Is H&M sustainable or not?
Photo: Investopedia
We felt that it was time to dig a little bit deeper into the problem of the fast fashion industry and provide insights into the key fundamental problems in an easy way. We’re often asked about H&M since they have become a symbol of what fast fashion is and means. But sometimes the spotlight on H&M can be a little bit unfair. Other fast fashion giants such as Inditex (owners of Zara) and Fast Retailing (owner of UNIQLO) probably have even more work to do in relation to responsibility but are seldom mentioned. The founders of these fast fashion brands and their respective companies are billionaires, and some of the richest people in their countries, including the Persson Family who owns shares in H&M Group and has most of the influence over the business. H&M group also include the brands: COS, Weekday, Monki, & Other Stories, ARKET and Afound.
But aren’t H&M stepping up their work? Well, we will tell you why they’re not doing enough and why fast fashion can never be sustainable.
H&M Group sustainability work
In the sustainability report, you can read about several initiatives and efforts. The brand decreased its carbon footprint in 2021 in scopes 1 and 2 (offices etc.) by 22% and in scope 3 (this is where the supply chain is calculated) by 9% in comparison with 2019. H&M Group’s goal is to reduce its greenhouse gas emissions in absolute figures by 56 % by 2030 (baseline 2019). H&M is ranked second in the Fashion Transparency Index of 250 brands. H&M follows the UN Global Compact Ten Principles. The brand has decreased its plastic packaging by 27.8%. About 17.9% of the materials used are recycled and by 2025 the goal is to reach 30%. The goal is for 100 % of the materials to come from recycled or other more sustainable sources by 2030.
H&M also says they are carrying out due diligence across the operations and value chain, paying special attention to vulnerable groups such as migrant workers and children − they do not accept forced labour or child labour.
This sounds good, doesn’t it? We will go through some of the key aspects of sustainable businesses in relation to the H&M group.
Key Sustainability Challenges of H&M Group
The volumes
H&M has two key goals such as by 2030 doubling sales while halving its carbon footprint and the goal that profitability should exceed 10% over time and some of this should go into investment. One of the investments has been in the company Re:newcell which through H&M has secured access to “sustainable” materials. Is this not a good thing that all materials become sustainable? Of course, it is, carbon, water and other resources can be saved due to this initiative but if virgin material is still extracted we still put pressure on earth. Some materials can help nature, such as regenerative initiatives, but that requires an approach beyond sustainability sourcing, it’s actually about making an impact while growing plants later used to create fibre. Sustainable materials still need a way to be reused, repaired, remade and recycled. Recycling is the last destination and currently, there is no full infrastructure developed to fully recycle all textile materials and create new textile materials. Most of the recycled materials you see come from PET bottles such as recycled polyester. Recycling processes also require energy and many times water and shouldn’t be seen as a magical solution.
The largest problem comes from the fact that the volume of textiles has increased rapidly on the market (Since 1996, the amount of clothes bought in the EU per person has increased by 40% following a sharp fall in prices) too little of it is worn on a long-term basis and too much of it is thrown away in landfills. There is also an over-supply in the second-hand market. Therefore, the demand for second-hand needs to increase while the supply of textiles on the market needs to decrease. We’re not taking care of the textiles we already have! Sustainable materials or not, this is a waste. Therefore it is problematic to increase sales without mentioning the effects on volumes. Further making a profit shouldn’t be used as an argument for switching to more sustainability practices (as the investment arguments often become).
Sustainability sourcing is still a good thing, but circularity needs to be taken into account. Circularity is good but the reduction of total negative impact is essential. Therefore the 15,944 tonnes of textiles customers handed in in 2021 for H&M is not enough to truly address this issue. A goal related to total volumes must be in place.
2. The working conditions
Currently, the suppliers’ list includes 394 mills that provide the suppliers with fabrics and yarns, including spinning, tanneries and fabric dyeing and printing. The list also includes two mills that make up 71% of the making volume. In the sustainability report, tier 1 and 2 production supply chains alone contribute to the employment of around one and a half million people. However, in textiles, there are many stages/tiers in a supply chain. Tier 1 includes the direct partners, where H&M reports on the number of them having trade union representatives and collective bargaining agreements. But the H&M supply chain can include up to 6 tires, which is not reported on. H&M works with 1519 tier in Europe, Asia and Africa. The manufacturers are listed per country here!
