Boohoo facing possible US import ban over supply chain allegations

A report has emerged this morning that Boohoo is facing a possible US import ban over allegations of the use of slave labour in its supply chain, following the submission of two petitions to the US Customs and Border Protection (CBP) agency by campaign group Liberty Shared.

According to Sky News the agency has seen enough evidence to launch an investigation but the Manchester-based fashion etailer says it is confident the measures it has in place in its supply chain would exceed the demands of the US agency and points out it has not had any correspondence from the CBP on the matter.

The US Tariff Act of 1930 prohibits the import of products if they contain "in whole or in part materials made with forced labor." In a petition to the CBP on 7 February 2021 Liberty Shared outlined concerns with products made by apparel industry businesses based in Leicester with specific reference to Leicester East – with the exception of two companies, Basic Premier Limited and Ethically Sourced Products Limited. This followed an earlier petition on 1 February concerning products made by Boohoo in general.

"While, Boohoo PLC’s supply chain is the focus of one petition, we made a deliberate distinction between the activities of the company and problems in the Leicester apparel industry and its vulnerable communities. The second petition, focusing on the apparel industry in Leicester, particularly Leicester East, concerns the wider problems of the vulnerable local communities, presence of criminal and unlawful activities and practices in apparel manufacturing, difficulties in the provision of social services and criminal justice, and the challenges of community engagement. Two companies in Leicester who have made their intention to follow better practices did stand out and we have been clear in the second petition to except Basic Premier Limited and Ethically Sourced Products Limited from investigation," Liberty Shared explains on its website.

While concerns about conditions at certain factories in Leicester, where Boohoo sources around 40% of its clothing, have been circulating for many years, they were brought into sharp focus at the height of the Covid-19 crisis last summer following an under-cover investigation by The Sunday Times.

The reporter found that staff at a factory in which he was working as part of his investigation were paid as little as £1.30 an hour and insufficient health and safety measures were in place to protect workers from the virus. Boohoo clothing was seen on the premises.

Boohoo responded that the factory in question was not an authorised, direct supplier and that its clothing had been made abroad and sent, without its knowledge, to the factory for re-packaging.

Nonetheless it carried out a widespread investigation into its supply chain and subsequently appointed Alison Levitt QC to carry out her own, independent investigation. Some 64 suppliers were deselected as a result. The company has also appointed former judge Sir Brian Leveson to sit on its board with a brief to oversee its supply chain on an on-going basis.

The US is a key market for the fast fashion group and in the 10 months to 31 December it generated sales of £370m in the US, up 67% year on year. Total group sales for the 10-month period were £1.48bn.

In response to the Sky News report, Boohoo issued the following statement this morning:

boohoo notes recent media commentary. The Group has not received any correspondence from, nor is it aware of any investigation by, US Customs and Border Protection ("CBP"). 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 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.

Over the past 8 months the Group has been working closely with UK enforcement bodies. If the Group were to discover any suggestion of modern day slavery it would immediately disclose this to the relevant authorities. In addition, Alison Levitt QC's independent review (the "Independent Review") into boohoo's Leicester supply chain, published in September 2020, stated that "there is no evidence that the company itself or its officers have committed any criminal offences."

As a result of changes already under way since 2019, and those initiated through the Agenda for Change programme, which includes implementing the Independent Review's recommendations in full, the Group's supply chain in Leicester, and oversight of it, has been significantly improved and strengthened.The Group has made significant progress in a number of areas, including:

●     Appointing Sir Brian Leveson PC to provide independent oversight of the Group's Agenda for Change programme

●     Appointing Bureau Veritas and Verisio to support the ethical audits of suppliers and subcontractors, together with enquiry and enforcement specialists headed by former Deputy Commissioner of the Metropolitan Police Tim Godwin OBE to support Sir Brian's independent enquiries

●     Continuing to map and audit the Group's tier one and tier two supply base, in the UK and internationally, led by teams from Bureau Veritas and Verisio

●     The completion of over 400 on-site audits on UK suppliers

●     Removing 64 suppliers from the Group's UK supplier list, who did not meet the Group's standards on the levels of transparency required

●     Committing to publish UK tier one and tier two supplier list by end of March, and global supplier list by the end of September, which will both be updated every 6 months

●     Significantly investing in strengthening the Group's internal Responsible Sourcing, Compliance and Sustainability teams

●     Establishing a Supply Chain Compliance Committee reporting to the Board, led by the Group's Director of Responsible Sourcing

●     Appointing KPMG as consultants to advise and monitor the implementation of the Agenda for Change programme

The Group and Sir Brian Leveson will continue to provide stakeholders with further updates on its Agenda for Change programme, including publication of its first Annual Sustainability Report alongside its 2021 Annual Report and Accounts.