How we report
We are committed to transparent reporting on the progress we make towards meeting our sustainability strategy.
We are committed to transparent reporting on the progress we make towards meeting our sustainability strategy.
The H&M group’s Sustainability Report is produced annually and covers our material sustainability strategies, challenges, activities, goals and performance for the global group operations of H&M Hennes & Mauritz AB (also called the H&M group in this report), including all its brands (H&M, H&M Home, COS, Weekday, Monki, Cheap Monday, & Other Stories), as well as its wholly- or partially-owned subsidiaries globally during our financial year from 1 December 2015 to 30 November 2016, unless stated otherwise. (For a full list of entities, please see our Annual Report 2016).
We aim to address key impacts (positive and negative) across our value chain, and this is reflected in our reporting wherever possible. Information limited in scope to only one of these brands or any other limitations or deviations in scope are clearly stated in the respective section of this report. Unless stated, franchise operations are not included. The report was reviewed by the highest executive management and external assurance has been performed for selected indicators (clearly marked where applicable, as well as in regards to materiality and stakeholder engagement). Additional stakeholder comments and interviews have been included throughout this report.
All data is collected by our sustainability team from the relevant functions within our organisation and from external parties such as suppliers or implementing partners. This data is always reviewed by our internal controlling team, relevant experts in our sustainability team and expert functions following a two-tier quality control principle. Any extrapolations or estimations are clearly indicated. The same goes for any changes in data methodologies or scope that may influence data comparability. All data is based on the best possible systems that are currently available to us, and where applicable aligned with recognised standards. However, this needs to be seen in the light of continued improvements in data systems, methodologies and scientific uncertainties. For example, while our GHG emissions accounting and reporting is aligned with the GHG Protocol, the emission factors we use are from publicly available sources such as the International Energy Agency (IEA), the Network for Transport Measures (NTM), Reliable disclosure system for Europe (RE-DISS) and supplier specified emission factors. GHG emission data is subject to inherent uncertainties due to incomplete scientific knowledge used to determine emission factors and resulting effects on measurements and estimations. The reported energy usage is based on invoiced data, data from real-time electricity meters and data as reported by transport providers. Conversion between fuel usage and energy content has been done using energy values specified by the supplier or by using tabled values provided by national bodies.
Our material reporting requires us to make assumptions on waste factors, weight per sizes, etc. We are continuously working to improve those aspects of reporting that may lead to minor updates in our yearly material consumption reporting. For this year, the material data has been restated due to the fact that historical data has been updated using a new, more detailed system. We are continuously working to improve our data systems and accuracy to report on material consumption.
Unless otherwise specified, all data concerning suppliers and supplier factories includes all suppliers. and factories that were active andapproved for production during the reporting period. Factories included in our scope are first tier manufacturing or processing (i.e. washing or dyeing), factories that are owned or subcontracted by our suppliers, and, where stated, selected second tier suppliers and suppliers for non-commercial goods (such as store interior suppliers). The second tier suppliers we have selected so far are mostly fabric and yarn suppliers that account for about 56% of our products.
Monetary amounts are reported mainly in the currency of transaction (usually SEK). Additional currency values are conversions as approximate figures based on the conversion rate on 30 November 2016, unless stated otherwise. Additional information is provided at sustainability.hm.com and in our financial and corporate governance reporting. Our most recent sustainability report was published in April 2016.
We are signatories to the UN Global Compact and our annual Sustainability Report also serves as our Communication on Progress (COP) for the UN Global Compact as well as the CEO Water Mandate.
This report is prepared in accordance with the GRI Standards: Core Option. We have additionally included material indicators from the pilot of the Apparel and Footwear Sector Supplement. The detailed GRI index can be found at sustainability.hm.com.
In 2015 we were one of the first companies in the world to report on human rights in line with the UN Guiding Principles Reporting Framework. This framework is the first comprehensive guidance for companies to report on human rights issues in line with their responsibility to respect human rights set out in the UN Guiding Principles on Business and Human Rights. The detailed references to the UN Guiding Principles Reporting Framework can be found at sustainability.hm.com
Below, we set out our approach to assessing the materiality of sustainability issues for our business and how we supplement this for human rights with the identification of our salient human rights issues, based on an understanding of risk to people. This process to define our salient human rights issues was comprehensively conducted in 2015 and included many internal and external stakeholders. Going forward, we plan to conduct this comprehensive process every third year, or as deemed necessary. Annually, we will review the relevance and definitions of the issues identified and discuss additional emerging issues.
