Ep. 11: How Neiman Marcus makes sustainability fashionable

The fashion industry faces its own unique set of ESG and sustainability challenges. Understanding how to communicate complex sustainability challenges to diverse consumer audiences is critical for companies as they progress on their journeys. In this episode, Mike speaks with Ali Mize, an ESG and sustainability expert to learn more about Neiman Marcus Group’s approach to sustainability storytelling, and how companies can improve sustainability communication overall. 

Read the full transcript of the conversation on the Hower Impact website. You can also listen to this episode on Spotify, Apple Podcasts, Amazon Music and YouTube.

TRANSCRIPT

Mike Hower: For the fashion industry, communicating sustainability is so in. But companies must tread carefully in this complicated and ever-changing space.   

I'm here today with Ali Mize, Senior Director of ESG, Belonging, and Corporate Philanthropy at Neiman Marcus Group. Ali is a major expert in everything related to ESG and DEI. In a former life, you were in the policy world. And in the last couple of years, you've had a really great opportunity to essentially build an ESG function from scratch at one of the world's most recognized brands. Today, we're going to focus a little bit on how the fashion industry is communicating sustainability challenges and things like that.

So, as everybody is probably aware of, the fashion industry has a lot of unique challenges related to the S and the E and the G of course. And particularly when they're communicating these issues to consumers. Today, I definitely want to dive in a little deeper into how we get consumers to care about sustainability. How do we translate complex issues like circularity into messages that make sense to different types of stakeholders? And just kind of get to the bottom of what's the latest in sustainable fashion and communication. So, Ali, to kick it off — what are the biggest challenges to communicating sustainability in the fashion industry — particularly around greenwashing or anything else you want to touch on?

Ali Mize: Well, I think you already alluded to it in your opening remarks. One of the biggest issues is defining which ones to prioritize when you're communicating with customers when people get dressed every day. They're thinking about lots of different issues — whether that's climate change or circularity or deforestation or animal welfare, chemical management. There are so many different topics that a luxury fashion retailer could communicate with its customers about. It's really important that we as ESG professionals take the time to help them really zero in on what are the right ones to focus on. 

The second thing that I think a lot about is how to communicate the trade offs related to these different issues to the customer. Because, for instance, just because something is made with safer chemicals against your skin doesn't mean that it'll have the same technical performance that you would expect from other pieces of clothing that you may buy. So how do you communicate the trade offs when promoting sustainable and ethical fashion to the customer?

And lastly, I think the third biggest challenge is how do we communicate all of this information succinctly in an omnichannel environment where there may not be a lot of space to talk about all the different issues or their trade offs. And also how do you communicate it in a way that makes it aspirational for today's customer, right?

We're not asking them to sacrifice anything. We're asking them to think differently about the way they make choices. And so, we have a responsibility as ESG professionals to make sustainability an aspirational part of the marketing and communication story. 

Mike: Can you explain a little bit more for those who might not be familiar with the term ‘aspirational’ and what you mean by that?

Ali: Yeah. I mean that it is something that you look to, that you hope to see as being a normal part or becoming a normal part of your daily life. So, it may not be just yet, but it's something cool that you can work towards. 

Mike: Most are familiar now with a lot of the different regulations coming out around ESG governance and disclosure. Most recently, the SEC climate rule, CSRD in Europe, California climate rules, a few others — I know a lot of folks, even those that have been working in this a long time, are still a little bit confused as to what to do next. 

I know you spend a lot of time thinking about this with your job and just probably even just out of personal interest. Where do you see the current regulatory environment going writ large for ESG and sustainability communications? But also how would anybody trying to communicate sustainability in the fashion industry — how should they be thinking about the SEC rule and these other regulations coming out?

Ali: Sure. Well, I don't think the regulatory environment is going to slow down. And the EU isn’t going to lose its focus on fashion any time soon. I think as regulators continue to learn more about the social and environmental impacts of fashion as an industry, it's only going to continue. And I think customers are starting to demand that their elected representatives care about this issue, which is an interesting shift in the dynamic for an industry that's flown under the radar for so long.

I also just think the EU is making a really concerted push. So, I will be clear that Neiman Marcus Group is a privately held company that operates exclusively in the United States of America. So, we're not subject to the new SEC climate disclosure regulation or the CSRD. We are subject to the new California climate disclosure regulations.

But when we were building our ESG program from scratch a few years ago, some of the important goals that we set for ourselves was that we would aspire to hold our private company to public company standards and to treat our ESG data with the same rigor as our financials. So, that doesn't mean we always meet that goal or that commitment — but that's definitely something that we strive for and that we've striven for since the outset of our program.

