# boohoo group launch independent review of UK supply chain

- Link: https://www.directorstalkinterviews.com/boohoo-group-launch-independent-review-of-uk-supply-chain/412840316
- Published: 2020-07-08T07:09:52+01:00
- Author: Giles Arbor

**[boohoo](https://www.directorstalkinterviews.com/company/boohoo/boo.l) group plc**(
LON:BOO) have stated that as a board, we are shocked and appalled by the recent 
allegations that have been made and we are committed to doing everything in our 
power to rebuild the reputation of the textile manufacturing industry in Leicester.
We want to ensure that the actions of a few do not continue to undermine the excellent
work of many suppliers in the area, who succeed in providing good jobs and good 
working conditions. To support this, we are:

·      launching an immediate independent review of our UK supply chain, led by 
Alison Levitt QC

·      making an initial commitment to invest an incremental £10 million to eradicate
supply chain malpractice

·     accelerating our independent third party supply chain review with ethical 
audit and compliance specialists, Verisio and Bureau Veritas

We take extremely seriously all allegations of malpractice, poor working conditions,
and underpayment of workers. The Group will not tolerate any incidence of non-compliance
with its Code of Conduct or any mistreatment of workers, and will not hesitate to
terminate relationships with any supplier who does not comply.

We would welcome the opportunity to work with the Home Secretary and the local authority
on any future investigations to help eliminate any instances of labour malpractice
in Leicester.

**Update on investigation into media commentary**

As soon as the Group was made aware of the allegations of mistreatment of garment
workers by our third party suppliers, as detailed in the 6 July announcement, an
immediate investigation was launched.

Our findings show some inaccuracies with last Sunday’s media report. The garments
featured were not actually manufactured in Leicester, but in Morocco. Post production,
the garments were shipped back to the UK by the supplier to be repackaged into compliant
boxes for delivery to the Group’s international distribution centre in Burnley. 
This was the process that was filmed at a premises formerly operated by Jaswal Fashions
Limited.

Jaswal Fashions Limited, contrary to the media report, is not and has never been
a supplier for the Group, and does not operate in the unit stated. Investigations
over the last 72 hours have highlighted that the order from Nasty Gal was placed
with Revolution Clothing Co Limited, who then instructed Morefray Limited to manufacture
in Morocco and repackage the garments on their behalf in Leicester.

Our investigation to date has not found evidence of suppliers paying workers £3.50
per hour. However we have found other evidence of non-compliance with our Code of
Conduct and the Group has taken the decision to immediately terminate its relationship
with both suppliers.

**Our commitment to UK manufacturing**

boohoo supports UK manufacturing and the British fashion industry. boohoo does not
own or operate any manufacturing facilities. We have a global and flexible supply
chain and at this time around 40% of the products that we sell are manufactured 
in the UK, supporting thousands of jobs in this country that may otherwise be lost
to overseas markets. Producing garments in the UK does not bring a cost advantage
for the Group. We produce garments in the UK because of its proximity to our international
distribution centres, giving the Group additional flexibility to react to the latest
trends for our customers. The Group is wholly committed to continuing to have garments
manufactured in the UK and we will develop initiatives to further support our suppliers.

Since the onset of the COVID-19 pandemic, we have stood side by side with our manufacturers,
continuing to pay them promptly with our industry-leading 14-day payment terms for
all of their orders. During this period, the Group has not taken advantage of any
of the financial support that has been made available by the UK Government in either
grant or loan form.

**Supplier auditing procedures**

We monitor our UK suppliers through a dedicated in-house compliance team who are
responsible for co-ordinating our supplier compliance programme. In 2016, we established
an on the ground compliance team in Leicester who carry out regular unscheduled 
inspections against our Code of Conduct so as to ensure adequate standards are maintained
in the supply chain.

In late 2019, we supplemented our team by funding an additional third-party audit
programme, with ethical audit specialist, Verisio. We are working together to further
improve the transparency of our supply chain compliance, including our tracking 
and auditing practice. This comprehensive review commenced in May 2020, and is focusing
on all of our UK suppliers, and their subcontractors, with unannounced audit visits
to all of their facilities. As part of this review, all of our suppliers are required
to acknowledge their compliance with the Group’s updated Code of Conduct and to 
provide full disclosure of their own sites as well as details of any locations where
work is subcontracted. Non-compliance with this programme will not be tolerated 
and we are committed to working with the relevant local and national authorities.

Immediate independent review of UK supply chain

Today the Group has launched an independent review of its UK supply chain. The objective
of the review is to identify areas of risk and non-compliance, take action to strengthen
future compliance, and to provide stakeholders with comfort that similar allegations
will not recur in the future.

The review will be led by Alison Levitt QC with boohoo board representation from
Brian Small, the Group’s Deputy Chairman and Senior Independent Director.

It will focus on reviewing our UK supply chain, prioritising: 

●     Supplier compliance with minimum wage regulations

●     Compliance with COVID-19 regulations

●     Working hours and record keeping

●     Right to work documentation and contracts of employment

As part of this review, the Group has retained additional services of compliance
specialists, Bureau Veritas. This appointment will provide additional capacity to
accelerate the review that is already underway with Verisio.

**Timeline for communication**

We are committed to providing our stakeholders with regular and informative updates
on our supply chain initiatives in order to give as much transparency into our review
as possible, with an indicative timetable outlined below.

Late July 2020

·      Publication of Terms of Reference for the independent review

September 2020

●     Update on supply chain review and Half Year results

January 2021

●     Update on supply chain review and publication of the Group’s peak trading 
performance

April / May 2021

●     Update on [Sustainability](https://www.directorstalkinterviews.com/sustainability-green-stocks-news)
and publication of the Group’s Full Year Results

May / June 2021

●     Publication of the Group’s Annual Report and Accounts, including dedicated
Sustainability Report

**Board composition and governance**

The Group currently has a PLC board comprising three Non-Executive Directors, and
four Executive Directors. The Group is currently in the process of recruiting two
additional Non-Executive Directors to provide an appropriate balance of independent
Directors on the Group’s board. Consideration will be given to experience in dealing
with Environmental, Social and Governance (ESG) matters as part of the recruitment
process.

**Update on wholesale operations**

The Group has a relatively small wholesale operation with almost all of our revenues
coming from our own brand websites. In the last financial year, wholesale accounted
for less than 4% of the Group’s turnover, as we increased our focus on our direct
to consumer proposition. In the first four months of the current financial year,
wholesale accounted for just 1.4% of the Group’s turnover.

**Sustainable and agile business model**

As a Group we have a flexible and diverse global supply chain, which has adapted
extremely well to our test and repeat model, with 60% of our products manufactured
in overseas markets. We will continue to develop our international supply chain 
and invest in high quality UK manufacturers. We are therefore confident in our ability
to maintain our sustainable business model that can create value for all stakeholders.

> **John Lyttle, boohoo Group CEO, commented:**
> “As a board we are deeply shocked by the recent allegations about the Leicester
> garment industry. We wish to reiterate how seriously we are taking these matters
> and we will not hesitate to terminate any relationships where non-compliance with
> our Code of Conduct is found. Our commitment to an incremental £10 million of 
> investment demonstrates our resolve to enforce the highest standards of ethics,
> compliance and transparency for the benefit of all garment workers. We look forward
> to regularly updating our stakeholders as we move through this process.”

Share on: