Do watch buyers really value sustainability?

GENEVA – What influence does sustainability have on the sales of luxury watches? According to industry research, consumers are more concerned than ever about a watch's environmental impact. Deloitte's Swiss Watch Industry Study, released in October, found that 43 percent of industry executives surveyed said investing in sustainability was one of their “strongest priorities” for this year.

Still, it felt like sustainability was less of a focus at this year's Watches and Wonders Geneva, which ends on Monday, compared to previous editions.

Even the brand that has championed sustainability in watchmaking for the past two decades appears to be silent on the matter: IWC, which has been a leader on the issue since being certified carbon neutral in 2007, did not publish its annual sustainability report this year.

In a November report assessing the sustainability performance of Swiss watch brands, WWF highlighted that the industry was still lagging behind on key issues such as transparency, traceability and responsibility for the social and environmental impacts of mining. Nevertheless, IWC was ranked as the company with the “most ambitious” sustainability profile due to more detailed annual reporting and advances in manufacturing. The failure to produce a report is viewed by WWF as a step backwards.

Asked why IWC, part of the Richemont Group, had backed away from its commitment to transparent reporting, the company's chief executive Chris Grainger-Herr said the company would now provide the group with information about its environmental impact. “We are part of an ESG [environment, social and governance] We have created a new framework within the group and we have started reporting on it at the group level,” he said.

Less transparency – its impact will now be mixed with data on all of the group's brands – will not mean less progress, Grainger-Herr said. “Our goal is to continually improve in all important aspects [sustainability] Factors.” However, without appropriate reporting, it becomes more difficult to verify such claims.

Grainger-Herr also said the partnership would continue with supermodel Gisele Bündchen, who serves as an advisor to the IWC Sustainability Committee and has appeared in nature-themed campaigns for the brand. “Yes, we are working with her as closely as possible,” he said. He also confirmed that sustainability would remain a key marketing pillar for the brand. However, the sustainability section of the company's website did not appear to have been updated since 2022.

Research suggests that sustainability is important to luxury watch buyers. In its study, Deloitte reported that 48 percent of watch buyers said sustainability was one of the most important factors when purchasing a luxury watch, and that 41 percent of pre-owned watch buyers were also motivated by sustainability, second only to price considerations.

However, the report also found that sustainability is the fourth strongest factor when purchasing a watch – after brand image, design and price. And there is often a gap between what customers say and what they actually buy.

An industry expert suggested that IWC would be wise to step away from the sustainability message and leave the reporting to the group. “The decision for sustainability gives IWC a communication aspect, but not values ​​or vision,” said Oliver Müller, founder of the Swiss consulting firm LuxeConsult. “At the moment the brand lacks meaning, although the product and marketing mix is ​​well implemented.”

IWC's sustainability efforts have gained traction on an important issue in the industry, winning accolades from groups like WWF – but there doesn't appear to be a revival in sales

Richemont keeps a close eye on the financial results of its brands and Grainger-Herr declined to comment on IWC's performance. But according to a report from Morgan Stanley estimating the size of Swiss watch brands (of which Müller is a co-author), IWC's revenue fell from 908 million Swiss francs ($996 million) in 2022 to 726 million Swiss francs last year Year.

“The brand suffers from high price positioning compared to direct competitors, especially Breitling and Omega,” said Müller. “Unfortunately, the proportion of customers who buy a watch at this price solely or primarily based on a brand’s sustainability performance is very low.”

Industry-wide focus

Schaffhausen-based IWC has been at the forefront of more sustainable practices in Swiss watchmaking since achieving carbon neutrality certification almost two decades ago. In 2018, the company opened a $43 million state-of-the-art factory that draws energy from solar panels and water for cooling and heating from groundwater sources. It has also worked with entrepreneurial startups such as Boom Supersonic, an aviation company that aims to decarbonize supersonic air travel. When reviewing its activities, WWF concluded that IWC is the most sustainable luxury watch company in Switzerland.

Swiss watch brands such as Breitling and Oris have also placed emphasis on sustainability commitments in recent years. Start-up watch company ID Genève has caused a stir by focusing its product and marketing strategy on circularity, the principle of reusing existing materials and eliminating waste throughout the product life cycle. However, it is unclear whether their efforts will really translate into much customer demand. Reports of declining IWC sales last year came amid a fast-growing market, with the broader Swiss watch industry reporting record export figures (up 7.6 percent to 26.7 billion Swiss francs).

“We have [demand for sustainability] on an anecdotal level, but it’s not something I can measure empirically,” Grainger-Mr said. “We see this as an important driver as we understand that a product is made as responsibly as possible and that the brand strives to continually improve its work in this area.”

Deloitte's study found that the desire for sustainability in a luxury watch was more pronounced among younger buyers. “They make very conscious decisions about purchasing products,” said Christian Knoop, creative director at IWC. “They are interested in lasting values ​​and authentic brands. We need to work on our credibility, and that includes sustainability and improvements in material sourcing, production methods and environmental measures for buildings.”

At Watches and Wonders in Geneva this week, IWC presented a collection of Portugieser models that express sustainability through timeless design rather than buzzwords like traceability. One high-end piece featured a new complication the brand calls a “perpetual calendar” that could supposedly track the date up to the year 3999 and the phases of the moon for 45 million years if wound and maintained. The origins of the design go back to the 1930s.

“In the design process, it is important to create a design that is long-lasting and not just adaptable to the latest fashion,” said Knoop.

The law may still dictate watch brands’ approach to sustainability. Last year, Switzerland passed the Swiss Climate and Innovation Act, the aim of which is for Switzerland to become climate neutral by 2050.

Asked by The business of fashion As to whether the Swiss watch industry would be affected by the act, Cyrille Vigneron, CEO of Cartier – another ESG frontrunner in the industry – said that while the country's manufacturing processes were “quite fine”, upstream supply chain issues such as the Environmental costs of global distribution remained a “general problem”.

And he issued a warning. “The point where Swiss watchmaking is not really ready is transparency,” he said.