Firms are being urged to partner with suppliers that share their ethical values in the wake of the Leicester slavery debacle.
Boohoo has announced an independent review of its UK supply chain, to be led by Alison Levitt QC, following newspaper allegations that a supplier paid workers below the minimum wage and claims by an NGO that factory staff were forced into work with coronavirus symptoms.
Boohoo’s share price has plummeted and Next, Asos and Zalando are reported to have dropped its clothes from their websites.
Meanwhile, the Gangmasters and Labour Abuse Authority (GLAA), along with other agencies, has been conducting site visits in Leicester following “concerns about how some businesses in the city have been operating before and during the localised lockdown introduced by the government at the end of June”.
Independent anti-slavery commissioner Dame Sara Thornton said brands had stopped sourcing from Leicester due to slavery concerns.
John Perry, managing director of consultancy Scala, warned a customer company would be held accountable for a supplier’s failings.
“Adverse business impact can come about from problems in a number of areas, such as at the manufacturing source, in transportation or routing or, as we have seen here, in the manufacturer’s supply chain,” he said. “Failure of one or more aspects may present a major or even existential risk to the company – as Boohoo has already found – which also highlights the need for increased supply chain resilience and robustness.
“Businesses should therefore partner with suppliers that share their own ethical values, wherever possible. Establishing and communicating expectations through a supplier code of conduct is a particularly effective way for businesses to involve their supply chain partners in their efforts.”
Michael Harris, director, financial crime compliance at LexisNexis Risk Solutions, said a “thorough supply chain check can take as little as two weeks” when onboarding a supplier and there was “simply no excuse for a lack of due diligence to be taken in an organisation’s supply chains”.
“When you consider the true cost of these allegations to the organisations involved – loss of shareholder value, investor and public confidence, and reputational damage – then thorough due diligence and site audits should be a no-brainer,” he said. “And of course, the human cost is potentially far greater, as we’ve seen with worker exploitation cases in the past, such as the Rana Plaza disaster. The risk to human life should outweigh the need to drive profit.”
GLAA head of enforcement Ian Waterfield said: “We are committed to working with partners to ensure that workers in Leicester are safe during the coronavirus pandemic and are not having their employment rights eroded or abused.”
Boohoo, which owns the Nasty Gal and PrettyLittleThing brands, said along with the review it would invest £10m to “eradicate supply chain malpractice”.
“We take extremely seriously all allegations of malpractice, poor working conditions, and underpayment of workers. The group will not tolerate any incidence of non-compliance with its code of conduct or any mistreatment of workers, and will not hesitate to terminate relationships with any supplier who does not comply,” the company said.
An SM/CIPS poll on the impacts of the coronavirus found nine in 10 firms were spending more on PPE and 84% were spending more on additional services such as cleaning and facilities management. Half said it would be “quite difficult” to adhere to social distancing rules.
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