Shein Production Volume Increased by 57% in 2022

Even Shein isn’t immune to climate change.

In 2022, the e-tail fashion phenom partnered with Risilience, a climate analytics platform, to understand its exposure to warming temperatures. The results weren’t promising.

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“The risks arising from the effects of climate change on soil and water accessibility and extreme weather events could cause disruption in raw material supply and market demand as well as operational downtime in key facilities with possible damage to physical assets,” Shein wrote in its latest ESG report, its second to date. The zeitgeist shift, buoyed by the rising price of carbon, it noted, could increase policy and regulation constraints. Consumers, too, could start to overwhelmingly opt for more sustainable products, leaving their less responsible counterparts in the dust.

Carbon has become a banner issue for a company widely criticized for fueling overconsumption and polluting the environment with its jaw-droppingly cheap clothing and shoes, the vast majority of which are derived from virgin petrochemicals.

Even so, the Singapore-headquartered firm says it wants to reduce its absolute emissions—99 percent of which stem from its supply chain partners—by 25 percent by 2030. It has poured $7.6 million into the Apparel Impact Institute, which helps manufacturers to improve their energy, water and chemistry use, and teamed up with Brookfield Renewable Partners to outfit an unspecified number of factories with renewable energy. With polyester accounting for the bulk of its fiber portfolio, Shein also called transitioning to recycled polyester a “significant aspect of our decarbonization initiative,” though not everyone agrees it’s a better choice.

But the Amazon-dethroning app might be a victim of its own success. Shein churned out 57 percent more bikini tops, figure-hugging dresses and peep-toe stilettos, many of them under $10, in 2022, generating 52 percent more emissions in the process, according to the report. The spike in its absolute emissions from 6.04 to 9.17 million metric tons between 2021 and 2022, it said, stemmed from the “strong growth of our business,” which raked in $700 million in profits last year, or $400 million less than in 2021.

Shein, which serves more than 150 markets, doesn’t disclose how many products it peddles every year, though it adds some 6,000 new styles of clothing and shoes to its website every day and features more than 600,000 at any one time. It maintains that despite the breadth of options, its algorithmically driven, small-batch approach keeps waste at a minimum. To further fend off its detractors, it has inked an agreement with Queen of Raw to source its deadstock fabrics. It’s also funneling $50 million into an extended producer responsibility-like scheme to benefit communities in the global South impacted by textile waste and ramping up resale. In the spirit of collaboration, TikTok’s buzziest brand joined Textile Exchange and signed CanopyStyle’s commitment to source deforestation-free textiles.

But all that doesn’t matter if Shein doesn’t slow down, said Samantha Taylor, the third-generation garment producer behind The Good Factory in England.

“We already needed 2.7 planets in order to sustain our levels of consumption before Shein made epic growth,” she told Sourcing Journal. “And that’s before we address their claim they will be able to reduce emissions by 70 percent just by switching to recycled polyester. Even the most creative of accountants must be scratching their heads at that one. If the growth of one of the most polluting fashion companies can’t be curbed, we are in serious trouble.”

Elizabeth L. Cline, author and professor of fashion policy at Columbia University, agreed that Shein’s ESG report was “mostly greenwashing.” She helped advocacy group Remake compile its last two Fashion Accountability reports, the second of which gave the Christian Siriano collaborator 0 out of a possible 150 points.

“Most of the report is greenwashing, including mentions of sustainability initiatives that are voluntary or highlighting one-off or charity projects that serve as a red herring for the core business model,” Cline told Sourcing Journal, noting that it lacks evidence of year-over-year progress on any “meaningful” indicator and fails to include standard disclosures such as a supplier list that names its factories, their locations and size of their workforces.

Of the “disturbing details” in the report, one that struck her was the fact that 82 percent of the 1,941 factories audited in 2022 required corrective action for violations such as insufficient emergency exits, signs of structural damage, non-payment of minimum wages, underage labor and involuntary labor. Some 11 percent required what the Temu rival called Zero Tolerance Violations, or ZTVs, which will have orders frozen until they have remediated those violations. The best “A”-grade factories accounted for 4 percent of the manufacturers, which in all accounted for roughly 84 percent of Shein-branded products by procurement value for the year.

The e-tailer said that the stricter grading methodology resulted in a larger number of supplier facilities—24 percent—receiving “D” grades, which “does not necessarily indicate worse performance, but does enable Shein to take a more active role in advocating for improvements in those facilities.”

Cline doesn’t see it the same way, however. “This means that by its own admission, Shein continues to be a company that competes via exploitation and poor labor standards,” she said.

She also takes a gimlet view of Shein’s plan to incorporate workshop courses for workers that focus on lean production models. Its newly established Centre of Innovation for Garment Manufacturing in China, which will benefit from an infusion of $40 million over five years, will similarly tackle “innovative lean production solutions” for garment manufacturing, such as the use of Automated Guided Vehicles.

“There is the concern that the company continues to advertise their factory ‘training programs’ that focus on lean production models as somehow good for workers, as lean manufacturing tends to mean more instability and longer, unpredictable hours for garment workers,” Cline said.

But could Shein, which is facing scrutiny from Congress as it edges toward an IPO, simply be misunderstood? Its founder and CEO thinks so.

“Like all companies, we are on a sustainability journey,” wrote Sky Xu, who previously went by the name Chris, in the introduction of the report. “ However, what sets us apart is our leadership ambition, underpinned by our use of innovative technology to reduce inventory waste and deliver products at affordable prices to customers around the world.”

Xu said that everyone deserves a more equitable and sustainable future and that he is confident that Shein can become a “catalyst for that transition.”

So what’s next? The report teases a partnership to manage end-of-life clothing waste as “coming.” It’s one way, the Romwe owner said, of moving it closer to its goal of establishing a circular textile supply chain by 2050 in alignment with its World Circular Textile Day commitment.

“Living wage and compensation” also appears in a chart under “continue/expand internal efforts” though Shein provided no details. Wages, in general, get passing mentions in the report, with little to counter allegations that workers who make Shein clothes are making pennies an hour, something that the company has denied. Millions of dollars worth of factory improvements and worker upskilling are forthcoming, as are investments in childcare and housing. Whether these will “disrupt” the fashion system, as its head of ESG, Adam Whinston put it, or simply maintain the status quo, remains to be seen, particularly as Shein expands its manufacturing footprint from Guangzhou to Mexico and Brazil.

Nearshoring of production to slash the use of air freight is one way the company can ameliorate its impact and business risk, it noted in the report.

“We at Shein are optimistic,” Whinston wrote of the retail titan, which reportedly raised $2 billion in its latest fundraising round, putting the company at a value of roughly $66 billion. “Using our disruptive mindset to tackle social and environmental challenges, we can achieve our targets by 2025 and beyond.”

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