Boohoo and the Future of ESG Accountability: Lessons from the Latest s.90A FSMA Case Management Decision Introduction

The case concerns claims by 49 institutional and retail investors in Boohoo Group plc ("Boohoo"), a clothing manufacturer and retailer.  The claimants allege that Boohoo failed to disclose information relating to poor working conditions and wages paid to workers at supplier factories in Leicester, and that Boohoo’s published reports, statements, and disclosures across a multi-year period were untrue or misleading in portraying high standards of ESG compliance. 

The claimants allege that they acquired, continued to hold, or disposed of Boohoo shares in reasonable reliance on information published by Boohoo that was later shown to be false or incomplete.  They claim that they suffered losses in excess of £100 million due to a decline in Boohoo's share price, which fell by c. 42% in the three days after adverse media reports were published.

The claims have been brought under s 90A FSMA.  A central issue in the claim is whether the claimants did in fact rely upon Boohoo's alleged omissions or misstatements when acquiring, continuing to hold or disposing of shares in Boohoo (the "Reliance Issues"). 

The parties were agreed that the matter would need to be determined by way of a split trial.  The principal matter for determination at the CMC was how the issues should be split between the trials, and in particular whether the Reliance Issues should be dealt with in Trial 1 or Trial 2.

The claimants argued that Trial 1 should deal primarily with issues of standing and liability, with the Reliance Issues to be addressed only at Trial 2 together with questions of causation and quantum. That approach is generally favoured by claimants as it enables them to defer the costly and time-consuming process of establishing reliance as much as possible, and may assist it to place settlement pressure on Boohoo in the event that Trial 1 determines liability in the claimants' favour.  By contrast, Boohoo argued that Trial 1 should deal with Reliance Issues as well as issues of standing and liability.

Both parties could point to case law concerning claims under s 90A FSMA that supported their respective positions. Ultimately, the Court rejected the claimants' assertion that Reliance Issues should always be split off for determination at Trial 2, preferring a practical case-management approach that reflected the requirements of each individual case. It agreed with Boohoo that the starting point for a split trial of a s 90A claim should be to determine as many issues as possible in Trial 1, and only defer issues to Trial 2 if there were "good reason" for doing so. 

On that basis, the Court ordered that the Reliance Issues should be addressed in Trial 1, to be listed from October 2027.  Any subsequent Trial 2 will address issues of causation and quantum only in respect of those claimants that had successfully established reliance at Trial 1.  

This case is a further example of the creative routes that claimants are exploring to bring claims against UK corporates in respect of ESG failures.

UK Regulators are taking active action against "greenwashing", i.e., misleading or overstated claims regarding the sustainability or environmental credentials of their businesses.  By way of example, in 2024 an investigation by the CMA led to the signing of undertakings by ASOS, Boohoo, and George of Asda to improve the accuracy and transparency of their environmental claims.  The Advertising Standards Agency has also investigated alleged greenwashing, including into misleading claims by airlines of the use of allegedly "sustainable" aviation fuel.^[1]  

Until now, the main power that investors have had to effect ESG-related change in investee companies is through using their commercial and corporate leverage – such as via voting decisions and/or raising questions at AGMs – to influence practices and decisions.  If successful, the claim in Boohoo may demonstrate that s 90A FSMA provides a viable route by which investors can bring private actions to recover loss arising from greenwashing by listed corporates.  If so, the threat of similar actions may place further pressure on investee companies to ensure that their claims regarding ESG practices are complete and accurate.