The coveted ‘Made in Italy’ label faces increasing scrutiny and existential challenges, from supply chain scrutiny and evolving EU regulations to climate change and threats to heritage craft. This article is part of a new series where we unpack what these pressures mean for the future, and sustainability, of luxury fashion. Read more here.
Prato-based fabric producer Lanificio Cangioli 1859 was in a state of transformation when I stopped by in early October. The company — which started as a small artisanal workshop in 1859 — is now in its fifth generation of family ownership, churning out several million metres of fabric per year. The latest building renovation will further expand its vertical production capacity, but the top priority is the installation of a kitchen for hosting visitors in the showroom.
As we tucked into a feast of fresh pasta, salad and roasted vegetables, company president Vincenzo Cangioli used the food to illustrate how ‘Made in Italy’ suppliers feel about impending European Union (EU) regulations.
“Everybody wants Italian tomatoes, so the government — correctly — says they have to be grown in fields without pesticides and that the workers have to be paid well. You enforce these regulations and you know you are doing the right thing,” he says. “The problem is that the cost of these compliant tomatoes goes up to €5 per kilo, but people can import non-compliant tomatoes from elsewhere for 50 cents per kilo. Of course, the customer goes for the best price. So, in the end, the environmental impact of these regulations is worse, because you drive the demand towards the bad supply.”
At every stop of my two-week tour around fashion and textile suppliers in Italy — from Biella to Bergamo and Vicenza to Florence — his theory was echoed. Italian suppliers say they already have to contend with higher baseline costs than their global counterparts, especially for energy and labour, so complying with incoming regulations means investing even more money and time in software and machinery, innovations to drive efficiencies, and upskilling staff in all of the above. The problem is, there is no immediate incentive for change, because brands are largely unwilling to pay a premium for compliant suppliers. And without this support, suppliers risk losing customers — meaning they will be left to sink or swim, with seemingly endless stacks of paperwork and heightened costs dragging them down.
For centuries, Made in Italy has been heralded as the epitome of luxury fashion production. Now, its fragmented — and often opaque — supply chains are threatening its survival.
These fears are especially prominent for Italy’s thousands of small, specialist mom-and-pop suppliers, which lack the resources to adapt, but even larger businesses are struggling. Reda’s head of sustainability Luca Bruschi says the wool mill fields at least 20 audits each year to maintain its certifications (including Responsible Wool Standard), with countless others to satisfy brand clients. On the day I visited, there were two separate audits taking place. Nearby, Piacenza Group owner Ettore Piacenza says brands send auditors every other week to monitor its processes. The cashmere company has had to grow its sustainability team from one to five people to keep up with the administrative load. “Ten years ago, brands did not care about this, but now they are very present in the production process,” Piacenza continues. “There is a cost to this, but sometimes it is not understood by the customers. They want to pay the same as before.”
With so much time and money dedicated to proving their sustainability credentials, suppliers have little left to actually improve them, adds Claudio Taiana, president of Como-based textile company Tessitura Taiana Virgilio. The priorities are misplaced, he says. If brands won’t pay more to support suppliers with compliance, both their financial stability and their know-how (the very thing that attracts brands to Made in Italy in the first place) will be at stake. “Today, it seems like it is much more important to appear sustainable than to actually be sustainable.”
The push for standardisation
The regulations suppliers are scrambling to comply with are intentionally broad. Under the EU’s strategy for sustainable and circular textiles and the European Green Deal, regulations span from ecodesign principles and supply chain due diligence to extended producer responsibility for waste and a crackdown on greenwashing. For suppliers, that means improving transparency and traceability, developing more recycled and recyclable fabrics, and adapting how products are developed and assembled. Whether brands or suppliers should bear the cost of compliance has proven controversial, but the changes require brands to engage with their full supply chains, a marked shift from how fashion has historically operated.
Regulation wouldn’t be such a big challenge if the mandate were clear, says Andrea Sianesi, professor of operations and supply chain management at Italian university Politecnico di Milano. The evidence suppliers are asked for — and the traceability platforms used to gather it — aren’t streamlined, meaning suppliers are asked for the same information over and over. “There is absolutely an overload of data requirements,” he says.
As the hub intended to house all of this evidence, digital product passports (DPP) are the biggest red flag for sprawling platforms and conflicting data requests. While the ‘what’ has been agreed, the ‘how’ is still up for debate, creating a Wild West of meantime solutions. During a tour of luxury fabric producer Manteco, which specialises in recycled wool, I trialled a QR code-based DPP the company has developed to house all of the data brands might request. Down the road at Beste Group, the equivalent DPP leverages the near-field communication (NFC) tag built into my iPhone. Both are comprehensive and engaging in their presentation, but they face the same challenge: data still needs to be adapted to fit brands’ preferred formats. Gruppo Florence-owned hatmaker Facopel says it is currently running 16 different work stations to accommodate the five different operating systems dictated by various brand partners. Each brand requires its own station, with a dedicated Facopel employee trained in its chosen methodology, notes CEO Luca Galigani.
