The fashion group has tied £150 million in executive bonuses to sustainability initiatives. In addition, roughly 15% of executive directors’ bonuses through the end of 2022 will depend on meeting certain sustainability measures, Bloomberg reported.
Boohoo’s commitment to sustainability is part of a larger trend of companies, particularly those in fashion, making improvements around supply chain failings that are detrimental to the environment. Consumers are also increasingly seeking out brands that are green, with more demand for recycled products and carbon neutral businesses.
“We know that fashion faces social and environmental challenges, and we want to play our part in creating a better fashion future,” Boohoo Group CEO John Lyttle said in the company’s recently published sustainability plan 2021. “That’s why we’ve made significant changes to the way we run our business.”
Boohoo’s decision comes after the British parliament’s Environmental Audit Committee recommended the financial incentives to Boohoo co-founder and chairman Mahmud Kamani, Reuters reported in late April. An independent review in September 2020 found a number of supply chain failings, from working conditions to low wages, that were accepted by the fashion group.
At the same time, Boohoo came under fire for its bonus structure. The new bonus incentives may help placate some of that previous investor and analyst firestorm. However, Boohoo executives are still in line to earn huge bonus sums, including £50 million each for co-founders Kamani and Carol Kane. The plan pays out if the stock price rises 66% over a three-year period beginning June 2020. Lyttle has also agreed to amend a separate bonus plan worth upwards of £50 million based on a £6 billion market value.
The new structure also ensures the bonuses aren’t just tied to growth. Shareholders will vote on the sustainability element of the bonuses in next month’s shareholders meeting.