Supported by 15 sourcing offices around the world, production for H&M takes place at around 1,800 factories that are owned or subcontracted by 785 suppliers. Looking for long-term partnerships with suppliers, the company engages in strategic partnerships with the best ones, rewarding good sustainability performance with better business. As a result, currently 148 strategic partners (19 per cent) make 53 per cent of H&M products.
The priorities set by the company are about closing the loop on textile fibres and waste and playing a part in combating climate change and growing water scarcity. In addition, ensuring that all workers in supplier factories earn enough to live on in a decent number of working hours is another key challenge. H&M wants to use its scale to bring about systemic change to the industry and across its entire value chain. On the retail floor, the price of a garment doesn’t even reflect how hard a brand has worked to improve conditions.
Challenges in the supply chain
In activities related to core operations, H&M has the ability to directly influence the impact they make. For other activities, the influence is indirect; for example, they can make a difference by choosing conscious raw materials or responsible business partners, or by collaborating with stakeholders to tackle the challenges that are shared with the industry and the communities in which all of them operate in, like Sumangali in India.
H&M has divided the fashion lifecycle into seven critical areas and analyzed the influence and impact they have on all these areas. The first and foremost for which the influence and impact both is high is the design stage. Challenge is to create affordable fashion from season to season and that is easy to care for in a conscious way. According to H&M, it’s about the choice of materials and using the same as efficiently as possible, while considering impacts on people, costs and the environment right from the start.
[bleft]“We take a long-term view on our business. And there is no way for us not to think about and invest in our sustainability, because it simply makes business sense.” – Karl-Johan Persson, CEO, H&M[/bleft]
Since H&M does not purchase raw materials directly, the influence is much less, but by making conscious choices the company feels they can significantly reduce impacts, and their active involvement with the BCI, Textile Exchange and UNICEF can increase the influence. Fabric processing also raises concerns regarding water, chemicals and working conditions as well as carbon emissions. Usually, H&M does not have direct business relationships with mills, but they work with a dedicated mill development program and with important stakeholders such as Solidaridad and NRDC. H&M also works to increase the traceability of fabric used for their clothes to increase influence of fabric process as the impact is high.
At the manufacturing stage H&M has medium influence with high impact value. Ensuring high social and environmental standards with 785 suppliers can be a challenge especially in terms of complex industry-wide issues such as wages, overtime and safety. The company not only monitors factories for compliance but also provides training for suppliers and their workers, promotes social dialogue and collaborates with organizations such as BetterWork, the Fair Labor Association and the Fair Wage Network for improvement.
Since transport represents approximately 3 per cent of the carbon emissions in a garment’s lifecycle, choosing the right modes of transport can reduce the impact further. As a customer to logistic companies, H&M is attempting to use the influence to promote environmental consciousness. With more than 2,800 stores in 48 countries across 4 continents (incl. franchises) the challenge is to ensure that the corporate values they preach is practiced and that they work in a resource-efficient way wherever they operate, including energy-efficiency and increasingly sourcing renewable energy.
At the end of the fashion lifecycle, the way customers take care of the products has a major environmental impact. About 36 per cent of all carbon emissions occur when consumers wash and tumble dry their clothes. H&M is working to inspire customers towards conscious garment care and reward them for bringing old clothes to H&M stores for reuse and recycle.
Participating in developing common sustainability index…
Realizing that each brand was measuring ‘sustainability’ on different parameters, H&M joined the Sustainable Apparel Coalition in 2011. This quick-growing multi-stakeholder initiative today brings about 50 per cent of the global apparel and footwear production including brands such as Patagonia, GAP Inc., Nike Inc. and many more together with other key stakeholders such as suppliers, academics, and NGOs working together to build a common approach for evaluating product sustainability performance, using what is known as the Higg Index.
Interventions at the supplier level…
At the grass-root level, H&M works very closely with its suppliers to achieve sustainable practices. The commitment is to choose and reward responsible partners who share the same values and are willing to be transparent and work with the company to improve their social and environmental practices. In 2012, audits were conducted in 2,646 supplier factories and on an average H&M was involved with 3.6 sustainability activities per factory, including training and other support. In fact, the supplier sustainability performance index (ICoC) for suppliers increased from 76.5 to 78.4 during 2012. As part of the supplier relationship management initiative H&M offers strategic partners up to five-year mutual capacity planning, which also encourages adherence to and improvement of sustainable practices.
In the area of ethical manufacturing the results of audits were encouraging with 100% factories not employing child labour, 76% companies ensuring basic worker rights, 82% compliant to health & safety norms, 67% compliant to environment norms, 72% handling chemical are prescribed in code of conducts and 97% having in place transparent monitoring systems. By the end of 2012, 44 factories had completed Supplier Energy Efficiency Programmes, (SEEP) with another 110 undergoing planning or implementation. Based on this, H&M has developed data baselines to evaluate the factories’ performance against these through 2013.
The company is always looking at vendor development and in 2012, H&M audited 485 potential new supplier factories and of these it did not approve 25 per cent (119). All factories that are approved in this initial assessment are covered by the Full Audit Programme (FAP), through which H&M continuously monitors the progress made by each factory and works to remediate any non-compliance that might arise.
New initiatives in India…
In 2008, H&M teamed up with suppliers and local NGOs in Bangladesh to develop a series of five short films and training packages in order to increase this awareness. Since the initiation, 5,70,821 workers and middle managers have received this training and in 2012, H&M developed similar short films in India together with four other brands for implementation in 2013.
Among the many initiatives supported and focused on through the year, in India the attention was on combating the practice of “Sumangali’ in textile mills in Tamil Nadu. In 2012, the company joined a three year, multi-stakeholder project run by the Ethical Trading Initiative (ETI) aiming to tackle this issue in joint efforts with all concerned stakeholders on a community as well as industry level.
