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Will Shein’s $10 Million CSR Fund ‘Backfire’?

Like Boohoo before it, Shein is working on overdrive to convince its critics that ultra-fast fashion can be ethical. Whether it’s successful, however, remains the billion-dollar question.

The Chinese e-tailer announced Tuesday the rollout of the Shein Cares Fund, a $10 million commitment, spanning multiple years, to support international nonprofits dedicated to “empowering entrepreneurs, supporting underserved communities, ensuring animal health and welfare and promoting recycling and the circular economy.”

The program’s inaugural recipient is Vital Voices, a Washington, D.C.-based organization whose mission to connect and mentor women leaders spans a range of issues, from gender-based violence to the climate crisis. Through a $500,000, two-year partnership, the Shein Cares Fund will “support fellowships and mentoring programs for many female change-makers across the world.”

“Women’s participation in every sector is more critical than ever and changemakers in Vital Voices’ network are charting a new course for women’s leadership,” Alyse Nelson, president and CEO of Vital Voices, said in a statement. “We are thrilled to partner with Shein as they invest in women with strong roots in community, bold ideas that bridge divides and a strong commitment to paying it forward.”

The fund is an extension of Shein Cares, the Amazon-ousting app’s philanthropic arm, which has doled out more than $1 million in monetary and product donations to global organizations aligned with its goal of “empowering entrepreneurs, helping communities thrive and protecting the environment.”

“Empowering individuals and giving back to those in need has been part of our company DNA since day one,” said Molly Miao, chief marketing officer at TikTok’s buzziest brand. “Organizations like Vital Voices are critical given the challenges of inequity globally, and the reinforcement of barriers to economic development. In addition to our partners at Vital Voices, we hope the Shein Cares Fund will further support many organizations around the world who are on the front lines of tackling tough challenges.”

Shein might be in for a tough challenge of its own if it’s hoping to win over its detractors. While the Gen-Z fave delivered an estimated $10 billion in revenue in 2020, a 250 percent year-over-year growth, according to Coresight Research, its financial success is largely due to a business model that its naysayers insist promotes overconsumption, waste and dire labor conditions.

“It looks like Shein is trying to make us believe charity is the same as business responsibility,” David Hachfeld, textiles expert at Public Eye, told Sourcing Journal. “There is nothing wrong with charity supporting a good cause, but if it is used as a fig leaf to protect an exploitative business model against criticism, it will certainly backfire.”

An investigation by the Swiss watchdog group, published last month, revealed that Shein uses factories that have barred windows, blocked stairways and no emergency exits. Public Eye also found that some workers were toiling for 75 hours per week, with only a day off each month, in contravention of not only Shein’s own code of conduct, which stipulates “reasonable” working hours, but also Chinese labor laws.

“People have developed a good sense for smelling greenwashing, and Shein makes billions on the back of workers and the planet,” Hachfeld said. “First and foremost, Shein should work on an overhaul of its business model, especially of its buying practices, and break-up with the throwaway consumption patterns it is fostering.”

Shein churns out roughly 6,000 new styles of clothing and shoes a day–averaging at $7.90 apiece—and features more than 600,000 products on its website at any one time. While its goods are manufactured in China, Shein sells only to markets outside the country. It ships its orders directly from the mainland, flying low-value packages to destinations across the United States, Australia, Europe and the Middle East, sparing it from the import duties most major retailers incur when dispatching goods via container to their distribution centers. But this also makes Shein a super-polluter, a Sun on Sunday investigation claimed last week.

Shein, the outlet said, uses a “neverending conveyor belt of cargo jets to transport clothes as the orders come in.” Each 5,000-mile flight from China to London generates 175 metric tons of carbon emissions, the equivalent of driving a car more than 560,000 miles. The e-tailer told the Sun on Sunday that it is “assessing the carbon footprint of our manufacturing base and will be working with our supply chain partners to set and achieve greenhouse-gas reduction goals.”

One person who will have his job cut out for him is Adam Whinston, a former Disney, JCPenney and SGS executive, that Shein hired last month as its global head of environmental, social and governance, or ESG. Whinston’s appointment suggests that the e-tailer is eager to dispel its bad press, which has included a slating of its lack of in-depth supply-chain disclosures and the recent recall of a toddler jacket by Health Canada over high levels of lead. Shein has also been accused of ripping off designs from major and indie labels alike, as well as employing so-called “dark patterns” to goad or otherwise deceive shoppers to spend more.

Neil Saunders, managing director of retail at GlobalData, a data analytics company, described Shein’s move as “somewhat cosmetic,” if superficially reassuring for consumers.

“Shein has come under a lot of fire for its fast-fashion model and an alleged lack of concern about the environment,” he told Sourcing Journal. ”As such, it is not surprising that it is taking steps to improve its image via a CSR fund and the appointment of an ESG chief. That said, while this will have a positive impact it has to be asked whether this is something of a veneer or a true commitment by Shein to change its ways. One thing it might do is make its shoppers feel better about using it even if it is somewhat cosmetic.”

This sentiment was shared by Ayesha Barenblat, founder and CEO of fashion advocacy group Remake, whose latest accountability report gave Shein 5 out of a possible 150 points for its lack of transparency and dearth of environmental or labor commitments.

”Neither a $10 million CSR fund nor the hiring of an ESG chief who incidentally has a long history of working for companies that are not serious about ethics or sustainability will make Shein a ‘sustainable’ company,” Barenblat told Sourcing Journal. “If Shein is serious about a remake, they must address their score in our 2021 accountability report and revamp their business model to pay living wages and produce less and better. Everything else is simply greenwashing.”

All of this underscores what Hachfeld characterizes as a “regulatory deficit” in the broader fashion industry.

“We cannot and should not rely on companies’ announcements and goodwill,” he said. “We need laws ensuring that all companies are transparent about their supply chains and operations, communicate on risks and measures, and mainstream human-rights and environmental due diligence in their business strategies.”

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