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16: Luxury and Sustainable Development

Sustainable development represents the greatest challenge to industrial society.

For several decades, the western world has experienced constant growth, firms in need of materials and labor could find them readily, and have been able to find more customers for their products. It has been easy to do so, because so much of the world's potential has been untapped.

However, globalization has over the past thirty years has largely consumed the untapped potential of world markets. While there is still some room for growth, the speed of growth has changed. We now recognize that the Western model of consumption cannot be generalized to the while planet, and it's more difficult to find resources, labor, and customers.

There is a theoretical limit to the world's capacity to produce and consume, and firms are beginning to recognize that the potential for growth is finite, and they must transition to a sustainable model in which the demand for products and supply of customers becomes fixed: when everyone is producing as much as they can and consuming as much as they care to, there is no easy path to growth, and firms must instead seek to sustain themselves with limited resources and demand.

In that sense, luxury may be a step ahead of the mass markets: the luxury strategy is based on rarity: the supply of the best quality materials, the most skilled laborers, and the wealthiest customers has always been limited. As such, luxury companies have sought to sustain themselves without descending into the mass markets.

In a sense, a luxury company that wishes to remain "golden" has much in common with the environmentally concerned firm that wishes to stay "green" - in that both must sustain themselves without compromising on their values. As resources, labor, and consumer markets approach full exploitation, the need to be sustainable will spread to the mass market, upon whom the limitations will be a matter of necessity rather than choice.

Luxury and sustainable development

The concept of "sustainable development" was first used in 1987, in a report (Brundtland) that, like Malthus centuries prior, recognized that resources were finite and that the rate of growth was unsustainable. The notion of corporate social responsibility arose about the same time, as considering the long-term future and the adoption of practices that would sustain companies for future generations.

The first sectors to fall prey to this concern are those whose core businesses consisted of harvesting finite resources - chiefly mining and petroleum - followed shortly by the energy, transportation, and manufacturing, whose impact on the environment was perceived to be significant.

The focus of consternation has been on the mass markets: the luxury sector was too small to have much of an impact, in spite of the fact that its hedonism and lavishness was diametrically opposed to the values of deprivation and conservation fostered by the environmental movement. While luxury firms generate exorbitant profits, there are comparatively too few of them - such that the full-time professional environmentalists, whose tactics are thinly veiled extortion, found it more profitable to target larger organizations that served the mass markets.

Luxury as Inequality

The most vulgar interpretation of luxury is that it is extremely expensive. The person who purchases a luxury item, even if their motives are entirely intrinsic, is seen as undertaking an action that demonstrates his superiority over others.

In the western world, particularly the United States, luxury was the reward for success. It is a society that fully believes in the tales of Horatio Alger, whose dime-store novels were based on a single plot: an individual in the depths of poverty achieves success through dedication to hard work. Luxury for such a person is not an entitlement of birth, but the justly earned reward for a lifetime of effort.

The American phenomenon of the business tycoon, whose wealth was made by providing something of great value to many other people, is acutely different to old-world luxury, from European and Eastern societies in which wealth was inherited through generations from those who had acquired it by violence and exploitation. And ironically, the American perspective on wealth as reward is fading in the United States even as the perspective overseas is changing.

In Asian societies, particularly Japan and China, there is now a stark contrast between the wealthy entrepreneurs and the peasant classes, and the existence of wealthy individuals is seen as a symbol not only of their own personal success, but the progress of the society in which such success is possible.

Luxury as exploitation of rare resources

The price of luxury is supported by the scarcity of the materials that are used in luxury goods. The rarest things are considered to be the finest, and command the highest price due to their scarcity.

Not only does the production of luxury goods consume rare resources, but the consumption of luxury goods also represents consumption: a Rolls Royce burns ten times more gas than a Toyota, and a private jet consumers far more fuel per passenger than a commercial airliner.

For a single person to consume so many resources is a demonstration of their ability to afford such consumption, but seems a waste to the masses - much in the way that the sumptuousness of a luxury banquet is coveted by those who count the number of people who could have been fed by the leftovers.

The "leftovers" of mass production goods are pollution and garbage: the pollution of burning fossil fuels, and the garbage of plastic containers that clutter the dumps of third-world villages where recycling is unknown and both subjects of much consternation.

