Two Years After Italy's Luxury Supply Chain Scandal: Has Anything Really Changed?

Despite audits and oversight measures, labor advocates say the fundamental business structure that drives exploitation hasn’t changed, making real improvement unlikely without industry-wide pressure to continue.

Summary of Luxury’s Italian Supply Chain Reckoning Isn’t Over. Every timestamp links into the original audio.

The short version

• 00:01:45 — In early 2024, a Milan prosecutor launched investigations against fashion brands, starting with lesser-known companies before targeting Armani and then Dior, revealing factories operating like sweatshops on the outskirts of Milan despite the brands’ claims of unawareness.
• 00:03:58 — Italian luxury manufacturing relies on intricate networks of micro-suppliers handling specialized tasks, making it difficult for brands to maintain visibility across their entire supply chains, though this complexity is sometimes used as a convenient excuse for oversight.
• 00:05:56 — Industry insiders described the existence of exploitative factories as an open secret kept convenient because luxury brands demand products at low prices and high speed, creating pressure that incentivizes working with questionable suppliers.
• 00:06:50 — Evidence suggests some brands demonstrated willful blindness, sending quality control representatives to factories later identified as operating illegally but failing to address worker conditions beyond product quality.
• 00:09:27 — Brands responded by conducting more audits and restricting subcontracting, but the system created burdens on manufacturers already struggling with tight margins, rising energy costs, and economic downturns.
• 00:10:31 — The proliferation of different auditing standards from each brand creates excessive costs and time burdens for suppliers, as each client sends separate auditors with different requirements rather than using unified criteria.
• 00:17:29 — The industry proposed a Milan Protocol establishing a voluntary database of approved suppliers to reduce individual auditing needs, but it remains limited to one region, suffers from low voluntary participation, and lacks proven incentive mechanisms.
• 00:21:10 — The issue became politically contentious when Tod’s chairman publicly challenged the prosecutor’s authority, leading a government minister to propose alternative rules that critics feared would shield brands from accountability, ultimately derailed by labor advocates.
• 00:23:49 — Labor groups report minimal on-the-ground improvement, attributing stagnation partly to economic downturn reducing orders but primarily to the unchanged fundamental business structure that creates exploitation incentives.

In depth

How the scandal unfolded, and why Armani and Dior changed everything

The Milan investigations didn’t begin with the names that would make headlines. Sarah Kent explains that the prosecutor’s first case targeted a domestically known but internationally obscure label, and barely registered outside Italy 00:01:55. It was only when the same prosecutor moved on to Armani, and then Dior, that the story became impossible to ignore 00:02:0300:02:09. The pattern mattered: this wasn’t an isolated bad actor but a prosecutor working his way up the ladder of Italian luxury manufacturing, suggesting the conditions he’d found were not confined to marginal players.

What the investigations actually uncovered was conditions resembling sweatshops, not in some distant, lower-cost country but on the outskirts of Milan itself, embedded in the supply chains of brands whose entire value proposition rests on the promise of Italian craftsmanship 00:02:1500:02:36. Kent frames this as creating three distinct and uncomfortable questions for the industry: whether the brands themselves were culpable, how such factories could exist inside their supply chains without their knowledge, and whether products sold at ever-escalating prices were actually worth what customers were paying, a question made sharper by the fact that 2024 marked something close to peak inflation in luxury pricing 00:02:5400:03:1500:03:21. The scandal thus landed at a moment when consumers were already primed to question value, turning a labor story into a referendum on the entire luxury pricing model.

The ‘open secret’ and the question of willful blindness

One of the more striking threads in the conversation is the idea that this exploitation was not hidden so much as tacitly tolerated. Kent recounts learning the Italian phrase for an open secret, tied to a stock comedic character famous for being unable to keep anything quiet, and says people inside the supply chain used it unprompted to describe these factories: everyone knew, nobody said anything, because the arrangement was convenient 00:05:3100:05:4900:05:56. That convenience, she argues, traces back to brands’ own commercial demands — prices they’re willing to pay and the speed and flexibility they expect — which push pressure down the chain until, in a pinch, someone quietly turns to a supplier who can deliver cheaply and fast, even if that supplier wouldn’t normally pass muster 00:06:0100:06:18.

Structurally, this is compounded by how Italian luxury manufacturing actually works: an enormous concentration of specialized expertise distributed across countless micro-suppliers, so that a single handbag might pass through one location for brass hardware and another for assembly 00:04:0100:04:1400:04:37. Kent is careful to say this complexity makes it genuinely easy to lose track of where a supply chain begins and ends 00:05:06 — but she stops short of letting brands off the hook entirely. She points to specific evidence of what she calls willful blindness: instances where brand representatives were physically present in factories later found to be operating illegally, inspecting for quality control, yet apparently never registering or reporting the working conditions around them 00:06:5000:06:5500:07:07. In other words, the brands knew which factories they were using; they simply chose not to look past the stitching.

This unresolved tension — structural opacity versus selective attention — runs through the whole episode without a clean resolution. Kent never claims to know what share of the abuse was due to genuine supply-chain blindness as opposed to brands looking away on purpose, and the ambiguity is itself part of the story: it’s precisely the deniability that makes the arrangement so convenient and so hard to prosecute or regulate decisively.

Audits, oversight, and the gap between compliance and change

In the immediate aftermath, several implicated brands were placed under judicial administration, a process Kent is careful to distinguish from a finding of guilt: it simply means a judge determined their internal controls were inadequate and appointed an external overseer to fix them 00:07:5100:07:5700:08:11. Notably, in nearly every case brands cleared that bar well before their twelve-month deadline 00:08:15 — a fact that could read either as genuine urgency or as evidence that the bar wasn’t especially high.

