Boohoo plans to set up a “model factory” in Leicester following criticism over working practices at supplier factories.
John Lyttle, Boohoo’s CEO, outlined plans for the online retailer to begin manufacturing its own products at the facility as soon as September.
He told the Mail on Sunday the factory was a “commitment to UK manufacturing” and would demonstrate best practice in terms of workers’ rights.
Lyttle explained: “Inditex have a number of joint ventures in Spain and in Portugal that they work with and that really help their flexibility – it's not dissimilar to that.
“Let's get this one up and running, prove the model. And then decide and see where we go from there. We're not manufacturers but we feel confident we can execute this and we can make this factory successful.”
The move comes after Boohoo was criticised over reports that workers at a supplier factory in Leicester were paid just £3.50 and were not given personal protective equipment to avoid Covid-19 infection.
Lyttle said the reports had been “upsetting”.
“If there's stuff wrong in Leicester I'd rather find it and fix it, not run for the hills and say, 'That's it, we're out of here – let somebody else sort it out’,” he said.
He said there had been no evidence of Boohoo’s suppliers paying £3.50, but two suppliers have been suspended due to “documentation issues”.
Meanwhile, the financial sector has been warned to consider social issues as much as the environment when investing in firms.
At an event by financial crime agency Themis, Tom Stancliffe, co-founder of Tribe Nutrition, said: “Increasingly consumers really care and attach value to the way in which businesses act. What recent examples like Boohoo has shown is that if you invest in businesses that don't have great practices around human rights or other social issues, ultimately this is going to destroy value.”
While environmental concerns have been front and centre when considering environmental, social and governance (ESG) issues, there is a need for transparency from firms in regards to their due diligence and reporting processes for exploitation in supply chains, he continued.
“Going forward the ‘S’ in ESG is going to become more important. [Firms] doing not just what they’re required to do but going well beyond that and demonstrating best practice is going to become even more important.”
Also speaking on the panel, Dame Sara Thornton, the UK’s independent anti-slavery commissioner, reiterated that firms should work with their suppliers when issues are identified, rather than cutting them off.
“The best companies think about how to cascade ethical standards down the supply chain. If, as soon as there's a problem, a retailer or someone who is procuring from that supply chain cuts them off, the people who are often the most hurt by that is the poorly paid, abused workers.”
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