ESG Enforcement Tracker

Key facts:

Prosecutors in Milan have investigated the supply chains of a number of fashion brands, following reports of worker exploitation.

In June 2024, a Milan court appointed a commissioner for a year to oversee Manufactures Dior SRL, an Italian subsidiary of Christian Dior, which is responsible for producing Dior handbags.

According to the court ruling, the company failed to take appropriate steps to verify the working conditions and technical capability of the companies, with which it had contracted.

Between March and April 2024, Italian police carried out a number of inspections at four of the company’s suppliers, Pelletteria Elisabetta Yang SRL, New Leather Italy SRLS, AZ Operations SRLS, and Davide Albertario Milano SRL. The working conditions were held to be unethical and exploitative, resulting in the special measures.

The appointment of a special commissioner allows the subsidiary to address and rectify supply chain issues while continuing operations.

According to the press coverage, this is a further example of the Italian courts proactively taking action against companies in the fashion industry for failing to adequately oversee its supply chains.

The court sent a proposal to Italy’s Chamber of Fashion and other associations with guidelines to exert better control over the Italian supply chain.

In its press release of 21 May 2025, the ICA stated that the investigation into Christian Dior Couture S.A., Christian Dior Italia S.r.l., and Manufactures Dior S.r.l. has been closed without establishing any infringement. The ICA explained that the companies accepted binding commitments including €2 million over five years to fund initiatives targeted at identifying victims of labour exploitation and providing them with tailored protections, training, support, and social and workplace integration.

According to the ICA, Dior agreed to amend its ethics and social responsibility statements, and implement new protocols to vet and monitor suppliers. The ICA further said that marketing and communication employees would receive in-house training on consumer protection laws. Suppliers and contractors would also be trained on labour law and the ethical principles outlined in the Supplier Code of Conduct adopted by the Dior group.

The decision came just a week after an Italian court placed a unit of fashion brand Valentino under judicial administration following revelations of worker abuse in its supply chain.

In another recent development, on 14 July 2025 the Court of Milan (Autonomous Section on Preventive Measures) placed LVMH subsidiary Loro Piana under judicial administration. The court found that Loro Piana’s apparel production was subcontracted through two companies, before reaching a Chinese-owned company said to be involved in labour exploitation. The factory which ultimately manufactured Loro Piana’s products reportedly failed to comply with workplace health and safety regulations, as well as with Italian national collective labour agreements concerning wages, working hours, breaks, and holidays.

Loro Piana “culpably failed” to verify the capacity of the contractors and subcontractors to which it entrusted production, and similarly failed to carry out effective inspections or audits along its supply chain. The court placed Loro Piana under a year-long administration, under which an external administrator is to monitor its compliance with demands on the control of its supply chain. The administration order will be lifted earlier if Loro Piana comes into compliance with its legal obligations.