Boohoo directors failed to act on known serious issues months before scandal

Independent review of Boohoo supply chains finds that company directors knew of problems long before they were reported in the press

In July this year, front page news stories about Covid 19 outbreaks in Leicester clothing factories named Boohoo as the key company responsible.

Part of Boohoo’s response to widespread criticism was to commission an ‘independent’ review by the QC Alison Levitt.

The report from this review was published in September, and found that Boohoo’s directors did not need a new enquiry to tell them that serious workers rights abuses were taking place in Leicester because they already knew.

There had in fact already been documentaries by Channel 4’s Dispatches in 2010 and 2017; research by the Ethical Trading Initiative in 2015; analysis in the Financial Times in 2018; and an investigation by the Environmental Audit Committee in 2019.

Key findings of this latest review included:

       • 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

 • the allegations about poor working conditions and low rates of pay in many Leicester factories are not merely well-founded but substantially true

    • Boohoo’s monitoring of its Leicester supply chain was inadequate and this was attributable to weak corporate governance

    • Boohoo ought to have appreciated the serious risks created by ‘lockdown’ in relation to potential exploitation of the workforce of the Leicester factories. It capitalised on the commercial opportunities offered by lockdown and believed that it was supporting Leicester factories by not cancelling orders, but took no responsibility for the consequences for those who made the clothes they sold.

Levitt warned that if Boohoo did not make a serious commitment to addressing problems in the Leicester supply chain then “it is inevitable that these problems will recur”.

NGOs challenge the review

Following on from an assurance of the independent status of the review,  Levitt stated “there is much to like and admire about Boohoo” and praised the company for its contribution to the UK economy, democratisation of fashion, job creation and vibrant and energetic headquarters. She then acknowledged that: “This report will not satisfy everyone. By way of example, a number of stakeholders and possible witnesses have declined to speak to me on the ground that the Terms of Reference are unacceptably narrow”.

Ethical Consumer made a decision not to submit evidence on these same grounds. It was outside the narrow remit of the enquiry, for example, to ask whether turning a deliberate blind-eye to the issue of sweatshop conditions might have been a core part of a business model which had allowed Boohoo to expand dramatically in recent years by undercutting its competitors.

The Ethical Trade Initiative released a public statement in August outlining why it would not be responding to the enquiry stating “Tackling these challenges through a questionnaire focusing upon individual factories and incidents in one city is not the best way to take forward a full investigation into these matters. This is a supply chain issue that begins with corporate business practices around purchasing and costing...”

Recommendations do not go far enough

The review does present some damning evidence and make some genuine calls for improvement including greater transparency, a proper audit system and membership of the ETI.

The ETI itself, however, asks: “Can we really trust all elements of this enquiry, when boohoo refused to grant access to Board emails? The assertion in the Executive Summary that no evidence of criminal activity was uncovered conflicts with the reports made of a meeting on 16 December 2019 at Boohoo's offices, mentioned on page 86 of the full report, at which Leon Reed, Verisio's Managing Director, told boohoo that he had identified "criminal activity and ridiculously poor conditions."”

The ETI also raise concerns that the importance of trade union engagement is not acknowledged, and that the report focuses on supplier actions rather than Boohoo’s business model. While Boohoo states that the review “emphasises the clear benefits of improved purchase practices” there did not seem to be many recommendations around payments for clothing.

The review did suggest however that Boohoo could ensure their suppliers earn enough to pay their workers properly. Labour Behind the Label goes further, with a clear demand that Boohoo “In a transparent manner end the undercutting of prices and ensure that all pricing and purchasing practices enable the payment of the national minimum wage and the end to Precarious Work in Leicester.”

A bigger problem

In Issue 180 we looked back at Primark in 1999: “its low prices were frightening all the other manufacturers and it said nothing about ethical issues at all”, and acknowledged that sustained pressure on the company had resulted in it improving standards. We also pointed out that fast fashion brands like Boohoo and Misguided had essentially moved into the space Primark left behind, with their extremely low prices and zero ethical policies.

Without proper regulation it is debatable whether this latest episode will result in any lasting change, or if a new brand will be able to fill any space Boohoo does leave behind.

A coalition of civil society groups including Labour Behind the Label has commented, “Abuses in Leicester garment factories must be set within a wider landscape of laws and regulatory bodies that are clearly failing to provide adequate protections to garment workers across the UK. To drive meaningful change, the government must take action to curb the abusive business practices of brands that have contributed to this situation.”

Campaign group Share Action stated “It is hard to imagine the steps as they are set out in the report will significantly shift the quality of Boohoo supply chain. It will still be reliant on an under-invested supply chain where human rights challenges will remain.  Although the conditions in Leicester are not solely Boohoo’s responsibility to fix, they will need to go significantly further than what is set out in the recommendations if they are to have a supply chain that supports decent jobs that we can all be proud of.”

The full report from the review, conducted by Alison Levitt QC, is now available on Boohoo’s website.