Proactive Investors - Some UK fund managers have expressed concerns about supporting fashion company Shein's potential flotation in London due to allegations about its treatment of workers.
Recent indications have suggested the $66 billion Chinese online fashion company is seeking to list in London after getting pushback in the US from its hoped-for IPO in New York.
While a London IPO could potentially help revive a dormant market in the Square (NYSE:SQ) Mile, leading UK institutional investors are hesitant to invest, according to a report from the Financial Times, due to allegations of forced labour in Shein's cotton supply from Xinjiang.
Shein has denied these claims and stated the company has a zero-tolerance policy for forced labour and is committed to respecting human rights.
"It’s a tricky one," one UK fund manager told the paper. "I don’t think anyone with an ESG team will be able to buy it. It smacks of desperation for the London Stock Exchange — they’ll take anything." He added that there is a risk of "collateral brand damage" for the LSE.
Other fund managers said the listing was important for London as investors large and small have shown there remains interest in companies that don't have the best ESG records.