The London Stock Exchange (LSE) faces pressure to clarify its vetting procedures for firms after fast-fashion giant Shein refused to answer key questions regarding its supply chain practices. Shein, which has filed initial paperwork for a UK listing that could value the company at £50 billion, stands accused of utilizing forced labor, particularly cotton sourced from China’s Xinjiang region. These allegations have sparked significant concerns among UK Members of Parliament (MPs) and prompted calls for greater transparency.
During a recent appearance before the Commons’ Business and Trade Committee, Shein’s lawyer, Yinan Zhu, repeatedly declined to confirm whether the company sold products containing Xinjiang cotton. This refusal led MPs to describe the evidence as “ridiculous” and accuse Zhu of “wilful ignorance” regarding Shein’s supply chain and its potential UK listing. The controversy over forced labor claims is not new. China has faced accusations of imposing forced labor on Uighurs, a mainly Muslim ethnic minority in Xinjiang, prompting several major fashion brands, including H&M, Nike, Burberry, and Adidas, to cease using Xinjiang cotton.
Shein Denies Involvement in Forced Labor
Shein has denied any involvement in using forced labor but has failed to provide satisfactory responses during the committee hearing. The company operates through a vast network of suppliers primarily based in China, with additional suppliers in Turkey and Brazil. Notably, Shein does not own any manufacturing facilities, relying instead on third-party suppliers.
The Business and Trade Committee, concerned by Shein’s lack of transparency, has taken action by writing to LSE chief executive Dame Julia Hoggett. They requested clarification on the stock market’s procedures for authenticating company statements, especially concerning safeguards against forced labor.
“The committee was profoundly concerned at the lack of candid and open answers to some extremely simple, basic questions about the integrity of Shein’s supply chain.” – Liam Byrne
In addition to addressing the LSE, the committee reached out to Nikhil Rathi, head of the Financial Conduct Authority (FCA), inquiring about the checks the watchdog enforces to ensure UK-listed companies disclose any “legal risks.” These steps underscore the MPs’ determination to uphold ethical standards and protect consumer interests.
Research conducted in December 2020 illuminated the scale of forced labor in Xinjiang, revealing that up to half a million individuals were compelled to pick cotton there. Such findings have intensified scrutiny of companies like Shein that potentially benefit from these practices.
“In the light of this I would be grateful if you would let me know what checks, if any, the London Stock Exchange has in place to authenticate statements by firms seeking to list, with particular regard to their safeguards against the use of forced labour in their products.” – Liam Byrne
The committee’s actions reflect broader concerns about corporate responsibility and ethical sourcing in the fashion industry. As Shein moves forward with its UK listing plans, it faces mounting pressure to address these allegations transparently.
“The committee would like to draw your attention to the concerning evidence we heard,” – Liam Byrne
What The Author Thinks
The scrutiny of Shein’s supply chain practices ahead of its UK listing is a critical moment for ensuring corporate accountability in the fashion industry. While Shein denies involvement in forced labor, the company’s refusal to answer key questions about its sourcing practices raises serious concerns about transparency and ethics. As MPs continue to push for greater clarity, it’s essential that the LSE and other regulatory bodies uphold stringent standards for companies seeking to list in the UK, particularly on issues of human rights and forced labor. This issue could set an important precedent for future corporate listings and reinforce the importance of ethical sourcing in global supply chains.
Featured image credit: Dick Thomas Johnson via Flickr
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