Luxury brands are facing not only a challenging economic climate but also a social climate unlike any other time in history. These corporations are being challenged to not only provide high-end products and experiences, but do so in a way that promotes positive social change. These businesses must also maintain margins for stakeholders, and contend with rising product costs while facing pressure from investors to take ESG (environmental, social and governance) practices seriously.
So how can these top global brands make a difference while maintaining the bottom line? They can start by looking at their deposit management strategies.
The top 5 luxury brands in the world by revenue earned over $250B in 2023. This amount of cash can have a profound impact on not just the economy, but the planet overall.
First, the banks where these brands place their deposits should be closely vetted for brand-values alignment, to ensure that the bank’s portfolio isn’t working directly against the stated goals for the brand.
For example, let’s say a top fashion brand has outlined that their main ESG priorities are combating climate change and promoting sustainable manufacturing practices. If this brand holds a $20 Million dollar deposit at a bank that loans heavily to the fossil fuel industry, that would not be values-aligned. The brand's deposits would be directly funding activity that is against its stated values.
In that same example, the brand can work with a company like Ampersand to partner with a network of banks that report on their environmental initiatives. The brand’s leadership could view reporting about key climate efforts, and be assured that their deposits were not primarily funding activities that they are not aligned with.
Secondarily, earning competitive returns on cash deposits can enable the luxury industry to directly fund important climate and social initiatives without impacting the bottom line. These returns can be allocated to projects that promote sustainability, such as renewable energy investments, sustainable supply chain improvements, or social programs supporting local communities. This approach ensures that while the business prospers, it also contributes to the greater good.
Ampersand makes this easy via our Impact Allocation Account, which is simply a second account that is funded with any portion of your interest earnings, which can be deployed, at your direction, to the organizations you support.
Transparency is key in these efforts, which is why Ampersand works with its clients to provide detailed impact reporting through our AmpersandAlign™ program. Regularly communicating these impacts to stakeholders, including customers, investors, and employees, can enhance the brand's reputation and demonstrate a genuine commitment to ESG principles.
Additionally, by transparently showcasing how their deposit management strategies align with their ESG goals, luxury brands can build trust and loyalty among their customer base. This not only supports the brand's social responsibility efforts but also strengthens its market position.
Luxury brands have a unique opportunity to leverage their significant financial power to drive positive change in both the economy and the environment. By aligning their deposit management strategies with their brand values, utilizing financial returns for social good, and maintaining transparency with stakeholders, these brands can meet the challenges of today's social and economic climate while maintaining their bottom line.
Learn how Ampersand can help your organization with deposit management strategies. Contact Ampersand to get started.
