HM Group SustainabilityReport 2016 FullReport en

THE H&M GROUP
SUSTAINABILITY
REPORT 2016
ABOUT THE H&M GROUP
Table of contents
VISION & STR ATEGY

1. ABOUT THE H&M GROUP 3 5. 100% FAIR & EQUAL 67
Introduction 4 Overview 68
100% LEADING THE CHANGE

2. VISION & STRATEGY 6 Introduction 70
Message from our CEO 7 Fair jobs for all: Within the H&M group 72
Key facts & figures 2016 10 Fair jobs for all: Within our supply chain 74
Our vision 12 Stewards for diversity and inclusiveness 82
Our strategy 14 Key collaborations 85
Q&A with the head of sustainability 15 6. STANDARDS & POLICIES 87
100% CIRCUL AR & RENEWABLE

Our Change-Making Programme 17 Overview 88
How we are organised 19 Introduction 89
Impacts along our value chain 20 How we work with our standards and policies 90
3. 100% LEADING THE CHANGE 22 Our Human Rights Policy 92
Overview 23 Our Code of Ethics 97
Introduction 24 Our Sustainability Commitment 99
Promote and scale innovation 25 Animal welfare and material ethics 105
Drive transparency 27 Chemical restrictions 106
100% FAIR & EQUAL

Reward sustainable actions 31 Social policies 107
4. 100% CIRCULAR & RENEWABLE 32 7. HOW WE REPORT 108
Overview 33 Introduction 109
Introduction 36 Materiality matrix 112
Our ambitions 38 Our salient human rights issues 113
STANDARDS & POLICIES

100% Circular 41 Sustainable Development Goals 116
100% Renewable 55 Engaging with our stakeholders 118
Our climate impact 63 Auditor review statement 119
Key collaborations 65 Awards & recognition 121
8. GET IN TOUCH 122
9. APPENDIX Our KPI overview 123
HOW WE REPORT
H&M Conscious Exclusive.
T H E H & M G R O U P S U S TA I N A B I L I T Y R E P O R T 2 0 1 6 2 O F 1 24
VISION & STR ATEGY 100% LEADING THE CHANGE 100% CIRCUL AR & RENEWABLE 100% FAIR & EQUAL STANDARDS & POLICIES HOW WE REPORT
ABOUT THE H&M GROUP
3 O F 1 24
THE H&M GROUP
ABOUT
T H E H & M G R O U P S U S TA I N A B I L I T Y R E P O R T 2 0 1 6
ABOUT THE H&M GROUP
INTRODUCTION
About the H&M group
VISION & STR ATEGY

Introduction
About us
223 billion

H & M Hennes & Mauritz AB (publ) was founded in
Sweden in 1947 and is quoted on Nasdaq Stockholm.
The H&M group includes several clearly defined SEK sales including VAT.
fashion brands, each with its own unique identity.
We offer fashion from the brands H&M, COS, Monki,
Weekday, & Other Stories and Cheap Monday, as
well as homeware from H&M Home. 64 markets on six
continents and e-commerce

Through our brands, we want to inspire fashion fans
around the world to dress in their own personal in 35 markets.
style. We are driven by a desire to always create the
4,351
best offering for our customers – and to do so in
a sustainable way.
stores globally,
all brands included.
100% FAIR & EQUAL

The H&M group works
with 1,826 first tier

factories of which 508 are

based in EMEA and 1,318 in
Southeast Asia.
COS, Bukarest. H&M.
HOW WE REPORT
ABOUT THE H&M GROUP
INTRODUCTION
About the H&M group
VISION & STR ATEGY

Our shared values

Our shared values run like ‘a red thread’ through
our company. They reflect the heart and soul of
the H&M group and define what we stand for and
how we act.
Around 75% of the average

number of employees are women
WE BELIEVE IN PEOPLE ENTREPRENEURIAL
and 25% are men.
WE ARE ONE TEAM CONSTANT
SPIRIT IMPROVEMENT
Women hold 69%and

men 31% of the management
100% FAIR & EQUAL

positions.
Over 161,000 employees

work for the H&M group today of

whom 13,000 were new colleagues
welcomed in 2016.
COST-CONSCIOUS STRAIGHTFORWARD KEEP IT SIMPLE THE H&M GROUP
AND OPEN-MINDED
HOW WE REPORT
ABOUT THE H&M GROUP 100% LEADING THE CHANGE 100% CIRCUL AR & RENEWABLE 100% FAIR & EQUAL STANDARDS & POLICIES HOW WE REPORT
VISION & STRATEGY
6 O F 1 24
STRATEGY
VISION &
COS.
ABOUT THE H&M GROUP
MESSAGE FROM OUR CEO / KEY FACTS & FIGURES 2016 / OUR VISION / OUR STR ATEGY / Q&A WITH THE HEAD OF SUSTAINABILITY / OUR CHANGE-MAKING PROGR AMME / HOW WE ARE ORGANISED / IMPACTS ALONG OUR VALUE CHAIN
Vision & Strategy
VISION & STRATEGY

Message from our CEO
The H&M group makes affordable, good-quality and sustainable

fashion available for many people, regardless of their income or
where they live – that is our passion and our everyday work.
We believe sustainable fashion should are taking a circular approach to how
be available for everyone. The idea is fashion is made and used. That includes
that people who enjoy fashion should be a more effective use of resources, support
equally able to dress sustainably. How- of innovations within recycling tech-
ever, to be able to continue to offer sus- nologies as well as an increased use of

tainable fashion to present and future existing or new sustainable materials.
generations in a world with growing pop- Our ongoing work to contribute to good
ulations and finite resources, both the working conditions for the people mak-
H&M group and the industry must look ing our products is just as important.
for new ways of working. That is why we
Investing in sustainability issues such
as these is a business opportunity – and
vital for our future business success. But
also, as stated in international guidelines
100% FAIR & EQUAL

such as the UN Guiding Principles on
Business and Human Rights, it’s part of
our responsibility as a company. Corpo-
rations have a big responsibility to act in
a way that helps to drive change, making
their business economically, socially and

environmentally sustainable.
Our sustainability work is built on three

foundations. First, it’s integrated into
all parts of the business – in every single
department and function and in all
brands and markets. Sustainability is
HOW WE REPORT
Karl-Johan Persson, CEO. part of our company’s DNA and values. Monki.
ABOUT THE H&M GROUP
Vision & Strategy
VISION & STRATEGY

“ Ittohas
Secondly, we are convinced that a long-
term way of working is the only way always been important to us

forward. As a result, we always take
a long-term view instead of choosing
short-term solutions that don’t lead
act in a way that makes it possible
to lasting change. Finally, we have a not just for the present but also future
”
collaborative mindset. As many of the
challenges we are facing are systemic
and industry-wide, we need to work with
generations to enjoy fashion.
others. Our collaboration with brands,

trade unions, NGOs, experts and scien-
tists, business partners and civil society
will continue – no matter if it’s about
recycling innovations, new sustainable
materials or the work to improve
working conditions for the people
making our clothes.
This is why we very much welcome
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the collaborative focus within the UN
Sustainable Development Goals (SDGs)
and the SDG Agenda. Through our
continued commitment to the United
Nations Global Compact, we take shared
& Other Stories. COS.
responsibility for achieving positive

change. Our sustainability priorities
are aligned with the SDGs and aim to We contribute to several of the SDGs, for a sustainability perspective, this tran- solution and help expand the lifespan of
mobilise efforts to end poverty, fight example, through our circular approach sition is necessary. However, it requires garments and increase reuse or recycling
inequalities and tackle climate change, and efforts to close the loop on textiles more effective use of resources as well as of materials. The Global Change Award
see more on p. 117. The SDG Agenda pro- (SDG 12). We are a member of the Ellen innovations within recycling and mate- innovation challenge, initiated by the
vides a good framework when designing MacArthur Foundation’s Circular Econ- rials. Garment collecting in our stores is H&M Foundation in 2015, is another
strategies going forward and finding new omy 100 to help accelerate the transition one step on our circularity journey, invit- way of speeding up the development. It
HOW WE REPORT
collaborations. from a linear to a circular economy. From ing our customers to become part of the aims to find new ideas to help close the
ABOUT THE H&M GROUP
Vision & Strategy
VISION & STRATEGY

loop on textiles. Because technology there should be in charge – but obviously
and innovations are key to reaching our with support from the H&M group and

vision of becoming circular, we are sup- many others who want to continue their
porting this development through both commitment in these countries in the
investments and knowledge. long term.
Our efforts to improve working condi- It has always been important for us to
tions in the countries where our prod- act in a way that makes it possible not
ucts are made is also in line with the just for present but also future genera-
SDG Agenda (SDG 8). We are committed tions to enjoy fashion. However, along

to focusing our efforts on creating a with the rest of the industry, we still
well-functioning dialogue in the labour have a long way to go. It is now time to
market since this is a precondition for lift our ambitions and push the bound-
achieving lasting improvements in work- aries again. I’m convinced that our new
ing conditions for people. We are work- sustainability strategy presented in this
ing to promote a dialogue where free- H&M.
report will take us closer towards our
dom of association is respected, where vision: to lead the change towards circu-
workers’ representatives have a voice lar and renewable fashion while being
and where trade unions can negotiate a fair and equal company.
100% FAIR & EQUAL

and bargain collectively. These issues
are also central in several of our collab-
orations, for example, within the Global
Framework Agreement with IndustriALL
and IF Metall which was converted into
a permanent partnership in 2016.

The H&M group wants to contribute to
structures and frameworks, to inspire,
educate and bring the best from the
Swedish labour market to countries like
Bangladesh and Cambodia – but we will
not be able to push development on our Karl-Johan Persson, CEO
HOW WE REPORT
own. The countries and the people living H & M Hennes & Mauritz AB
ABOUT THE H&M GROUP
Vision & Strategy
VISION & STRATEGY

Key facts & figures 2016
S U S TA I N A B L E C O T T O N * I N %

O F T O TA L C O T T O N U S E * * *
We renewed the Global
100% Framework Agreement
GOAL 2020
with IndustriALL and the We are the biggest user of
Swedish union IF Metall. responsibly sourced down.
Source: Textile Exchange Preferred Fiber Market Report
43%

T O TA L S H A R E O F R E CYC L E D O R O T H E R
34% S U S TA I N A B LY S O U R C E D M AT E R I A L S **/***
100%
GOAL 2030
22%
16%
13% We are the second largest user
of recycled polyester in the world.
26%
In 2016, we used recycled polyester
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equivalent to more than 180 million 20%
PET bottles.
14
12
13
15
16
20
20
20
20
20
13%
11%

Since 2013, we have collected almost 39,000 tonnes
of garments in H&M group stores, which is
equivalent to 196 million t-shirts.
14
13
15
16
20
20
20
20
* Certified organic cotton, Better Cotton (BCI) or recycled cotton. ** Included are all materials classified as conscious materials, such as certified organic or recycled fabrics, as well as Better Cotton (BCI). *** Please note: Material data has been restated due to the fact that historical
HOW WE REPORT
data has been updated using a new, more detailed system. We are continuously working to improve our data systems and accuracy. An independent assurance statement related to GRI 301-1 is provided on page 119. Deviations are due to rounding effects.
T H E H & M G R O U P S U S TA I N A B I L I T Y R E P O R T 2 0 1 6 1 0 O F 1 24
ABOUT THE H&M GROUP
Vision & Strategy
VISION & STRATEGY

Key facts & figures 2016
TONNES OF GARMENTS COLLECTED
96% of electricity

IN H&M GROUP* STORES
140 supplier factories
used in our own
25,000t/year have implemented an improved
GOAL 2020
wage management system. operations comes from
renewable sources.
15,888t T O TA L C O 2 e E M I S S I O N S * *

C O M PA R E D W I T H P R E V I O U S Y E A R I N %
(S C O P E 1+2 ) V S . G R OW T H I N S A L E S
12,341t ( I N L O C A L C U R R E N C I E S)
NET SALES EMISSIONS
7,684t
7%
14% 11%
We are 9%
3,047t the world’s biggest
100% FAIR & EQUAL

user of Better Cotton. 356,373t 341,675t
Source: Better Cotton Initiative (BCI)

