• Shein’s Hong Kong IPO comes as regulators in Europe and the U.S. intensify scrutiny of fast fashion, labour standards and green claims.
• The company’s four co-founders will control 90% of voting rights after the IPO, raising concerns over board independence and minority shareholder protections.
• Shein reported 2025 greenhouse gas emissions roughly double those of Inditex, despite generating lower annual sales.

Shein prepares for IPO under regulatory pressure

Shein is preparing to enter Hong Kong’s public markets next month after years of failed listing attempts in New York and London. This time, investors will be assessing more than its rapid growth.

Environmental, social and governance concerns remain central to the investment case. Regulatory investigations are active in both Europe and the United States. Investors are also examining labour conditions, carbon emissions and the company’s governance structure.

Previous listing efforts attracted criticism from politicians and investors. Shein has since expanded sustainability disclosure and strengthened its ESG infrastructure.

Its annual ESG report reached 118 pages last year, compared with 28 pages in 2021. The company also hired external consultants and created an ESG advisory board in 2024.

Yet those measures have not removed investor concerns.

“The company continues to face serious ESG controversies, particularly around working conditions and labour rights in its supply chain, supply chain traceability, environmental impacts and the broader sustainability implications of its high-volume, ultra-fast-fashion business model,” said Janina Bartkewitz, ESG analyst at Union Investment in Frankfurt, which managed €569 billion ($664 billion) of investment at the end of June.

Regulatory exposure remains a material risk

Shein is currently under investigation by the European Commission and the U.S. Federal Trade Commission. Earlier investigations resulted in fines in France over alleged fake discounts and in Italy over greenwashing.

The wider regulatory environment is also becoming more costly for large e-commerce platforms. European authorities recently fined Alibaba-owned AliExpress €550 million and PDD-owned Temu €200 million over illegal products.

For investors, the issue extends beyond potential penalties. Persistent regulatory scrutiny can expose weaknesses in compliance systems, internal controls and board oversight.

Shein says its governance framework continues to evolve.

A Shein spokesperson said: “Shein is committed to maintaining high standards of corporate governance, transparency and accountability. We operate in compliance with applicable laws, regulations and listing requirements, and continue to review and strengthen our governance practices as the business evolves.”

The company has also reported progress among suppliers. In its 2025 sustainability report, 53% of suppliers received the highest audit grades, up from 47% in 2024.

Voting structure raises governance questions

Shein’s post-IPO ownership structure may become another focus for institutional investors.

Its dual-class share structure gives Class A shares 10 votes each, while Class B shares receive one vote. The company’s four co-founders will own 59.6% of total shares but control 90% of voting rights after the listing.

That concentration has no fixed expiry.

Shein also combines the roles of chairman and chief executive. All four co-founders hold executive positions and sit on the board. Only three of its seven directors are independent.

“Taken together with the concentrated voting control, this risks weakening independent oversight and increasing potential misalignment between management and controlling shareholders on the one hand, and minority shareholders on the other,” said Kiran Aziz, head of responsible investments at Norway’s KLP pension fund, which manages more than €80 billion.

RELATED ARTICLE: Shein Under Scrutiny: Italian Probe into Greenwashing Claims

Carbon intensity challenges sustainability case

Environmental concerns extend to Shein’s underlying business model.

The company argues that its demand-led production system reduces waste. It initially produces small batches, then increases manufacturing when customer demand becomes clear.

Critics question whether that efficiency offsets the impact of ultra-low prices and exceptionally high sales volumes.

Shein’s website adds about 4,700 new styles every day and contains more than 2 million apparel styles.

“Shein is making garments primarily from plastic and selling them at nearly half the prices of H&M and Zara. So the fact that there’s no ‘excess’ … well, everything they make is more disposable, just based on price alone,” said Ken Pucker, professor of the practice in sustainability at the Fletcher School at Tufts University.

Shein’s reported greenhouse gas emissions in 2025 were roughly double those of Zara owner Inditex. That came despite Shein recording lower annual sales of $41.8 billion, compared with Inditex’s $46.54 billion.

For C-suite executives and institutional investors, the IPO will test whether fast growth can coexist with credible ESG governance. Shein has expanded reporting and supplier oversight, but its carbon footprint, regulatory exposure and concentrated voting power remain significant risks.

Its Hong Kong debut will therefore offer a broader test for global markets. Investors must decide how heavily sustainability performance should influence valuations for companies built around high-volume, low-cost consumption.