Standard Life Aberdeen to toughen engagement process after Boohoo scandal

In this news, we discuss the Standard Life Aberdeen to toughen engagement process after Boohoo scandal.

LONDON (Reuters) – Asset manager Standard Life Aberdeen has reshuffled its process for engaging the company after being torched by a scandal at fast fashion retailer Boohoo BOOH.L over allegations of poor working conditions at some of the company’s suppliers earlier this year.

Boohoo shares fell in July after allegations workers were being paid less than minimum wage at some of the company’s suppliers.

Boohoo accepted all the recommendations of an independent review in September, which uncovered several failures in its supply chain.

Standard Life Aberdeen, which was previously one of Boohoo’s biggest investors, later sold out after calling the firm’s response to the allegations “inadequate.”

Aberdeen Standard Investments’ global chief executive, Euan Stirling, said the experience had been “painful”, especially after his team had become heavily engaged with Boohoo.

“What we had done during that time was not just sit idly by and count the pennies as they came in,” said Stirling, speaking at Reuters ESG Europe. Tuesday.

“We had made some pretty big demands on the company and specific executives by providing ourselves and the board with assurance on their supply chain, and by encouraging them quite aggressively to adopt more rigorous practices. led by industry.

Following the experience, Stirling said he decided to change the process for key engagements going forward.

Institutional investors use “commitments” to talk to the companies in which they invest about a range of issues, including corporate governance.

“We are now trying to make them more stringent; specific milestones set at the start of an engagement program, timelines associated with that and (then) the pursuit of specific results as well, ”he said.

“This is a significant development in the way we engage,” he said, adding that this would apply to companies in which ASI had significant concerns or in which it had significant capital or debt that could be significantly affected by the problem in question.

Using milestones, Stirling said the company would be able to work out when and how to step up engagement, with the ultimate option, like with Boohoo, to sell out.

Report by Simon Jessop. Edited by Jane Merriman

Original © Thomson Reuters

Originally posted 2020-11-03 09:36:11.

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