Burberry Corporate Social Responsibility Analysis

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23/09/19 Business Reference this

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Table of Contents

 

Executive Summary

I. Introduction

II. The Value Chain

III. 2017 Performance Report

IV. Research using Tools

V. Problems Identified

VI. Recommendations/ Implementations

VII. Goals for 2022

VIII. Tools Used and its Reliability

IX. Conclusion

X. Appendix

Appendix 1

Appendix 2

Appendix 3

Appendix 4

Appendix 5

Appendix 6

Appendix 7

Appendix 8

Appendix 9

Appendix 10

Appendix 11

Bibliography

Executive Summary

Corporate Social Responsibility (CSR) is an approach where a company shows its concern towards its stakeholders by providing them with economic and social benefits. The main areas of CSR are Employees wellbeing, Environment protection, community, and corporate management. Burberry has already started taking steps towards sustainability which shows their concern. They are one of the leading brands ranked in the DJSI. The UN’s conference on climate change was held at COP24 on December 2018 in Poland where Burberry has signed an agreement to reduce carbon emission to net zero by 2050. This charter was in line with UN climate change and Paris Climate Agreement and 43 other brands signed into this (Minnock, 2018). This report is going to analyze the brand in terms of its sustainability and suggest some recommendations. This would be done with the help of the articles, case studies, past performance, competitor analysis, and other tools. The points covered in this report are:

      Value Chain

This depicts the global supply chain of the Burberry and their work to fight for sustainability.

      2017 Performance Report

This shows the area where they failed to achieve their set target for 2017 such as in the reduction of PVC used, Renewable energy, and energy consumption.

      Research using Tools

Using Rankabrand, Buzzsumo, Hult Library, Google Reviews, Keywords Everywhere the data for Burberry sustainability was analyzed.

      Problems

The main problems found be doing the research through tools and data was in raw materials, the supply chain of water & energy, and burning clothes. The area of CSR focused here is mainly the environment and the society.

      Recommendations/Implementations

The main suggestion provided was to use sustainable raw material, effective marketing to promote, recycling, and collaborate with suppliers. Also, the impact on the bottom line of the company was provided.

      Goals

Burberry has set some goals to achieve by the year 2022. For example, positively impact 1 million people, drive positive change through all products, and to be carbon neutral and revalue waste.

      Tools reliability

Tools were reliable to find more accurate data, trends, and the problems for sustainability.

I. Introduction

Burberry is a global brand with more than 10,000 employees and 400 retail locations. They aim to desire positive change and sustainable future for the company, society, and the environment through partnership and innovation. From the last four consecutive year including 2018, they are ranked as a leading brand in the Dow Jones Sustainability Index (DJSI) in the ‘Textiles, Apparel & Luxury Goods sector’ (Petter, 2018). The DJSI is a trusted benchmark for the investor who considers sustainability to invest in the companies. Furthermore, they are the member of ‘Ethical Trading Initiative’ and won Bronze Class distinction for excellent performance in RobecoSAM’s 2018 Sustainability Yearbook (Burberry, 2018). Some of their business partners include Avena Environmental, Greenline, OHCS and INNO hotline services, and the principal partner includes the Living Wage Foundation (Burberry, 2018).

II. The Value Chain

 

According to the Burberry Responsibility Report 2012-17, Figure 1.1 and Figure 1.2, depicts the global nature of their supply chain. Burberry work with their suppliers, team, and partners worldwide to make a difference in their value chain. Also, to fight the problems related to sustainability and the environment. This includes the processing of raw materials, sourcing, and product manufacturing. 

Figure 1.1

Figure 1.2

 

III. 2017 Performance Report

According to the corporate responsibility report 2017, Burberry lacks behind in some of the areas as targeted for 2017.

