Investors Push LVMH for More Transparency on Supplier Practices
Europe’s top asset manager, Amundi, along with other investors in luxury conglomerate LVMH, are calling for more aggressive monitoring of the company’s suppliers following allegations of sweatshop-like conditions at subcontractors for high-end brand Dior. The investigation into suppliers for LVMH’s second-largest fashion label has raised concerns about worker exploitation in the global luxury goods industry.
Amundi, holding a 0.6% stake in LVMH, worth $2.2 billion, has reached out to the French conglomerate for more transparency on supplier audits and internal purchasing practices. Other investors, including CCLA Investment Management and Robeco, are also pushing for greater public evidence of efforts to ensure fair pay for workers in the supply chain.
Italian prosecutors revealed that Dior’s subcontractors were paying workers as little as 53 euros per bag assembled, while selling the same bags in stores for 2,600 euros. Dior has since cut ties with the suppliers in question and denied the allegations, stating that reports of low production costs were false.
LVMH has updated its supplier code of conduct and is working towards a more uniform approach across all its brands. The company acknowledges the need for continuous improvement in ensuring fair wages for workers in its supply chain. The conglomerate is also collaborating with rivals to coordinate efforts to pay workers a living wage.
In response to the allegations, Italian antitrust authorities have launched a separate probe into Dior’s marketing claims about the craftsmanship of its products. The investigation also includes luxury brand Armani.
Investors like Amundi have been advocating for better wage policies at LVMH for years, emphasizing the importance of promoting living wages and addressing human rights risks. The conglomerate has received low ratings in annual reports on fair wage policies, prompting calls for increased transparency and due diligence efforts.
As the luxury industry faces scrutiny over supply chain practices, investors are urging companies like LVMH to be more transparent and proactive in ensuring fair treatment of workers. The quest for transparency and accountability in the luxury sector continues as stakeholders demand better practices from industry leaders like LVMH.