During 2016, we aligned our materiality matrix with our new sustainability strategy. We developed this strategy in close dialogue with external and internal key stakeholders and updated our previous materiality matrix with key takeaways from this process. We reviewed scores provided for all relevant aspects and added several new aspects to our materiality assessment. In line with our strategic ambition to take a leadership position on sustainability, we also expanded the boundaries for some aspects. This scoring process to define the report content and the aspect boundaries from our 2016 Report was based on the following steps:
We regularly update a gross list of aspects based on an analysis of external standards, such as the GRI Standard topic list, legislation, investor and NGO questionnaires, peer reviews, business intelligence, lifecycle assessment results, stakeholder dialogues and stakeholder reports, and media coverage. The gross list has been checked against GRI’s Sustainability Context and Stakeholder Inclusiveness tests.
To prioritise the most material topics from this gross list, we scored the different aspects in regards to their influence on stakeholder assessment and decisions, and their significance for economic, environmental and social impacts. Both categories were broken down into a number of different categories, such as frequency raised by key stakeholders (weighted x3), frequency featured in media (weighted x1) and frequency raised in key sustainability benchmarks, rankings and indices (weighted x1) (to determine the influence on stakeholder assessment and decisions), as well as social and environmental impacts (weighted x1) and importance to business strategy (weighted x2) (to determine the significance of economic, environmental and social impacts). Scores were given by at least two internal experts per category and were based on lifecycle assessment (LCA) data and existing strategy documents. During 2016, we reviewed the gross list and added further aspects based on the analysis described under step 1, which were also in line with our new sustainability strategy. We reviewed previous scoring for several aspects based on feedback received from external and internal stakeholders as part of the development process of our new sustainability strategy. In this way, about 17 topics were identified as material. For the sake of user friendliness, these were thematically clustered into 26 focus areas and gathered in a materiality matrix on p. 112. In line with our new strategy, some material topics were re-grouped in these focus areas. Some new material focus areas were identified, and some previously identified ones underwent minor adjustments. The impact scoring and boundary descriptions were checked against the GRI’s reasonability tests.
We conducted a broad validation of our matrix and assessment process in 2013. We selected at least one representative from each of our key stakeholder groups (which includes customers, colleagues, communities, suppliers and their employees, industry peers, NGOs, IGOs, policymakers and investors). Eleven stakeholder representatives were asked to provide feedback on this materiality matrix. These organisations were chosen based on their expertise, their ability to make professional and critical judgements and on the coverage of aspects that were potentially material. While updating our sustainability strategy, we also adjusted our materiality matrix based on feedback from internal as well as external stakeholders involved in this process. The feedback widely confirmed the material topics presented, and no topics were considered missing.
Updated priority scoring of each of these topics resulted in some adjustments in the position of the scatter in relation to each other. This concerns for example the topics water or animal welfare. As a result of the feedback, both have now been moved upwards in the matrix.
One new topic named ‘supply chain transparency’ has been added. Throughout this process, we have used the principles of defining report content in order to secure a robust process.
We gathered feedback on our 2015 sustainability report from various stakeholders. This included a review of the materiality matrix and no objections or concerns were raised. Through close, regular dialogue with our stakeholders, and as part of the process for developing our new sustainability strategy, we have incorporated additional forwardlooking strategies and priorities into our matrix. For 2017, we plan to conduct more stakeholder surveys, helping us to further validate our materiality assessment and further integrate stakeholder feedback in our strategy development and decision-making processes.
The H&M group conducted a thorough process of identifying its salient human rights issues in 2015. Salient human rights issues are the human rights at risk of the most severe negative impact because of our operations and supply chain. This process supplements our materiality analysis in the area of human rights, with an understanding of risk to people. We started out by defining who we impact through our business activities throughout our value chain, especially recognising those who potentially are more vulnerable and hence are more at risk, such as migrant workers, women and children. The result of this mapping was a list of both potential and actual human rights impacts. From this list, we identified those which were salient by applying two criteria: the severity of the potential impact and the likelihood that this impact will occur. Consultations regarding the method and input to the identified salient human rights issues were held (both internally and externally) with almost 100 people. Internally, consultations were held through workshops and dialogues on all levels of the company and across functions. Externally, consultations were held with experts, organisations, academia and local stakeholders. This process does not only guide us on the human rights issues relevant to report on according to the UNGP’s Reporting Framework, it also informs our strategies and work to address these issues going forward. To ensure our list of salient human rights issues remains relevant, we will review these issues annually, and the full process, including input from external stakeholders, will be conducted approximately every three year, or more frequently if necessary.
While we take steps to mitigate all risks, salience guides us in what to focus on within human rights and hence informs our strategies and work. The most recent review took place at the end of 2016 and resulted in slightly adjusted definitions on for example social security, highlighting that we refer to social security linked to employment. We also expanded child labour to the broader children’s rights, due to the various ways our activities directly and indirectly impact children, while still recognizing child labour as an issue of great severity.
We are committed to transparent reporting and want to provide information in a way that is most valuable to our diverse stakeholders.
We dedicate major resources to monitor our suppliers` sustainability performance and support them in making improvements.