On Monday, LVMH released what it is calling its “first comprehensive social and environmental report,” in which “spotlight[s] its initiatives to support sustainable growth.” According to the Paris-based luxury goods conglomerate, the new 140-page release “provides a clear overview of the Group’s actions” – from its efforts when it comes to diversity and inclusion (Sephora, for instance, became the first retailer to join the “15 Percent Pledge” and commit a minimum of 15 percent of their shelves to Black-owned businesses) and climate change, with the group “aiming to reduce (and/or avoid) scope 3 greenhouse gas emissions per unit of added value by 55 percent by 2030, and halve emissions from energy consumption by 2026” in conjunction with its LIFE 360 venture – while also “facilitating engagement with stakeholders.”
In line with LVMH head of image, communications and environment Antoine Arnault’s recent revelation that the group plans to “stay away from the secondhand market” for the time being (he previously stated that they were “looking at” resale opportunities), it appears that LVMH is, instead, focusing at least some of its efforts on what the Bernard Arnault-run group calls “creative circularity.” In the lengthy “2020 Social and Environmental Responsibility” report, the group states that it intends to “preserv[e] natural resources and avoid waste” in part by doubling-down on its “strong belief that one of the principal characteristics of luxury products is that they should last forever.”
With this in mind, LVMH asserts that “sophisticated repair services, upcycling, reuse of precious raw materials, and efforts to find alternative materials all feed into the Group’s circular economy strategy.” Such a strategy “offers a new source of inspiration and creativity,” per LVMH, which says that it endeavors “to ensure that, by 2030, all new LVMH products will result from eco-design, so as to present a minimal environmental footprint – from raw material extraction to transformation.” All of the group’s businesses, from its Fashion & Leather Goods division to its Selective Retailing arm, “are involved in this drive to improve product composition and define eco-design practices,” the latter of which “acts as an elixir of youth,” the report states, as it “helps give products a second life by repurposing, reusing, or upcycling, and therefore, also provides a solution for unsold items.
At the same time, LVMH – which owns 75 luxury goods brands, such as Louis Vuitton, Dior, Givenchy, and Celine, as well Tiffany & Co., Bulgari, Moet & Chandon, Vueve Clicquot, and Sephora, among others – contends that it is also working to “avoid producing waste with sustainable inventory management,” noting that the “business models of [its] Maisons famously employ very tight, skillful inventory planning right from the design stage, making them very far removed from mass production.”
In terms of specific examples of “creative circularity” that are in play, the report cites the following, among others …
·· In Fashion and Leather Goods, Fendi applied an eco-design policy to its iconic Baguette and Peekaboo bags, which resulted in a Zucca motif fabric woven from recycled polyester and sustainable cotton. Beyond that, for some of the items in its 2020-21 collections, Fendi used previous collection samples, dormant stock and archive pieces.
·· Fashion house Patou has made inventory management one of its corporate purposes — striving to manufacture only what will be sold. That was the reasoning behind “Les Essentiels,” its permanent collection of timeless basics available every season. Group Maisons also have other ways of minimizing the number of unsold items, [while] in 2020, Bvlgari conducted an inventory age-check to ensure that old stock took priority over new and was not destroyed.
·· Other solutions to avoid waste include donations and recycling. For example, Fendi significantly ramped up its circular economy initiatives in Italy in 2020, donating uniforms, leather and rolls of fabric to non-profits. It also implements a range of other practices, such as reusing packaging and other items (including 10 metric tons of clothes hangers) and recycling metallic components and pieces of wool, silk, cotton and denim ready-to-wear clothing, as well as leather goods items through partnerships with a variety of service providers.
·· In France, Louis Vuitton, LVMH’s Perfumes and Cosmetics Maisons, and Sephora all work with the Environmental Center for Ecofriendly Packaging Breakdown and Recycling (“CEDRE”) to deconstruct and recycle unsold or obsolete goods. CEDRE, which will soon double the size of its processing surface area, also develops new recycling streams – after setting up channels for silk and Surlyn in 2019, it created a channel for textiles, to transform polyester and polyamide into felt in 2020.
·· Louis Vuitton’s men’s Spring/Summer 2021 collection designed by Virgil Abloh features items created using pieces from previous collections and surplus materials. For example, the Maison’s designers created the new LV Trainer by upcycling an existing model. The sneaker is made from an older version that has been disassembled by hand and features a new lining and laces. The “LV upcycling” logo is embroidered on the back of the shoe. LVMH states that “the designer” – presumably Abloh – “believes that previous collections should no longer go out of fashion and should instead be transformed into signature items that are reinterpreted from one season to the next.”
·· In 2020, Group Maisons also conducted several trials in the early stages of product design – often teaming up with environmentally minded partners—to ensure that more categories of materials and objects could be repurposed or reused. For example, Celine launched a recycling scheme for its leather scraps and Fendi is now working with Progetto Quid, an ethical fashion brand, to give a second life to discontinued fabrics.
·· Several of the Group’s Maisons also offer specific after-sales services that enhance the use-value of their products. Berluti, for example, maintains and repairs half the leather goods it sells. Its patina care ritual allows customers to change the color and burnish of their shoes, bags and belts, making them uniquely personal as a result. Meanwhile, for several years now, TAG Heuer offers its customers a first-class repair service to ensure products remain in good working order for as long as possible.
The push towards circularity comes as consumers and investors become increasingly aware of – and demand transparency about – the practices of companies on the Environmental, Social, and Corporate Governance (“ESG”) front. Interestingly, LVMH’s growing embrace of upcycling and other, similar initiatives coincides with the passage of a wide-ranging anti-waste law in France, which will ban the disposal (i.e. landfilling/incineration) of any unsold non-food products once it is implemented. The closely-watched new law, which is set to come into effect at the end of 2021/start of 2022, will subject companies to more than 100 new sustainability-centric provisions, including the prohibition on the destruction of an array of different types of unsold goods, including fashion items.
Unsurprisingly, few groups that generate revenue as a result of the large-scale turnover of high-margin goods, either in the premium/luxury space or in a more mass-market segment, have been willing to walk back on their consistent quest for scale, raising questions about whether the push to build multi-billion-dollars businesses can ever really be sustainable. Nonetheless, many have been vocal (often by way of voluntary reports) about efforts aimed at cutting down on waste, setting carbon emissions targets, addressing biodiversity risks, and boosting racial and gender diversity initiatives, among other ESG initiatives.