How Luxury Brands Can Earn Green By Going Green In China

Key Takeaways: Équité and IMS Hong Kong did a long-term, AI-supported study throughout the pandemic to identify what women want in China. One striking finding was that conversations about corporate social responsibility (CSR) had become a priority to Chinese consumers. Brands got used to playing it safe for years when it came to sustainability, choosing to be reactive rather than active on it. However, with the rapid shift in consumer sentiment, playing it safe is now playing to lose. Luxury brands create extreme value by creating desire and enticing Gen Zers or elder targets. That requires radically rethinking what brands have been doing in the past to create one thing that is always key: a competitive advantage. The importance of sustainability has grown exponentially. Today, most brands have launched sustainability initiatives, and many have even created a narrative around it. Hermès is experimenting with mushroom leathers. Gucci uses recycled packaging. Lamborghini recently pledged to transform all cars into hybrids within the next three years and launch its first all-electric sports car by 2030. Meanwhile, small boutique luxury brands like the celebrity hairstylist brand Iles Formula are setting benchmarks with its ambitious sustainability program, which earned the Butterfly mark — the industry’s most prestigious sustainability certification. In jewelry and leather goods, blockchain initiatives like Aura (backed by LVMH, Richemont, and Prada) aim to increase the transparency of materials and supply chains. These initiatives show a paradigm shift over the last decade — particularly over the past year, thanks to the pandemic. Équité and IMS Hong Kong did a long-term, AI-supported study throughout the pandemic to identify “what women want” in the most critical luxury market: China. The aim was to identify subtle changes in consumer sentiment among Chinese luxury consumers that the pandemic triggered. One striking finding was that conversations about corporate social responsibility (CSR) had become a priority to Chinese consumers. This finding is supported by the anecdotal evidence I've received from several Chinese managers of luxury brands. Many of them relay how consumers walk into their stores for the first time and turn right around if store staff cannot convincingly tell them about their sustainable measures or recycled materials. Even a year ago, these tough conversations were the exception. But now, they are the norm, particularly with Gen Zers. They want answers to their questions. Brands were used to playing it safe for years when it came to sustainability, choosing to be reactive rather than active on it. However, with the rapid shift in consumer sentiment, playing it safe is now playing to lose. The traditional luxury sustainability playbook was to reduce a negative footprint, exchange materials for newer, more sustainable ones, and provide more transparency. But today's new consumer expectations require a different mindset. Inspiration has never come from playing it safe. Luxury brands create extreme value by creating desire and enticing Gen Zers or elder targets. That requires passion, commitment, risk-taking, and inspiration. It also means radically rethinking what brands have been doing in the past to create one thing that is always key: a competitive advantage. Brands that play it safe on sustainability will only be able to catch up. They will never lead. The more a brand waits, the farther it will be from the true innovators. Sustainability is a huge opportunity for innovation, disruption, inspiration, and extreme value creation. It is also a huge opportunity for brand storytelling, especially if the storytelling elements come from the brand's heart and are authentic and not made up. "Greenovating" has to replace "greenwashing." That also means putting real passion into innovation initiatives. Because in luxury, passion is always contagious. When consumers sense that brands are passionate about things other than sustainability, their initiatives will not resonate as well. I believe that sustainability will become one of the strongest enablers in the luxury industry. It is at the top of Gen Zers' minds, and so few brands have even tapped into its potential yet. Now is the time to switch from playing it safe to playing to win. Daniel Langer is CEO of the luxury, lifestyle and consumer brand strategy firm Équité, and the professor of luxury strategy and extreme value creation at Pepperdine University in Malibu, California. He consults some of the leading luxury brands in the world, is the author of several luxury management books, a global keynote speaker, and holds luxury masterclasses in Europe, the USA, and Asia. Follow @drlanger

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How Luxury Brands Can Earn Green By Going Green In China