In a recent revelation, Shein, the fast-fashion giant known for its low-priced apparel, acknowledged two instances of child labour within its supply chain, cited in its 2023 sustainability report. This move comes as part of a broader initiative to enhance supplier audits and address mounting scrutiny regarding its business practices. The company’s actions reflect an industry-wide challenge: balancing profitability with ethical considerations, particularly concerning labour practices.
The issue of child labour in the textile industry is not new, yet it has garnered renewed attention as consumer consciousness increasingly favours ethical sourcing and transparency. Shein’s report disclosed that both cases were identified at manufacturing sites in China and were dealt with expediently. The company stated that it has suspended orders from the implicated suppliers until they improve their employee verification processes to prevent future violations.
According to Annabella Ng, Shein’s senior director of global government relations, the updated supplier policy introduced last October mandates stringent measures for handling serious breaches. Previously, suppliers had a 30-day grace period to rectify violations; under the new framework, immediate termination is enforced for severe infractions—termed “Immediate Termination Violations.” This shift underscores Shein’s commitment to refining its supply chain governance in response to both regulatory feedback and public pressure.
A significant part of Shein’s auditing process is conducted by third-party agencies. In 2023, the company conducted nearly 4,000 audits—up from approximately 2,800 in the previous year—demonstrating an increasing investment in compliance measures. These audits serve not only to assess working conditions but also to ensure that no minors under the legal working age are employed. Over the years, audit data reveals a declining trend in child labour cases: 1.8% of audits in 2021 encountered this issue, which decreased to 0.3% in 2022, and further to 0.1% in 2023.
The ramifications of these findings extend beyond corporate responsibility; they are pivotal for investors eyeing Shein’s upcoming initial public offering (IPO) in London. The sustainability report is crucial for investors who are increasingly concerned about environmental, social, and governance (ESG) issues. A detailed examination of Shein’s supply chain policies and performance against child labour will likely factor into investment decisions during the IPO rollout.
In conjunction with its audit enhancements, Shein also reported a significant increase in carbon emissions from its logistics operations, which more than doubled to 6.35 million tonnes of CO2 equivalent in 2023. This surge is primarily attributed to the company’s reliance on air transport to expedite delivery from its suppliers in China to global customers. To counteract the emissions, Shein is exploring sourcing from manufacturers located nearer to major markets, such as Turkey and Brazil. This strategic shift is expected to reduce transport-related carbon output significantly. They reported saving nearly 50,000 tonnes of CO2 equivalent by switching from air to sea freight for some product lines.
As part of its sustainability initiatives, Shein has also set targets in line with the Science-Based Targets Initiative (SBTi) to validate its emissions reduction ambitions, a sign of alignment with global climate commitments. Moreover, a sustainability committee has been established at the board level, including key stakeholders to enhance oversight and accountability in these efforts.
While Shein’s measures signal progress in addressing child labour and improving emissions management, criticisms remain regarding transparency and the overall impact of fast fashion on global labour standards. The fast-paced nature of fashion retail inherently poses challenges in maintaining ethical practices across vast supply chains. Consumers and investors alike are increasingly demanding ethical accountability, pushing companies toward more transparent operations.
Shein’s recent actions may be seen as steps towards reconciliation of profit and responsibility in a climate where the fashion industry faces intense scrutiny. As the company moves closer to its IPO, stakeholders will be attentive to whether these policy changes translate into genuine ethical practices throughout its supply chain.
For Shein, the road ahead involves not only addressing past shortcomings but also fostering a culture of continuous improvement in sustainability and social responsibility to secure its place in the increasingly conscientious marketplace.
