Shein Uncovers Child Labor Violations amid Supply Chain Overhaul

The company reported a significant increase in supplier audits, rising from 664 in 2021 to 3,990 in 2023

Shein, the fast fashion company, revealed in its 2023 sustainability report that two instances of child labor in its supply chain. The company, which is preparing for a potential IPO, revealed that it had detected the violations during enhanced audits of its Chinese suppliers. Shein swiftly addressed the issues, suspending orders from the implicated suppliers until they implemented stricter worker verification processes.

In October 2023, Shein revised their supplier policy in response to the incidences. The new guidelines dictate that any severe breaches, termed "Immediate Termination Violations," will result in the immediate severance of ties with the offending supplier. Suppliers formerly had 30 days to make remedies for these violations. Shein's intensified focus on supply chain governance is part of its broader efforts to address criticism of its low-cost business model and environmental impact. The company reported a significant increase in supplier audits, rising from 664 in 2021 to 3,990 in 2023, with 92% conducted by third-party agencies. In addition to tightening supplier oversight, Shein is working to reduce its carbon footprint, particularly its transport emissions, which more than doubled in 2023. The company has begun sourcing products from suppliers in Turkey and Brazil to minimize air freight reliance.

As Shein moves closer to a public offering, its efforts to enhance transparency and accountability are likely to be closely scrutinized by potential investors.