The Business of Fashion Podcast

Luxury’s Italian Sweatshops Problem

Jan 3, 2025

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.

24:10

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Episode guests

Sarah Kent

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Quick takeaways

Investigations reveal systemic exploitation in luxury fashion supply chains, highlighting the stark contrast between high retail prices and unethical labor practices in production.

The luxury industry's complex subcontracting methods create accountability issues, exacerbating consumer distrust and prompting calls for greater transparency and ethical practices.

Deep dives

Allegations of Exploitation in Luxury Fashion

Investigations have revealed that several high-profile luxury brands, including Dior and Armani, are linked to sweatshops operating illegally near Milan. These factories allegedly pay workers below minimum wage, enforce excessive hours, and neglect safety standards, leading to systemic exploitation within the luxury supply chain. The situation began with an inquiry into Alvearro Martini, which expanded to encompass other brands, showcasing an entrenched issue within the industry. The contrast between the retail price of luxury items and their production costs highlights the troubling practices at play, exemplified by a handbag sold for approximately €2,600 that was reportedly produced for as little as €53.

Intro

4min

Unveiling Fashion's Open Secret

8min

Ethical Dilemmas in Fashion Supply Chains

3min

Ethics vs. Profit in Fashion

8min

The Future of Supply Chain Transparency

3min

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.”

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The Business of Fashion Podcast

Luxury’s Italian Sweatshops Problem

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Allegations of Exploitation in Luxury Fashion

The Complexity of Supply Chains

Consumer Awareness and the Future of Luxury Brands

Remember Everything You Learn from Podcasts