Dior, the second-largest fashion brand under the $345-billion LVMH conglomerate, has recently come under scrutiny for lapses in ESG and regulatory compliance. Until July 19, Dior’s UK website displayed outdated anti-slavery statements and invalid sustainability certifications, in breach of the UK Modern Slavery Act of 2015. This law mandates annual disclosures from companies with a UK turnover of £36 million ($46 million) or more, detailing efforts to combat forced labor in their operations and supply chains. 

The outdated disclosures came to light amid heightened attention from Italy’s competition authority, which is investigating Dior and Armani for potential misrepresentation of their social responsibility commitments. This investigation has prompted major investors, including Europe’s top asset manager Amundi, to demand stricter oversight of LVMH’s supply chain practices. 

Following Reuters’ inquiry on July 18, Dior swiftly updated its modern slavery statement, which now includes plans for employee training on modern slavery awareness. However, Dior has yet to publish statements for 2021 and 2022. Despite legal requirements, no penalties have been enforced for non-compliance, though there are growing calls for stricter enforcement. 

In response to the broader supply chain concerns, LVMH has committed to intensifying controls and audits to prevent future lapses. LVMH’s CFO, Jean-Jacques Guiony, acknowledged the issues and vowed to strengthen oversight. 

Additionally, Dior’s sustainability page had erroneously displayed the Butterfly Mark, a certification from Positive Luxury, even after terminating its certification in June 2023. Positive Luxury, which certifies brands based on ESG criteria, requires the removal of its certification mark within 90 days of termination. Dior complied with this requirement in July 2024 after Reuters’ inquiry. 

This scrutiny comes as companies brace for stringent new EU supply chain regulations aimed at mitigating human rights and environmental risks, underscoring the critical importance of robust ESG and regulatory compliance in today’s business environment. 

Sources: 

https://www.reuters.com/business/retail-consumer/lvmhs-dior-lagged-supply-chain-disclosure-made-outdated-esg-claim-2024-08-06/ 

https://www.msn.com/en-ca/money/topstories/exclusive-lvmh-s-dior-lagged-on-supply-chain-disclosure-made-outdated-esg-claim/ar-AA1oiDif