With suppliers pulled in different directions, the quality of the data they’re gathering — which is used to inform industry progress and brand sustainability strategies as well as regulatory compliance — is more likely to be compromised. “We have suppliers who are not reporting to us, or making mistakes in their surveys, so it’s difficult to use the data they share,” said Mickaël Maniez, head of sustainable value chain at Kering, during a panel discussion at Italy’s 4Sustainability conference earlier this month. “If we asked for less data, we might get clearer results.”
The need for more standardised data and processing is clear, but this must be balanced with context-specific implementation strategies, so that suppliers feel engaged and valued, says Dr Hakan Karaosman, associate professor at Cardiff University and co-founder of Fashion’s Responsible Supply Chain Hub (FReSCH), an EU-backed action research project. “Every supplier has a different cultural ecosystem. We cannot shoehorn operational strategies in, even in different regions of the same country,” he explains.
Even within the EU, member states vary, adds Candiani Denim owner Alberto Candiani. “The German economy is mostly sustained by large companies with over 500 employees, but the Italian economy relies on small and medium-sized enterprises with fewer than 25 employees. You cannot adopt the same policies for opposite economies and hope for the best.”
Building trust into brand-supplier relationships
Halfway through my trip, I drove up to Como for the annual 4Sustainability conference, hosted by consulting and training company Process Factory. Nestled between the 80,000-strong textile archive of printing and dyeing specialist Fasac1955, speakers shared their fears about regulations and thrashed out potential solutions — the tension was akin to crisis talks. Many lamented brand-appointed consultants “telling us how to work”, undermining trust in the supply chain and “wasting time and money” on misguided initiatives.
Brunello Cucinelli CEO Riccardo Stefanelli summarised the mood perfectly: “Trust is the basis of human relationships, and human relationships are the basis of supply chains.” The lack of trust between brands and suppliers is a large part of why transformation seems so elusive.
“Brands aren’t listening enough to their best producers,” says Andrea Crespi, CEO of Eurojersey, which manufactures warp-knit fabrics for major sports and ready-to-wear brands. “They simply hire auditors or external consultants to say what we should do, instead of asking the people who know the job and do it very well.”
When brands are detached from the reality of supply chains and attempt to dictate top-down changes, they can miss obvious challenges, adds Christian Tubito, director of Kering’s Material Innovation Lab. “You might be asking a cotton ginning facility (where cotton fibres are separated from the seeds) to input data for your traceability platform, but they don’t even have access to a laptop.”
If brands don’t redress this power imbalance and commit to long-term partnerships, they risk losing quality suppliers, either through repulsion or ruin. One supplier told me they lost a potential client the morning I visited, because the brand demanded a level of chemical certification that was literally impossible to achieve, and the supplier had to point out that competitors promising to deliver were likely greenwashing. Meanwhile, another supplier lost a big luxury client the week prior, because their prices went up by just 50 cents, to accommodate recent investments necessary for regulatory compliance.
“Brands have big margins, and they squeeze the supply chain’s margins, but at the same time, they ask the supply chain to make a big transition,” says Manteco CEO Matteo Mantellassi. “We need to know that customers will buy for the next 10 or 15 years, but fashion changes so fast that you can never be sure your investments will pay off.”
Creating incentives for change
Building trust is vital, but this can be intangible and deeply personal. On a systemic level, creating positive incentives could help drive change, says Sianesi. “The prescriptive approach can work but, for suppliers who don’t want to comply with this approach, the trade-off is between the benefits you can achieve by not being consistent and the risk of problems if you are audited. On the contrary, if you have positive incentives in place, there is no risk, just reward.”
Some brands attempt to incentivise positive change by giving suppliers an ESG score, or use a supplier scorecard to track progress and make decisions about their partnerships. Those with higher scores might get preferential treatment, for instance, especially since brands say there is a correlation between sustainability performance and overall production quality.
Experts warn against adding more qualitative and competitive measures. “Fashion and luxury are obsessed with scores, but this obsession has damaging consequences,” says Karaosman. “Brands should work in partnership with their suppliers, rather than measuring them in old-fashioned structures based on fear culture. In a context where challenges range from legislative pressure to the insecurity of supply, such repressive measures are the last thing we need in the system.”
Another option might be to enshrine incentives for compliant suppliers in the bill of materials (a tool used by brand production teams to define the supply chain for a specific product), says Process Factory CEO Francesca Rulli. “If brands introduced water reduction, energy efficiency and worker wages in the bill of materials, it would be in the definition of the product. You would have a sort of profit and loss of the product, which evaluates marginality. So you can evaluate if you are producing something in the correct way.” This way, sustainability investments and compliance wouldn’t be an added cost for suppliers to take on, she explains, but something brands share responsibility for, as a necessary part of the production process.
To understand what kind of incentives would be most effective, brands should understand their suppliers’ approaches to sustainability. In Italy, that is often centred around providing a good life for the people in its supply chains. “The biggest problem is that we have a mismatch in mentalities,” says Karaosman. “Brands perceive compliance as an efficiency drive, whereas suppliers see it as an opportunity for better well-being. Brands need to remember that their supply chains are made up of human beings. The people in the field understand the fatigue and the problems, and the context-specific interventions we need.”
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