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Boohoo Urged to Tie Bonuses to Better Workers’ Rights—Not This Common Metric

British lawmakers are urging Boohoo to “put its money where its mouth is” and link its generous executive bonuses to measurable environmental, social and governance criteria, such as improved workers’ rights, instead of courting runaway growth amid allegations of low pay and unsafe working conditions in its supply chain.

In a letter to Boohoo Group chairman Mahmud Kamani following his appearance at a parliamentary hearing in December, the Environmental Audit Committee of the House of Commons said that such a move would “demonstrate genuine commitment to environmental and social responsibility,” particularly since Kamani had admitted that the ultra-fast-fashion retailer’s due-diligence failings were the result of not developing processes quickly enough to keep up with its booming business.

“You went on to state that, ‘Our business has been growing between 50 percent and 100 percent year-on-year and we have been growing the top line, and processes do fall away,’” the letter said. “Yet Boohoo Group’s bonus scheme, announced in June 2020, ties very generous bonuses for yourself and other executives to continued breakneck growth,” with incentives of up to 150 million pounds ($208.5 million) if the retailer’s market value perks up by two-thirds over three years.

A spokesperson for Boohoo, 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, said the company has received the letter from the committee and it will “take time to digest the contents and respond to Mr. Dunne, the chair, in due course.”

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The company came under fire after damaging revelations emerged last summer that Boohoo’s suppliers in Leceister in England were illegally underpaying their workers as little as 3.50 pounds ($4.86) per hour in conditions rife with life-threatening health and safety violations.

An independent review of its supply chain by Alison Levitt, a former legal advisor to the Crown Prosecution Service, later concluded that while there was no evidence that Boohoo had committed any criminal offenses, these reports were “substantially true” because of the company’s own “weak” and “inadequate” monitoring of the “many failings in the Leicester supply chain.”

“Boohoo has not felt any real sense of responsibility for the factory workers in Leicester and the reason is a very human one: it is because they are largely invisible to them,” Levitt added. “It is hard for people to empathize with the plight of those of whom they know little.”

While lawmakers said they “welcomed” Boohoo’s appointment of retired judge Brian Leveson and Big Four accountancy firm KPMG to oversee an overhaul of its processes, Kamani’s responses at last year’s hearing—and his lack of clarification since—still left them wanting.

“Despite the positive steps taken since media allegations last year, your answers to our questions did little to dispel the impression that the company has been focused on rapid growth regardless of the social or environmental costs,” the letter said. “We were surprised that as chairman and executive chairman of Boohoo Group, you were unable to list any actions that Boohoo Group had already taken to comply with the Levitt review, despite your assertion that this was a priority for the business.”

The committee also pressed Boohoo for updates about how it would guarantee minimum-wage compliance, a list of the Tier One and Tier Two suppliers it promised it would publish, as well as further details about the 64 facilities it said it severed ties with because of violations to the company’s code of conduct.

“We are interested to learn how you intend to factor minimum wage costs into your price negotiation with suppliers to prevent them from being put in a position where illegally low wages are paid,” the letter said. “The relationship between Boohoo Group and suppliers alleged to be paying illegally low wages remains opaque. We request that Boohoo Group publishes the list of 64 factories it has exited at the same time as it publishes its current Tier One and Tier Two suppliers.”

Fixing Fashion

The letter comes two years after the committee’s “Fixing Fashion” inquiry examined the damaging effects of throwaway clothing and exploitative working conditions in the U.K. fast-fashion supply chain. Its continued scrutiny of Boohoo is part of follow-up efforts to monitor progress due to ongoing concerns about the fashion industry’s social and environmental impacts.

“Boohoo’s rapid growth has taken the U.K. garment industry by storm; it has been linked to poor pay and conditions in U.K. garment factories. But to its credit, it has pledged to clean up its act,” Philip Dunne, chairman of the Environmental Audit Committee, said in a statement. “We have written to Mr. Kamani to seek updates on a range of issues, including on supply-chain transparency. We are asking Boohoo to put its money where its mouth is and link the multi-million-pound bonuses it has lined up for its bosses to the achievement of its ethical and environmental pledges.”

Boohoo found itself on the defensive again last week after Sky News said U.S. Customs and Border Protection (CBP) had “seen enough evidence” to launch an investigation after receiving a set of petitions that lobbied for the exclusion of the company’s apparel and apparel-related products “produced wholly or in part by forced labor.”

A Boohoo spokesperson said the company hadn’t received notice of any investigation and that it’s “confident in the actions that we are taking to ensure that all of the group’s products meet and exceed the CBP criteria on preventing the product of forced labor entering the U.S. We will work with any competent authority to assure them that products from our supply chain meet the required standard.”

Meanwhile, Boohoo has submitted plans for an office, factory and warehouse at a former car showroom on Thurmaston Lane in Leicester. In a planning application submitted to Leicester City Council earlier this month, the retailer said it hoped to rehabilitate the “rundown” site, create roughly 95 jobs and promote “belief in the Made in Britain stamp once again.”

“The newly proposed use seeks to completely rejuvenate the site, with the intention to reuse the entirety of the building for office accommodation and light industrial processing activities including the manufacture, test and quality control of clothing items,” the application added. “The proposals will ensure that a disused building is improved and brought up to the standards of modern needs and occupation.”

Editor’s note: The story was updated on March 12, 2012, to include a statement from Boohoo.