Global e-commerce platform Shein has recently been the talk of the town, and not for its well-known fashion products. The Chinese company focusses its retail operations mainly on the Australian, European, American as well as the Middle Eastern market. Further consumer markets throughout the world also add on to the customer base. The product focus ranges between women’s clothing, children’s wear, men’s apparel, accessories, cosmetics, shoes, etc.
A not-so-fine day for doing business
Italy’s competition authority (AGCM) imposed a 1-million-euro ($1.16 million) fine on China-founded online fast fashion retailer Shein on Monday for misleading customers about the environmental impact of its products. The greenwashing fine, or greenwashing in itself, is considered a form of marketing or advertising that falsely uses green marketing and PR to persuade potential consumers that an organization’s products, and all other related matters are environmentally friendly.
It is Shein’s second financial sanction by a European competition authority in little more than a month, after France fined the company 40 million euros on July 3 over fake discounts and misleading environmental claims. The Italian fine was imposed on Infinite Styles Services Co. Limited, a Dublin-based company that operates Shein’s website in Europe, following anย investigation by AGCM launched last September. In a statement, Shein said it has cooperated fully with AGCM and took immediate action to address the concerns raised.
A misleading take on the story
AGCM said the environmental sustainability and social responsibility messages on Shein’s website “were sometimes vague, generic, and/or overly emphatic, and in other cases omitted and misleading. Shein’s claims on circular system design and product recyclability “were found to be false or at the very least confusing“, and the green credentials of its ‘evoluSHEIN by design’ collection were overstated, the regulator said. Shein promotes the ‘evoluSHEIN by design’ collection as clothes made using more sustainable and responsible manufacturing.
AGCM said consumers could be misled to think that the collection was made with materials that are fully recyclable, “a fact that, considering the fibers used and currently existing recycling systems, is untrue”. Shein, in its statement, said:ย “We have strengthened our internal review processes and improved our website to ensure that all environmental claims are clear, verifiable, and compliant with regulations.”
What was and what will be for Shein
AGCM also took issue with Shein’s “vague and generic” commitments to cut greenhouse emissions by 25% by 2030 and to net zero by 2050, noting that Shein’s emissions increased in 2023 and 2024. The Italian regulator said its overall assessment was influenced by an “increased duty of care” falling on Shein, “because it operates in a highly polluting sector and with highly polluting methods”.ย AGCM is in charge of consumer protection as well as competition specifically focused on the European as well as Italian laws.
Since about 2004, they were also tasked with enforcing laws against conflicts of interest for Holders of Public Office. The AGCM is also classified as an Italian quasi-autonomous non-governmental organization which was established according to the basis of Law No 287 of 10 October 1990. China-founded retailer Shein has managed to build up a very strong customer base during the course of their operations. This was mostly due to the ultra-cheap product offerings that they have available.
Their other practices, specifically with regards to labor and environment, have harnessed some further scrutiny. This issue has directly impacted some of their future ambitions. Some of these future plans include the launch of an initial public offering or IPO within London. Attempts were also made by the company to list in the UK capital, no consensus could be reached on the language which is included within the risk disclosure section of its prospectus. This particularly where it refers to human rights abuses.
GCN.com/Reuters