Fast Fashion and fast profits
Are you wearing any of these brands?
boohooMAN,
MissPap.
Karen Millen,
Oasis
Warehouse.
Probably not – Boohoo targets the 16-24 year old fashion market and is principally bought by young women. Happily young people have better things to do than read my pension blogs. Speak out if you are a young reader – my comments box needs you!
Boohoo has done very well out of the pandemic as it sells its clothes online.
But the sharp decline in Boohoo.s share price in the past few days is explained by an expose in the Sunday Times last weekend.
Boohoo has been found to be sourcing many of its garments from businesses which are not paying the minimum wage and are allowing employees to subsidize the cost of labour by claiming universal credit.
The conditions in which people are working to make Boohoo garments and the principle town making these garments in the UK is Leicester. Leicester has a very fine university , a great football club and is held up as one of Britain’s multi-cultural success stories. But Coronavirus doesn’t do hype. The conditions people are living and working in – in Leicester is thought to have created the second wave of cases and the BBC has shown that it was demand for fast fashion garments sold over the internet that has created these conditions.
While there are several rivals to Boohoo, it is Boohoo which is the principal purchaser of garments made in Leicester.
After a wave of allegations over illegal conditions — including a groundbreaking FT investigation in 2018 — fashion retailers such as Asos, New Look and Missguided reduced their reliance on the city. Boohoo, by contrast, maintained a significant presence.
Manufacturers said most of the city’s output goes to Boohoo and its brands, such as Nasty Gal and Pretty Little Thing. The retailer sources around a third of its stock there, with orders worth at least £100m last year, according to FT analysis of company filings. – Financial Times
I want to make my money matter
Whether we spend our money buying Boohoo shares or buying Pretty Little Thing blouses, we are accidentally triggering trouble for Leicester and in particular the people who work in the garment factories.
And people who what their money to matter, including many of the 16-24 year olds who are wearing the brands I’ve mentioned may well be asking themselves whether they haven’t been “nasty gals”.
The fund managers that invest in Boohoo may be having interesting conversations with their ESG teams and working out their exit strategies, or not. Boohoo , even after the falls in its share price over the past few days, is still trading around the level it achieved prior to the pandemic.
If Richard Curtis and his team want to test the capacity of the pension industry to practice the ESG principles it is preaching, then it should be getting fund managers to read the FT’s excellent explanation of
How Boohoo came to rule the roost in Leicester’s underground textile trade
Either the exposes in the Sunday Times are false (and Boohoo is currently denying wrongdoing), or they are correct. If correct then Boohoo stock can only be held on a promise of an immediate change in its business model with management looking hard at their impending 150m GBP bonus and Boohoo accepting operating margins will fall or prices will rise.
The challenge is not just to Make My Money Matter, it is to the funds industry who, in holding Boohoo, but doing nothing, is accepting either that Boohoo is right or that their ESG policies are only cosmetic.
People matter more than prices
The human cost of poor labour practices is just felt in the mainly Asian communities that work in the factories. They are the people in Leicester’s hospitals and we know that BAME communities suffer disproportionately from COVID-19 when they get to hospital. Black lives matter.
Everything else, the reputational damage to Leicester, Boohoo’s share price, the impact on the performance of Boohoo invested funds is of no importance relative to the lives of the people infected by COVID-19 in Leicester.
So I don’t just want to see a statement on this from Richard Curtis, I want to see statements on Boohoo from the ESG teams of all the leading fund managers.
Because how we conduct ourselves in business in this country matters , most of the fund managers are signed up to UN Sustainable Development Goals
To my mind , Boohoo are not living by the UN sustainable goals and their stock and debt have no place in funds that are run along ESG lines.
Boohoo are about fast fashion, let’s hope they can be fast to change their business practices and make sure that they are paying prices for their garments that ensure the people who make them do so on at least the minimum wage and in conditions that are safe to work in.