13
14
15
16
20
20
20
20
151,753t

80,541t
The factories where our suppliers make

our products employ about 1.6 million people,
13
14
15
16
65% of whom are women.
20
20
20
20
* With the exception of our franchise markets. Other brands within H&M group (Weekday, Cheap Monday,Monki, & Other Stories) offer garment collection to customers as well. An independent assurance statement related to our tonnes of garments collected for reuse and recycling is
provided on page 119. ** Our GHG emissions accounting and reporting is aligned with the GHG Protocol. Reported CO 2 e emissions are based on supplier specific emission factors where available. For further details and data, please see our CDP Climate Change Investor Response 2016.
HOW WE REPORT
CO 2 e emissions include carbon dioxide (CO 2), methane (CH 4), nitrous oxide (N 2 O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6). An independent assurance statement related to GRI 305-1 and 305-2 is provided on p. 119.
ABOUT THE H&M GROUP
Vision & Strategy
VISION & STRATEGY

Our vision
The H&M group has a strong history in sustainability. Ultimately,
we want to make sure that fashion continues to be enjoyed today

and for generations to come. But to create a truly sustainable
fashion industry that is good for people, communities and the
planet, we need to take our work to the next level. Our vision is
therefore to use our size and scale to lead the change towards
circular and renewable fashion while being a fair and equal

company. This vision applies to every brand in the H&M group,
all of which share the same passion for fashion and quality, as well
as the ambition to serve our customers in a sustainable way.
Our world sustains and inspires us Our global society is also facing serious
to create incredible things. But today, challenges. Many people are already
our environment and our society are living in extreme poverty, and issues
facing some serious challenges. The such as forced labour and discrimination
100% FAIR & EQUAL

rise in global temperatures is already prevent millions of people from living
affecting our climate, and the world a good life. and industry. By preparing to meet this sibility – and an opportunity – to create
needs to stay well below a 2°C increase change in a sustainable way, businesses this acceleration and facilitate the right
to avoid increasingly damaging out- These challenges are compounded by the have an opportunity to flourish and cre- collaborations for success. We believe
comes. According to the World Bank, size and growth of the world’s popula- ate job opportunities for people around in moving the whole market forward,
we will soon face a global shortage of tion, which is set to increase from seven the world. for our own business and for other busi-

vital resources. For example, there is a billion people today to about eight and nesses that share our values.
projected 40% gap between water sup- a half billion by 2030*** – five billion We believe that our industry needs to
ply and demand by 2030,* and we are of whom are predicted to move into the increase the pace of change in addressing Built on lessons learned from our
losing about 130,000 square kilometres middle class.**** This growth and demo- these global environmental and social Conscious Commitments, our new strategy
– equivalent to 48 football fields every graphic shift will drive massive, unprec- issues. The size, scale and global reach of will guide us in the next exciting phase
minute – of forest every year.** edented changes across our society the H&M group means we have a respon- of our journey towards real, sustainable
HOW WE REPORT
* worldbank.org ** worldwildlife.org *** esa.un.org ****According to the OECD (using their $10–100 benchmark), the global middle class will reach nearly five billion by 2030, out of a world population of eight billion. See: oecd.org
ABOUT THE H&M GROUP
Vision & Strategy
VISION & STRATEGY

fashion. It is built on our vision to use Adopting a 100% Circular & Renewable Our Sustainability Strategy
our size and scale to lead the change approach to making and using fashion is

towards circular and renewable fashion an essential step to helping our business
while being a fair and equal company. continue to thrive for the next decades and VISION
Our vision is to lead the change
This vision is built on three ambitions: beyond. It’s not just important, but a pre-
towards circular and renewable fashion
requisite for our growth and future success, while being a fair and equal company.
100% LEADING THE CHANGE just as it is for every other fashion brand.
– Promote and scale innovation
– Drive transparency When it comes to striving for 100% Fair
– Reward sustainable actions & Equal, we want our business to benefit

everyone it connects with, from empow-
100% CIRCULAR & RENEWABLE ering our customers to express their
– A circular approach to how products personality through fashion – wherever 100% LEADING THE CHANGE
are made and used they are in the world – to the millions of 100% CIRCUL AR & RENEWABLE 100% FAIR & EQUAL
– Use only recycled or sustainably people who work across our value chain.
sourced materials By building stronger, more rewarding con-
– Use only renewable energy in our nections with our customers, employees CHANGE-MAKING PROGR AMME
value chain and suppliers, our business will benefit in Our Change-Making Programme is at the heart of all of our sustainability work. It
many different ways. includes goals, roadmaps, standards and methods that help us work towards our vision,
100% FAIR & EQUAL

100% FAIR & EQUAL enable changemakers and ensure that sustainability is integrated in everything we do.
– Fair jobs for all Our new vision sets a high bar. Ultimately,
– Stewards for diversity and inclusiveness it will help us create sustained and bal-
anced growth that meets demand while
ENGAGING CHANGEMAKERS
Our commitment to 100% Leading the also helping to improve our environment
change will drive and accelerate our impact and society. However, although this vision

as we seek to fulfil our vision. To us, it is an is essential to the future of our business, we
ambition that can help set new standards, don’t yet have all of the solutions in place
find innovative solutions and discover new for achieving our goals, many of which are
ways of engaging our stakeholders to create breaking new ground. We know there is ALL COLLEAGUES ALL PARTNERS
a truly sustainable fashion industry. a significant journey ahead of us, but our
vision gives us clear long-term focus and ALL CUSTOMERS
Of course, it is important to recognise the direction and provides the motivation we
HOW WE REPORT
business case that our vision represents. will need to succeed.
ABOUT THE H&M GROUP
Vision & Strategy
VISION & STRATEGY
VISION & STR ATEGY

Our strategy
Our strategy will allow us to fulfil our vision and take our
sustainability work to the next level.

The H&M group has come a long way At the heart of our sustainability work
since our first sustainability strategy in is our Change-Making Programme,
2009. In 2016, we reported on our seven which makes our strategy come to life. By
Conscious Commitments for the last bringing together all of the component
time. This year, we have started report- parts of our strategy, including our goals,
ing on our new vision and strategy. roadmaps, standards and methods, it

integrates sustainability into every part
We have developed our new strategy in of our business. Read more about the
partnership with internal and external Change-Making Programme on page 17.
stakeholders and experts from across our
value chain. We mapped and prioritised Underpinning all of this is our ongoing
our human rights risks, and identified commitment to engage changemakers
how we could leverage positive change – the people from across our value chain
by addressing these risks. And we used who turn goals and ambitions into action
an inclusive and science-based process. and achievements. There is simply no way
100% FAIR & EQUAL

Working with our partners, we defined we will fulfil our vision without their help.
our ambition areas as 100% Leading the
change, 100% Circular & Renewable and
100% Fair & Equal. Each area is covered
in an individual chapter in this report.

That said ‘100%’ is not an exact goal – it
demonstrates the scale of our ambition
and our commitment to change, and
creates a clear long-term direction and
momentum at H&M group and across
our industry that will lead to the best
possible results.
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ABOUT THE H&M GROUP
Vision & Strategy
VISION & STRATEGY

Q&A with Anna Gedda, head of sustainability
Our vision for sustainability at the H&M group is ambitious. seven Conscious Commitments helped no way we will be able to reach these
us achieve a lot, and our new vision and goals without getting our customers,
It imagines a whole new way of making and consuming fashion

focus areas will take us even further. employees, business partners and other
for the world. It’s a vision that is built on the experience we have stakeholders on board, our strategy is
What makes the H&M group’s sustaina- founded on the need for engagement
gained about what works and what doesn’t.
bility strategy unique? and collaboration.
Many things. First, our ambition. We
Why has the H&M group updated its want to lead the change towards a circu- How can you continue to expand while
sustainability strategy? lar and renewable fashion industry while also becoming more sustainable?
The H&M group has been committed to also being a fair and equal company. That According to the UN, there will be 9.7

sustainability for a long time, and we are is a huge commitment to make. billion people living on this planet by
proud of what we have achieved so far. 2050, with a rapidly growing middle
But the fashion industry is still facing big Second, the size of our business. We are class. We believe that all of these peo-
challenges and we need to rethink how one of the world’s biggest fashion compa- ple should be able to access and afford
fashion is made and used. We have the nies. This comes with both responsibility clothes they love that are also sustain-
size, scale and ambition to help lead and opportunities as we have a unique able – no matter where they live or how
that change. reach and possibility to create change. much money they have. To accomplish
Because of this, our sustainability ambi- this, we have to grow our business sus-
Sustainability is fundamental to the tions won’t just set our agenda, they will tainably and move towards a circular use
100% FAIR & EQUAL

future of our business. Looking 20 or help drive change across the industry. of resources. That means making sure
30 years ahead, we need a strategy that our growth is not linked to, or dependent
will both help ensure that our planet The third thing that makes our strategy on, similar growth in our resource use.
has enough resources to go around and unique is that it is about true sustaina- It won’t happen overnight, but we will
that enables us to use and produce those bility. We are not here to outperform our get there.
materials in a sustainable way. competitors. It doesn’t matter if we have

the smallest carbon footprint compared Leadership is obviously a key element
Our new strategy is built on years of to anyone else. Instead, we are using a of the new strategy. Why is that?
Anna Gedda.
hard work and experiences of both scientific approach to find out where our Our size, scale and influence mean that
successes and setbacks. But all of the planet needs us to be – in terms of our we have both a responsibility to do the
Anna Gedda, head of sustainability at original building blocks, such as set- environmental and social impact – and right thing and an opportunity to create
the H&M group, explains where the ting long-term goals, collaboration and then setting goals around that. real, lasting change. We have the ability
new strategy came from and how it will integrating sustainability in all of our to create large-scale impacts that few
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become a reality. business operations, are still there. Our And finally, because there is simply others have.
ABOUT THE H&M GROUP
Vision & Strategy
VISION & STRATEGY

For me, being a leader means using this all the answers on how we’ll get there, the extent to which we’ve implemented trade unions, which is necessary for last-
position to lead by example and break but we do know you have to be bold to and used the Higg Index* to evaluate our ing improvements in all areas of working

new ground. By testing new ideas or make things happen. For us, 100% is not suppliers. The Higg Index exists to help conditions, including fair living wages.
doing what others have not done before, necessarily an exact measurement, but businesses like ours get a clear picture
we can pave the way and try new things. a way to demonstrate our ambition and of our environmental, social and labour Finally, I would like to mention the work
This will also hopefully lead others to create action – both within our company impacts and identify areas for improve- we’re doing to engage our customers
follow our example or join us in our and outside of it. ment. See more in the Standards & to be more sustainable. We need their
movement for change. help if we’re going to reach our goals.
“ Our
For example, since we introduced our
Of course, while being first gives you an size, scale and influence mean we garment collecting initiative globally in

advantage, it also means you are more 2013, we have gathered almost 39,000
likely to make mistakes. That’s why it
is important to remember that perfect
have both a responsibility to do the tonnes of garments to give them a new
life so nothing goes to waste. By showing
is the enemy of good. Instead of putting right thing and an opportunity them that sustainability is part of the
”
brands off from taking the kind of bold H&M group’s brands, we’re changing
steps we need, I hope that we can cele-
brate the milestones that take us closer
to create real lasting change. their behaviour when it comes to caring
for and disposing of clothes. Our objec-
to a more sustainable industry. I believe tive is to make fashion sustainable and
leadership deserves both scrutiny and Which sustainability achievements are Policies chapter on p. 99. It takes time to sustainability fashionable.
100% FAIR & EQUAL

encouragement, and I hope our efforts you most proud of from 2016? both create a universal standard and for
will attract both. I’m really proud of our ambition to it to be adopted industry-wide to work. What does sustainability mean to you?
become 100% Circular. It’s a big, daring No other brand of our size has made this For me, it’s very real and a big part of
What does 100% mean? commitment, and I see it is an achieve- kind of commitment to transparency yet, both my professional and private life.
Basically, ‘100%’ is our ultimate ambi- ment to have made it. Obviously, it’s but we hope that by us using it, others I have two young children and I want
tion, and it will take us decades to the starting point for much more to will follow. to know that I’m leaving them a better

achieve. Any company can say it wants come! Looking at the challenges around world to build their lives in. That means
to become circular, but unless we all aim resource use that not only our, but all After a successful first year, we also everything from taking care of how we
for 100% we’ll never fully get there. We industries face, this marks such an extended our Global Framework Agree- use resources to helping people around
want to be part of the solution and help important step towards a more sustaina- ment to become a permanent collabora- the world enjoy good and healthy lives
advance science in this area, and to do ble way of making and enjoying fashion. tion with IndustriALL and the Swedish in a more fair and inclusive society. I’m
that we need to be transparent about our trade union IF Metall. We see this as a really proud to be working for a company
ambitions. Our roadmap doesn’t have I’m also proud of the steps we’ve taken to foundation for creating a well-functioning that wants to be part of making this
HOW WE REPORT
become more transparent, in particular dialogue between our suppliers and local change happen.
* Read more about Higg Index in the next chapter.
ABOUT THE H&M GROUP
Vision & Strategy
VISION & STRATEGY

