The Luxury Consumer, Sustainability and Social Responsibility:
It’s Complicated

Luxury has a terrible reputation.

It starts with the word: The etymology of the word remains rooted in the notion of excess.

And excess does reign — from the air miles involved in the annual cycle of fashion “weeks” (perhaps permanently disrupted by COVID) to the world of yachts and eye-popping shopping excursions carried on in private, on Instagram, or in shows such as “The Real Housewives” or "Bling Empire.”

But in recent years, luxury companies — led by fashion houses and brands — have upped their game on many matters ESG; in some cases, because of a sense of internal purpose, as a result of activism, or as a result of the numerous surveys that point to the luxury consumer as caring about luxury. Gucci is noted for its activism and the relative transparency on supply chains. Stella McCartney is a long-time campaigner for ethical fashion, eschewing leather and pioneering new biomaterials such as Mylo, made from mycelium. And luxury holding companies such as Kering (Gucci’s parent company) and LVMH have both developed sustainability strategies for a cornucopia of initiatives including greenhouse emissions and supply chain tracing; as well as commitments to biodiversity, animal welfare, and of course, workers’ rights. 

The changing luxury consumer

Despite (or because of) the reputation for profligacy, research has shown that luxury consumption does indeed create a sense of guilt among luxury consumers. And on the more positive side, numerous surveys from firms such as Bain and Boston Consulting Group have indicated that luxury consumers care about sustainability, purpose, and impact. In fact, many have already demonstrated commitment to doing good through philanthropy.

In addition, like the rest of us, the long pandemic lockdowns gave many luxury consumers more opportunity to reassess their values. Social issues such as Black Lives Matter exploded. The environmental causes of the pandemic were endlessly discussed. The risks of climate change were made ever more evident with wildfires in the West. And people — luxury consumers included — swarmed to outdoor recreation areas and activities and fell in love with nature.

In response, prayer trended and people searched for purpose. And during the pandemic, philanthropy among the Ultra High Net Worth accelerated (when compared to recessions, for example). Sarah Willersdorf, global head of luxury at Boston Consulting Group, said: “COVID was the first time that a lot of people realized that their individual actions have societal consequences.”

Much of the pandemic response merely continued consumers’ search for meaning and happiness that was trending pre-pandemic. In particular, social psychologists have long widely believed that having a sense of purpose and broader service is one of the foundations of happiness. Amplified by the pandemic, we see this trend continuing long into the future. 

Gaining additional insight through social listening

It’s one thing to answer that one values sustainability and social responsibility when prompted in a survey. It’s another to actively engage with it. As a company that tracks the Modern Luxury Consumer, we set out to discover whether luxury consumers did so in the only way you can without resorting to surveys or extensive ethnographic studies: social listening. We listened across multiple sectors, ranging from travel to fashion to home and lifestyle.

Social listening is an evolving way of gaining customer insight, often used in conjunction with traditional surveys. Even the most unbiased surveys tend to prompt respondents into giving an opinion, while social listening is a far more organic tool — which merely “listens” for insights gathered from the millions of breadcrumbs consumers scatter across the web detailing their experiences, viewpoints and personal perspectives. While considered “alternative data,” it is a vast dataset, expanding exponentially, and often overlooked or underutilized. 

Our “listening” partner, social listening expert Metric Centric, used a process that combines data and human analytics: It “crawls” the open web (not just social channels), then combines that information with industry research and audience data. Analysts filter massive amounts of data to pull out the key insights and review sentiment, comments, issues, problems and ideas “heard” for contextual meaning. The analysts then develop scorecard summary analyses of trends and key findings that allow business managers to fully understand audience segments, influencers and public opinion.

What luxury consumers talk about

We wanted to understand the extent to which values — in particular, sustainability and social responsibility — played a role in consumers' conversations about luxury purchases.

In a nutshell, we discovered that despite survey claims that sustainability and social purpose were important to them, Modern Luxury Consumers rarely mentioned it in the context of shopping decisions. In fact, they rarely mentioned it at all.

Given that kind of finding, it might be tempting to conclude that luxury consumers only say they care about sustainability and social responsibility when prompted, but that’s not the whole story. 

Modern Luxury consumers did engage intensively but ONLY when prompted to do so via news reports, etc. Organic online commentary around the topic was low, but discussions increased when brands themselves or — much more likely — industry media highlighted CSR efforts. 

It appears that more of the conversation is sparked by business press than by consumer press, with much of the conversation being had by executives, journalists and marketers.

Sustainability was a big driver in positive conversations around luxury brands, indicating that it does have a significant effect on brand reputation.

Social responsibility and sustainability had distinctly different profiles: sustainability is “safer” than “social responsibility.” Unsurprisingly (and consistent with the survey findings), Millennial and Gen Z luxury consumers were more engaged, particularly when it came to social responsibility. “Sustainability” resonated relatively more strongly with older luxury consumers. 

Social equity-related issues (BLM, the election) created conversational intensity. They drove a much higher volume of comments (300 percent) than sustainability issues, indicating a higher connection to “human” issues than “environmental” issues (though of course, these two are highly intertwined). Unsurprisingly, social equity issues were highly polarizing and resonated significantly more positively with younger consumers (Gen Z, Millennials) than older ones. 

