Stella McCartney, Thesis Paper Example

Stellla’s World

Stella McCartney is a prominent personality promoting sustainability in the luxury fashion industry. According to the website of the company (Stella McCartney.com), the designer launched a fashion joint venture with Kering in 2001. Since then, the designer has pledged to several sustainability goals, starting with not using leather or fur in designs, to green supply chains. She received a Women’s leadership award in 2014. Supporting charities and green initiatives, the designer is considered to be a role model for the fashion industry. The below review of her company’s internal sustainability policies, initiatives, stakeholder engagement and charity promotion campaigns will attempt to reveal the best practices that other luxury brands should introduce in their strategies to improve stakeholder engagement, brand reputation, and embrace business ethics.

Between 2010 and 2013, the revenues of Stella McCartney and Kering’s joint venture grew by 60 percent, according to Business of Fashion (2015). This growth was achieved despite the fact that Stella McCartney brand does not include animal products. According to the article (Business of Fashion, 2015), similar luxury fashion brands earned over half of their revenues from leather product retails.

Building a Brand on Personal Beliefs

Stella McCartney has pledged to several green and sustainable commitments since 2001, when her own luxury brand was established. All the pledges are related to the personal beliefs of the leader, and represent Stella’s personal vision that is embedded in not only the corporate strategy, but also the culture of the organization. As the website (Stella McCartney.com) confirms. Stella McCartney is “the world’s first and only vegetarian luxury brand”. A vegetarian herself, Stella has managed to embed her personal beliefs and values in the company’s policies. There are several reasons why the company does not use animal produce in making its fashion items. First and foremost, it is to protect animal rights. However, the website also confirms that – according to recent studies – the industries related to meat and leather production have the highest environmental impact. The website also states that this industry is responsible for a total of 18 percent of the world’s greenhouse gas emission. Finally, the chemicals used to process and treat leather are highly toxic and are prone to pollute fresh water.

The responsible sourcing policies of Stella McCartney are also in line with the leader’s personal vision. The company does not use animal testing for developing any of its cosmetic products. Going further, the company decided not to sell any of its products in China, as a protest against government policies making animal testing compulsory for companies. The company also joined the PETA campaign in 2013 and eliminated products from its collections that contained angora rabbit materials.

In 2010, Stella McCartney became PVC free. PVC is a chemical that is non bio-degradable, and has a great impact on landfills. Further, the company has pledged not to use sand-blasting, a technique used by several designer labels to make denim appear worn-in. According to studies, referred to by the website, the process of sandblasting can increase one’s risk to developing lung diseases.

Ethical trade policies are also embraced by Stella McCartney. The company is a member of the Ethical Trading Initiative, working on improving workplace conditions over the world. As a consequence, the company does not outsource manufacturing and production to countries where there are no sufficient provisions to protect workers. All fashion items are produced in Europe. However, in alliance with the Ethical Trading Initiative, the company has recently launched a project that provides job for some of the most marginalized women in Kenya.

The joint venture initiative with Kering was also a part of a strategy to create a responsible and ethical venture. The main goals set by Stella McCartney are related to the Kering targets, such as carbon emission reduction, sustainable sourcing of paper and packaging, and the phasing out of hazardous chemicals by 2020.

Stella McCartney also created sustainability partnerships with other popular brands. The change agent has managed to introduce her own vision of sustainability within Adidas, H&M and L’Oreal. This means that she is not only making a difference within her own company, but contributes towards change within the entire industry. Securing an investment from Adidas, for example, for research on sustainable production methods has improved both businesses’ reputation. Supporting H&M’s Clevercare system to educate customers about washing garments less has also been a success.

As an additional CSR initiative, Stella McCartney also supports several charities, such as the Kering Foundation, the Kids Company, NSPCC, PETA, and the WWF.

Sustainability and Brand Image

Bendell and Kleanthous (2007) talk about methods of creating a more sustainable luxury fashion industry. The authors signify the role of fashion brands in connecting with customers and promoting principles. As the article confirms: “Luxury brands have the power to influence consumer aspiration and behaviour by editing consumer choices through product design, distribution and marketing; and by influencing how, when and for how long consumers use their products”. (Bendell and Kleanthous 2007: 2). Further, the authors indicate that luxury brands are currently facing several strategic challenges that can be addressed through sustainability initiatives. Below the author would like to list the three main challenges that the industry is facing, in order to determine how integrating corporate social responsibility in the organization’s strategy can help increase brand performance and overall competitiveness.

