Boohoo management were well aware workers in its supply chain were being badly treated months before fresh allegations came out this summer, an independent review has found.
Senior lawyer Alison Levitt QC said the fast fashion chain knew about “serious issues” with the treatment of factory workers in Leicester last December, but failed to move quickly enough to do anything about it.
She also said Boohoo “capitalised” on the commercial opportunities offered by lockdown - as online sales rocketed - supporting Leicester factories by not cancelling orders, but taking no responsibility for the impact on the people on the shop floor.
And she blamed “weak corporate governance” for Boohoo’s inadequate monitoring of its Leicester supply chain.
That came despite its chief executive John Lyttle promising to LeicestershireLive in August 2019 that they were taking steps to ensure their Leicester suppliers gave their workers a fair deal.
Back then he had said a 20 strong team based in Leicester was helping ensure its suppliers in the city were treating staff ethically and paying them a fair wage.
In her review findings, published today, Ms Levitt wrote: “Of those who responded to the call for evidence via the questionnaire, a large number were of the view that Boohoo either was aware of the sorts of conditions within their supply chain that have been described above or that, with proper due diligence, they could have easily discovered them.
“A number of witnesses took the view that Boohoo turned a “blind eye” to certain practices and conditions within their supply chain.
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“There were some witnesses who thought that because Boohoo employees, including the “compliance team”, “quality control” employees and buyers were physically present at factories in Leicester, they must have been aware of conditions.
“Witness 153 asserted that they had seen Boohoo’s chairman Mahmud Kamani in “at least two factories this year”.
“Some respondents questioned the extent to which Boohoo’s inspections were effective at uncovering poor conditions. For example, Witness 368 described visits as the “compliance team” as “focussed on ticking boxes”.
“Some respondents said that poor working conditions are the inevitable result of Boohoo’s business model and thus they must have known.”
Boohoo, which gets about 40 per cent of its stock from Leicester, asked Ms Levitt to carry out the independent review when serious allegations came to light in the summer.
In her 234 page summary, Ms Levitt said Boohoo had treated Leicester factory conditions as a low priority even though there was no doubt about poor working conditions and low pay in many Leicester factories.
But she said she saw no evidence to suggest the way the company used its Leicester suppliers had contributed to a localised spike in Covid-19 cases in the city.
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She also said there was no evidence the company had broken the law, even going on to say there was “much to like and admire about Boohoo” such as its support of manufacturing in Leicester and the entrepreneurial talent of founders Mahmud Kamani and Carol Kane
She said: “The problems in Leicester are complex and of long-standing and Boohoo is not solely to blame – others too are responsible for not having gripped this over many years.
“It has been alleged that Boohoo’s business model is dependent on the profits which can be made from the deliberate exploitation of the Leicester supply chain, safe in the knowledge that there will be little scrutiny.
“I do not accept this – I am satisfied that there are sound legitimate business reasons for Boohoo using Leicester to manufacture clothing but for this to be the case going forwards it may require a change of approach, not least in terms of how Boohoo educates and trains its buyers.
“I have reached the conclusion that the true reason that Boohoo did not become more involved in monitoring conditions in Leicester was that it saw it as being a lower priority than matters which directly affected the company (such as commercial issues or their own employees).
“The Leicester workers are not employed by them and so they are not their responsibility in the way that their own workforce is.
“To some extent this is understandable, but can lead to serious issues of the kind which Boohoo is now facing.”
Shares in the business took a battering in the summer after the Sunday Times sent an undercover reporter into a Leicester factory making clothes destined for its websites, which he said was exploiting workers.
It was not the first time factories supplying the chain had been accused of poorly treating workers. As far back as 2017 by Channel 4, the BBC and the Guardian were reporting on problems in Leicester.
Ms Levitt did however say the company was reacting to the problems before the latest allegations came to light.
She said: “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.
“Whilst it put in place a programme intended to remedy this, it did not move quickly enough.”
In May 2018 the Financial Times published a story about “labour exploitation in Britain’s garment industry” which questioned how Boohoo was able to sell dresses so cheaply.
Months later, in November 2018, MPs grilled then co-chief executive Carol Kane about the prices of its goods.
However, the QC also placed a part of the blame away from Boohoo.
She said: “Inaction by the authorities has contributed significantly to the deficiencies … If the law is not enforced, this sends a clear message that the violations are not important and the people affected do not matter.”
Boohoo chief executive John Lyttle said: “Ms Levitt’s independent review … has identified significant and clearly unacceptable issues in our supply chain, and the steps we had taken to address them, but it is clear that we need to go further and faster to improve our governance, oversight and compliance.
“As a result, the group is implementing necessary enhancements to its supplier audit and compliance procedures, and the board’s oversight of these matters will increase significantly.
“As a board, we recognise that we need to rebuild confidence that these matters will be dealt with appropriately and sensitively, and that they will not recur.”
The “clear, strong, and measurable actions” Boohoo promises to take include:
– Improving the way it oversees its operations including appointing someone senior to “provide independent oversight” of the changes needed
– Discussing supply chain compliance at every board meeting
– Improving its sourcing team with a new group director of responsible sourcing
– Mandatory education and training for its purchasing teams
– Giving bonuses to staff who stick to its new guidelines – with disciplinary action for anyone placing orders with unapproved suppliers
– Consolidating its approved supplier list, while maintaining a significant presence in Leicester
– Inviting new suppliers with a track record of ethical and sustainability policies to work with it
– Extending its independent audit programme to the rest of our 海角视频 and global supply chain
– Establishing a Garment & Textiles Community Trust, governed by independent trustees, with grants for Leicester garment workers suffering hardship
– Doing more to help workers know their rights
– Helping suppliers improve the way they work
One of the things it is already doing is creating a “state-of-the art manufacturing facility” in north Leicester which will demonstrate “best practice, and develop our suppliers’ skills and capabilities in areas from core management systems to worker engagement”.
Brian Small, Boohoo Group deputy chairman and its representative for the independent review, said: “Although in some parts it makes for uncomfortable reading, I would like to take this opportunity to thank Ms Levitt on record for her diligent and thorough Independent Review, which we are making public in full today.
“We welcome in particular her clear recommendations, which we accept, and as a board are committed to driving up standards in our supply chain and business practices.
“The board is also committed to adding further independent experience, increased oversight on matters of compliance and business practices, and adopting higher standards of corporate governance.”