Dior Lagged Behind on UK's Supply Chain Disclosures

LVMH's second-largest fashion brand, Dior, was until last month behind on disclosures required by UK law regarding working conditions in its supply chain. Reuters found that Dior had outdated statements on its website about a third-party certification that had been terminated more than a year ago.

Under the Modern Slavery Act of 2015, UK companies with a turnover of £36 million ($46 million) or above must publish annual statements detailing steps to combat forced labor in their business and supply chains. Until July 19, Dior's UK website displayed an anti-slavery statement from 2020 and a sustainability certification that was no longer valid.

Dior, part of the $345-billion LVMH conglomerate, which is a major sponsor of the Paris Olympics, came under scrutiny after Italy's competition authority announced on July 17 that it was investigating whether Dior and Italian label Armani misled consumers about their commitment to craftsmanship and social responsibility. This followed a judicial investigation that revealed potential sweatshop-like conditions at some Italian contractors. The investigation led Europe's top asset manager, Amundi and other investors to urge LVMH to take more aggressive steps to monitor its suppliers' treatment of workers.

Dior condemned the illegal practices uncovered at some suppliers, stated it had ceased working with them, and was cooperating with authorities. Armani expressed confidence in a positive outcome following the investigation. Dior published a 2023 modern slavery statement on July 18, following Reuters' inquiries about its compliance with UK regulations. The updated document, approved by Christian Dior UK's board on July 18, is more comprehensive than the 2020 version. Dior plans to implement a training course to raise employee awareness of modern slavery and encourage action if wrongdoing is suspected.

Dior has not published statements for 2021 and 2022. The company did not directly address Reuters' questions about the missing statements. Although publishing these statements is mandatory by law, no company has been penalized for non-compliance, according to Sara Thornton, a professor of modern slavery policy at the University of Nottingham's Rights Lab. Some lawmakers and rights groups are pushing for penalties.

In 2020, Britain's Home Office estimated that 83% of eligible organizations complied with the Modern Slavery Act. LVMH stated on July 19 that its UK-based Dior subsidiary follows "group-wide procedures concerning respect for human rights and addressing modern slavery risk in our business and supply chains." Another subsidiary, Parfums Christian Dior UK, has published British modern slavery statements for 2021, 2022, and 2023.

LVMH Chief Financial Officer Jean-Jacques Guiony said on July 23 that the conglomerate was unaware of the alleged worker exploitation at Dior suppliers in Italy, adding that LVMH "accepted full responsibility for what happened." Guiony stated that LVMH would "intensify" supply chain controls, planning to strengthen audits and controls of its subcontractors.

A Certified Approach

Until July 19, Dior's website featured the Butterfly Mark, a certification by luxury-focused sustainability audit firm Positive Luxury. The certification, obtained in 2021, attested to Dior's sustainability strategy. However, Dior decided not to undergo reassessment in June 2023, leading to the termination of the certification and community membership.

Brands must remove the certification mark within 90 days after deciding not to be reassessed. Dior removed the certification mark and accompanying statement in July 2024. Dior and LVMH did not respond to requests for comments on the certification and logo.

Positive Luxury currently certifies or reviews approximately 170 brands, including LVMH-owned Belvedere Vodka. The audit assesses companies on environmental, social, and governance issues, including supplier oversight. Positive Luxury reassesses all certified brands every two years, adjusting its audit to new regulations.

Companies are preparing for new European Union supply chain rules that require tighter supplier audits to mitigate human rights and environmental risks.