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Boohoo Mulling Radical Step Toward Elevating Workers’ Rights

Boohoo Group is considering linking its multi-million-pound corporate bonuses to measurable environmental, social and governance (ESG) criteria, such as improved workers’ rights, following suggestions by British lawmakers last month that it “put its money where its mouth is” when it comes to mitigating labor abuses in its supply chain.

“I can confirm that this matter is being considered by our board,” Mahmud Kamani, the fast-fashion e-tailer’s executive chairman, wrote to the Environmental Audit Committee (EAC) of the House of Commons in a letter dated March 23 and published Saturday. “Our remuneration committee is looking at the details of how this might work in practice and have engaged specialist consultants to help us with this.”

The company’s annual remuneration report, which will be published in May, will “include a further update on this matter,” he added.

The letter is a response to a missive dated March 4 by the EAC, which urged Boohoo to “demonstrate genuine commitment to environmental and social responsibility” by decoupling its executive payouts from its “continued breakneck growth.”

The Gen Z fave—which also owns the BoohooMan, MissPap, Nasty Gal, PrettyLittleThing, Karen Millen, Oasis and Warehouse brands, along with Debenhams and Arcadia Group’s erstwhile Burton, Dorothy Perkins and Wallis labels—announced last year that top executives would share a maximum payout of 150 million pounds ($208.5 million) if Boohoo’s market value spiked by two-thirds to 7.55 billion pounds ($10.5 billion) by June 2023.

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But ministers reminded Kamani of his admission at a December parliamentary hearing that Boohoo’s due-diligence failings in the English city of Leicester were due to its inability to develop processes quickly enough to keep pace with its runaway sales, which increased 40 percent to 661 million pounds ($918.6 million) in the four months to Dec. 31 alone, outstripping analysts’ predictions of 29 percent growth.

Philip Dunne, chairman of the EAC, said he welcomed Boohoo’s response, which sends “promising signals that we are reaching a turning point in fast fashion’s awareness of its environmental and social responsibilities.”

“It is welcome news that the board is considering aligning senior executive bonuses with making ESG improvements, and I look forward to hearing whether this is being taken forward,” Dunne said in a statement. “Bonuses shouldn’t just be linked to breakneck growth. Boohoo needs to demonstrate that it is delivering verifiable improvements in workers’ rights and the climate impact of its products.”

Kamani also described in his letter Boohoo’s new sustainability strategy, dubbed Up.Front, which the retailer bills as a “no-nonsense set of measurable targets” centering on creating eco-friendlier clothing, strengthening supplier relationships and addressing climate change.

“We are excited about the impact this will have on our business, our customers and the environment,” Kamani wrote, adding that Boohoo has “begun the process” of signing up to the nonprofit Waste & Resources Action Programme’s circularity-focused Textiles 2030 initiative. “This is an important step in reducing our impact on the environment and I would like to thank you for your encouragement on this issue.”

Last month, Boohoo published for the first time a full list of its U.K. suppliers as part of a bid to promote greater transparency in its value chain. The company had axed an estimated 500 suppliers to just 78, which drew questions from labor groups about whether the fast-fashion empire employed a responsible exit strategy that included an appropriate phase-out time that minimized negative impacts on employees.

“What is worrying is the lack of reference to what has happened to those suppliers–and crucially their workforce—who made Boohoo clothes for years despite regular allegations of violations, namely underpayment of wages,” Dominique Muller, policy director at Labour Behind the Label, which alleged last year that Boohoo was putting its workers at risk of contracting Covid-19, told Sourcing Journal at the time. “Have the workers been remediated? When will they get their money back? Is Boohoo laying down its ethical credentials on the backs of years of wage theft in Leicester?”

Kamani told the EAC that Boohoo will not be publishing a list of excluded suppliers.

“We have been asked not to publicize names by government agencies,” he wrote. “We have also been advised that it would not be appropriate to prejudice any future applications to join our, or other retailers’ supplier lists, by these manufacturers, should they be able to demonstrate full compliance with our code of conduct, which identifies the legal requirements for safe and ethical working practices. I can assure you that we have shared details of these manufacturers and the nature of our concerns with the Gangmasters and Labour Abuse Authority and others.”

Dunne said last year’s revelations about poverty wages and life-threatening workplace conditions in Leicester’s factories may have encouraged Boohoo to “take steps to clean up its supply chain.” These have included appointing retired judge Brian Leveson and accounting giant KMPG to provide independent oversight of Boohoo’s Agenda for Change scheme to overhaul its corporate governance, purchasing and worker-welfare practices.

“News last summer emanating from Leicester’s garment industry appalled us all, with allegations of modern slavery in supply chains and a lack of Covid-secure measures in factories,” he said. “Once the publicity dies down, I hope these changes remain in place for years to come with a renewed pride in ‘Made in Britain’ items and certainty on improved workers’ rights.”