So, that's really relevant to this current regulatory environment. When we think about things like the California or SEC bills, we were already well-positioned to meet a lot of the basic requirements in those. We already conduct an annual scope one and two footprint. We seek limited assurance with our public financial accounting firm, Ernst & Young.

So really proud as a privately held company that we were able to already meet some of those basic requirements. That was because we were listening to the voice of our investors, and we already knew that those were demands and expectations that they had of us. I think where the SEC and California legislation has really made us lean in relates to going deeper into our Scope 3 emissions and making sure that we're not just screening them every few years — but that we're measuring Scope 3 emissions, which are the largest part of our footprint, obviously, on an annual basis, and that we're quantifying our climate related risk. As we work with our finance, legal and auditing teams to move toward more integrated reporting.

So, that's always been something that we have wanted to do. But I think that this new regulation has really hastened our efforts in that space. And the last thing that I would say, particularly as we look at what's coming out of the EU as a predictor of what will eventually come into the U. S. regulatory environment, is the regulation the policy that you alluded to earlier around greenwashing or product labeling and claims. We're paying a lot of attention right now to how we verify the sustainability product claims that our brand partners pass along to our merchants before we pass those along to the customers and include them in our fashion for change or conscious curation.

Mike: That brings up a really good point. I know I've been working with some privately held companies as well. And some of them do business in Europe, so they're subject to CSRD, but I’ve been thinking a lot about when we communicate sustainability — especially with the green washing regulations coming out of Europe — how do we make sure that we're saying stuff that's interesting, but also compliant? Do you partner closely with your legal team when you're making big, new claims — or,  how does your legal team factor into your communication strategy? 

Ali: Well, they help guide us on what level of transparency is appropriate to provide to the customer at the most basic level.

So if you go on to Neiman Marcus dot com or Bergdorf Goodman dot com and visit our fashion for change and conscious curation edits, you can click a little button that says choose your criteria or learn more where you can do a deep dive into the list of third party certifications or verifications that make a product claim true.

So, when you filter for products made with sustainable materials or by diverse-owned brands or by products that give back, you can understand what child attributes or child certifications make that product claim true. And that's a really important part of the way we preserve our customers' trust and maintain our own credibility.

And then also we write clear descriptions of these things into our partner contracts so that they understand when they're passing a claim along to us and telling us that something is certified or verified, that if we pass that claim along to the customer, they hold liability in that process too. So, our legal partners are really important in that journey.

Mike: Speaking of communicating to consumers. That's a big word. I mean, consumers are literally everybody. I know, your customers tend to come from certain segments, but in general, it's a pretty diverse audience. And I'd like to dive into one particular term that I think is something that you're focused on a lot. And I think it's something that's still a point of confusion for a lot of consumers. This is this idea of circularity, which if you're a sustainability nerds like us, you hear about it all the time and it's pretty straightforward. But, you know, even I know… is that your dog? It's becoming a tradition on this podcast for dogs to bark. So, don't worry whether it's my dog or someone else's.  

Anyway, there's a whole long list of vocabulary that  is going to be confusing to the average person who doesn't have time or interest to go in and study all this stuff. So, I'd like to know a little bit about how Neiman Marcus Group is communicating topics like circularity — and then maybe any advice you would have  to any consumer facing brands on how to communicate circularity and other niche topics like that. 

Ali: Yeah. So, the first thing I'd say is it doesn't always have to be termed circularity when you're discussing it with the customer. We discuss it in terms that resonate with them — whether it's extending the useful life of your most loved luxury items. It's a big part of our relationship selling model is the fundamental thing that I would say. We currently communicate about Neiman Marcus and Bergdorf Goodman circular services online, so those can be anything from alteration services for garments to repair on shoes, handbags, jewelry, resale, for shoes, handbags and accessories with fashion file or product donations with giveback box.

Those are our four key focuses on what we would call circular services for joining us. So they're definitely all available online, and then we promote them in other unique ways throughout the omnichannel environment. Sometimes you'll see them featured in Neiman Marcus's book, seasonal book, which is one of our key marketing tools. It's a print magazine that goes to our top clients. We also have QR codes on some of our Neiman Marcus online boxes. So when you receive a large shipment from Neiman Marcus online, it may have a QR code directing you to print a free shipping label to reuse the box for a product donation to your closest local charity.

But like I said, one of the main ways we promote circular services is through our sales associates. Since we really view it as a critical piece of our relationship selling model. And the reason that is, is because we recently partnered with our customer insights team to do a little research and found that when a customer engages in an alterations or repair service with Neiman Marcus, their spending with us increases by 73 percent in the 12 months following that service. 

Mike: Wow. 

Ali: Huge lift. They view us all of a sudden as the partner for their closet management. We're not just here to sell them items. We're here to help maintain the life of the items that they purchased from us as well. And the customer doesn't necessarily think of that as circularity, even though it's contributing to extending the life of what's already produced.

