Standard Life Aberdeen sells nearly all of its Boohoo shares

Boohoo said earlier this week that it had commissioned a review of its UK supply chain after retailers such as Next and Asos dropped the brand following reports that workers at one of its supplier factories were being paid as little as £3.50 an hour and forced to work without protection during the coronavirus lockdown.

The company said it was "shocked and appalled" at the allegations of modern slavery at the Leicester factory.

Lesley Duncan, deputy head of UK equities at Aberdeen Standard Investments, said it invested in Boohoo at the time of its IPO in 2014, at which point it passed the asset manager’s ethical screening.

Duncan said that over the years SLA has lobbied the company to improve its management of supply chain transparency, environmental efficiency and working conditions.

"While we would have liked progress to have been quicker we did feel that progress was being made," he said.

"However, in the last few weeks our concerns have grown on the progress being made, which even before recent developments, had negatively impacted our conviction levels in the company. Having spoken to Boohoo’s management team a number of times this week in light of recent concerning allegations, we view their response as inadequate in scope, timeliness and gravity.

"We strive to use our influence as significant investors to achieve progress. In instances where our standards have not been met, divestment is both appropriate as responsible stewards of our clients’ capital and aligned to our goal of investing for better outcomes."

Broker Shore Capital downgraded its stance on Boohoo shares to ‘sell’ on Wednesday, saying it may be off limits for ethical funds.

Boohoo owns brands PrettyLittleThing, Nasty Gal, Coast and Karen Millen. It also recently acquired the online businesses of Oasis and Warehouse for £5.25m.

At 1510 BST, Boohoo shares were down 3.6% at 275.90p.