Sarah Kent, BOF's Sustainability Editor, dives deep into the troubling revelations surrounding luxury brands like Dior and Armani, connected to illegal sweatshops in Italy. She discusses how these brands obscure labor exploitation under the guise of high prices and Italian craftsmanship while ignoring systemic issues. Kent highlights the industry’s 'open secret,' where unethical practices persist despite audits. The conversation questions the balance between ethical standards and profitability, exploring how consumer trust hangs in the balance amidst these revelations.
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The 53 Euro Dior Bag
The Dior handbag, retailing for 2,600 euros, was allegedly produced for 53 euros.
This cost disparity sparked outrage on social media, highlighting consumer concerns about value.
insights INSIGHT
Willful Ignorance
Luxury brands often use complex, fragmented supply chains.
This makes it difficult to monitor and prevent labor abuses.
question_answer ANECDOTE
Armani's Presence
An Armani employee was present in the factory during a police raid, highlighting brands' awareness of subcontractor practices.
The employee's role was quality control, not labor compliance, suggesting misaligned priorities.
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Over the past year, the pristine image luxury brands have built on their links to artisanal craft, ethical manufacturing and quality has begun to crumble, buffeted by a scandal that has linked labels including Dior and Armani to sweatshops in Italy.
According to investigators in Milan, factories producing for the brands were operating illegally and exploiting workers. Dior and Armani have said the allegations don’t reflect their commitment to ethical practices, but prosecutors say the issues uncovered by the probe are systemic and entrenched. Around a dozen more brands could still be implicated, with further cases expected in the coming months.
This week, BoF senior correspondent Sheena Butler-Young and chief sustainability correspondent Sarah Kent discuss the findings of BoF’s own investigation into how exploitative practices persist in luxury’s supply chains and what the scandal means for the industry.
Key Insights:
Luxury brands use their high prices and Italian manufacturing to sidestep concerns over labour practices frequently levelled against lower-priced labels. But the problems pervade even Italy’s most exclusive supply chains. “This may seem shocking and surprising to those outside this part of the industry, but in Italian manufacturing, everyone knows,” said Kent. “It's an open secret.”
BoF’s investigation found brands routinely turn a blind eye to labour exploitation, ignoring red flags raised by audits and sustainability teams in the interest of convenience and cost.
New regulations mean the risks associated with such scandals will soon be much more severe. Under incoming European due-diligence rules, brands could be subject to penalties of up to five percent of global revenue if they fail to adequately monitor and prevent labour abuses in their supply chains. “There are still a lot of questions around how that's going to be enforced and what that might actually mean,” said Kent. “But that is a chunky piece of change for any big company.”
The Business of Fashion Podcast