Boohoo links its bonuses to sustainability progress

United Kingdom-based online fashion retailer, Boohoo has taken steps to link executive bonus payouts to proven improvements in labour conditions and other ESG commitments across its supplier chain.

Members of the firm’s Environmental Audit Committee advised the firm this week that the £150 million incentive pool, which was created last year and was based on business success, should also be connected to sustainability initiatives and broader supply chain improvements.

The company created a financial incentive scheme last year, with senior leadership, including co-founders Carol Kane and Mahmud Kamani, poised to get large paydays if the firm’s worth climbs by about two-thirds by 2023. When the incentive system was activated in June 2020, Boohoo was valued at roughly £4.5 billion.

BoohooMan, Karen Millen, PrettyLittleThing, and erstwhile Arcadia Group labels including Burton and Oasis are among the brands owned and operated by the UK-based online apparel store. It was besieged by claims of bad working conditions and underpayment of employees in factories in UK cities last summer. Workers were allegedly required to work long shifts for less than minimum pay, resulting in a £1 billion loss in the company’s stock price.

In response to the complaints, Boohoo agreed to a continuous audit and has now broken relations with over 400 suppliers. However, early this year, increased pressure from workers’ rights activists prompted a new investigation into charges of “slave labour,” which might result in an import ban in the United States.

Boohoo released its first sustainability report, Up.Front Fashion Ready for the Future, earlier this month, in which the company committed to “do more for our suppliers” as a primary goal, with an emphasis on transparency and increased monitoring throughout the value chain.

The report says it’s critical that they have confidence in their suppliers’ adherence to their ethical, environmental, and product quality requirements. They want them to treat workers well and pay them properly. They also need to convey their progress clearly and honestly to develop stakeholder trust and brand loyalty. That’s why all of our Up.Front goals are based on transparency.”

The retailer has also stated that it will disclose a list of its suppliers, make its purchasing methods public, and increase supplier management and accountability control.