LVMH, Puma, Patagonia, Nike, Adidas and More: Winners and Losers on ESG Sentiment
Luxury company LVMH, which owns Louis Vuitton, Fendi, Givenchy and a number of other brands, has been named the top fashion brand by sentiment in a recent study done by Permutable AI.
The artificial intelligence startup uses natural language processing models to track market sentiments, headlines, environmental, social and governance (ESG) markers and more.
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For this report, Permutable AI used its software to extract news from a variety of sources pertaining to ESG and the United Nations’ Sustainable Development Goals (UN SDG). Then, a natural language processing model determined whether the articles pertained to a specific company and its actions. From there, AI-powered sentiment analysis ascertained whether the articles portrayed the company in a positive, negative or neutral light.
The Louis Vuitton owner, though it has had issues with animal cruelty allegations this year, received high marks on sentiment where climate action, profit, diversity, equity and inclusion (DE&I) and clean energy are concerned. It did considerably worse when considering lawsuits, intellectual property, negligence and protests against it.
Meanwhile, Adidas took the cake as the worst-ranked fashion brand by sentiment. Just like LVMH, Adidas has struggled against animal rights activists, specifically related to kangaroo cleats.
The ex-Yeezy partner received high marks for sustainability-related news. It recently announced a partnership with DyeCoo, which allows it to use cleaner dyes in its products, releasing less CO2, and has worked to use deforestation-free leather in its product assortment.
But those initiatives alone couldn’t save the Rheon partner from a harsh truth: the industry and consumers alike are paying attention to its actions around labor and ethics. Its last-place position comes as a result of negative sentiments around labor standards, intellectual property, business ethics, hostility, lawsuits and other considerations.
This year alone, protestors have shut down a handful of events, targeting the Ivy Park partner after wage theft accusations.
The report notes that sentiment around Adidas was completed on Oct. 10. Late last month, the athletic wear giant called for a wage hike for Bangladeshi garment workers, alongside Puma and Patagonia, which took the second and third-place slots, respectively, for positive sentiment around ESG.
Only a month prior to that announcement, Adidas, Nike and Puma were slammed for allowing Cambodian garment workers to “languish” below the poverty line.
Nike joined Adidas in the worst-ranked fashion companies by sentiment.
The world’s most valuable brand earned the fifth-worst fashion ranking by sentiment award from Permutable AI. Similar to its competitor Adidas, Nike took harsh marks when considering labor standards, human rights, ethics, corruption and legal issues.
The Canadian government opened an investigation into alleged ties between Nike and Uyghur labor in China earlier this year. The sneaker giant, which has recently been the target of a number of thefts, also faced scrutiny from U.S. lawmakers over forced labor.
The other three lowest-ranked fashion brands were Balenciaga, Hermès and Boohoo.
Companies that have been long-heralded as ESG offenders, like Shein and Temu, are not part of Permutable AI’s index. The data it released in this report covers 207 fashion brands that it regularly tracks and measures sentiment on.
Despite Balenciaga’s effort to use more sustainable materials and its breakup with Ye, sentiment is still near rock bottom after a dicey advertising campaign in 2022, which featured children holding BDSM teddy bear bags. Permutable AI’s report notes that this was the main reason the Kering-owned luxury brand ended up as the second-worst fashion brand by sentiment this year.
Hermès, another luxury player, found itself garnering negative sentiment around corruption, lawsuits, hostility and corporate behavior, landing it at the fourth-worst fashion brand by sentiment this year.
PETA has repeatedly urged the brand to halt its use of exotic skins in its products. And though it has incorporated some mycelium leather alternatives, it has not completely stopped its use of animal-skin products.
Boohoo, the fast-fashion brand based in England, is the outlier among the brands generating the worst sentiments. Coming in as the third-worst this year, several of the gripes that landed the company there are specifically related to its lack of attention to the environment and DE&I.
The Frasers-backed brand has been on the receiving end of accusations about greenwashing and “unconscionable” work demands in its facilities. Despite its shortcomings, Boohoo Group signed the Pakistan Accord last month, which other large peers have still failed to do.
As those brands struggle with their reputation and sentiments, Puma, Patagonia, Gucci and Asics join LVMH in the top five fashion brands with the best ESG sentiments this year.
Puma, which came in at No. 2, received high marks for corporate governance, DE&I and environmental considerations. The Rihanna partner has worked on recyclable materials, phased out its use of kangaroo leather and has worked to slash its carbon emissions.
Meanwhile, Patagonia nabbed the No. 3 spot, with its reputation as an ethical B Corp. It received shining marks on labor standards, activism and environmental impact. The brand’s repair and resell program, Worn Wear, has gained traction, and its focus on eco-friendly materials has led it incorporate a planet-friendly odor-fighting textile technology.
Gucci came in fourth place, with positive sentiment surrounding clean energy, DE&I and environmental consideration, such as cooking up an animal-free material innovation. The Kering-owned luxury brand recently earned a circularity award at Milan Fashion Week.
Footwear brand Asics clinched the No. 5 spot, beating out competitors Nike and Adidas by a long shot. The company has recently been recognized for its actions related to the climate, and that showed in its sentiment analysis. The brand has a track record for using recycled materials in its assortment. It came away from the analysis with only one minor scratch on its record: a defamation lawsuit.
