Christian Dior SE (OTC: CHDRY), a subsidiary of French luxury goods conglomerate LVMH Moet Hennessy Louis Vuitton SE (OTC: LVMUY), is reportedly behind on the UK's required supply chain disclosures. The company's website also contained outdated statements about third-party certifications.
What Happened: Until Jul. 19, Dior's UK website displayed an anti-slavery statement from 2020 and an obsolete sustainability certification, Reuters reported. This was discovered through a review of company filings.
The company's non-compliance with the UK's Modern Slavery Act of 2015, which mandates annual statements on steps taken to combat forced labor, has raised concerns.
The investigation into Dior's practices has prompted calls from investors like Amundi and others for LVMH to take more aggressive measures in monitoring its suppliers' treatment of workers.
Following inquiries about its compliance with UK regulations, Dior published a modern slavery statement for 2023. The company claims to have ceased working with suppliers involved in illegal practices and is cooperating with authorities, according to the report.
Despite the legal obligation to publish these statements, no company has yet been penalized for non-compliance. There are ongoing discussions among lawmakers and rights groups about introducing penalties for non-compliance, according to Sara Thornton, professor of modern slavery policy at the University of Nottingham's Rights Lab, the report said.
"We have been preparing an up to date modern slavery statement, which...has now been published on our website," Dior said in a statement, according to the report.
Why It Matters: This development comes at a time when LVMH is facing other challenges. The company's earnings fell short of expectations, leading to a significant drop in the fortune of its CEO, Bernard Arnault. This has raised the possibility of Meta Platforms Inc. (NASDAQ: META) CEO Mark Zuckerberg overtaking Arnault as the third-richest person in the world.
Despite these challenges, LVMH has been strengthening its ties with Alibaba Group Holding Limited (NYSE: BABA) to enhance its luxury retail experience in China. This partnership aims to leverage Alibaba's cloud technologies and AI-powered retail innovations to elevate the luxury experience in China.