Exclusive: interview with Shein’s head of ESG

GUANGZHOU – Chinese online retailer SHEIN has come from nowhere to establish itself as the world’s largest fast fashion brand in the past couple of years. Earlier this year, Bloomberg reported that the business was seeking to raise US$1bn at a valuation of US$100bn. A US$100bn valuation or even somewhere in that ballpark would give SHEIN more financial clout than Inditex and H&M combined. 

However, the company’s meteoric rise has not been without controversy. Foremost among critiques have been accusations of greenwashing, with claims that SHEIN’s business model encourages the over-consumption of cheap, polyester clothing.

We reached out to the company to put some of these criticisms to its global head of ESG, Adam Whinston. Here, we publish his answers to our questions in full.

Apparel Insider: SHEIN recently announced its first sustainability report and has appointed a head of ESG. The company seems to be undergoing a ‘green’ re-branding. What is the thinking behind this? Is this for ESG reasons?

Adam Whinston: One big misconception is that the ESG programmes at this company only began with my joining. The reality is SHEIN has a truly unique business model that has enabled us to take a more sustainable approach to manufacturing since our founding. We only produce an ultra-small batch of each SKU (stock keeping unit) on our site, 100-200 pieces, gauge market response in real-time, and then respond with larger production to meet demand if it’s warranted. It’s a completely transformative approach to fashion. Reducing the waste in garment manufacturing is at the core of how we operate. It’s how we keep prices so low, and is nothing new to us. There is much more for us to do in various parts of the value chain, but that is also true for any brand or retailer. 

Apparel Insider: SHEIN will now be working with the Or Foundation. Will donations to the Or Foundation keep up with Shein’s business growth? And what do you say to the idea that we should be preventing excess waste in the first place rather than spending money cleaning it up?

Adam Whinston: The creation of the EPR Fund is about transparency, accountability and taking tangible action to support the communities affected by the fashion industry’s waste problem. We chose The Or Foundation as an initial recipient of the multi-year fund because they are experts on the ground in Ghana, the epicentre of second-hand textile waste, and have been spearheading this critical work for many years.

We are not stopping there in our response to this problem. The issue has to be addressed from multiple angles. SHEIN’s small batch production model results in less waste to begin with, a model which would result in an immediate drop in global textile production of 20% or more, if adopted by the rest of the industry. There are additional initiatives we will be announcing in the coming months to help our clothing achieve a longer life, which goes to the heart of circularity. 

Apparel Insider: Shein has been accused of greenwashing regularly these past 12 months. The gist of most arguments seems to be that no business that launches so many new lines per day can never be sustainable. What is Shein’s response to this? 

Adam Whinston: The premise that more variety leads to higher overall production volume is incorrect. The opposite is true. Our test-and-learn model ensures that products that do not sell well are not overproduced, since we initially produce in small quantities before we know how successful any particular style is going to be. At SHEIN, we don’t have merchants or business planners trying to predict demand–our customers do that for us. They tell us what styles they like and help inform production. Traditional retailers and brands engage in forecasting practices that basically ensure they either overproduce or underproduce. Overproduction results in sitting on costly unsold inventory that eventually goes to waste or is sold at a loss, while underproduction results in lost sales and chasing suppliers to produce more product within shortened lead times. SHEIN avoids both scenarios. The average inventory level in the industry is around 30% and SHEIN can reduce it to single digits.

Apparel Insider: Our understanding is that Shein introduces lots of lines but only does short production runs. How short are these runs? How do the length of your runs compare with industry averages? Does Shein have a better production and logistics model than its competitors?

Adam Whinston: SHEIN suppliers produce only 100-200 units of each SKU until the demand signal on our ecommerce platform indicates that more production is necessary. Suppliers receive that signal directly and new production can begin without SHEIN personnel even intervening. This kind of real-time on-demand production model not only reduces costs, decreases prices, and minimizes inventory waste, but is also more compatible with the diversified fashion needs of consumers.

Traditional retailers order thousands of units per SKU, even millions in some cases, based on forecasting that can be inaccurate. This is due to the way traditional supply chains are set up with a network of distribution centres and thousands of stores that need to be replenished, as well as a culture of having operated this way for decades. SHEIN’s advantages include the absence of physical stores, and fulfilling most of our orders directly from one central location. Clearly, there are trade-offs between waste and emissions, which we are studying, but we believe our model is optimal.