  1. PVC – They failed to achieve the target to reduce the use of Plastic Polyvinyl Chloride (PVC) by replacing it with other bio alternatives (Appendix 1). These PVC contains harmful chemicals like lead, ethylene which is not good for the environment, humans or animals. To achieve this plan, they were planning to work with other suppliers and industries to develop materials. Burberry’s competitor like Gucci has already started eliminating PVC from their catwalk or fashion show.
  1. Energy consumption – They have not achieved their target that was set in 2012 of reducing energy consumption (Appendix 2). The energy used in retail locations generates direct greenhouse gas of C.75%. Although, digital monitoring equipment and in-store energy audits have helped Burberry to implement energy saving devices. Overall 15 % reduction was achieved in stores and offices and 14% was achieved at London headquarters.
  1. Renewable Energy – their target was to obtain energy in all Burberry stores and offices by on-site or green tariff renewable energy, wherever available (Appendix 2). This process was delayed in the areas where they had available renewable energy. Burberry faced the challenge where no alternatives for the energy was available. The 42% energy obtained on-site comes from renewable sources. The solar panels installed at UK head office, US distribution center, and Beverly Hills provides 1 million kWh clean energy per year.

IV. Research using Tools

According to the Rankabrand tool, it was analyzed that the sustainability level of Burberry is D-label with a score of 10 out of 36 (Appendix 3). This means that they have started taken sustainability into consideration and there is a lot to improve. Whereas, its competitor Gucci also has D-label but has more score than Burberry with 12 out of 36. On the other hand, the other competitors like Dior, Fendi, and Hermès has E-label. This is the lowest score and it depicts that they are not indulged in sustainability.

One of the brands that are well on the way is ‘Vaude’ as they are given B-label by Rankabrand. They have 21 scores out of 31 (Appendix 4). This brand has gone 100% green electricity for their operations. Additionally, the brand that is doing better is ‘Stella McCartney’ as it has C-Label. This means that they are on its way of sustainability but need more improvement. Burberry can follow the footsteps of both the brand and see what they are doing differently than others.

Furthermore, using tools like Buzzsumo, Hult Library, Google Reviews, some of the problems would be identified. Also, keywords Everywhere would be used to analyze the trends. With the help of the articles, case studies, and data recommendations would be provided for Burberry to achieve B-label or B-Corp. Later, they can decide if they would prefer to take those suggestions into consideration.

V. Problems Identified

The main area of CSR considered while identifying the problems are the environment and the society.

1. Raw materials – Burberry’s 30% of greenhouse gas is caused by Leather, Cashmere, and Cotton (Annual report, 2017/18).

a)      Cotton – it is used to make the most iconic fabric invented in the year 1879, named gabardine. It is light in weight and breathable. Today, this cotton farming has caused environmental as well as social impact due to the two reasons. First, the amount of water, pesticides, and fertilizers used in cultivation. Second, efficiency energy processes of spinning, weaving and dyeing cotton. In 2017, they have sourced 21% of cotton by partnering up with the BCI (Better Cotton Initiative).

b)     Leather – it is used for making accessories, apparel, and shoes. It emits more than 10% of greenhouse gas. The leather production can have a harmful impact on its value chain. It can affect the natural ecosystem by the emission of methane, tanning of leather, and processing done through water, energy, and chemicals. Currently, 64% of leather products are manufactured from tanneries.

c)      Cashmere –  It is used for making knitwear and scarves from last 130 years. The cashmere farming has resulted in desertification and biodiversity loss and further impacting the environment.

The example of its competitor who already took a few steps towards sustainability are:

      Gucci – In 2018, the brand has declared that they would not use fur anymore to protect the animals and environment. This program initiated in 2018 spring/summer. The other competitors like Armani, Ralph Lauren has already gone fur-free (Pavithran, 2018).

      ‘EDUN’ brand from LVMH group – they use upcycled, organic, and recycled fabrics and promote fair trade (Pavithran, 2018).

2. Burning clothes – Burberry has been popular for burning unsold inventory to maintain its exclusivity. Since 2014, the number has been tripled and reach $37 million worth clothes (Edgar, 2018). This impacted on the environment and caused wastefulness. On the other hand, their strategy of making clothes available in the store right after the fashion show or catwalk for customers to buy indicates that they have to produce more stock. This will lead to more creation of waste (Ferrier, 2018).

