At SESAMm, we have always been at the forefront of utilizing artificial intelligence (AI) for Environmental, Social, and Governance (ESG) risk analysis. Our journey began in 2014, leveraging natural language processing (NLP) to analyze vast amounts of data to identify company risks - from public equities to expanding into private assets. Our technology stack, deeply rooted in AI-first principles, has evolved significantly over the years, incorporating deep learning and large language models since their inception.

2023 marked a significant leap in generative AI, breaking data quality and precision barriers. Our ability to attain human-level precision in ESG control detection across dozens of languages is a testament to our commitment to continual technological advancement. We plan to further integrate generative AI into our processes, enhancing data quality and expanding our coverage, especially for smaller firms and infrastructure projects that often go unnoticed in the market.

Enhancing User Interaction with AI: The Future of Client Engagement

A significant focus for SESAMm in 2024 is transforming how clients interact with our SaaS platform. Last year, we introduced a prototype of our generative AI chatbot, which marked the beginning of a new era in user interaction. Our goal is to utilize generative AI not just for data improvement but to enhance the overall user experience. This includes making data more accessible and addressing challenges like the lack of unique identifiers in the private space.

Accelerating Innovation and Development with AI

Our team of 60 engineers and researchers is the driving force behind our rapid development and innovation. The integration of large language models has enabled us to deliver features more quickly and efficiently. With a robust infrastructure and an agile AI team, we're pushing the boundaries of what's achievable with AI, outpacing traditional human analyst capabilities. This agility in innovation is crucial for our continued leadership in the market.

The Future of AI Technologies in SESAMm's Roadmap

We keep a close eye on the latest AI advancements, from new open-source libraries to cutting-edge commercial models. Our team is deeply engaged in fine-tuning models for specific applications, especially in tracking ESG events and uncovering insights about smaller, lesser-known companies. This approach reflects our culture – an AI-first company specializing in the financial and ESG space, always eager to incorporate more technology and innovate.

Cementing Leadership in AI-Powered ESG Analysis

Our vision extends beyond 2024, aiming to be the premier global player in ESG controversy and risk analysis. With regulations evolving globally, we anticipate a significant expansion in our market. Our focus remains on delivering unparalleled reputational insights, especially in the investment world, but also rapidly expanding into supply chain analysis and client monitoring. We're not just keeping pace with the market but setting the standard for AI-powered ESG analysis.

The Expanding Global ESG Landscape: Opportunities and Challenges

As regulations intensify worldwide, including in polarized markets like the US and Asia, we see a growing demand for ESG analysis. This global shift presents both opportunities and challenges. Our strategy includes further integrating our solutions into various ecosystems, such as ESG reporting tools, portfolio management systems, and CRMs. Through strategic partnerships, we aim to position SESAMm as an integral part of the global ESG analysis framework.

Walking the Talk: SESAMm's Commitment to Sustainability

In 2024, SESAMm is not just about leading in technology; we're deeply committed to practicing what we preach regarding sustainability. We have a robust ESG Manifesto and a series of actions aligned with environmental, social, and governance principles. Recognizing our relatively limited carbon footprint as a tech company, we focus on making impactful choices and fostering a culture of awareness and change within our team.

We've implemented programs for environmental awareness, like our Climate Risk training, conducted by certified employees. Our efforts in governance are highlighted by the appointment of our first independent board member, Stephane Beson, signifying our dedication to having diverse external perspectives guiding our company.

Regarding environmental footprint, we prioritize partnering with providers that use clean energy in their data centers. This conscious decision-making extends to selecting partners who can offset their carbon emissions, reflecting our commitment to sustainability.

Remote Work and Sustainability: A Dual Focus

Our approach to remote work has always been progressive. We see it as not just a productivity enhancer but also as a key sustainability strategy. Given our global presence, with teams in France, New York, Tunisia, and London, remote work is essential. It brings our team closer, transcends cultural barriers, and reduces our carbon footprint by significantly cutting down on travel. This strategy aligns with our dedication to work-life balance, recognizing the importance of flexibility for our employees.

Targeting the Right Market with Tailored Services

2024 is a year of strategic focus for SESAMm, especially in terms of our target market. We're seeing a growing trend among banks to aggregate ESG controversy data. Our unique capability to provide comprehensive coverage, encompassing mixed assets portfolios, positions us as a key player for these institutions.

