Retail Shopping portal Shein invests 250 million in sustainability

The controversial Asian online retailer Shein wants to invest 250 million euros in a "sustainable fashion industry" in the European Union and the UK over the next five years.

According to the Singapore-based company, the "heart of the investment program" is a "circularity fund", for which Shein is providing seed capital of 200 million euros.

The fund builds on the fashion retailer's existing initiatives to promote research and development as well as innovation in the circular economy in the fashion industry. "This will support start-ups and companies in Europe that are developing the technologies and solutions of tomorrow."

According to the Group, a further 50 million euros will be used to support brands, designers and artisans. It is intended to help them expand their online businesses via the "Shein Marketplace" services. In addition, the aim is to explore whether and how Shein production facilities can be set up in the EU or the UK.

Criticism of "fast fashion"

In the past, the shopping portal made a name for itself primarily as a provider of "fast fashion" - in other words, as a provider of clothing that is produced cheaply, particularly in China, and is usually replaced by consumers after a short time. Shein has a strong presence on social media platforms such as Instagram, Tiktok and YouTube and is able to quickly adapt production to demand in order to minimize the number of unsold garments.

Critics question the sustainability of this business model. At the end of April, the Federation of German Consumer Organizations (VZBV) accused the online retailer of using manipulative designs on its website to pressure users into making purchases. The consumer advocates also criticized complicated complaint channels and hidden contact options. Shein thus violated the Digital Services Act (DSA) on several occasions.

Violation of EU law?

The European Union's DSA obliges online platforms throughout the EU to provide more consumer protection and transparency. Design tricks are prohibited. At the end of June, the European Commission demanded more information on this matter from online retailers Temu and Shein.

Shein did not respond to the criticism in its investment announcement. The multi-million euro funding includes investments in start-ups that deal with innovations in the field of textile-to-textile recycling and similar topics, the group explained. The funding also includes the conclusion of purchase agreements or other commercial partnerships with established start-ups that already have production capacities for recycled textiles or new and more environmentally friendly fibers.

SDA