Boohoo may link bosses’ pay to environmental and social improvements

Fast fashion company considers plan to link bonuses to environmental, social and governance targets

The company has been under fire over allegations that a number of its suppliers manufacturing clothes in Leicester paid workers substantially less than the minimum wage (REUTERS/Dado Ruvic)

Boohoo has told MPs it will look into linking bosses' bonuses with environmental, social and governance improvements after a damning report found evidence of widespread labour abuses at some of the companies' suppliers.

Executive chairman and founder Mahmud Kamani said the potential move was being considered by Boohoo's board with further details to be published next month in the group's annual remuneration report.

"Our teams are working intensively to deliver sustainable change, strengthening our supply chain governance and our internal processes," Mr Kamani wrote in a letter to the Environmental Audit Committee (EAC).

"I sincerely believe that these efforts will have a positive impact, not just on our own suppliers, but on standards across garment manufacturing in the UK as a whole."

The EAC said it believed that linking executive pay to ESG improvements would demonstrate a genuine commitment to environmental and social responsibility.

Last month, Boohoo published a list of its suppliers as it launched a transparency initiative.

The company has been under fire over allegations that a number of its suppliers manufacturing clothes in Leicester paid workers substantially less than the minimum wage.

A review by Alison Levitt QC found that Boohoo’s senior directors knew “for a fact” that there were “serious issues” with the treatment of workers in the company’s Leicester factories from December 2019 at the latest.

Ms Levitt QC, who was hired by the company to review its practices, said she found the reports of poor working conditions and low rates of pay at the garment factories to be “substantially true”.

However, Ms Levitt said she found no evidence that Boohoo or its officers committed any criminal offences.

Environmental Audit Committee Chairman, Rt Hon Philip Dunne MP, said: “Boohoo’s response to our Committee’s letter sends promising signals that we are reaching a turning point in fast fashion’s awareness of its environmental and social responsibilities.

"It is welcome news that the board is considering aligning senior executive bonuses with making ESG improvements, and I look forward to hearing whether this is being taken forward.

“Bonuses shouldn’t just be linked to breakneck growth. Boohoo needs to demonstrate that it is delivering verifiable improvements in workers’ rights and the climate impact of its products."