Our Change-Making Programme: Turning our strategy into action
Our Change-Making Programme is
the ‘nuts and bolts’ of how we turn our How we will turn our vision and strategy into action

sustainability strategy into action and
make our vision a reality.
The H&M group is a big, global and diverse fashion
company and we recognise (perhaps more than
most) that one size doesn’t fit all. The Change-Making
Programme will allow us to integrate sustainability GOALS ROADMAPS STANDARDS AND METHODS AND

into our business by bringing our sustainability Our vision and These are strategic POLICIES FOLLOW-UP
strategy to life in a systematic way across all of our ambitions are trans- plans, targets and Our sustainability These are the
functions, brands and countries. It makes sustain- lated into concrete actions for reaching standards ensure that processes, routines
ability a practical part of everyone’s dailyworking goals at group, market our goals. we and our business and methods we use
and function levels. partners operate in to set goals and evalu-
life. The programme brings together the goals, We have roadmaps a sustainable way. ate our progress.
roadmaps, standards and follow-up methods we Each function and for specific sustainabil-
will need to work towards our vision while at the market has ownership ity areas, for example They include our They ensure that our
same time leaving room for locally-tailored imple- of its own sustaina- energy, water, inno- Code of Ethics, strategy is well-
mentation and activities. bility goals. vation, waste and Sustainability integrated across
100% FAIR & EQUAL

transparency. Commitment, Human our business.
Rights Policy, etc.
See more on page 89

in Standards &
Policies chapter.

CULTURE AND VALUES
NB: At the time of print, we are still defining some of the initial goals for our
sustainability strategy. For the best results, goal-setting must be an ongoing
process that works with the latest insights and information available and is
supported by our internal functions and external stakeholders. By constantly
improving our goals, we will stay aligned internally on fulfilling our vision.
HOW WE REPORT
We anticipate all initial goals to be set throughout 2017 and onwards. Please
see the interview on p. 18. for more information on our goal-setting process.
ABOUT THE H&M GROUP
Vision & Strategy
VISION & STRATEGY

Interview with Cecilia Strömblad Brännsten: Our science-based goal setting explained

What’s your background and role at the Wherever possible, we follow a science- One example for how science helps our
H&M group? based approach to goal setting – we want to goal setting is our research project with the
I started out in the buying office at H&M in base every decision on facts and data. Cur- Stockholm Resilience Centre and the Ellen
2004. Five years ago, I moved to the Global rently, this approach is most valid for goals MacArthur Foundation. Together, we are
Sustainability Department to work on circu- concerning climate change and water use, working to identify what a circular fibre sys-
larity and sustainable materials as an expert but we are taking an ‘outside in’ perspective tem within planetary boundaries could look
in sustainable business. I am also the Global to understand and thereby mitigate our local like for the textile industry. The outcomes

Project Manager for the garment collecting and global impact across all areas of action. of this long-term project will influence what
initiative. It is also our job to continuously connect with material-use goals we set for ourselves,
our internal and external stakeholders to and provide guidance for the whole textile
How will the H&M group reach 100% share progress and get further input. industry.
circularity?
Reaching 100% circularity is an ambitious Why is a science-based approach so How important is it to work with
vision, and we don’t have all the answers for critical? external stakeholders when it comes
getting there yet. We are currently working Leading the change towards a circular fashion to goal setting?
with internal and external stakeholders to industry means running our business in a way I believe it’s very important. Our external
100% FAIR & EQUAL

set the goals, roadmaps and actions that will that is in line with what our planet can afford. stakeholders inspire and challenge us,
push us forwards on our journey. You will A science-based approach helps us collabo- and push us in the right direction. When
see many of these goals in this report, but ratively and transparently work with experts it comes to circularity, we have the privilege
some are not ready to share yet. to define priorities and targets consistent of working with some of the most influential
Cecilia Strömblad Brännsten.
with these planetary boundaries, see box stakeholders in the field including the
What’s your role in the goal-setting on p. 37. It pushes us to increase our pace of Ellen MacArthur Foundation, the Stockholm

process? perspective. We also work to facilitate innovation, make the big leaps that are neces- Resilience Centre and the WWF.
Together with my colleagues in the Global cross-functional goal setting – many of our sary and set our long-term goals.
Sustainability Department, I lead the targets will only be achieved if different
goal-setting process for 100% circularity. functions across our business are aligned. Much of the science in this area is still evolv-
That means we set the direction and ambi- To realise our vision, we also need to con- ing. That means we need to keep exploring to
tion level, and ensure we are on the right tinuously revise our ambition level – and set find the best solutions for our business and
track from an environmental and business new goals that push us forward. the planet.
HOW WE REPORT
ABOUT THE H&M GROUP
Vision & Strategy
VISION & STRATEGY

How we are organised
Our head of sustainability, reports
directly to our CEO and has responsi-
At the group functions and brands, we
have approximately 15 colleagues. They
Organisational chart

bility for the implementation of our have set specific sustainability goal and
sustainability strategy together with targets. Their performance is measured
the Executive Management Team. and follows the same procedure as for BOARD OF DIRECTORS
any other goal.
Twice a year, our CEO, CFO and head of
sustainability review the progress made. In our production markets, we have
With the same frequency, our head of approximately 145 sustainability manag-
sustainability reports performance ers that operate from 21 local production

against key sustainability indicators offices around the world. They work Bi-annual
performance
to our Board of Directors. directly with our commercial business
reporting
partners to assess their performance CEO
At our head office, our global sustaina- against our Sustainability Commitment
bility department consists of more than and support them in making improve-
25 colleagues responsible for setting the ments through capacity building pro-
strategic directions and ambition level, grammes and activities.
reviewing our progress, and supporting
and advising all relevant departments on In our sales markets, we have 35 sus-
100% FAIR & EQUAL

the development and implementation of tainability managers who support the
our strategy. implementation of our strategy across HEAD OF JOINT GROUP FUNCTIONS
all of our sales markets. SUSTAINABILITY AND BR ANDS
Define
priorities annually
based on business

We have 220 colleagues globally intelligence and
innovation
who work with sustainability as GLOBAL

process
LOCAL
their core task. SUSTAINABILITY

DEPARTMENT
SUSTAINABILITY
FUNCTIONS
HOW WE REPORT
ABOUT THE H&M GROUP
Vision & Strategy
VISION & STRATEGY

Impacts along our value chain
Our value chain is connected
to countless people, communi-

ties, ecosystems and other busi-
nesses around the world – that is
what it means to be part of the
global economy. Our business’ Fabric and yarn
social, environmental and eco-
Design Raw materials production

nomic impact is significant and
far-reaching, and we want it to High 0% 0% Low Medium 11% 87% High Medium 47% 6% High
be as positive as possible.

OUR C L I M AT E WAT E R SOCIAL OUR C L I M AT E WAT E R SOCIAL OUR C L I M AT E WAT E R SOCIAL
INFLUENCE I M PA C T * I M PA C T * I M PA C T * * INFLUENCE I M PA C T * I M PA C T * I M PA C T * * INFLUENCE I M PA C T * I M PA C T * I M PA C T * *
This means creating positive change
along our value chain – from the farms OUR CHALLENGE Sustainability OUR CHALLENGE Processing raw mate- OUR CHALLENGE When our business
and factories that supply us to our mil- starts at the drawing board. We need to rials such as cotton is an area we must partners buy yarn and fabric, we need
lions of customers. We can do this in our create fashion without compromising on pay close attention to. It involves high to consider water use (a salient human
100% FAIR & EQUAL

own operations, but what about the parts design, quality, price or sustainability. water and chemical use, and it is often rights issue for us), chemical use, work-
of the value chain that lie outside of our Our choice of materials and our designs associated with poor working conditions. ing conditions and greenhouse gas
direct control? Our strategy is grounded impact the environment and the people There is a potential risk of child and emissions. Generally speaking, we do not
on the idea that we must use the size and who make and wear our clothes. We forced labour, and concerns around land have direct business relationships with
scale of our business to leverage change can make our impact more positive, for rights issues (identified as salient human mills. Instead, we work with organisa-
and create maximum positive impact example, by choosing sustainable mate- rights issues for us). There are also con- tions such as Solidaridad and the Natural

and minimum negative impact. One par- rials and reducing what ends up on the siderable traceability challenges as we Resources Defence Council (NRDC) to
ticular focus area is the protection and cutting room floor. do not always have full insight on where help mills improve their performance.
improvement of human rights along our our conventional cotton comes from. Our We have already integrated fabric and
value chain. This is explained in full in choices matter, which is why we work to yarn mills that are involved in making
the Standards & Policies chapter on p. 92. use raw materials as efficiently as pos- about 56% of our products into our sup-
sible, making and promoting sustain- plier assessment system.
able raw material choices and working
HOW WE REPORT
* See next page. ** See next page.
towards our 100% circular ambition.
ABOUT THE H&M GROUP
Vision & Strategy
VISION & STRATEGY

Check out where in the world
the different stages of our value chain take
place on an interactive world map here.

Product manufacturing Transport Sales Use

Medium 17% 1% High Medium 2% 0% Low High 5% 0% High Low 18% 8% Medium
OUR C L I M AT E WAT E R SOCIAL OUR C L I M AT E WAT E R SOCIAL OUR C L I M AT E WAT E R SOCIAL OUR C L I M AT E WAT E R SOCIAL
INFLUENCE I M PA C T * I M PA C T * I M PA C T * * INFLUENCE I M PA C T * I M PA C T * I M PA C T * * INFLUENCE I M PA C T * I M PA C T * I M PA C T * * INFLUENCE I M PA C T * I M PA C T * I M PA C T * *
OUR CHALLENGE Over 1.6 million peo- OUR CHALLENGE Transport repre- OUR CHALLENGE We have over 4,351 OUR CHALLENGE Caring for clothes
ple work in the factories of our business sents approximately 2% of the green- stores across 64 markets. As we grow, enter at home represents about 18% of the
partners, 65% of whom are women. Social house gas emissions in a garment’s new markets and employ new people, we greenhouse gas emissions in a garment’s
100% FAIR & EQUAL

security, wages, freedom of association lifecycle. By choosing the right modes need to keep living up to our values and life. Our challenge is to create afforda-
and collective bargaining, health and of transport, we can reduce this impact ensure an inspiring and healthy working ble fashion that our customers will love
safety, and working hours are all salient even further. And as an important environment. Discrimination and harass- from season to season and that is easy
human rights issues. Our industry must customer of the transport companies ment are human rights issues and our inter- to care for in a low-impact way. We need
ensure fair living wages, reductions in we work with, we have the opportunity nal policies, such as our Global Diversity, to inspire our customers to be more
overtime and workplace safety to become to influence their awareness and action Inclusion and Equality Policy and Non- conscious in the way they care for their

socially sustainable. on environmental issues as well. Harassment Policy, are vital to ensure a good garments and make it easy for them to
workplace. Our customers rightfully expect not let fashion end up in landfills.
good quality products and shopping experi-
ences. As part of that, we need to ensure
the privacy of their and our colleagues’ data,
and to advertise in a responsible way.
* Climate impacts are based on a scope 3 assessment made by Ecofys in 2016, based on 2014 data. Calculations in the footprint analysis are based on a combination of good quality H&M group data (2014 material usage) combined with best available public data sources
HOW WE REPORT
on CO2 emissions. We are working to further improve the calculations by using primary data from our main suppliers. The water footprint is based on the Water Footprint Network’s methodology and includes green, blue and grey water footprints. Deviation from 100%
due to rounding effects.** For more information about our social impact, see p. 114. A number of these issues related also to the H&M group’s salient human rights issues, i.e. those human rights at risk of the most severe impact across our operations and supply chain.
ABOUT THE H&M GROUP VISION & STR ATEGY 100% CIRCUL AR & RENEWABLE 100% FAIR & EQUAL STANDARDS & POLICIES HOW WE REPORT
2 2 O F 1 24
100% LEADING
THE CHANGE
H&M.
ABOUT THE H&M GROUP
OVERVIEW / INTRODUCTION / PROMOTE AND SCALE INNOVATION / DRIVE TR ANSPARENCY / REWARD SUSTAINABLE ACTIONS
100% Leading the change
VISION & STR ATEGY

Overview

TOPICS AMBITIONS & GOALS ACTIONS 2016 ACHIEVEMENTS & RESULTS 2016
–C
ollaborated with Cradle-to-Cradle Products Innovation Institute to help
support industry-wide demand and supply of sustainable materials.
See also 100% Circular & Renewable chapter.
– Donated almost EUR 0.8 million to the H&M Foundation for circular innovation
To identify and promote innovative solutions and to – Provided Global Change Award winners with knowledge about the fashion
INNOVATION use our size to take any breakthroughs to scale. industry and the supply chain to further strengthen their innovation ideas.
project from the total proceeds of the garment collecting initiative.
See also 100% Circular & Renewable chapter p. 54.
– Donated 50% of the proceeds of our garment collecting initiative to
the H&M Foundation for circular innovation that benefits the whole industry.
See also 100% Circular & Renewable chapter.

