As with another LVMH last year, the brand known for its vicuña wool has been placed under judicial administration for up to one year due to allegations of labor exploitation in its supply chain

Loro Piana store, The Shoppes at Marina Bay Sands

It was only a year ago that Dior made the news for corporate irregularities that threatened to dent their reputational standing. Allegations of labor exploitation in its supply chain also revealed staggeringly high markups of their bags that shocked the world. Now, another LVMH brand, Loro Piana, is similarly placed under court administration after they were believed to have “culpably failed” in monitoring its subcontractors, leading to workers, including migrants, being subjected to unsafe and exploitative conditions, according to Italian media. As the news broke, observers were wondering, again, about the effectiveness of LVMH’s efforts to address supply chain issues.

This is not the first time Loro Piana waded into far-reaching controversy. Last year, a March Bloomberg Businessweek report brought to light criticisms that Loro Piana was underpaying indigenous communities in Peru who harvest vicuña wool, the world’s most expensive fiber. While the brand sells vicuña sweaters for thousands of dollars (e.g., US$9,000 for a sweater or US$33,425 for a coat), the locals of Lucanas, who are reported to have been Loro Piana’s sole customer for vicuña fiber since 1994, receive a significantly lower amount (about US$280 for an equivalent amount of fiber). Some farmers were allegedly unpaid for their labor. Loro Piana may be known for their quiet luxury, but their operational missteps are loud and unmistakably clear.

In a recent Reuters report, readers were reminded that Loro Piana is the fifth high-end brand to be placed under judicial administration in Italy. Among the quintet, two are LVMH-owned. The others are Armani (implicated at the same time as Dior), Valentino, and the handbag company Alviero Martini. This recurring narrative of luxury brands embroiled in scandals of labor exploitation in Italy reveals a grim pattern that goes beyond isolated incidents. With Loro Piana, authorities are describing it as “serious negligence”. That’s clearly severe enough. This is increasingly looking less like a few recalcitrant suppliers; it seems to point to systemic vulnerabilities within the worn fabric of the “Made in Italy” luxury manufacturing model, and critically, a perceived inadequacy in the oversight by powerful conglomerates. The spirit of avarice, not an impotent apparition, seems to be doing its best to be helpful here.

This judicial intervention, a clear public rap on the knuckles, suggests that voluntary corporate social responsibility initiatives have achieved an admirable level of ‘not nearly there’. Brands have pledged better internal surveillance and apparently updated codes of conduct. Yet, the consistent uncovering of sweatshop-like conditions, including workers living in abusive quarters, toiling for up to 90 hours a week, and earning a mere fraction of the legal minimum wage, points to a profound disconnect between boardroom policies and factory floor realities. The courts are asserting that the pursuit of ever-higher profit margins has directly contributed to a tenacious disregard for basic human rights and labor laws. The knit of luxury and exclusivity continues to unravel, swiftly revealing a deplorable reality.

Photo: Chin Boh Kay