Can a 250-million-euro ‘Circularity Fund’ make Shein circular?

It may seem strange indeed to hear ultra-fast fashion giant Shein boasting of circularity measures: The company has launched a new 200 million euros “Circularity Fund” in the EU and the UK plus a further 50 million euros for “broader ESG measures”, planning to invest a total of 250 million euros in circularity over the next five years. However, as the lead investor, the Singapore-based company will also invite global corporates, financial institutions and sovereign wealth funds to contribute capital to the fund as well.

“Shein invests in initiatives that enable European and UK brands, designers and artisans to grow their businesses online and beyond. The leading Circularity Fund will invest in start-ups and other businesses in the EU and UK that are driving circular solutions,” states a press release issued on Tuesday afternoon.

Specifically, the fund will allow more European and UK artists and designers to join the Shein X design incubator programme, which enables emerging designers to commercialise their designs by working with Shein on production, marketing and logistics. Support will also be given to European and UK companies to enter Shein's marketplace platform.

New fund builds on existing programmes

The Circularity Fund will build on Shein's existing programmes to promote research, development and innovation in the circular economy and is intended to support start-ups and companies across Europe and the UK in developing next-generation technologies and solutions.

The Group cites innovations in the field of recycled materials, such as textile-to-textile recycling, as an example. It will also enter into purchase agreements or commercial partnerships with experienced start-ups that already have production capacity for recycled textile-to-textile materials or new preferred fibres.

“As a global leader in our industry, Shein has both the responsibility and the opportunity to accelerate innovation that can improve the fashion industry's environmental footprint. The Circularity Fund builds on our support for entrepreneurs and companies at the forefront of innovation in circular initiatives. The focus is on supporting entrepreneurship and innovation in the EU and the UK, where some of the most inspiring activity in this area is taking place,” commented Donald Tang, CEO of the Shein Group, in the press release.

“In addition to funding early-stage start-ups exploring new technologies, we also plan to invest in more experienced start-ups that have commercialised their innovations and are ready to scale up. Given its scale and reach, Shein can be a catalyst for the broad adoption of these solutions in the industry,” Tang added.

The company also highlights its existing sustainability efforts, which the Circularity Fund is intended to support: A partnership with New York-based data marketer Queen of Raw, for example, to purchase surplus fabric or deadstock from other brands to be used in the production of new Shein garments.

Shein also mentioned the increased use of cool-transfer denim printing technology at its supplier base, that uses highly fixative inks instead of conventional indigo colours, thus using "significantly less" water. Another example is a research collaboration with academic institutions launched last year that will explore how chemical recycling can achieve the commercially scalable production of recycled polyester fibres. According to Shein, this research has already produced experimental recycled polyester material.

Overall, the fund barely disguises what Shein is aiming for: To further tap the lucrative European and UK market and its design talent pool. Instead of cutting back on production and ceasing to drive consumption with ever more readily available styles, the clothing giant wants to ease consumer conscience by having them believe they are buying items made from circular materials. However, until one hundred percent textile recycling is possible, these measures will remain just a band-aid on the gaping fast fashion wound.