Global fashion online retailer SHEIN announced the launch of a new Circularity Fund, with the company providing an initial investment of €200 million, aimed at supporting startups in Europe and the UK focused on textile-to-textile circularity solutions.

The new fund comes as the fashion industry, and the fast-fashion sector in particular, face increasing pressure to address the climate impact of their businesses. The European Commission, for example, has proposed rules aimed at supporting the sustainable management of textile waste, and placing responsibility for the full lifecycle of textile products in the hands of producers, noting that only 22% of post-consumer textile waste is collected for re-use or recycling, with the remainder often landfilled or incinerated, and that consumption of textiles has the fourth highest impact on climate change and the environment, and is one of the top factors impacting water and land use as well as greenhouse gas emissions.

The Commission has also noted the exacerbating impact of fast fashion on the creation of textile waste, which places low-priced products on the market which do not internalize environmental externalities in the cost, and encourage higher volume clothing purchases.

According to SHEIN, the new fund will support start-ups and businesses throughout Europe and the UK that are developing next-generation circularity technologies and solutions. The fund will invest in early-stage start-ups working on textile-to-textile recycled materials innovation and related areas, and will also enter into offtake agreements and other commercial partnerships with more mature start-ups with existing production capacity in textile-to-textile recycled materials or new and emerging preferred fibres.

The launch of the fund follows the establishment by SHEIN in 2022 of value chain emissions targets, including a goal to reduce Scope 3 emissions by 25% by 2030. According to SHEIN’s most recent ESG report, Scope 3 emissions account for more than 99% of the company’s greenhouse gas footprint, with the majority originating in its product supply chain.

The company said that it will be the cornerstone investor in the new fund, and is inviting businesses, financial institutions, sovereign wealth funds globally to co-invest in the fund.

Donald Tang, SHEIN’s Executive Chairman, said:

“As a global leader in our sector, SHEIN has both a responsibility and an opportunity to accelerate innovations that can address the environmental footprint of the fashion industry.  The Circularity Fund will build on our support for entrepreneurs and businesses at the forefront of innovation in circular initiatives, with a focus on supporting entrepreneurship and innovation in the UK and the EU, where some of the most exciting work in this space is taking place.”