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News & Views

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  • 10 July 2020
  • Emma Nelson

Boohoo’s ultimate faux pas: neglecting to check whether its suppliers were the right fit

How applying the principles of ESG throughout the supply chain can protect brand reputation

Reputation takes a lifetime to build and only a few minutes to destroy. It’s a message that many business leaders have expressed for years as the principles of corporate social responsibility have become more engrained in business operations.

Fashion fallout

It’s also a message that’s been particularly prevalent over the last week as fast fashion brand Boohoo faced allegations of low pay and unsafe conditions at a supplier’s factories. Following the allegations – published in a report by The Sunday Times over the weekend – more than £1.5bn was wiped off the stock market value of the fashion retailer, with its share price dropping by more than 33% in just two days.

In response, we’ve seen Boohoo strongly distance itself from the supplier in question, promising that the company will “urgently review our relationship with any suppliers”. Similarly, Next, Asos and Zalando have now all dropped Boohoo from their websites, with a spokesperson for Zalando stating “we expect our partners to apply similar fundamental priorities and will distance ourselves from those who don't”.

The company we keep

This highlights just how important it is for businesses to ensure they take a truly 360 approach to reputation and corporate social responsibility (CSR). It’s not enough to just do the work internally – organisations also need to align themselves with partners and suppliers that act responsibly and share their fundamental values.

CSR has evolved significantly from annual sustainability reports and community fundraising to a global movement driving business ‘as a force for good’. However, the fallout from Boohoo’s supply chain controversy demonstrates the need to go even further – it’s reassuring that businesses are now placing a greater focus on their values and ethics, but this means very little if it’s not reflected across their entire supply chain. Companies also need to be responsible and transparent when it comes to their partners, suppliers and distributors – now more than ever, we are being judged not by our actions alone, but by the company we keep.

The rise of ESG

This concept has paved the way for a new age of socially responsible investing in the form of Environmental, Social and Governance (ESG) criteria – a set of standards for a business’ operations that socially conscious investors can use to screen potential investments. ESG essentially helps investors find companies with values that match their own, while at the same time avoiding companies that might pose a greater financial risk due to their environmental or social practices.

Businesses have navigated the relationship between ethics and profit for many years, but the rise of ESG demonstrates how the two are intrinsically linked – something that’s seemingly verified when we look at the financial implications for Boohoo over the last few days. It’s also something that more and more organisations are building into their core offering – including us in the agency world.

So, in the same way that investors are using these sets of standards to screen potential investments, companies should be applying the same level of due diligence when identifying their partners and suppliers. There needs to be a shift from this reactive distancing when a crisis hits to a proactive alignment at the very start. If Boohoo had taken this approach and enacted the principals of ESG to its own supply chain initially, it could have avoided its latest fashion faux pas.