Juliette Vartikar, Director of Sustainable Investing at UBS Asset Management and Founder of ArtSustainability, brings a strategic lens to the intersection of AI, sustainability and luxury, in this latest excerpt from our Luxury Insights Report into Art, AI and the Future of Creativity.

Read on as Juliette explores how AI can help luxury brands strengthen their environmental and social responsibility - from improving traceability in global supply chains to supporting fair wages for artisans and reducing production waste.

With a focus on ethical governance, she outlines both the opportunities and risks AI presents, urging luxury businesses to stay ahead of regulation and to integrate technology in ways that uphold transparency, fairness, and cultural integrity...

How do you think AI will influence the sustainability of a luxury brand, particularly in sourcing materials locally and paying fair wages to artisans?

AI has the potential to strengthen luxury brands' sustainability efforts by increasing transparency, traceability, and optimisation.

Materials sourcing: AI can ensure that materials are ethically sourced and meet both environmental and ethical standards. This could enable luxury brands to focus on materials with a lower environmental impact, such as organic or recycled fibres, while reducing the carbon footprint associated with long-distance transportation.

Human capital: AI has the ability to provide real-time insights into global supply chains, particularly in terms of fair wages and working conditions. By integrating blockchain technology, luxury brands can track the journey of raw materials from farms to workshops, ensuring adherence to local and international labour standards. Specifically, AI can monitor payments and working hours, ensuring that artisans are paid fairly and not exploited, which supports the continuity of artisan heritage and reduces the risk of economic displacement.

Production optimisation: AI can help reduce waste by optimising the use of resources without compromising quality or authenticity. It can identify areas where production may be streamlined to improve efficiency and minimise waste, such as reducing offcuts or simulating product designs to predict environmental impact. These AI solutions could enable luxury brands to uphold commitments to circularity and low-impact production.

What ethical considerations should guide the integration of AI into luxury production for sustainability and social responsibility?

As with any industry disruption, integrating AI into luxury production comes with both risks and opportunities. Risks include compliance with rapidly evolving regulations, the environmental impact of the technology itself, the balance between automation and craftsmanship, and data privacy concerns.

However, opportunities for improved sustainability include greater efficiency in sourcing materials, enhanced transparency in human capital management, and optimised production processes.

Governance considerations: Luxury brands must adhere to best practices and regulatory standards when implementing AI. As governance standards for AI are still evolving, with varying regulations by market and industry, luxury brands must pay close attention to these developments, especially as they operate globally.

to the UBS Sustainability and Impact Institute (Spring 2024), companies that neglect the societal risks of AI are exposed to greater risks, including regulatory challenges, loss of public trust, and the erosion of their social licence to operate. To avoid these risks, luxury brands must proactively address the social impacts of AI integration.  

Source: UBS Sustainability and Impact Institute. How AI can improve life outcomes around the world. June 2024.

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