Faced with environmental and labor disputes, SHEIN is positive

Reporter | Huang Shan

Edit | Lou Shuqin

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According to fashion business outlet Business of Fashion, Shein, a cross-border fast fashion e-commerce platform in China, recently appointed a global environmental and social governance (ESG) director to deal with a series of environmental and labor issues facing the global fast fashion giant.

The executive, adam Whinston, previously worked at Walt Disney Company and U.S. clothing retailer J.C. Penney has up to 15 years of experience in the ESG space.

Founded in 2008, SHEIN is one of the hottest fast fashion brands in the world, mainly in the Americas, Europe and the Middle East, and has recently accelerated its expansion into Southeast Asia. According to data released by mobile application data analytics company Sensor Tower in June, SHEIN was downloaded about 75 million times in the first half of 2021, even surpassing Amazon Amazon to become the world's first mobile fast fashion brand.

It is only a matter of time before the SHEIN market size surpasses ZARA, the originator of fast fashion. The rapid growth allowed SHEIN to grow from unknown to world-famous within two years.

This has been followed by close attention to SHEIN's business practices and compliance by overseas media and European and American regulatory authorities.

Image source: SHEIN

Interface Fashion previously reported that although SHEIN is doing overseas markets outside of China, its entire production is completed in China, and its core fast fashion supply chain base is located in Panyu, Guangzhou. SHEIN's large-scale output and extremely fast production rely on its "small single fast reaction" flexible supply chain model, which is supported by a large number of laborers.

The large number of outsourced factories and complex supplier management systems make SHEIN often questioned in overseas markets about supply chain opaque, environmental and labor compliance. The ESG controversy surrounding SHEIN is quite intense.

In mid-November 2021, Labor Watch Publish Eye published an investigative report saying some of the factories SHEIN used were non-conform to ESG standards. Among them, some workers broke the news that they worked 75 hours a week and only had one day off per month, "violating China's labor law."

In August 2021, Reuters reported that SHEIN claimed on its website that it was certified by the International Organization for Standardization (ISO) and met the strict labor standards set by international organizations such as SA8000, but both ISO and the international organization for social responsibility (SCI) that developed the SA8000 standard denied that it had given SHEIN certification. After the report was issued, the SHEIN official website has removed the original page, and information such as ISO certification and SA8000 certification no longer appears.

Reuters also reported that SHEIN did not fully disclose supply chain information on its official website as required by Uk and Australian law. In response, a SHEIN spokesperson said at the time that a statement on The requirements of Ukish law was being finalized, which would be published on the company's official website in the coming weeks and that the company complied with Australian law.

Previously, there were rumors that the controversy surrounding SHEIN's environmental and social governance was the reason for hindering its smooth overseas initial public offering. However, in an interview with BoF, GEORGE Chiao, PRESIDENT OF SHEIN USA, said that SHEIN currently has no plans for an IPO. George Chiao also acknowledged that SHEIN's annual revenue is indeed "close" to the $15 billion expected by the media, and that it is doubling at a rate of doubling every year.

With the appointment as SHEIN's Global Head of Environmental and Social Governance, Adam Whinston's primary focus is to initiate a review of SHEIN's supply chain to uncover potential violations of labor laws.

"Having a leadership in the ESG space is a big trend in corporate governance." Adam Whinston said in the interview, "Of course, there will be critics who say it's just PR, or marketing, but please give us a chance to make these changes." ”

Adam Whinston said in the above interview that he will conduct a stricter review of the more than 6,000 suppliers that SHEIN works with. Currently, SHEIN has worked with a group of auditors and has a team dedicated to running the Code of Conduct compliance program. SheIN's finalized review will be made available to the public.