Global law firm Baker McKenzie and sustainability enthusiast Positive Luxury have announced the latest edition of their environmental, social and governance (ESG) guide, The Future of Sustainability Legislation for Luxury.
With a new government entering the Oval Office, a new government in the UK, and the ongoing transition to a new European Commission in the European Union, this report highlights the key ESG changes expected to unfold. They said it would provide a “timely overview” of the For the next few years.
“Upcoming global ESG regulations will be a catalyst for change in the luxury goods industry,” said Amy Nelson Bennett, CEO of Positive Luxury. “Luxury brands should see these not just as compliance hurdles, but as opportunities to move forward by embedding sustainability into their operations.”
This report focuses on six key action points to help brands navigate the regulatory changes that will come sooner or later (and what to expect from them) as they navigate changing laws and regulations to stay compliant. is emphasized.
Nelson Bennett said: “Businesses that embrace change using this guide will not only build stronger consumer trust, but also gain a competitive advantage by demonstrating real change for people and nature. He will be able to stand.”
The first were the EU Corporate Sustainability Reporting Directive (CSRD) and the EU Corporate Sustainability Due Diligence Directive (CSDDD), which emphasize the urgency of transparency throughout the product lifecycle.
Katia Boneva-Desmicht, global chairman of consumer goods and retail at Baker McKenzie, said: “Rapidly evolving legislation for luxury brands in key regions requires comprehensive due diligence, transparent reporting and new We need to actively adapt to the standards.” “This guide is a tool to help luxury goods companies stay ahead of stringent ESG requirements and prepare for significant changes such as stricter enforcement and increased penalties for non-compliance.”
If climate change has not yet begun, brands will need to adopt plans that align with the Paris Agreement and the EU’s environmental goals, Positive Luxury said. Snowballing scrutiny and greenwashing laws require brands to “carefully verify” green claims to ensure accuracy and compliance. The London-based sustainability experts suggested that brands embrace innovation, coordinate communication between all departments and educate stakeholders on ESG obligations such as new materials and recycling methods.
“These regulations encourage luxury goods companies to create products that last longer and are easier to repair, reuse and recycle,” said Senge Gilban, sustainability consultant at Positive Luxury. said. “Instead of destroying inventory, get creative and invest in reuse, recycling, and remanufacturing processes. Companies need to track and report data as well as cover the costs of collection, sorting, and recycling. We need to ensure that we have the resources for EPR.”
The intersection of competition and sustainability also received attention.
Luxury brands may cite competition law as the reason for such conflicts between them, despite a shared desire to tackle climate change.
“But due cooperation…can often produce better sustainability outcomes for the benefit of the whole population than if companies act alone,” says London-based Baker & Co. said Imogen Green, an associate at Mackenzie. “Recognizing this, regulators including the European Commission and the UK Competition and Markets Authority (CMA) are providing guidance on how the existing competition law framework applies to agreements pursuing sustainability objectives. We are stepping up our efforts to provide this.”
Of course, this comes with varying degrees of risk, as competition rules vary from country to country. However, it would be wise to ensure that the corporate sustainability function is “aligned” with the legal department.
“Competition law safeguards should also be in place for sustainability projects with competitors, and scope creep should be regularly monitored to manage the risks inherent in all forms of collaboration with market participants. “It should be checked,” Green said of exchanges and agreements of competitively sensitive information. Common approaches that can limit competition.
Julia Hemmings, a partner at London-based Baker McKenzie, considered the elephant in the room of artificial intelligence in the sustainability space.
Meanwhile, AI can drive efficiency, innovation, and solutions to complex challenges such as climate change and supply chain transparency. On the other hand, the development and deployment of AI systems requires “significant computational power”, leading to increased energy consumption and emissions. Of course, this creates a classic Catch-22.
“This is creating tensions, and AI, a tool that could help us achieve sustainability goals, is simultaneously exacerbating the problem,” she says. “Balancing the benefits of AI with its environmental impact therefore requires a concerted effort to develop more energy-efficient technologies and integrate renewable energy sources into AI infrastructure.”
