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Shein launches €200m fund to combat fashion waste, plans London IPO

Shein launches €200m fund to combat fashion waste, plans London IPO

Shein, the fast-fashion online giant preparing to list in London, is launching a €200 million “circular fund” to tackle fashion waste. Executive chairman Donald Tang announced that the China-founded company intends to inject the funds into start-ups and established businesses in the UK and Europe “as quickly as possible”. Tang highlighted Shein’s financial resources and scale, highlighting its potential role in pioneering new technologies and processes for sustainable development.

The investment is a small part of Shein’s projected $2 billion in profits for 2023. The e-commerce group, which has boomed during the pandemic and is closing in on rivals like Zara and H&M, was valued at $66 billion in its latest funding round. Potential investments could include early-stage companies specializing in recycled materials or partnerships with mature companies using innovative fabrics.

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The fund’s launch coincides with Shein’s ambitions to list its shares on the London Stock Exchange. The company scrapped earlier plans for a New York IPO amid U.S.-China tensions and accusations of forced labor in China’s Xinjiang region, Shein said, denying that it has a “zero tolerance policy for forced labor.” Although headquartered in Singapore, Shein keeps most of its operations and supply chain in China. The company is also considering a Hong Kong listing as a backup plan.

Tang refrained from commenting on the listing process, which requires approval from China’s securities regulator. Asked whether the fund was a response to criticism of the supply chain, Tang described it as part of an ongoing sustainability journey.

Fast fashion brands like Shein have faced criticism from activists concerned about the environmental impact of cheap, low-quality fashion, which quickly ends up in landfills. More than half of all fast fashion is thrown away in a year, according to the Ellen MacArthur Foundation. Shein says its on-demand model results in less inventory than traditional retailers.

Tang argued that solving fashion waste requires a collective effort that goes beyond financial investment. He called on competitors, wealth funds, investors, policymakers, nonprofits and academics to join the circularity initiative.

Shein recently filed confidential documents with the UK’s securities regulator, moving closer to what could be a major listing on the London stock market. The company met with new Business Secretary Jonathan Reynolds ahead of Labour’s landslide election victory. Labour has indicated that London should back Shein’s listing to enforce tougher regulatory standards.

In addition to the circularity fund, Shein announced a further €50m investment in UK and EU brands, designers and artisans, suggesting potential investments in R&D or a pilot factory in Europe or the UK. In 2022, Shein launched a US resale platform, currently available in the UK and Europe, offering over 115,000 pre-owned items.