Boohoo accused of failing to improve working conditions in its supply chain

Boohoo has been accused of failing to significantly improve working conditions in its supply chain, as company co-founder Carol Kane survived an attempt to block her re-election to the board over the issue.

Just over 12% of Boohoo shareholders failed to back Kane’s re-election after an investor advisory group had raised concerns over the board’s handling of problems in its supply chain.

The company’s remuneration report, including a scheme under which 15 key managers are set to share a £150m bonus, received a stronger rebuke after it failed to receive the backing of 29% of shareholders at the company’s annual general meeting on Friday.

It came as the campaign groups Labour Behind the Label, ShareAction and the Business & Human Rights Resource Centre said they had found little evidence that Boohoo had changed its commercial purchasing practices to protect workers in its supply chain in Leicester.

In a joint report published on Friday, the organisations said the low prices paid by Boohoo, its encouragement of price competition among suppliers and demand for short order times were drivers for illegally low wage payments and poor working conditions.

They said the fashion company had also not offered redress to workers who had been previously underpaid by factories.

Boohoo said the campaigners had failed to recognise any of the substantial action the company and its advisers had taken.

The latest criticism followed a recommendation by the advisory group Glass Lewis that shareholders block the reappointment of Kane at the AGM. Fellow advisory group Pirc also criticised the company’s board for paying out executive bonuses last year despite an independent report finding they were aware of the problems but failed to act quickly to rectify matters.

Boohoo last year put in place the Agenda for Change programme to improve standards in the factories it works with after the independent report by Alison Levitt QC found “very serious issues” in the supply chain.

The retired judge Brian Leveson was brought in to oversee the change programme and has since written three upbeat progress reports, the latest of which said progress was evident and Boohoo was determined to “embed a new way of working”.

The human rights groups claimed those positive conclusions were unsubstantiated and said they believed: “Agenda for Change is simply providing a veneer of progress without corresponding improvements for workers.”

They called on Boohoo to provide evidence that it had ringfenced labour costs for workers within its buying terms to ensure all factory workers were being paid at least the minimum wage. They added that Boohoo should sign up to the UK corporate governance code, shift its registration from Jersey and move its listing from the junior Aim market to the main London Stock Exchange to improve oversight.

Boohoo said: “Significant progress has been made to date, including the consolidation of suppliers to 54, who are working with the business to drive a continuous cycle of improvement and that journey will continue.”

The company added: “We are committed to growing with compliant suppliers and continue to source similar volumes out of the UK versus 12 months ago, working with fewer, larger suppliers who have evidenced that they share our values. Unlike many others, who have turned their backs on UK manufacturing, Boohoo have faced into the challenges with an absolute determination to fix any problems.”

Campaigners and unions also called on Boohoo to fulfil a promise made to the parliamentary Environmental Audit Committee in 2018 to engage with the unions at their warehouse.

Usdaw, which represents workers at Boohoo’s facility in Burnley and its head office in Manchester, said the company continued to refuse to recognise the union, leaving staff without a real voice at work.

Mike Aylward, the north-west regional secretary for Usdaw, said: “We totally understand why shareholders have deep concerns about Boohoo’s reputation; after fast-fashion links with garment manufacturers who exploit workers and reportedly paid as little as £3.50 per hour were exposed. Sorting the supply chain is important and the company also promised MPs they would engage with Usdaw, but that is yet to happen.”

Boohoo did not respond directly to the criticism from Usdaw. It said: “The unions do not currently unionise in Leicester’s garment and textiles industry despite there being no impediment by Boohoo or anyone else for them to do so.”