OPINION: Boohoo report highlights worrying gaps in UK worker protections

by Thulsi Narayanasamy | Business & Human Rights Resource Centre
Thursday, 1 October 2020 11:13 GMT

A woman poses with a smartphone showing the Boohoo app in front of the Boohoo logo on display in this illustration taken September 30, 2020. REUTERS/Dado Ruvic/Illustration

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* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

While the fashion brand looks to shake off scandal, there are growing calls for firms to be responsible for abuses in their supply chains

Thulsi Narayanasamy is Senior Labour Rights Lead at the Business & Human Rights Resource Centre.

After years of exposés about the abusive working conditions in Boohoo’s Leicester supply chain, an independent review - commissioned by the company - has now confirmed what many labour rights advocates have long known: the serial allegations are “well founded and substantially true”.

The review, led by Alison Levitt QC, provides damning evidence senior Boohoo staff were aware of these labour abuses exposed in June this year despite their strenuous denial to the contrary.

But Boohoo’s investors have responded to the company’s ‘commitment to change’ as if the sweeping internal reforms put forward have already been implemented. A share price jump of 16% shows that Boohoo has been rewarded for publishing a report revealing how bad its supply chain issues are.

It’s a perverse vote of confidence which labour rights advocates see as dangerously unfounded and premature, with long-suffering workers once again abandoned.

Reports of poor working conditions in Leicester’s factories have been well documented over the last decade by media exposés, documentaries and even parliamentary hearings. And if Leicester's working conditions appear to be synonymous with Boohoo, it’s because around 80% of factories there produce exclusively for the brand - a rare, near monopoly over suppliers.

Understanding the details of Boohoo’s commercial practices - the rock-bottom prices Boohoo enforces through aggressive squeezing of suppliers it has the whip hand over - and how these directly affect workers was outside the limited scope of the investigation.

Some civil society groups declined to participate in the inquiry due to fears the narrow remit would lead to a falsely simplistic picture of how the company can improve, with the root causes of exploitative working conditions effectively ignored. They have been proven right.

Yet the report still points to how the internal culture fostered these practices, particularly under the leadership of founder Mahmud Kamani and CEO John Lyttle.

Email excerpts from Kamani reveal his insistence on bigger profit margins, in turn demanded by buyers shown to be worryingly inexperienced in understanding the labour rights implications of Boohoo’s exploitative pricing models. What is troubling is the revelations don’t translate into a corresponding concern about this deep-rooted internal culture.

Boohoo CEO John Lyttle said, “the reason for having an independent investigation was wanting to show we are transparent”. But wanting to show that the company is transparent and actually being transparent are vastly different.

Last year, Lyttle and other Boohoo senior staff received an email from independent auditors who identified: “Falsified wage records, no signed contracts of employment, buildings in a deplorable condition, workers who had not been paid for seven weeks.”

In the auditor’s words what he saw was, “the worst working conditions that I have seen in the UK”. Lyttle and other Boohoo staff then followed up with a visit to Leicester in December 2019 which confirmed the findings.

The sunny outlook Levitt offers on the prospects for change at Boohoo are at odds with findings that the company was aware of the severity of the issues last year. This, in spite of the company strenuously denying the very same allegations raised this year.

The view that change at Boohoo will be “relatively easily-achieved” underestimates the scale of the challenge and presents a falsely optimistic view to investors.

The report finds no evidence Boohoo is liable for criminal offences related to the exploitation of workers which has evidently appeased investors. But this is simply because the UK lacks a way to hold companies criminally liable for their failure to prevent human rights abuses in their supply chains.

The explanation given to the deep-rooted issues in Boohoo’s supply chain is “weak corporate governance”. Yet even for UK businesses with strong corporate governance, there is still considerable room to abuse rights with impunity in the absence of any binding and enforced regulation protecting workers from exploitation.

This speaks to a deeper set of questions about who our regulations exist to protect. Are we content to protect the returns of shareholders and the outsized bonuses of executives at the expense of exploited minimum wage workers? Investors must start to recognise that the spoils of wage theft turn up in the profit margins they celebrate.

Responsibility for illegal wages and poor working conditions are borne entirely by suppliers, even if they produce only for a single brand, like Boohoo. That Boohoo knew its business was systematically violating the rights of the people making their clothes was considered a secondary concern at best, and wholly irrelevant at worst.

What investors should be calling for is a total shift in the buying and pricing function of the company - nothing short of a total overhaul will ensure that workers who make Boohoo’s clothes are paid properly and work in safe conditions. With civil society and even businesses galvanizing around a call for legislation on a corporate duty to prevent rights abuses, soon even investors will no longer be able to ignore the plight of Leicester’s exploited workers.