Last week, ultra-fast fashion brand SHEIN announced its commitment to invest €250 million in the UK and EU in the next five years. €200 million of this investment is used to launch a Circularity Fund. This fund aims to advance circularity solutions within the fashion industry by supporting start-ups and businesses across the UK and EU. These businesses will focus on developing next-generation technologies and solutions, such as textile-to-textile recycling and innovative fibres.
Key aspects of the Circularity Fund include:
- Investment in Early-Stage Start-Ups: Targeting innovations in textile-to-textile recycled materials and related areas.
- Commercial Partnerships: Forming off-take agreements with mature start-ups that have established production capacities in recycled materials.
Donald Tang, SHEIN’s Executive Chairman, stated, “As a global leader in our sector, SHEIN has both a responsibility and an opportunity to accelerate innovations that can address the environmental footprint of the fashion industry. The Circularity Fund will support entrepreneurs and businesses at the forefront of innovation in circular initiatives, focusing on the UK and the EU.”
Specific initiatives under this funding include:
- SHEIN X Designer Incubator Program: Bringing more UK and European artists and designers into the program to commercialize their designs through SHEIN’s manufacturing, marketing, and logistics support.
- Onboarding UK and European Businesses: Helping local businesses tap into SHEIN’s global customer base via its Marketplace platform.
While SHEIN’s Circularity Fund aims to position the company as a leader in sustainability and innovation within the fashion industry, it faces significant scepticism due to its existing environmental and ethical issues.
Circularity in Fashion
Circularity in the fashion industry refers to a sustainable model of production and consumption designed to minimize waste and maximize resource efficiency. Unlike the traditional linear model of “take, make, dispose,” circular fashion emphasizes the use of renewable resources, recycling, and extending the life cycle of products. This involves designing garments for longevity, promoting the reuse and repair of clothing, and developing innovative recycling technologies to transform old textiles into new materials.
Skepticism Surrounding SHEIN's Circularity Efforts
Despite SHEIN’s bold claims, their Circularity Fund initiative falls short of true circularity in several key areas:
Mass Production and Waste
SHEIN’s business model is based on mass production and rapid turnover of fashion items, contributing to vast amounts of textile waste. Circularity requires a significant reduction in production volumes and a focus on quality over quantity, contrary to SHEIN’s current operations.
Short Product Life Cycles
True circularity involves designing products that are durable and can be repaired or repurposed. SHEIN’s products are often criticized for their low quality and short lifespan, which encourages a disposable mindset among consumers.
Limited Recycling Infrastructure
While SHEIN’s fund targets textile-to-textile recycling innovations, the company lacks a comprehensive infrastructure for collecting and recycling used garments. Effective circular systems require robust recycling networks, which SHEIN has yet to establish.
Lack of Transparency
Transparency is crucial for circularity, as it ensures accountability and sustainable practices throughout the supply chain. SHEIN has been criticized for its opaque supply chains, making it difficult to verify the sustainability of its practices.
The Impact of SHEIN
SHEIN has become a force to be reckoned with over the last few years. Since its foundation in 2008, the e-commerce giant has quickly become the largest clothing retailer in the world, surpassing brands like Zara and H&M. The retailer is known for its extremely low prices and thousands of new styles daily.
SHEIN’s business model is based on speed and efficiency, allowing it to rapidly produce new styles to follow the continuous influx of new trends.
Although SHEIN is a private company and does not disclose its financials, it was reported to have generated around $23 billion in sales in 2022. In addition, the company reported 88.8 million users in 2023 and is the most downloaded app, exceeding Jeff Bezos’ Amazon.
Despite its profitability, SHEIN’s business model has a severe environmental and ethical impact. Fast fashion practices like those employed by SHEIN are associated with pollution, greenhouse gas emissions, toxic chemicals, and extreme textile waste. Additionally, SHEIN has been linked to unethical working conditions and even forced labor. Let’s take a closer look at some of these issues.
CO2 emissions
The fashion industry is responsible for about 10% of global CO2 emissions, with SHEIN significantly contributing to this figure. Although the retailer has announced plans to decarbonize its supply chain, it stated on its website: “In 2022, production volume increased by 57%, and our emissions increased by 52%. The change in our absolute emissions from 6.04 to 9.17 million tons of CO2e from 2021 to 2022 comes from the strong growth of our business.” Given that the brand has continued to grow, its carbon emissions are unlikely to decrease.
Toxic chemicals
Textile dyeing in the fashion industry is a significant problem, causing severe water pollution in many regions. The chemicals used in this process are hazardous to animals and humans. Several studies have found that clothes made by SHEIN contain chemical levels well above the recommended limits. Seoul authorities discovered that certain items from SHEIN contained high levels of phthalates, chemicals known to disrupt hormones and link to health issues such as obesity and cancer.
Unethical practices
In 2021, a Swiss human rights advocacy group found that labourers in factories supplying SHEIN worked 75-hour weeks. The organization interviewed workers across six factories in the Guangzhou region of China. Although SHEIN does not disclose its suppliers, the organization linked these factories to SHEIN through the interviews. They reported that workers toiled 12 hours a day without lunch or dinner breaks and earned well below the living wage. These were not isolated incidents. A documentary on the UK’s Channel 4 also alleged labour exploitation at two of SHEIN’s suppliers in China. Following this documentary, SHEIN announced plans to upgrade many of its suppliers’ factories.
Final Word
While SHEIN’s Circularity Fund aims to showcase the company as a pioneer in sustainable fashion, it falls short of true circularity. The fund’s initiatives, although a step in the right direction, do not address the core issues of SHEIN’s business model, including mass production, short product lifecycles, and opaque supply chains. For SHEIN to genuinely embrace circularity, it must make fundamental changes to its production processes and prioritize sustainability over rapid growth. Only then can its Circularity Fund be seen as a credible effort towards a more sustainable fashion industry.
Sources
- CNBC – Shein’s revenue is ‘a lot more’ than $30 billion annually, key retail partner says
- CNN – Shein promised to tackle overwork. A new report claims 75-hour weeks are still common.
- CNA – Commentary: Unfortunately, toxic chemicals in Shein products won’t be the tipping point for consumers of fast fashion
- Business & Human Rights – Chinese retailer Shein allegedly fails to disclose working conditions along supply chain as required by modern slavery laws in UK and Australia Resource Centre –
- ECO-STYLIST – The Dark Side of Fast Fashion: Exploring the Environmental Impact of SHEIN
- Environment + Energy LEADER – Shein, Temu, AliExpress Under Fire as Seoul Inspections Reveal Dangerous Chemicals
- European Parliament – Circular economy: definition, importance and benefits.
- Ellen MacArthur Foundation – What is a circular economy?
- SHEIN Group – SHEIN launches €200 Million Circularity Fund in the UK and the EU and commits to investing €50 million in broader ESG efforts
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