Shein's London IPO on the line as it fails to address forced labour concerns8 Jan 2025 13:29
MPs ‘horrified’ by lack of evidence.
Yinan Zhu, general counsel for EMEA at Shein, was criticised for avoiding questions regarding concerns over forced labour practices. Shein’s hopes to float on the London Stock Exchange faced a roadblock on Tuesday (7 January) after MPs criticised the retail giant for failing to disclose the origin of its cotton sourcing.
At a Business and Trade Select Committee hearing, Yinan Zhu, general counsel for EMEA at Shein, was criticised for avoiding questions regarding concerns over forced labour practices in its supply chain and failing to address the origins of its cotton sourcing.
Committee chair Liam Byrne said that although the evidence session had been "helpful", MPs were left "pretty horrified" by the lack of evidence provided by the Shein representatives to quell any concerns over forced labour practices. Byrne added that, for a company that sells around £1bn of products to UK consumers and is trying to float on the London Stock Exchange, "you have given us almost zero confidence in the integrity of your supply chain". The chair continued by noting that the Shein representatives could not even tell the committee "where your products are made from" nor about the "conditions which workers have to work in, and the reluctance to answer basic questions is frankly bordered on contempt of the committee", he argued.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, and Danni Hewson, head of financial analysis at AJ Bell, both agreed that Tuesday's session has created additional hurdles for Shein's listing process, which is currently pending approval from the Financial Conduct Authority. Hewson highlighted that Shein's London IPO had been polarising among investors from day one, as on the one side it would give markets "a huge boost", while on the other, accusations regarding the retailer's suppliers and practices meant many will feel "more than a little uncomfortable" about its listing. "Shein has been on something of a charm offensive, but the [outcome of the evidence session] in front of MPs suggests it will need to work harder if it is to deliver credible answers to difficult questions," she added. Streeter echoed Hewson, arguing that there will likely be "further holdups" following the committee hearing. She continued: "Fast fashion has increasingly become an ESG risk for investors and one the regulator will be alert to, particularly given how the committee hearing has gone. "The sector raises serious about the sustainability of low-cost materials, the environmental impact of production and the human rights of the labour force behind the low price tags." The committee asked the Shein representatives to "bring some clarity" to the issue of supply chains and product sourcing "as quickly as possible" via correspondence.
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