We continue strengthening our presence in private equity and expanding our reach into the banking sector, private debt, and infrastructure funds. Our dedicated corporate business practice is another area of expansion, helping European companies monitor ESG controversies. We also focus on sustainability and ESG teams, procurement teams, and third-party risk teams, ensuring a broad yet targeted market approach.

Upholding Data Security and Privacy

Data security and privacy are paramount, especially given the increasing sophistication of cyber threats. Our co-founder and CTO brings invaluable expertise in cybersecurity. We conduct annual audits, have robust systems to monitor and preempt attacks, and continuously train our teams to be vigilant. While we don't deal with personal data, we focus on protecting critical systems for our clients, ensuring that we maintain the highest standards in data security.

Building a Team for the Future

Looking ahead, our confidence in 2024 stems from our team's exceptional capabilities. We've implemented agile processes and onboarded talented individuals across all levels. Our team's passion and dedication are key drivers in adapting to market changes and delivering high-quality services. It's not just about where SESAMm is now but how our team will continue to excel and innovate in the future.

A Vision of Innovation and Responsibility

As we move into 2024, SESAMm stands at the forefront of AI-powered ESG analysis, not just through technological innovation but also through a steadfast commitment to sustainability and security. Our focus on the right markets, combined with a forward-thinking approach to remote work and data protection, positions us to meet the evolving needs of our clients.

Join us at SESAMm as we navigate the future of ESG analysis, leveraging our expertise to foster a sustainable, secure, and innovative business environment. Explore SESAMm's cutting-edge solutions and be part of a future where technology meets responsibility.

SESAMm’s AI Technology Reveals ESG Insights

Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.

Paris, January 18, 2024 – SESAMm, a leader in AI-powered text analysis, is proud to announce its recognition in the Forrester report "ESG Data And Analytics Providers Landscape, Q1 2024."

Sylvain Forte, CEO of SESAMm, commented, “We are thrilled to be recognized by Forrester. Our AI-driven approach, particularly our flagship product, TextReveal®, positions us uniquely in the market. TextReveal® leverages a vast data lake and advanced natural language processing to provide comprehensive insights on public and private companies, a capability not commonly found in traditional ESG analytics.”

Alexandre Tiesset, Head of ESG at SESAMm, added, “Our technology's ability to process massive volumes of data, provide nuanced ESG insights and stakeholder feedback is a game changer. It significantly enhances our clients' ability to assess non-financial risks and monitor ESG-related events, offering them a more accurate and effective solution for their needs.”

SESAMm's AI technology sets it apart as a leader in ESG analytics, enabling more precise and timely insights into ESG controversies and positive events. This technology empowers private equity firms, asset managers, corporations, and financial institutions to monitor and identify company events and controversies, providing an edge in the rapidly evolving landscape of sustainable investment.

For more information about SESAMm and its innovative solutions, please visit www.sesamm.com.

Download the full Forrester report, The ESG Data And Analytics Providers Landscape Report for Q1 2024 (available to Forrester subscribers and for purchase).

About SESAMm

SESAMm is an innovative leader in AI and big data analytics for investment. The company specializes in using advanced natural language processing and machine learning techniques to provide comprehensive ESG and thematic insights, aiding clients in identifying potential risks and opportunities in their investment portfolios.

SESAMm’s AI Technology Reveals ESG Insights

Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.

Globally, ethics and sustainability are important, but the retail industry faces intense scrutiny over supply chain integrity. This spotlight shines on SHEIN and TEMU, two giants in the fast fashion and e-commerce sectors, known for their vast reach yet marred by controversies around labor practices and environmental impacts. This article explores their supply chain strategies, examining how current and emerging legislation, like the CSDDD initiative, aims to tackle the ethical dilemmas plaguing global retail. Through a comparison of SHEIN and TEMU, we assess the effectiveness of regulatory frameworks in addressing these critical issues.
By analyzing their ESG controversies and comparing their responses, we assess how well current and future legislation, particularly the CSDDD initiative, addresses ethical issues in global supply chains.

Specialized Retail: The Case of SHEIN and TEMU

SHEIN and TEMU are compelling use cases due to their past controversies and the focus on their supply chain practices. Both companies have come under scrutiny for their labor practices, environmental impacts, and ethical issues, making them ideal subjects for analysis. By studying their supply chain challenges, we aim to assess the effectiveness of current legislation and predict the potential impact of future regulatory frameworks, particularly in the context of the CSDDD initiative.

