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Brands such as Bulgari, Tiffany and Tod's fail miserably in terms of their ethical and environmental credentials, says the first major audit of sustainability in the world's top 10 companies for luxury brands.
The report, called Deeper Luxury, by the charity WWF, exposes many major designer jewellers and
fashion houses as barely passable in the ethical and environmental stakes.
None of the top 10 labels analysed score more than a C+ grade from the report's A-F scale and two of the labels - Bulgari and Tod's - fail the test, emerging with a dismal F grade.
The companies are ranked according to their own reporting both of their sustainability and social performance, as well as reports by non-governmental organisations and media on their working practices.
L'Oreal comes out as the best of a mediocre bunch, with a C+, while Tod's languishes at the bottom of the chart with an abysmal score of 34.9 per cent.
Richemont and PPR, whose brands include Chloe and Gucci respectively, are both graded D for their ethical efforts. The report says that with their greater budgets, producers of luxury goods could in fact be leading the way in social and environmental performance.
Anthony Kleanthous, senior policy adviser for WWF, said: "This report is a call to action for the world's top brands to improve the way they do business. Luxury companies must do more to justify their value in an increasingly resource-constrained and unequal world.
"Despite strong commercial drivers for greater sustainability, luxury brands have been slow to recognise their responsibilities and opportunities," said Mr Kleanthous.
Celebrity endorsement of ethically questionable luxury goods also comes under fire in the report, which says that while Hollywood stars such as Sienna Miller are good at raising ethical issues, they do not apply the same principles to the labels they choose to promote. Miller, who has given her face to the Global Cool environmental campaign, also promotes Tod's, the worst offender in the ethical audit.
Mr Kleanthous, said: "The world of celebrity leads by example and generates an aspirational desire for branded products. These stars have the responsibility to make sure that the brands they are endorsing are not damaging the planet."
A spokesman for Tod's said: "Tod's is committed to the process of developing long-term strategies to address the very serious issues of global warming, ethical production and the potential environmental crisis."
Researchers found that in some cases the luxury goods industry, which is worth £77 billion ($206 billion) worldwide, is depleting natural resources, exploiting labour and hiding its supply chain from outside scrutiny.
Conflict diamonds were still a prevalent concern in the high-end jewellery industry despite high-profile campaigns on the mining and selling of the gems in war zones following the Hollywood film Blood Diamond.
The investigation also exposed the gold mining industry as still being conducted without due social or environmental concern - often displacing communities, destroying environments and contaminating drinking water.
According to WWF, consumers are increasingly keen to buy into an ethical standard as well as the promise of quality when they purchase luxury goods.
"These consumers use luxury products as a symbol of success," the report says. "The definition of success and the way it is perceived by others is changing. Increasingly, successful people want the brands they use to reflect their concerns and aspirations for a better world."
RATING THE BRANDS
WWF report into luxury brands' ethical and environmental credentials:
* Luxury brands were rated on susceptibility and social performance.
* All the brands were rated on an A-F scale.
* None of the top brands tested scored more than C+.
- Independent