Boohoo's new appointment to its audit committee

November 17, 2020

Boohoo has appointed a new audit committee chair, Shaun McCabe, after unethical trading allegations were made against the group earlier some months ago. Let's hope this is the start of a good journey for them.

The retailer is following the recommendation made by the review of its supply chain that was headed up by Alison Levitt QC in terms of its expertise. The review included a detailed audit of Boohoo's supply chain and publishing of a list of all suppliers by the end of 2021.

And that's the opportunity for factories to slip through the net. Most retailers have a similar hierarchy in their supply chains: some use buying agents as their tier 1 vendors, then there are product and service suppliers, then at tier 3 are the factories; below the factories in the supply chain are the subcontractors.

Conducting compliance audits on subcontractors is rare enough but even factories aren't always audited as thoroughly or independently as they should be in order to address properly the issue of unethical working practices. This is usually because of the cost and complexity: the cost includes paying for the time of staff at the retailer going through countless spreadsheets or paper audits to extract and organise the data from them and report on them.

The complexity can be caused by the same thing: the use of spreadsheets, paper audits or software so complex that specialist users have to be employed to make them productive.

If the cost and complexity can be controlled enough to drive Boohoo's compliance auditing down to lower tiers of its supply chain, the next challenge is the retailer's own culture. Ethical sourcing isn't just about getting compliance auditing right - if the business model, real supplier collaboration and support, supply chain training and expectations aren't suited to it, it won't work. All of those ought to be included in a root and branch review, to avoid accusations of greenwashing.

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