Luxury as an unfair business model or economy

Luxury goods are generally not the subject of much criticism in terms of business models. The use of sweatshop labor or the buying of government favors to maintain a monopoly are largely practices of mass producers rather than the luxury market. A luxury good is not produced by slave labor, and seeks only those customers who can afford it, indifferent to those who choose lesser goods.

However, producers in the premium markets face considerable challenges: the use of slave labor has diminished the esteem of premium clothiers. A brand that is caught in such practices must pay a great deal to make amends, and be very public in its dedication to working conditions of both its own facilities as well as that of any of their suppliers - to be caught a second time would destroy the reputation and credibility of the brand.

On the other hand, consumers in the lower ends of the mass markets do not seem to care. The human rights violations of the Chinese government and the treatment of workers in Chinese factories have not dissuaded the discount-store customer from purchasing goods that are made in China.

How luxury became the focus of critics

The authors cite a recent survey (Kapferer) of consumers, who were asked to indicate sectors that were sustainable. Chemistry, petroleum, and transportation were the most frequently mentioned as being the least sustainable and the least engaged in sustainability. The luxury sector was considered by many to be "quite remote" from sustainable development.

The authors speculate as to the reasons that sustainability is not perceived as an issue for the luxury sector:

In fact, the very notion of sustainable development is a criticism of mass-consumption society, and luxury seems idealistic by comparison. That is, the ecological movement reviles bigness in all its forms, and advocates small producers who are attentive to the quality of their products and the process by which they are produced, even though this means decreased availability and increased prices. Ultimately, this is to say that the ecological movement is obsessed with luxury, and wish mass-production to be more like it.

Why the perennial criticism of luxury?

Luxury inspires not merely admiration, but envy. Much in the way that people of little importance and less esteem seek to call attention to themselves by publicly attacking others who are more well-known, so do small fringe groups seek recognition by attacking the luxury sector. (EN: In the Aristotelian sense of drama, there is little interest in a story of the mundane - but when a poet speaks of the nobility, he attracts the attention of an audience.

By its very nature, luxury is diametrically opposed to folksy values such as modesty, humility, and frugality. It does not cater to the proletariat, but offers a superlative experience to the fortunate few. By standing thus above the penny public, it becomes a natural target of their consternation.

In that sense, criticism of industry of any kind on the grounds of sustainability has become a general aspersion that denigrates the accused even when there is no supporting proof of the accusation. While luxury is low-impact by virtue of the small size of the market, it has a high level of prestige and visibility, making it an attractive market for "militant organizations" who wish to share in its spotlight.

How luxury and sustainable development ideals converge

Real luxury brands, which again are to be differentiated from fashion and premium brands that are often included in a broader notion of luxury, are inherently supportive of sustainable development, because the rules of the latter are subsumed by it.

(EN: My sense is that this list is a bit aggrandized, and describes luxury as it ought to be rather than such as it is - but even so, it seems worthwhile to encourage the achievement of these ideals rather than suggesting a practice be abandoned because it has not yet fully succeeded in every regard.)

There is a limit to which sustainability can be practiced within luxury. In a broad sense, sustainability is an ideal, but in practice, it is often boiled down to specific qualities that are comparative, which is a characteristic of the mass market. When a claim is made that a product has a "lower carbon imprint" than another, it is being treated as a mass-market product that is better or worse in specific regards than a close competitor.

A Broader Context for Sustainability

Sustainability is not limited to the fabrication and retail of the final consumer product, but is an issue to be considered through the entire process. Some examples to demonstrate the impact at each phase:

In each of these instances, there are examples of brands that serve as models to the rest of industry in terms of practices that minimize or mitigate environmental impact - and they tend to be in the luxury and premium markets, which have sufficient margin and pricing power to afford the additional expense.

Addressing environmental impact is not strictly necessary to producing and distributing goods, and brands that seek to provide cheap goods to market often cut corners to keep their prices low. But as the body of consumers becomes increasingly sensitive about environmental matters, the lesser ranks of products will find that accommodating these sentiments is less optional.

Silent sustainable development actions within luxury groups

The authors assert that "there is not a single serious luxury group that has not made sustainable development a key strategic concern." And further, they suggest that luxury groups take a genuine interest in sustainability, as differentiated from mass-market brands that buy image commercials, change the color of their packaging, and make token donations to environmental charities while leaving their processes and practices unchanged.

