Chinese fast fashion brand Shein has said it will invest €250 million in the UK and EU over the next five years as part of its ESG efforts.

Around €200 million will be earmarked for a circularity fund to invest in startups and other businesses which work on textile recycling, materials innovation, and related areas.

The move comes after Shein reportedly filed papers with Britain’s Financial Conduct Authority to prepare for a London IPO in June.

This drew criticism from human rights organisation Amnesty International who warned that it could set a worrying precedent for corporate responsibility and human rights standards in the UK financial markets due to the company’s “questionable labour and human rights standards” and “unsustainable fast fashion business model”.

Following Amnesty International’s objections, UK-based human rights group Stop Uyghur Genocide launched a campaign attempting to block fast-fashion firm Shein’s prospective London listing.

Shein said it will be the main investor in the UK and EU fund and will invite other businesses, financial institutions and sovereign wealth funds across the world to act as co-investors.

The circularity fund builds on Shein’s existing partnerships with other companies working on circular solutions such as a partnership with Queen of Raw to purchase deadstock fabric from other brands.

The company said that the remaining €50 million of the investment will be used to support designers and brands to grow their online business with its marketplace services, as well as pilot production facilities in Europe.

Shein said that the funding would bring more European designers into the Shein X designer incubator programme and enable them to partner with the retailer on manufacturing, marketing and logistics.

“As a global leader in our sector, Shein has both a responsibility and an opportunity to accelerate innovations that can address the environmental footprint of the fashion industry,” said Donald Tang, Shein’s executive chairman. “The Circularity Fund will build on our support for entrepreneurs and businesses at the forefront of innovation in circular initiatives, with a focus on supporting entrepreneurship and innovation in the UK and the EU, where some of the most exciting work in this space is taking place.

“In addition to funding early-stage startups exploring new technologies, we also intend to invest in more mature start-ups in this space that have commercialised their innovations and are ready to scale up. Given SHEIN’s scale and reach, Shein can become a catalyst for the widespread adoption of these solutions across the industry.”

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