The London Stock Exchange (LSE) has been asked what checks are in place to vet firms after fast-fashion retailer Shein refused to answer “basic questions” over its supply chain.
Liam Byrne, chair of the Business and Trade Committee, wrote to Dame Julia Hoggett asking if the stock market had tests in place to “authenticate statements” by firms seeking to list, “with particular regard to their safeguards against the use of forced labour in their products”.
It comes after MPs branded the evidence of a Shein lawyer “ridiculous” when she refused to say if the company sold products containing cotton from China.
Byrne told Dame Julia that MPs were “profoundly concerned at the lack of candid and open answers”.
“The committee would like to draw your attention to the concerning evidence we heard,” he said in a letter to the LSE chief executive on Friday.
The BBC understands Shein, founded in China but now headquartered in Singapore, has filed initial paperwork to list in the UK, which could value it at £50bn. It follows the retailers rapid rise to one of the biggest fast fashion firms globally, shipping to customers in 150 countries.
But questions remain over the company’s supply chain amid allegations of forced labour and human rights abuses.
During an appearance in front of the Commons’ Business and Trade Committee on Tuesday, a senior lawyer representing Shein, Yinan Zhu, repeatedly refused to say whether the company sold products containing cotton from the Xinjiang region – an area in which China has been accused of subjecting Uyghur Muslims to forced labour. Shein has denied the claims.
Ms Zhu declined to answer and asked if she could write to the committee following the hearing.
Her repeated refusal to answer questions about supply chains and a potential UK listing, was met with backlash from the committee of MPs, who accused her of “wilful ignorance”.
She told MPs that the Shein does not own any factories or manufacturing facilities, but works with a large network of suppliers, mostly in China, but also in Turkey and Brazil.
She added that the firm complied with “laws and regulations in the countries we operate in”.
China has been accused of subjecting members of the Uighur, a mainly Muslim ethnic minority, to forced labour. 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 has denied any rights abuses.
The allegations have led to some big fashion brands, including H&M, Nike, Burberry and Adidas, removing products using Xinjiang cotton, which has led to a backlash in China, and boycotts of the companies.
In his letter to the LSE, Byrne, a Labour MP, said: “The committee was profoundly concerned at the lack of candid and open answers to some extremely simple, basic questions about the integrity of Shein’s supply chain.
“In the light of this I would be grateful if you would let me know what checks, if any, the London Stock Exchange has in place to authenticate statements by firms seeking to list, with particular regard to their safeguards against the use of forced labour in their products.”
The LSE told the BBC it would respond to the committee’s letter “in due course”.
Byrne also wrote to the boss of the Financial Conduct Authority, Nikhil Rathi, to ask what checks the watchdog itself has in place to ensure UK-listed companies disclose “legal risks”.
Shein has been contacted for comment following the letters.
