ASI exposed to Boohoo slavery investigation via ethical funds

Lesley Duncan fund focused on good labour practices among those with a large holding in the fashion business

Updated: ASI divests from Boohoo with damning assessment of its response to slavery investigation

An Aberdeen Standard Investments fund that invests in UK companies with good employment practices is one of four responsible investment products that hold Boohoo, which now is under investigation for slavery in its supply chain.

Boohoo’s shares dropped 13.9% by midday Monday after The Times revealed over the weekend that UK workers were paid as little as £3.50 an hour to make clothes destined for the fast fashion business. The minimum wage in the UK for people over 25 is £8.72.

The National Crime Agency is now investigating modern slavery in the Leicester factories involved at the direction of the home secretary.

It is not the first time substandard working conditions have been exposed among Boohoo’s factory workers with a Channel 4 investigation in 2017 revealing similar findings.

See also: ‘A global systemic issue’: the risks of modern slavery

Trio of Aberdeen Standard funds exposed to the fast fashion business

Boohoo is the largest holding in Lesley Duncan’s ASI UK Impact Employment Opportunities fund, which has an objective to investment in companies that “promote and implement good employment opportunities and practices”.

It represents 3.4% of the portfolio, according to FE Fundinfo. The IA All Companies fund launched in February 2018.

Several other Aberdeen Standard funds with broader responsible investment mandates also invest in the company: the ASI UK Ethical Equity fund, also run by Duncan (pictured), has a 4.7% allocation and the ASI UK Responsible Equity fund has 3.6%.

The Premier Ethical fund also has a 3% allocation to Boohoo, according to FE Fundinfo.

The ASI allocations come despite the fact Standard Life Aberdeen stated in its modern slavery statement that it could drive change by taking environmental, social and governance factors into consideration when investing.

An Aberdeen Standard Investments spokesperson said the business had been engaging with Boohoo on its supply chain management for some time and would be speaking to management in light of the slavery allegations to “understand what action they are taking in response”.

“We continue to monitor the appropriateness of all the holdings in our values-led funds on an ongoing basis,” the spokesperson said.

Premier Miton said it had “been in contact with Boohoo and will assess their response”.

See also: Will investors call time on ‘fast fashion’?

Merian funds hold over 10% in Boohoo

But the responsible investments are not the funds with the largest holdings.

The Merian UK Mid Cap fund has a 12.5% weighting while the Quilter Investors Equity 1 fund, also run by Merian, holds 11.2%. Merian UK Dynamic Equity holds 10.7%.

A Jupiter spokesperson, speaking on behalf of the Merian funds, said the company had done site visits to several of Boohoo’s UK suppliers and had been engaging with the company over supply chain management. “We have been given strong assurances by management that any suppliers found to be in breach of the company’s strict code of conduct will be terminated immediately and we will continue to engage with the firm regarding this situation.”

Both Jupiter’s and Premier Miton’s modern slavery and human trafficking statements focus on their own supply chain with no mention of the companies they invest in and therefore deem themselves low risk.

The Global Slavery Index, which Jupiter uses to determines the countries, goods and services most at risk of being involved in slavery, states 136,000 people in the UK suffer under modern day slavery.

See also: Investors lose patience over slavery in supply chains

About the author

Latest Stories