As natural resources decline, luxury fashion must seek sustainability, according to Square Management study

Long defined by rarity, artisanal excellence and desirability, the luxury sector now faces an unprecedented equation: how can it continue to create value without further increasing pressure on natural and social resources? This is the question addressed in the report “Business Models for Sustainable Luxury”, published by the consulting firm Square Management, which offers an in-depth analysis of the transformation of luxury business models through the lens of planetary borders.

The first conclusion of the study is that luxury occupies a strategic position in the ecological transition. With global sales of 364 billion euros in 2024 and considerable symbolic weight, it exerts a significant influence on all creative industries. However, this influence develops in a context of multiple pressures: the growing scarcity of raw materials (gold, leather, cashmere); stricter regulation (the CSRD directive, the AGEC law, the Green Deal); the increasing integration of ESG criteria in financial valuation; changing consumer expectations; and changing cultural norms around consumption.

A strategy to implement globally

Faced with these changes, the study shows that marginal adjustments are no longer enough and urges the luxury sector to undertake a profound transformation of its business models. To frame this reconfiguration, the report draws on the “9Rs” framework of the circular economy, which ranks sustainability strategies from least to most transformative, from recycling to challenging overproduction.

The study highlights a wide variety of models already in play. Less ambitious strategies focus on converting waste into energy (Recover) or recycling raw materials (Recycle), with examples such as Guerlain's refillable bottles and Prada's Re-Nylon line. More structurally significant are recycling approaches (reuse, remanufacturing, renewal), which turn unsold items and idle stock into creations with high symbolic value: Balenciaga, Jean Paul Gaultier, Coach and Jeanne Friot exemplify this combination of circularity, creativity and storytelling.

Reduce production and buy less: two key ideas for sustainability

Repair is a crucial lever. By extending the useful life of products, the stages of the life cycle with the highest emissions are avoided. Houses like Hermès, Chanel and Cartier have made it a pillar of their customer relationships, while platforms like Tilli are helping to structure this practice at scale. Reuse and rental are also rapidly growing markets, driven by younger generations: 65% of luxury consumers say they are interested in purchasing second-hand items, according to the “True-Luxury Global Consumer Insights” report (BCG-Altagamma, 2023), a figure that continues to rise.

The most transformative models are those that aim to reduce production itself, namely Reduce, Reject (superfluous purchases) and Rethink. Manufacturing on demand, pre-orders or limited production, as practiced by Gabriela Hearst or MaisonCléo, help limit unsold stock while reinforcing exclusivity. Some houses go even further and commit to regenerative models: Kering invests in regenerative agriculture, while Chloé puts social and environmental impact at the center of each product as a mission-driven company. However, the report highlights that these transformations face major obstacles.

The limits of the “do less harm” philosophy

Internally, many obstacles are cited for the introduction of circular models: complex logistics, high costs, cognitive resistance and a cultural attachment to ownership. To overcome them, the study's authors identify several key factors, including greater traceability (especially through blockchain), cooperation between actors to pool costs, and, above all, the ability to reframe sustainable luxury symbolically, not as a renunciation, but as a new form of prestige.

The study also highlights a strategic shift: luxury can no longer settle for “doing less harm.” It is now expected to create positive, measurable and shared value that is compatible with planetary boundaries. A transformation that profoundly redefines the very notion of desirability.