The allure of a luxury brand is fragile, and rests on reputation, prestige, and appeal - to be caught in an act of deception regarding their practices implies that the very essence of their product is also an act of deception. And because luxury depends on word of mouth rather than publicity campaigns, anything that endangers their reputation is a serious threat.

To devour something entirely, without regard to the broader consequences in the present and future, is vulgar gluttony. Hedonism is itself a sustainable practice: the desire to have pleasure on an ongoing basis, and over a length of time, requires some responsibility in consumption. The thought that the pleasure of a moment results in displeasure afterward diminishes the appeal of consumption to a hedonist.

From the producers' perspective, catering to gluttony is not a sustainable business practice. A firm that means to have longevity must have the ongoing capability to provide a product or service to consumers for generations. "The essence of luxury strategy is to never sacrifice long term to short term."

It's also noted that luxury brans pursue sustainability in a subtle and quiet manner, without a great deal of public fanfare. The authors offer a few reasons this should be so:

In that sense, there are sufficient reasons for a luxury product to maintain high standards of production and seek sustainable and environmentally responsible processes - the very least of which should be accommodating public opinion.

When is sustainable development no longer luxury?

Because sustainable development represents a dream (of a cleaner world) it has some appeal to luxury clients, but when in practice it becomes a matter of priority, to the detriment of pleasure or even satisfaction, it becomes a vulgar ritual. In essence, it becomes efficiency, to which the experience of the consumer is sacrificed for the sake of achieving production-oriented goals.

For example, a luxury hotel has the ability to modify its practices to be sustainable. The author gives the example of a Chilean resort where the resort is run on solar power, waste is sorted for recycling, materials and labor are drawn from local markets, and a portion of the proceeds is donated to local charities - but it remains a luxury hotel for the lavish appointment and attentive service provided to guests.

On the other extreme are eco-lodges that are primitively appointed, and where the guest experience is in the nature of an deprivation ordeal. This may constitute a break from ordinary life, and may support the philosophy of environmentalism, but they are not luxury experiences.

The same is true of products. The authors speak of one fashion designer who is very strict about eschewing the use of leather, and whose products are sold to the premium market because they failed to be accepted by luxury. Philosophical ideals aside, leather remains the noble material and substitutes such as plastic and vinyl are regarded as inferior, regardless of how the products are designed or whose name is on the label. There is no such thing as a luxury plastic bag.

The same holds for electric vehicles, which appeal to the intangible dream but whose functional attributes and driver experience is lacking. As such, they appeal to the conspicuous consumer that wishes to demonstrate to others their environmental consciousness, but who must sacrifice their own pleasure to maintain this facade. No luxury automotive brand presently offers an electric or hybrid car, nor will they until the quality of the product meets the standards of luxury - and when it does, it will be readily adopted.

"Conspicuous altruism" has an appeal that is very strong, but fails to qualify as luxury because it is superficial and disingenuous. The authors expect some objection, in that certain eco-friendly brands have high prices and are modeled by celebrities - but this is disregarded as celebrity appeal. The class of customer who looks to celebrities to determine what to buy is not particularly sophisticated, nor has very discerning tastes: they are simply mimics. To the luxury customer, the reputation of a brand is diminished rather than increased - there can be no more obvious signal that the brand lacks integrity and is based on a false appearance than for it to be used as a prop by an actor to create an impression on his audience.

Adopting the luxury strategy to foster sustainable development

Sustainable development faces two major issues, price and quality, both of which serve to undermine consumer acceptance. For the premium and luxury markets, the environmental dream may supersede functional concerns, but when a high price is paid for a disappointing product, the dream evaporates.

(EN: Consider the example of electric and hybrid vehicles. A buyer is extremely enthusiastic about owning their first one, but studies [Polk, 2011] indicate that they are traded in more quickly than gasoline-engine vehicles, and two-thirds of hybrid owners switch back to gas.)

For the manufacturers, price and quality are a difficult balance. Most sustainable alternatives to traditional materials require paying a higher price for lower quality, and sustainable practices in manufacturing require an inordinate expense that contributes nothing to the quality of the final product.

