Boohoo is “travelling along the right road” towards addressing poor working practices in its supply chain, a report has said.
Sir Brian Leveson, retired judge and author of the report, said despite early efforts made by the online retailer, “it is clear that there is a long way to go” to implement lasting change in Boohoo’s supply chain.
In his first report since being appointed by Boohoo to oversee its supply chain overhaul, he said there is a perception of a “buying culture involving a race to the bottom which has run the risk of generating unacceptable or even illegal practices by suppliers”, which must be addressed in the training of those responsible for buying.
In September, a report by Alison Levitt QC found Boohoo’s monitoring of its supply chain had been “inadequate for many years”, following media reports that one of its suppliers had paid workers in a Leceister factory £3.50 an hour.
Leveson said Boohoo had proceeded “with pace” to address some of the concerns highlighted by Levitt through its Agenda for Change programme, and the retailer had removed 64 suppliers from its supplier list as a result.
He said buyers employed by Boohoo must ensure they are prepared to offer to contract only on ‘fair-trade’ terms.
This would include a fair price based on the fabric required, the other materials involved such as buttons, the time taken to manufacture the garment, which must be reflected in the cost of labour lawfully remunerated, rent, rates, energy and a fair margin of profit, together with transport costs and other incidentals.
“Working with buyers to ensure that there is an auditable process of ensuring that a ‘fair trade’ approach has been adopted to purchasing negotiations has to run alongside a thorough and complete compliance audit not only of all those with whom Boohoo contracts but also their subcontractors,” Leveson added.
“It is important to set a shared clear vision of the future, reinforcing the ethics and compliance agenda through corporate change… This must be clearly articulated by the board and cascaded from the top of the group to the most junior staff. Failure to do so will pose a risk to the progress and ultimate success of the programme.”
Mahmud Kamani, Boohoo group executive chairman, said: “I’m immensely proud of the speed with which our team has worked to effect change during such a challenging period for the group, and it’s encouraging to see our progress acknowledged in the report.”
The report came as Boohoo reported strong sales growth of 40% in the final four months of 2020.
Laura Morroll, senior manager at consultancy, BearingPoint, commented: “Boohoo’s final year results stand in stark contrast to traditional bricks and mortar retailers and are evidence of the polarisation of retail performance through the pandemic.”
Morroll said the firm had achieved success through successful social media engagement, working with influencers and connecting with customers.
“Boohoo responded quickly in lockdown to emerging customer loungewear trends, but unfortunately this came at the cost to factory worker welfare across the UK. The pace of growth and desire to respond to fast fashion customer demands in a fiercely competitive marketplace has been at the core of the issue,” she continued.
“Whilst Boohoo’s UK factory base has been established to set up a supply chain with the ability to turn fashion around quickly, it has also been set up without the necessary oversight and structures in place to guarantee the necessary level of corporate governance.
“Even though customer spending shows little sign of abating, in the months ahead, the regulatory spotlight must remain on Boohoo’s supply chain practices and the progress made on the company’s ‘Agenda for Change’ will be an important factor in maintaining sustainable growth.”
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