Shein faces OECD censure over human rights wages and environment

Shein, the Chinese fast-fashion giant, has come under renewed scrutiny after the Organisation for Economic Co-operation and Development criticised the company for failing to meet its international guidelines on corporate social responsibility. The Paris-based authority outlined that Shein does not comply with several key standards relating to workers’ rights, sustainable wages, and environmental impact.

The OECD’s National Contact Point in France initiated an inquiry into Shein’s business practices following a formal referral from several French Socialist MPs in 2023. Its findings were damning, accusing Shein of ignoring France’s Anti-Waste Law for a Circular Economy, known as AGEC. This legislation requires companies to disclose the percentage of recycled materials used in products and to make transparent the origins and manufacturing journey of goods, including where weaving, dyeing, and assembly are performed.

The report found that Shein masks its supply chain practices behind Chinese legislation, thereby sidestepping more rigorous international standards expected of multinational companies. The company has not published its audit findings for factory conditions, nor has it offered a supply chain map or comprehensive analysis of its social and environmental footprint, aside from some limited greenhouse gas reporting. The OECD has recommended that Shein publish full details of its financial performance, capital structure, ownership, and governance in line with best practice for responsible business conduct.

Globally, 52 nations adhere to OECD guidelines for multinational enterprises, pressuring companies like Shein to uphold higher standards. Investor interest in Shein remains robust, with the business last valued at approximately £50 billion, although it has faced difficulties securing regulatory approval for planned stock market listings outside China. A London listing remains on ice following UK regulatory concerns about labour conditions and the possible use of Xinjiang cotton, alongside disputes with Chinese authorities about risk disclosures. The company is now looking to Hong Kong as a possible venue for its first major listing.

Shein’s operational growth in the UK has been significant, with turnover for its British subsidiary rising over 32 percent to £2.05 billion in the last reported year. Pre-tax profits also saw a notable increase, accompanied by high street ventures such as a pop-up in Liverpool and a festive-themed bus tour. The company attributes its expansion to its direct-to-consumer model, shipping low-value parcels from Chinese factories to customers worldwide, often exploiting duty-free thresholds in many markets including the UK.

Shifting regulatory environments pose fresh risks to Shein’s international ambitions. The United States, its largest market, has abolished the tax exemption which enabled packages under $800 to enter duty-free. As governments tighten the regulatory net and public pressure grows regarding sustainability and workers’ rights, Shein faces a critical test of its ability to adapt and operate on a truly global scale.