Luxury brands have faced increasing public pressure concerning worker conditions in supplier facilities. The Business & Human Rights Resource Centre reported that
“luxury clothing company Loro Piana (part of LVMH) has been put on judicial administration over the abuse of Chinese workers in its Italian supply chain.
A factory producing Loro Piana-branded jackets allegedly subjected ten Chinese workers, including five undocumented workers, to 90 hour and seven-day workweeks for payment of just EUR4 an hour. The workers slept in rooms inside the factory. The employer was reported after he attacked a worker who asked for unpaid wages. The worker required 45 days of treatment after the violent attack.
The court in Milan found Loro Piana ‘culpably failed’ to oversee its suppliers to pursue higher profits. Reuters reports that Loro Piana subcontracted work through two companies that had no manufacturing capacity to Chinese-owned factories in Italy.
Loro Piana faces no criminal probe, but it will be monitored for a year, although the administration may end earlier if the company shifts its practices in line with requirements.
In a statement, the company blamed a supplier for subcontracting work and said it had ended its relationship with the supplier.”
Wow – “‘culpably failed’ to oversee its suppliers to pursue higher profits”… Harsh words, and not the kind of reputation any brand wants. Supplier relationships are inherently complex, but the risks extend to subcontractors and beyond. When conducting supplier due diligence, make sure you thoroughly understand (and control) when and how subcontractors are used because their problems also become your reputation. If you don’t already subject subcontractors to the same due diligence as direct suppliers, you should consider doing so.
Members can read more about supply chain risk management here.
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Photo credit: Florence Piot – stock.adobe.com
