Loro Piana, the luxury Italian cashmere brand owned by LVMH, was put under court-mandated judicial administration in July 2025 for one year. This extraordinary measure was imposed due to significant findings of worker exploitation within the company’s supply chain. Here’s what happened and what lessons this holds for others in the fashion industry.
What Prompted the Court Action?
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Exploitation Through Subcontractors: Italian authorities found that Loro Piana’s supply chain involved subcontracting to workshops in Italy (primarily Chinese-operated), where mainly undocumented migrants were forced to work up to 90 hours a week, earning less than $5/hour and living in unsanitary, factory-based conditions.
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Failed Oversight: Loro Piana did not contract these workshops directly, but went through intermediaries—“shell” companies without actual manufacturing capacity—who then farmed out the work. The court found Loro Piana had “culpably failed” to oversee its supply chain.
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No Criminal Charges for Loro Piana: The providers themselves are being investigated criminally, but Loro Piana is not. The court’s goal is corrective—requiring the brand to fix compliance and operational controls under the watch of an external administrator.
Industry Context: A Systemic Problem
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Loro Piana is now the fifth major Italian luxury brand (after Dior, Valentino, Armani, Alviero Martini) placed under similar judicial oversight since 2023—revealing a much wider pattern of labor abuse in Italy’s luxury supply chain.
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Italy’s fashion industry is highly fragmented: thousands of tiny manufacturers make more than half of all global luxury goods, creating deep challenges in ensuring labor conditions and oversight.
How Did Loro Piana Respond?
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Immediate Action: Loro Piana claims it was unaware of the abusive subcontracting and that its supplier breached contract by not disclosing further subcontractors. When alerted, Loro Piana cut ties with the implicated supplier within 24 hours.
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Public Pledge: The brand reaffirmed its “unwavering commitment to upholding human rights and compliance with all applicable regulations.” It also promised more robust monitoring and supply chain audits.
Lessons for Other Brands
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Fragmented Supply Chains Are High Risk: Outsourcing through many intermediary layers creates blind spots. Rigorous, frequent audits—even down to minor subcontractors—are critical.
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Brands Are Now Held Responsible: Even if you don’t directly employ exploited workers, you can be legally and reputationally liable for failures downstream in your supply chain.
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Transparency and Rapid Response Matter: Immediate, public action and transparent communication can help contain damage if abuses are exposed.
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Proactive Auditing Is Essential: It’s not enough to have contracts and periodic audits. Unscheduled spot checks, real-time reporting, and clear supplier codes of conduct must be embedded processes.
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Legal & Reputational Risks Are Rising Globally: Sweeping authorities are increasingly willing to target even the most prestigious names. Court administration is intended as a corrective, but media and consumer backlash can be even more punishing.
Loro Piana’s case is a stark warning: luxury brands cannot afford to outsource their ethical obligations. Sustainable reputation, as well as compliance, now requires end-to-end supply chain transparency, relentless oversight, and a zero-tolerance approach to exploitation.
