Asset manager ASN Impact Investors has ditched its shares in clothing companies, citing a lack of progress towards sustainability goals prompted by competition from Chinese fast fashion companies.

ASN, which held shares in H&M, Inditex and Asics, said working conditions had improved but nothing else was moving.

The sector is locked in a cycle of ever-faster production, ASN director San Lie said in a statement.  “They are competing with Chinese parties such as Shein and Temu whose production is even faster. That is a threat to sustainability,” he said.

ASN Impact Investors, which manages the ASN biodiversity fund as well as ASN Bank, are subsidiaries of the Volksbank, with assets totalling €4.2 billion. Some €70 million had been invested in the clothing companies.

The constant stream of cheap clothing is too tempting for consumers to resist, Lie said. “We know about the heartrending conditions in the clothing factories and that beaches in Africa are full of textile waste. And yet when we walk into a shopping street we come out with another item of clothing,” he said.

The government should intervene to combat the negative effects of the fast fashion industry on climate, biodiversity and human rights, he said. In other countries, such as France, legislation is being prepared to put a tax of €10 on each fast fashion item.

On a European level, a digital product passport to be introduced in 2027 will show consumers in detail where the clothes come from and the CO2 emissions which were produced to make them. It is then up to the consumer to make an informed choice.

According to European Environment Agency figures, textiles consumption in the EU caused in 2020 the third highest pressures on water and land use and the fifth highest use of raw materials and greenhouse gas emissions.