–F
urther expanded of our public supplier factory list to include more second
tier factories.
– C ollaborated with SAC to build a Higg Index tool to measure the sustainability – The second factories included in the public factory list represent 56%
performance of apparel and footwear. of the H&M group’s total business volume compared with 51% last year.
To promote transparency that drives positive change – Adopted the Higg Index environment and social facility modules and integrated – We were one of the first global companies to roll out the Higg Index to
DRIVE TRANSPARENCY in the industry. them in the SIPP. See more in Standards and Policies chapter on p. 100. our business partners.
– Participated in EU initiative to create a methodology for consumers to compare – We rolled out our SIPP to all of our first tier and 56% of our second tier
sustainability performance on the product level. business partners.
–Cooperated with Control Union on a successful pilot traceability system for
organic cotton and viscose.
100% FAIR & EQUAL

–F
urther integrated our sustainability goals into our business goals. We have
a follow-up process to create accountability and have made sustainability part
of our management evaluation process.
REWARD SUSTAINABLE To develop and use reward systems that can best create – Developed incentives for our customers to create positive behavioural change
and accelerate progress towards our sustainability goals through the H&M Club and for those who recycle their clothes via our garment
ACTIONS and vision. collection programme.
– Continued working with our commercial business partners to raise environmental
and social standards. We reward partners who maintain good sustainability

performance with more orders and long-term commitment.
HOW WE REPORT
ABOUT THE H&M GROUP
VISION & STR ATEGY

Introduction
We want to ensure that people can enjoy fashion today, and for To lead the fashion industry towards Our three ambitions
our sustainability vision, we have
generations to come. As we explain in our Vision & Strategy

identified three key drivers that will
chapter, to accomplish this we need to change how fashion accelerate progress: innovation,
transparency and rewarding sustain-
is currently made and used. This will require significant
able action. When we apply these
commitment and action from stakeholders across the fashion drivers to our vision and goals, they
industry. Because of our unique size and position as a brand help us accelerate change, empower
and encourage our stakeholders 100% LEADING
with a long-term commitment to sustainability, we see it as a (including our customers) in making THE CHANGE

responsibility – and an opportunity – to help drive this change. sustainable choices and develop new
solutions to complex challenges.
100% Leading the change is our commitment to act as a
catalyst for change and help lead our industry forwards. Collaboration is fundamental to suc-
cessful leadership and the challenges
we face are too great to solve alone.
A full list of key collaborations is pro-
As leaders, we want to push bound- up progress towards a truly sustaina- vided at the end of the 100% Circular 100% CIRCULAR 100% FAIR
aries and break new ground. Our ble fashion industry. We want to lead & Renewable chapter and the 100% & RENEWABLE & EQUAL
100% FAIR & EQUAL

role is to bring people and partners by example. Fair & Equal chapter, all of which will
together to identify opportunities for help us ‘lead the change’.
new kinds of collaboration. On top of This leadership approach is core to
this, we aim to proactively seek out our strategy and will empower us to
and share the innovative ideas and fulfil our vision of a 100% Circular
Our sustainability strategy has three focus areas: 100% Leading the change,
solutions that will move our industry & Renewable and 100% Fair & Equal 100% Circular & Renewable and 100% Fair & Equal. Real, lasting change

comes when we approach these areas in a holistic way and find areas of overlap.
forward. Our size and scale mean that fashion industry. In particular, our approach to leadership must be applied to our work in
we can accelerate change and speed 100% Circular & Renewable and 100% Fair & Equal.
One example of the effectiveness of this approach is our work on water steward-
ship. Working collaboratively with the WWF, our strategy addresses both the fair
“ We need to change how fashion

and equal issues around water (such as livelihoods and access) and the circular and
renewable issues (such as wastewater, water basin levels and local environments).
This has involved working with a full range of stakeholders, most significantly local
”
communities, NGOs and governments. Our chapter on water stewardship goes into
is currently made and used. more depth on p. 51.
HOW WE REPORT
ABOUT THE H&M GROUP
VISION & STR ATEGY

Promote and scale innovation
To achieve the kind of transformative Our approach to innovation
change our industry needs, we must

–W
e focus. We target a clear area – such as becom-
do more than make incremental ing Climate Positive – and come up with a plan for
improvements to how fashion is made getting there. Any gaps in the plan are where we
focus our innovation resources.
and used. Instead, we need to take
leaps. Innovation is the key to this and –W
e identify and promote any promising innova-
tions through ongoing dialogue with universities
we have a unique opportunity to not and research centres, through our supplier and

only identify and promote innovation, business partnerships and through our connec-
tion with platforms like the Global Change Award.
but also use our size to take any
breakthroughs to scale. Our goals are – We collaborate. Through our extensive network of
ambitious, so our approach must be, too. partners, we identify and facilitate the opportu-
nities for collaborative innovation that will speed
our progress towards our goals and, wherever
We see innovation as a tool that can keep unlock- possible, lead the way for the rest of the industry
ing sustainable change over the long term. We are to do the same.
100% FAIR & EQUAL

already aware of some major challenges to achiev-
ing our goals. For example, we need to find a way –W
e scale. The size of our business means we can
to sustainably recycle blended fibres and develop take successful innovations to scale quickly, for
technologies that can capture carbon. We will example, by introducing new sustainable materi-
continue to innovate to address these challenges. als in our supply chain.
Looking ahead, we will inevitably encounter many

more unpredictable challenges along our journey Alongside this, we also have CO:LAB, an internal
that will require solutions we do not yet have. By investment team with a mission to promote entre-
allocating resources now and by creating collabora- preneurship, explore and challenge the future of
tive platforms for innovation – both internally and fashion and support the long-term growth of the
externally – we will build the skills and capacity to H&M group. CO:LAB makes investments in sus-
tackle these challenges as they arise. tainable fashion, innovative business models and
technology enablers, and looks for companies with
HOW WE REPORT
H&M Studio S/S 2017. a strategic match to our business.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Here are some examples of how we promising technologies in development
use this approach to help tackle our for textile-to-textile recycling. Similarly, Global Change Award

100% Circular & Renewable ambition. our work with the Cradle-to-Cradle
Products Innovation Institute is helping The Global Change Award is an innovation equity or intellectual property rights in the
First, we focus on a challenge. We want support industry-wide demand and sup- challenge initiated by the non-profit H&M innovations. The aim is to influence the fash-
to increase the lifespan of our garments, ply of sustainable materials. Foundation in 2015. By catalysing green, truly ion industry as a whole.
for example, by facilitating secondary ground-breaking ideas, the Global Change
use. In November 2015, we identified the In addition to our own initiatives, the inde- Award takes on one of the biggest challenges The H&M Foundation is a non-profit global
potential of Sellpy, a Swedish start-up pendent non-profit H&M Foundation aims facing today’s fashion industry – creating fash- foundation privately funded by the Stefan
that offers an on-demand service to help to drive change throughout the industry. ion for a growing population while improving Persson family, founders and main owners

people sell items they no longer use. We For example, the Global Change Award its impact on the environment. of the H&M group. Since 2013, the family has
invested in Sellpy to help them develop is one of the world’s largest competitions donated 1.1 billion Swedish kronor (USD 154
and scale their sustainable retail con- for early-stage innovation, providing Each year, an expert panel annually selects million/EUR 123 million) to the Foundation.
cept – a new and exciting way to shop grants of EUR 1 million annually (see five winners that share a grant of EUR 1 mil-
that aligns well with our own business p. 26). The H&M Foundation receives lion and gain access to a one-year innovation The mission is to drive long lasting positive
concept of fashion and quality at the the proceeds of our garment collecting accelerator provided by the H&M Founda- change and improve living conditions by
best price in a sustainable way. initiative (almost EUR 0.8 million) for tion, Accenture and the KTH Royal Institute investing in people, communities and innova-
circular innovation. The H&M group also of Technology in Stockholm. tive ideas. This is done through partnerships
We are also focusing on developing supports Global Change Award winners within four focus areas: Education, Water,
100% FAIR & EQUAL

methods to recycle a much larger with knowledge about the fashion indus- The global public is invited to distribute the Equality and Planet.
percentage of products, particularly try and the supply chain. This and more EUR 1 million grant between the five inno-
garments. When a garment is no longer is covered in detail in our 100% Circular vations through an online vote. The result of For further information, please visit
usable, recycling is usually the best & Renewable chapter on p. 54. the vote and the innovators are revealed at hmfoundation.com.
option – ideally into products of the same a grand award ceremony held in Stockholm
or higher value. Because the technology in April. This is one of the world’s biggest

doesn’t exist for this to happen, we are challenges for early-stage innovation and the
working to increase the share of products first such initiative in the fashion industry.
that can be recycled by creating demand
for further innovation, and by identifying The H&M Foundation introduced the
and investing in several exciting ideas. challenge to speed up this process for the
entire fashion industry and neither the H&M
In 2016, our collaboration with the inno- Foundation nor the H&M group claim any
HOW WE REPORT
vation company Worn Again saw some
ABOUT THE H&M GROUP
VISION & STR ATEGY

Drive transparency
As an important accelerator of change, Creating a more accountable
transparency is key to building trust and transparent supply chain

and credibility along our supply chain
and empowering our customers to make Transparency is a complex issue. Building a system
for transparency along a fashion supply chain takes
more sustainable choices. time and a lot of collaboration. It involves finding a
way to track and store information about raw mate-
Transparency is about knowing how and where rials and then connecting it to specific products.
our products are made and being open and honest The complexity of the industry makes this harder,

about it. Transparency allows us to hold ourselves as does the fact that neither we nor our competitors
and our suppliers accountable on issues such as have a direct business relationship with many of our
human rights, fair jobs and environmental protec- second and third tier suppliers. What’s more, there
tion. And it means we can pinpoint priorities, take is always some industry-wide tension around the
appropriate action and communicate with confi- balance between transparency and competitiveness.
dence and credibility about our progress. Greater
transparency also makes it possible for our cus- However, we are serious about transparency and
tomers to make more sustainable choices, which is – despite the challenges – are making good pro-
essential to driving and accelerating change. gress towards it. We were the first fashion retailer
100% FAIR & EQUAL

to make our supplier list public (in 2013) and we
Transparency is also critical to achieving our 100% are collecting more and more in-depth produc-
Fair & Equal and 100% Circular & Renewable ambition information to share with our customers and
tions. For example, it helps us identify and favour H&M Conscious Exclusive. other stakeholders. This includes information from
suppliers who pay their employees a fair living factories that are subcontracted by our suppliers
wage, monitor and manage material and chemical for specific tasks such as washing, embroidery and

use much more effectively, and communicate more printing. In 2016, we continued to expand our
clearly with our customers about the issues they public supplier factory list to include second tier
care about. factories. It now includes the fabric and yarn mills
that made about 56% of our products in 2016.
We will continue to lead the change when it comes

to transparency. However, we have learned that
HOW WE REPORT
increased transparency typically also increases
ABOUT THE H&M GROUP
VISION & STR ATEGY

external scrutiny and criticism. Despite ual facility (such as a factory). The Higg
“ We
this, we are committed to transparency Index measures environmental, social
aim to drive supplier ownership,