Traditional and business news sources such as Business of Fashion, Vogue Runway, Luxury Daily, and NYT Style (amplified by social) drove conversation around sustainability; while social media was the native platform for conversation about social issues. 

Why is this?

On one hand, consumers say (in surveys) they want to engage with sustainable, purpose-driven brands. Pandemic and post-pandemic behavior do indicate an increased sense of purpose (or search there for) on the part of consumers. But they don’t necessarily share those views with their networks and don’t engage with those issues, unless prompted.  

So, what gives — particularly when it comes to values? Is it just that surveyed consumers believe they should say that they care — when in fact, it’s not top of mind, in most cases? We believe that’s partially — but not universally — true. There are several other reasons:

• Brand silence. Many luxury brands include sustainability and social responsibility as part of their mission and operating ethos, but don’t do more to elucidate or engage consumers. This is because luxury — with its aura of excess — has been reticent to talk to consumers about the broader CSR issues, concerned (quite rightfully) about attracting charges of “greenwashing.” 

• Sustainability has become table-stakes. Luxury consumers could already believe that their favorite brands are doing the right thing when it comes to the environment, even if those brands don’t talk about it.

• Sustainability is too confusing for most consumers. Sustainability isn’t just hard to talk about — it’s hard to understand. There are so many competing standards and accreditation platforms, there are so many nuances and tradeoffs (e.g. Is carbon reduction “better” than carbon offsets? Is using recycled water in production better than recycling?) — the answer to which is often: It depends. Consumers — even more educated ones — who have a hard enough time deciding between steel gray and graphite don’t have the patience to go through reports and analyses of environmental statements. And if they don’t have the patience, they won’t know what to say to each other about it on social media. 

• Sustainability has been joined — or even usurped — by social justice. Younger consumers expect their brands to be much more “woke” — looking to them to be a part of, and even lead social change. This is part of a long-standing trend of Millennial and Gen Z consumers embracing ethics and values as a key part of brand and purchase decisions.

For older generations, unused to seeing corporations take political stands, negativity is understandable.  

But the trend is clear: CEOs have taken note of the desires of their future markets. After an uncomfortable time for many in the wake of Black Lives Matter, CEOs from a wide range of industries are joining together to support voter rights and access in response to consumers, employees, shareholders and activists.

What are the implications for luxury brands?

Whether it’s sustainability or social activism, luxury brands will have to contend with issues related to corporate social responsibility: It’s in the zeitgeist, and much more. However, there is no “one size fits all” strategy for doing so. Instead, here are five principles on which to base positioning and customer engagement strategy. 

1. First, do no harm. Avoid greenwashing, avoid virtue signaling. Tell the truth. Walk the walk before you talk the talk. And remember, it’s never the truth that does a company in, it’s the cover-up. 

2. Understand your brand and its purpose. Every brand has a purpose — a reason and a way of being. Understand yours, and understand what it means in the context of sustainability and social responsibility. Starting with your brand purpose ensures that it is and feels true to your brand. 

3. Identify your social archetype — where you position your brand affects what you do, how you engage and engage with your customers, and how you will stand out from the competition: each presents significant opportunities and potential pitfalls. At Collective Work, we have found that there are four primary archetypes: 

   a. The Activist: Examples: Patagonia, Ben and Jerry’s

   b. The Educator: Examples: Stella McCartney, Six Senses

   c. The Social Business: Examples: The Real Real, Yerdle, Warby Parker

   d. The Operator: Examples: Kering, IHG, Estee Lauder Companies

4. Know what resonates with your customers — but don’t pander. There’s nothing worse than brands that chase every social cause: they dilute their purpose and voice and risk turning off customers. Pick the causes — particularly when it comes to social justice and responsibility — where you can make an impact, and find thoughtful ways to create change — not just talk about it.

5. Understand the model of influence — and act accordingly. The Collective Work x Metric Centric social listening project shows that sustainability and social responsibility each has a distinctive model of influence — what moves the needle in terms of opinion, where that influence takes place, and even the kind of content necessary for it. Create roadmaps and plans based on those models, and keep listening as the world of corporate social responsibility evolves. 

Purpose, values, sustainability and social responsibility are here to stay as modern luxury consumers consider their choices. For some consumers, these factors will alleviate guilt and make them feel better about their purchases: They won’t drive purchases, but they could well alleviate guilt — and create greater brand affinity.

For others — particularly younger luxury consumers — these factors are all important. In fact, enrolling customers in social and environmental causes could even create greater brand loyalty — helping the customer transform themselves into better citizens.

“Being your best self” is the essence of luxury. Values and purpose — whatever form they take — are thus luxury essentials, not just nice-to-haves.

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Regina Connell

Regina Connell is the founder of Collective Work, a research consultancy specializing in the Modern Luxury Consumer and ecosystem that surrounds them.

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Published Apr 23, 2021 2pm EDT / 11am PDT / 7pm BST / 8pm CEST