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Boohoo blasted over ESG concerns by major investor Baillie Gifford

The fund managers said they thought it was better to be “encouraging and expecting significant improvements in some business practices” rather than just selling the shares

Boohoo Group PLC -

Boohoo Group PLC (LON:BOO) received criticism from one of Britain’s biggest tech investors and social media users over its governance and sustainability practices.

Baillie Gifford, the Edinburgh-based fund management group that runs the £15bn Scottish Mortgage trust that is the biggest external shareholder in Tesla, published results from another of its trusts on Friday, the Baillie Gifford UK Growth Fund PLC (LON:BGUK).

In the report, the portfolio managers said they had been “closely involved in the detailed and extensive engagements” with Boohoo over the “unacceptable practices carried out by some suppliers” in Leicester, as well as with FTSE 100-listed Rio Tinto PLC (LON:RIO) over its destruction of sacred aboriginal sites in Australia.

The fund manager said: “Our experience of engaging with companies on sensitive governance matters is that commenting publicly when the engagement is ongoing destroys trust and consequently weakens our ability to influence.

“Yet we also understand that this approach could be misunderstood.

“So, let us be clear: we have as supportive long-term shareholders expressed in direct language our strong disappointment at serious governance failings at each, but we also acknowledged in our meetings with both that it is what happens next that really matters.”

Baillie said it was “encouraging and expecting significant improvements in some business practices”, which was “what serious long-term investors should be trying to do in the first instance with companies that in our view exhibit attractive investment potential rather than selling and moving on”.

Disposable fashion?

Meanwhile, on Twitter, it was flagged that Boohoo’s PrettyLittleThing was selling a pair of trousers for just 15p and a trench coat for 45p, which was criticised for promoting “disposable fashion”.

The offers were part of a promotion offering “up to 99% off” for Black Friday, though some of the cheapest advertised products were unavailable to buy.

After last summer’s scandal over poor pay and conditions of workers at factories making clothes for the company, a report this year from Alison Levitt QC found that senior directors “knew for a fact that there were very serious issues about the treatment of factory workers in Leicester and whilst it put in place a programme intended to remedy this, it did not move quickly enough”.

This September the AIM-listed company vowed to address its corporate governance responsibilities, though PwC, its auditor since 2014, has since stepped down.

Retired judge Brian Leveson was appointed this week to oversee the new governance plans, with his notes published to ensure transparency.


Quick facts: Boohoo Group PLC

Price: 335.04 GBX

Market: AIM
Market Cap: £4.23 billion

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