A resource-based perspective on corporate environmental performance and profitability in the luxury fashion industry

Abstract

The purpose of this study is to analyse if there is a positive relationship between corporate environmental performance and profitability in the luxury fashion industry. Using a multiple regression analysis on data from financial statements in the period 2010-2015 we were able to explore this on a sample of luxury fashion groups. Using both environmental performance and corporate social performance as dependent variables in the analysis, our findings show that i) there is a positive correlation between environmental performance and profitability within the firms of the study; ii) including more factors into the definition of corporate environmental performance by also focusing on community, employees and government gives a higher tendency of positive correlation on performance. This indicates that both environmental and corporate social responsibility engagement can enhance the profitability performance in the luxury fashion industry. This supports theory stating that luxury and sustainability can be harmonised. It also shows that focusing on sustainability can increase the competitive advantage even in the luxury sector. Lastly we found that focusing on all aspects of corporate social responsibility, and not only environment, generates a higher correlation.