Today, the Fashion industry is one of the most polluting industry. According to Tamison, “73 percent of the world’s clothing ends up in landfills, while less than 15 percent of clothes are recycled and less than 1 percent of the material used to produce clothing is recycled into new clothing” (O’connor, 2018).

3. Supply chain: Energy and water – Earlier in the performance report 2017, it has been highlighted that Burberry lacks behind their target. Energy is significant in all the stage of productions that is from manufacturing to finished products. The apparel and footwear industry generates 8% of greenhouse gas and the expected growth is 49% by the year 2030 (Burberry, 2018).

Furthermore, the water is necessary for raw material production and processing. This includes washing and dyeing. There is a large amount of consumption of water by the Textile manufacturing company. The process of production causes the water to get into rivers with acids, bleaches, dyes, and inks (Helbig, 2018). According to the ‘Pulse of the Fashion Industry report 2017’, from the Global Fashion Agenda, “the fashion industry today consumes 79 billion cubic meters of water a year, enough to fill nearly 32 million Olympics-size swimming pools, and anticipates that this will increase by 50% by 2030.” (Burberry, 2018).

VI. Recommendations/ Implementations

The millennials are the biggest consumption of the fashion market. In 2017, their spending in the USA was about $200 billion (Hahn-Pertersen, 2018). Their interest in sustainability is increasing. According to the State of Fashion 2018 report by BoF & McKinsey, “Sixty-six percent of global millennials are willing to spend more on brands that are sustainable” (Hahn-Pertersen, 2018). Also, according to research by LIM College, “Nearly 90 percent believe they will help create more sustainable products by convincing businesses and governments to change existing practices” (Hahn-Pertersen, 2018). Some of the recommendations that Burberry could use to target millennials and achieve sustainability are:

1. Raw materials – Burberry’s 21% of cotton procurement is not enough to be sustainable. Cotton is a biodegradable material.  They should aim for 100% organic cotton. They can work with their partnered company BCI to achieve this target. The other fabrics that they can use to attain sustainability are bamboo, wool, silk, linen, hemp, and modal.

They should target for 100% Leather from tanneries that have the certification of traceability, social compliance, and environment. Furthermore, the brand, ‘Bolt Threads’ has been attracting celebrity designers like Stella McCartney due to their innovative idea to make leather from funghi and silk fabric from yeast proteins (Forbes, 2018). Burberry could do something similar and further eliminate the use of PVC from their products.

Burberry has declared to go fur-free in 2018 September but its competitors like Gucci, Armani, Ralph Lauren who has already completely gone a fur-free long time back. This shows that its competitors are a step ahead in sustainability. Burberry has banned some of the furs from its collections but yet to achieve completely (Yotka, 2018). To stay with the competition, they should go fur-free as soon as possible.

This could help Burberry with their bottom line of the company as it will enhance the reputation of the company by differentiating its product by other high-end brands. Nowadays, people like to buy things which are more sustainable.

2. Effective marketing – Burberry can market their sustainability as no consumer has time to go on the website and read about sustainability. They should be clear, visible, and easily identifiable by the consumers. They can provide sustainable information just like they do for pricing, brand, and sizes. In short, they can deal in fair trade both online and offline. They can put product labels like Global Organic Textiles Standards (GOTS) or the certified Leather Working Group (LWG). Additionally, another option is to create their own sustainable logo in a similar way ‘ASOS’ brand has done (Hahn-Pertersen, 2018).

The brand ‘Gaia and Dubos’ is known for sustainable fashion. It is a good example for Burberry to consider in terms of sustainable labels, raw materials, packaging, and using waste for recycling. The materials used to make the products by the brand are eco-friendly and manufactured in an ethical environment. Appendix 5 is the example of online sustainability information of the brand ‘Gaia and Dubos’.

This technique will create more awareness among people about sustainability and the concern of Burberry towards the environment and society. This will attract people and thus affecting the bottom line of the company.

