Inside the Fashion Facade: Unveiling the Italian Luxury Supply Chain

A Reuters investigation reveals systemic shortcomings in the Italian luxury supply chain, spotlighting Dior. Despite passing formal inspections, Dior's Italian production faced allegations of worker exploitation. Ineffective audits allowed such practices to hide beneath a reputable surface, illustrating broader industry challenges in maintaining ethical standards.

Dior, owned by luxury giant LVMH, is embroiled in controversy after formal inspections allegedly failed to uncover worker exploitation within its Italian supply chain, a Reuters investigation reveals. The fashion titan is under scrutiny following allegations surrounding sub-contractor AZ Operations, accused of operating a front for exploitative labor practices.

Unpublished court documents and audits reviewed by Reuters show that while AZ Operations passed multiple environmental and social inspections in 2023, a police investigation found the company was "de facto non-existent" and was exploiting undocumented workers. This has led Milan prosecutors to place Manufactures Dior under court administration.

The broader luxury industry faces challenges with Italian authorities uncovering systemic oversight issues across brands like Giorgio Armani and Alviero Martini. Brands dictate the depth of checks, often limited to direct suppliers, allowing issues to persist unnoticed. As consumer and investor pressure mounts, luxury giants are urged to reinforce their ethical oversight to uphold brand integrity.

(With inputs from agencies.)