Global law firm Baker McKenzie and sustainability stalwart Positive Luxury released the latest edition of their environmental, social and governance (ESG) guide, “The Future of Sustainability Legislation for Luxury.”
Considering a new administration will be entering the Oval Office, a new government in the United Kingdom and the European Union’s ongoing transition to a new European Commission, the duo said the report provides a “timely overview” of the key ESG changes expected to unfold over the next few years.
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“Upcoming global ESG regulations will be a catalyst for transformation within the luxury sector,” said Amy Nelson-Bennett, CEO of Positive Luxury. “Rather than seeing these as mere compliance hurdles, luxury brands should view them as opportunities to get ahead by embedding sustainability into their operations.”
Centered around six essential action points, the report highlights the regulatory changes coming sooner than later (and what to expect from those changes) as brands navigate the shifting legislative landscape to remain compliant.
“Those that use this guide to embrace the shift will not only build stronger consumer trust,” Nelson-Bennett said, “but also position themselves competitively by demonstrating real change for people and nature.”
Up first was the EU Corporate Sustainability Reporting Directive (CSRD) and the EU Corporate Sustainability Due Diligence Directive (CSDDD), which underline the urgency for transparency throughout the entire product lifecycle.
“The fast-evolving legislation across key geographies for luxury brands requires comprehensive due diligence, transparent reporting and proactive adaptation to new standards,” Katia Boneva-Desmicht, global chair of consumer goods and retail at Baker McKenzie, said. “This guide is a helpful tool for luxury businesses to stay ahead of stringent ESG requirements and be prepared for significant changes, including stricter enforcement and higher penalties for non-compliance.”
If the climate transition hasn’t already started, brands need to adopt a plan that aligns with the Paris Agreement as well as the EU’s eco-objectives, Positive Luxury said. With snowballing scrutiny and greenwashing legislation, brands need to “meticulously verify” their green claims to ensure accuracy and compliance. The London-based sustainability experts suggested that brands embrace innovation, align communication across all departments and educate stakeholders on ESG obligations such as new materials and recycling methods.