because we believe it is what the indus- and labour impacts, presents a score
try needs. However, we also hope that it and identifies areas for improvement.
will become more valued in the future to We were one of the first global fashion reward the extra mile and measure
”
encourage companies to be more open. companies to roll out the facility module
of the Higg Index to all of our first tier performance beyond compliance.
THE SUSTAINABLE APPAREL factories. We also rolled out the module
COALITION AND HIGG INDEX to our second tier factories that represent
The Sustainable Apparel Coalition (SAC) 56% of the H&M group’s total business to complete one assessment rather than Through the SIPP, we aim to drive sup-

is an industry-wide alliance between volume. (The product module is not yet meeting the demands of various indi- plier ownership, reward the extra mile,
stakeholders working towards sustain- finished and we are using the brand vidual brands, they free up resources for measure performance beyond com-
able production. As one of the founding module for internal purposes). putting those improvements in practice. pliance and reflect that sustainability
members of the SAC, we share our com- drives business performance. We explain
mitment to drive transparency across We hope that this will inspire other We also score each supplier factory’s the SIPP and its process and progress in
the fashion industry with those partners brands to follow suit – if we are all in the sustainability performance through more detail in the Standards & Policies
who are most capable of creating change. same system, we can create a universal our own set of defined KPIs and Higg chapter on p. 100.
For more information, see the interview standard to compare the sustainability Index questions. We use the output of
with the CEO of the SAC on p. 30. of products, brands and suppliers using this to create our Sustainability Index Our ongoing progress towards greater
100% FAIR & EQUAL

the same bar. This brings many advan- (SI), which replaced our Code of Conduct transparency will help us improve our
The Higg Index is the main output of the tages. Consumers can make sustainable Index in 2015. Currently, we use the SI goal setting. As we collect more and
SAC. It’s a suite of self-assessment and choices more easily. Brands and suppliers to give us a broader view of the sustain- better information about our impact and
verification tools across three modules can identify their strengths and devel- ability impacts and performance of our our supply chain, we will be able to set
– brand, facility and product – that helps opment areas more easily and there- suppliers, therefore giving us greater more ambitious and effective goals. For
assess the sustainability performance fore focus on the right improvements. visibility and insight. example, greater transparency will help

of a brand, product, material or individ- What’s more, when a supplier only has us achieve our initial goal to have full
Over the last few years, we have devel- traceability of all of our cotton by 2020.
“ Our ongoing progress towards oped a supplier assessment programme

called the SIPP – the Sustainable Impact
greater transparency will help Partnership Programme. This is based

on the Higg Index facility module as well
”
us improve goal setting. as our own KPIs (for now).
HOW WE REPORT
ABOUT THE H&M GROUP
VISION & STR ATEGY

Empowering our In 2016, the H&M group collaborated
with Control Union on a pilot traceability Case study: Environmental score
customers

system for organic cotton and viscose. labels on our footwear
At the other end of our value chain, one We developed a web-based system that
of our key transparency goals concerns allowed suppliers to record incoming Transparency is a key driver of progress. other brands including Nike, Adidas and
communication with our customers. The and outgoing shipments and provide That’s why we were excited to be part of Zara. Working together, we created a
Higg Index is a tool used to measure the transaction records and a QR code for a pilot programme that explored how to methodology to calculate the footprint
sustainability performance of apparel each one. Selected suppliers from all give customers more information about from each shoe and a communication
and footwear. Not only will this drive tiers were trained to use the system for the lifecycle impact of products – in this format that delivered clear, practical
sustainability performance across our this pilot, which enabled fibre to gar- instance, shoes. This included everything information. We want our customers to

entire industry, we ultimately want to ment traceability. The pilot was a success from the raw materials we use and how know that our products are made with
translate it into a product labelling sys- and we now plan to scale up the system we transport our products to their poten- care for the environment and allow them
tem that allows customers to benchmark to cover the entire viscose supply chain tial use and disposal. to compare sustainability performance –
products across brands. We support the over the next few years. even between brands.
SAC’s vision of completing the consumer The European Commission piloted this ini-
facing index by 2020. tiative, which was then run by the Sustain- The new hang tag used a rating system
able Apparel Coalition (SAC) and several from A to E, which was developed by the
SAC, participating brands and independ-
“ We
ent experts. We entered four models of
want our
100% FAIR & EQUAL

women’s shoes into the pilot, all of which
scored A or B.
customers to
The pilot finished in autumn 2016. Looking
know that our ahead, the SAC will use its findings to
grow our shared understanding of how to
products are

assess the impact from products and how
to communicate that impact in a way that
made with care informs our customers and drives sustain-
ability across our industry. The European
for the environ- Commission will evaluate the results of the
”
pilot in 2017 and then make a recommen-
ment. dation to the European Parliament.
HOW WE REPORT
& Other Stories, Beverly Hills.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Stakeholder interview with the Sustainable Apparel Coalition (SAC)

The Sustainable Apparel Coalition (SAC) is an alliance between Getting an entire industry to use one What do you see as the H&M group’s
members of the apparel, footwear and home textile industries. assessment tool takes time and patience, biggest sustainability challenges in
but we’re making good progress. Our the coming years?
The H&M group was a founding member of the SAC and we members and their value chains have so far The H&M group and all large retailers
share in its vision of a sustainable fashion industry that does not performed nearly 15,000 brand and facility will have to find a way to continue to
assessments. All SAC members, which grow while dramatically reducing their
harm the environment and has a positive impact on the people

comprise nearly 40% of the industry, will environmental and social footprint. The
and communities connected to it. We talked to Jason Kibbey, be required to use the Higg Index. solution is to become circular, but that’s
CEO, about the value of transparency for a more sustainable a big challenge.
What are you hoping to achieve in
future of fashion. the next five years?
First, we want product-level transparency
factory, products and materials. Each of for apparel and footwear to become
Name Jason Kibbey
these lenses generates a Higg sustainabil- a reality for all stakeholders, including
Title CEO
ity score. While these scores are currently consumers. This will allow them to choose
100% FAIR & EQUAL

Organisation Sustainable Apparel
only used in a business-to-business con- products according to their sustainabil-
Coalition (SAC)
text, eventually they will be available to all ity performance. And second, we want
stakeholders including consumers. there to be measurable positive social and
environmental impact in the apparel and
When can we expect all of the social footwear value chain.
and environmental data to be publicly

available?
How does the SAC improve the trans-
parency and sustainability performance
of brands and their suppliers?
According to our roadmap, all of this informa-
tion will be available by 2020, if not before.
“ We want product-level transparency
for apparel and footwear to become
The SAC’s Higg Index measures the man- What are the biggest challenges to push
agement and performance of clothing and
footwear through the lens of the brand,
for an even greater adoption of the
Higg Index?
”
a reality.
HOW WE REPORT
ABOUT THE H&M GROUP
VISION & STR ATEGY

Reward sustainable actions
To fulfil our sustainability goals, we to love their clothes for longer and
reuse and recycle wherever possible.
have to build sustainability into every

We already reward customers who
decision taken at every step of our value recycle their clothes via our garment
collection initiative and through the
chain from farmers and factory owners
H&M Club.
to our customers.
COMMERCIAL PARTNERS
There is a lot of research out there into how to We will work with our partners
encourage sustainable mindsets and empower sus- to raise environmental and social

tainable behaviour. We want people to do the right standards. Our Sustainable Impact
thing and believe they should be rewarded for posi- Partnership Programme (SIPP), see
tive behaviour. We know that incentives and reward p. 100, will help with this. We will
systems can change behaviours for the better in the reward partners who maintain a
long term. This principle is true for all of our poten- good sustainability performance and
tial changemakers – from customers to suppliers. aspire to further improve it with more
Colleagues from H&M in Taipei, Taiwan.
orders, training opportunities and
Our approach is to reward sustainable actions and more long-term contracts. In this way,
choices in a way that integrates sustainability into Developing reward be followed up regularly to create we will support partners in raising
100% FAIR & EQUAL

decision-making for our colleagues, customers and systems accountability and to reward good environmental and social standards
partners. For example, we choose and reward part- performance. across the industry as a whole.
ners who share our values and are willing to work It is our ambition to develop and use
transparently with us to improve their social and reward systems that can best create We will encourage colleagues at all
environmental performance. and accelerate progress towards our levels to contribute to change in the
sustainability goals and vision. We workplace and in their communities.

will use different reward systems for This will involve a range of activities
different groups and situations. and strategies, some of which are still
in development.
COLLEAGUES
We have integrated sustainability CUSTOMERS
goals in our business goals. This We know that incentives create pos-
forms part of our regular manage- itive behavioural change so we will
HOW WE REPORT
ment evaluation process and it will use them to inspire our customers
ABOUT THE H&M GROUP VISION & STR ATEGY 100% LEADING THE CHANGE 100% FAIR & EQUAL STANDARDS & POLICIES HOW WE REPORT
100% CIRCULAR & RENEWABLE
3 2 O F 1 24
H&M.
100% CIRCULAR
& RENEWABLE
ABOUT THE H&M GROUP
OVERVIEW / INTRODUCTION / OUR AMBITIONS / 100% CIRCUL AR / 100% RENEWABLE / OUR CLIMATE IMPACT / KEY COLL ABOR ATIONS
100% Circular & Renewable
VISION & STR ATEGY

Overview

100% CIRCULAR
–C
o-developed a tool to assess the circularity of our non-commercial goods
To build circularity into the design process in collaboration with the Ellen MacArthur Foundation.
STAGE A – To become circular* on 80% of the store concepts – Ran regular training for design and buying office on sustainable material use.

by 2025.
CIRCULAR DESIGN –O
ur design and buying departments created Conscious Exclusive,
* A s defined in the Circular Assessment Tool developed together with the
Ellen MacArthur Foundation
C/O Cheap Monday Capsule Collection, Closed Loop 2016 collections
– Launched Conscious Beauty line.
– Collaborated with the Cradle to Cradle Production Innovation Institute:

Fashion+ and the circular innovation working group.
To use 100% recycled or other sustainably sourced – Kicked off research project with the Ellen MacArthur Foundation and Stockholm – 26% of our total materials were either recycled or sustainably sourced.
materials* by 2030. Resilience Centre focusing on creating vision and a pathway a circular textile –S
econd largest user of recycled polyester equivalent to 180 million PET bottles.
* H&M brand. fibre industry within planetary boundaries. – Second largest user of Tencell®Lyocel.
–W
orked with the canopy style initiative, our man-made cellulose supply chain
and internally to ensure fibre producer and brand compliance with our policy.
–C
ommissioned a life cycle assessment study to understand the impact – The largest user of Better Cotton.
COTTON
100% FAIR & EQUAL

of closing the loop recycling on cotton. – Second largest user of organic cotton.
To use 100% cotton from sustainable sources* by 2020.
STAGE B –O
ne of the founding partners of Organic Cotton Accelerator Foundation, – 43% of our cotton comes from sustainable sources.*
* Including certified organic, recycled and Better Cotton (BCI).
launched in 2016.
OUR CHOICE OF
* Certified organic cotton, Better Cotton (BCI), or recycled cotton.
MATERIALS ANIMAL-BASED MATERIALS

To achieve full traceability of animal-derived materials – We are the largest user of Responsible Down Standards (RDS) certified down.
and only source from responsible farms with good animal – Supported the development and launch of the Responsible Wool Standard
husbandry. in a project led by the Textile Exchange. – We source 100% RDS certified down as of January 2016.
– To use 100% Responsible Wool Standard (RWS) – Introduced the standard to our supply chain and established links down – 100% of our key seond tier suppliers (or 70% of our product volume in wool)

certified wool in our products by 2022. to the farm level. have been briefed on the new responsible wool standard.
– To use 100% Responsible Down Standard (RDS) – B egan integrating tanneries into sustainability assessments, covering social – A pprox. 25% of our second tier spinners have completed the Content Claim
certified down by 2016. and environmental requirements. Standard* (CCS) for RWS.
* The CCS is the chain of custody verification used for all Textile Exchange standards. It is used to verify wool
– To use only leather from known and well-managed through the entire supply chain.
sources that act on environmental, social and animal
welfare issues.
HOW WE REPORT
ABOUT THE H&M GROUP
VISION & STR ATEGY


100% CIRCULAR
– Received Green Screen hazard assessment training.
– The H&M group became part of the ChemSec business group.
–E
ngaged in the EU public consultation on the restriction of certain hazardous
CHEMICALS – Ran a hazardous substances training pilot for 93 business partners in China,
substances in textiles and clothing.
Bangladesh, Indonesia, India, and Turkey.

