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Conversation around Shein's Attempts to IPO & its Circularity Fund
Induja from Trace
August 08, 2024
Happy Thursday!
We’re excited to kick off our newsletter this week with a discussion on what’s going on in the industry. In conversation this week we’ll dive into some of the conversation over the last few months surrounding Shein publicly, regarding its attempts to IPO and recent announcements of a circularity fund.
We want to dive deeper into past controversies surrounding greenwashing by exploring a case study of a well known scoring system within the fashion industry. We’ll also close out with a spotlight on one of our brand partners and highlight more innovative companies in the sustainable fashion space.
Thanks for reading!
Headlines
Earlier this year, it was revealed that Shein is looking to IPO on the London Stock Exchange this year, which has driven much online conversation in the last few months regarding the larger implications if this goes through.
"Say No to Shein" an online campaign was launched in July, calling on the government to block the fast-fashion retailer's listing. The petition calls for an investigation into Shein's labor practices, environmental impact and questionable tax practices, before it can be listed on the London Stock Exchange.
In July, Shein announced it was starting a $216 Million circularity fund, likely to get ahead of the conversation surrounding them while attempting to secure approval for an IPO. While the fund claims to invest in startups and businesses that are advancing the development of circularity, Shein is ultimately still not addressing the core issues of their business: unsustainable materials, their impact on overconsumption culture, and their labor practices. Ultimately, this fund is a small initiative on the company’s part, and does not appear to be an earnest effort to correct genuine issues in the fast fashion industry.
Some politicians argue that debuting as a public company will encourage Shein to consider public opinion, and be easier for politicians to regulate, but ultimately public companies are primarily beholden to shareholders, which usually emphasizes profit.
The online petition has gathered over 42K signatures as of today, and aims to hit 45K signatures. You can check out the petition here.
Analysis of the Week
This week let’s revisit a well-known instance of greenwashing within the fashion industry and talk about the Higg Index. The Higg Index, a sustainability measurement tool created by the Sustainable Apparel Coalition (SAC), faced controversy in 2022 due to concerns over its methodology, transparency, and potential biases. Let’s review some of the key issues that came with it.
Issue | Detail |
Fabric Ratings | Many critics argued that the Index rated synthetic fibers very highly such as polyester and nylon despite the overall negative impact of synthetic fabrics |
Data Issues | The rating system was developed in 2011, and although takes many factors into consideration, did not have a good or consistent base of data to pull from which affected the ratings |
Industry Bias | Many large companies were involved in the formation of the SAC behind the index, making it likely they have influenced the index’s rating system to more positively favor their products |
Transparency | The index is not very transparent about how different factors are weighted into its scoring system, meaning its difficult to understand how they’ve determined the sustainability of different material |
After this criticism, the index suspended its consumer-facing reports and since 2023, the SAC has revamped the index and the organization has revamped itself as Cascale. Higg Co., the platform that hosted the Higg Index which spun off from the SAC in 2019, also rebranded as Wordly and said it would become a software platform for the Higg Index.
Despite this rebrand, the index has not fully shaken it’s issues and reputation. It did spur a larger and interesting conversation about how we evaluate the sustainability of products and draw attention to the issues of being able to properly assess various metrics and avoid greenwashing within the industry.
Brand Spotlight
Learn about one of the sustainable brands on Trace’s marketplace!
Check out today’s featured brand: Julkee Fashion
Julie Patel was driven by a mission to redefine fashion through global sustainability and the transformative power of upcycling. Julkee Fashion creates new innovative outfits through repurposing old saris, a traditional garment popular in South Asia.
The core of Julkee fashion lies in preserving the environment, celebrating cultural heritage, and empowering individuals to make conscious fashion choices. Julkee fashion collaborates with skilled artisans, ensuring their craftsmanship is respected, their livelihoods are supported, and their cultural heritage is honored.
Innovation in Fashion
Vivobarefoot - circular and sustainable footwear that is all designed to be recyclable, compostable or biodegradable
Balena - material science company, developing advanced, compostable, recyclable, and bio-based thermoplastic materials
E.L.V. Denim - British luxury brand that crafts pieces from 100% upcycled materials
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