Shein, with significant operations in China, has faced criticism in the U.S. over alleged labor malpractices. U.S. Senator Marco Rubio has urged the U.K. government and the FCA to thoroughly investigate Shein before allowing it to float. “Slave labor, sweatshops, and trade tricks are the dirty secrets behind Shein’s success,” Rubio wrote.
Shein maintains a “zero-tolerance policy for forced labor” and is serious about supply chain visibility. The company declined to comment on IPO plans.
Seeking Legal Redress
Shareholders are increasingly concerned about ensuring sound ESG practices in the companies they invest in. Litigation is becoming a strategic tool to hold companies accountable for their ESG credentials.
“The emergence of litigation as a strategic tool to influence the actions of boards of listed companies reflects the increasing societal focus on ESG,” said Richard Clayman, a partner at Kingsley Napley LLP.
Shareholders can sue a listed company under section 90 of the FSMA if it publishes misleading information, including about ESG credentials. This provision does not require individual shareholders to prove they relied on the false statements, opening the door for group actions.
