Standard Life Aberdeen drops BooHoo shares amid sweat shop scandal
Standard Life Aberdeen (SLA) has dropped its shares in fashion retailer Boohoo amid allegations of sweat shop conditions within the company.
It has been claimed that some of Boohoo’s clothes were being packaged in sweatshops where staff were significantly underpaid, earning as little as £3.50 per hour. The firm’s clothing factories have also been accused of breaking social distancing protocol designed to keep workers safe.
Boohoo has since seen its shares plummet by 42% in just three days, costing founders Carol Kane and the Kamani family a total of £433 million.
Standard Life Aberdeen (SLA) said Boohoo’s reaction to the claims were “inadequate in scope, timeliness and gravity”.
Lesley Duncan, deputy head of UK equities at Aberdeen Standard Investments, said that SLA had invested in Boohoo at IPO at which point it passed its ethical screens.
She said Boohoo had achieved strong revenue growth driven by the structural shift in retail from high street to online and its flexible test and repeat model enabling the company to adapt quickly to changing consumer trends.
However, she added: “However, in the last few weeks our concerns have grown on the progress being made, which even before recent developments, had negatively impacted our conviction levels in the company. Having spoken to Boohoo’s management team a number of times this week in light of recent concerning allegations, we view their response as inadequate in scope, timeliness and gravity.
“We strive to use our influence as significant investors to achieve progress. In instances where our standards have not been met, divestment is both appropriate as responsible stewards of our clients’ capital and aligned to our goal of investing for better outcomes.”