What does sustainability mean to you?
My grandfather founded H&M in 1947. He often spoke about the importance of long-term thinking, not just about maximising short-term profits. He wanted to look at our customers and colleagues and feel good about the business – that it was run the right way. As CEO, I have a long-term perspective on H&M. And just like my grandfather, when one day looking back at my time at H&M, I want to feel proud of what we achieved. That we offer our customers great value for money, but also that we have a positive impact on the world.
How does sustainability fit into H&M’s business idea?
Our business idea is to offer fashion and quality at the best price in a sustainable way. It’s about the best value, not the cheapest price. Sustainability is an important part of this. We know that our customers, just as our colleagues, care more and more about it. And while we must be realistic about the fact that most customers are not prepared to pay more for added sustainability value, I am convinced that it will become an important differentiator in the future.
But much more than that, in order to remain a successful business, we need to keep growing – and at the same time respect the planetary boundaries. So, there is no question that it makes clear business sense to invest in our sustainability.
What are the biggest challenges?
The fashion industry is too dependent on natural resources and we must change how fashion is made. This is certainly a big challenge, but also a great opportunity. We want to go from a linear production model to a circular one. And we have to do it at scale. At the same time, we need to make sure that our growth helps the millions of people along our entire value chain to better lives and further improves their working conditions. Promoting fair living wages in our industry is an important part of this. Just as creating transparency, so that we can know exactly where each part of our products comes from as well as for our customers to be able to make truly informed choices.
Garment production can be a development escalator that show communities the way out of poverty. It’s creating a lot of jobs, particularly for women. It’s often their first paid job, so it’s very often a great driver for independence and liberation. That being said, we can’t just lean back and be happy with the fact that there are a lot of jobs being created. It’s a good starting point. From there, we need to ensure that these are good jobs that actually contribute to the development of people and their communities. And there are still a lot of other challenges connected to the garment industry – water impacts or textile waste just to mention a few. It’s no easy task, but we need to continue tackling these, do it faster and together with a whole range of different stakeholders.
You mentioned fair living wages. H&M launched quite an ambitious roadmap in 2013 – how is it progressing?
We are seeing positive developments on many fronts. We started to test the so called Fair Wage Method, developed by the independent Fair Wage Network, in three role model
factories, two in Bangladesh and one in Cambodia. These are factories where we have a five-year commitment and 100% of the capacity so we can have time to test this method and create best practice examples for our suppliers and our entire industry. Although it’s still early in the process, the initial results from the first factory that’s been evaluated are promising. Overtime has been reduced by over 40%, wages have increased, pay structures have improved just as the dialogue between the management and workers. At the same time productivity has also gone up. Based on what we have learned, we aim to scale this work up to all our strategic suppliers by 2018 at the latest, the first 60 of them already in 2015.
We also continued our dialogue with governments. They need to be on board, for example to adjust minimum wages regularly and to create legal frameworks for fair and functional
collective bargaining processes. I have myself met with the Prime Ministers of Bangladesh and Cambodia, and most recently with the Bangladeshi Minister of Commerce to discuss these topics. We have also taken another important step in aligning with a number of other brands on a joint approach towards fair living wages. And not least, we are investing a lot of resources into empowering workers through better skills and to enable them to negotiate their wages and working conditions directly with their employers. As part of this, we
set a unique goal for all of our strategic suppliers to have democratically elected workplace representation in place by 2018 at the latest.
How about the closed loop?
In 2013, we launched our global garment collecting initiative. H&M cuscustomers can leave used garments from any brand to be reused or recycled at almost all H&M stores in all our markets. This year alone, we have more than doubled the amount of garments that we collected this way and have now reached over 7,600 tonnes. That’s as much fabric as in about 38 million t-shirts. Although we don’t make profits with the collected clothes, it makes clear business sense: creating a closed loop will mean immediate access to environmentally conscious raw materials for new garments. In 2014, we already launched the first closed loop products made with 20% recycled cotton. More than 20% isn’t currently possible without losing quality. But there are a number of interesting ideas and innovators working to overcome this and other challenges that we are working with.
You mentioned transparency as a key focus. How can transparency drive sustainability?
I believe that transparency is the starting point for all change. For example, we are working with other brands in the Sustainable Apparel Coalition on the HiGG Index, a tool to measure apparel and footwear products, brands or suppliers on their sustainability performance. It takes the entire value chain into account, from raw materials to end-of-life solutions. We hope that this will result in consumer labelling that will allow customers to compare products, even from different brands, based on the same standards in an easily accessible way. I believe that this kind of transparency will ultimately make sustainability a key driver in our industry, as we all are competitive and want to make our customers the best offer. Transparency and mutual trust are also crucial with our suppliers. In 2013, we published our supplier list and we have now added the first second-tier suppliers. As far as I know, that’s unique in our industry. And we keep working hard to further increase the transparency across our entire value chain, down to the raw materials.
How do you at H&M manage this process practically in a big company like yours?
Firstly, sustainability needs to be integrated into all parts of the business, be it design, sales or production. There have to be clear sustainability goals on which these functions are measured, and they need to have the same priority as other goals. Therefore, we have integrated sustainability goals into our major performance measurement tool. Our head of sustainability is part of the management group and reports progress made regularly to our Board of Directors. In other words: we think it is very important that sustainability is completely integrated into the business and part of the company’s DNA and values. Secondly, it’s very important to dare to take a longterm view. Good sustainability work will require big investments. We will have to be prepared to sacrifice short-term profits for long-term success. Thirdly, we have to have a collaborative mindset. Meeting our sustainability goals is not an easy job and often nothing that one company can drive in isolation; we have to work together – with other brands but also with other stakeholders such as trade unions or NGOs and innovators. All of this forms the basis for taking those actions that will continue to make the right difference.