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.

The rapid growth of social media companies has created significant ESG challenges, particularly in the areas of data privacy, content moderation, and corporate governance.

Meta and ByteDance, in particular, have been hit with lawsuits and fines related to data breaches, privacy violations, harmful content affecting minors, labor practices, and antitrust, with regulatory bodies across the US, EU, and Asia increasing scrutiny of their data collection practices.

Let’s dive into some of the key ESG challenges facing the social networking industry.

Meta Platforms Inc.: Privacy Breaches and Regulatory Scrutiny

Meta, the mother company of some of the most used social platforms, Facebook, Instagram, and WhatsApp, has faced numerous ESG challenges over the years, including privacy breaches, data misuse, and content moderation issues. 2025 is off to a rocky start, with the company facing a new lawsuit over personal data usage for targeted ads. In 2024, Meta was fined €251 million for a 2018 data breach and faced fines in South Korea and Nigeria for unlawful data collection and antitrust trials regarding Instagram and WhatsApp. In 2023, it addressed issues related to minors and employee treatment. Previous years included fines over the Cambridge Analytica scandal and minors' privacy violations, highlighting ongoing governance and privacy risks amidst regulatory scrutiny.

Key Controversies:

• Meta Faces Lawsuits Over Targeted Advertising and Data Use
• EU Fines Meta €251 Million for 2018 Data Breach
• Meta Settles $1.4B Privacy Lawsuit Over Facial Recognition
• Meta Faces Antitrust Trial Over Instagram and WhatsApp Acquisitions
• Meta Fined for Violating Consumer and Data Laws in S.Korea and Nigeria
• Meta Censors Pro-Palestinian Content Amid Global Tensions
• Content Moderators in Kenya Sue Meta Over Working Conditions and 'union-busting'
• Meta Settles $725M Lawsuit Over Cambridge Analytica Privacy Scandal

ByteDance Ltd (TikTok): National Security Risks and Content Concerns

In recent years, TikTok has faced significant ESG risks as U.S. politicians labeled it a national security threat, leading to data privacy concerns and investigations in the EU. By 2022, it incurred major fines, including a £27 million penalty in the UK for data breaches. In 2023, child safety and harmful content lawsuits increased, prompting government bans on official devices in the U.S., UK, and EU. In 2024, TikTok lost its appeal against a U.S. ban, while countries like Canada and Albania imposed restrictions. A 2025 Supreme Court ruling heightened the risk of a complete ban, highlighting ongoing legal challenges.

Key Controversies:

• TikTok Faces Lawsuits Over Harmful Content and Security Concerns
• TikTok Hit with Multiple Fines and Investigations Over Privacy Violations
• Bans and Restrictions Over National Security Risks‍
• TikTok Sued by Parents and States for Impact on Minors' Mental Health‍
• US Government and Several States Move Toward TikTok Ban‍
• CEO Faces Congressional Testimony on Security and Privacy Concerns‍
• TikTok Faces Backlash Over 'Blackout Challenge' and Content for Kids
• Allegations of Discrimination and Toxic Work Culture‍
• TikTok Fined £27M in UK for Data Protection Breach

X Corp: Hate Speech and Misinformation

Since Elon Musk's acquisition of X (formerly Twitter), the platform has faced major controversies over hate speech and misinformation. Legal issues from the $44 billion buyout and a $150 million settlement for security breaches surfaced in 2022, along with fines in Russia and India. In 2023, X received backlash for hosting anti-Semitic content, leading to advertiser losses and lawsuits. The EU initiated investigations into disinformation, and by 2024, X faced fines in Brazil and Australia, GDPR complaints, and class action lawsuits related to age discrimination and mass layoffs, raising concerns about its online impact.

Key Controversies:

• X Faces Multiple Lawsuits and Fines for Hate Speech, Misinformation, and Privacy Violations
• X Under Investigation for Disinformation, and Biased Algorithms
• X Hit with Large Fines for Data Violations and Misleading Practices
• US SEC Sues Musk for $150M Twitter Shareholder Fraud
• X Faces Legal Challenges Over Mass Layoffs, Age Bias Claims, and Former Executives Severance Payments
• Global Boycott of X Grows Amid Rising Hate Speech and Toxicity Since Musk’s Acquisition

KakaoTalk: Privacy and Market Manipulation

Kakao has faced moderate ESG risks, notably privacy issues and market behavior controversies. In 2024, the company was fined $11.1 million due to a KakaoTalk data breach. Additionally, in 2023, Kakao faced investigations over market manipulation linked to its SM Entertainment acquisition and experienced security vulnerabilities enabling fraudulent activities. Despite these concerns, Kakao's service outages and monopolistic practice allegations have had less severe impacts compared to industry peers.

