In its 2023 sustainability report, fast-fashion retailer Shein disclosed the discovery of two child labor cases within its supply chain during the previous year. These findings emerged as the company intensified audits of its manufacturing partners, primarily based in China, to address ongoing criticisms of its low-cost business model and to prepare for a potential public offering.
Upon identifying that two suppliers had employed children under the age of 16, Shein temporarily suspended orders from these manufacturers. The company resumed business with them only after they had implemented stricter measures, such as enhanced verification of workers’ identity documents. The remediation process included terminating the contracts of the underage employees, ensuring the payment of any outstanding wages, arranging medical checkups, and facilitating their return to their parents or legal guardians.
In October 2023, Shein revised its supplier policies, mandating immediate termination of contracts with any partners found in violation of severe breaches, including child or forced labor. This change replaced the previous policy, which allowed suppliers a 30-day period to address such issues before facing potential termination.
Annabella Ng, Shein’s senior director of global government relations based in Singapore, stated that the updated supply chain policy reflects feedback from both regulators and suppliers. The company reported a decline in the percentage of audits revealing child labor violations: 1.8% in 2021, 0.3% in 2022, and 0.1% in 2023. In total, Shein conducted 3,990 audits in 2023, an increase from 2,812 in 2022 and 664 in 2021. Of these audits, 92% were performed by third-party agencies, with a goal of reaching 100% in the future.
These developments occur as Shein considers a public listing, having filed initial documents for an initial public offering (IPO) in London in early June 2024. The company’s 2023 sustainability report, published more than a year after the previous report, is expected to be closely examined by potential investors evaluating the retailer’s commitment to ethical practices and environmental sustainability.
In the report, CEO Sky Xu emphasized the importance of enhancing Shein’s supply chain governance and managing its carbon footprint, particularly indirect “scope 3” emissions. The company noted that emissions from product transportation more than doubled in 2023, reaching 6.35 million tonnes of carbon dioxide equivalent. To address this, Shein has begun sourcing products from suppliers closer to its customer base, including locations in Turkey and Brazil, aiming to reduce transport-related emissions.
Additionally, Shein established a board-level sustainability committee in July 2023, comprising its CEO, executive chairman, and three investor representatives. This move aims to bolster governance structures as part of the company’s broader environmental, social, and governance (ESG) efforts, promoting greater transparency and accountability within its operations.
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