AI-Driven Demand or Environmental Demand? Shein’s Sustainability Dilemma Amidst Fast Fashion’s Pollution Surge

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Artificial Intelligence Contributes to Shein's Status as the Top Polluter in the Fast Fashion Industry

This article was first published in Grist and is a collaborative piece from Climate Desk.

In 2023, the colossal brand Shein dominated the global market. Aircraft traversed the world, delivering tiny parcels containing its remarkably affordable attire from countless manufacturers to the doorsteps of millions of consumers across 150 nations. Social media influencers promoted the brand's fashionable offerings through their "#sheinhaul" videos, which attracted billions of views.

Throughout each phase, information was generated, gathered, and examined. To handle the vast amount of data, the fast fashion sector is now adopting new artificial intelligence technologies. Shein employs its own machine learning tools, which are fundamentally algorithms for recognizing patterns, to assess consumer tastes instantly and forecast future needs, which are then met through a highly responsive supply chain.

As artificial intelligence accelerates the production of cost-effective, fashionable apparel, Shein finds itself among the companies facing growing demands to adopt eco-friendlier practices. The firm has committed to lowering its CO2 emissions by 25 percent by the year 2030 and aims to reach net-zero emissions by or before 2050.

Environmental activists and experts argue that the rapid production methods and digital-first approach of the corporation inherently result in significant carbon emissions. Furthermore, they suggest that the implementation of artificial intelligence software to accelerate its processes might be increasing its carbon footprint. These worries were heightened by Shein's latest sustainability report, unveiled recently, revealing that the company's carbon dioxide emissions almost doubled from 2022 to 2023.

"Sage Lenier, the executive director of the environmental nonprofit Sustainable and Just Future, stated that AI has transformed fast fashion into an even quicker industry, with Shein and Temu leading the way. “Without AI, they simply wouldn’t be possible,” she mentioned. (Temu, a swiftly growing online retail giant, offers a range of products that competes with Shein in terms of diversity, pricing, and turnover.)

Over the past 12 years, Shein has carved out a niche for itself in the fashion industry with its remarkable production capacity, reportedly bringing in revenues exceeding $30 billion in 2023. While figures may differ, it's said that a new design from Shein can go from concept to finished product in as little as 10 days, with the website seeing an addition of up to 10,000 new items daily. At any given moment, it's believed that Shein has around 600,000 products available for purchase, with an average cost of about $10 per item. (Shein has neither confirmed nor refuted these figures.) According to one market study, nearly 44 percent of Generation Z consumers in the United States make a purchase from Shein at least once a month.

The magnitude of the operation results in significant ecological repercussions. The firm's environmental report reveals that in 2023, Shein was responsible for releasing 16.7 million metric tons of CO2, an amount surpassing the annual emissions of four coal-fired power stations. Criticism has also been directed at the company for its contribution to fabric waste, the proliferation of microplastic contamination, and practices of labor exploitation. The report discloses that 76 percent of the company's fabric composition is polyester—a material notorious for discharging microplastics into our surroundings—with a mere 6 percent of this polyester being sourced from recycled materials.

A recent probe discovered that employees at factories supplying Shein are often subjected to 75-hour workweeks, despite the firm's commitment over a year ago to enhance labor conditions in its supply chain. While Shein's report on sustainability suggests some progress in worker conditions, it also reveals that in external evaluations conducted on more than 3,000 suppliers and subcontractors, 71 percent were rated as C or below based on Shein's grading system from A to E, indicating at best lackluster performance.

Machine learning significantly influences Shein's operational framework. Despite Peter Pernot-Day, the chief of global strategy and corporate relations at Shein, asserting to Business Insider in August that artificial intelligence wasn't a core component of their business practices, his statements at a retail conference earlier this year suggested the opposite.

Peter Pernot-Day is slated to speak at the Collision 2024 tech conference in June.

"He stated that they're leveraging advanced machine-learning techniques to forecast demand with precision, an approach they consider to be at the forefront of innovation," he remarked. Pernot-Day informed the attendees that every one of Shein's 5,400 suppliers is equipped with an artificial intelligence software platform. This platform provides continuous updates on consumer tastes, allowing them to adjust their production to align with these preferences instantly.

"He explained that this allows us to create a limited number of each clothing piece. "This approach minimizes our waste and reduces excess stock significantly." The company typically maintains a stock range of 100 to 200 units per product, which sharply differs from the approach of traditional fast-fashion companies. These businesses often manufacture thousands of units for each design per season, attempting to forecast trends well ahead of time. Shein refers to its strategy as "on-demand," whereas a technology analyst interviewed by Vox in 2021 described it as "real-time" retail.

