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Sports Direct rebuked by the Church of England over employee conditions

PUBLISHED: 09:20 19 February 2018 | UPDATED: 09:25 20 February 2018

Sports Direct founder Mike Ashley. The sportswear giant has been chastised by the Church of England over the treatment of factory workers and governance failings at the retailer, it can be revealed. Picture: Joe Giddens/PA Wire

Sports Direct founder Mike Ashley. The sportswear giant has been chastised by the Church of England over the treatment of factory workers and governance failings at the retailer, it can be revealed. Picture: Joe Giddens/PA Wire

Mike Ashley’s Sports Direct has been chastised by the Church of England over the treatment of factory workers and governance failings at the retailer, it can be revealed.

The Church Commissioners - which manage the Church’s £7.9bn investment fund - criticised the sportswear giant amid a string of controversies at the high street chain.

In a series of letters delivered to the company, the Church is thought to have touched on issues including executive pay and working conditions at the retailer.

The correspondence came at a time when Sports Direct was dealing with serious operational, governance and risk oversight problems.

These included what unions described as “Victorian” working conditions at the high street chain’s Shirebrook factory in Derbyshire, and the retention of Keith Hellawell as chairman against the wishes of key shareholders.

The retailer also admitted to paying warehouse workers below the national minimum wage in 2016.

Mr Ashley, who also owns Newcastle United Football Club, was hauled before MPs to answer questions on the controversies, after which Sports Direct ordered in-house law firm RPC to carry out a review of the failings.

The Church’s investment arm, which has a minority holding in Sports Direct, made its disapproval clear at the group’s AGM, voting against the re-election of both chairman Mr Hellawell and chief executive Mr Ashley in 2017, as well as the head of the remuneration committee and remuneration report.

The Church of England declined to comment.

Church Commissioners also voted against a proposed £11m back payment to Mr Ashley’s brother and former Sports Direct IT director John Ashley, which had caused consternation among investors.

The group also backed an initiative spearheaded by union Unite which called for an independent review of working practices and corporate governance.

It is understood that the Church still holds its stake in the business but continues to engage over key areas of concern.

The intervention by the Church Commissioners falls in line with its responsible investment policy, which sees its engagement team work with firms on environmental, social and governance issues.

The revelations come at a difficult time for Mr Ashley, whose retail empire saw profits plunge 67.3% to £45.8m in the first half of the year.

Among the other controversies the tycoon has been involved in includes a slapstick legal battle that took place last year between the billionaire and a former confidant, the investment banker Jeffrey Blue.

While Mr Ashley emerged victorious, lurid details in the case - which included the Sports Direct chief apparently vomiting into a fireplace after an alcohol-fuelled management meeting - have done little to enhance the businessman’s reputation.

The Church Investors Group has also warned recently that it will toughen its stance regarding the lack of women on company boards.

There are no women on the board of Sports Direct.

A spokesman for Sports Direct said: “The board received backing from a majority of independent shareholders at the AGM in September 2017, at which many of these historic issues were addressed.

“We note that under its 2018 voting policy the Church will not back members of nomination committees where less than 25% of the board are women.

“We recognise the value and need for female representation on the board, and we are taking steps to address this. We recently disclosed to the Hampton-Alexander review that women make up 35.1% of our senior executive team, which is ahead of target and compares with the Church of England, where we understand that around 10% of bishops are female.”

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