Over the past two years supply chain scandals have rocked the luxury fashion industry in Italy, shaking both its reputation and business practices.
Investigations by a Milan court that uncovered ties of luxury brands such as Tod’s, Loro Piana, Valentino, Dior and Giorgio Armani, among others, to subcontractors allegedly involved in sweatshop schemes have raised concerns about the industry’s ability to manage its supply chains effectively.
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Overall, prosecutors identified the brands’ negligence in properly auditing their supply chain partners. As a result, all the above brands have been put under judicial administration to correct and enhance audits and oversight through court-mandated procedures, with the exception of Tod’s, which in December obtained a two-month postponement of the hearing aimed at determining developments in the company’s probes over alleged labor abuses in its value chain.
Dior’s and Giorgio Armani’s probes have been fully resolved and the judicial oversight has been lifted.
Meanwhile, last fall some 13 fashion companies fell under the scrutiny of the same Milan prosecutors and were asked to provide documents on governance and supply chain audits for preliminary probes.
The names involved included Prada, Versace, Gucci, Dolce & Gabbana, Ferragamo, Missoni, Givenchy Italia, Yves Saint Laurent Manifatture, Alexander McQueen Italia, Adidas Italy, Off-White Operating, Coccinelle and Pinko. None of these have been put under judicial administration.
Brands have begun strengthening their internal controls and compliance measures. Loro Piana has reaffirmed its commitment to improving its supply chain auditing, severing ties with suppliers found in violation of its agreements, as did Valentino, Giorgio Armani and Dior.
Tod’s chairman and chief executive officer Diego Della Valle has arguably been the most vocal entrepreneur, among those involved in such cases, in defending not only the company’s conduct but also the narrative being circulated that Made in Italy production lacks ethical controls.
To be sure, the pressure on high-end fashion brands to maintain their aura of quality, exclusivity and ethics is mounting amid an already challenging luxury landscape, which is being impacted by a global spending downturn.
The climaxing backlash has led brands and industry associations to pressure domestic policymakers to come to the rescue and define nationwide auditing standards and regulation protocols promoted by the Ministry of Enterprises and Made in Italy.
Legislation had seemed to move swiftly through several contacts between Minister Adolfo Urso and representatives from Confindustria Moda, Confindustria Accessori Moda, Camera Nazionale della Moda Italiana and Altagamma. Four fashion industry-specific amendments were added to the “Small-and-medium-sized Enterprises Bill,” or “ddl PMI” in Italian, which had been set to pass a Parliament vote by the end of 2025.
The proposed amendments outlined a voluntary certification system for fashion brands’ value chains, aimed at ensuring legality and traceability throughout the entire production process, across all tiers of subcontracting.
Adopting companies meeting the organizational models for crime prevention and all compliance requirements were to be entitled to use the designation “Certified Fashion Supply Chain,” under the supervision of the Ministry of Enterprises and Made in Italy and the Italian Competition Authority, AGC.
But right before the holidays, the bill — which had already passed a Senate Commission vote — was stalled by the Lower House Commission of the Italian Parliament.
The move apparently resulted from backlash from trade unions, which have been among the strongest opponents of the measures, billing them as an attempt on the part of the fashion sector to seek “legal immunity from prosecution” should wrongdoing emerge across their supply chains.
These developments were met with frustration by industry associations, which hope that negotiations on a new version of the bill will start again in 2026.
Pressure from the European Union is also a factor. The bloc is to enforce several new directives aimed at increasing transparency in supply chains, such as the Corporate Sustainability Reporting Directive, the Corporate Sustainability Due Diligence Directive, as well as the EU Forced Labor Regulation. The latter, set to take effect in 2027, will ban within the EU the sale of goods made using forced labor, affecting all stages of the supply chain.
