The decision follows the brand’s pledge to support efforts tackling labour exploitation in the luxury goods sector, after a major scandal involving illegal workshops was uncovered last year.

In 2023, Prosecutors in Milan revealed that underpaid workers, many of them undocumented immigrants, were employed in dire conditions to produce leather bags for high-end brands, including Dior and Armani. The goods, crafted in makeshift workshops, were then sold to these fashion houses at a fraction of their retail value, raising alarm about the hidden costs behind luxury fashion.

The investigation by the Italian Competition Authority (AGCM) found that Dior failed to conduct adequate oversight of its supply chain, allowing subcontractors to exploit workers in violation of labour laws. In a statement, the AGCM said it had accepted Dior’s commitments, which include funding training and awareness programmes to combat labour exploitation, particularly in the leather goods sector.

Dior, owned by luxury conglomerate LVMH, avoided a fine but has agreed to implement stricter auditing measures and take “corrective actions” across its production chain. The company also pledged to work with authorities and non-governmental organisations  to ensure better protection of workers’ rights, especially among vulnerable migrant communities.

While the AGCM acknowledged Dior’s co-operation, labour rights groups say the case highlights a broader systemic issue in the fashion industry, where outsourcing and opaque supply chains often shield big brands from responsibility.

“Brands must be held accountable not only for the quality of their products but for the dignity of the workers behind them,” said Claudia Fontana, a Spokesperson for a migrant workers’ advocacy group in Milan. “This isn’t just an Italian problem, it’s a global one.”

Dior is not the only luxury label under scrutiny. Armani was also named in the original investigation and is reportedly cooperating with authorities under similar conditions.

The scandal has sparked calls across Europe for tougher laws requiring fashion brands to trace and disclose their entire supply chains. Earlier this year, the European parliament approved a directive on corporate sustainability due diligence, which would hold large companies legally accountable for human rights abuses and environmental harm in their operations.

For now, Dior’s commitments mark a symbolic step towards transparency and reform, but activists warn that only sustained pressure and legal enforcement will prevent future abuses.

--Reuters/ChannelAfrica--