Since 2021, SHEIN has been releasing annual “Sustainability and Social Impact” reports. Typically, they are released in the summer for the prior year. Before 2021, the company did not release any formal ESG communications, but with IPO pressure mounting, they have committed to more regular reporting.
For those of us on the outside of the ESG corporate reporting world, this may seem like a win as it appears to communicate a desire for more transparency and more responsibility into business operations. However, having worked in the financial reporting world for over a decade, I have personal knowledge of how subjective the metrics are and how easily companies can manipulate the reports to support their narrative.
"At best, ESG and social impact reporting can...improve the lives of a company's employees...At worst, it is corporate greenwashing at its most diabolical."
The first issue lies in the reliability of the metrics chosen. Within the world of sustainability reporting there is no single, universally agreed upon metrics or standards. Companies have a significant amount of control over what is measured and how it is measured. Any time a company is allowed to decide their own reporting standards, they will naturally choose the standards which best align with their brand positioning.
Secondly, companies are allowed to be as transparent about their practices as they desire. When I worked in financial reporting, many clients wanted to invest in companies who were prioritizing environmental and socially responsible business practices. The problem was, it was nearly impossible to agree on what those words actually meant and how to determine whether or not a company met certain standards.
At best, ESG and social impact reporting can be a framework used to improve the lives of a company’s employees and customers and ensure their business operations are not harming the environment. At worst, it is corporate greenwashing at its most diabolical.
While I admit I am making assumptions and opinions based on my past experience with these types of reports, I am taking SHEIN’s social impact reporting with a very large grain of salt.
To be fair, I commend them for going through the effort to prepare these reports and deliver them to the public. Not every company does this. Also, they seem to be taking some steps to mitigate child labor in their supply chains, something I find highly commendable.
"The all-expenses-paid trip showcased their design innovation center, modern manufacturing facilities, and favorable working conditions. It was all fake."
Where I struggle is with the company’s highly controlled transparency. It reminds me of a failed positive publicity stunt they attempted in 2023, which was when they first came onto my radar. At the time, a damning documentary had come out exposing worker’s low wages, unsafe working conditions, and extremely long working hours. In response, the company brought in a select group of social media influencers to view their “brand operations” in-person and supposedly onsite. The all-expenses-paid trip showcased their design innovation center, modern manufacturing facilities, and favorable working conditions. It was all fake. Allegedly.
The trip had the opposite effect than the executives intended. While influencers returned with videos of airy and open facilities, their followers called out the obviously curated locations. The trip-goers claimed to see happy and relaxed workers throughout the tour, when the vast majority of seamstresses were not direct employees of the company but instead poorly paid independent contractors allegedly working 75-hour weeks to meet brand quotas.
When attempts to suppress information only serve to amplify it, it is called the Streisand effect, one of my favorite phenomena. The term originates from an incident in which a photographer documenting California’s coastline captured an image of Barbra Streisand’s home. Incensed, she sued to have the image removed. Before the lawsuit, the photo had been viewed only a few hundred times. Afterward, it had been seen by hundreds of thousands of people. She would have been better off remaining silent. The same ended up being true for SHEIN and their failed attempts to allay the fears of the public.
As this was my first introduction to the brand, you can understand how I would be skeptical of easily manipulated, internally created reporting.
There are also objective reasons to question their motives. Because the company releases 2,000 new styles daily (you read that statistic correctly) and employs thousands of suppliers throughout China, it is nearly impossible to independently audit each supplier to ensure they are not using exploitative practices. The company also does not release any specific data on their environmental impact or sustainability practices, other than a few “eco-conscious collections” released to distract detractors.
They also refuse to give a definitive statistic on what percentage of their clothing is made from synthetic fibers.
So, I did my own digging. Having never dipped a toe into SHEIN’s website (something I’m pretty proud of), I decided to throw a grenade on my search algorithm and check them out for myself.
First off, this website is exhausting. It is like they took the base code from the most addictive social media platform and then used it to sell clothing. The number of styles is overwhelming, which tracks given they supposedly release something like one million new styles per year (another statistic they do not clearly disclose).
"...79.9% of the sampled fabrics used are non-recyclable, non-biodegradable, petroleum-based, and ultra-low cost."
I clicked through twenty different styles of dresses, shirts, and bottoms, documenting the fabric composition of each item. I was surprised to find one item made from 100% cotton, but the good news stopped there. The remaining items were all composed of a majority of synthetic fibers, mainly polyester and elastane. After aggregating my findings, polyester made up 76.76% of the fabrics with elastane comprising an additional 3.14%, meaning 79.9% of the sampled fabrics used are non-recyclable, non-biodegradable, petroleum-based, and ultra-low cost.
While polyester and elastane are not environmentally friendly fabrics, they can be long-wearing and highly durable, which softens their negative impact on the environment. If you can buy a synthetic windbreaker that lasts for decades, the item’s longevity somewhat offsets the environmental cost. Because SHEIN creates ultra-low quality garments meant to be worn only a few times, the fact they are made from these unsustainable fibers means the vast majority of these pieces are ending up in landfills within a year of purchase.
"They are taking credit for the responsible actions of their customers....using moral proximity as an ESG strategy."
Now, SHEIN would like us to believe that because a majority (~70%) of their customers engage in circular fashion behaviors like using resale platforms and donating items to charities, it means their clothing is inherently more sustainable. However, around 85% of all clothing produced ends up in a landfill and billions of garments go unsold each year in the garment industry, another area where SHEIN’s reporting seems to be silent.
They are taking credit for the responsible actions of their customers, instead of performing responsible actions themselves. It’s sustainability inception. If they can make us believe their customers are all responsible, socially conscious people, then doesn’t that mean SHEIN is a responsible, socially conscious company? Apparently, the brand is using moral proximity as an ESG strategy.
Their approach is actually quite genius. No one likes to admit they are supporting a morally bankrupt company, so SHEIN gives customers just enough good feelings to assuage their guilt and ensure they keep spending money with a clear conscience.
But we cannot allow them to redefine sustainability by pointing to the actions of their customers. That would be like claiming to be a great artist simply because your child is one, and when asked for proof, pointing to your child’s work instead of your own. Proximity does not equal proof.
"Voting with our dollars is a great way to force change."
In a world where words are losing their meaning, we cannot allow the maker’s of the World’s Most Disposable Clothing to twist “sustainability” to support their chosen narrative. Sustainability does not begin after a company ships their product; it begins all the way upstream, at the moment a new style is conceived in the mind of a designer. If we don’t require companies to earn their laurels and instead borrow them from their customers, the responsibility and accountability permanently shifts to the customer and away from the producer.
It appears unlikely SHEIN will dramatically curb their overproduction any time soon, therefore we, as consumers, must demand better. Voting with our dollars is a great way to force change.
Until next time,
EM
