The Italian consumer protection and competition authority (AGCM) has imposed a fine of 1 million euros on fast-fashion retailer Shein for misleading environmental claims on its website.

This action reflects an increasing scrutiny on companies regarding the accuracy of their sustainability claims in marketing.

Shein's IPO plans in London have been stalled due to regulatory disagreements, while the company is also facing investigations by the European Commission for potential violations of consumer protection rules.

Despite the scrutiny over its environmental and labor practices, Shein reported a net income exceeding $400 million and nearly $10 billion in revenue in the first quarter of 2025.

While Shein has made some progress in reducing its Scope 1 and 2 emissions through solar power adoption, its Scope 3 emissions from suppliers still represent the largest share of its carbon footprint.

The AGCM emphasized that Shein's operations in the fast fashion industry impose a heightened duty of care regarding environmental impact, given the sector's pollution levels.

Shein's 2024 Sustainability and Social Impact Report revealed a 13.7% increase in transport-related emissions, primarily due to a reliance on air freight.

The AGCM warned that misleading sustainability claims can distort consumer choices, favoring less environmentally responsible companies.

In response to the findings, Shein stated it has strengthened its internal review processes and improved its website to ensure compliance with regulations.

This case serves as a cautionary tale for startups and businesses in the fast fashion ecosystem, illustrating that growth must be accompanied by integrity to avoid regulatory challenges.

Shein is currently facing multiple investigations by national consumer protection authorities for potential violations of EU consumer protection law.

As of now, Shein has not commented on the fine or the accusations.