LVMH subsidiary Dior has been slow to disclose its supply chain, making it outdated… | kbnmart

Dior, LVMH’s second-biggest fashion brand, was until last month lagging in making disclosures required by British law about working conditions in its supply chain, Reuters has learned, and has published outdated data on its website regarding a third-party certification it terminated more than a year ago.

In Britain, the Modern Slavery Act 2015 requires companies with a UK turnover of £36 million ($46 million) or more to publish annual statements on their websites outlining the steps they are taking to combat forced labour in their businesses and supply chains globally.

As of July 19, Dior’s UK website was displaying an anti-slavery statement from 2020 and a sustainability certification that is no longer valid, according to a Reuters review of company filings.

Dior, part of the $345 billion LVMH group and receiving a global marketing boost as the title sponsor of the Paris Olympics, has been under the spotlight after Italy’s competition authority said on July 17 it was investigating whether it and Italian brand Armani misled consumers about their commitment to craftsmanship and social responsibility following a judicial probe that uncovered sweatshop-like working conditions at some Italian contractors.

The investigation has prompted Amundi, Europe’s largest asset manager, and other investors to demand that LVMH take tougher steps to monitor its suppliers’ treatment of workers, the investors told Reuters.

Dior condemned the illegal practices uncovered at some suppliers, said it had stopped working with them and was cooperating with authorities. Armani expressed confidence in a “positive outcome following the investigation.”

Dior has published a statement on modern slavery for 2023 after Reuters inquired on July 18 about its compliance with the UK regulation. The new document says it was approved by the board of its UK subsidiary Christian Dior on July 18.

In its updated statement on modern slavery, which is longer and more detailed than its 2020 statement, the French brand said Christian Dior UK is planning a training course to raise employees’ awareness of modern slavery and encourage them to take action if they suspect wrongdoing.

“We have been preparing an updated statement on modern slavery, which… has now been published on our website,” Dior said in a written statement issued on July 19 in response to Reuters inquiries about the anti-slavery disclosure.

As of Aug. 5, Dior also had not published data for 2021 and 2022. The company did not directly address Reuters’ questions about its missing data.

Although data release is required by law, no company has been sanctioned for non-compliance, according to Sarah Thornton, a professor of modern slavery policy at the University of Nottingham’s Law Lab. Some lawmakers and human rights groups are pushing for sanctions.

In 2020, the UK Home Office estimated that 83% of eligible organisations complied with the Modern Slavery Act.

LVMH said in a July 19 email to Reuters that its UK-based subsidiary Dior has “group-wide measures in place to respect human rights and address the risks of modern slavery in our business and supply chains.”

Another subsidiary, Parfums Christian Dior UK, has published data on modern slavery in Britain for 2021, 2022 and 2023.

LVMH CFO Jean-Jacques Guiony said on a call with analysts on July 23 that the group was not aware of the alleged exploitation of workers at Dior’s suppliers in Italy, adding that LVMH “accepted full responsibility for what happened.”

LVMH will “intensify” controls on its supply chain, Guione said, adding that it plans to strengthen audits and controls on subcontractors.

Approved approach

Until July 19, Dior’s website sustainability page also featured the Butterfly Mark, a certification from luxury-focused sustainability auditing firm Positive Luxury, which rates companies on 23 environmental, social and governance issues.

Above the Butterfly Mark logo is a statement titled “Certified Approach” that says Christian Dior Couture received the certification in 2021 “after a rigorous audit,” adding that it “attests to the validity of its sustainability strategy.”

On July 17, Dior CEO Amy Nelson Bennett told Reuters that the company had decided in June 2023 not to begin the reassessment process. “Therefore, the Butterfly Mark’s certification and membership in the society have been terminated,” she added.

Nelson Bennett said brands are required to remove the certification mark within 90 days of a decision not to re-evaluate. Dior removed the certification mark and accompanying statement in July 2024.

Contacted by Reuters, Dior and LVMH did not respond to a request for comment on the certification and the logo on the website.

Positive Luxury currently certifies or audits nearly 170 brands, including LVMH-owned Belvedere Vodka. The audit asks companies and brands to answer hundreds of questions on environmental, social and governance issues, including how much control the brand has over suppliers.

Positive Luxury re-evaluates all of the brands it certifies every two years, adjusting its auditing processes to keep up with new regulations, Nelson Bennett said.

Companies are preparing for new EU supply chain rules that will require stricter audits of suppliers to mitigate human rights and environmental risks.