While both companies operate with a similar business model, SHEIN is an established player entangled in numerous supply chain controversies. On the other hand, TEMU, a newcomer since 2022, faces similar issues. Comparing them helps us evaluate the effectiveness of existing supply chain legislation and determine whether increased regulatory scrutiny has improved compliance or merely raised awareness of these controversies within the industry.

Note:

Size bias mitigation:

We normalized the data for both companies to ensure an equal basis of comparison, accommodating the difference in operational history—SHEIN since 2008 and TEMU since 2022— to eliminate discrepancies in web attention.

Risk analysis:

It’s worth noting that the figures presented here specifically relate to supply chain risks, as that is the primary focus of our analysis.

Examining Supply Chain Controversies

We analyzed ESG risks in the supply chains of SHEIN and TEMU over the past four years, adjusting data volumes for comparative analysis. SHEIN's supply chain risks have significantly increased since 2021, peaking in 2022 and continuing to rise in 2023, reflecting a growing online focus on its issues. Meanwhile, TEMU, despite only being established in 2022, has quickly come under intense scrutiny. The company faces frequent criticism for its supply chain practices, including condemnations for inaction and ongoing human rights violations.

Examining Social Sub-risks

In our analysis of social risks within the supply chains of TEMU and SHEIN, we discovered that fundamental human rights and labor rights are the most and second most prevalent issues, respectively. Notably, despite TEMU's more recent establishment compared to SHEIN, its supply chain has a relatively higher proportion of human rights controversies.

Both companies have faced serious allegations related to their supply chain practices. TEMU and SHEIN are scrutinized for using Chinese cotton potentially linked to slave labor, with insufficient efforts to mitigate forced labor risks. Allegations include child slavery, privacy issues related to sharing user data, and environmental neglect, including the use of carcinogens in products. Despite their efforts to boost their public image through aggressive marketing and influencer engagements, both companies have been criticized for their approach to environmental responsibility and labor practices.

Political calls for investigations into the use of Uyghur slave labor in both companies underscore their ethical challenges. Neither company has shown rigorous compliance with anti-forced labor laws, lacking stringent programs to audit supplier compliance. This highlights significant gaps in their corporate responsibility efforts.

SHEIN has faced accusations of stealing artists' work and failing to comply with modern slavery reporting regulations, adding to the ethical concerns. Consumers have also been alarmed by hidden clothing tag messages indicating threats. Both companies are heavily investing in lobbying efforts amid regulatory scrutiny as they struggle to balance rapid growth with sustainable and ethical business practices.

Examining Environmental Sub-risks

It's evident that social risks, particularly human rights breaches and labor rights controversies, have received significantly more attention than environmental risks. Despite the severity of environmental events, they represent a lower percentage in comparison. This highlights the prioritization of addressing social issues within these companies' operations.

SHEIN experiences extensive scrutiny, leading to a wealth of data on its practices. Conversely, TEMU, despite facing environmental controversies, has been less transparent about its environmental footprint, with Greenpeace reports highlighting this lack of clarity. This disparity underscores that SHEIN’s environmental impacts are more thoroughly documented than TEMU’s.

For SHEIN, concerns include lead contamination in products, resulting in recalls by Health Canada of toxic children's jackets. Greenpeace's analysis has also revealed hazardous chemical levels surpassing EU regulations. Additionally, SHEIN’s operations are criticized for their contribution to climate change through promoting overconsumption that leads to high carbon dioxide emissions, severe water pollution from textile dyeing, and substantial textile waste.

These environmental and health issues gained attention during SHEIN’s attempts to launch IPOs in the US and UK, spotlighting the company's ethical and environmental practices. Despite SHEIN's pledges to donate towards solving textile waste problems, critics label these actions as greenwashing, calling for significant alterations to its business model to address the underlying issues effectively.

Supply Chain Dynamics: SHEIN vs TEMU

While TEMU doesn't have its own brand like SHEIN, it operates under a comparable business model. It acts as an intermediary, managing shipments for products it doesn't manufacture. Despite their distinct approaches, both companies frequently engage in disputes, drawing attention to their supply chains. Additionally, policymakers often group them with similar firms, subjecting their fast fashion practices to heightened scrutiny.

