Shein’s ultra-fast fashion is causing controversy but is growing at an unprecedented rate: in three years, it has gone from 3 to 30 billion GMV. The Swedes at H&M try to improve their sustainable reputation but suffer two lawsuits for greenwashing while their turnover nevertheless grows. The more they sue, in short, the more they sell. Why?
2022 was the year when many, including at the institutional level, began to take greenwashing a little more seriously. But it was also the year of Shein’s boom. And not only that. So, while sensitivity towards sustainability seems to be growing (at least that’s what reports and polls tell us), the race of certain fast fashion brands continues. Of the series: they charge, but they sell. A paradox? Perhaps yes, perhaps no. Certainly, something.
They accuse them, but they sell
For Bank of America, Shein, a Guangzhou-based ultrafast fashion company with 45 million online customers, will reach a gross merchandise value of EUR 28.4 billion by the end of the year. Thus, it will become number one in the market in record time. Shein, in fact, took three years to go from $3 billion to $30 billion GMV (Gross Merchandise Value), a progression that Inditex, Zara’s parent company, made in 20 years. Not only that. The website money.co.uk found that Shein is the most searched fashion brand globally: it tops searches in 113 countries. Results stand in stark contrast to the continuing heavy accusations about its operations.
The first comes from Bloomberg. Shein uses cotton from Xinjiang for garments exported to the United States. But so far, it has always managed to evade official controls. How? His individual shipments to customers are below the threshold ($800) that triggers checks and possible reporting to US Customs and Border Protection. The second is from Greenpeace, which published an investigation according to which 15% of the garments analysed register quantities of harmful chemicals above the limits allowed in Europe. The third comes from the British television network Channel 4, which aired a documentary entitled ‘Untold: Inside the Shein Machine‘.
In practice, workers in the factories in Guangzhou, Shein’s subcontractors, are allegedly underpaid (4 cents for each garment produced), with deductions for mistakes made during shifts of 18 hours a day, seven days a week, with only one day off per month. After this documentary, the Rolling Stones requested to terminate the merchandising agreement with Shein signed seven days earlier.
Shein stated that it would invest $15 million for ‘physical improvements’ in its suppliers’ factories over the next three to four years. According to experts, this is a good start, but more is needed to correct the imbalance inherent in its business model. In fact, the company is passing the buck to its suppliers instead of taking it directly by virtue of decisions made internally. But, as the sales show, those who try to spend as little as possible on clothes don’t give a damn: they only look at the price and the aesthetics of the garment.
The lawsuits against H&M
H&M faces two greenwashing lawsuits in the USA. Both with the same motivation: higher prices for products labelled ‘green’, but in a misleading way. The Swedish giant is trying to improve its sustainable image. In a short time, in fact, it has entered into a partnership with a wool supplier to implement a project to restore biodiversity and start regenerative land management.
Then, it signed a maxi-agreement for the purchase of renewable energy. Paradoxically, however, one of the two lawsuits he has to deal with concerns Conscious Collection, his (allegedly) sustainable showcase, now accused of greenwashing. Also hanging over H&M are budgetary problems that reflect on social responsibility. It has to reduce its operating costs by $190 million a year, and, to do so, it will cut about 1,500 jobs, closing 2022 with 89 new shops opened, but 254 closed, not counting those in Russia, Belarus, and Ukraine.
In the end, his stance against Xinjiang cotton has put Swedes in a bad light in the Chinese market, losing sales volumes and revenue, which did not prevent him from closing 2022 at EUR 20.5 billion, 6% more than the previous year. In short, many belly ache, but, thanks also to inflation, a balance sheet that many cannot even dream of. Moral: they will continue to charge, and they will continue to sell.
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