Boohoo is developing a set of “purchasing principles” following a critical independent review of the firm’s supply chain practices.
The principles will be mandatory for buying teams, with bonuses available for those adhering to them and disciplinary action for “anyone placing orders with unapproved suppliers”.
The company has also appointed a new group director of responsible sourcing with “outstanding knowledge and experience of implementing sustainable supply chain systems”.
The moves follow a report from Alison Levitt QC, who was commissioned by Boohoo to carry out a review following negative press reports about working conditions in Leicester factories supplying the company and a sharp drop in the share price.
Levitt said she was satisfied allegations about poor working conditions and low rates of pay in factories were “substantially true” and Boohoo’s monitoring of its Leicester supply chain was “inadequate for many years”.
“From (at the very latest) December 2019, senior Boohoo directors knew for a fact that there were very serious issues about the treatment of factory workers in Leicester and whilst it put in place a programme intended to remedy this, it did not move quickly enough,” said Levitt.
She added: “Boohoo’s extraordinary commercial growth has been so fast that its governance processes have failed to keep pace.”
Levitt said Boohoo did not deliberately allow poor conditions and low pay within its supply chain, but added: “Boohoo’s culpability lies not in doing nothing but that they did too little too late.”
Boohoo said under the changes supply chain compliance would become a mandatory item on every board meeting agenda and a new supply chain compliance committee, headed by the group director of responsible sourcing, will be created.
The company said it would work with suppliers to support best practice operations, including a more consistent and predictable flow of orders, a programme of education and consultancy, and a set of KPIs to drive improvements.
John Lyttle, group CEO, said: “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.”
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