Labels drive the luxury industry. But are more tactical labels such as carbon footprint labels of any consequence to the luxury goods industry. Let’s first take a look at what such labels mean and what their contribution is in the consumer goods industry.
Carbon footprint labels basically indicate the quantity of carbon dioxide emissions associated with the production and transportation of a product, mainly food products and initially was designed to move customers to more local products and reduce the environmental impact of transporting essential goods across the globe with a view on reducing costs. Standards for carbon printing are defined by various agencies like France’s AFNOR and Britain’s PAS 2050, though it is the latter that is gaining prominence. PAS 2050 requires that carbon footprint to be tracked not only in its production and manufacture but also in its use. This definition has posed problems for manufacturer’s who will now have to estimate the “use phase” emissions for a product such as a shampoo which will depend on other things, the consumer’s bathroom fixtures (boiler) and how long he takes to have a bath!
From a consumer point of view carbon labels as expected have had limited success – fewer than 20% of British consumers recognized a carbon label, leave alone change their buying behavior because of it. The benefits from carbon labeling come not from the “sell” side but curiously from the “buy” side of the supply chain. Manufacturers need to investigate their supply chain and buying process (and suppliers J) to get their carbon footprint. This investigation provides ample scope for improvement as shown by this company manufacturing potato crisps. Walkers bought its raw material from potato farmers and paid for it by gross weight. Farmers in a bid to increase the value of their potato’s stored them in special humidifiers to increase their gross weight. Walkers also ended up having to fry them for a longer period of time to drive out the moisture and get a perfect crispy crisp! The unusually high carbon footprint sent supply managers on an investigative path which ultimately resulted in Walkers procuring its potatos in dry weight. This was a win-win situation since the farmers saved on the costs of humidifiers and Walkers on the extra costs of procurement and frying them for longer times. An added benefit was a reduction in carbon footprint by 7%
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| Carbon footprint averages for Timberland footwear |
This very same investigative nature of mapping the carbon footprint will help the luxury goods industry reduce costs or in some cases justify them. Location has always been one of the major contributors to a luxury goods brand value (more of this in another post). By having a carbon footprint show your leather was sourced and finished locally rather than halfway across the world will provide additional brand value to your designer bag or shoes. For an interesting article on Timberlands quest to map the carbon footprint of its shoes and the contribution of leather from its Chinese suppliers, please see link to Wall Street Journal http://online.wsj.com/article/SB122304950601802565.html
Food sourced from specific areas also add value – beluga caviar, kobe beef etc. Who know what might be uncovered when a carbon footprint is being mapped out for high fashion Marchesa gown or a Phantom Rolls Royce. Though currently the costs of mapping the carbon footprint for a single product at around $30,000 is very high for industrialized consumer products, its not a high proportion of the product costs for most luxury goods with their smaller product portfolios. Therein lies the opportunity for luxury goods industry to explore their carbon footprint and benefit from improving their supply chains. Besides labels such as “conflict free” diamonds and “fair trade” coffee has helped the industry and this is one way of the luxury industry doing its bit for the environment (and adding a larger bit to its bottomline!)
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