For the consumers, their interest in sustainable development remains superficial. When they respond to marketing surveys, they speak very highly of the notion and claim it to be highly influential in they purchasing decisions. Meanwhile their behavior in the market does nto at all reflect their ideals.

The price issue

The additional cost of a sustainable product can be addressed by regulation: where all manufacturers must meet a certain standard, as required by law, then even the cheapest manufacturer must increase their price to absorb the additional cost. For the very lowest tier of customer, the product may become entirely unaffordable - but for the majority of the market, the price remains affordable, and their perception of "high" price is based on the range of prices available.

To succeed, such laws must be enforced universally: if some manufacturers are compelled to comply while others are not, such as a law that affects domestic products but not imports, it merely increases the price of some and consumer preference turns to the others. As such, it's difficult to impose such regulations in free markets.

Industry agreements and practices can substitute for regulation, particularly when they are in the financial interest of producers, but can also have unintended consequences. Consider that, in the 1970s, environmentalists hectored bottle makers about the number of glass containers that were being thrown away, prompting glass recycling ad buy-back programs which were both very expensive. Consequently, plastic manufacturers stepped in with cheaper bottles (after the petroleum crisis of the 1970s had subsided) and as a result, the glass bottle industry virtually collapsed and the environmental issue remained, as consumers grew weary of hauling empty bottles back to the store and began tossing away plastic bottles with equal indifference to the landscape.

Ultimately, these solutions represent taking away the choice of the customer by either removing an option or making it so difficult as to be entirely undesirable.

For mass-market products, there is not sufficient margin and the price must increase. The best they can do is to be transparent in their pricing, to convince their consumers that their price is driven up by the need to meet environmental concerns. Even this is not satisfactory to customers: environmentalism delivers a collective benefit to society while the price of doing so is visited upon the individual customer, whose chief concern is the direct benefit received for the direct price imposed.

The behavior challenge

Consumer behavior is a much more serious and difficult challenge. In traditional marketing, vendors seek to satisfy customers by providing what the customers want - and where sustainable development is concerned, the vendor refuses to do so, but still expects the customer to purchase from them. Unfortunately, customers claim to want to purchase sustainable products, but do not follow through in practice, and as such firms are guided in the wrong direction.

One way that firms seek to overcome the problem is to convince the customer that there are direct benefits to themselves for consuming a sustainable product (e.g., organic food is more nutritious and healthier for the consumer, not merely good for the environment). Another way is to use public relations to attempt to swap public conscience to convince the public that the premium paid for sustainable products is in the nature of a donation to a charitable cause.

In France, the charity angle was played in the glass recycling industry, by an advertising campaign that claimed that the profit from recycling would be paid to a popular cancer charity, and the annual donation was made a media event.

A third appeal is social acceptability: it is easier to get people to recycle their trash when they see others doing so, and "doing their part" makes them part of an environmentally responsible society - or conversely, failing to do their part makes them socially irresponsible and carries the threat of being shunned by their neighbors.

This final appeal is most compatible with luxury, as the use of a luxury product conveys to the luxury-for-others consumer as a method of gaining entry to an elite and privileged segment of society. In that sense, conspicuous altruism contributes to the perception of the consumer, borrowing upon the qualities of the product.

The future

The misconception of luxury as ostentation and wastefulness creates the perception of disunion between luxury and sustainability, but the connection between them relies on the qualifications of rarity and craftsmanship, both of which make luxury compatible with sustainability.

The concepts of rarity and scarcity are not entirely incompatible: it is entirely conceivable that a garment can be made of a common and sustainable material such as cotton or hemp - it is the quality of the cloth, the skill of the designer, and the craftsmanship of the item that make it uncommon, even though the materials are not scarce. In the converse sense, a product made of rare materials is not qualified for luxury if the design and craftsmanship are unremarkable.

Luxury is also compatible with sustainability in terms of its longevity. Disposable products that are used and tossed aside are not luxury items, but instead luxury products are durable and reusable, kept for a lifetime and passed on to future generations - and this concern for the welfare for future generations is the essence of sustainability's appeal.

So long as the dream of sustainability, which is the harmonious integration of mankind into nature, does not require compromise on the qualities that cause a product to be regarded as luxury, then luxury goods can be sustainable.

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