The luxury industry is thriving and that shouldn’t change any time soon.
According to Bain & Company consulting firm and its Global Luxury Goods Market study published in 2022, the global luxury goods market saw a major leap forward in 2022, with a 13% progress at constant exchange rates compared to 2021. The growth benefited 95% of all luxury brands.
This growth is definitely driven by the strong demand of the APAC region as well as by the spread of e-commerce which should amount to as much as 30% of total luxury goods purchases by 2050.
The environmental toll of this success is undoubtedly significant. Besides, the luxury industry is subject to growing expectations and demands as to its environmental footprint. Decarbonizing has become a key concern for luxury Groups and companies. From product design to delivery to the final client, the industry players have been pioneering this issue and regularly showcase the numerous actions taken by the different Groups. Focused at first on the product’s ecodesign, these initiatives tend to be more and more directed towards the transportation of goods, a component slowly but finally becoming part of the core decarbonization strategies of the luxury industry players.
The environmental footprint of freight transport is far from neutral, with an estimated share of more than 10% of global greenhouse gas emissions (GHG emissions). Even worse and contrary to the fixed goal expressed by the French Agency for Ecological Transition (ADEME) of carbon neutrality in freight transport by 2050, this share is rising. The business-as-usual scenario forecasted by the International Transport Forum plans a 22% growth of emissions by the same year if current circumstances remain unchanged.
Given the luxury industry’s growth perspectives and the main role played by air freight transport in most of its flows (air transport being the largest emitter of GHGs of all modes of transport, although a particularly suitable solution to the needs of safety and timeliness inherent to this industry), the growing focus of the luxury industry’s companies about transport greening comes as no surprise. Transport unquestionably makes up for a large part of their emissions.
Let’s be clear here: modal shift to maritime or rail transport when possible seems to be (along with relocation) the only solution with a real impact on the actual decarbonization of the industry.
Therefore, transport decarbonization seems to be a prerequisite for luxury players. As coined by François-Henri Pinault, CEO of Kering Group, “Sustainability marks a fundamental break that will reshuffle all the industry’s cards. Current companies’ leading status of tomorrow will be determined by their understanding of this break today”.
In their efforts to comprehend this shift as best as possible, the transport teams of the industry’s Groups and Houses must act carefully and methodically to build and drive coherent and ambitious roadmaps, starting necessarily with a representative view of their baseline situation.
When it comes to the decarbonization of freight transport, everything starts with a reliable calculation, representative of GHG emissions issued by each shipment. This approach applies to every type of shipment, transport mode, type of energy used, or global destination… The calculation’s reliability depends mainly on the quality of the data input.
The key aspect here is to ensure one’s capacity to provide an efficient and high-performing management of this approach on a long-term basis, which implies:
Therefore, it appears critical to have available a clear state of play showing the level of gas emissions issued by each House during a given time. This finding will help to provide an initial assessment of the different sources of gas emissions making up the largest share of the carbon balance, which will be used to build a roadmap both realistic and truly representative of the transport activity of a Group.
In addition to the general relevance of this approach, the real benefits of a reliable calculation show in different ways and are not limited to the following:
Capitalizing on reliable and understandable conclusions gives the ability to share a common vision between all Houses of a Group and have a clear picture of each player’s involvement in the evolution of GHG emissions.
Calculating greenhouse gas emissions also allows to put in perspective all organizations to identify common ground between Houses and allows for the implementation of a shared pool of transport flows. It can also help to highlight similar constraints shared by different players part of the same Group (such as delivery time, shipped goods’ worth, the importance of packaging and customer experience…).
It also provides luxury players with tangible and undeniable data during negotiations with transport service providers and can offer the insurance of tight control of their service, which can be improved by capitalizing on reliable information on their activity.
Lastly, this approach ensures a concrete and relevant information base that can be used to feed a transparent communication strategy, meeting the expectations of all external stakeholders such as clients, organizations, associations, or certification bodies.
When it comes to these stakeholders, it goes without saying that transparency and truthfulness are prerequisites, the absence of which presenting a risk of potential media backlash. The biggest risk for all organizations is to get accused of greenwashing. In its Greenwashing Research Report published in January 2023, Sensu consulting firm points out that 89% of the general public express care for companies’ and brands’ environmental positioning. 86% of them actually call for more transparency on environmental topics.
As explained earlier, all this approach comes down to data: but freight transport professionals will agree that their industry lacks maturity when it comes to data, and its reputation as a “black box” is unfortunately still strong, even though some changes are currently taking place.
It must be said though that it is an arduous job. To capitalize on a truthful and reliable calculation of the GHG emissions issued by their transport activity, the project teams must collect, process, standardize, and consolidate a large volume of data spread across multiple sources and of mixed nature depending on each transport company, place of dispatch or warehouse.
To add to the challenge, the Luxury industry has many specificities, such as the global dimensions of the major Groups, themselves divided into Houses with their own processing of transport data, using their own tools and methods…
All this complexity makes up for a mix of assorted methodologies with mismatched maturity levels, all developed internally by the players and supported by mostly unsuitable tools (such as Excel, which we should ban from viewing as a transport control tool ever again!).
The main problem faced by a Group committing to an ambitious roadmap with concrete and quantified targets is the necessity of a well-defined approach, commonly shared by all its internal Houses that need to align and act collectively.
In addition to the general relevance of this approach, the real benefits of a reliable calculation show in different ways and are not limited to the following:
Capitalizing on reliable and understandable conclusions gives the ability to share a common vision between all Houses of a Group and have a clear picture of each player’s involvement in the evolution of GHG emissions.
Calculating greenhouse gas emissions also allows to put in perspective all organizations to identify common ground between Houses and allows for the implementation of a shared pool of transport flows. It can also help to highlight similar constraints shared by different players part of the same Group (such as delivery time, shipped goods’ worth, the importance of packaging and customer experience…).
It also provides luxury players with tangible and undeniable data during negotiations with transport service providers and can offer the insurance of tight control of their service, which can be improved by capitalizing on reliable information on their activity.
Lastly, this approach ensures a concrete and relevant information base that can be used to feed a transparent communication strategy, meeting the expectations of all external stakeholders such as clients, organizations, associations, or certification bodies.
When it comes to these stakeholders, it goes without saying that transparency and truthfulness are prerequisites, the absence of which presenting a risk of potential media backlash. The biggest risk for all organizations is to get accused of greenwashing. In its Greenwashing Research Report published in January 2023, Sensu consulting firm points out that 89% of the general public express care for companies’ and brands’ environmental positioning. 86% of them actually call for more transparency on environmental topics.
As explained earlier, all this approach comes down to data: but freight transport professionals will agree that their industry lacks maturity when it comes to data, and its reputation as a “black box” is unfortunately still strong, even though some changes are currently taking place.
It must be said though that it is an arduous job. To capitalize on a truthful and reliable calculation of the GHG emissions issued by their transport activity, the project teams must collect, process, standardize, and consolidate a large volume of data spread across multiple sources and of mixed nature depending on each transport company, place of dispatch or warehouse.
To add to the challenge, the Luxury industry has many specificities, such as the global dimensions of the major Groups, themselves divided into Houses with their own processing of transport data, using their own tools and methods…
All this complexity makes up for a mix of assorted methodologies with mismatched maturity levels, all developed internally by the players and supported by mostly unsuitable tools (such as Excel, which we should ban from viewing as a transport control tool ever again!).
The main problem faced by a Group committing to an ambitious roadmap with concrete and quantified targets is the necessity of a well-defined approach, commonly shared by all its internal Houses that need to align and act collectively.
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