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Conscious Actions

Sustainability
Report 2015

CEO interview

The future success of any company today, including H&M, depends, amongst other things, on long-term sustainability work and responsible processes. CEO Karl-Johan Persson gives his view on H&M’s progress in terms of sustainability, his opinion on sourcing from developing countries and what results have been achieved when it comes to the Fair Living Wage strategy.

ceo-2015

About H&M Conscious

H&M Conscious stands for everything we do in the name of a more sustainable fashion future. It’s a mission built on passion, long-term thinking and teamwork.

All we do must be economically, socially and environmentally sustainable. It is all highly connected and important for our future growth. We want to make sustainable fashion choices available, attractive and affordable to as many people as possible. Our planet is facing scarcity issues on many fronts and too many people still live in poverty. Clean water, climate change, textile waste, wages and overtime in supplier factories are some of the key challenges in the textile industry.

We love bringing fashion to the world in an exciting and conscious way.

We want to use our scale to bring about systemic change and across the lifecycle of our products. Together with colleagues, customers, stakeholders, business partners and peers, we have the opportunity to truly make a difference – all the way from improving the livelihood of a cotton farmer to lowering the impacts from washing and drying our clothes. Ultimately, we want to make fashion sustainable and sustainability fashionable.


Key performance 2015

SUSTAINABLE COTTON* IN % OF TOTAL COTTON USE
* Certified organic cotton, Better Cotton (BCI) or recycled cotton.
More than

12,000 tonnes of
garments were collected in our stores in 2015. That’s as much textile fabric as in more than
60 million t-shirts.

TONNES OF GARMENTS COLLECTED IN H&M STORES
Change in total CO2e emissions to previous year in % (scope 1+2) vs. growth in sales (in local currencies)
Share of renewable electricity in all our stores, offices and warehouses

In 2015, some 1.3 million pieces were made with closed loop material. That’s over 300% compared to 2014.

We are one of the biggest users of recycled polyester
in the world.

Share of sustainably sourced materials
Included are all materials classified as conscious materials, such as certified organic or recycled fabrics, as well as Better Cotton.

We signed a global framework agreement with IndustriALL and the Swedish union IF Metall to promote sustainable industrial relations and bargaining in our supplier chain globally.

Progress in supplier factory sustainability performance (In ICOC* scores)
*Code of Conduct Index. Data collected during the period 1 Dec 2014 to 31 May 2015 according to our previous Full Audit Programme (FAP).

About 76%
of our colleagues are
women.
And so are
72% of our managers.

All of our denim products are now scored by Jeanologia’s Environmental Impact Measurement tool.

We entered into partnership with Ellen MacArthur Foundation to further develop towards a circular business model.

We implemented a new assessment method, SIPP,
based on a stronger partnership approach.


Awards and recognitions

Here are some of the indices, rankings and awards that assessed and recognised our sustainability performance during the year.

2015 and 2016 World’s Most Ethical Companies
RobecoSAM’s sustainability award for Industry Mover in the retailing industry
Dow Jones Sustainability World Index
Global 100 Most Sustainable Corporations 2015
Green Power Leadership Awards
Green Ranking Global Top 100
PETA’s Libby Award as Most Animal-Friendly Clothing Company

Our value chain around the world

We have stores and suppliers in over 61 markets around the world. Without a doubt, we have an impact on these communities – good and bad. H&M Conscious works to embrace positive impacts and to reduce negative ones along our entire value chain. Impacts created in our own operations are the easiest to control, but often not the most critical ones. So, we need to team up with others to make a difference where it matters the most.

Sustainability starts at the drawing board. We need to create sustainable fashion without compromising on style, design, quality or price. Not only minimising what ends up on the cutting floor, but also knowing how our choice of materials and looks impact the environment and the people around us.

Processing raw materials such as cotton is a part of the value chain that is often associated with concerns for working conditions and intense water and chemical use. By making the right choices at this stage, we can reduce such impacts significantly. Ultimately, we achieve a closed loop in which old garments can be recycled into new ones.

From making yarn to final fabrics, there are concerns regarding water, chemicals and working conditions as well as greenhouse gas emissions. Generally speaking, we do not have direct business relationships with mills but we work with organisations such as Solidaridad and the Natural Resources Defense Council (NRDC) to help mills improve their performance. We have started to integrate the fabric and yarn mills that are involved in making about 50% of our products into our supplier audit system, aiming for 60% by 2016.

