Engagement

 

Engagement is of great importance for EAM‘s sustainable investment approach. It combines own initiatives with collaboration on a national and international level. The structured engagement process is based

on the „EAM Engagement Guideline“ which determines engagement issues, approach and procedures.

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Luxury producers

 

It’s Christmas time – the time of year

when consumers like to spend a little more on luxurious gifts. In 2013 the market volume of luxury goods such as textiles and jewels amounted to USD 217bn. In the past 20 years there have been only two phases where spending

was on the decline, with the shortfall

being recovered as early as the following year. At revenues of USD 74bn, Europe’s demand leads North and South America (USD 69bn) and Asia (USD 46bn).

 

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Given that textiles account for a signifi-

cant share of the luxury goods industry,

Erste Asset Management contacted companies from that sector. We wanted

to obtain information about the social

and environmental standards in their supply chain, addressing the lack of transparency of luxury producers with respect to sustainability often claimed

by research agencies. To this end we contacted Burberry, Christian Dior, Hermès, Hugo Boss, Moët Hennessy

Louis Vuitton (LVMH), and Prada. Four

of these companies did not react to our enquiry. LVMH promised to answer our questions, but has not been heard of since. Only one company, Hugo Boss,

was prepared to talk about its sustaina-

bility strategy. This is the weakest res-

ponse rate EAM has ever experienced – which confirms the assumed lack of transparency of luxury goods manufac-

turers.

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​Only 1 out of 6 luxuryproducers respondedto our enquiries

 

No matter where you look for sustainable strategies in the luxury goods segment, your search will probably be in vain. Of

the aforementioned companies, only

Hugo Boss issues a separate sustainabi-

lity report. All other firms only dedicated

a small section of their annual report to sustainability.

 

In past engagements we found that producers have a hard time steering the sustainability activities of their suppliers. For that reason we asked Hugo Boss

what criteria the company paid particular attention to with regard to its suppliers. The company points out that it demands

a range of minimum standards; they are much more stringent and detailed for social criteria than for environmental ones. Said standards range from the

ban of child labour to the demand of freedom of association and wage nego-

tiations. While Hugo Boss tries to reduce the environmental pollution caused by

its suppliers, its demands do not do not

go beyond compliance with statutory requirements.

(Richard Boulanger)