Boohoo - A tearful lesson on supply chain ethics?

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Boohoo - A tearful lesson on supply chain ethics?

Published 13 octubre 2020

On 24 September 2020, Alison Levitt QC published her independent report into the fashion giant, Boohoo PLC. This followed investigations and a report in July 2020 by The Sunday Times which found poor working practices in the company’s Leicester based supply chain.

In a damning report, Alison Levitt QC concluded:

  • the allegations about poor working conditions and low rates of pay in many of the company’s Leicester based supply chain companies are substantially true;
  • Boohoo’s monitoring of its suppliers was inadequate and this was attributable to weak corporate governance
  • By December 2019 (at the latest), senior management at Boohoo were aware of serious issues about the treatment of factory workers.

Crucially, however, Levitt’s report at the same time cleared Boohoo of committing crimes of modern slavery and of committing money laundering offences by continuing to work with suppliers which it knew has breached employment laws.  Her report also confirmed the company was taking steps to sort out the issues with its suppliers.   This may explain that whilst Boohoo’s shareholders have been on a roller-coaster ride over the summer, the company’s share price has been steadied and indeed even increased on the day of the publication of the Levitt report.

When the news about Boohoo’s supply chain first emerged in July 2020, one of the company’s largest institutional shareholders offloaded £80m worth of shares and there were fears that the scandal could lead to further shareholder backlash and potential litigation.  For now however it appears this may have been avoided. 

The BooHoo episode serves as a timely reminder to all companies of the need to ensure full compliance with the provisions of the Modern Slavery Act by not only the company itself but also by all companies within its supply chain. Supply-chain ethics is of growing importance  - companies which are committed to the fair treatment of workers and their environment, and adhere to ethical codes are likely to rise above the rest.

Authors

William Allison

William Allison

London - Walbrook

+44 (0) 20 7894 6440

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