Shein Report Finds Child Labor, Escalating Emissions
Shein has long been scrutinized for sketchy standards, be it in form of accusations of using forced labor or reports of dangerous toxins in some of its products.
Since these allegations started intensifying in 2021, Shein has consistently denied any and all wrongdoing. The most-mentioned brand on TikTok has emphasized its commitment to ethical labor practices—even taking some influencers behind the curtain. The Singapore-based shopping platform also released a Supplier Code of Conduct in response to the climbing claims in 2021, outlining its expectations on exploitation.
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Its latest sustainability report gives some more ammunition to its critics.
Shein admittedly found two cases of child labor in its supply chain last year, as revealed in juggernaut’s 2023 sustainability and social impact report. The findings were unearthed as the London IPO hopeful attempted to assuage the criticism of its business model by way of amping up the audits of its Chinese manufacturers. The two child labor cases were uncovered during audits at two different suppliers, each involving one underage worker—defined as under the age of 16 by China’s local labor laws—a Shein spokesperson told Sourcing Journal.
Per the report, Shein suspended orders from these errant suppliers, but gave them 30 days to make adjustments.
“Both cases were resolved swiftly, with remediation steps including terminating contracts with underage employees, ensuring the payment of any outstanding wages, arranging medical checkups and facilitating repatriation to parents/legal guardians as needed,” the report reads. “Following appropriate remediation, the contract manufacturers were permitted to resume business.”
The Forever 21 stakeholder tightened its supplier policy last October in light of these findings. Moving forward, the “most severe violations” are now called Immediate Termination Violations (ITVs) and result in immediate termination—instead of the 30-day grace period. But Immediate Remediation Violations (IRVs), defined as “serious violations that warrant urgent rectification” and covering labor violations, workplace health and safety issues, still have a month to rehabilitate. Previously, IRV offenders had 90 days before being axed.
“We previously focused on educating our suppliers and giving them an opportunity for remediation before termination,” the Chinese e-tailer said in the report. “As suppliers are generally not exclusively contracted by Shein, this benefits the wider fashion ecosystem by instilling standards and best practices across the supply chain. It also helps to protect workers and their livelihoods.”
“As our supply chain and suppliers have matured over time, we believe that we should now take a stricter stance on severe violations,” the (alleged) infringer said in the report. “Nevertheless, even for suppliers that Shein has decided to terminate, we send them action plans with guidance on how to remediate their identified ITVs/IRVs, so as to educate and empower the suppliers to take steps to improve conditions in their facilities.”
The Gen Z favorite hadn’t previously quantified the number of child labor cases, opting instead for providing the percentage of audits that found children on the clock. That violation was found in 1.8 percent of supplier audits in 2021, 0.3 percent of audits in 2022, and 0.1 percent in 2023, per the report. Nearly 4,000 on-site audits were conducted on China-based suppliers in 2023. The Shein Responsible Sourcing (SRS) policy audits conducted on the 2,796 contract manufacturers represent approximately 95 percent of Shein-branded products by procurement value in 2023.
Interestingly, suppliers do have the right to refuse SRS audit, as 0.2 percent did in 2022, and 0.1 percent did in 2023. However, Shein said that refusing to undergo an audit results in an immediate termination violation.
Shein has racked up lawsuits from Adidas, Dr. Martens, H&M Group, Levi Strauss & Co. and Ralph Lauren on the basis of assorted antics ranging from anti-competitive behavior and data scraping to “mafia-style intimidation and detention scare tactics” and copycat violations tantamount to racketeering.
It’s no secret that the brand, parodied on SNL as “Xiemu,” wants to go public, namely on the London Stock Exchange (perhaps because the millions spent on lobbying Washington appear to have been in vain). Shein is actively seeking backing for a potential 50-billion-pound (about $65.9 billion) UK stock market flotation, as originally reported by the BBC. Former Green Party lawmaker Caroline Lucas’ “Say No to Shein” campaign as well as human rights group Stop Uyghur Genocide are calling on the government to block Shein’s application.
“On supply chain governance, we have continued to strengthen programs for both enforcement and empowerment,” Shein’s founder and CEO Xu Yangitan, also known as Sky Xu, penned in the report. “As signatories of the UN Global Compact (UNGC), we support the Ten Principles focused on human rights, labor, environment and anti-corruption, and expect our suppliers to share our commitment to such principles.”
The Chinese e-tail behemoth also addressed emissions in the report.
“Our absolute emissions grew from 9.17 million metric tons of CO2e in 2022 to 16.88 million metric tons of CO2e. In 2023, our business continued to experience strong growth, and our operations diversified with the introduction of Shein Marketplace,” the report reads. “We recognize that we still have much more work to do on our climate mitigation journey and are committed to driving progress.”
As Shein has said in the past, 99 percent of its emissions are Scope 3, meaning they stem from outside its owned or operated facilities. To address these, the fast-fashion purveyor collaborated with industry experts in pursuit of reducing emissions by 25 percent by 2030. This includes working with Intertek as well as building partnerships with suppliers in Brazil and Turkey to “bring production close to key consumer regions” and “expand the number of warehousing facilities globally in countries such as the USA and Poland.”
In partnership with Apparel Impact Institute (Aii), Shein initiated Clean by Design (CbD) projects that focus on improving process efficiencies to reduce energy, water and chemical usage as well as waste generated in the manufacturing process. Per the report, these projects were implemented across 28 supplier sites and collectively introduced 217 improvement actions, saving 14,046 MWh of electricity and nearly 46,000 metrics of CO2e per year.
On the social side, Shein committed $155 million over the next five years toward the “Equitable Empowerment” pillar of the evoluSHEIN roadmap. Roughly 2,000 global artists and designers launched products and collaborations through the Shein x Designer Incubator program in 2023 as well.
“We are committed to getting better every day and will remain anchored by the fundamentals in our evoluSHEIN roadmap,” Xu said in the report. “Our goal is to build a resilient business that contributes to a more equitable and sustainable future for all.”
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