Recent reports and incidents shed light on TEMU's practices, including its engagement with suppliers previously rejected by SHEIN for substandard practices and allegations of evading responsibility for forced labor. We also detect TEMU's legal battles with SHEIN, involving disputes over supply chain arrangements and copyright violations, and a separate lawsuit filed by TEMU against SHEIN accusing it of coercive tactics against suppliers and allegedly intimidating its third-party suppliers and taking retaliatory actions against them for conducting business with TEMU.

These events highlight the growing scrutiny surrounding the supply chain practices of both SHEIN and TEMU. Senator Rubio's call for an investigation into allegations of Uyghur slave labor usage by both companies, additionally, mentions of Congressional attention has also focused on these companies, with reports exposing violations of U.S. tariff laws and evasion of human rights reviews on imports, shedding light on systemic issues within their operations.

Increasing Sustainability Awareness

We studied the mentions of both ESG initiatives associated with the brands and detected that over the analyzed time frame, SHEIN has been associated with significantly more initiatives than TEMU.

We analyzed the sustainability initiatives of these companies, finding that SHEIN's efforts outpace TEMU's significantly.

SHEIN focused on circular economy practices, exemplified by partnerships like that with Queen of Raw to reuse excess industry inventory and launches such as EvoluSHEIN and SHEIN Exchange, also boosting Product safety mentions, which promote recycled materials and resale of used products, respectively.

In contrast, initiatives related to atmospheric emissions are mainly concerned with reducing supply chain emissions by 25% by 2030, while climate change efforts include innovations with water-saving technologies and collaborations to avoid sourcing from forests and promote low-carbon, recycled textiles.

Social initiatives, though less frequent than environmental efforts, include a $70 million Supplier Community Empowerment Program and compliance monitoring, a community empowerment fund, and clothing drives supporting nonprofits.

Risks versus Initiatives: Focus on SHEIN

Throughout our analysis period, we noted that 2022 was a turning point for SHEIN's sustainability efforts, sparked by several mentions of breaches related to the Modern Slavery Act and child labor allegations in the previous year, which subsequently increased the company’s sustainability-related mentions.
By 2023, as SHEIN prepared for potential IPOs in the US and UK and with the release of a controversial documentary, the company faced heightened scrutiny, with more allegations surfacing in its supply chain concerning various acts and legislations, such as the Modern Slavery Act, Uyghur Forced Labor Prevention Act, and others.
Despite these challenges, mentions of SHEIN’s ESG initiatives also rose, although they remained less prominent than risk-related mentions due to controversies typically gaining more attention online. However, from 2024 to the present, we have observed more initiatives than risks, suggesting that, despite some acts and legislations being non-binding or not directly applicable to SHEIN, the potential reputational impacts drive the company toward positive change.

It's worth noting that we've observed discussions linking SHEIN with the recent EU Corporate Sustainability Due Diligence Directive, also referred to as CSDDD or CS3D. These discussions underscore the view that governments should refrain from incentivizing fast fashion companies like SHEIN.
As the CSDDD is expected to bring about significant changes, forcing businesses to identify, prevent, or mitigate adverse impacts of their operations on human rights and the environment. Notably broader in scope compared to previous legislation, this directive will apply to all EU companies surpassing a certain revenue threshold. Consequently, fast-fashion retailers like SHEIN will face increased requirements to take action and ensure compliance.

The absence of enforceable regulations allows companies like TEMU to continue operating, but SHEIN's actions, particularly as it moves towards an IPO, raise questions about whether its efforts to improve practices are driven by the scrutiny associated with preparing for a public offering or by a sincere commitment to compliance with laws and regulations.

To conclude, our analysis underscores the dynamic landscape of supply chain regulations, ESG risks, and sustainability initiatives within the specialized retail sector, particularly in the fast-fashion industry. A focus on SHEIN and TEMU reveals a rise in both ESG initiatives and identified breaches. SHEIN's proactive initiatives suggest a response to regulatory pressures.
Additionally, our findings suggest that even without binding legal requirements, companies may still choose to comply to enhance their reputation or respond to heightened scrutiny.

Reach out to SESAMm

TextReveal’s web data analysis of over five million public and private companies is essential for keeping tabs on ESG investment risks. To learn more about how you can analyze web data or to request a demo, reach out to one of our representatives.