For years, shoppers have known about scandals involving cheap clothing sold in high street stores. Workers making clothes for major brands have reportedly been beaten for demanding fair wages, and desperate pleas for help have been found hidden in garments. There have also been reports of hidden child labor, and some workers in UK factories may even be trapped in modern slavery.
Now, following a series of labor investigations by prosecutors in Milan, the luxury fashion industry is facing similar scrutiny.
Last week, Loro Piana—a century-old Italian brand known for its high-end cashmere sweaters and “quiet luxury” style, favored by celebrities like Gwyneth Paltrow and featured in Succession—was placed under court supervision for 12 months over allegations of worker exploitation.
The ruling stems from a 2023 investigation into Italy’s luxury supply chain. According to the court, Loro Piana—owned by luxury giant LVMH—outsourced production of some items, including cashmere jackets, to a Chinese-operated fashion company, which then subcontracted the work to two other firms. These were illegal workshops operating on the outskirts of Milan.
In May, Italian police found that 10 Chinese workers—five of them undocumented migrants—were forced to work up to 90 hours a week for as little as €4 per hour.
It’s important to note that Loro Piana itself is not under criminal investigation. If the company meets legal requirements by the court’s deadline, the order will be lifted.
In a statement to The Guardian, Loro Piana said the supplier had not disclosed the use of subcontractors. The brand added: “Loro Piana learned of this situation on May 20 and ended all relations with the supplier within 24 hours.”
However, the case has further damaged the reputation of “Made in Italy,” a label usually associated with high-quality craftsmanship.
Loro Piana is the fifth fashion house placed under court monitoring in Italy since 2023. Both Armani and LVMH’s Dior faced similar actions last year, though their orders were lifted early after they took corrective steps. In May, a Valentino subsidiary was also placed under judicial supervision.
Last year, an investigation revealed that Armani bags selling for €1,800 were being made by a Chinese subcontractor for just €93, then sold to the brand for €250. Similarly, a Dior subsidiary was fined for paying as little as €53 for bags retailing over €2,000.
Loro Piana addressed reports that some of its jackets, which sell for over €3,000, were allegedly produced for just €118. The company stated: “The reported costs do not reflect what Loro Piana paid its supplier, nor do they account for all expenses, including raw materials and fabrics.”
Many consumers assume luxury brands operate ethically. But Deborah Lucchetti of the Clean Clothes Campaign says this is a myth. “Luxury relies on a system of cost-cutting, profit maximization, and opaque subcontracting, which often exploits workers.”“Many immigrant workers have no protection or contracts,” she says.
Lucchetti highlights another case in Prato, Tuscany, involving workers in the Montblanc supply chain who claim they were fired after speaking out against harsh working conditions. “All of this is shielded by commercial audits that protect brand reputations, not workers,” says Lucchetti. “Honestly, how is this different from fast fashion?”
Montblanc told The Guardian that it had ended its contract with the firm for failing to comply with its parent company’s supplier code of conduct and for working with an unauthorized subcontractor. The company stated, “Neither surprise inspections nor a third-party audit in early 2023 found evidence of the alleged poor working conditions.”
They added that the supplier later dismissed six workers—out of roughly 60—ten months after Montblanc had stopped working with them.
Meanwhile, a Bloomberg investigation last year alleged that Loro Piana underpaid Indigenous Peruvian workers who supply vicuña wool, known for its softness. Loro Piana denied the claims, stating, “Since arriving in Peru in the 1980s, we have upheld the highest ethical and responsible business standards.”
These allegations come at a tough time for the luxury industry, with tariffs, wars, and financial instability slowing demand. Whether supply chain scandals deter buyers or not, steep price hikes have clearly hurt sales. According to HSBC, luxury prices in Europe are 52% higher than in 2019. The fact that many items cost only a fraction of their retail price to produce may also turn consumers away.
Sarah Kent, chief sustainability correspondent at Business of Fashion, says it’s unclear how much these scandals will affect sales. “Historically, luxury shoppers haven’t been very responsive to scandals. What’s different now is that scrutiny over supply chains coincides with debates about whether luxury goods are still worth their inflated prices—especially amid complaints about declining quality.”
Loro Piana’s chairman, Antoine Arnault—who also oversees LVMH’s environmental strategy—has called luxury products “sustainable by nature.” Speaking at the 2023 Global Fashion Summit in Copenhagen, he said, “They’re made from the finest materials, built to last, and repairable. That’s what sets us apart from the rest of fashion.”
Yet the gap between fast fashion and luxury seems to be narrowing. Fast fashion giants often blame complex supply chains for labor abuses, but luxury brands—despite their claims of exclusivity—face similar scrutiny.The fashion supply chain is often exploited for cheap labor. Some specialized tasks like embroidery may be outsourced because brands can’t handle everything internally. Luxury brands sometimes create the illusion that this work is done by small artisan workshops, justifying higher prices—when in reality, some items are produced in large factories that mistreat workers.
Lucchetti argues that the root causes of exploitation must be confronted directly: “The issue uncovered by Milan prosecutors is systemic and can’t be fixed quickly, especially not through voluntary agreements. The real problem lies in unfair business practices and the low prices brands force on suppliers, pushing them to violate laws and labor contracts just to stay competitive.”
Italy’s Competition Authority has previously investigated misleading ethical claims. In May, Dior settled an unfair-practices case by agreeing to donate €2 million over five years to anti-exploitation efforts.
Kent points out that Milan prosecutors see subcontracting abuses as an inherent flaw in the system, not an accident. “Luxury brands routinely ignore red flags to maximize profits,” she says.
She adds: “Critics argue that brands face minimal consequences when caught in scandals. Stronger financial penalties for failing due diligence could drive faster change.”
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