Boohoo is — in many ways — a remarkable company. In the midst of a pandemic, the online fashion retailer grew by 41%, snapped up six fallen high-street retailers, opened two warehouses and unveiled a new London office.
 
Only yesterday, it also announced that it has teamed up with Kuwait-based Alshaya Group to build up the presence of one of those recently acquired retailers, Debenhams, in the Middle East.
 
The secret sauce to its success lies in its rapid reactions to consumer demand. On average, Boohoo churns out approximately 100 new products on its website a day, but if a particular design is found to be unpopular, it is immediately discarded.
 
Mid-last year, an undercover report on its Leicester garment factories revealed Boohoo to be embroiled in a modern slavery controversy branded as “one of the worst ESG scandals in UK history.” And while its share price fell close to 50% after the scandal erupted, the stock had effectively rebounded a mere month later and is now projected by analysts to continue rising despite ongoing concerns over its unresolved supply chain problems.  
 
Hailing from Nanjing, China, Shein is yet another example of a fast-growing fashion brand facing a labour abuse scandal. Backed by global investors the likes of IDG and Sequoia, it is rumoured be considering a record-breaking $47bn IPO in 2021.
 
Investors love a good growth story and brands like Boohoo and Shein tick all the boxes. Worryingly, however, the fashion industry is widely believed to be the second most polluting industry in the world. The sector’s dominant business model of fast fashion has long been criticised for encouraging hyper-consumption and a “throwaway” culture — as personified by Boohoo and Shein. The apparel industry’s climate impact is expected to increase 49% by 2030, almost equivalent to the annual United States’ greenhouse gas emissions of today.
 
Change is necessary. But in order for significant change to happen, the finance industry will need to acknowledge its part in supporting fast fashion’s detrimental effect on the environment. There is power in the way capital is allocated and financial incentives or penalties seem to be crucial if fast fashion companies are to clean up their act.
 
A report by Boston Consulting Group and Fashion For Good estimates that a financing of $20 billion to $30 billion per year is needed to achieve a step change in sustainability by 2030. In the global transition towards net-zero, it is increasingly clear that the roles that the fashion and finance industries play are more intertwined than ever.