Boohoo scandal reveals the problem with fast fashion

e brand quickly pledged to undertake an independent review of the allegations.  Last week, the findings of the review were published in a 234-page report, which accused the brand of several major failures, though it could have been much worse.  The lawyer who conducted the review, Alison Levitt QC, found the brand’s monitoring of its Leicester supply chain had been inadequate for many years and that it knew about the workplace issues for months but didn’t act quickly to correct them.  But ultimately, she concluded that Boohoo’s business model was not reliant on exploiting workers in its supply chain and that it could reduce the risk of it happening again by changing its governance systems. The report has been criticised by some industry experts, who think it’s ridiculous that a large company like Boohoo, which reported £1.235 billion (A$2.2 billion) in annual revenue in April, is only taking these steps now.  “This is a massive international brand, how can they afford not to have these compliance checks in place? That’s where I just go, ‘Seriously?’ It’s staggering that this is still happening,” Jude Kingston, an experienced fashion brand consultant, told Inside Retail.  For Kingston, like many in the fashion sector, the collapse of the Rana Plaza factory in Bangladesh in 2013 was a turning point. More than 1,100 garment workers died in the disaster, which the Bangladesh government blamed on the “extremely poor quality” of the building’s construction.  “The reaction from businesses across the board was huge in that everyone said, ‘We need to go out there and do our compliance checks to make sure this doesn’t happen again’,” Kingston said. “An out-of-sight problem” But Angela Bell, national manager of Ethical Clothing Australia (ECA), told Inside Retail she was “not terribly surprised” to learn of unethical practices in Boohoo’s supply chain. For one thing, the UK doesn’t have anything like the ECA, an accreditation body that works with textile, clothing and footwear (TCF) businesses to ensure their Australian supply chains are legally compliant. The organisation was created 20 years ago following revelations of poor working conditions in Australian factories.  “The UK and parts of Europe have been particular leaders in the conversation around fast fashion and sustainability, but there’s a difference between a conversation and actual action,” said Bell. “Businesses can call themselves ethical, sustainable and all sorts of things, but that independent certification is incredibly important.”  The fact that more than half of Boohoo’s garments are produced in the UK is not necessarily a safeguard against exploitation, according to Bell.  “People have to learn that just because it’s locally made doesn’t mean it’s ethically made,” she said. “The TCF industry is a really complex one, and the use of outsourcing [creates] opportunity for exploitation, because the further it’s removed from the physical company, [the more] it’s allowed to happen.” When the reports about Leicester factory came out in July, Boohoo said it didn’t know how its garments ended up there. Presumably, one of its suppliers had outsourced the work. This visibility problem is one of the reasons garment workers continue to be exploited, even though brands have a strong incentive to stamp it out. “It continues because it can be such an out-of-sight problem,” Bell explained. “If there’s no visibility of the factories, their workers and whether they’re getting the correct entitlements or a minimum wage, or whatever it might be in that country, this exploitation can continue, because it’s such a competitive industry.” An unintended consequence Some industry experts say the rise of fast fashion created the perfect conditions for the exploitation of garment workers to occur. Good on You co-founder Sandra Capponi is one of them. “It has driven many brands to seek the cheapest modes of production, often through complex layers of outsourcing and squeezing suppliers at every turn,” Capponi told Inside Retail. “Unfortunately, that means vulnerable workers further down the chain are the ones that bear the cost.” A fashion supplier in China, who asked to remain anonymous to speak more freely, explained how pressure from brands filters through the supply chain.  “The industry is under pressure to deliver products with a shorter production lead time, so brands can carry less inventory risk, so they are pushing suppliers to produce and react to the market faster,” the supplier told Inside Retail. “They are placing orders later and wanting the goods quicker. Brands know they can always find a cheaper place to produce, so they keep pushing and pushing suppliers for [a] better price or threaten[ing] to move the orders to someone cheaper. For many big brands, price is still the key.” According to the supplier, safety has improved a lot since the Rana Plaza factory collapse, but workers’ pay and hours continue to suffer.  “Brands don’t do it on purpose, but it is the unintended consequence of their buying practices, and their addiction to financial growth,” the supplier said. “Can’t be left to the next generation” Given the amount of change that needs to occur, can exploitation in the fashion supply chain ever be eradicated? Capponi is hopeful.  “When the scandal first hit the headlines, Boohoo’s share price came tumbling down and swarms of customers took to social media to express their dismay,” she said. “This backlash goes to show that people really do care and it can hurt a company’s bottom line.” This can also be seen in the growth of the Good On You, an app that helps people find ethical and sustainable brands, which is used by more than 700,000 people a month. “We see every day more and more consumers using our ratings to inform their choices – they’re avoiding brands causing harm and spending more on sustainable fashion,” Capponi said. But in the days after the findings of the review were published, Boohoo’s shares rose 20 per cent, and they are nearly back at their pre-scandal price. The brand has not faced any other repercussions.  The supplier in China who asked to remain anonymous doesn’t think consumer boycotts will lead to long-term change. “I think after a few months, people won’t remember and will keep buying from the brand,” they said. “In the end, companies are rewarded by their financial performance, not ethical performance. If investors don’t take ethical and environmental performance as seriously as revenue and profit, then this will happen again.” Giving suppliers more bargaining power when negotiating prices to reinvest in their factories would help, they said. Bell from the ECA agrees that change needs to happen on many different levels.  “It can’t be left to the next generation,” she said. “Governments can do more, businesses can do more and activism needs to continue.”