Luxury fashion firms falling short on supply chain transparency

Luxury fashion companies are meeting the letter but not the spirit of France’s mandatory sustainability reporting law, according to a new study of seven years of disclosures.

Research published in the Social Responsibility Journal examined 35 annual reports submitted by LVMH, Kering, L’Oréal Luxe, Hermès and Dior under France’s Devoir de Vigilance law from 2018 to 2024.

The authors say disclosures fall short of the legislation’s intention to require large companies to identify and disclose human rights and environmental risks across their supply chains.

Dr Claire Lindsay, a supply chain and procurement expert from Heriot-Watt's School of Social Sciences oversaw the research, with graduate student Candide Hammel.

Hammel said: “Despite seven years of reporting, no firm in the sample could be held up as an exemplar.

“All of the disclosures fell short of the spirit and substance of the law.

“These luxury companies all showed basic technical compliance, but their reports are vague, inconsistent and lack detail on their supply chains.

“There is no evidence that they have changed anything as a result of the legislation.”

France’s Devoir de Vigilance law was introduced in the wake of the Rana Plaza disaster in 2013.

It requires companies to report on five areas: risk mapping, the assessment of suppliers and subcontractors, preventative action, alert mechanisms and monitoring.

Lindsay and colleagues say they have “very little confidence” in the reporting by luxury firms.

They found that firms often referred to issues such as human rights, climate change and resource depletion in very general terms, without properly defining them or showing how they were assessed.

In many cases, there was no clear evidence that suppliers or subcontractors had meaningfully contributed to the reports, despite that being part of the legislation’s intended approach.

Lindsay said: “Luxury fashion companies sell products based on their quality and savoir faire, which means the use of specialist, artisanal craftsmanship.

“There are repeated references to broad categories like ‘rest of the world suppliers’, without information on where these suppliers were based, the risks in those countries or how those risks were being managed.

“If these firms have the control over their supply chains that they claim, they should be able to report clearly on these matters.”

“They’ve had seven years to demonstrate better transparency, and what we found is that the substance just isn’t there. In many cases it looks like a tick-box exercise.”

The French legislation has been used as a model for emerging supply chain diligence rules in Germany and across the European Union.

Lindsay said “If brands are serious about being sustainable and treating people fairly, then the public reporting has to tell us something useful. It should not just be a set of brief, generic statements.

“And if we’re going to have mandatory reporting, it needs stronger enforcement, clearer expectations and greater scrutiny from regulators. Only then will we see demonstrable improvements in corporate behaviour.”