During the meeting, Pernot-Day mentioned that the technology enables the business to identify and respond to minor trends that consumers are interested in wearing. "We have the capability to recognize these trends and respond in a manner that we believe is quite innovative," he stated. A designer who has recently initiated a class action lawsuit in a New York District Court claims that the company's artificial intelligence tools for analyzing the market are involved in a "large-scale operation of consistent, digital violation of copyright involving the creations of independent designers and artists." This operation allegedly involves collecting designs from the internet and directly forwarding them to manufacturing facilities for production.

In a written communication sent to Grist, a representative from Shein echoed Peter Pernot-Day's claim that through the use of technology, the firm is able to minimize waste and enhance productivity, and proposed that the rise in the company's emissions for the year 2023 was due to its expanding operations. "We do not believe that expansion is in conflict with our commitment to sustainability," the representative stated.

An examination of Shein’s environmental report by Business of Fashion, an industry magazine, revealed that in the previous year, the firm experienced a surge in emissions nearly twice as fast as its income growth, positioning Shein as the top polluter in the fashion sector. In contrast, Zara saw its emissions increase at only half the pace of its revenue growth. Meanwhile, other leading names in the sector, like H&M and Nike, saw their revenues rise as their emissions decreased compared to the previous year.

According to Sheng Lu, a professor specializing in fashion and apparel studies at the University of Delaware, Shein's carbon footprint is significantly large due to its heavy use of air freight for shipping. "AI holds vast potential across the fashion sector. It's not that AI itself is detrimental," Lu explained. "The issue fundamentally lies in the unique business approach adopted by Shein."

Several leading companies transport goods internationally in large quantities, opting for sea freight due to its cost-effectiveness, and maintain suppliers and storage facilities across numerous nations. This strategy reduces the journey lengths for products to reach buyers.

Based on the sustainability report released by the company, transportation, including shipments from their locations to consumers, accounts for 38 percent of Shein's environmental impact, while 61 percent is attributed to various elements within its supply chain. Despite the company's headquarters being in Singapore and having suppliers across a select few nations, a significant portion of its clothing is manufactured in China. These items are then dispatched daily to customers via air in packages addressed to each individual. In July, the firm was shipping approximately 900,000 packages daily to the United States.

Activists staged a protest in Barcelona, Spain, on Black Friday in November 2023.

A representative from Shein communicated to Grist that the firm is in the process of creating a strategy to reduce carbon emissions within its supply chain. The company has recently boosted its inventory levels in American warehouses to shorten delivery times for its customers in the US and has expanded its reliance on cargo ships, which emit less carbon compared to cargo planes.

"Managing carbon output in the fashion sector is quite intricate," Lu remarked, noting that numerous labels employ artificial intelligence to enhance their efficiency. "The effectiveness of AI greatly relies on its application."

Studies suggest that adopting specific AI technologies can aid businesses in enhancing their sustainability efforts. Shahriar Akter, who is the associate dean of business and law at the University of Wollongong in Australia, believes that AI represents a crucial component that was previously missing. In May, Akter, alongside his team, released research showing that fast-fashion suppliers implementing AI data management systems to meet the sustainability objectives of major brands not only saw an increase in profits but also a reduction in emissions. Akter emphasizes the significance of these technologies in meticulously tracking environmental footprints, including pollution and emissions levels, a capability that was unattainable prior to the advent of AI-based solutions.

Shein informed Grist that it does not employ machine-learning data management tools for monitoring emissions, a function of AI highlighted in Akter’s research. However, the firm’s highly publicized implementation of machine-learning technology for forecasting demand and minimizing waste represents another application of AI that the study addresses.

Nonetheless, there's still a significant journey ahead for the company to achieve its objectives. According to Grist's calculations, the carbon emissions Shein claimed to have reduced in 2023, through initiatives like supplying its suppliers with solar panels and choosing sea freight, only represented roughly 3 percent of its annual total carbon emissions.

Lenier, a representative from Sustainable and Just Future, holds the opinion that the fast-fashion sector cannot employ artificial intelligence ethically. She argues that the lack of stringent regulations on this technology enables companies to exacerbate their negative effects on both employees and the ecosystem. “The individuals employed in these fast-fashion manufacturing sites are facing unprecedented pressure to increase production at an even quicker pace,” she mentioned.

Lenier and Lu share the opinion that the fashion industry can become more eco-friendly if consumers are persuaded to reduce their purchases. Lu mentioned that if businesses employ artificial intelligence to increase their sales but don't alter their eco-damaging habits, their environmental impact will inevitably rise. "This results from the capability to provide items that are more appealing to the market, leading to increased consumer buying beyond previous levels," he stated. "Naturally, this will result in a greater carbon footprint."

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