
the market opportunity that sustainability provides… luxury brands
have an urgent mission to propose and introduce an approach that
promises to deliver a sustainably driven tomorrow and beyond.
There is no doubt that the brand business model repercussions
may prove significant, but brands no longer have a choice”
– Source: Forbes, 2021
POSITIVE LUXURY hopes this paper provides all readers with confidence in ROSI, in both the near- and long-term.
Sustainability has changed drivers of consumer preference, employee career aspirations, brand/supplier/retailer relationships
and investment valuation and justification. The golden rules of luxury brand strategy have been irreversibly altered, but the core
values of sustainability and luxury are synergistic – craft, durability, scarcity, creativity – and leveraged from a fresh perspective
will provide advantage.
The advice from Positive Luxury is:
1
2
3
ecognise the opportunity. Thousands of highly credible studies have been conducted, then further analysed by experts.
R
58-63% of companies between 2015-2020 saw a positive financial impact from investment in ESG, only 8% negative. With
consumer and employee preference swinging strongly toward sustainable companies during and since the pandemic and
financial institutions favouring low-risk investments, we expect the positive correlation to continue to rise. For a cohort of
smart, progressive companies leveraging ESG to transform their organisations this is a huge environmental, social and
financial opportunity. Positive Luxury supports nearly 200 companies who through their combined impact are redefining
luxury and seeing payback.
SG and Financial KPIs are interdependent. The luxury industry was a follower in digital; let’s learn from that and be
E
leaders in sustainability. If this topic isn’t on the agenda of Board Meetings, ExComms, and Town Halls every month,
get commercial and get it there. Success in today’s volatile macro-economic climate requires companies to embrace
uncertainty and build resiliency and adaptation skills into the DNA of their business. The impacts of climate change will
continue to exacerbate this. Prepare through effective management of ESG risks and opportunities, and you will turn
adversity into advantage.
isten to evolving demands of your stakeholders. To build trust with B2B and B2C customers, engage employees
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and be valued by shareholders and investors, get serious about sustainability. Look beyond superficial statements of
commitment and purpose, and aim to embed sustainability into your business strategy, operations, ways of working and
full value chain. Get into the detail before legislation forces you to.
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4
5
ursue not just sustainability, but also transparency. Sustainability provides a golden opportunity to create a
P
truly compelling and relevant vision. Crafting and communicating purpose statements are the simple parts. The more
challenging, less comfortable aspects comprise living that purpose and communicating ESG performance with honesty
and clear evidence. As alarmingly illustrated in this year’s Edelman Trust Survey, the default position of 55% of global
consumers is distrust. This declining trust between individuals and corporations is fed by issues like greenwashing and
climate hypocrisy. The New York Times recently identified in a global review of net-zero pledges by corporations that fully
half of them laid out no concrete plan for getting there. Those companies who continue to speak the ubiquitous language
of commitment without measurement, targets and progress updates place themselves at risk of a public backlash. This is
luxury. It’s the details that matter.
ake a leadership position. Sustainability is an opportunity for leaders of luxury brands, retailers and suppliers to create
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a meaningful legacy. As identified by Forbes, McKinsey & Company, Harvard Business Review and numerous other
experts, innovation is the magic ingredient crucial to the long-term success of both companies and leaders. Sustainability
drives innovation because it demands that we think differently about the challenge and the solution. Innovation isn’t a new
product. It’s adapting to change to deliver a better product or service. It’s uncovering new ways to operate and modifying
the business model to adapt to evolving conditions. Climate change is a game-changer – we see it daily in the news, in the
staff room and in our supply chains. Operating in the status quo isn’t an option stakeholders will place a bet on. Leaders
who recognise this will unleash innovation. Creativity will abound. This is the space in which luxury was born and to which
the most successful leaders of companies large and small will return.
Positive Luxury is a partner with more than a decade of experience helping luxury companies manage their sustainability risk
and opportunities, accelerate efforts to improve ESG performance and leverage sustainability as a driver of positive impact and
corporate value. Our community of ambitious luxury brands, suppliers and retailers redefining luxury is growing fast, each in
a different stage of its sustainability journey, but all aligned behind one well-evidenced belief. Strong ESG+ performance isn’t
a nice-to-have. It’s the responsibility of business, and a must-have to ensure access to talent, capital and luxury consumers.
We’re here to help brands, suppliers and retailers adapt and not be left behind.
“Good management of sustainability risks
and opportunities is one of the most powerful
ways to improve financial performance.”
– NYU Stern Center for Sustainable Business
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“As sustainability becomes more of
a strategic and operational imperative,
executives must lead the way to set up
a sustainability organisation that’s
right for their companies.”
– Source: What Matters:
Five priorities for CEOs in the Next Normal,
McKinsey & Company, September 2021
POSITIVE LUXURY’S METHODOLOGY
POSITIVE LUXURY’S proprietary four-part methodology rejects the traditional model
rating past performance. Incorporating a focus on innovation, it provides clients with
a clear gap analysis enabling them to identify and address both current and future
sustainability risks. This is then combined with diagnostic and communication tools to
leverage areas of strength and opportunities for advantage.
1
ASSESSMENT
Positive Luxury’s ESG+ assessment is the most
comprehensive on the market. Between baseline and
final assessment, to meet our exacting standards for
certification which require a minimum score of 50 at
aggregate level and across each of the environment,
social and governance pillars, the average company
improves its ESG+ performance by 27 points on a
scale of 1 to 100.
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2
CERTIFICATION
The Butterfly Mark is earned via sustainability-led business
transformation, providing tangible evidence of improvement
and independently validated performance measures
across 29 drivers critical to ESG performance. Clients
must undergo reassessment every two years to maintain
certification, ensuring each company continues to improve
its performance in line with evolving market expectations
and growing legislation.
3
TRUST-BUILDING
To communicate positive impact and earn stakeholder
trust, clients are supported pre- and post-certification with a
comprehensive suite of tools, the cornerstone of which is the
Connected Butterfly Mark. Leveraging Web3, technology this
unique tool blends ESG+ performance data and sustainability
journey mapping, allowing certified companies to deliver
transparency with confidence and monitor consumer
engagement through the back-end passport office.
Product-level traceability is in development for launch
in 2023.
4
FUTURE-PROOFING
Leveraging our reporting and insight tools, including a
detailed risk map, we help clients prioritise key areas
of opportunity for competitive advantage and value
generation. The diagnostics allow clients to set clear and
ambitious 2030 targets and develop a near-term two-year
roadmap. Ongoing reviews with our sustainability experts
ensure certified companies are kept abreast of changes
in legislation and standards, and continuously manage
sustainability risks and opportunities to improve ESG
impact and financial performance.
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To learn more about Positive Luxury and how we help luxury brands, retailers and suppliers
unlock sustainability as a driver of value please visit positiveluxury.com, where you can also demo
our ESG+ assessment and directly book an appointment with a member of our Development Team.
Hamish Scott, Development Director
hamish.scott@positiveluxury.com
+44 (0)7377 098645
Rosa Spinney, Sales Executive
rosa.spinney@positiveluxury.com
+44 (0)7964 775577