FCA under pressure to block Shein listing over forced labour concerns
The Financial Conduct Authority (FCA) is coming under increasing pressure to block the listing of fast-fashion giant Shein due to concerns over the alleged use of forced labour in its supply chains.
In a letter to the City watchdog today, seen by City A.M., lawyers of the campaign group Stop Uyghur Genocide have called for the Chinese-founded retailer’s rumoured London IPO to be blocked unless the regulator is “satisfied that its products are not tainted by forced labour”.
“The UK is a signatory to various International Labour Organisation conventions. Our client is concerned that listing a company on the [London Stock Exchange] whose products are manufactured by supply chains engaging workers in breach of minimum standards set out in those conventions is inconsistent with the UK’s obligations under them,” Stop Uyghur Genocide’s lawyers Leigh Day wrote.
Shein’s listing would be “irreconcilable with the FCA’s statutory duty of integrity, its principles and standards as well as the protection of investors,” Leigh Day claimed.
The calls come amid a raging debate across the City over whether to embrace the IPO of Shein, which is expected to be one of the biggest deals of the past decade and fetch the company a price tag of more than £50bn.
Shein has been dogged by concerns over its alleged use of forced labour since a report in 2021 sounded the alarm on conditions in the Chinese district of Nancun, where several of its outsourced factories are based.
Traces of cotton from the province Xinjiang have also been found in its clothing, where it’s estimated that 100,000 Uyghur detainees are forced to work in labour camps.
“We request that the Financial Conduct Authority (“FCA”) uses its powers to require additional information from Shein regarding the accuracy of its published Modern Slavery Statement,” Leigh Day added in its letter today.
While companies are required to submit a prospectus to the FCA ahead of any listing, it is not within the regulator’s remit to independently verify the details of the prospectus. The firm itself is responsible for ensuring the information in its is accurate, meaning that responsibility will lie solely with Shein.
Shein, which swapped its headquarters to Singapore to ease concerns over its ties to China, faced backlash against its initial plans to float in New York. Washington’s House Select Committee on the Chinese Communist Party launched a probe into the company’s data privacy practices and lawmakers sounded the alarm on labour practices in its supply chains.
The fresh calls comes after the firm reportedly confidentially filed papers for its IPO with the Financial Conduct Authority earlier this month.
Amnesty International said yesterday that Shein’s listing on the market would be a “badge of shame” for the London Stock Exchange, while Anti-Slavery International urged the regulator to “give meaningful consideration to a company’s human rights and environmental track record as part of its due diligence.”
“We are concerned that this does not seem to be happening. While some countries have introduced, or are introducing, mandatory human rights and environmental due diligence laws, and import controls (so that products made with forced labour are not able to enter their market), the UK has no such laws,” Sian Lea, business and human rights manager at Anti-Slavery International, said.
Shein did not immediately respond to a request for comment. It has said previously it has a “zero-tolerance policy for forced labour” and is “committed to respecting human rights”.
“We take visibility across our entire supply chain seriously and we require our contract manufacturers to only source cotton from approved regions,” the firm told City A.M. in a statement earlier this year.
The FCA declined to comment while the London Stock Exchange said it does not comment on individual companies.