1. The democratization of the luxury industry: lack of exclusivity and differentiation power
2. Conspicuous consumption patterns threatening the cohesion of the society
3. Lack of industry credibility

The authors define authentic luxury brands as those that “provide the greatest positive contributions to all affected by their creation and that identify their consumers as having the means and motivation to respect both people and the planet” (Bendell and Kleanthous 2007:2). There is a change in the attitudes of luxury customers, according to the report, and this means that they are likely to choose brands that are able to reflect their values and aspirations. Therefore, having a sustainability vision, like the one that has been found within Stella McCartney’s organization will help engaging with conscious customers, improve brand relationships, and increase the reputation of the company. Addressing sustainability does not only make the company more ethical, but also makes business sense to address the growing awareness of the market about global warming and pollution.

Further, Shen et al. (2015) confirm that while it is simple to implement CSR strategies in developed country operations within the textile industry, challenges still exist for those firms that outsource production. The above statement seems to justify Stella McCartney’s decision to reject the idea of outsourcing to developing countries, like other luxury fashion brands.

Choi and Li (2015) defines sustainability as the attainment of the triple bottom line, consisting of society, economy, and environment. Focusing on all the above areas is challenging for companies, and implementing CSR requires strategic thinking, mission, and the creation of not only a vision, but measurable goals as well. There is a need to re-engineer business processes in order to achieve the goal of the 5R, described by Choi and Li (2015: 15400) as “reduce, reuse, recycle, re-design, re-image”. Fashion companies can adapt a formal CSR policy and utilize it as a tool to promote the image of the company and increase the brand’s reputation.

Gazzola (2014) completed a literature review related to the impact of CSR strategy on fashion companies’ reputation. The brand’s identity is thought to have a great impact on the reputation of the company, and therefore can influence the overall performance. There are different aspects of a company’s reputation: trust and confidence. Both of these aspects are dependent on the company’s values and vision. Corporate reputation, according to Gazzola (2014:75) “drives business success”. Positive attributions towards the brand image will encourage customers to trust and support the brand. CSR policies can, therefore, act as a tool for brand identity formation and differentiation.

A theoretical review created by Nastanski and Baglione (2014) also found a close relationship among brand value, profit, and social responsibility. The authors confirm that the better a company I able to serve its stakeholders and address their concerns, the higher the perceived value of the brand will be. This, in turn, drives performance improvement and increases profitability. However, many companies believe that sustainability initiatives that are created in a standalone manner can create a difference. As Nastanski and Baglione (2014:165) highlight the issue: “a modern corporation has multiple stakeholders including, customers, employees, suppliers, and communities”. Therefore, the strategy of the firm should address concerns related to each stakeholder to enable the brand to “fit in” the operating environment. Stella McCartney does not only address animal rights issues when not selling leather. They also reduce the company’s carbon footprint at the same time. Further, by not outsourcing to developing countries to reduce production cost. They do not only prevent pollution that is related to supplier activities, but also make their supply chain greener, as the transportation between the production facilities and the warehouse requires less fuel.

Corporate social responsibility is identified as the foundation of social component of sustainability. However, considering that pollution affects communities, causing drought and severe weather conditions, sustainability of supply chains has the ability to benefit all stakeholders at the same time. As the framework drawn up by Nastanski and Baglione (2014) shows, sustainability has an impact on the brand’s reputation. This, in turn, affects the company’s performance related to employees, intermediaries, and customers. Positive reputation can lead to higher trust, attraction, retention, commitment, and brand preference across multiple stakeholder groups. It can also    drive innovation within subsidiaries, and help building positive stakeholder relations. This will result in a higher brand equity, greater market share, and profit growth.

The above literature review has successfully drawn a line between CSR strategies and business performance. Further, it has been found that embedding corporate social responsibility into the brand’s vision and mission can increase the reputation of the company, and act as a differentiation agent. The following part of the paper will focus on Kering’s initiatives and their alignment with Stella McCartney’s policies and pledges to make the luxury brand more sustainable, benefiting all stakeholders at the same time.

The Philosophy of Kering

Kering is a worldwide organization with a strong commitment towards sustainability and improving lives of communities worldwide through reducing pollution, embracing democracy and ethical business principles, and research. The company’s joint venture with Stella McCartney provides policy guidance and expertise for the fashion brand to address some of the issues that the firm’s customers are most concerned about. By creating sustainability targets for itself and partner companies based on research, Kering is a major driver for change in the global fashion industry.