To achieve zero discharge of hazardous chemicals, in any
– Hazardous Substance Control (HSC) training launched at suppliers.
of the H&M group’s production procedures by 2020. – 29 business partners have joined the environmental emission evaluator (E cube/BVE3).
– L aunched the environmental emission evaluator (E cube/BVE3)
– Awarded avant-garde grading in Greenpeace detox assessment.
a measurement and monitoring tool from Bureau Veritas in 2016.
–R
enewed partnership with the WWF for five more years. It now includes
climate action in addition to water stewardship. – 82% of business partner factories are in full compliance with wastewater
STAGE C quality requirements as defined by the BSR.
– Continued updating our roadmap for water risk mitigation.
SUSTAINABLE PRODUCTION – Together with business partners we used 2.3 million m3 less water due to our
– Worked with fabric mills involved in making about 56% of our products in our
PROCESSES business partner assessment systems to improve their environmental footprint. water saving programmes.
WATER
– M oved the Taihu basin water stewardship programme in China from a pilot – 8 ,234 workers were trained in four regions (Bangladesh, China, India and
To manage water responsibly across our value chain. Turkey) by the STWI on water, energy and resource efficiency.
to a project.
To complete installation of water-efficient equipment – 75 factories participated in cleaner production programme i.e. STWI/PaCT
in our own operations by 2020. – C ontinued to work with the Sustainable Textile Water Initiative to improve
water management in factories connected to our business. Continued to work in four regions.
100% FAIR & EQUAL

with water saving programmes such as the Sustainable Textile Water Initiative – Half of our denim products were ranked at highest level (green) using
to improve water management in factories. Jeanologia’s tool.
– A ll of our denim products are scored using Jeanologia’s Environmental Impact – 51% of H&M group stores, offices and warehouses have water-efficient equipment.
Measurement tool.
CARE AND REPAIR

– Launched extended garment care information online. – Clever care labels are now included on all of our textile products.
To encourage customers to prolong the life-span of products.

REUSE AND RECYCLING – Continued to launch products and collections made in closed loop recycled
and upcycled materials from collected garments. Both at H&M brand and
To use materials from collected garments in our products. Cheap Monday.
STAGE D
PROLONGING THE LIFE-SPAN GARMENT COLLECTING
–B
eat our target to collect 1,000 tonnes of garments globally during the
– Collected more than 15,888 tonnes of garments (29% increase from 2015).
OF OUR PRODUCTS World Recycle Week campaign.
To increase the volume of collected garments to – B etween 2013 and November 2016, we collected almost 39,000 tonnes
– Donated surplus income from our H&M garment collection programme
25,000 tonnes per year by 2020. of garments.
to the H&M Foundation, which invests in the HKRita and social projects.
STORE WASTE AND RECYCLING

To have store waste and recycling systems for – 71% of our stores have recycling systems, up from 61% last year.
HOW WE REPORT
100% of our stores.
ABOUT THE H&M GROUP
OVERVIEW / INTRODUCTION / OUR 100% CIRCUL AR & RENEWABLE AMBITIONS / 100% CIRCUL AR / 100% RENEWABLE / OUR CLIMATE IMPACT / KEY COLL ABOR ATIONS
VISION & STR ATEGY


100% RENEWABLE
To become climate positive throughout our value chain

– Initiated goal and strategy implementation throughout the organisation.
by 2040.

ENERGY EFFICIENCY
–U
pdated our ambition to a new, more ambitious goal. This new goal means
stores constructed in 2030 will be 40% less energy intense compared to
stores constructed with the 2016 framework. ENERGY EFFICIENCY
– Electricity intensity (using less electricity per square meter sales area)
WITHIN THE H&M GROUP RENEWABLE ENERGY has been reduced by 8% compared with 2007 baseline.
– To reduce energy use in our own operations by 25%* – Added purchase of I-REC certificates.
by 2030, with 2016 as a baseline. RENEWABLE ENERGY
– Supported the construction of a wind park in Sweden through our GO2
– To use 100% renewable electricity in our own operations. engagement. (To be up and running in mid-2017). – We source 96% of our electricity from renewable sources. This includes
– Installed solar panels on some of our own buildings. This includes several methods such as purchase of certificates recognised by GHG Protocol
(GO, REC and I-REC) and our own generation of renewable electricity.
CLIMATE POSITIVE distribution warehouses and one of our IT parks. We are looking at ways to
expand this initiative. – We have reduced our CO2 emissions by 47% compared to previous year.
100% FAIR & EQUAL

– Started collaboration with a Power Purchase Agreement (PPA) broker in US
to initiate a long-term PPA.
ACROSS OUR VALUE CHAIN

– To achieve a climate neutral supply chain (first and ENERGY EFFICIENCY
second tier) by 2030. Milestones on the way: – Reduced GHG emissions through supplier energy efficiency programmes Resource savings made on supplier level:
– 20% of factories enrolled in an energy efficiency in Bangladesh, China, India and Turkey. (See results in the next text box). – nearly 30 million kWh
programme by 2018. – nearly 8 million tonnes natural gas

– 30% greenhouse gases reduction per product by 2025 RENEWABLE ENERGY – nearly 1,5 kilo tonnes coal
compared to 2017 baseline. – Initiated renewable energy workshops in Bangladesh and India to support This is a total combined reduction of over 200 kilo tonnes greenhouse gases.**
– 100% of factories enrolled in an energy efficiency suppliers’ investments in renewable energy.
programme by 2025.
HOW WE REPORT
* Calculated as kWh/m2 and opening hours ** All data has been verified and endorsed by our project partners STWI and International Finance Corporation (IFC). Independent consultants appointed by our project partners assessed, verified and reported
the savings of every factory at the end of the project.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Introduction
Our planet sustains us, but our global demand for resources is
Decoupling growth

outstripping supply. Today, it would take 1.5 planets to support our
lifestyles. If we continue along the same track, we will need the
equivalent of 2.3 planets by 2050.* In part, this is because the global
middle class is expected to increase by over three billion people in
the next two decades, which will inevitably lead to an increase in
POPULATION
consumer demand. And, like today, everyone will want clothes that ECONOMY

keep them warm and dry as well as help them express who they are
and what they stand for.
This is the job that fashion performs. consume in a sustainable way, we must
Today, fashion is a huge, complex industry rethink how our products are made
RESOURCES
but at its core, it’s still about turning raw and enjoyed.
materials (such cotton grown on a farm)
100% FAIR & EQUAL

into products. Our customers buy the The solution is to bring about a global
products they like, use them, and then shift from a linear to a circular system. In
dispose of them when the time is right. a circular model, resources stay in use for
as long as possible, before being recov-
This system is known as a linear model ered and regenerated into new products
and it is the norm for nearly every other and materials. This is the only way our

industry. But, looking ahead, this model industry will be able to operate to its
is placing increasingly unsustainable fullest potential, while staying within our CIRCULAR ECONOMY
demands on our world. It uses up too planet’s boundaries. See box on p. 37.
many natural resources, and does it in
a way that disrupts our environment. There is also a strong business case for
If we want our industry (not to mention the H&M group to make this shift. For
our planet) to survive and for people to example, the price of raw materials is
HOW WE REPORT
* footprintnetwork.org
ABOUT THE H&M GROUP
OVERVIEW / INTRODUCTION / OUR 100% CIRCUL AR & RENEWABLE AMBITIONS / 100% CIRCUL AR / 100% RENEWABLE / OUR CLIMATE IMPACT / KEY COLL ABOR ATIONS
VISION & STR ATEGY

predicted to rise as global shortages
lead to greater competition.* Securing Planetary boundaries explained

our own supply channels will help
keep us profitable in the long-term. A group of scientists* has developed a con-
A circular approach will also help us cept to help us understand the complex and
build more efficiency into our cur- interlinked ecological systems that sustain
rent system and it will increase the life on earth. Using this concept, the group
value of our products, both because it has proposed a framework of nine ‘plane-
removes the increasingly unpredict- tary boundaries’ that define a safe operating
able cost of extracting resources and space for humanity. Each boundary is set

because it means we can reuse and at a ‘safe’ distance from a dangerous level
upcycle products. While at the same or potential ‘tipping point’ and include, for
time contribute to responsible con- example, fresh water use, biodiversity loss
sumption and production (SDG12), and species extinction, and climate change.
see more on p. 117. This will help
keep us profitable in the long-term. The scientist report that if we stay within
these boundaries, life on earth has a good
chance of continuing as usual. But if we
cross them, we risk abrupt and irreversible
100% FAIR & EQUAL

environmental changes that could be very
damaging or even catastrophic for society.
Because of human activity, we have already
crossed four out of nine boundaries, and we
are in imminent danger of crossing others.

* This study was conducted by a group of earth system and
environmental scientists led by Johan Rockström from the
Stockholm Resilience Centre and Will Steffen from the Australian
National University. For information see stockholmresilience.org
HOW WE REPORT
* mckinsey.com
ABOUT THE H&M GROUP
VISION & STR ATEGY

Our ambitions
At the H&M group, part of our sustainability strategy is to become
Becoming 100% circular
100% circular and renewable. By decoupling the growth of our

business from our resource use, we can continue to provide good,
fair jobs and sustainable products for millions of people for years
to come. And we can help bring about a similar shift across the rest
of our industry.

To achieve this, we are taking a holis- print. Many of our key partnerships will
tic approach to becoming circular and help us address complex issues that con-
renewable. This means rethinking how we nect to multiple focus areas. For example,
design and make our products (including our strategic collaboration with the WWF
our water, chemical and energy use), what addresses both climate and water issues.
materials we choose, and how our custom-
ers use and dispose of them. This holistic GOALS
approach also means finding ways to sig- As explained in our Vision & Strategy
nificantly reduce our climate impact. Our chapter, we are working with experts –
100% FAIR & EQUAL

goal is to achieve a Climate Positive Value both internally and externally – to set
Chain – an entire value chain that creates goals that keep pushing us towards 100%
a net positive impact on the climate by circularity and, wherever possible, we are
2040. See more on p. 57. following a science-based approach to
define our targets and actions.
We also need to create new and stronger

partnerships, and continue collaborating Goal-setting is an ongoing process. These
with stakeholders along our value chain – goals represent the initial key milestones
including our suppliers and our customers. along the way to achieving our vision of
Together, we will need to find innovative 100% Circular & Renewable on a global
solutions to key challenges including how group level.
to fully recycle blended fabrics and how to
help our suppliers access renewable energy
HOW WE REPORT
and minimise their environmental foot-
ABOUT THE H&M GROUP
VISION & STR ATEGY

100% Circular 100% Renewable

CIRCULAR DESIGN CLIMATE POSITIVE
– To become circular* on 80% of our store concepts –T
o become climate positive throughout our
by 2025. value chain by 2040.
OUR CHOICE OF MATERIALS CLIMATE POSITIVE: WITHIN THE H&M GROUP

– To use 100 % recycled or other sustainably –T o reduce electricity use in our stores by 25%***
sourced materials** by 2030. by 2030.
– To use 100% cotton from sustainable sources – To
use 100% renewable energy in our own

by 2020, including certified organic, recycled operations.
and Better Cotton (BCI).
– To use 100% Responsible Wool Standard (RWS) CLIMATE POSITIVE: ACROSS OUR VALUE CHAIN
certified wool in our products by 2022. Climate neutral supply chain (first and second tier)
– To use 100% Responsible Down Standard (RDS) by 2030, with the following key milestones:
certified down by 2016.
–2 0% of factories enrolled in an energy efficiency
SUSTAINABLE PRODUCTION PROCESSES programme by 2018.
– To achieve zero discharge, of hazardous chemicals – 1 00% of factories enrolled in an energy efficiency
100% FAIR & EQUAL

in any of the H&M group’s production procedures programme by 2025.
by 2020. –3 0% greenhouse gases reduction per product by
– To complete installation of water-efficient equip- 2025 compared to 2017 baseline.
ment in our own operations by 2020.
PROLONGING THE LIFE-SPAN OF OUR PRODUCTS

– To increase the collected volume of garments
to reach 25,000 tonnes annually by 2020.
– To have store waste and recycling systems at
100% of our stores.
& Other Stories, Utrecht.
HOW WE REPORT
* As defined in the Circular Assessment Tool which has been developed together with the Ellen MacArthur Foundation ** H&M brand, materials include certified organic, recycled and Better Cotton (BCI) ***Calculated as kWh/m2 and opening hours with
2016 as a baseline.
ABOUT THE H&M GROUP
VISION & STR ATEGY

