Shein, the online fashion giant planning a London listing, has announced a "Circularity Fund" of 200 million euros to combat fashion waste. This initiative comes amid growing concerns about the brand's sustainability.
The China-founded company intends to invest capital in start-ups and established companies in the UK and Europe as quickly as possible, Donald Tang, Executive Chair of Shein, stated to the Financial Times on Tuesday.
Our financial resources, our scale, and our leverage mean that we can and will be a significant pilot or user of these technologies or processes," said Tang.
The planned investment accounts for a fraction of Shein's $2 billion profit for 2023. The e-commerce company, which grew significantly during the pandemic and now competes with major fashion retailers like Zara and H&M, was valued at $66 billion in its latest funding round.
Possible investment targets could be early-stage companies working with recycled materials, or partnerships with more mature companies whose existing operations use new or emerging substances to become more sustainable.
This step is part of Shein's efforts to list its shares publicly in London after a planned IPO in New York was abandoned. The company was involved in tensions between the US and China and also faced allegations of forced labor in the Chinese region of Xinjiang. Shein has denied the accusations, stating it has a zero-tolerance policy towards forced labor.
Shein, which is headquartered in Singapore but maintains most of its operations and supply chains in China, is also considering a backup plan for a listing in Hong Kong, as previously reported by the FT.
Tang declined to comment on the listing process, which must be approved by the Chinese Securities Regulatory Commission, regardless of where in the world it ultimately takes place.
In response to the question of whether the fund was a reaction to criticism and concerns regarding its extensive supply chain, Tang said it was a "continuation of the efforts and journey we have been on for quite some time.
Fast fashion companies like Shein are the focus of activists who argue that their rise has led to an unprecedented amount of cheap, low-quality fashion ending up in landfills. According to the Ellen MacArthur Foundation, a nonprofit organization fighting against waste and pollution, more than half of all fast fashion is disposed of within a year. Shein stated that its on-demand business model means it has less inventory than traditional retailers.
Tang emphasized that the problem of fashion waste cannot be solved "individually" and that it is not "just about money." "It is too big, it requires collaborative efforts," he said, urging others, including rival retailers, sovereign funds, investors, politicians, non-profit organizations, and academics, to join the Circularity Initiative.
Last month, Shein submitted confidential documents to the UK market regulator, taking a step closer to a potential blockbuster listing for London's otherwise lackluster capital markets.
Shein had a meeting with the new Minister of Economy, Jonathan Reynolds, before last week's parliamentary election, where the Labour Party achieved a landslide victory. Labour had previously stated that London should welcome a Shein listing as it would bring higher regulatory standards for the company than elsewhere.
The company also announced on Tuesday that it would invest an additional 50 million euros in British and European brands, designers, and artisans collaborating with Shein, as well as "potential investments" in research and development or a pilot factory in Europe or the United Kingdom.
In 2022, Shein launched a resale platform for clothing in the USA, which is now also available in the UK and Europe, with more than 115,000 used items for sale.
