LOADING

Type to search

SHEIN’s Bold Response to Explosive Labor Allegations: Massive Investments in Fair Practices

SHEIN’s Bold Response to Explosive Labor Allegations: Massive Investments in Fair Practices

SHEIN
Listen to this story:

On May 13, the Swiss NGO Public Eye published a report about the working conditions at the factories of some of SHEIN’s third-party suppliers.

While many allegations in this report are not recognized, the discussion on working hours and wages raised by Public Eye is important to SHEIN. Significant progress has been made to enhance conditions across the ecosystem.

The Public Eye Report is based on a sample of 13 interviewees. While all voices in the supply chain are important, this small sample size should be seen in the context of SHEIN’s comprehensive, ongoing process to continually improve the supply chain, involving thousands of suppliers and workers.

SHEIN is investing tens of millions of dollars in strengthening governance and compliance across the supply chain, as well as in empowering suppliers to build more successful and responsible businesses. These efforts are already delivering results, with regular supplier audits showing consistent improvement in performance and compliance.

SHEIN is actively working to improve suppliers’ practices, including ensuring that hours worked are voluntary and that workers are compensated fairly. Industry collaboration is recognized as crucial to ensure continuous improvement and progress in this area.

As a result of these efforts, research conducted by third-party auditors across more than 4,000 workers at SHEIN supplier facilities in China has found that they earn basic salaries (before overtime) that are on average, two times higher than the local minimum wage and more than 50% higher than the Global Living Wage Coalition’s 2022 living wage for Shenzhen.

The report does not convey the reality of SHEIN as an organization. SHEIN is committed to being a responsible global company and works closely with governments and authorities worldwide to ensure compliance with laws and regulations in all operating markets.

Approach to Supply Chain Governance

SHEIN works with a network of third-party contract manufacturers globally, including in China, Brazil, and Türkiye.

Responsibilities extend throughout the supply chain, including third-party manufacturing suppliers. SHEIN is a signatory to the UN Global Compact (UNGC), supporting the Ten Principles focused on human rights, labour, environment, and anti-corruption. Supplier partners are expected to share this commitment to human rights.

SHEIN has developed and implemented robust supply chain governance policies and mechanisms called the SHEIN Responsible Sourcing (SRS) Program. The policy governing third-party suppliers is the Supplier Code of Conduct (CoC). This was developed from industry best practices, guidance from regulators, and alignment with international standards, such as the core conventions of the International Labour Organization. Through the SRS, stringent requirements are enforced on suppliers to comply with health and safety, labour and social welfare, and environmental standards, as well as applicable laws and regulations.

The strategy pairs enforcement with empowerment, ensuring that manufacturing suppliers:

  • Have a clear understanding of SHEIN’s expectations and standards.
  • Have the infrastructure, knowledge, and ability to meet these standards.
  • Consistently comply with SHEIN’s CoC, including fair wages and working conditions.

SHEIN’s Expectations and Standards

To work with SHEIN, all suppliers must sign and agree to abide by the Supplier Code of Conduct (CoC), which prohibits the use of forced labour and child labour, wages and working hours abuses, and employee discrimination and harassment. Regular training sessions detail and explain the standards within the CoC, providing clear examples, outlining steps for remediation, and penalties for non-compliance. In 2023, 133 group workshops and 276 one-on-one training sessions were organized for suppliers, with participant numbers totaling over 5,200.

Infrastructure, Knowledge, and Ability

SHEIN believes in improving standards across the supply chain by investing in uplifting supplier partners and empowering them to operate effectively and responsibly. A total of US$70 million has been earmarked for supply chain empowerment and support until 2028. This investment is split across various initiatives that continuously transform traditional production models with technology advancements, provide upskilling initiatives for workers, facilities enhancements, and services for communities within the supplier ecosystem.

Compliance

SHEIN has established clear and transparent requirements as part of supply chain governance policies. Per the Supplier Code of Conduct (CoC), employment and any hours worked must be voluntary, salaries must be paid on time, and not be lower than the minimum wage required by local laws. Supplier partners must comply with legal requirements for overtime compensation, and disciplinary deduction from wage payment is not condoned.

SHEIN enforces supplier compliance through the SHEIN Responsible Sourcing (SRS) Policy, which includes comprehensive supplier audits by third-party verification agencies and internal auditors. All prospective suppliers must undergo an SRS assessment before working with SHEIN. Regular unannounced on-site SRS assessments are conducted, and non-cooperation results in termination of the business relationship. Violations are penalized per the SRS Policy, with follow-up to validate remediation and corrective action. Suppliers are required to maintain employees’ payslips and attendance records. During SRS audits, samples of workers’ payslips and timesheets are collected, and workers are interviewed to examine compliance with policies.

SHEIN has dedicated training and education programs to improve suppliers’ wages and working hours practices. From fewer than 700 audits in 2021, 3,990 on-site audits were conducted on suppliers in China in 2023. Third-party agencies conduct salary audits on suppliers to ensure fair compensation. SHEIN has set up anonymous grievance channels for workers at supplier partner facilities to report issues, which are investigated to address complaints and concerns.

Related Article: SHEIN Dives into Sustainable Denim with Water-Saving Tech

SHEIN is committed to setting high standards in supply chain governance, ensuring supplier compliance, investing in supplier empowerment efforts, and making sustained progress in ensuring workers are treated with dignity and fairness.

Topics

Related Articles