Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Shein, the online fast-fashion group that is planning a London listing, is launching a €200mn “circularity fund” that its executive chair says will tackle fashion waste, amid concerns about the brand’s sustainability.
The China-founded company intends to inject the cash in start-ups and more established businesses in the UK and Europe “as soon as possible”, Donald Tang told the Financial Times on Tuesday.
“Our financial resources, our scale and leverage [means] we can be, and we will be, a significant guinea pig or applicator of these technology or processes,” Tang said.
The planned investment is a fraction of Shein’s $2bn in profits for 2023. The ecommerce group, which is rapidly closing in on major fashion retailers such as Zara and H&M after it boomed during the pandemic, was valued at $66bn in its last funding round.
Targets for investment could include early-stage companies working on recycled materials, or Shein could strike up deals with more mature companies whose existing operations use new or emerging fabrics in an effort to be more sustainable.
The move comes amid Shein’s ambitions to publicly list its shares in London, following a decision to ditch a planned IPO in New York. The company has been caught up in tensions between the US and China, and has also faced allegations of links to forced labour in China’s Xinjiang region. Shein has denied the claims, saying it “has a zero-tolerance policy for forced labour”.
Shein — which is based in Singapore but was founded and retains most of its operations and supply chain in China — is also exploring a back-up plan to list in Hong Kong, the FT previously reported.
Tang declined to comment on the listings process, which must get sign-off from the Chinese securities regulator no matter where in the world it eventually takes place.
Asked whether the fund was a response to criticism and concerns over its vast supply chain, Tang said it was a “continuation of the efforts and journey that we have been on for quite some time”.
Fast-fashion companies such as Shein have been in the crosshairs of campaigners who argue that their rise has led to an unprecedented volume of cheap, poor-quality fashion that ends up in landfills.
More than half of all fast fashion is discarded in less than a year, according to the Ellen MacArthur Foundation, a non-profit that campaigns against waste and pollution. Shein said its on-demand business model meant it carried less inventory than traditional retailers.
Tang said fashion waste could not be fixed “individually” and that it was not “just about the money”.
“It’s too big, it needs collaborative efforts,” he said, as he called on others, including rival retailers, sovereign wealth funds, investors, policymakers, non-profit organisations and academics, to join the circularity initiative.
Last month Shein filed confidential paperwork with the UK’s markets regulator, taking the company a step closer to what could be a blockbuster listing for London’s otherwise lacklustre capital markets.
Shein had a meeting with the new business secretary, Jonathan Reynolds, before last week’s general election in which Labour won a landslide. Labour has previously said London should welcome a Shein flotation because it would impose higher regulatory standards on the company than elsewhere.
The company also said on Tuesday that it would invest a further €50mn in UK and EU brands, designers and artisans who work with Shein, along with “potential investments” in research and development or a pilot factory in Europe or the UK.
In 2022 it launched a re-sale platform for clothes in the US that is now also available in the UK and Europe, with more than 115,000 pre-owned items listed for sale, Shein said.
Read the full article here
