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LVMH Gets Competitive About Sustainability

In a high-octane gathering of senior executives, the French luxury conglomerate mixed updates on its environmental progress with thinly veiled criticisms of its rivals.
A model walks a forested runway for Dior | Source Peter White/Getty Images
By
  • Sarah Kent,
  • Laure Guilbault
BoF PROFESSIONAL

PARIS, France — The parent of Louis Vuitton, Dior and other luxury brands doesn't think much of how the rest of the industry is tackling fashion's climate problems.

"We prefer acts to pacts," LVMH Moët Hennessy Louis Vuitton executive and board member Antoine Arnault said at the opening of an event the conglomerate hosted in Paris to outline its environmental agenda.

The remark was a reference to a sustainability agreement signed by more than 30 brands and presented to world leaders last month by François-Henri Pinault, chief executive of Kering, LVMH's main rival in the luxury space. LVMH was not among the signatories, and Arnault dismissed the initiative as a "textile pact" on Wednesday.

Kering, which owns Gucci and Saint Laurent among other brands, has been particularly vocal on sustainability issues. Earlier this week it announced plans to go completely carbon neutral. The company declined to comment on LVMH's remarks.

LVMH has come under fire in the past for lagging behind its rivals on climate action, though it has had an environmental program in place for decades. In addition to fashion, the company makes wine, sells spirits and dominates perfume, skincare and cosmetics markets, adding an extra layer of complexity to the environmental challenges it faces.

The conglomerate says that’s a key reason it has eschewed many industry-wide sustainability initiatives, including the fashion pact spearheaded by Pinault at the request of French President Emmanuel Macron. That initiative aims to mitigate fashion’s impact on the climate, biodiversity and oceans, though exactly how that will be achieved is still a work in progress.

We prefer acts to pacts.

Such efforts are getting underway as consumers and regulators are becoming more aware of the industry’s negative impact, making it increasingly important for fashion companies to show that they are taking a leading and active role on climate. The sector slurps water for raw material production and manufacturing, spews pollution into the atmosphere and churns toxic chemicals into waterways. There’s growing pressure to change.

On Monday, 16-year-old Swedish activist Greta Thunberg condemned world leaders for their lack of action on climate in an emotional speech at the United Nations. Her words reflect the views of millions of young people — fashion’s future consumers.

"She is indulging in an absolute catastrophism about the evolution of the world," LVMH Chief Executive Bernard Arnault said of the young climate activist. "I find it demoralising." Instead, Arnault told the company's Paris gathering of around 300 members of the press, senior executives and employees that he wanted to focus on solutions that could enable economic growth while tackling the challenges of global warming.

LVMH’s own actions were the focus of the three-hour-long conference on Wednesday. The company is nearing the deadline for targets it set to reduce its impact by the end of the decade.

LVMH said it is on track to meet or exceed its 2020 goals to procure 30 percent of its energy from renewable sources and reduce carbon dioxide emissions by 25 percent across its own operations, despite sales growth. Companies are increasingly facing pressure to include their supply chains in these targets, as this is where the vast majority of fashion’s impact takes place. It is aiming to reduce the overall environmental impact of its packaging by 10 percent — an important part of the footprint for a company with large cosmetics and perfume holdings. Elsewhere it is set to hit goals to improve its sourcing of precious stones, leather and animal furs.

We will have ambitious objectives after 2020.

"You have to keep in mind, this was the ambition we set in 2013," the head of LVMH's environmental department Sylvie Bénard told The Business of Fashion. The company will set new goals after next year once it has all the results of the current program. "We will have ambitious objectives after 2020," Bénard said.

The company already teased new initiatives, including updated guidelines on how to source animal-based raw materials like fur, leather, exotic skins, wool and feathers, providing aid to fight fires in the Amazon and collaborating with the Solar Impulse Foundation to develop new technologies that can combat environmental issues.

The company noted that it has doubled the amount it contributes to its internal carbon fund — a pot of money used to finance efforts to bring down operational carbon emissions — to €30 ($33) per ton of carbon, and is focused on reducing rather than offsetting its footprint. The fund is currently valued at nearly €12 million ($13 million).

Kering already has standards in place for sourcing and manufacturing raw materials. It’s working to reduce emissions across its entire supply chain 50 percent by 2025, and reduce its broader environmental impact by 40 percent. It’s expected to spend millions of dollars on its new offsetting program to achieve carbon neutrality, which is intended as an additional stop-gap measure to mitigate the emissions the company can’t currently avoid.

“They are talking about objectives and initiatives, we talk about our results,” the head of LVMH’s environmental department Bénard said.

They are talking about objectives and initiatives, we talk about our results.

Still, LVMH looks cautious compared to some of its peers, many of which already have similar initiatives in place or have gone further with more ambitious targets. Across the sector, new environmental initiatives have been released at a dizzying rate over the last 12 months. A suite of companies have pledged to reduce the industry’s emissions by 30 percent over the next decade as part of UN charter for climate action within fashion. LVMH is not a signatory.

Perhaps the biggest leap LVMH has taken into embracing sustainable fashion came in July, when the company took a minority stake in Stella McCartney's brand, a little over a year after the label split from Kering. The sustainable and ethical luxury brand has been at the forefront of the growing conversation amongst consumers and regulators around responsible fashion.

Other LVMH brands are also becoming more vocal on the subject. Dior used its Paris catwalk show this week as a platform to highlight climate issues.

McCartney has also been brought on as an advisor to LVMH Chief Executive Bernard Arnault and the group's executive committee.

"I am a firm believer that you have to infiltrate from within," she told Wednesday's gathering when asked why she took on the advisory position. “For me, it's an opportunity to work with the leaders in your business and make great change."

Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.

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