According to LVMH’s head of image and sustainability Antoine Arnault, luxury is “sustainable by nature.”

It’s a common message within the industry, where high prices and claims of artisanal manufacturing are often used as proof points for ethical and environmentally responsible operations.

And yet just this week, a Milan court placed an LVMH unit under external supervision after an inquiry alleged that subcontractors in its supply chain had exploited workers. In April, the same court found evidence of sweatshop conditions in Armani’s Italian supply chain. Suppliers to around a dozen more fashion brands are currently under investigation in Italy, Reuters has reported. Meanwhile, earlier in the year, an investigation by Bloomberg called out exploitation in LVMH-owned Loro Piana’s vicuña supply chain. (Armani has said it has always had controls in place to minimise abuses, while LVMH has denied the claims relating to Loro Piana. The French luxury group did not respond to a request for comment on the Italian court’s decision).

Such findings are shocking, but hardly surprising. Though luxury brands like to position fashion’s environmental and social ills as a mass-market problem, the incidents are just the latest in a string of reports challenging the carefully cultivated perception that luxury goods are synonymous with ethical practices.

The reality is that many luxury players operate more like fast fashion than they care to admit. For years now, “exclusive” goods have been produced and sold by the millions in a shift towards high-margin mass production that has come with increased pressure on manufactures and greater risks of labour exploitation.

Rethinking Luxury’s Ethics

Even as luxury players increasingly weave sustainability claims into their image-building, most are continuing to operate in much the same way they always have: leaning on prestige and heritage to side-step demands for more transparency and accountability.

But the world around them is changing. Global regulations are tightening, with policymakers moving to make brands more accountable for human rights and environmental abuses in their supply chains. Investors are also demanding more, with sustainability-focused funds pushing businesses to address their environmental and social impact. Consumers might not always shop their values, but they also don’t want to spend $10,000 on a handbag that could be linked to sweatshop conditions.

As a baseline, luxury brands must adhere to strict guidelines on labour standards and human rights, enhance the efficacy of social audits, assure living wages, pursue rigorous third-party certifications to back up any sustainability claims, and foster transparent communication with stakeholders.

But more than this, to live up to claims that luxury is “sustainable by nature,” brands should leverage their substantial economic and cultural clout to move beyond mere compliance and ensure their operations have a positive impact on people’s lives.

That may seem like a tall order in an industry where transparency and progress on labour standards have lagged for decades, but there are signs of movement.

Take Chloé, which made history in 2021 as the first luxury brand to become a B Corp, a certification that verifies companies meet high environmental and social standards. Qualifying was just one step in a broader strategy that saw the company working on its supply chains in a bid to drive positive social impact through sourcing, while also reducing the brand’s environmental footprint. (Full disclosure: I consulted on the strategy).

Among other initiatives, Chloé adopted a policy of “social procurement,” seeking to leverage its purchasing power to create new opportunities and deliver social benefits. In 2020, the company launched a partnership with the World Fair Trade Organization, a community of social enterprises committed to ethical business practices. Unlike sporadic “capsule” collections, Chloé's approach is systematic, guided by concrete long-term targets. By the end of next year, the company is aiming for 30 percent of its products to be sourced under its fair trade and social impact framework.

By contrast, far too many of luxury’s sustainability initiatives remain stuck in pilot mode or forgotten within a season.

I still believe the sector has the power to set a positive example for the fashion industry, but doing so requires true leadership and a deep commitment to ethical conduct throughout the value chain. It necessitates setting high benchmarks for ethical conduct and sustainability and living up to them, not just marketing them.

Caterina Occhio is a sustainability advisor to the UN and luxury companies. She is a former EU and UN development aid manager and sits on the board of the World Fair Trade Organisation in Europe.

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