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Boohoo, Shein Scramble to Save Face on Supply-Chain Shortcomings

Is ultra-fast fashion due for a reckoning?

Pure-play upstarts like Boohoo and Shein, whose agile if obstinately opaque supply chains pump out cut-price clothing at rates that make H&M and Zara look positively sluggish, are certainly facing more intense scrutiny as their market shares mushroom.

Some are even in danger of running afoul of the law.

For one, Shein, the rapidly growing Chinese retailer that vaulted to the top of several e-commerce leaderboards seemingly out of nowhere, has failed to make public disclosures about working conditions along its supply chain as legally required by the United Kingdom, Reuters said Friday.

Shein’s sudden and stunning success—it reportedly raked in nearly $10 billion in 2020 alone—has hoisted the ultra-fast-fashion purveyor onto the regulatory radar. Britain’s Modern Slavery Law requires businesses with annual global turnovers of 36 million pounds ($49.9 million) or more to prominently list on their websites the steps they are taking to fight forced labor in their supply chains.

While Shein’s “social responsibility” page avers that it “never, ever” engages in child or forced labor, it does not provide the full depth of disclosure required by British law.

A spokesperson for the firm told Reuters that it is in the process of “developing comprehensive policies,” in accordance with U.K. regulations, that it will post on its website in the “next couple of weeks.”

While Shein’s website does provide a disclosure required by the California Transparency in Supply Chains Act of 2010, the statements shy away from any specifics.

The company says it “regularly evaluate[s] and address[es} human trafficking and slavery risks in product supply chains through in-house inspectors who are tasked with investigating internal or third-party reports of this nature” and it maintains “internal accountability standards and procedures for employees and contractors who fail to meet company standards regarding slavery and human trafficking.”

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According to a recent assessment by labor-rights group Remake, Shein offers no transparency regarding its suppliers or audit benchmarks. Neither does it provide ​​third-party evidence to support any of the claims it makes regarding factory conditions and worker welfare, the organization said, adding, “If Shein is truly proud of the conditions surrounding its supply chain, why isn’t the brand forthcoming about providing this information?”

In fact, up until recently, Shein falsely stated on its website that conditions in the factories it uses were “certified” by the International Organization for Standardization (ISO) and “proudly in compliance with strict fair labor standards set by international organizations like SA8000,” Reuters said.

ISO only establishes standards, meaning a company “cannot be either accredited or certified by ISO,” a spokesperson told the outlet. Social Accountability International, which administers the SA8000 standard, said that Shein had not been certified through its program and that it had not engaged with the company. Shein removed its claims after Reuters inquired about them.

Boohoo, still smarting from recent allegations that its crackdown on worker exploitation in the English city of Leicester has only driven factory bosses to more “creatively” hide poverty-pay offenses, is also scrambling to paper over any peccadillos, whether real or perceived.

Its latest parlay attempt: an opportunity for customers to peek behind the curtain at some of its suppliers’ factories.

A select group of “interested customers,” it said Friday, could snag an “all-access” day in Leicester next month to “see the supply chain from start to finish.”

“I’d like to personally extend the invitation to our customers to be a part of this opportunity to come meet our makers firsthand,” CEO John Lyttle said in a statement, which said consumers should email and spell out why they want to join the tour.

Boohoo, which also owns PrettyLittleThing and Nasty Gal, among others, has fielded both kudos and brickbats for its so-called Agenda for Change, a program that it launched last year to overhaul its operations following reports of wage violations and poor working conditions that a third-party audit investigation later backed up. A summary of the program is provided in Boohoo’s modern-slavery statement, which it updated in February in accordance with U.K. law. (It clocked a pre-tax profit of 125 million pounds, or $173.1 million, in the past fiscal year.)

But labor-rights campaigners say Agenda for Change is “simply providing a veneer of progress without corresponding improvements for workers,” since Boohoo hasn’t discussed engaging with trade unions or ring-fencing labor costs to ensure that prices negotiated with suppliers offset the “reasonable cost” of production.

“Without confirmation from Boohoo that the price paid to suppliers has changed to ensure workers are paid at least minimum wage and all expected benefits—such as national insurance contribution, holiday pay, pension auto-enrolment and statutory sick and maternity pay—the conditions for labor-rights abuses that have persisted for the past decade will continue unabated,” Martin Buttle, head of good work at ShareAction, a nonprofit that promotes responsible investment, said in June.

Lyttle said, however, that Boohoo is proud of the work it has done in the United Kingdom and wants to “showcase” these efforts.

“We are committed to transparency and this initiative is another demonstration of this,” he said. “Customers can be confident in our operations and the way in which we are working with suppliers to drive positive change, as we help rebuild a vibrant manufacturing base in Leicester that offers good employment and great prospects for the city and its workers.”