3. Recycling – Burberry’s 2022 goals are to revalue waste and to become carbon neutral company. To do this, they have partnered up with Elvis & Kresse, a sustainable company. They aim to transform 120 tonnes of leather offcuts into new products (Burberry, 2018). Apart from these, other methods that they can engage and stop burning clothes are:

a)      Repurpose the luxury goods –  Burberry can engage in campaigns or start a program for the upcoming designers. They can donate their unsold inventory to them so that they can come up with innovative ideas and designs for Burberry. For example, when you are having fruits daily at home and you cannot eat more of it, you make juice. Similarly, these emerging designers could indulge in.

b)     Vintage collection – Burberry can stock their unsold inventory for coming 25 to 30 years and sell it later as their exclusive vintage collection. Fashion is something that keeps rotating time to time and it never gets too old.

c)      Make employees brand ambassador – they can gift their unsold inventory to the employees who are dedicated to the company and its culture. They will promote the brand while walking on the street and would also show the company’s love towards their employee. This would lead to better employee engagement and loyalty.

They can follow the lead of their competitors who have already engaged in recycling. For example, Gucci and Balenciaga by converting raw materials into yarn to produce fabric and garments. This program is called ‘Worn Again’ (Ferrier, 2018). On the other hand, the circular economy is the option that is opted by many fashion brands where they recycle the product.

By engaging in recycling Burberry can cut down their additional cost which will lead towards net profits for the company.

4.  Reduction of the usage of water and energy – Burberry can reduce their consumption of water and energy by collaborating with the suppliers to track their performance. By doing this, they can be more efficient with the usage of resources in the supply chain and would keep the pollution low at the early stage of processing. They can also aim for 100% green electricity for their own operations.

At last, the sports brand ‘Vaude’ which is B- Corp in sustainability according to Rankabrand tool. They conduct environment-friendly production, upcycling, innovations to reduce micro plastics, and deal in fair prices and working conditions. Additionally, their supply chain is ecological, social and transparent. Burberry can consider this company for better sustainability ideas.

VII. Goals for 2022

Burberry has set next five-year plan to target sustainability which they named, ‘Creating Tomorrow’s Heritage’ (Appendix 6). The plan consists of three main goals that are:

  1. Positively Impact 1 million People –  currently, they have impacted positively 23,000 people by developing more sustainable cashmere industry, global community programme, and ways to tackle educational inequality.
  2. Drive Positive Change through all Products – this means they target to achieve more than one positive attribute in 100% of the Burberry products. These attributes include social and environmental improvement. Currently, they possess, 14% with more than one positive attribute, 28% with one positive attribute, and 58% with positive attributes in development (Appendix 7).
  3. To be Carbon Neutral and Revalue Waste – they plan to do this by driving resource efficiently, achieving 100% energy from renewable sources, and ways to deal with waste. They aim to bring their market-based carbon dioxide emission down to zero.

VIII. Tools Used and its Reliability

The tools used to analyze the data are:

      Keyword Everywhere – Keywords Everywhere was useful to know the trends and find the data related to it (Appendix 8)

      Buzzsumo – to find the articles and case studies (Appendix 9)

      Hult library – to find the case studies and articles (Appendix 10)

      Rankabrand – to know the CSR ranking

      Google Reviews – it helped in identifying the different area of CSR that is wellbeing of the customers (Appendix 11)

These tools were reliable as they useful to find the articles related to sustainability in high-end luxury brands and made it easier to identify the area of CSR that Burberry should focus on. At last, Google Reviews for San Francisco, Post Street store was conducted. The customers have given 4.6 rating which is good for the company.

IX. Conclusion

The four lenses of innovation helped to think about the recommendations, in terms of sustainability. If Burberry opts to adopt these recommendations, I believe it will help them to increase their profits by cutting down the cost and being different than its competitors. It will further show their concern towards sustainability and generate awareness. It will attract new customers and millennials who are concerned about the environment.

To conclude, currently, Burberry is doing a lot better than its competitors in sustainability. But to stay up with the competition and other brands who already indulged in sustainability they should start implementing their strategies.

X. Appendix

 

Appendix 1

Appendix 2

Appendix 3

 

Appendix 4

Appendix 5

Appendix 6

Appendix 7

Appendix 8

Appendix 9

Appendix 10

Appendix 11

Bibliography

 

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