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Boohoo Skirts Xinjiang Cotton Sourcing With This Asian Neighbor

Boohoo Group will grow its own cotton in Pakistan amid escalating Western concerns over reports of forced labor in China’s northwestern Xinjiang Uyghur Autonomous Region, where more than half a million Uyghurs, Kazakhs and other Turkic Muslim minorities are widely believed to toil in cotton fields under the guise of “poverty alleviation.”

CEO John Lyttle told the Telegraph Sunday that the move will allow the fast-fashion e-tailer to have “complete traceability” of the provenance of its cotton. The first crop, which will yield roughly 2,000 tons of the fiber early next year, will be used to create “millions” of garments for its leisurewear and denim lines.

The news comes as governments in the United States and elsewhere are tightening regulatory nets to prevent products made with modern slavery from slipping past their borders. Cotton from Xinjiang, where evidence for crimes against humanity, including forced labor, extrajudicial detention, forced sterilizations, forced separation of families, torture, sexual violence and cultural repression, continues to mount despite Beijing‘s protests, has become a particular target.

Boohoo, which also owns BoohooMan, MissPap, Nasty Gal, PrettyLittleThing, Karen Millen, Oasis and Warehouse, along with the recently acquired Burton, Debenhams, Dorothy Perkins and Wallis brands, previously denied selling products made with forced labor from Xinjiang following a U.K. Parliament inquiry into the risks British businesses face when engaging with supply chains that hail from China.

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Xinjiang cotton makes up roughly 85 percent of China’s cotton, which, in turn, comprises one-fifth of the world’s supply of the fiber.

“We wrote to all our suppliers across the supply chain to confirm that we have no manufacturing or fabric links to that particular region,” Andrew Reaney, group director of responsible sourcing at Boohoo, told lawmakers in November. “That was done and all of our suppliers confirmed that they have no manufacturing or fabric links to that region.”

Boohoo reportedly had a shipment of products detained by U.S. Customs and Border Protection over forced labor concerns earlier in the year, though the origin of the alleged offense was the English city of Leicester, where the company had been battling allegations of poverty wages and unsafe conditions, rather than Xinjiang.

“We are 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.,” Boohoo said in a statement in March. “We will work with any competent authority to assure them that products from our supply chain meet the required standard.”

Boohoo has since published a list of its approved domestic suppliers, which it aggressively whittled down from 500 to fewer than 60. The Gen Z and millennial fave, whose revenues jumped 32 percent to 486.1 million pounds ($677.3 million) in the three months leading up to May, says it will be releasing a global list in September.

Revolt averted

On Friday, co-founder and executive director Carol Kane fended off an attempt to oust her from the board after more than 80 percent of Boohoo’s shareholders supported her reelection against the advice of prominent investor advisory groups such as Glass Lewis, which blamed Kane for her “direct role” in the company’s “inadequate governance practices.” (Her co-founder—and current chairman—Mahmud Kamani was not up for reelection this year.) The firm’s controversial bonus scheme, which could net executives 150 million pounds ($208.9 million) if Boohoo‘s market value reaches 7.55 billion pounds ($10.5 billion) by June 2023, also pushed through with only 20 percent of shareholders dissenting.

“We are delighted with the overwhelming support received from shareholders in passing all resolutions at our [annual general meeting], including the reelection of co‐founder Carol Kane,” Lyttle said, commending Kane’s “drive, enthusiasm and unwavering” support for Boohoo’s Agenda for Change program, a supply-chain overhaul initiative that it instituted last year in the wake of a third-party investigation that concluded that reports of the company’s lackluster due diligence were “substantially true.”

Kane’s victory was preceded by a joint statement by several human-rights groups, including the Business & Human Rights Resource Centre and Labour Behind The Label, that said they found “little evidence” that Boohoo has addressed the purchasing practices among the “fundamental drivers” of poor labor conditions in the supply chain.

Its so-called “responsible purchasing practices,” the organizations said, do not tackle the “fundamental issue” of ring-fencing labor costs so that the costs negotiated with suppliers cover the reasonable cost of production. In short, Boohoo’s pricing is currently too low to factor in fair labor costs, they noted.

“Adopting policies and implementing them are two very different things. It appears the Boohoo Group is going to great lengths to appear committed to change, but this hasn’t necessarily translated into action,” said Thulsi Narayanasamy, senior labor rights lead at the Business and Human Rights Resource Centre. “Sources in Leicester suggest there is serious cause for concern with workers still being paid well below the minimum wage at 5 to 5.50 pounds ($6.97 to $7.66) an hour. By over-emphasizing the role of factories, Boohoo is wrongly exonerated for its central role in creating the necessary conditions of labor abuses.”

The expansion of Boohoo’s supply chain to Italy, Morocco and Pakistan further “runs the risk” of exporting a business model that results in poor labor practices to other countries, the groups added.

The e-tailer hit back at the organizations, saying that they failed to recognize any of the substantial action the company and its advisers—including retired judge Brian Leveson and accountancy giant KPMG—have taken.

“Significant progress has been made to date, including the consolidation of suppliers to 54, who are working with the business to drive a continuous cycle of improvement and that journey will continue,” a spokesperson said, citing Levson’s June update, which averred that Boohoo was displaying a superior degree of due diligence. “It is therefore completely out of touch and frankly incorrect, to suggest that thousands of suppliers in Leicester are producing for the group, when we only source from 54 approved manufacturers who are detailed on our website.”

Boohoo said it is committed to “growing with compliant suppliers” and continuing to source similar volumes out of the United Kingdom versus a year ago by working with “fewer, larger” suppliers who share its values.

“Unlike many others, who have turned their backs on U.K. manufacturing, Boohoo have faced into the challenges with an absolute determination to fix any problems,” the spokesperson said.

But Dominique Muller, policy director at Labour Behind the Label, said that nothing has changed for workers in Leicester, which earmarks 75 percent of its apparel output for Boohoo.

“Indeed we now know that many workers still receive wages well under the minimum wage, that prices being asked of suppliers fail to cover the legal wage costs,” she said. “Boohoo must do more than simply stating a much-delayed commitment to change and investors must hold Boohoo to account and not simply chase the ever-increasing profits that are being made on the backs of workers.”