Key Controversies:

• Kakao Faces Privacy Fine Equivalent to $11.1 Million for Data Leak
• Kakao Challenges Record Fine Over Personal Data Breach
• Regulator to review Kakao's acquisition of SM Entertainment
• Kakao Faces Scrutiny Over Fake Business Channels and Security Flaws
• FTC Investigates KakaoTalk's Market Dominance After South Korea Outage
• Hundreds Fall Victim to Major KakaoTalk Pyramid Scheme Scam

RedNote (Xiaohongshu): Censorship and Privacy

REDnote (Xiaohongshu) has fewer ESG issues compared to its peers, facing challenges primarily related to censorship, privacy, and regulatory compliance. In 2025, Texas banned its use on government devices due to security concerns. Earlier, REDnote encountered legal challenges over AI-generated art copyrights (2023), a Taiwan-imposed national security ban (2022), layoffs due to restructuring (2022), and fines by Chinese regulators for inappropriate content involving minors (2021).

Key Controversies:

• Texas Governor Issues Ban on RedNote for Use on Government Devices
• Xiaohongshu Faces Legal Challenges Over AI-Generated Art and Copyright Infringement
• Taiwan issues ban on Xiaohongshu
• Xiaohongshu's Concerns Amid Censorship and Government Compliance
• China's Xiaohongshu Announces Staff Layoffs
• Xiaohongshu Suspected of Compromising Minors' Privacy
• China Fines Tech Giants Including Xiaohongshu for Spreading Soft Pornography Involving Minors

Conclusion

The social networking industry continues to grapple with significant ESG challenges related to data privacy, harmful content, and corporate governance. Major companies such as Meta, ByteDance, X Corp, KakaoTalk, and REDnote face ongoing regulatory scrutiny, fines, and lawsuits, highlighting persistent ethical concerns. While these issues pressure platforms to improve transparency and governance practices, they also underscore the industry's substantial risks and responsibilities to users and stakeholders.

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.

A few months ago, SESAMm undertook a CSR audit conducted by Early Metrics as part of its fundraising round. This audit allowed us to identify our strengths and weaknesses in these matters; while the results were very positive for the company, they highlighted a few aspects that require focused attention.

Environment: A green commitment

Limitation of transportation impact

By promoting remote work, SESAMm has mitigated the carbon footprint caused by daily commuting. This initiative has a dual benefit – a positive impact on the environment and potentially enhancing employee work-life balance.

Technology and renewable energy

The approach to leasing refurbished IT equipment and choosing server providers relying on renewable energy is a step toward a sustainable technology ecosystem.

Ethical and environmental awareness

Implementing an Ethic charter and introducing Climate Fresk workshops within the organization speak to SESAMm's commitment to building an environmentally conscious culture.

Social: Human–Centric Approach

Well–being and work-life balance

By prioritizing employees' health and well-being, SESAMm has fortified its internal culture. These initiatives pave the way for a balanced work-life ecosystem, from gym memberships to remote work arrangements.

Gender equality

With women representing a commendable percentage of overall staff, the company has made strides toward gender equality. Yet, recognizing the need for further improvement reflects a candid and evolving approach to inclusivity.

Talent management

Cultivating talent through mentoring, professional training, and internal education illustrates SESAMm's dedication to professional growth and development.

Governance: Transparent and Ethical

Policy implementation and oversight

With robust policies such as an IT charter, an anti-corruption guide, and an ethics charter, SESAMm has laid a strong foundation for transparent governance.

Diversity and inclusion

The celebration of diversity, represented by team members from 10 different nationalities, adds to the richness of the organizational culture.

Executive transparency

Open communication channels like Ask Me Anything meetings foster a transparent relationship between the executive committee and the employees, enhancing trust and alignment with the company's strategy.

The Road Ahead: Focused Priorities

SESAMm's recognition of areas requiring further development marks a responsible and forward-thinking approach. Conducting a carbon footprint assessment, finalizing career paths, and implementing a transparent salary policy is a testament to the company’s commitment to continual improvement.

Conclusion

SESAMm's CSR audit achievements reflect a commitment to sustainable business practices and a vision for continual growth and improvement. The intricate blend of environmental stewardship, social responsibility, and governance paints a portrait of a company that recognizes its corporate citizenship. The internal CSR committee's establishment assures that this is a momentary success and a sustained journey toward excellence.

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 request a demo, contact one of our representatives.