In 2012, the organization committed to several sustainability targets to achieve by 2016 across all the brands belonging to Kering. The key areas that the targets focused on were environmental protection, reducing negative social impact of operations and supply chains, and the efficient use of resources, including raw materials. Kering’s sustainability department is responsible for developing and executing strategies to ensure that the goals set by the organization will be obtained. In the 2014 progress report, the chairman states on sustainability targets (Kering 2014: 1) that “meeting our targets is dependent on not only how fast we can act and adapt internally, but also how fast we can improve and create sustainable options in the world in which our supply chains function”. The above statement highlights the importance of aligning companies’ supply chains with the needs of the operating environment, as one of the main success factors of implementing CSR. The following section of the research will evaluate Kering’s progress towards its specific targets individually.

Animal skins and furs

The target set for this area of operation is to ensure that 100 percent of all animal skins and furs come from ethical sources:  verified captive breeding sources, and humane treatment principles are employed when sourcing animal products. As of 2014, several initiatives were supported by Kering and its companies, such as the one making python snake skin trade sustainable, and supporting brands to develop animal welfare standards, Recently, Gucci has introduced a new sustainability policy for protecting animal welfare. Ostrich skin is already sourced from sustainable farms.

Further, the company has pledged to source all leather from domestic livestock by 2016. Several measures have been introduced within the group to trace the origin of the leather back to its source. Gucci has also joined the initiative with MADE BY. Puma and Bottega Veneta created their own projects, as well. The main goal of the initiative is to ensure 100  percent traceability of leather by 2016.

Gold and diamond sourcing

The next target is related to sourcing gold and diamond. The company is committed to obtain precious stones and metals from operations that do not have a negative impact on communities, the environment, and wildlife/ecosystems. The target is to achieve 100 percent sustainability target in sourcing gold and diamonds by 2016. The main issue that the group’s companies face again is that all raw materials need to be traceable to verify their origins. Several initiatives have been already created to increase raw material traceability and alliances have been started with worldwide organizations, such as the Alliance for Responsible Mining and Solidariad. These partnerships are extremely valuable, as Kering can rely on the expertise of these organizations, as well as their related experience. On the group level, Kering focuses on small scale, sustainable mining that supports communities. According to the report (Kering 2014:9), “the big challenge is that gold is fungible and tracing its origins through the supply chain is difficult”. The main elements of achieving the targets are: verifying the origin of raw materials through the supply chain, supporting recycled gold production, and collaborating with small scale mining communities.

Paper and packaging

Kering is committed to reducing its environmental impact by using recycled materials in at least 50 percent of its paper packaging. Further, by 2016, the company is planning to use only packaging that is sourced from sustainably managed forests. In order to achieve this goal, the group has introduced a “Bring Your own Bag” campaign. Individual brands, such as Saint Laurent moved towards sustainability-certified packaging. The group is working together with the Forest Stewardship Council (FSC) to reduce its impact on the global trend of  deforestation. As of 2013, 77 percent of the total paper used by the group was either recycled or certified by the FSC, compared with the target of a hundred percent by 2016.

PVC-free Collections

The group reports that as of 2013, 98 percent of the collections is PVC-free. The results were achieved through close collaboration with individual designers and brands, as well as research projects. Through the support of the “Alternative Plastics Idea Lab”, the group of companies has invested into research that is focused on finding sustainable alternatives to PVC. The importance of removing PVC from collections is justified by the related research findings that the material imposes environmental health risks on communities, and is not biodegradable.

Phasing out hazardous chemicals

By creating the Kering Product Compliance Advisory Department within Kering’s luxury division, the company has pledged to eliminate 100 percent of chemicals considered to be harmful for the environment and humans from its product line. Individual brands have joined the initiative, and PUMA pledged to remove all toxic residues from its production activities by the target date of 2020. The Materials Innovation Lab of Kering is working with researchers to discover green alternatives to hazardous chemicals.

Reducing waste, carbon emissions, and water use

As it has been confirmed previously, the textile and fashion industry is highly reliant on fresh water, while it is responsible for a great amount of landfill.  PUMA brand joined Greenpeace’s initiative to commit to zero discharge. The group of companies is planning to reduce water usage by 30 percent by 2020. Recycling is also in the focus of several companies’ sustainability commitment and strategy. Reducing landfills and recycling waste is also reliant on research. As an example project, Gucci leather cuttings were used to create 115 tonnes of fertilizer.