And decreasing the demand for the use of new natural resources. So, that's why I say we don't always have to call it circularity. I think in our mind as sustainability professionals, that's tempting to do, but that has been one of our major lessons. We also build circular services into our digital assisted sales models. So, for instance, our connect application is what our sales associates use to identify sales trends among key clients and figure out how to do outreach. And so if they can see, for instance, that someone bought a pair of blue batons from them three years ago, they can guess that the bottom of those Louboutins may need to be freshened up or repainted.

And so they're a prime candidate to reach out to for repair services. So how do we start to use intelligent client management systems to refer people to our circular services? And there's a lot of training involved in that process as well. So again, less about circularity, more about closet management, but it all achieves the same goal, which is reducing the demand for new natural resources.

Mike: I love that approach. And actually, I hate to say this as a person who makes a living communicating sustainability, but it seems like the less we communicate sustainability, the more we communicate it sometimes, right? It's kind of like Fight Club. Like don't talk about Fight Club. Don't talk about circularity.

Don't talk about sustainability. Because so many of these words are either too complex or they've become politicized. So, if you can just communicate it in a way that is clear, concise, you don't even have to use these words. We love our buzzwords, but we don't need to use them all the time.

Ali: Absolutely. 

Mike: Love that. We already touched on how consumers can care about sustainability in a way, but actually maybe we could talk a little bit higher level. So, okay, we're not using terms like circularity and actually talking about environmentalism or the social piece in your communication.

How can you use your company as a platform to actually get companies to care more about climate change? How would you even approach that? 

Ali: Yeah, I think three key things. I'll go back to how you make it easy for the customer, right? How do you reduce the friction that's involved in getting them to learn about these topics and then to act on them?

I think the first thing is to give them very specific tools to engage with the topic. So, like I mentioned, we have our fashion for change or conscious curation edits where I as a customer can go in and filter for products that match the values that I care about most whether that's sustainable materials or products that are manufactured in factories that protect workers or use safer chemicals, whether I care about products that have digital product passports, it's a self service journey that I think is really powerful and letting the customer explore the topic of sustainability circular services that we discussed are another great example. We also have point of sale fundraising where the customer can engage and donate to causes that we care about and learn about those causes through our sales associates at point of sale. So, providing really distinct programming that gives the customer a clear way to engage is always the first and foremost priority.

I think the second thing is once you have those tools and programs in place, featuring them in your mainstream marketing and not letting them become just like a siloed thing that the ESG team does over on the side. They have to show up particularly within fashion in seasonal campaigns, right? And the more you can integrate them into mainstream marketing, the more aspirational it becomes.

And then lastly, no jargon, don't don't use jargon. Just talk about what the client cares about, which is maintaining their items, staying at the forefront of trends and sustainability and a lot of the cool innovations that are making our world a better place to live are definitely trends. So, we can talk about them that way.

Mike: I'm recalling a conversation you and I had a few years ago — maybe at a conference — where we were talking about how the rising generation of Millennials and Gen Z as they become wealthier they're becoming more attracted to the concept of luxury and sustainability going hand-in-hand.

Is that still a trend that you're seeing play forward? Like, well off folks that want to buy trendy stuff. Is sustainability still one of the bragging rights that they're looking for? 

Ali: Absolutely. I still don't think that's as prevalent as we want it to be. I think there's more work to be done, but I definitely think we see younger generations buying less, but better.

It's no longer in fashion to do hauls. Like we used to see a lot of young people do on social media. I think that's slowly going out the door and they're thinking about how can I shop in a more elevated way and buy fewer items but buy better quality and pieces that have a story and I think for instance that's why we see vintage taking off the way that it has isn't necessarily because it's better for the environment.

I think that's a secondary benefit. But I think when you buy vintage, you have an item that has a really cool story that's unique and exclusive to you that not everyone is wearing when you walk down the street. 

Mike: Yeah, thrifting is popular. I definitely don't mind a stroll through a thrift shop to find something good.

Ali: Yeah, well it's happening in the luxury space too. We just added a pre-owned attribute to our Fashion For Change edit with vintage watches and jewelry and it's been performing really well among our luxury clients as well, our older luxury clients as well. So, I think it's a trend that we see spanning generations of customers.

Mike: Right. So you're doing a lot of communication on the sustainability front here. How are you measuring success? I know you've got a bunch of goals that you're making progress on the strategy side of things, but  how do you know if you're succeeding in your sustainability communication strategy?

Ali: Yeah, I think a few ways, I think first and foremost, it's sales. How are sales of sustainable and ethical products going? Really proud to say that, last week for the first time, we just surpassed 9 percent of company sales coming from sustainable and ethical products in our fashion for change and conscious curation edits, which is huge for us.

