Luxury’s harmful secrets
Five of the biggest luxury brands have been found severely lacking when it comes to their legal and ethical obligations to disclose risks around sustainability and human rights.
One of the reasons Dark Luxury exists is a Bloomberg investigation into Loro Piana’s vicuña wool, the rarest and most expensive fibre in the world. The Lucanas community in the Peruvian Andes that herds and shears the animals received about $280 for the quantity of fibre that ends up in a roughly $9,000 jumper.
Some villagers worked the annual shearing for nothing and had never seen a finished garment. We put that to Loro Piana’s management at a conference last year, who didn’t really want to talk about it. Earlier it had become clear that the company told Peruvian officials it does not verify whether the people supplying its fibre are paid at all.
Since we launched last year we’ve reported on how Louis Vuitton treats its retail staff, and on the Milan prosecutor whose investigations have turned a fringe issue over luxury’s treatment of its subcontracted workers into a national scandal.
What the luxury industry does and doesn’t know, and what it chooses not to know, about its supply chain, has never been more relevant.
As LVMH CEO Bernard Arnault likes to say, he is fond of the luxury business because it earns luxury margins. This publication exists partly to suggest that some of those margins might be redirected towards the problems the rest of this newsletter describes. The Arnault family has received billions of euros from its private holding company, Financière Agache in the last few years. The supply chain, as you’ll see, is run on a rather tighter budget.
For this week’s edition we’ve gone line by line through an extremely detailed and highly critical academic paper which reveals how five luxury firms (LVMH, Kering, L’Oréal Luxe, Hermès and Christian Dior) responded to France’s mandatory sustainability-risk law.
The paper, Transparency or opacity?, is published in the Social Responsibility Journal and is, as far as its authors can tell, one of the first studies to examine the luxury sector’s obligations to do reporting on its supply chains. I’ve interviewed two of its three authors, Dr Claire Lindsay and Candide Hammel of Heriot-Watt University in Edinburgh, who along with Professor Marylyn Carrigan read and analysed 35 annual reports, picking through subsections of the annual reports.
They found some extraordinary things. The main takeaway is that what these firms don’t say about their supply chains is more interesting than what they do say, and that it appears as if several of their own sustainability initiatives have quietly been dropped without anyone announcing it. Ultimately, luxury firms are only damaging themselves by failing to follow the spirit of the law.
If you’re a paid subscriber, skip down to the feature and the interview. If you’re a free subscriber, a brief request.
This story took a lot of reporting, and there’s plenty more on the way. I have several stories in the works from freelancers on a similar theme, each of whom I pay. Some of the stories in the pipeline are legally delicate enough to need a media lawyer who costs hundreds of pounds an hour. I also pay for subscriptions to dozens of publications so I can bring you the weekly round-ups, and for subscriptions to image services Getty and Alamy. The more paid subscribers this newsletter has, the more I can report, and the more freelancers I can commission.
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Now, the story. Here’s a preview of what’s ahead:
What luxury reports don’t say is more interesting than what they do
Savoir-faire is apparently not a safeguard
Inconsistency and numbers that stop being reported
Whistleblowing, where?
A ‘box-ticking’ exercise
A Q&A interview with the reports’ authors
What luxury companies don’t say about their supply chains is hurting them
France’s Devoir de Vigilance (duty of care) law, in force since 2017, requires large companies to do five things and report on them: map their supply chains, assess the risks to workers and the environment, take preventive action, run an alert mechanism and monitor everything. It is tougher than many other modern slavery laws, like the UK’s Modern Slavery Act, because the content is mandated rather than left to a firm’s discretion.
On that test, all five firms in the report (a reminder: that’s LVMH, Kering, L’Oréal Luxe, Hermès and Christian Dior) technically comply, but the authors’ verdict on what’s in them is not flattering. The whole thing reads as “a box-ticking exercise” lacking the transparency the law was meant to force. The reporting, the paper argues, leans so heavily on positive news that, rather than reassuring anyone, escalates the very risks it is supposed to manage.
Eight years ago the picture was bleaker. Five years after the Rana Plaza collapse in Bangladesh killed more than 1,100 garment workers, Fashion Revolution’s 2018 Transparency Index found Dior disclosed virtually nothing about where its clothes were made, while Dolce & Gabbana, Chanel, Marc Jacobs, Versace and Giorgio Armani each scored under 10 per cent of the available points. Things have improved since then, but that progress arrived in lockstep with the French vigilance law, Germany’s supply-chain act, the EU’s incoming due-diligence directive and a run of Italian prosecutions.
Which is the polite way of saying that the luxury industry has improved its transparency at roughly the pace it has been forced to. It has been pulled into the future, kicking and screaming, by the Rana Plaza disaster, by public outrage and an Italian prosecutor, and it’s still dragging its heels.
What the reports don’t say is more interesting than what they do