Supplier evaluation

The group has a strict and detailed Code of Ethics that is required to be followed by all suppliers. In the past few years, the group conducted over two thousand audits of suppliers, and is focusing on working with firms that have obtained an SA 8000 certification. Those companies that outsource production to developing countries also work on educating their partners about sustainability initiatives. A good example for the above is the “Bangladesh Accord” project, focusing on improving health and safety at workplaces.

A Business Model that Sustains Itself

• The above review of company policies, as well as Kering’s own initiatives has revealed that sustainability is embedded in the long term and short term strategy of both Stella McCartney and Kering. The alignment of Stella McCartney’s policies related to sustainability are in line with the commitments highlighted above and the targets set by Kering.
• The majority of the change initiatives in both Kering’s and Stella McCartney’s strategies focus on redesigning supply chains to address environmental, social, and economic issues. Stella McCartney’s commitments are based primarily on building sustainable supply chains. Given the fact that the company only started operating in 2001, it is clear that the implementation of policies from the beginning has fewer challenges than redesigning them, in the case of companies with business activities dating back long decades.
• The initiatives of Stella McCartney go further than Kering’s own targets. Kering does not require group companies to eliminate animal products entirely from the product line, however, based on her strong beliefs and values, Stella McCartney pledged to do this (Stella McCartney, 2013). The company pledged to reduce toxic chemical use. This target is also in line with the Kering policy. Related to water use. Stella McCartney does not only focus on reducing water use, but also the protection and preservation of fresh water sources. Reducing greenhouse emissions is another commitment related to the environmental aspect of CSR.
• Stella McCartney is committed to educating consumers about garment care, and this way the company goes beyond its responsibilities. Instead of restricting the introduction of positive change to its own operations, Stella McCartney is a change agent, an influence, and expands her visions outside of her company’s policies. This shows that the vision of sustainability can be spread around and used to motivate individuals, build strong brand relationships, and create a business model. The review of Stella McCartney’s business model and performance has proved that sustainability as a business model does not impact profitability in a negative way. It creates a dimension of differentiation, increases brand value, and helps maintain the company’s reputation, which will later translate to higher market share and profits that can be invested into further research related to sustainable business methods.
• Likewise, Kering’s Environmental Profit & Loss report (Kering 2014) shows that the group’s revenues increased by 4.5 percent between 2013 and 2014, while the environmental profits also grew by 2.2 percent. The idea of publishing an environmental profit and loss report is relatively new in the luxury fashion industry, and is an effective method of providing stakeholders with a snapshot of progress and the success of initiatives. Based on research related to developing a measurement framework, the Kering group has created important analysis that drive change within global supply chains. As an example, the group evaluated the CO2 emission impact of tanneries on a global scale, and found that it is the lowest in Italy, at 2.63 kg per a kilogram of leather, compared with 48.6 kilograms. Further, the company has reviewed the main drivers of greenhouse gas impacts across the group. This information can be a valuable resource for individual luxury fashion brands to introduce changes that make a significance difference in “greening” the supply chain.

Conclusion

From the above review of policies and initiatives it is evident that the vision of Kering and Stella McCartney brand is aligned, and both companies have their sustainability mission embedded in not only their supply chain, but their entire corporate strategy. This way, they both managed to create a business model that sustains itself.

References

Bendell, J., & Kleanthous, A. 2008. Deeper luxury: Quality and style when the world matters. WWF-UK.

Choi, T. M., & Li, Y. 2015. Sustainability in Fashion Business Operations. Sustainability, 7(11), 15400-15406.

Gazzola, P. 2014. Corporate Social Responsibility and Companies’ Reputation. Network Intelligence Studies, (03), 74-84.

Kering. 2014. Sustainability Targets Progress Report. May 2014.

Kering. 2014. Environmental Profit and Loss.

Kering, 2014.  Kering publishes mid-term Progress Report on 2016 Sustainability Target. Press Release.

Nastanski, M., & Baglione, S. L. 2014. Sustainability: Benefits of Social Responsibility to Brand Value & Profit. Journal of International Management Studies, 9(2), 164.

Nawaz, A., Ashraf, M., & Shaikh, K. H. 2014. An Empirical Investigation to the Factors Influencing Buying Decision of Luxury Goods: A Study of Y Generation. Global Management Journal for Academic & Corporate Studies, 4(2).

Stella McCartney. 2013. Stella’s Sustainability Commitments.

Stella McCartney. n.d. Website.