As natural resources dwindle, luxury fashion must pursue sustainability says 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 by the report “Business models for sustainable luxury,” published by the consultancy Square Management, which offers an in-depth analysis of the transformation of luxury business models through the lens of planetary boundaries.

The study’s first finding 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 wields significant influence across the creative industries as a whole. Yet this influence plays out against a backdrop of multiple pressures: the growing scarcity of raw materials (gold, leather, cashmere); tighter regulation (the CSRD directive, the AGEC law, the Green Deal); the increasing integration of ESG criteria into financial valuation; evolving consumer expectations; and shifting cultural norms around consumption.

A strategy to be implemented globally

In the face of these shifts, 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 circular economy’s “9Rs” framework, which ranks sustainability strategies from the least to the most transformative, from recycling to calling into question overproduction.

The study highlights a wide variety of models already in play. The least ambitious strategies focus on waste-to-energy (Recover) or the recycling of raw materials (Recycle), with examples including Guerlain‘s refillable bottles and Prada‘s Re-Nylon line. More structurally significant are upcycling approaches (Repurpose, Remanufacture, Refurbish), which turn unsold items and dormant stock into creations with high symbolic value: Balenciaga, Jean Paul Gaultier, Coach, and Jeanne Friot exemplify this blend of circularity, creativity, and storytelling.

Reducing production and buying less: two key ideas for sustainability

Repair is a crucial lever. By extending product lifespans, it avoids the most emissions-intensive stages of the life cycle. Maisons such as Hermès, Chanel, and Cartier have made it a pillar of their client relationships, while platforms such as Tilli are helping to structure this practice at scale. Re-use and rental are also fast-growing markets, driven by younger generations: 65% of luxury consumers say they are interested in buying second-hand, according to the “True-Luxury Global Consumer Insights” report (BCG-Altagamma, 2023), a figure that is rising steadily.

The most transformative models are those aimed at reducing production itself, namely Reduce, Refuse (superfluous purchases), and Rethink. On-demand manufacturing, pre-orders or limited production, as practised by Gabriela Hearst or MaisonCléo, help limit unsold stock while reinforcing exclusivity. Some houses go further still, committing to regenerative models: Kering invests in regenerative agriculture, while Chloé embeds social and environmental impact at the heart of every product as a mission-driven company. However, the report emphasises that these transformations face major obstacles.

The limits of the “do less harm” philosophy

Internally, many obstacles are cited to the introduction of circular models: complex logistics, high costs, cognitive resistance, and a cultural attachment to ownership. To overcome these, the study’s authors identify several key factors, including enhanced traceability (notably via blockchain), co-opetition between players 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.