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Over the past year, the pristine image that luxury brands have built on a foundation of craftsmanship, ethical manufacturing, and ties to quality has begun to crumble, with scandals surrounding ties between brands like Dior and Armani and Italian processing plants. is being hit by.
According to Milan investigators, the factories producing these brands were operating illegally and exploiting workers. Dior and Armani say the allegations do not reflect a commitment to ethical practices, but prosecutors say the problems uncovered in the investigation are systemic and deep-seated. Around a dozen more brands may be involved, with further incidents expected in the coming months.
This week, BoF Senior Correspondent Sheena Butler-Young and Chief Sustainability Correspondent Sarah Kent discuss how exploitative practices persist in the luxury goods supply chain and how this scandal We discuss BoF’s own findings on what they mean for the industry.
Key insights:
Luxury brands are using their high prices and manufacturing in Italy to avoid concerns about labor practices that are often raised against lower-priced brands. But the problem also pervades Italy’s most exclusive supply chain. “For people outside the industry, this may seem shocking and surprising, but in Italian manufacturing everyone knows this,” Kent said. “It’s an open secret.” BoF research finds that brands routinely turn a blind eye to labor exploitation, ignoring red flags raised by audits and sustainability teams in favor of convenience and cost. It turned out that New regulations are even stricter, meaning that the risks associated with such scandals will soon become much greater. Under new European due diligence rules, brands could be fined up to 5% of their global revenue if they fail to adequately monitor and prevent labor abuses in their supply chains. “There are still a lot of questions about how it will be enforced and what it actually means,” Kent said. “But that’s a big change for any large company.”
Additional resources:
Inside Italy’s luxury sweatshops: An Italian investigation linking labor exploitation to luxury brands such as Dior and Armani has put the supply chains of up to a dozen more brands under the microscope, revealing how deeply embedded they are in the luxury goods system. The PR crisis comes at a volatile time for the industry, exposing shady practices and creating unpredictable problems, a BoF investigation has found. Has luxury goods finally taken sustainability into account? A series of Italian investigations linking major companies such as Dior and Armani to sweatshop workers comes as disillusionment with luxury brands grows. , putting new pressure on the industry’s most powerful asset: its brand image. Are luxury brands still worth it? The luxury industry’s “superweek” results highlighted how much consumer demand has fallen. Macroeconomic weakness is part of the problem, but there may be deeper problems with the value proposition of large-scale luxury goods.
