By
Bloomberg
Published
December 22, 2024
A Loro Piana executive acknowledged to government officials that the luxury clothing brand does not know whether some indigenous Peruvians receive compensation for providing the company with fiber used to make $9,000 sweaters.
The Italian company came under fire in March after a Bloomberg Businessweek report showed that indigenous Peruvians who supplied Loro Piana were sometimes not paid for their work chasing and corralling vicuñas, a wild relative of the alpaca that produces the finest and most expensive wool in the world. world. the world. Critics have called it “exploitation,” while Loro Piana says it pays local communities, who then determine how they distribute the payments.
The executive's comments were made at a roundtable in April between the textile industry and the government, and a video recording was obtained through a public records request. They are the most candid acknowledgment yet of possible gaps in the company's knowledge of the working conditions of its prized 30-year-old vicuña fiber supply chain in Peru. Loro Piana sources vicuña fiber from impoverished Andean communities that capture the animals to shear them in a process called chaccu.
“It has been said that we do not pay the people who make the chaccus,” said Eliphas Coeli, general manager of Loro Piana in Peru. He had raised his hand to take the microphone toward the end of the 150-minute meeting, which had not been previously reported.
“Well, I don't know how other companies work, but we buy the fiber and deposit the payment for the value of the fiber” into a bank account, he said. “And then the distribution of that payment is out of our control,” he added, referring to indigenous communities and what they do with the money afterwards.
Loro Piana said in a statement that it had increased supplier audits to ensure compliance and is working with local NGOs to benefit up to 15 communities involved with vicuña with infrastructure, healthcare, nutrition and education projects.
“Loro Piana firmly reaffirms its long-standing commitment to ethical and responsible business practices,” he said. “For the last 30 years, the maison has fully complied with Peruvian law, ethics and the labor regimes of local communities recognized by the Constitution and their legitimate practices, such as the Chaccu that takes place more than one day a year ”.
The April meeting, a month after the Businessweek story was published, was attended by representatives of the vicuña industry and hosted by government officials.
Loro Piana, a subsidiary of Bernard Arnault's LVMH and a reference brand of the discreet luxury movement, is the world's largest buyer of raw vicuña fiber and the largest seller of garments made from vicuña wool. Peruvian indigenous groups are their main supplier of crude fiber. The company's chief executive, Damien Bertrand, told the Financial Times in October that he had “officially refuted” the Businessweek story, without providing details.
At the April meeting, Coeli's comments prompted a response from Enrique Michaud, who at the time was the top government official in charge of regulating wildlife, which includes vicuñas. He has since left the government.
“I understand what you are saying, Eliphas, and it is true that this is a private contract signed with a community and the community is responsible for the redistribution” of the income, Michaud said. “However, we must think about mechanisms to ensure that there is a correct distribution of benefits.”
LVMH's own code of conduct for suppliers requires organizations that provide it with materials to pay wages “sufficient to meet the basic needs of workers and provide some discretionary income.” Loro Piana said it had “launched a supplier awareness campaign to further enforce our Code of Conduct.”
Coeli directly addressed the code of conduct in the discussion and said that Peruvian suppliers do sign it.
“Is there some kind of indirect liability?” he continued. “Yes, maybe so, because each company is responsible for where they obtain the materials. But hey, it's easy to say and it's another thing to corroborate it.”
