Chinese online retailer Shein is preparing to list on the Hong Kong Stock Exchange, but investors remain concerned about the company’s environmental impact, labour standards and corporate governance.
Shein is now expected to float on the stock exchange with a potentially deflated valuation following concerns among regulators and politicians about the firm’s labour practices and harm to the environment. At its peak in 2022, Shein was thought to be worth $100bn (£73.3bn) – now its valuation could reportedly reach $27bn.
The firm has made efforts to strengthen its ESG practices over the past few years, but investors are still concerned it hasn’t gone far enough.
Janina Bartkewitz, ESG analyst at Union Investment in Frankfurt, said: “The company continues to face significant ESG controversies, particularly concerning working conditions and labor rights in its supply chain, supply-chain traceability, environmental impact, and the broader sustainability implications of its high-volume ultra-fast-fashion model.”
Dan Coatsworth, head of markets at platform AJ Bell, said Shein will hope that floating in Hong Kong is its “third time lucky” after previous plans “went awry” in the US and UK over ESG concerns.
“Plan A was to float in the US, which seemingly didn’t happen because of geopolitical tensions between the country and China, and concerns around regulatory matters, corporate governance, and alleged copyright infringement,” he said.
“Plan B was to float in London, and that also amounted to nothing, with similar factors blamed. There were reports that institutional investors were uneasy about a host of ESG matters, including questions over the treatment of workers making the clothes sold by Shein.”
A spokesperson for Shein said: “Shein is committed to maintaining high standards of corporate governance, transparency and accountability. We operate in compliance with applicable laws, regulations and listing requirements, and continue to review and strengthen our governance practices as the business evolves.”
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