Client: Raiffeisen Bank International

Industry: Corporate Banking and Finance

Location: Austria

Use case: ESG alerts and monitoring

SESAMm solution: TextReveal^® API and Dashboards

Introduction

Raiffeisen Bank International’s (RBI) Advanced Analytics and AI Tribe is crucial to the bank’s operations. The team delivers, maintains, and operates AA&AI (digital) solutions allowing Retail and Whole-Sale Banking to increase revenues (and to fulfill their role as the first line of defense). They are pioneers in using cloud-based infrastructure. With more than 50 data scientists, data engineers, machine learning engineers, and cloud engineers, they play a crucial role in transforming RBI into a data-driven company.

The AA&AI tribe at RBI recognized a significant opportunity in SESAMm, a leading AI-powered analytics, and data solutions provider. SESAMm’s solutions offer access to an extensive range of web-based information, which is otherwise challenging to obtain. This data is critical for RBI’s operations, enabling the bank to stay ahead of the curve regarding market trends, consumer preferences, and industry insights.

Key successes for RBI after working with SESAMm include:

• Generated analytics on clients to specifically monitor companies exposed to the Ukraine war, enabling the bank to proactively identify potential risks and minimize its exposure to geopolitical events.
• Integrated specific languages within RBI’s core market, including Russian, Romanian, Slovak, Czech, and Polish, improving the bank’s ability to analyze and understand regional data.
• Integrated SESAMm’s data with RBI’s internal visualization dashboard, allowing the bank to leverage the insights generated by SESAMm’s AI-powered analytics to improve decision-making and drive business growth.

Why RBI chose SESAMm: Coverage, early warning signals, and customizability

Raiffeisen Bank International decided to partner with SESAMm due to several key factors:

1. SESAMm’s excellent coverage, including that of the CEE market, is a crucial need for RBI. This coverage enables RBI to obtain critical data and insights that help inform the bank’s decision-making process.
2. SESAMm’s product, TextReveal API, provides data and the underlying natural language processing (NLP) capabilities, enabling RBI to analyze data at a deeper level. This capability is significant for the bank’s operations in the CEE region, where multiple languages are spoken.
3. The relationship built between SESAMm and the RBI team during the proofs-of-concept (PoCs) brought confidence in the quality of SESAMm’s products and the potential value they could bring to the bank.
   
   Overall, the combination of SESAMm’s excellent coverage of the CEE market, NLP capabilities, and positive relationship with the RBI team made them the ideal partner for the bank’s data and analytics needs.

The Collaboration

After SESAMm and Raiffeisen Bank International agreed to collaborate, SESAMm began working with David Eschwé, the Head of Group Advanced Analytics at RBI. SESAMm onboarded the RBI team on TextReveal API and opened dashboards and API access to RBI. This access allowed RBI to generate historical datasets. SESAMm worked with the RBI team to define the roadmap and key milestones, particularly for integrating Central and Eastern European languages. This enabled RBI to access critical information efficiently that could help their internal teams generate early warning signals to better mitigate potential risks that can harm the bank. By working closely together, SESAMm and RBI achieved key milestones, demonstrating the value of the collaboration to both parties.

The results

By leveraging SESAMm’s solutions, RBI was able to monitor more than 1,000 clients, generating analytics on companies exposed to the Ukraine war and creating early warning signals to mitigate better potential risks that could harm the bank. Additionally, SESAMm’s solutions provide substantial yearly savings in raw-data-related costs, allowing RBI to allocate resources more efficiently and effectively. Through this collaboration, SESAMm helped RBI achieve more significant insights into their data, improve their risk management processes, and achieve considerable cost savings.

"Our partnership has been a great success. Thanks to SESAMm, we can now answer business-relevant questions within days, including those related to the critical topic of ESG” —David Eschwé, Head of Group Advanced Analytics in RBI.

About Raiffeisen Bank International

Raiffeisen Bank International AG (RBI) is a leading Austrian banking group that operates across Central and Eastern Europe. It is headquartered in Vienna, Austria. RBI offers a wide range of banking and financial services, including corporate and investment banking, retail banking, leasing, and asset management. With a focus on sustainability and social responsibility, RBI is committed to providing high-quality banking services while supporting the communities in which it operates.

Reach out to SESAMm

Whether you’re a financial institution, an asset manager, or a data-driven company looking to gain insights into your data, SESAMm’s technology and team of experts can help you achieve your goals.

On 5 December in New York, SESAMm was selected to take part in The BIG Alternative Data Showcase Event, one of the major events focused on alternative data applied to the asset management industry. Organised by our partner Eagle Alpha, this very first step in the US market for SESAMm represented a unique opportunity: to bring our expertise and solutions to the biggest asset managers globally.

Since September, SESAMm’s business has been growing steadily. In addition to the ongoing discussions we have with several significant asset managers, two major groups have signed a contract with us: one of the top 5 asset managers in Japan that has more than $100 billion of assets under management; and one of the top 10 asset managers in France with more than $50 billion under management.

In addition to this great news, we recently signed partnerships with two major data providers in the USA, one of them with Eagle Alpha. Shortly after our agreement, from a list of 450 data vendors, Eagle Alpha selected 12 of them to be part of the BIG Alternative Data Showcase Event, SESAMm being the only French company chosen. This event in New York City represents the biggest one globally on alternative data applied to asset management. That was an opportunity for our company to present for the very first time L’Humeur des Marchés and our expertise in the United States.

Sponsored by Deloitte, Lowenstein Sandler, S&P Global Market Intelligence and CRUX, Eagle Alpha’s event showed us how unique and exceptional the US market is in terms of business opportunities for SESAMm. Gathering renown international hedge funds, investment banks but also major companies from other sectors with needs in Artificial Intelligence and Data Analysis, this event proved to be one of the most interesting and exciting we have attended so far.

Following this event, with the multiple contacts and leads for both partnerships and business contracts that have been gathered, our journey home only strengthens our intention to plan future business trips in the United States and our entry on this market.

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.