Boohoo founder Carol Kane wins shareholder vote amid new “slavery” claims

Boohoo has been accused of poor treatment of workers in its supply chain (Boohoo)
Boohoo has been accused of poor treatment of workers in its supply chain (Boohoo)

The co-founder of online fashion group Boohoo today beat off a shareholder revolt and won overwhelming support from investors for her re-election to the board.

A proxy shareholder group has called on investors to oust Carol Kane over the Leicester “modern slaveryscandal, but the majority of investors voted for her to stay on at today’s AGM.

A total of 88% of shareholders who voted polled in favour of Kane’s re-election in what was seen as a major defeat for the “anti Kane” camp.

The shareholder proxy group Glass Lewis, which advises big investors on how to cast their AGM votes, had said Kane should be kicked off the board for failing to prevent the poor treatment and low pay of workers in its Leicester suppliers’ factories.

Speaking after the vote, John Lyttle, chief executive, said he was “delighted” at the result, adding: “Carol plays an integral role in establishing the identities that sit behind each of the brands on our multi-brand platform.”

He claimed her commitment to the group as a co-founder would be crucial in making sure the company sees through the necessary changes to end poor working conditions.

However, today three labour rights groups issued a joint statement accusing Boohoo of failing to take meaningful action to resolve issues of low pay and poor working conditions in Leicester.

Business & Human Rights Resource Centre, Labour Behind the Label and ShareAction said they had found “little evidence” Boohoo had addressed problems in its buying practices that caused poor labour practice. Namely, the company’s insistence on paying supplies low prices that drive illegally low wages.

The groups said: “Boohoo and enforcement agencies are trying to place the blame solely on exploitative suppliers, thus ignoring the central role Boohoo and similar brands play in generating and continuing the root causes of labour abuses and exploitation.”

They added that Boohoo had not offered to refund workers in the supply chain for the wages they had been underpaid and accused it of shifting UK work to Italy, Morocco and Pakistan where it could be “exporting a business model that results in poor labour practices in other countries.”

They called on Boohoo to provide evidence that all workers are getting paid the minimum wage; engage with trade unions to ensure organising within factories can take place; and to move its shares from the lightly regulated Aim market to the main market of Stock Exchange and sign up to the UK corporate governance code.

Boohoo responded that it was an “absolute failure” of the three rights groups not to recognise any of the “substantial action” taken by the group by judge Sir Brian Leveson, KPMG and others to improve Boohoo’s supply chain work.

Sir Brian Leveson (PA Archive)
Sir Brian Leveson (PA Archive)

It said they were “completely out of touch and frankly incorrect” when they implied thousands of suppliers in Leicester were producing for Boohoo, saying the company had now cut that down to just dozens of firms which it was closely checking for workers’ rights.

“Sir Brian Leveson says that Boohoo’s continuous assessment of its UK manufacturing base is demonstrating a degree of due diligence which may well go beyond that which is undertaken by other retailers or in other industries.”

It said it was not standing in the way of unionisation and said it had set up a Textiles and Garment Workers Trust in Leicester with £1 million to “help champion workers’ rights”.

It denied quietly moving its supply chain out of the UK, saying while it had cut its suppliers here in number, it was shifting to fewer, bigger companies to make it easier to audit their workplace practices. Volumes of clothes bought from UK suppliers were broadly unchanged, it said.

“Unlike many others, who have turned their backs on UK manufacturing, Boohoo has faced into the challenges with an absolute determination to fix any problems,” it said in a statement.

Meanwhile, brokers at Liberum today said Boohoo’s shares were cheap and said the company’s progress on sorting out the supply chain issues (bracketed under environmental, social and governance factors, or ESG) “has positively surprised us and credit is warranted.”

He forecast growth this year 29% - ahead of the company’s own recent guidance of 25%.

“Our conclusion is that the shares still appear to have a large ESG discount built in.”

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