There's nothing like a brush with death to focus your attention.
The global economic collapse has been like a brush with death for business. It has changed our perspective and will have lasting aftereffects on our behavior. Last week I read a report called "Responsible Luxury" released by the World Jewelry Confederation. The report argued that because of the economic downturn, there are new motivating factors behind consumer decision making. We have entered an era where consumers prefer to buy products from a company with a good reputation for social responsibility. The report also suggests that this turn of events will propel companies in the distressed luxury market to adopt conscientious business practices as the only option for survival.
This is good news for the diamond industry, which has long been criticized for fueling unrest, particularly in diamond-rich central and western Africa. More to the point, it's great news for the countless families, communities, and countries ravaged by the effects of 'conflict' diamonds.
Influential industry brands are stepping up to support the "responsible luxury" trend. Recently Tiffany & Co., the world's premier jeweler and the gold standard (pun intended) of the luxury industry , stated that they are actively embracing corporate social responsibility (CSR). As regards large-scale mining, Tiffany pledges to strive to source gemstones and precious metals from mines that operate at the highest standards of social and environmental responsibility.
This is important because Tiffany has a 19 percent share of the global jewelry market. This move is sure to be a catalyst for change. What it means is that Tiffany has the opportunity to set standards for best practices. Ethical jewelry currently accounts for less than 1 percent of the $56 billion market in annual jewelry sales. But when a revered brand like Tiffany proactively engages in CSR, it is bound to have powerful cascading effects across the entire luxury goods industry.
This is also a smart business move for Tiffany, because consumers are becoming increasingly conscientious about the origins of the products they buy. An excellent study on this topic from Cone titled "Consumers Like Companies With Cause," states that causes help to convert new customers and revealed that 83 percent of U.S. consumers have a more positive image of a product or company when it supports a cause they care about. What's more, the study reveals that consumers are asking for transparency; 90 percent of consumers surveyed confirmed that they want companies to tell them about the ways in which they are supporting causes.
On the consumer behavior front, 80 percent of Americans say they are likely to switch brands to buy a product equal in price and quality from a company that supports a cause, and 19 percent will even buy a more expensive brand. This should be music to the ears of the luxury goods companies, which desperately need to spark beleaguered consumers to spend more this holiday season.
These are still early days to demonstrate the inherent value of CSR from the perspectives of consumer mindshare, market share, and profitability. It will take time for C-suite and boardroom discussions to reevaluate a company's social contract with the environment and the communities in which they do business.
Still, I often talk about CSR being a tsunami that will wash over business and change everything. I firmly believe this is so. Tiffany is leading a big change by setting an example in a little blue box.
Michael J. Kowalski, Chairman and CEO of Tiffany & Co put it this way: "Tiffany & Co. is committed to crafting our jewelry in ways that are socially and environmentally responsible. It is simply the right thing to do: Our customers expect and deserve nothing less."