I think that's a great indicator of where this progress is heading. And I think we also track the number of items whose life we've extended through circular services. So, how many people are using these services, which services are they using and why? For instance, we still see alterations on new items, outpace alterations on customer owned merchandise.

So that's telling me a few things. It's telling me that when people get a piece that fits their body to a T or that is personalized, they're going to keep that item longer, but it also means that there may be barriers to a client feeling comfortable bringing their customer owned merchandise into an even more store.

How do I think differently about that client journey and tweak a few things to make that a more common thing that happens? So, we definitely look at service numbers as an indicator of our sustainability communication success. And then lastly, we track things like net promoter score for our brands or even on the employee side, our employee satisfaction scores because we know that these topics matter not only to our customers, but also to the people that work at Neiman Marcus and Bergdorf Goodman and sell all of our sustainability efforts to our clients.

So, how do we make sure that they're considering us the best place to work because of what we're communicating about sustainability as well. 

Mike: So, the E gets the most attention with I'd say sustainability communications in general, focus on environments. But the S is also very important. And I know part of your role is also overseeing belonging, uh, DEI at Neiman Marcus Group.

And I'm curious how you approach this, not only in this role, but maybe in previous roles, how you've communicated social impact and just the S in general to different stakeholders. 

Ali: Yeah, I think it's really important to look at which social issues are inherent to your brand's DNA. At Neiman Marcus Group, we are a female founded, female majority company that outpaces the U.S. population in racial and ethnic diversity, and we also have an openly gay CEO at our helm. And so, social issues, DEI issues, they're all very natural for us to talk about because we've cared about them and acted upon them for so long. I think where we see companies get in trouble is when they try to speak to things that they haven't had a connection to for very long just because it's relevant for the moment.

So, that's definitely something that we avoid doing is we only speak to issues that feel natural to us that we've had a longstanding connection with. We generally also try to speak to them in tandem with external partners who are doing really cool work in the space. So, we leverage our foundations to support organizations that are advancing social topics that are important to us and let their work shine resonates with our customers as well because — as an organization with a more affluent customer base —  we do see them have a lot of philanthropic interest since they love when we introduce them to new organizations and they can get the season's latest fashions while also making a social change.

I think that's something that really resonates about our business model. And lastly, I think we try to do it in person, you know, social issues are meant to be discussed in community and a really important part and a unique part of Neiman Marcus Group's sales model is something called “retail attainment” where we bring the retail environment to life through in person events that bring in engaging community perspectives and activations where you can engage directly with the brands or the non profits making a difference. And so I think incorporating a discussion of social issues into our retail attainment model in addition to other mediums like social or print is a really effective strategy for us. 

Mike: I love everything you just said there. And I think we're seeing kind of a reckoning right now with the anti-ESG backlash. It scared a lot of companies that were quote unquote faking it — or maybe it wasn't quote unquote — they actually were faking their interest in social impact. And, we've seen some DEI functions be completely removed or rolled back on, unfortunately. I don't really have a question on that. I think it's more of an observation, but I'm curious to see, once the dust settles on this latest round, if you see companies like Neiman Marcus Group who were already doing it for the right reasons, and they're just moving forward, but we're going to need those companies that got scared away, maybe to rethink their approach next time instead of just jumping on the bandwagon to take to you said like find what's natural. I think that's actually the nicest way of saying what's material I think i've ever heard like just what feels right what feels natural is also probably what's material to your business, right?

So approaching it that way could be really effective. Well, and as you ask yourself what's natural and what feels right for your business you're going to answer in business terms right. And you're not going to use wonky sustainability terms to answer that question. You're going to say, we have this challenge or this opportunity. And so I think the more that we can, again, speak about business issues as social and environmental issues, the better off we'll be.  

I always like to wrap these interviews with a quick question about your own career journey. I know you've done a lot of different things and we could have a whole podcast to your background — but for anyone listening here who's trying to break into sustainability, not just as a communicator, but even just in general, what's your kind of quick advice of how would you approach breaking into sustainability or advancing a career in sustainability?

Ali: Be naturally curious about other people, their problems and how you can help solve them and make every career a sustainability career. I think I didn't start off in a traditional sustainability role. I've been really intentional about building a portfolio career centered around stakeholder management.

And learning how to speak the language of different key stakeholders that I interact with on a day to day basis. 

Mike: All right. Well, that's all the time we have for today. Ali, thank you so much for your insights. This is super helpful. For those of you who are on LinkedIn, definitely follow Allie. She puts some great content out about her work at New Marcus and just other ESG thoughts. Thank you so much for your time today, Ali.