100% Circular
The vast majority of today’s production Becoming 100% circular

models are linear and rely on a finite
supply of natural resources. This is
unsustainable for the long-term future
of our planet – and for the future of
our business. STAGE A
Design

To become 100% circular, we are taking a circu-
lar approach to how our products are made and
used, and finding ways to use only recycled or
sustainably sourced materials. This means build-
ing circularity into every stage of our value chain,
including the products we make (both commercial
and non-commercial), and the materials we use in STAGE D STAGE B
our operations. H&M Conscious Exclusive. Use Materials
100% FAIR & EQUAL

“ Aregenerative
circular economy is restorative and
by design and aims to

STAGE C
Production
keep products, components and mate- processes
rials at their highest utility and value

at all times.
”
This is our circular approach to how our products are made and used.
We have identified four stages to address: Stage A – Circular design,
Stage B – Our choice of material, Stage C – Sustainable production
ELLEN MACARTHUR FOUNDATION processes and Stage D – Prolonging the lifespan of our products.
HOW WE REPORT
ABOUT THE H&M GROUP
VISION & STR ATEGY

STAGE A ble fashion in all of our brands. For the
H&M brand, these products are labelled
Circular design

with our Conscious label. This includes
fashion basics as well as collections with
Great design is core to high fashion content. These products
our business. We want are made using approved conscious
to make sustainable, materials and/or processes that are bet-
good-quality fashion ter from an environmental perspective
accessible to as many (i.e. materials that are produced with
people as possible. Design is an essen- less water, fewer chemicals, and with

tial tool that allows us to do this. We care for the soil and natural habitats,
have our own teams of designers, who such as organic cotton), and verified as
create unique products that our custom- sustainable by a third party.
ers love. To fulfil our vision, we need to
build more circularity into the design – In 2016, we have set an overall goal
process for our products, as well as for that at least 80% of our store concepts
our stores and offices. This means we should be circular* by 2025. This goal
will look at how design can be used to is developed for non-commercial goods
expand product lifespan, for example, and includeds a roadmap with selected
100% FAIR & EQUAL

H&M Conscious Beauty.
through greater durability and quality, priorities leading to a circular approach.
as well as designs that allow for reuse Together with the Ellen MacArthur
and recyclability to decrease our envi- Foundation, we have developed a tool to – We regularly train our design and Monday Capsule Collection, Closed
ronmental footprint. assess the circularity of our non-com- buying office on sustainable material Loop 2016 collections. These collections
mercial goods, such as our store inte- use. We have a specific Conscious are an example of how our design can be
Within our stores and offices, we want to riors. The tool will be used from 2017 Material Course that covers both the used to expand a product’s lifespan or

increase circularity. To be able to achieve onwards and aims to increase the why and the how of our work with mate- allow for reuse and recyclability.
our goal, we will focus on material choices sustainability of the non-commercial rials approved as ‘conscious’, as well
and design to make our non-commercial goods we buy. The tool will also support as a company strategy for sustainable – The H&M brand launched its new
goods more efficient to use, reuse and our dialogue with suppliers, helping material use. Conscious Beauty range of organically
recycle. Our focus will be on decreasing us increase awareness of circularity in produced products for skin, hair and
the overall landfill rate created by store their products and processes. – Our design and buying departments body in March 2016.
rebuildt and closed. We offer sustaina- created Conscious Exclusive, C/O Cheap
HOW WE REPORT
* As defined in the Circular Assessment Tool which has been developed together with the Ellen MacArthur Foundation.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Stakeholder interview with Cradle to Cradle Products Innovation Institute

als for use in the fashion industry, verify What else can the H&M group to fulfil
Name Lewis Perkins
those materials according to the Cradle to our vision to become 100% circular
Title President
Cradle Certified product standard, then and renewable?
Organisation Cradle to Cradle
make those materials available for fashion Continue to collaborate with our institute!
Products Innovation Institute
industry use. And work with other brands to help drive
material innovation and Cradle to Cradle

How does a product standard become standards more deeply across the entire
a positive force for society and the supply chain.
environment?
By using Cradle to Cradle Certified for
What does Cradle to Cradle mean, responsible product design, Fashion+
and how does it connect to a circular members are helping reduce demand
economy? for natural resources, ensuring the use of
The circular economy is based on the healthy materials, and bring about positive
concept of keeping products – and their change in the way fashion is consumed.
100% FAIR & EQUAL

constituent materials – within a continuous,
regenerative cycle of use and reuse. Cradle What are the key Cradle to Cradle chal-
to Cradle design, and, in turn, the Cradle lenges for the fashion industry?
to Cradle certified product standard, offer Identifying materials that meet Cradle to
a continuous improvement process for Cradle standards and can also deliver on
product design and manufacturing to help aesthetics, performance and other qualities

companies innovate and make materials is one. Another is scaling the systems that
and products for the circular economy. can separate fibre types and upcycle them
into new material streams.
What is Fashion+?
Fashion+ is a collective of brands, designers
and suppliers who are working together
to identify, optimise and innovate materi-
HOW WE REPORT
Flowers made from H&M garments and H&M Home
textiles by photographer Dan Tobin Smith and team.
ABOUT THE H&M GROUP
VISION & STR ATEGY

RECYCLED MATERIALS
STAGE B sustainably sourced materials must
Our choice of material

Recycled material is made from a be verified as better by a third party Case study: The HK

waste product, such as old textiles, (e.g. through a Life Cycle Assessment
production waste or used PET bot- report, Higg MSI Tool, or MADE-BY Research Institute of
Choosing more tles. By using recycled material, we fibre benchmark). Textiles and Apparel
recycled or sustaina- can reduce the amount of waste (e.g.
bly sourced materials old textiles) that go to landfill, the To accelerate our journey towards
(HKRITA)
for our products is use of virgin raw materials and the recycled or other sustainably sourced In addition to the H&M group initiatives, the
another vital step che micals, energy and water used materials we are creating demand for non-profit H&M Foundation and The Hong
to become 100% circular and close in raw material production. We use solutions and working with innova- Kong Research Institute of Textiles and Apparel

the loop on fashion. We have been a wide range of recycled materials at tors and scientists, including Worn (HKRITA) have entered a four-year partnership
working with recycled and sustain- the H&M group including recycled Again, the HKRITA and the Circular to develop the required technologies to recycle
ably sourced materials for many cotton, polyester, wool, cashmere and Innovation Working Group that aim blended textiles into new fabrics and yarns.
years. In the 90s, H&M sold one-off plastic. In the long term, we want to to close the loop and enable recycling
collections using organically grown turn all products that can no longer of all types of textile fibres. See more The technology will be licensed widely to ensure
cotton and in 2004, we began selling be used into new materials and on p. 43. broad market access and maximum impact.
garments made from certified organic products. Today, this is not possible Apparel and textile products made from blended
cotton in certain baby and children’s because the technology for recycling We use a wide range of sustainably materials account for a high proportion of all
garments. Today, we are one of the is limited. For this reason, the share sourced materials, including organic textiles and apparel in the market today. And yet
100% FAIR & EQUAL

biggest users of recycled and sustain- of recycled materials in our products materials such as cotton, linen, hemp, no commercially viable separation, sorting or
ably sourced materials*, all of which is still relatively small. jute and silk, Tencel®Lyocell and recycling technologies are available for many of
are third-party certified.** According third-party certified down, rubber, the most popular materials, such as cotton and
to the Textile Exchange Preferred SUSTAINABLY SOURCED MATERIALS wood, Better Cotton and wool. polyester blends.
Fiber Market Report, the H&M group Sustainably sourced textile materi-
is the world’s second biggest user of als can either be grown naturally or This work is being financed through the surplus

organic cotton, recycled polyester cultivated, but must also be renew- income from our garment collecting initiative.
and Lyocell and largest user of able through natural processes
responsibly sourced down. According within a reasonable amount of
to the Better Cotton Initiative (BCI), time. Sustainably sourced materials
we are the biggest user in volume of should also have the potential to be
Better Cotton. recycled. The sustainability profile of
HOW WE REPORT
* textileexchange.org ** Depending on the type of sustainable materials, we are certified to a relevant sustainable material standard such as, OCS, GOTS, GRS, RCS, RDS, RWS,
by a third party such as Control Union, Ecocert, ICEA, IMO.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Choosing only recycled or widely available. See more in the inter- S H A R E O F R E CYC L E D O R O T H E R T O TA L S H A R E O F R E CYC L E D O R O T H E R
S U S TA I N A B LY S O U R C E D M AT E R I A L S S U S TA I N A B LY S O U R C E D M AT E R I A L S *
other sustainably sourced view with the Institute on p. 42.

materials RECYCLED
100%
– In 2016, we also initiated a research GOAL 2030
OTHER SUSTAINABLY
Our goal is to use 100% recycled or other project with the Ellen MacArthur SOURCED MATERIALS*
sustainably sourced materials by 2030*. Foundation and Stockholm Resilience
Centre that looks at how a circular textile
0,7%
In 2016, 26% of our total materials fit fibre industry can operate within plane-
this description. As we move towards our tary boundaries. This collaboration also 26%
goal, we will focus on prioritising the use supports our ambition to use a science- 0,5%
20%

of recycled materials and complement- based approach in all our sustainability
ing them with materials that have been work. 26%
sustainably sourced. 0,2%
19% 13%
– We are the second largest user of recy- 0,3% 11%
– We need to understand how to make cled polyester. In 2016, we used recycled
0,3% 13%
10%
better choices about the materials we polyester equivalent to more than 180
8%
use and understand their impact – from million PET bottles. Recycled polyester is
farm and factory to customer use. To get made from PET – the same material as in
this insight, we used LCA** data when clear plastic water bottles – and requires
100% FAIR & EQUAL

evaluating materials, together with third significantly fewer chemicals and less
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party verified data (such as the MadeBy energy and water to make. Recycling
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fibre benchmark or the Higg Materials these bottles also prevents them from
Sustainability Index***). going to landfill. * Included are all materials classified as conscious materials * Included are all materials classified as conscious
that are not recycled, such as Better Cotton (BCI) and materials, such as certified organic or recycled fabrics,
certified organic materials. as well as Better Cotton (BCI)
– We are collaborating with the Cradle – We are the second largest user of

to Cradle Products Innovation Institute Tencel®Lyocell (also known as Lyo- Please note: 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. An independent assurance statement related to GRI 301-1 is
on a project called Fashion+. This brings cell****). Lyocell is produced in a closed- provided on page 119. Deviations are due to rounding effects.
together brands, designers and suppliers loop system and has a lower environ-
to identify, optimise and innovate sus- mental impact than other man-made
tainable materials for use in the fashion cellulosic fibres. We use Tencel®Lyocell
industry, and then work to make them with a range of other recycled and
* H&M brand. **LCA assesses the impact of a product at every stage of its life from raw material extraction to materials processing, manufacturing, distribution, use, repair and disposal. *** These benchmarking tools compare the environmental impact of
HOW WE REPORT
different fibres used in the fashion industry and help brands make more sustainable choices. See for more information made-by.org and apparelcoalition.org. **** Tencel® is a brand owned by fibre manufacturer, Lenzing. The generic name for the material is
Lyocell. The H&M group considers only Tencel® manufactured by Lenzing as a conscious material.
ABOUT THE H&M GROUP
VISION & STR ATEGY

sustainably sourced materials in water impacts by 80–90% for the stages S U S TA I N A B L E C O T T O N * I N % O F S U S TA I N A B L E
our products. up to when the fibre is ready for spin- % O F T O TA L C O T T O N U S E C O T T O N O F T O TA L U S E

ning. Unfortunately, it is not currently
– Viscose is a man-made fibre typically possible to use more than 20% recycled 100% RECYCLED COTTON 0,1%
made from tree pulp. We teamed up cotton from collected garments in a GOAL 2020
BETTER COTTON
with the NGO Canopy and several other product (because of quality issues), but *Certified organic cotton,
leading brands to ensure any viscose we we are investing in technology to over- Better Cotton (BCI) ORGANIC COTTON 0,2%
or recycled cotton.
buy (or similar fibres) does not contrib- come this challenge.
ute to the deforestation of ancient or 43% 28,3%
endangered forests. During 2016 we have – The H&M group was one of the found- 0,1% 19,6%
34%

continued to work with the canopy style ing partners of the Organic Cotton
initiative, our man-made cellulosic supply Accelerator (OCA) which was launched in 9,7%
22%
chain and internally to ensure fibre 2016. The OCA is a foundation created to 6,5%
16% 4,1%
producer and brand compliance with accelerate the organic cotton market and 13%
our policy to source all of our manmade find solutions to issues that the industry
9,9% 12,4% 13,9% 14,5%
cellulosic fibre and fabrics from forests is facing. Organic cotton is grown with- 8,9%
that are neither ancient or endangered by out synthetic pesticides, fertilizers or
the end of 2017. genetically modified organisms (GMOs).
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100% FAIR & EQUAL

