Why does this exploitation persist despite existing protection under labour law? This is not only a legal issue, it also a structural problem. A persistent lack of transparency in fashion supply chains shields companies from reputational pressure and weakens their accountability. Increasing transparency, particularly towards consumers, could therefore play a crucial role in combatting labour exploitation.

The hidden cost of luxury fashion

Since 2024, investigations in Milan have uncovered a recurring pattern in the organisation of luxury fashion production. Major fashion houses outsource manufacturing to companies that lack the necessary productive capacity. These intermediaries, in turn, subcontract the work to small workshops that often operate on the margins of the law.

Workers in these workshops, often undocumented migrants, are paid below the minimum wage, work long and exhausting shifts, and are exposed to unsafe working conditions. Fundamental labour rights, including the right to health and safe labour conditions, are routinely violated. This supply structure allows brands to benefit economically from these practices while remaining formally distanced from them.

Lack of transparency in supply chains

The fragmented structure of fashion supply chains, with multiple tiers of actors, makes production methods largely opaque. This prevents consumers from accessing information about production methods and assessing companies’ practices. As a result, companies face limited reputational pressure to comply with legislation.

Various private certification schemes and social audits try to fill this information gap for consumers. However, these certifications remain voluntary and have been criticised for not being truly independent. Auditing firms are often paid by the companies they inspect, creating conflicts of interest that can lead to labour abuses being overlooked. In addition, time constraints imposed on auditors to contain costs result in superficial audits.

The Milan Protocol: progress with limits

In May 2025, Italy took a step towards greater accountability by signing the Milan Protocol. It was signed by public authorities, labour unions and industrial associations, and companies can adhere to it on a voluntary basis.

Its central instrument is a ‘supply platform’, where supplier companies can register and share information. Companies that are compliant receive a transparency certification and are listed in a database that can be accessed by fashion brands. While this initiative promotes traceability within the industry, it remains invisible to consumers. As such, it has limited capacity to generate meaningful reputational pressure on fashion brands and to strengthen public accountability.

Consumer-driven accountability

A more ambitious approach would make supply chain information directly accessible to the public. The EU Digital Product Passport (DPP), introduced under Regulation (EU) 2024/1781, already gives consumers digital access to information about a product’s origin, materials and environmental impact. This model could be expanded to include a mandatory social certification. Embedding labour compliance data in a digital transparency tool, for example through a simple QR code, would enable consumers to verify whether a product’s supply chain meets labour standards.

However, such a model raises complex questions. Which labour standards should be monitored? To what extent should companies be required to identify the human rights impacts across their supply chains? Should they extend to all standards, or only those identified based on reasonably available information? A regulatory framework with clear labour standards, together with a robust enforcement mechanism, will be required to enable such a tool to operate efficiently and ensure that transparency translates into genuine accountability.

A structural problem

Labour exploitation in luxury fashion supply chains is not only the result of insufficient labour laws, but of structural opacity. Without transparency in supply chain structures, accountability remains weak and reputational pressure ineffective.

Enhancing supply chain transparency, particularly for consumers, can strengthen both effective legal enforcement and corporate responsibility. Without such efforts, the hidden cost of luxury fashion will continue to be borne by the most vulnerable workers, whose fundamental rights and dignity will remain at risk.