Boohoo clothing company

The discovery of poor working conditions in Boohoos Leicester supply chain has been branded one of the worst environmental, social and corporate governance (ESG) scandals in modern UK history, by one of the citys MPs. Liz Kendall, the MP for Leicester West, today called on Boohoos executive chairman Mahmud Kamani and chief executive John Lyttle to step down and slammed major shareholders for their response to the scandal.

Boohoo yesterday appointed Trainline finance Chief Shaun McCabe as an independent non-executive director as part of its agenda for change, after it pledged to tackle the problems in its Leicester supply chain. However Kendall said the move will not solve fundamental governance weaknesses where boards are still in the power of an all-powerful founder chairman. She said the reaction from shareholders Jupiter Fund Management, Fidelity Investments, Invesco and Blackrock to the situation has so far been extremely disappointing.

Kendall said she told the firms that she did not think that those who had turned a blind eye to these problems over many years were the right people to take the company forward. The MP praised the actions of Standard Life Aberdeen, which divested most of its shares in the company following the revelations.

An independent review, conducted by Alison Levitt QC and published in September, found that allegations of low pay and poor working conditions at Boohoos Leicester supplier not merely well-founded but substantially true.

Questions

1. Is the ESG issue of the supplier the responsibility of Boohoo? (5 marks)
2. What do you think is the issue regarding the structure of the board. Provide two ways to improve the structure? (10 marks)
3. The MP Liz Kendall mentioned that 'the reaction from shareholders Jupiter Fund Management, Fidelity Investments, Invesco and Blackrock to the situation has so far been extremely disappointing' - what did she mean by this statement and what is expected of these institutional investors? (10 marks)