Why did so many ESG funds back Boohoo?

Just weeks before Boohoo was hit with fresh allegations about poor working practices in factories that make its clothes, MSCI gave the UK fast-fashion retailer a clean bill of health.

The rating and index provider reiterated Boohoo’s double A rating — its second-highest ranking — while highlighting how it scored far above the industry average on supply-chain labour standards in a June update of the online retailer’s environmental, social and governance ranking.

That exceptional rating — which placed Boohoo among the top 15 per cent of its peers based on ESG metrics — as well as the decision by so-called sustainable funds to invest in the retailer has come under fire in recent weeks after the Sunday Times claimed garment workers at a Leicester factory making clothes for one of Boohoo’s brands were paid below the minimum wage and suffered poor working conditions.

Boohoo has since announced an independent review of its UK supply chain, said it had not uncovered “evidence of suppliers paying workers £3.50 per hour”, and alleged there were inaccuracies in the investigative reporting. 

“The fact that Boohoo ended up in so many sustainable funds shows the callous infrastructure of our investment system, and its participants,” said Martin Buttle, head of good work at ShareAction, the responsible investment group.

via Why did so many ESG funds back Boohoo?

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