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A boo boo for Boohoo? Supply chain and modern slavery allegations

Boohoo is in the spotlight once again, for all of the wrong reasons. This time, following a BBC Panorama investigation into its "Agenda for Change" programme, which involved an undercover reporter being employed at Boohoo’s head office in Manchester.

The Agenda for Change programme’s aim was to improve the standards and conditions in its supply chain, following an independent review by Alison Levitt KC which found, amongst other things, that allegations of poor working practices in Boohoo’s supply chain were “substantially true”. Just last month it was reported that Boohoo’s shareholders were planning a “£100m lawsuit” against Boohoo following allegations of modern slavery, which took around £1.1bn off its market value.

The Boohoo Group’s current modern slavery statement indicates that it is/was pro-actively attempting to mitigate any risks in its supply chain but this does not appear to be the case following the findings in the Panorama investigations.

Increasing ESG focus

Modern slavery falls within the remit of environmental, social and governance (ESG), specifically under the “S” for social, but also under the “G” for governance when it comes to decision making, regulations, policies and transparency.

Last year, the Competition and Markets Authority (CMA) announced it would be investigating Boohoo to scrutinise its environmental claims (the “E” of ESG). Greenwashing has been a focus of the CMA for a while and it has issued guidance to assist companies from making misleading or untrue claims in relation to its environmental impact (see our article here). The CMA has not yet reached a view as to whether there have been any breaches of consumer protection law in relation to Boohoo’s activities.

So, who investigates or substantiates claims in modern slavery statements and modern slavery practices?

The answer in short, appears to be nobody to date, although the relatively new role of the Independent Anti-Slavery Commissioner established by the Modern Slavery Act 2015 (the Act) may lead to a more robust enforcement regime. Under the Act, the requirement to have a modern slavery statement is enforced by the Secretary of State who can seek an injunction requiring the company to comply with the requirements in the Act. Failure to comply with the injunction could result in an unlimited fine. To date, there have been no injunctions sought. This is despite the fact a report by the Financial Reporting Council on Modern Slavery Reporting Practices in the UK (published in 2022) found around 1 in 10 in-scope companies didn’t provide a modern slavery statement at all, and that reporting on modern slavery in both modern slavery statements and annual reports was lacking the information needed for shareholders and wider stakeholders to make informed decisions. However there is no clear sanction under the Act for a misleading modern slavery statement.

There have been various attempts to improve and update the Act, with the most recent being the reforms mentioned in the Queen’s Speech in 2022 but we have not seen much progress since the initial announcement. At present the main drivers for greater transparency and responsible behaviour is the fear of reputational risk and the increase in consumer and shareholder activism demanding accountability.

It will be interesting to see how this pans out, and how it affects Boohoo’s reputation and its wider group companies such as Karen Millen and Coast. However whilst there remains little actual statutory “enforcement” or action when it comes to ensuring that brands are considering modern slavery and monitoring their supply chains, it is likely that further incidences of poor behaviour will continue. Unfortunately it seems the UK is starting to lag behind certain other countries and is in catch up mode. Meanwhile countries such as France and Germany are taking robust approaches in this area with meaningful sanctions. It is to be hoped that the current Modern Slavery Bill, which promises clearer sanctions, will make its way into law in the very near future.

Fast fashion: Boohoo breaks promises on ethical overhaul


fashion and luxury, sustainability and esg