Boohoo could lose right to export to US over forced labour claims
US authorities have reportedly launched an investigation into online fast-fashion giant Boohoo Group's supply chain practices, following allegations of worker exploitation at supplier factories in Leicester.
In the worst-case scenario for the business, the US’s Customs and Border Protection (CBP) body could choose to impound shipments at ports and prevent future shipments. Boohoo Group’s financial documents reveal that around one-quarter of its annual revenues come from US markets. The CBP made 13 such orders for businesses in 2020.
The CBP is understood to have found sufficient grounds to start the investigation after anti-modern slavery charity Liberty Shared sent it a petition and letter outlining recent forced labour claims. An independent review of Boohoo’s supply chain practices carried out by Alison Levitt QC and a study from the Centre for Social Justice and Justice & Care were both published last year, leading to a high-profile media scandal for Boohoo. The business was accused of sourcing from UK factories that paid workers £3.50 an hour – less than half of the legal minimum wage for those aged 21 and over.
Boohoo Group has already lost its contract to list on ASOS over the allegations. As well as its namesake brand, the firm owns the likes of Pretty Little Thing, Nasty Gal, Karen Millen, Oasis and Warehouse.
The business commissioned a review of the allegations last year, which concluded that most claims were “substantially true”. It then appointed Sir Brian Leveson, best known for his work on the tabloid phone-hacking enquiry, to oversee efforts to change supply chain requirements.
“The Group is confident in the actions it is taking to ensure that all of its products meet the CBP criteria on preventing the product of forced labour entering the US (or any of its markets),” Boohoo Group said in a statement.
“Boohoo continues to fulfil orders to customers in the US across all of its brands. The group will work with any competent authority to provide assurance that products from its supply chain meet the required standard.”
Also this week, Boohoo Group’s chairman Mahmud Kamani has received a letter from MPs on the Environmental Audit Committee (EAC).
After all of the recommendations from the EAC’s first ‘Fixing Fashion’ inquiry were thrown out in June 2019, the Committee began a fresh inquiry on the topic following the December 2019 general election, in which former chair Mary Creagh lost her seat as MP. The new chair is Philip Dunne MP.
The EAC’s letter follows speeches from Boohoo Group representatives given as part of this latest inquiry in December 2020. It urges Kamani to link executive remuneration to progress against key targets on waste, climate and worker rights after Boohoo Group’s profits surged amid lockdown restrictions that prevented bricks-and-mortar fashion retailers from trading in the UK for months.
The letter also requests that Kamani publishes a list of all Tier One and Tier Two suppliers and that it publicly names the Leicester suppliers that it is cutting contracts with over human rights allegations. It stipulates that, while steps have been taken to verify and combat the allegations, there is still much more work to be done.
“We welcome the appointment of Sir Brian Leveson and KPMG respectively to oversee and implement Boohoo Group’s Agenda for Change programme,” the letter states.
“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. 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.”
Aside from Boohoo Group, the EACs inquiry has heard from Leicester City Council, the Government’s Labour Market Enforcement arm, WRAP, Traidcraft and the British Retail Consortium. Further hearings are expected in the coming months.