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In light of recent allegations surrounding its supply chain and treatment of workers, online retail giant, Boohoo, received a letter from Home Secretary Priti Patel, calling on the company to work with suppliers and ensure better protection for vulnerable workers.
This follows reports in July 2020 in which certain factories in Leicester, which sell clothes to Boohoo, were called out for paying workers below minimum wage and failing to protect them from the coronavirus outbreak. These reports had seen the company’s shares plummet to a low of 210 pence per share in July, following Boohoo’s earlier impressive recovery from the peak of the pandemic (where shares reached a low of 157.5 pence in March) with shares reaching as high as 415 pence in June, after Boohoo snapped up a number of struggling retail competitors including Oasis and Warehouse, and reported a very strong first quarter.
Boohoo responded to the allegations on 8 July claiming the board were ‘shocked and appalled’ and would be launching an independent review of its UK supply chain, which is expected to conclude next month. The online retail giant went on to clarify that the factory in question in the report, Jaswal Fashions, was never a supplier to Boohoo. However, the order which was placed by Boohoo’s portfolio brand, Nasty Gal, had been placed with another company who had subcontracted the work to a Moroccan manufacturing company before repackaging the clothes in Leicester. Furthermore, Boohoo stated it had not to date found evidence of workers being paid £3.50 an hour, however, it had ‘found other evidence of non-compliance with our Code of Conduct and the Group has taken the decision to immediately terminate its relationship with both suppliers’. The board also stated it is in the process of recruiting two non-executive directors and would be giving consideration to experience in dealing with environmental, social and governance issues as part of the process.
Priti Patel expressed that she felt the approach taken by Boohoo was too focused on terminating contracts with suppliers who were in breach of the company’s Code of Conduct as opposed to protecting vulnerable workers. Furthermore, that companies should take responsibility for conditions in their supply chains. She went on to express her concern towards the fast fashion industry and its role in ‘fuelling alleged criminal, inhumane and abusive practices in Leicester’s garment sector’. She pointed out how the company’s aggressive pricing strategy could put pressure on supply chains which would in turn increase the risk of these conditions. Furthermore, she urged Boohoo to be more transparent regarding its supply chain, pointing to how companies were publishing names and addresses of their supply chains to allow for ‘effective public scrutiny’. The letter comes after Boohoo CEO John Lytlle called on the government to establish a licensing scheme in order to vet suppliers and ensure they were ‘meeting their legal obligations to their employees’.
Alongside the Home Secretary, the Ethical Trading Initiative (ETI), a group that monitors supply chains and promotes workers’ rights, also responded to Boohoo’s approach on 25 August. ETI called into question the independence of the report that had been commissioned and paid for by Boohoo. Like Priti Patel the group also called into question the impact of the fast fashion industry and whether ‘the price paid for a low-cost item feeds modern slavery’- something ETI believes that Boohoo’s review does not consider, being too focused on ‘individual factories and suppliers, rather than looking at the business practices that feed this environment’. Resultantly, ETI have chosen to not respond to the survey to provide evidence for the review.
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