Together with our suppliers we have made great improvements in developing high social and environmental standards. Achieving fair living wages, reducing overtime and ensuring workplace safety are key focus areas for the textile industry. We don't only monitor factory compliance but also train our suppliers and their workers. We want to encourage industrial relations and social dialogue and consequently collaborate with organisations such as the International Labour Organisation (ILO), the Fair Wage Network and the Ethical Trading Initiative (ETI).

Transport represents approximately 6% of the greenhouse gas emissions in a garment’s lifecycle. By choosing the right modes of transport, we can reduce this impact further. And as important customer to the transport companies we work with, we can set standards to influence their environmental consciousness.

We have over 3,900 stores across 61 markets. As we grow, enter new markets and employ new people we need to make sure that we live up to our values across the organisation and ensure an inspiring and healthy working environment for our colleagues. Our customers rightfully expect high quality products and shopping experiences. As part of that, we ensure the data privacy of our customers and our colleagues, and advertise in a responsible way.

Caring for our clothes at home represents about 26% of all of the greenhouse gas emissions in a garment’s life. Our challenge is to create affordable fashion that our customers will love from season to season and that is easy to care for with the lowest possible impact. We need to inspire our customers to be more conscious in the way they care for their clothes, for example as regards washing and drying, and make it easy and effortless to recycle any garment that might no longer be wanted.

Our influence
High
Climate impact
0%
Water impact
0%
Social impact
Low
Our influence
Medium
Climate impact
12%
Water impact
87%
Social impact
High
Based on countries with organic cotton or Better Cotton production for H&M. Cotton is our most important raw material. Conventional cotton is not currently traceable. Our goal is to by 2017 create full traceability for cotton and by 2020 use only cotton from more sustainable sources (such as organic cotton, Better Cotton or recycled Cotton).
Our influence
Medium
Climate impact
36%
Water impact
6%
Social impact
High
Based on data available for fabric mills involved in about 80% of our total production volume.
Our influence
Medium
Climate impact
6%
Water impact
1%
Social impact
High
Our influence
Medium
Climate impact
6%
Water impact
0%
Social impact
Low
Our influence
High
Climate impact
10%
Water impact
0%
Social impact
High
Our influence
Low
Climate impact
26%
Water impact
8%
Social impact
Medium

Our seven commitments

Commitment one

Provide fashion for conscious customers

We believe that conscious fashion choices should be easy and fun to make, without ever compromising on style. We want our customers to feel proud of what they are wearing and not only look good, but also feel good.

Every year, we work intensely to increase the share of sustainably sourced fabrics and materials in our clothes. We are constantly on the lookout for innovative materials and processes that make our products sustainable.

c1

Key performance

SUSTAINABLE COTTON* IN % OF TOTAL COTTON USE

* Certified organic cotton, Better Cotton (BCI) or recycled cotton. In 2014, organic cotton represented 13.7% of our total cotton use.

SHARE OF SUSTAINABLY SOURCED MATERIALS

Included are all materials classified as conscious materials, such as certified organic or recycled fabrics, as well as Better Cotton.

Commitment two

Choose and reward responsible partners

In the globalised world we live in, it is not a question for us to have suppliers in developing countries. It comes down to how we do it. We not only set high standards for our partners, but also for ourselves.

We work hard to ensure better livelihood and positive development in the communities where we operate. Ensuring lasting and systemic change across the industry cannot be done by one organisation alone, which is why we work with several partners and organisations all over the world.

c3

Key performance

Progress in supplier factory sustainability performance (In ICOC* scores)
*Code of Conduct Index. Data collected during the period 1 Dec 2014 to 31 May 2015 according to our previous Full Audit Programme (FAP).
No. of strategic supplier factories* with implemented improved pay structures

*All strategic supplier factories

Commitment three

Be ethical

We connect with millions of people around the world. Every single interaction should be guided by mutual respect, integrity, transparency and honesty. To us, being ethical is about doing the right thing. Respecting laws and regulations wherever we operate, paying taxes accordingly and taking a clear stance against corruption.

