Investing in megatrends throughout Europe
With so much uncertainty in the world in the short term, Zed Osmani manager of Legg Mason IF Martin...
Last year, when London Fashion Week was in town, I took a look at how the fashion industry was moving towards sustainability. A few weeks ago, I investigated millennials turning towards luxury brands. This week, as London Fashion Week is upon us once again, I wanted to bring these two themes together because, as Annabel Brodie-Smith, Communications Director of the AIC pointed out, “fashion brands often enjoy remarkable pricing power and customer loyalty. Admittedly, fashions come and go, and what is in vogue today can quickly become old hat.”
‘Over the years I have learned that what is important in a dress is the woman who is wearing it.’ — Yves Saint Laurent, French fashion designer
In this week’s podcast, Jason Pidcock, manager of Jupiter Asian Income fund, talks about how young people are willing to fly less for holidays, crediting this to Greta Thunberg. While he sees this change as a vulnerability for the aviation sector, this conscious consumer mentality spills over to numerous other sectors.
Kering, a French luxury group, with brands such as Gucci and Yves Saint Laurent, is a good example of adapting to the changing consumer. Kering was the first luxury company to create science-based goals around reducing it’s carbon footprint back in 2016*, “yet perhaps more impressive, according to Catharine Flood, corporate strategy director for Scottish Mortgage Investment Trust, “is the group’s leaders’ willingness to embrace the power of creative destruction for long-term growth and development.
“Kering’s Chairman and CEO, François-Henri Pinault, has long believed that ‘luxury and sustainability are one and the same’, Catharine said. “And the adoption and development of new synthetic materials by the group, despite its deep heritage in natural luxury materials such as leather, demonstrates its willingness to innovate as the world changes.”
Competitive luxury brand Moncler, a global leader in super premium down jackets, believes that “quality and uniqueness are the most important factors in driving millennials customers to luxury products.”
A top holding in Legg Mason IF Martin Currie European Unconstrained fund, manager Zehrid Osmani, said: “We believe that the structural growth potential of the company is compelling, and its ability to innovate is strong. The management has an exemplary track record and is clearly executing its business plan. For example, the CEO and Creative Director are ensuring that the brand remains fresh and that innovation is driving exciting new product ranges which is helping to deliver strong top-line growth.”
Closer to home for most of us, Adidas also has a longstanding tradition of sustainability. A top holding in European Opportunities Trust**, the company removed plastic bags from its stores in 2016 and, in 2018, created more than 5 million pairs of shoes containing recycled ocean plastic for its ‘Run for the Oceans’ fundraiser.
Globally, the footwear industry emits 700 million tonnes of carbon dioxide each year^. Allbirds, a New Zealand-American orientated shoe retailer, which designs environmentally friendly footwear from recycled bottles, wool, trees and sugarcane, has gone carbon neutral.
A holding in T. Rowe Price Global Focused Growth Equity***, Allbirds tackled its carbon footprint over its entire supply chain. The company has stated: “From the sheep on our farms to the light bulbs in our headquarters — we’ll pay to take a tonne of carbon out of the atmosphere. At first, we’ll do this by purchasing credits from third-party verified emissions reduction projects, commonly known as ‘carbon offsets.’ These projects do things like protect trees that capture and store carbon, build wind energy, and prevent harmful greenhouse gasses from entering our atmosphere.”
*Source: Science Based Targets 2016
**Source: Fund factsheet, January 2020
***Source: As at 31 January 2020
^Source: Allbirds, We’re changing so the climate doesn’t 2019