Even though H&M work with Due Diligence, including risk assessments and sustainability performance, it is still unclear to what extent the supply chain offers good working conditions. Neither does it say anything about minimum wage or living wage. It is in other words good that H&M becomes more and more transparent and has it as a goal to make the whole supply chain transparent, but as a consumer, we need to know exactly how H&M follows up with each factory.
For example, what are the questions asked and areas included in the assessment? Is there a third-party control involved? What are the identified and addressed issues (because they are definitely there)? Safety, health, inclusion, trade unions, working hours.. the list is long of areas that need to be included and H&M has a long list of tires to go through.
According to the documentary The True Cost, only 2% of all garments in the textile industry earn a living wage. In other words, most textile workers cannot provide themselves and their families with their basic needs. Not offering workers a fair salary that is liveable can never be a sustainable business or product.
Photo: H&M
3. Diversity and inclusion
There is very little data given in H&M Group annual report about diversity and inclusion. They do have data on gender, when it comes to management positions and on the board of directors where women are represented as the majority among employees, management and the board. They also report on their Layers of inclusion and diversity training where the total of participants is mentioned but it should be in the percentage of the employees worldwide.
We thought it would be easier just to give you the full picture of the H&M board. We do know that diversity is way more complex than what can be shown in a picture, even with high diversity it does not say much about individuals feeling safe, included and respected. Further, some diversity data such as functionality, sexual orientation, religion and so on are for the majority number of times not appropriate to measure.
However, we do know that Sweden has a diverse population. Sweden' has a high percentage of its population from European and worldwide countries with several ethnicities and backgrounds. Human diversity is a fundamental key to a successful responsible business.
3. The capital gain
There is one fundamental issue here when it comes to fast fashion and it’s the wealth it has created for its owners while neglecting millions of people’s right to proper livelihoods. Products have been produced and sold, markets conquered and businesses have grown with more money in the pockets of its owner while the developing countries and areas where the textiles are produced haven’t changed much at all.
For H&M net sales for the full 2020/2021 financial year increased by 6 % to SEK 198,967 m. In local currencies, sales increased by 12 %. Gross profit increased to 105,006 m SEK. The annual compensation Karl-Johan Persson for his role as a board member for H&M Group was 1.7 m SEK. According to Forbes its founder Stefan Persson has a net worth of $15.8 B.
A textile worker in Bangladesh got a monthly salary of 1230 SEK.
Do we have to say more?
To summarise - H&M is on its way but far from being sustainable
The current environmental efforts should have been done long ago. And with the profit that H&M Group has made in the last decade investments in material innovations could have happened earlier.
The scope of sustainability does not fully extent include the whole supply chain which is problematic when it comes to fashion. This can easily mislead consumers to believe that they’re purchasing something good due to some percentage of recycled materials while the total impact by the company and its supply chain is negative.
The increase in sales and a lower climate footprint are not good enough. A goal related to a decrease in the total volume of materials used must be put in place to complement the circular and sustainable materials initiative.
Working conditions in the whole supply chain need to be reported on. A full list of supply chain employees’ salaries in relation to minimum and living wage should be included in the sustainability report. Trade unions and agreements for all tires should be added. Further identified risks in factories should be transparently listed and assessments in terms of scope and time of all tiers in the supply chain should be included.
The fair and equal reporting does not include all the social sustainability aspects. There is a lack of data related to inclusion and diversity. A suggestion would be to put diversity data (such as first or second-generation immigrants on directing and boarding positions). Gender data is not enough, it should be connected to maternity leave too. Further, training needs to be extended to all staff including anti-racism and “white privilege” training and education. Help from external consultants for analysis regarding barriers and structures for inclusion should be done with a listed item of interventions. There is also a lack of data when it comes to health, such as % of people experiencing a level of high stress or the number of staff being on sick leave.
Wealth should be distributed. There should be a percentage of the profit that goes slowly to sustainability investment and the H&M foundation (they have given a lot to charity but it still needs to be related in percentage to the overall profit). Patagonia gave away their whole profit to charity and H&M can definitely share a larger piece of the cake too.
NOTE: There might be work done in areas not mentioned in the annual and sustainability report or on other sources we have checked. We are happy to be informed and provide more detail information if there is any.