Italy hands fast fashion retailer Shein €1 million greenwashing fine

The Italian Competition Authority (AGCM) announced on Monday that it had issued fast fashion company Shein with a €1 million fine for “misleading and/or deceptive environmental messages and claims”.

Authorities gave the fine to Infinite Styles Services Co. Limited, a Dublin-based company that manages Shein's website in Europe.

“Through its website https://it.shein.com and other promotional and/or informational online pages, the company disseminated environmental claims within the sections #SHEINTHEKNOW, evoluSHEIN, and Social Responsibility that were, in some instances, vague, generic, and/or overly emphatic, and in others, misleading or omissive,” said AGCM in a statement.

In particular, AGCM criticised Shein’s claims about recyclability and its “circular system” for minimising waste, which were “found to be either false or at least confusing”.

Italian officials also contested Shein’s statements on its greenhouse gas emissions targets. The firm claims it is aiming to reduce emissions by 25% by 2030 and says it hopes to reach net zero by 2050. AGCM said these proposals were “vague and generic” and “were even contradicted by an actual increase in Shein’s greenhouse gas emissions in 2023 and 2024”.

AGCM is the second European competition authority to fine Shein in just over a month, after France’s antitrust agency issued the firm with a €40mn penalty in July.

An 11-month investigation by the DGCCRF found that Shein had engaged in “misleading commercial practices towards consumers”, particularly “on the reality of the price reductions granted and on the scope of the commitments concerning environmental claims”.

Shein accepted the fine and said it had already taken steps to rectify the breaches after it was notified by the regulator last year.

Keeping prices low

The firm does not publicly disclose earnings updates, although sources familiar with the company told Bloomberg that in the first quarter, the firm’s net income rose to over $400mn (€346mn), while revenue was almost $10 billion (€8.6bn). According to the sources, Shein’s profit margin was lifted by customers rushing to get ahead of tariffs from the US administration.

The China-founded retailer has built up a strong consumer base by offering ultra-cheap products, although its environmental and labour practices have come under scrutiny.

The latter has notably stalled its ambitions to launch an IPO (initial public offering) in London, according to reports. Shein filed to list in the UK capital more than a year ago, although Chinese and UK regulators have failed to agree on the language included in the risk disclosure section of its prospectus, particularly where this relates to human rights abuses.

Shein faces claims that it sources cotton from China's Xinjiang region, where the US and NGOs have accused the Chinese government of forced labour and human rights abuses targeting Uyghur people.

Due to the hold up in London, the Financial Times first reported last month that the retailer had confidentially filed for an initial public offering (IPO) in Hong Kong.

Shein has also come under scrutiny from the European Commission, which has opened probes related to Shein’s potential violations of EU consumer protection rules and the Digital Services Act.

Shein did not immediately respond to Euronews’ request for comment.