Geopolitics and Luxury: European Agreement on Forced Labor. Coercive Measures Prompting Major Groups to Vigilance

An estimated 50 million people worldwide fall victim to modern slavery, a tragically lucrative phenomenon generating around $150 billion annually for its exploiters. Nearly 60% of the victims of this social and human scourge are located in Asia, with over 18 million in India and 3.5 million in China. According to data from the International Labour Organization (ILO), the phenomenon of forced labor, a primary facet of modern slavery, has seen a significant increase over the past five years, surpassing the figure of 28 million individuals.

In light of this reality, negotiators from the European Parliament and the Council have recently reached an agreement on new measures aimed at banning products originating from forced labor from our markets. Under this text, if countries are implicated, authorities will investigate the proven or suspected use of forced labor in companies' supply chains. Authorities may demand those goods be removed from the market or confiscated at borders, to be then donated, recycled, or destroyed.

While the issue of forced labor is often closely linked to fast fashion and its excesses, the world of luxury fashion is not immune to the risk of sourcing products—often unbeknownst to the houses themselves—from forced labor. This was evident in 2021 when the scandal of Uighur labor camps in China came to light, implicating brands like Calvin Klein, Lacoste, and Tommy Hilfiger. Xinjiang's cotton accounts for one-fifth of global production.

What has happened since then? Following the 2021 investigation, Calvin Klein and Tommy Hilfiger committed "to end all relationships" and to change their production chains, encouraging other houses to do the same through awareness campaigns.

Today, major groups, those setting the standard in luxury, such as Kering and LVMH, have their own ethical charters: LVMH's Code of Conduct draws inspiration from the principles of the Universal Declaration of Human Rights, the principles of the Global Compact, and the OECD Guidelines for Multinational Enterprises. Meanwhile, Kering's Charter explicitly prohibits "child labor and forced labor" for the multinational and its suppliers. A new report released in December 2023 by Sheffield Hallam University has raised concerns about the risk of cotton sourced from Uighur forced labor ending up in clothing offered by major brands. Among these, the university's investigation mentions Burberry and Ralph Lauren, among others. This does not imply that the leaders of these brands were aware. China does not release data on cotton production and links with foreign companies; investigation results often stem from studying customs data from neighboring countries like Vietnam or Sri Lanka.

Since the new measures adopted by the European Parliament, all major groups will be compelled to increase safeguards to avoid any association with the forced labor of Uighurs in Xinjiang and the products derived from it, to prevent heavy administrative sanctions and risking compromising the reputation of houses that are increasingly demanded ethics and transparency.

The most significant challenge will be maintaining good relations with China and its authorities so as not to upset local clientele. When the British brand Burberry officially decided to boycott Xinjiang cotton, it drew the ire of Weibo users and local authorities.