In its 2023 conservation statement, fast fashion store Shein increased audits of Chinese manufacturers to address concerns about its low-cost company model away of a planned buoyancy. Last month, it found two cases of child labor at its providers.
Shein claimed in a report on Thursday ( Aug 22 ) that it had been halting orders from suppliers who had employed children under the age of 16 and that it had only re-sourced from them once more after they had improved their procedures, including checking workers ‘ identity documents.
Both cases, according to the company, have been “resolved quickly,” with restoration measures including ending young employees ‘ contracts, organizing health checkups, and facilitating relocation to parents or guardians as needed.
Shein tightened its dealer plan in October after the child labor cases were discovered, making it clear that any serious vulnerabilities, known as” Immediate Termination Violations,” may lead to the cancellation of the relationship with the provider right away.
Previously, suppliers such as those that employed minors had 30 days to resolve the issue, failing which Shein would cut ties.
Shein’s senior director of global government relations, Annabella Ng, said the updated supply chain policy considered feedback from regulators and suppliers.
The company had only previously disclosed the percentage of child labor cases found in the workplace, citing the proportion of audits that found minors. That violation was found in 1.8 per cent of supplier audits in 2021, 0.3 per cent of audits in 2022, and 0.1 per cent in 2023.
” We remain vigilant in guarding against such violations going forward, and in line with current policies, will terminate any noncompliant suppliers”, Shein said in the report.
Shein, which has grown rapidly selling US$ 5 tops and US$ 10 dresses online to shoppers around the world, said 3, 990 audits were conducted in 2023, up from 2, 812 in 2022 and 664 in 2021.
It used Bureau Veritas, Intertek, Openview, SGS, Tuv Rheinland and QIMA for 92 per cent of its audits last year, and said it aims for 100 per cent of audits to be done by such third-party agencies.
Less serious violations were found in the audit results that Shein released overall than they did last year.
EMISSIONS SURGE
Shein’s 2023 sustainability report, published more than a year after the 2022 report, will be pored over by investors weighing whether to buy shares in the retailer if and when it lists. Early in June, the company started a preliminary public offering ( IPO ) in London.
In an introductory note, Shein CEO Sky Xu said improving Shein’s supply chain governance and managing its carbon footprint, particularly indirect scope 3 emissions, were” critical” areas for the company.
Shein sends goods directly from suppliers in China to customers by air, and according to the report, its emissions from these activities more than doubled in 2023, reaching 6.35 million tonnes of carbon dioxide equivalent.
The company has 5, 800 contract manufacturers in total, with most located in China’s Guangdong province.
It said it will reduce transport emissions by starting to source some products from suppliers closer to its customers, such as those in Turkey and Brazil. By switching from air to sea and land freight to transport those products, it claimed to have saved 49, 578 tonnes of CO2 equivalent last year.
Shein reported that it is currently going through the validation process and submitted its emissions reduction goals to the Science-Based Targets Initiative, the most influential global authority on how companies set climate targets, in June of this year.
It also said it had established a board-level sustainability committee in July last year, comprising its CEO, executive chairman and three representatives of investors- HongShan partner Jiajia Zou, Global Head of ESG ( environmental, social and governance ) at General Atlantic Cornelia Gomez, and Brookfield Growth Managing Partner Josh Raffaelli.
Ng said she could not comment on any IPO-related questions because Shein had created the committee to strengthen its governance as a result of the upcoming flotation.
” But undoubtedly, as part of our overall ESG journey toward more transparency and accountability, we have been looking at enhancing our governance structures,” she said.