Boohoo review finds 'many failings' in supply chain

Boohoo has published the findings of the independent review of its supply chain, revealing "many failings" and recommending improvements to corporate governance, compliance and monitoring processes.

In response to an investigation into the treatment of garment manufacturing workers in Leicester, the online fashion retailer's board announced in July that it was undertaking a review.

Alison Levitt QC was appointed to consider Boohoo's obligations and duties of care in relation to the workforce in its Leicester supply chain.

She was tasked with investigating allegations that some factories in Leicester that it used paid workers below the minimum wage and failed to protect them from the Coronavirus. The online fashion group, which owns brands including PrettyLittleThing and NastyGal, said £10 million would be invested in “eradicating malpractice” in its supply chain.

The review found unacceptable working conditions, with cramped factories that sometimes had no open fire escapes. “I have concluded that were a fire to break out in some of the buildings in Leicester it is likely that there would be loss of life,” Levitt stated.

Employee rights were ignored on a wide scale, with many not entitled to paid holidays or sick pay, facing “excessive” working hours and paid less than the national minimum or living wage.

“It is more likely than not that these conditions exist across the best part, if not the entirety, of Boohoo’s Leicester supply chain... the problems we have described are endemic,” Levitt said.

“I have concluded that, in truth, Boohoo has not felt any real sense of responsibility for the factory workers in Leicester and the reason is a very human one: it is because they are largely invisible to them.”

However, the review found no evidence that Boohoo had committed any criminal offences, adding that the steps which Boohoo is now taking in relation to remedying problems in its Leicester supply chain had been implemented nearly a year ago.

They were a product of processes it had itself put in place and not just a reaction to the negative publicity this summer. "Nevertheless, with the benefit of hindsight we regret that these processes did not advance quickly enough," read a statement from Boohoo.

Levitt stated that she was satisfied that the company did not deliberately allow poor conditions and low pay to exist within its supply chain, it did not intentionally profit from them and its business model is not founded on exploiting workers in Leicester.

In addition, Levitt stated she was "confident that the adaptations which Boohoo should make involve a relatively easily-achieved realignment of its priorities and governance systems and that the Board should not feel discouraged".

Boohoo stated that it is close to appointing a "highly experienced and respected individual" to provide independent oversight of the implementation of the new change agenda.

Alongside this person, two new non-executive directors will be appointed to make a majority of independent directors on the board. "Our intention is for one of these roles will be filled by an individual experienced in dealing with environmental, social and governance matters."

Supply chain compliance will also now become a mandatory item on every board meeting agenda with immediate effect

Boohoo also pledged to strengthen its sourcing team, with the recent appointment of a new group director of responsible sourcing, who joins from a major global apparel retailer. "This is a senior role, to be supported by two recent permanent hires with significant experience in sustainability and compliance," the statement added.

Boohoo appointed two external supply chain and compliance audit firms, which have visited the majority of its Leicester-based suppliers in recent months.

On their recommendation, the company will consolidate its approved supplier list, while still maintaining a significant presence in the Leicester garment industry; invite new suppliers who have a track record of ethical and sustainability policies; and extend the independent audit programme to the rest of the UK and global supply chain.

"Over the next 12 months, we will implement an electronic audit programme, which is currently in development to monitor status and capacity across our supply chain," read the statement.

"We will consolidate volumes, place more consistent order flows and focus on working to achieve best practice with suppliers," it continued, adding: "Taken with the continued growth in the scale of our business, the group remains well-positioned to lead the fashion e-commerce market in the future and successfully implement an agenda for change in UK garment manufacturing."

Group chief executive John Lyttle added that the review "identified significant and clearly unacceptable issues in our supply chain" and that "we need to rebuild confidence that these matters will be dealt with appropriately and sensitively, and that they will not recur".

Brian Small, group deputy chairman and senior independent director, and Boohoo representative for the review, concluded: "Although in some parts it makes for uncomfortable reading, I would like to take this opportunity to thank Ms Levitt on record for her diligent and thorough Independent Review, which we are making public in full today.

We welcome in particular her clear recommendations, which we accept, and as a board are committed to driving up standards in our supply chain and business practices."

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