Beyond that, it also means respecting human rights and embracing diversity and inclusion. We celebrate differences both outside and within our own walls.

c3

Key performance

Share of females amongst all* colleagues vs. management positions
*Average number of employees
BOARD OF DIRECTORS GENDER SPLIT 2015

Commitment four

Be climate smart

Climate change remains one of the greatest challenges of our time. Its consequences are as likely to affect us as everyone else on our planet, including our suppliers, colleagues and customers. Pulling our weight in this crucial matter, we continue our work to increase energy efficiency across our operations and use renewable electricity throughout our stores, offices and warehouses.

However, we are aware that the most significant climate impacts occur outside of our own operations. That’s why we increasingly work to help our partners and inspire our customers to make climate-smart choices.

c4

Key performance

CHANGE IN TOTAL CO2E EMISSIONS TO PREVIOUS YEAR IN % (SCOPE 1+2) VS. GROWTH IN SALES (IN LOCAL CURRENCIES)
Share of renewable electricity in all our stores, offices and warehouses

Commitment five

Reduce, reuse, recycle

Our planet’s resources are not endless and too much fashion ends up in landfill. Moving towards a 100% circular business model will be key for our future success and growth and one step towards closing the loop is our global garment collecting program.

We seek to extend the life of a garment, striving for a long product durability and facilitating secondary use. When a garment no longer can be used, recycling is the best option. Currently we can blend in about 20% recycled fibres without any loss of quality or durability. You can drop off your unwanted garments, no matter what brand or condition, at any H&M store.

c5

Key performance

TONNES OF GARMENTS COLLECTED IN H&M STORES

Commitment six

Use natural resources responsibly

Great fashion requires resources, meaning that each step in a garment’s life might be a risk to our planet. Growing cotton, dyeing fabrics and washing our clothes all require significant amounts of water, which is already a scarce resource globally.

Considering both present and future generations, we need to make sure to use natural resources responsibly. We are committed to reducing resource use across our business operations, and to helping our suppliers and customers do the same.

c6

Key performance

litres used per kg of clothing (manufacturing supplier water efficiency)
Based on data from supplier factories with wet processes.
% of supplier factories in full compliance with our waste water quality requirements (BSR)
Included are all supplier factories with wet processes and own wastewater treatment plants. Excluded are factories using shared treatment plans.

Commitment seven

Strengthen communities

Our business affects many people around the world and it is part of our responsibility to give back to the communities that contribute to our success. Prosperous and stable markets where human rights are respected, skills training are readily available and the ecosystems are healthy benefit our business.

However, we can’t tackle the challenges alone, which is why we through shared value investments and strategic partnerships work to drive lasting change. To reach beyond our value chain, the H&M Foundation, an independent nonprofit global foundation, invests in people, communities and innovation to drive positive change.

c7

Key performance

total shared value investments /donations
job creation (net) in our stores, offices and warehouses*
*Total heads
No. of cotton farmers trained and accredited for better cotton initiative (accumulated)
Figures have been re-stated to align with BCI reported data and reporting cycles. Latest figures available are 2014 calendar year figures.

How we work with sustainability

Board of Directors
Twice a year, our CEO, CFO and Head of Sustainability review our progress and results of our sustainability performance. Also, our Head of Sustainability reports performance against key sustainability indicators to our Board of Directors bi-annually.
CEO
Significant sustainability issues influencing and conflicting with the interests of more than one department are discussed in a decision making forum called the Green Room with the involvement and presence of our CEO.
Head of Sustanability
Head of Sustainability reports directly to our CEO and holds the responsibility for the implementation of the sustainability strategy together with the executive management team. In total we have more than 200 colleagues working with sustainability as their core.
Other Senior Executive Functions
All functions and departments have specific sustainability goals and targets. Their performance is measured and follows the same procedures as for any other goal.
Central Sustainability Functions
Our sustainability department at our head office in Stockholm consists of more than 20 people. They are working with four focus areas: social, environmental, relations and anti-corruption matters. The main responsibilities include setting goals and targets for our organisation, monitor compliance and measure and report results. The department is also supporting all functions and departments with the implementation of prioritised and relevant standards and Conscious Actions.
Local Sustainability Functions
Over 120 people from our sustainability teams operate from 21 production offices around the world. They work directly with our suppliers to support them in complying with our Sustainability Commitment and help to make our supply chain more sustainable. We have around 50 local conscious coordinators who are supporting the implementation of our global sustainability strategy across all of our sales markets.
Bi-Annual Performance Reporting
organisation chart

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