Inside LVMH’s biggest sustainability plan yetInside LVMH’s biggest sustainability plan yet

Life 360, introduced last year, is ambitious enough that it could shift the luxury conglomerate’s position on sustainability from lagging to leading. Will it work?

By guest author  Rachel Cernansky from Vogue Business

LVMH, the world’s biggest luxury company, has been slower than the rest of the industry to embrace sustainability. One year into implementing a new plan to overhaul its supply chain, the company’s position is changing: it now has potential to become a leader on sustainability in fashion.

It took until last November for LVMH, which owns luxury brands Louis Vuitton, Dior, Celine, Givenchy and Tiffany among others, to join the UN Fashion Charter; and it only released its first comprehensive social and environmental report, including a new sustainability plan, called Life 360, in May 2021. By that point, many other companies, from H&M and Inditex to LVMH’s main competitor and Gucci-owner Kering, had released major sustainability initiatives and filled out their sustainability teams internally.

Life 360 could make up for lost time. By recognising the need to slow volume growth and focusing on actions rather than claims of progress, Life 360 embodies a holistic approach to sustainability, across LVMH brands and the full supply chain. It also lays out a plan to address the company’s total impact, as opposed to just at product-level. Both are often missing from fashion’s approach to sustainability.

In an interview with Vogue Business, group environment development deputy director Alexandre Capelli shed light on how some of these efforts are starting to take shape. The group is looking at ways to utilise waste from its champagne business and repurpose it to replace harmful substances in the fashion supply chain, and has a goal for 25 per cent of profits to be generated by circular services — instead of new products — by 2030. LVMH is embracing regenerative agriculture, a growing focus for the industry broadly, and Capelli says they’re taking the concept beyond farming to include a product’s full lifecycle, from product design to end-of-life: “Regenerative design means regenerative materials, regenerative processes — and it’s not easy to define, or even to find regenerative processes for each material — and also circular design. If you have all of that, then maybe we can start to talk about regenerative design,” he says.

 

The plan would bring LVMH up to speed with some of its rivals. Kering has “reimagined” its brands to become more sustainable and inclusive, according to Edited market analyst Kayla Marci, through various initiatives and by overhauling materials, “including phasing out fur across all labels, something LVMH have not yet done”. With the comprehensive Life 360 plan, LVMH has a chance to lead, rather than follow, as sustainability becomes an increasingly competitive advantage for luxury companies.

It’s ambitious, requires fundamental shifts in business strategy and will demand significant heavy lifting from LVMH, Capelli recognises. “I don’t say we are there. It’s really the beginning, and it will be a journey,” he says. For all its ambition, LVMH also leaves some of its existing practices firmly in place, including ones that many sustainability advocates have drawn lines in the sand over, such as the continued use of exotic skins and fur — which leaves room for doubt as to just how seriously LVMH is about its overhaul.

“Overall, goals are a great starting point, but what consumers demand is transparency and accountability,” says Robyn Smith, Edited retail analyst. “If LVMH can publicly deliver regular updates on goal progress and take ownership of its setbacks, the group will then earn consumer trust.”

Unpacking Life 360

Life 360’s goals range from new circular services to habitat restoration and preservation, and it includes a number of priorities that are starting, experts hope, to become table stakes for the larger industry, such as ambitious climate targets and investing in regenerative agriculture.

Capelli says LVMH is experimenting with new material innovations and dye technologies, and plans to soon showcase some “first experimentation” with Colorifix, a startup that uses synthetic biology to replace industrial chemical dyes with nature-friendly alternatives. Much of the other work that LVMH is doing is internal, he explains. The company plans to share sustainability details with consumers at the product level eventually; that will be a slow rollout, with a goal to share some level of information for all products by 2026 and for all products to be “regeneratively designed” by 2030.

By 2030, LVMH aims for 25 % of profits to come from circular services. This is at the group level, meaning fashion brands could take on a majority of the work to achieve it, or none at all. Capelli points to Nona Source, the company’s platform for deadstock materials, launched last year, as one example of the kind of work that could grow within the circular services category; repair is another.

“Maisons such as Louis Vuitton, Berluti and Loewe propose a host of repair services to ensure long lifetimes for their products. We will expand this to other brands, as we believe this is the future of luxury, a way to prolong the life and durability of our products,” he says. “Sophisticated repair services, upcycling, reuse of precious raw materials, and efforts to find alternative materials all feed into the Group’s circular economy strategy. By 2030, all new LVMH products will result from eco-design.”

Upcycling of previous collections is another option, he says, pointing to the LV trainer revisited by the late designer Virgil Abloh, which was made by disassembling an older version of the shoe.

Some commitments will be harder to reach than others. LVMH’s goal to source natural materials from regeneratively-farmed sources will be a stretch, Capelli recognises, given how much leather it buys — it is the largest buyer in the luxury world — and how steep the climb is from conventional leather to a regenerative supply chain.

Company-wide change

Cultivating a shift in mindset and company culture within individual brands, so that all teams understand and are aligned to work towards the same goals, can be a challenge for even the most sustainable-centric brands, and Capelli says that isn’t lost on LVMH.

To ensure continuous and holistic progress, the group has begun to require each maison to report on its environmental strategy as part of the business plan that it has long been required to submit every year.

“At the beginning it was mainly a business plan, but now they also have to integrate how they’re going to achieve the Life 360 target,” he says.

Should customers be sceptical because of LVMH’s past silence on the environment? Maximiliano Nicolelli, managing partner and founder of Milan-based Hydra Consultancy — of which LVMH is a client — says its communication style should not be confused with its internal strategy. While Life 360 is bold, the company is up to the task, in his view. “It’s definitely ambitious, but I would say LVMH is also very transparent. I think it is doable. It implies an internal transformation, but it’s also very well-organised internally,” he says.

 

That organisation could become more visible as cross-brand collaboration grows within the group, something that Capelli says is underway.

“We have this chance at LVMH to have many brands be [involved] in many different activities. So, the idea is really to find synergies and to see how we can close the loop between different maisons,” he says. “It’s a really exciting playground.”

Regenerative at (almost) every step

Certain aspects of LVMH’s business have still gone relatively untouched, including areas where campaigners and investors want to see major change. While much of fashion is moving away from the use of fur, and showing an interest in finding replacements for animal agriculture in general, for example, LVMH has stayed committed to both fur and exotic skins. (Rival Kering announced a fur-free policy across all brands last September.)

Capelli acknowledges this could symbolise a gap in the company’s vision for a regenerative supply chain, but says its efforts elsewhere are what matter most. “Maybe they will never be regenerative. Okay, fine, fair enough. But, we have a very responsible supply chain,” he says. LVMH is focusing on “the vast majority of the rest of our product,” he adds, because that’s where the bulk of its impact is generated.

It’s also unclear what penalties the group or its brands will face if it doesn’t meet the goals. As the company reports unprecedented growth rates, critics have also questioned its commitment to the planet over profit, with doubts about whether it can successfully reduce its total carbon footprint.

For Nicolelli, though, luxury‘s strong performance in 2022 — despite global economic turmoil, the war in Ukraine and even as the biggest players have all raised prices — is a sign of encouragement that companies may actually be able to tackle the issue of overproduction. “With an increased demand and limited supply, brands might be looking at reducing supply of products but increasing prices — and by doing that, securing the revenues they have and potentially additional growth, by producing less,” he says. “Luxury could move in that direction.”

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