Sparks fly at boohoo AGM as investors revolt over ESG concerns

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boohoo Group PLC (LON:BOO) saw sparks fly at its AGM on Friday afternoon after 12% of shareholders voted to remove co-founder Carol Kane as an executive director amid ongoing fallout from a supply chain scandal last year.

Glass Lewis, which advises institutional investors, had pushed investors to oust Kane and also raised concerns about company chair and co-founder Mahmud Kamani even though he won’t face re-election this year.

READ: boohoo still an attractive stock, says Barclays

However, despite the sizeable rebellion, Kane was defended by boohoo’s chief executive John Lyttle.

“Carol plays an integral role in establishing the identities that sit behind each of the brands on our multi-brand platform, and as a co-founder of the Group her drive, enthusiasm and unwavering support for our Agenda for Change will be crucial in delivering change for the benefit of all stakeholders”, Lyttle said.

The rebellion is likely an indication that many investors are still worried about progress in the company’s ESG agenda and fears that top executives may not be doing enough to draw a line under last summer’s scandal.

The firm, which is the second-largest on the AIM market with a market cap of around £4bn, appointed former high court judge Sir Brian Leveson to review its supply chains, which in turn has revealed a clear lack of oversight, dismal monitoring and poor governance at the company.

However, some activists have pointed out that investor commitment to ESG may not be as solid as it seems.

“That investors did not have questions to pose [at the Boohoo AGM] after a scandal-ridden year where the company finally admitted to serious labour rights abuses in their supply chain speak volumes about their commitment to ESG,” said Thulsi Narayanasamy, Senior Labour Rights Lead at the Business and Human Rights Resource Centre.

“The only question posed related to the company’s controversial purchasing practices that ultimately drive the illegally low wage levels in Leicester and the response was characteristically flimsy. If I have heard that workers are still being paid below minimum wage in their supply chain right now, why haven’t they? We are left unconvinced by the progress made to ensure decent labour practices in their supply chain”, Narayanasamy added.

Shares in boohoo dropped 2% to 325.1p in late afternoon trading.

–Updates share price and AGM details, adds comment–

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