Suppliers are an essential part of understanding sustainability in the luxury industry but too often they are excluded from the conversation about a brand or organisation’s sustainability performance. Suppliers are regularly undisclosed by brands who choose not to declare upstream providers, with the consumption and sustainability practise of these suppliers also typically absent from company comms. It is a significant omission, given that an average of 90% of brand resource consumption takes place in the supply chain, with Scope 3 emissions accounting for 80% of a company’s greenhouse gas footprint.
For a luxury brand to be truly sustainable, they need to understand the importance of tier 1, 2, and 3, and it is essential that they build collaborative relationships with their suppliers. We discussed all of this and more in our recent webinar, where our co-CEO and co-founder Diana Verde Nieto hosted Frédéric Dufour the President and CEO of Ruinart, the CEO of James Cropper PLC Phil Wild, and Martin Townsend the Global Head for Sustainability and Circular Economy at BSI.
The webinar can be watched in full below, and we have broken down the main points of interest in an executive summary. Positive Luxury’s The Future of Sustainable Sourcing Report can be downloaded here.
Suppliers are more important now than ever
According to the BSI’s Martin Townsend, it is important that luxury brands don’t just see this as a B2B conversation but a B2C one as well. According to Gartner, about 75% of consumers are thinking about sustainability when they are making their decisions about products and services, making suppliers and their impact far more powerful as part of the consumer decision.
Expanding on this, Townsend saw two things at the heart of this rising wave of concern from brands about suppliers: transparency and risk management. In his experience, these two factors are what has been driving most of the conversations the BSI have been having with brands. The need to be transparent for both consumers and investors has brands scrambling to find ways to get the quality of the service that they need to create their products but with the lowest possible environmental impact. This is leading to the emergence of a more collaborative model between brands and supplier that shares risk and results in increased innovation.
How to effectively collaborate
Martin went on to outline how he sees effective collaboration between brands and suppliers working. In his opinion, ‘[brands need to ask themselves] how do I select the right partner? How do I make sure if we’re going to create a relationship which has value? If you don’t invest that time at the start I don’t think you’re going to get it right.’ He went on say that it is then it’s about investing time into process and working on factors like joint governance, continually discussing and reviewing progress, and creating value together. Finally, brands and suppliers need to ask themselves about their exit strategy. In his words, ‘you need to think about an exit strategy so once you’ve actually delivered what you wanted to do in a collaborative way’ you understand whether this is intended to be a permanent collaboration or a one off.
A first-hand account of collaboration in action
Frédéric Dufour, the President and CEO of Ruinart, and Phil Wild, the CEO of James Cropper PLC, gave a first-hand account of successful collaboration between luxury brands and suppliers.
The challenge for Ruinart was to improve on their already sustainable gift box. They saw that they were already at the limit of what their suppliers at the time could provide and sought out an innovative partner with a history of innovation. The partner they decided on was James Cropper, a paper expert that was already working with Ruinart’s shareholder Moet Hennessey. Together they worked to develop the ‘second skin’ packaging that is in use today – one that is nine times lighter, has a 60% smaller carbon footprint, and uses 100% paper issued from eco managed European forests. What made this solution so elegant was that it demonstrated how ‘both luxury and eco-consciousness could co-exist, according to Frédéric Dufour.
A more detailed case study of the second skin packaging and supplier behind it is available in our The Future of Sustainable Sourcing Report, which can be downloaded here.