Monitoring & grading

We regularly monitor our suppliers’ compliance with our Sustainability Commitment through our Sustainable Impact Partnership Programme (SIPP). Additional independent monitoring helps verify our audit systems. But monitoring alone is not enough. That’s why we go beyond monitoring and focus on helping our suppliers to build strong management systems that can prevent any non-compliances from occurring.

Choosing responsible partners

As part of our sourcing strategy, we only allow production for H&M to take place with suppliers and in factories that sign our Sustainability Commitment and commit to our values. This is the case whether they are owned directly by our suppliers or subcontracted to them. And it remains the case regardless of the price they offer.

New partners must comply with the minimum requirements of our Commitment from the outset and and must demonstrate the necessary willingness to work towards full compliance. When assessing a potential new partner, we start by providing them with detailed training in the expectations we have of a responsible partner. If, based on this understanding, they continue to show a strong willingness to work with H&M, our commercial sourcing teams often start with a compliance screening process, supported by dedicated tools.

If this first assessment is positive, our auditors conduct an in-depth head audit. They have the authority to make the final decision as to whether a supplier or individual factory fulfils. H&M’s minimum requirements and has the potential for further performance improvements in order to become a long-term partner of H&M.

Minimum requirements

H&M sets out a number of minimum requirements that supplier factories must meet before entering into a business relationship with H&M. To assess compliance with these requirements, our auditors visit each potential new supplier factory prior to placement of any order and decide whether or not the factory can be approved. These requirements include:

  • Absence of forced labour
  • A ban on child labour
  • No detectable breach of freedom of association
  • Payment of at least the relevant minimum wage
  • Fundamental safety provisions
  • No use of banned chemicals in accordance with H&M’s Chemical Restrictions
  • Wastewater treatment (for factories with wet processes)
  • Full transparency
  • Access to all relevant factory areas

Sustainable Impact Partnership Programme (SIPP)

During 2015, we started the implementation of our new supplier sustainability assessment programme SIPP (Sustainable Impact Partnership Programme). With this, we assess all our suppliers' factories on a three levelled approach:

Level 1: Compliance with fundamental requirements (such as legal requirements, the ILO core conventions and other requirements similar to our previous Code of Conduct).

Level 2: Existence and quality of management systems and setting of own sustainability performance goals. Management Systems help to sustain compliance and establishes a fundamental ground for leading practices and reaching aspirational goals.

Level 3: Setting of and performance against aspirational targets based on defined KPIs such as energy reduction or community impacts. We combine our suppliers’ performance against these three levels in our new Sustainability Index, which during 2016 will fully replace our current Code of Conduct Index (ICoC).

This new assessment method is based on the Higg Index, and some complementary questions and KPIs developed by H&M. The Higg Index is a holistic measurement standard with the aim of creating alignment, greater transparency and better sustainability performance across the apparel and footwear industry. It is developed by a broad range of brands (including us), suppliers, NGOs, academia and many more through the Sustainable Apparel Coalition (SAC).


Strong factory presence

In addition to our Sustainable Impact Partnership Programme, our presence in our suppliers’ factories goes far beyond just auditing. Activities such as capacity building, workshops and training with our suppliers, as well as management systems analysis are some of the additional sustainability activities that accompany our audit programme. Our suppliers are also in constant contact with other functions at our production offices, such as our merchandising and quality departments. This means that we have a regular presence at supplier factories and thereby provide strong support for the development of our suppliers throughout our relationship.

Supplier & factory grading

We measure our supplier factories’ sustainability performance with the help of an index. We call this the Index Code of Conduct (ICoC), which will be fully replaced by our new Sustainability Index during 2016, reflecting the broader cope of assessment in SIPP. It combines the compliance against fundamental requirements with results from management system analysis and the performance against impact KPIs, as well as the ambitiousness of goals that our suppliers set against these. Based on their results, each factory is given a Sustainability Index score (0–100) which is clearly communicated and will be integrated in our purchasing routines. This way, we reward good sus­tainability performance with better business.

Download Sustainability Commitment

Conscious Actions

Find out all we do in order to choose and reward responsible partners.

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