The London Stock Exchange (LSE) has been questioned over controls put in place to police companies after fast fashion retailer Shein refused to answer “fundamental questions” about its supply chain.
Liam Byrne, chairman of the Business and Commerce Committee, wrote to Dame Julia Hoggett to ask whether the stock market had tests in place to “authenticate the claims” of companies seeking to list, “particularly at this time which concerns their guarantees against the use of forced labor in companies”. their products.
It comes after MPs called a Shein lawyer’s testimony “ridiculous” when she refused to say whether the company sold products containing cotton from China.
Byrne told Dame Julia that MPs were “deeply concerned about the lack of frank and open responses”.
“The committee wishes to draw your attention to the concerning evidence we have heard,” he said in a letter to the LSE chief executive on Friday.
The BBC understands that Shein, founded in China but now headquartered in Singapore, has filed initial paperwork to list in the UK, which could value it at £50 billion. It follows the retailer’s rapid rise to become one of the world’s largest fast fashion companies, delivering to customers in 150 countries.
But questions remain about the company’s supply chain, amid allegations of forced labor and human rights abuses.
In an appearance before the Commons Business and Commerce Committee on Tuesday, a senior lawyer representing Shein, Yinan Zhu, repeatedly refused to say whether the company sells products containing cotton from the Xinjiang region – a region in which China has been accused of subjecting Uighur Muslims to forced labor. Shein has denied the allegations.
Ms. Zhu declined to respond and asked if she could write to the commission after the hearing.
Her repeated refusal to answer questions about supply chains and a potential UK listing sparked backlash from the committee of MPs, who accused her of “willful ignorance”.
She told MPs that Shein does not own any factories or manufacturing facilities, but works with an extensive network of suppliers, mainly in China, but also in Turkey and Brazil.
She added that the company complies with the “laws and regulations of the countries in which we operate.”
China has been accused of subjecting members of the Uyghur community, a predominantly Muslim ethnic minority, to forced labor. In December 2020, research seen by the BBC showed that up to half a million people were being forced to pick cotton in Xinjiang, but Beijing denied any violation of their rights.
The allegations led some major fashion brands, including H&M, Nike, Burberry and Adidas, to withdraw their products using Xinjiang cotton, sparking a backlash in China, and to boycott the companies.
In his letter to the LSE, Byrne, a Labor MP, said: “The committee was deeply concerned by the lack of frank and open answers to some extremely simple and fundamental questions about the integrity of Shein’s supply chain.
“In light of this, I would be grateful if you would let me know what controls, if any, the London Stock Exchange has in place to authenticate the statements of companies seeking to list, particularly in relation to their guarantees against the use of forced labor in their products.
Byrne also wrote to Financial Conduct Authority boss Nikhil Rathi to ask what controls the watchdog itself has in place to ensure UK-listed companies disclose “legal risks”.
Shein has been contacted for comment following the letters.
