A human rights group has urged Britain’s financial regulator to block the Chinese fast-fashion retailer Shein’s planned blockbuster flotation on the London Stock Exchange.
Stop Uyghur Genocide, a UK-based human rights charity that alleges minority Uyghur people are being used as forced labour at some of Shein’s cotton suppliers in China’s north-western Xinjiang region, has begun a legal campaign against the planned stock market listing.
Represented by the law firm Leigh Day, the campaign group has written to the Financial Conduct Authority (FCA) to argue that “any attempt by Shein to list on the LSE should be refused”.
The China-founded company, which was valued at $66bn in a fundraising round last year, began to explore a listing on the London Stock Exchange early this year, and is expected to file a prospectus with the UK regulator soon. Shein abandoned its original plan to list in New York after opposition from US politicians.
On Tuesday, Amnesty International UK said Shein’s potential London listing would be a “badge of shame” for the London market because of the fast-fashion firm’s “questionable” labour and human rights standards.
The fast-fashion retailer said on Wednesday: “Shein has a zero-tolerance policy for forced labour and we are 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.”
Stop Uyghur Genocide said it had reminded the FCA that its US counterpart, the Securities and Exchange Commission, has already refused to recommend the listing of Shein for trading on the US stock exchange because of concerns around labour practices in the company’s supply chains.
The group said the London listing should not be allowed to go ahead because the UK has signed up to International Labour Organization conventions, which set out minimum standards for engaging workers. Any concerns about companies engaging workers in their supply chains that may breach those minimum standards are inconsistent with the UK’s convention obligations, it said.
“The FCA has a statutory duty of integrity and to protect its investors,” the group added.
The Leigh Day solicitor Ricardo Gama, who represents Stop Uyghur Genocide, said: “Stop Uyghur Genocide expects UK financial institutions to uphold the high ethical standards that they pay lip service to, and to make clear that London isn’t the place to come for a ‘no questions asked’ approach to capital. At the very minimum regulators must make sure that laws in place to root out modern slavery are complied with.”
Stop Uyghur Genocide said it was concerned about the London Stock Exchange’s ability to detect and respond to any alleged forced labour in Shein’s supply chains.
Stop Uyghur Genocide is preparing a detailed submission to the regulator to support its letter.
In the meantime, the campaign group’s lawyers have asked the FCA to obtain more information from Shein about the “accuracy of its published modern slavery statement”.
Under the Modern Slavery Act, large businesses have to publish a statement every year that sets out the measures they have taken to ensure slavery and trafficking do not occur in their own operations and their supply chains.
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Leigh Day lawyers have urged the regulator to “refuse Shein’s listing application unless the FCA is satisfied that its products are not tainted by forced labour”.
Rahima Mahmut, executive director of Stop Uyghur Genocide, said she was “deeply concerned” about Shein’s potential London listing and said the organisation had been highlighting concerns from national security and human rights experts that Shein “could be associated with egregious human rights abuses, including modern slavery, and pose ethical and security risks to businesses and citizens”.
“Our investment community must not support companies like Shein who are reportedly linked to the Chinese state and which we believe may enable the ongoing genocidal policies against Uyghurs.”
The FCA declined to comment on Shein’s potential listing. It noted that it has no investigation or enforcement powers relating to alleged breaches of legislation not within its remit, such as the Modern Slavery Act or tax legislation.
Before a company’s shares can be admitted to the London Stock Exchange, the firm must apply to the FCA for admission to listing and to approve its prospectus. The watchdog said it was the company’s responsibility to ensure the information in its prospectus is accurate, and not the FCA’s role to independently verify the accurate of information.
Michael Polak, barrister and chair of Lawyers for Uyghur Rights, said: “A firm alleged to have involvement in goods directly produced by slave labour in the Uyghur region creates a risk that those vital principles will be violated. We will ask the FCA to consider the expert evidence that we will provide to them before deciding on a public listing in the UK.”
