Independent investigation finds ‘clearly unacceptable’ failings in Boohoo supply chain
An independent review into Boohoo’s manufacturing supply chain has found the company’s business model “is not founded on exploiting workers in Leicester”.
The online retail giant had been put in the spotlight by a Sunday Times investigation published in July which alleged poor pay and conditions at a factory making Nasty Gal products.
Home Secretary Priti Patel ordered the National Crime Agency (NCA) to investigate the claims while investors worried about the long-term impact on the business, with the group’s share price falling 40% in a week.
Boohoo said it was “shocked and appalled” by the allegations and responded with an action plan that included an independent review of its UK supply chain, led by Alison Levitt QC.
The Levitt report has been published today and “has identified many failings in the Leicester supply chain and recommended improvements to boohoo’s related corporate governance, compliance and monitoring processes”.
However she also found “ample evidence” that Boohoo was already responding to problems it had found in its supply chain and “has already made a significant start on putting things right”.
Boohoo Group chief executive John Lyttle said: “[The review] has identified significant and clearly unacceptable issues in our supply chain, and the steps we had taken to address them, but it is clear that we need to go further and faster to improve our governance, oversight and compliance.
“As a result, the group is implementing necessary enhancements to its supplier audit and compliance procedures, and the Board’s oversight of these matters will increase significantly.”
Boohoo said it was “wholly supportive” of the report’s recommendations and has committed to “implement these in full”.
The report’s recommendations covered a range of issues, from corporate governance to purchasing practices and workers’ rights.
Boohoo has said it will be appointing two new non-executive directors, a specialist to provide independent oversight of its change agenda, and a new group director of responsible sourcing.
It is developing a new set of purchasing principles, which will be supported by a bonus structure, and plans to bring in an electronic audit programme within the next year.
Boohoo has also committed to supporting garment industry workers in Leicester and said it will establish and support a Garment and Textiles Community Trust, and increase its work with partners to ensure workers understand and can exercise their rights.
Lyttle said he wanted the steps “to drive long-lasting and meaningful change” for the benefit of all of Boohoo’s stakeholders.
He added: “Garment workers in Leicester, and our suppliers across the city, are an important part of our success.
“We recognise that boohoo has been a major force in driving the textile industry in Leicester and today want to reinforce our commitment to being a leader for positive change in the city, alongside workers, suppliers, local government, NGOs and the community at large.”
Boohoo’s share price plummetted when the investigation was published. While it remains below its June peak, last night’s closing price of 324p is 50% above where it dropped to during the crisis, and is in line with its value in the pre-Covid-19 months of 2020.