As Shein unveils a €200 million fund to combat fashion waste, China faces challenges with textile recycling, and Zara embraces sustainable cotton.
Shein, the fast-growing online and often criticized fashion giant, has introduced a €200 million “circularity fund” that it says will be used to tackle the issue of fashion waste. This initiative is part of Shein’s broader sustainability strategy as it prepares for a potential public listing on the London Stock Exchange after abandoning earlier plans for a New York IPO due to rising US-China tensions.
The new fund will back early-stage companies working on recycled materials and might form alliances with more mature firms using innovative fabrics to promote sustainability. Donald Tang, the executive chair of Shein, says that the funds would support startups and established businesses in the U.K. and Europe. “Our financial resources, our scale and leverage [means] we can be, and we will be, a significant guinea pig or applicator of these technology or processes,” said Tang.
Shein has been accused of forced labor in China’s Xinjiang region, allegations it has denied, asserting, “It has a zero-tolerance policy for forced labor.” The company, which releases as many as 10,000 new styles a day, perpetuates problematic fast fashion, which has been linked to human rights and environmental issues.
China faces challenges in textile recycling
Globally, only 12 percent of textiles are recycled, according to the Ellen MacArthur Foundation. In China, where Shein is headquartered, more than 26 million tons of clothing are discarded annually, most of which end up in landfills. Despite efforts to reduce textile waste, the Chinese market is dominated by synthetic, unrecyclable fast fashion. Synthetics, made from petrochemicals, account for as much as 70 percent of domestic clothing sales, significantly impacting the environment.
The U.S. has banned imports from 26 Chinese cotton traders to combat forced labor. Yet, due to complex supply chains, controversial textiles, like Uyghur cotton, still end up in garments produced in other countries. About 20 percent of cotton garments globally are linked to forced labor issues. The nonprofit Remake’s recent report on environmental and human rights practices gave Shein only six out of 150 possible points, with competitor Temu scoring zero. Kim Kardashian’s Skims and Fashion Nova also received zero points while Everlane earned a score of 40, with half of that coming from its sustainability efforts.
“Textile waste is an urgent global problem,” says the Associated Press, with only 12 percent recycled worldwide, according to fashion sustainability nonprofit Ellen MacArthur Foundation. “Even less — only 1 percent — are castoff clothes recycled into new garments; the majority is used for low-value items like insulation or mattress stuffing.”
Chinese policies also impede textile recycling. Recycled cotton from used clothing cannot be used to make new garments within China, a regulation initially aimed at curbing low-quality recycling practices. Consequently, most recycled cotton is exported, and many Chinese consumers prefer new over recycled clothing due to rising incomes.
Inditex commits to sustainable cotton production
The news comes as Inditex, parent to Zara, has purchased a stake in Galy, a U.S. startup focusing on lab-grown cotton. This move is part of Inditex’s strategy to enhance sustainability within the fashion industry. “Today, we are disclosing that we have entered the capital of Galy, a startup founded in 2019 in the U.S., which is developing an innovative process to produce cotton in laboratories from plant cells,” Oscar Garcia Maceiras, CEO of Inditex, said at the company’s annual meeting.
Inditex aims to reduce its emissions by 50 percent by 2030 and has invested in other sustainable initiatives, such as Circ, a U.S. firm specializing in textile recycling. The company plans to source 40 percent of its fibers from conventional recycling and twenty-five percent from next-generation materials by the end of the decade.
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