Beyond the directly implicated brands, the broader industry response has centered on audits: more frequent factory inspections and tighter restrictions on subcontracting, with brands explicitly telling suppliers that work given to them cannot be quietly passed down the chain 00:09:3200:09:43. Kent frames this as the industry responding to what prosecutors publicly called a warning shot — an implicit threat that scrutiny would widen regardless of who had been caught so far 00:09:0800:09:16.

But she’s skeptical that audits alone solve the underlying problem. The practical burden falls heavily on manufacturers already squeezed by energy costs and a luxury downturn: a single factory serving twenty different brand clients may face twenty different auditors, each with their own checklist, each requiring time and floor access that amounts to lost production 00:10:3100:10:4000:10:5400:11:00. Even after passing, a factory might be told by each client to tweak some narrow aspect of its practices differently, multiplying the administrative burden rather than converging on a shared standard 00:11:1200:11:20. Kent also raises the structural fear underlying any audit regime — that if a factory knows what the test looks like, it will simply optimize to pass it — and notes that the industry’s partial answer, unannounced or blind audits, mitigates but does not eliminate that risk 00:20:0500:20:1100:20:28. Her broader point is pointed: these are risk-mitigation tools, not guarantees, and treating a passed audit as proof that everything is fine is itself a kind of self-deception.

Who bears responsibility: the structural economics nobody wants to touch

Pressed by Sheena Butler-Young on whether anything changes if brands don’t alter the prices and speed they demand, Kent frames this as the industry’s genuinely unresolved philosophical fault line. One camp — roughly the pro-business position — argues that a company’s responsibility extends only as far as its direct contractual relationships, since that’s where it actually has leverage 00:15:2600:15:33. The opposing, pro-labor camp argues that whoever sits at the top of the value chain, capturing the largest margins, also exercises outsized control over everyone beneath them, and therefore bears responsibility for conditions throughout, whether or not they hold direct contracts 00:15:4400:15:5700:16:03. Kent is candid that which argument you find persuasive depends almost entirely on who you ask: labor advocates and manufacturers describe business practices as essentially unchanged and workers as still being squeezed, especially given tougher economic conditions, while brands privately suggest they already operate fairly and that criticism amounts to an attempt to extract more money from them 00:16:2500:16:3100:16:4400:16:49.

The proposed industry-wide fix, the Milan Protocol, embodies this tension in miniature. It would create a shared database of vetted, compliant suppliers that brands could draw from with confidence, theoretically letting companies demonstrate they’d taken reasonable due-diligence steps 00:17:2900:17:4000:17:59. Kent flags three structural weaknesses: it currently covers only the Milan region rather than the country as a whole, participation is voluntary, and similar voluntary registries in other Italian industries have historically attracted only a small fraction of eligible players 00:18:2100:18:3000:18:37. The incentive logic — join the database and brands will seek you out — has not reliably worked elsewhere, leaving open the question of why this version would be different 00:18:5900:19:0700:19:17.

Government regulation, meanwhile, has become genuinely politically charged rather than a neutral backstop. Kent recounts how Tod’s chairman Diego Della Valle publicly accused the Milan prosecutor of political overreach, arguing brands shouldn’t be held responsible for everything happening deep in their supply chains 00:21:2700:21:3500:21:54. That dispute escalated to a government minister proposing a national version of the Milan Protocol, which left-wing politicians and labor groups attacked as a shield designed to insulate companies from accountability — and the proposal was ultimately dropped from the bill 00:22:0600:22:2700:22:33. Kent’s assessment is blunt: what role government and regulation will actually play, and what Italy’s democratic process wants that role to be, remains unsettled 00:22:4600:22:51.

Whether anything has actually changed on the ground

Asked directly whether conditions for workers have improved, Kent is notably unable to offer reassurance. Labor groups she’s spoken with report no significant change on the ground 00:23:3900:23:49, and she identifies two tangled causes: a genuinely difficult market, where lower luxury orders translate into less work and less leverage for laborers, and — more fundamentally — an unchanged underlying business structure that continues to generate the same incentives toward exploitation regardless of how many audits are layered on top 00:23:4900:24:1600:24:29. Her framing makes clear that procedural reforms — oversight periods, audits, proposed databases — treat symptoms of a problem whose root cause, the economics of price and speed, remains untouched.

Kent also raises a concern about durability of attention itself: these scandals depend on sustained investigative and journalistic pressure to stay salient, and without continuous new revelations, public and industry focus could simply fade as attention moves to the next controversy 00:24:5300:24:5900:25:06. She frames BOF’s own continued reporting as part of what keeps the issue alive, implicitly acknowledging that absent that spotlight, incentives favor quiet normalization rather than reform. She closes by noting, almost as a hedge against cynicism, that structural change in an industry is always slow and rarely visible in the short term, but that it isn’t impossible — a cautiously open-ended note rather than a resolved one 00:25:2900:25:3100:25:36.

What’s missing from two years of reform, by Kent’s own account, is any brand-side rethinking of the commercial pressures — price points, turnaround times, order volumes — that labor advocates and manufacturers alike point to as the actual engine of exploitation. Audits, judicial oversight, and supplier databases all operate downstream of that engine; none of them, in Kent’s telling, has yet reached it.

Summarised automatically. Listen to the original for the full conversation — this is not a substitute for it.