Shein will be dedicating $50 million over the next five years to an extended producer responsibility (EPR) fund that benefits communities impacted by textile waste.
The fund is part of a multi-year agreement with The Or Foundation, a Ghana-based environmental-justice group that tackles the issue of clothing waste in the developing world. Liz Ricketts, its co-founder and director, announced the partnership during a panel at the Global Fashion Summit in Copenhagen on Tuesday.
“While this is not a substitute for real EPR, Shein is acknowledging that their waste may be ending up in Kantamanto,” she said. “This is where they don’t want it to end up, and they decided to trust the people who have been dealing with the problem for decades.’
Ricketts was referring to Accra’s secondhand clothing market, West Africa’s largest, where roughly 40 percent of imported clothing winds up as garbage. Sometimes this is unloaded on dump sites, other times burned on open fires. For the most part, however, the castoffs are left to rot in the environment, where they can clog up waterways, promoting flooding and exacerbating the spread of diseases like cholera and malaria.
“I would like to extend an invitation to other brands to just be honest,” she added. “Shein is the first brand we’ve talked to that has admitted that their clothes may be ending up in Kantamanto. Honesty is the best policy and if you can start there, you can have a conversation about how to clean this up.”
As the initial grant recipient, The Or Foundation will receive $5 million for three years. The organization said it will be using the money to expand its Mabilgu Apprenticeship Program for young women who carry bales of secondhand clothing on their heads, often to the detriment of their bodies. It will go toward incubating community businesses turning used textiles into new products and piloting fiber-to-fiber initiatives with Ghanaian manufacturers. The Or Foundation will also funnel a portion of the initial funds to allied organizations in Ghana, as well as work with Shein to identify additional grant recipients in other countries bearing the brunt of throwaway fashion.
“Shein has set an ambitious impact agenda, and we are thrilled to be partnering with The Or Foundation, the initial recipient of Shein’s trailblazing fund, for the next step in our journey,” Adam Whinston, the fast-fashion e-tailer’s head of ESG, said in a statement. “Addressing secondhand waste is an important part of the fashion ecosystem that is often overlooked. We have an opportunity to make change in this space and we look forward to working with The Or Foundation on this first-of-its-kind effort.”
While Shein and The Or Foundation referred to the agreement as a turning point, others, like George-Harding Rolls, were skeptical.
“Shein recently received a $100-billion dollar private market valuation,” the Changing Markets Foundation campaign manager told Sourcing Journal. “This contribution to addressing the waste crisis in Kantamanto is just a drop in the ocean of the company’s profits.”
Harding-Rolls said that the money will make a big difference to the Kantamanto community, but he also warned of potential greenwashing.
“They are still an ultra-fast-fashion company that churns out thousands of new products a day and is heavily reliant on fossil-fuel based fibers like polyester,” he said of Shein. “Support for Kantamanto should not excuse them from scrutiny on overproduction, extractivism and waste. We must also push for policy instruments, such as EPR, that ensure reparations for those managing exported textile waste so that this action is mandatory rather than voluntary.”
At another panel, Bobby Kolade, creative director of Ugandan label Buzigahill, complained of a “clothing dictatorship” from the West that is throttling local talent. Designers like him, he said, are simply unable to compete with the flood of secondhand garments, nearly half of which is not in any condition to be resold.
“It’s 2022, Africa is no longer a charity box. The clothes you wear, if you don’t want them, you have your own rubbish systems,” he said. “You need to understand this is a big business but it’s not reaching us. Nobody wants white people’s yellowed T-shirts.”
Shein’s ESG head speaks on ‘variety’ versus ‘volume’
The news comes just days after Whinston addressed “misunderstandings” and “criticism” around the fast-fashion etailer’s business model during Sourcing Journal’s Sustainability Summit last week.
Instead of signing off on massive manufacturing runs up front, Shein’s “unique” approach focuses on gauging customer response to “ultra-small batches” of 50 to 100 pieces, only following up with bigger volumes when shoppers dictate demand, according to Whinston. That “test-and-learn” mantra leaves Shein with little of the overproduction and attendant waste that’s rampant in the sector, especially in fast fashion.
Shein, the former Walt Disney exec continued, is focused on “variety” instead of “volume.” The Chinese giant also eschews the typical “merchants and business planners that try to predict demand,” relying instead on a steady stream of customer data to inform where to pivot or pull back, Whinston added. He pegs Shein’s sell-through rate at 98 percent, and believes broader industry adoption of its model would drive a 20 percent reduction in “system waste.”
“We’re happy to share the concepts that make us successful,” he said.
The sustainability exec also took issue with claims that consumers view Shein’s products as cheap and disposable. Less than 4 percent of orders come from people ordering a SKU in multiple sizes with plans to send back whatever doesn’t fit, Whinston said, citing internal data that also puts the company’s return rate at 7 percent in contrast to the industry’s 30-40-percent average. What’s more, a Shein survey found that just 1 in 100 customers wears their brand purchase a single time, he pointed out. Even though that 1 percent is still “too much,” Whinston said accusations around one-and-done wearing just don’t jibe with Shein’s intel.
In fact, according to the executive, the company’s 15,000-customer, 14-country survey just a few months ago uncovered its audience’s sustainability-leaning behavior, including donating their Shein products to secondhand stores (one-third) or selling them on peer-to-peer resale sites (16 percent).
“We’re looking forward to working on programs that will increase the longevity, the circulation, the number of times that people are using the product,” Whinston said, admitting that those secondhand numbers are “good, but not as good as they could be.”
Shein’s Gen-Z-heavy 18-to-25-year-old target customers wants “trendy, affordable” fashion but they’re just as interested in sustainable fibers and packaging, said Whinston, adding, “we have more work to do in the space.”
The company says it’s investing in sustainable fibers in response to customer interest. It’s also growing the “purpose-driven” EvoluShein line to 1,500 SKU by year’s end and committing to sourcing only CanopyStyle “green shirt” viscose that doesn’t damage ancient and endangered forests by 2025, Whinston said.
Shein, which the ESG leader describes as a “late-stage startup,” is looking into onshoring and nearshoring where it makes sense, which would also curb its carbon footprint. Though critics slam the company for its outsize reliance on carbon-belching air freight (and exploitation of the de minimis loophole), Whinston pointed out that it just opened an Indiana warehouse to store heavier, ocean-freighted product like winter coats and denim in a bid to reduce fuel consumption.
The next step on Shein’s road to 2030 will be publicly sharing net zero and other sustainability goals “soon,” Whinston said.
“They will be aggressive. And they will be goals that will be difficult to achieve,” he added. “But they will be goals that will be realistic, also.”