Fast fashion: 1. Environment: 0.
Shein and Forever 21 are joining forces in a deal that will expand their reach and influence in the retail world. The union is a win for the Asian and American fast fashion leaders as the two battle competitors like Uniqlo, Temu, and Zara, but the deal will come at the cost of the environment that is already under stress.
The companies announced on Thursday that Shein will acquire roughly one-third of Forever 21’s operator, Sparc Group—which produces and distributes goods for brands such as Aéropostale, Nautica, Eddie Bauer, and Reebok. In turn, Sparc Group will get a minority stake in Shein.
Whereas Shein is an online company, Forever 21 is known primarily for its retail stores. In this arrangement, Shein will sell certain Forever 21 products on its website, giving Forever 21 reach to Shein’s 150 million digital customers, the Wall Street Journal reported.
Shein is among the largest U.S. fast-fashion retailers by market share, and bringing in more third-party brands, like Forever 21, is part of its strategy to grow into an Amazon-like marketplace. “We can’t make everything we sell,” Shein’s executive vice chairman Donald Tang told the Wall Street Journal.
In the future, shoppers may be able to return Shein products in person at Forever 21’s more than 540 global locations, none of which are in East Asia. Customers may also be able to buy Shein products in Forever 21 stores, according to the Journal.
The upsides of the deal are apparent, but the downsides to the environment loom large in the background.
Fast fashion is a business model in which trendy clothes and accessories are made cheaply and sold at low prices, thereby encouraging consumers to buy more but get fewer wears or less use of the items. The rapid production of these goods is connected to increased carbon emissions and massive waste production.
As of 2019, the fashion industry, overall, contributes up to 8% of total global carbon emissions and 20% of waste water production, making it the second-most polluting industry, according to the United Nations. It’s a $2.5 trillion global industry, but it loses about $500 billion annually due to a lack of recycling and from manufacturers and retailers throwing away clothes that fail to sell.
Shein in particular has drawn the ire of environmentalists for its fast fashion practices. A t-shirt bought from its site can cost as little as $2, and a pair of jeans as little as $10. Good on You—a nonprofit group that rates fashion brands based on their environmental, social, and corporate governance track record (ESG), and is supported by actress and activist Emma Watson—gave Shein its lowest “We Avoid” rating.
“From hazardous chemicals to carbon emissions to microplastics… It follows an unsustainable fast fashion model with quickly changing trends and regular new styles,” according to Good for You.
The Chinese-founded company has also faced backlash over allegedly sourcing its cotton from the Xinjiang region, where the U.S. accused Chinese authorities in 2021 of genocide against Uyghur Muslims and subjecting them to forced labor, among other crimes. Beijing has denied these allegations. Shein moved its headquarters to Singapore in 2022, which critics said was an attempt to distance itself from China amid contentious international relations.
“SHEIN has zero tolerance for forced labor, we do not source any cotton from China and we do not have any manufacturers in the Xinjiang region: 95% of our cotton comes from the U.S., India, Brazil, and Australia,” Shein told Fortune.
About sustainability, Shein said, “Our higher inventory turnover and resource efficiency translates to single digit unsold inventory levels, far below the industry average, and lower environmental impact and pricing for our consumers.”
Forever 21’s prices are marginally higher than Shein’s, but it also received Good on You’s lowest rating. The nonprofit labeled the company’s sustainability efforts and labor practices “Very Poor.”
Forever 21 did not immediately respond to Fortune’s request for comment.
But more sustainable fashion brands and retailers that present themselves as alternatives to fast fashion are cropping up, and ethical practices are gaining momentum as ESG standards become increasingly important for investors and buying second-hand clothing becomes trendier among Gen Z and millennials, with publications like Vogue curating “guides” for the sustainability-curious shopper.
Still, as fast fashion brands try to solidify themselves in the American consumers’ life, it’s hard to convince a broke college student to invest $100 in an ethically made shirt when they could get the same thing for $5 at Shein.