The INSEAD Retail, Consumer and Luxury Goods Club (RCLG), in collaboration with the Hoffmann Global Institute for Business and Society and Accenture Strategy, hosted the INSEAD Luxury Summit 2023. In one day of intense discussions, this Europe Campus event explored trends, challenges and transformative forces shaping the global luxury industry, with a focus on the pivotal shift toward sustainability. The Summit brought together passionate professionals, industry experts and enthusiastic students to discuss the future of fashion.
Over and over, one theme emerged. The future of fashion is sustainable. The world of luxury fashion currently stands at a pivotal crossroads where extravagance meets responsibility. The INSEAD Luxury Summit 2023 put a spotlight on this paradigm shift and revealed three key insights into how the industry is redefining itself in pursuit of a greener, more sustainable tomorrow.
The Challenge of Financing Sustainability
Our world is deeply rooted in capitalism. Growth often means ramping up production, which can put immense strain on natural resources. This came into sharp focus during the panel discussion on "Sustainable Luxury I: Financing and Scaling the Transition”, which explored how luxury fashion can thrive while minimizing environmental impact. The answer lies in new and innovative business models.
The challenge at hand is monumental – the industry needs to internalize externalities. Such a shift requires a transition from a short-term, profit-centric mindset focused on quarterly results to a broad, long-term perspective. Whether you are a corporate giant or a small enterprise, this transformation is not easy.
The key lies in shifting away from a narrow focus on shareholder value and adopting a more comprehensive perspective that considers the interest of all stakeholders. However, this is just one facet of the equation. A looming horizon presents a multitude of impending legislative changes. More than fifteen regulations will soon significantly impact the European Union's apparel industry.
Embracing sustainability isn't just about environmental responsibility. It's also a strategic move to secure firm financial standing in an evolving landscape.
In the world of sustainable luxury, consumers have emerged as a driving force for change. The panel discussion on "Sustainable Luxury II: New Business Models at the Heart of Sustainable Innovation," underscored the power of consumer demand to shape the industry. INSEAD alumna Sofia Gazzotti (20’J), VP Brand Partnerships at Reflaunt, emphasized that consumers are revolutionizing the fashion industry from the ground up. Their choices, including openness to second-hand items, serve as the catalysts for transformative change.
"What is new to you?" This thought-provoking question by Jade McSorley, Co-Founder and Chief Community Officer at Loanhood prompted a discussion on the strategies propelling the sustainability transformation. Circularity is key to reshaping consumer behavior. The goal is to make it effortless for consumers to adopt a ‘second-hand’ mindset and move away from a disposable approach to fashion purchases.
Changing consumer mindset is only part of the equation. It's crucial to educate and engage brands in this transformative journey. Brands, retailers, and e-commerce platforms must gain a comprehensive understanding of the bottom-line benefits of sustainability. Sustainability is more than a checkbox for clients, it represents a fundamental shift in approach that can deliver benefits. To seize this opportunity, brands must lead changes in the luxury industry.
While consumers are setting the course in the sustainability transition, brands must move down that path to a more environmentally responsible future.
Collaborative Action for Sustainability
The path to sustainability in the luxury sector requires collaborative action. Federica Bertolani, Sustainability Director at Nanushka underscored this fact, saying that “sustainability is a challenge that cannot be confronted in isolation”. Sharing information and best practices is a pivotal step toward a greener future.
Larger luxury brands often have better visibility of their supply chains, which can be tightly linked to raw materials. Smaller and mid-sized brands may lack visibility and clout when demanding necessary data, despite constituting a significant portion of the industry. Collaboration is imperative because it allows brands of all sizes to move together.
This theme resonated consistently throughout the event, underscoring the collective responsibility of all stakeholders in driving meaningful change. From consolidating resources for innovative solutions to cooperating to advance sustainable practices, the luxury industry is waking up to the power of partnerships.
Consumers are undeniably driving change but cannot be expected to bear all the responsibility. Dana Thomas, author of Fashionopolis, aptly pointed out that consumers play a vital role in pressuring brands to transform. "Buy less, buy better." This consumer movement signifies a collective effort to encourage companies to provide more sustainable options. This collaborative endeavour is profoundly reshaping the industry's priorities.
As the landscape of sustainability continues to evolve, industry-wide collaboration remains a cornerstone of progress. Brands, investors, consumers and legislators must now come together to envision and actively work towards a future where luxury and sustainability seamlessly coexist. This is a future where fashion is a force for good.
The RCLG Club and organizing partners would like to thank our 200+ attendees, 20+ expert speakers and everyone who helped make this year’s Summit a success. This blog was drafted by Shoba Suresh (MBA 23’J), Lara Gruering (MBA 23’J) and Joohae Park (MBA 23’D)