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COTTON ply and demand, the OCA aims to create
Our goal is to use 100% cotton from a prosperous organic cotton sector for
Please note: Material data has been restated due to the fact that historical data has been updated using a new, more detailed system.
sustainable sources by 2020, including all, from farmer to consumer. We are continuously working to improve our data systems and accuracy. An independent assurance statement related to GRI 301-1 is
provided on page 119. Deviations are due to rounding effects.
certified organic cotton, Better Cotton > organiccottonaccelerator.org
(BCI) or recycled cotton.
– In terms of volume, we are the largest a positive business case both for the in 2005. Today the BCI has 1.5 million

– In 2016, we commissioned a Life Cycle user of Better Cotton according to the farmer and for business. The BCI exists licensed farmers and Better Cotton
Assessment study to understand the BCI in 2016. Better Cotton is grown in a to improve global production of Better accounts for 11.9% of global cotton
impact of closing the loop by recycling more sustainable way. This means using Cotton for the people who produce it, for production.**
cotton.* The study showed that by using fewer chemicals, less water and working the environment it grows in and for the
recycled cotton fibre instead of virgin with farmers to provide education in future of the sector. The H&M group was
cotton fibre, we can reduce climate and ‘smarter farming’. Better Cotton provides one of the founding members of the BCI
HOW WE REPORT
*In partnership with external experts, we recently conducted a Life Cycle Assessment to compare the overall environmental impact of recycled cotton (gathered from garment collecting) and conventionally sourced cotton. The most relevant comparisons were
between water footprint and climate impacts)* bettercotton.org **BCI Annual Report 2015, see: bciannualreport.org
ABOUT THE H&M GROUP
VISION & STR ATEGY

ANIMAL-BASED MATERIALS the H&M group is the world’s largest and animal welfare issues. Looking
Because we use some animal-based user of down certified by the Respon- ahead, our work will now focus both Case study: Setting the

materials in our products, animal sible Down Standard (RDS). on closer integration of leather tan-
welfare is an important part of our neries into our supply chain manage- standard for wool
sustainable sourcing strategy. We – From January 2016, 100% of the ment systems and improved material Wool is an amazing fibre. It’s incredibly strong
are committed to having a positive down in our products has been traceability and to collaborate with and insulating, and our customers love to wear
impact on animal welfare, both in our RDS-certified. others to long-term secure the entire it. It represents only about 1% of our total fibre
value chain and across the entire tex- leather supply chain, all the way use, but it is still important that we source it in a
tile industry. Our long-term ambition Wool down to the farm level. In parallel, responsible way – and that we encourage other
is to achieve full traceability for all – In 2016, we helped develop the we will keep exploring innovative brands to do the same.

of our animal-derived materials and Responsible Wool Standard in a pro- non-animal leather materials that
only source from responsible farms ject led by the Textile Exchange. We have all the benefits of leather, but In 2014, after failing to find a global animal
with good animal husbandry. For are now working to get RWS-certified none of the risks. welfare standard for wool, we contacted the
example, through our work with the wool into our supply chain. See case Textile Exchange to see if they were interested
Responsible Down Standard and the study p. 46. – In 2016, we began integrating tan- in leading the development of a global wool
Responsible Wool Standard, we can neries into our sustainability assess- standard in collaboration with us, and other
ensure that we source these materi- – 100% of our key second tier suppli- ments, covering social and environ- brands and stakeholders. Two years later, the
als in a sustainable way. We are also ers (which covers 70% of our product mental requirements. All tanneries Textile Exchange launched the Responsible Wool
actively looking for new, innovative volume in wool) have been briefed on that supply the H&M group must Standard (RWS) – the only global animal welfare
100% FAIR & EQUAL

non-animal alternatives. the new responsible wool standard. comply with our chemical require- standard developed specifically for wool.
ments.
Besides using animal-based materi- – Approximately 25% of our second The RWS aims to improve animal welfare, incen-
als in our products, we also believe tier spinners have completed the Con- tivise best practice and ensure full traceability
that no animals should be used for tent Claim Standard (CCS)* for RWS. in wool production. We are now working to get
testing of cosmetics, and we do not RWS-certified wool into our own supply chain.

accept animal testing on any cosmetic Leather Our goal is to use 100% RWS-certified wool in
products, either during production or Together with the industry, we want all of our products by 2022.
on finished products to work towards a more transpar-
ent leather supply chain. Our long-
Down term goal is to use only leather from
– According to the Textile Exchange’s known and well-managed sources
Preferred Fiber Market Report 2016, that act on environmental, social
HOW WE REPORT
*The CCS is the chain of custody verification used for all Textile Exchange standards. The CCS is used to verify the wool through the entire supply chain.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Stakeholder interview with the Textile Exchange

The RWS is a neutral, third-party standard that
Name Anne Gillespie
can be used by the entire industry to ensure
Title Director of Industry Integrity
that animal welfare needs are being consist-
Organisation Textile Exchange
ently met. It also provides brands with a pow-
erful way to communicate their expectations
along their supply chain right back to the farms.
Furthermore, it provides a global benchmark

for best practice in both animal welfare and
We spoke to Anne Gillespie, Director of land management.
Industry Integrity, about the Responsible Wool
Standard (RWS) and the H&M group. What role did the H&M group play develop-
ing the RWS?
What are the most challenging animal The H&M group was the catalyst for the RWS
welfare issues facing the fashion to begin with, and is now the leader in its appli- H&M Studio S/S 2017
industry today? cation. By making a strong and public com-
Animal welfare issues exist in relation to all of mitment to use certified wool, the H&M group
100% FAIR & EQUAL

the Five Freedoms* and the greatest risks vary provides a clear goal for other brands, and
depending on the type of animal and geograph- sends a strong signal to farmers and the wool
ical region. The biggest challenge is to ensure industry that this standard is important.
that these Five Freedoms are being thoroughly
and consistently met throughout the supply What would you like to see from the
chain. Long, complex supply chains, multiple H&M group in the future in regards to

stakeholders and lack of transparency and animal welfare?
traceability, make this challenge even harder. The H&M group already has a strong animal wel-
fare policy. I would love to see the H&M group
How can a standard like the RWS help make third-party verification of the Five Free-
overcome these challenges? doms and traceability a goal for all their fibres.
*The Five Freedoms are recommendations on animal welfare set out by the World Organization for Animal Health (OIE) in their
HOW WE REPORT
Animal Health Codes and the Farm Animal Welfare Committee (FAWC).
H&M Studio S/S 2017
ABOUT THE H&M GROUP
VISION & STR ATEGY

STAGE C own supply chain and across the fashion
industry.
studies and success stories from its mem-
bers, raises awareness across the indus-
a pilot project at 29 suppliers in China,
Bangladesh, Indonesia, India, Pakistan
Sustainable production

try and pushes for better legislation. and Turkey to test the online version of
processes One of the ways we are doing this is this tool.
through our work with the Zero Dis- – Strong chemical legislation helps
To close the loop on charge of Hazardous Chemicals group strengthen our message to our supply – We received an “AVANT-GARDE”
fashion, we need all of (ZDHC), which brings brands together to chain and stakeholders. During 2016, grading in Greenpeace detox assess-
our production processes improve chemical management practices. we were actively engaged in the EU public ment in 2016, which means that we
to be sustainable. The Together with other committed ZDHC consultation** on the restriction of are a detox-committed company that is
third part of our journey brands we are actively involved with a certain hazardous substances in textiles ahead in the field leading the industry

to a 100% circular and range of stakeholders (including gov- and clothing. We have also endorsed the towards a toxic-free future with credible
renewable value chain involves looking ernments, industry associations, NGOs, restriction of the use of CMR (carcino- timelines, concrete actions and on-the-
at how we can further develop our work scientists and representatives from the genic, mutagenic, or toxic for reproduc- ground implementation. For more infor-
around sustainable production pro- chemical industry) to raise awareness of tion) substances in consumer products. mation, visit:
cesses, including chemical management industry standards and work collabora-
> greenpeace.org
and water use. tively for progress. For more information, – In 2016, we ran a Hazardous Sub-
visit: stances Control training pilot for 93
Chemical management > sustainability.hm.com
suppliers in China, Bangladesh, Indone-
sia, India and Turkey. We compared the
100% FAIR & EQUAL

Chemicals occur naturally in everything – In 2016, a team of H&M group chemists assessment results before and after the
– water, air, soil and our bodies. They has undergone training in Green Screen training and saw a significant improve-
are a part of everyday life, and critical hazard assessment, a robust and trans- ment in areas relating to chemical risk
to every process on the planet. We use parent scientific method of identifying identification and chemical monitoring
chemicals to make clothes and they are chemicals of high concern and suggest- through technical information.
an important part of many garment pro- ing safer alternatives.

duction processes, such as washing and – The environmental emission evaluator
dyeing textiles. Some chemicals com- – The H&M group became part of the (E cube/BVE3) is a measurement and
mon to the fashion industry are known ChemSec* business group in 2016 – a col- monitoring tool from Bureau Veritas that
to be hazardous and risk harming our laboration between companies to inspire was launched in 2016. It helps suppliers
environment, customers and workers. the industry to use fewer toxic chemicals. assess their performance and proactively
Our goal is to lead the way towards zero The collaboration develops effective improve their chemical usage and dis-
discharge of hazardous chemicals in our corporate practice and, by sharing case charge performance. In 2016, we started
HOW WE REPORT
* chemsec.org ** Article 68(2) of Regulation EC No 1907/2006 (REACH)
ABOUT THE H&M GROUP
VISION & STR ATEGY

Water stewardship S H A R E O F T O TA L WAT E R D I S C H A R G E BY D E S T I N AT I O N 2 0 1 6
“ To fulfil our vision of 100%

As with other natural resources on this
planet, our access to water is limited.
Due to our increasingly water-intensive 93,305 618 m3
TOTAL
circularity and renewability,
lifestyles and rapidly growing popula-
tion, water management is crucial to
51%
BANGLADESH Brahmaputra we must take action to
maintain welfare and ecosystems. This
is particularly true in areas already
5%
CHINA Yangtze manage water responsibly
facing water risks – including South and
across our value chain.
”

subcontinental Asia, where many of our
Data is estimated based on data collected from wet processing units during 2015.
suppliers are based. Our two most signif-
icant water sources for our wet-process
WAT E R W I T H D R AWA L BY S O U R C E I N S U P P L I E R FA C T O R I E S % O F U S E D WAT E R T H AT I S R E CYC L E D
suppliers are located in areas with high
L O C AT E D I N B R A H M A P U T R A , B A N G L A D E S H A N D YA N G T Z E , C H I N A
water risk on the deltas of Brahmaputra 9%
(Bangladesh) and Yangtze (China).
RIVER WATER
GROUND WATER MUNICIPAL WATER OTHER
8%
To fulfil our vision of 100% circularity 1% 2% 5% 1% 1% 7% 7%
and renewability, we must take action
100% FAIR & EQUAL

13%
to manage water responsibly across 19%
our value chain. We recognise that the 36% 36%
biggest impacts come from outside of 5% 5%

2%
our own operations so, to be effective, 10%
98% 99% 99% 99%
we must take an integrated approach with
local industries and decision makers. 3%

2%
We have been collaborating with the
1% 1% 1% 1% 52% 57% 85% 80%
WWF since 2011, and our partnership
has played a fundamental role in our
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our value chain.
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Brahmaputra Yangtze Region
Yangtze Region Brahmaputra
HOW WE REPORT
Data is estimated based on data collected from wet processing units during 2015.
Data is estimated based on data collected from wet processing units during 2015
ABOUT THE H&M GROUP
VISION & STR ATEGY

AV E R AG E Y E A R LY WAT E R W I T H D R AWA L P E R OUR APPROACH Outside of our operations, we are work- Bangladesh Water Multi-Stakeholder
FAC T O RY I N WAT E R S T R E S S E D A R E A S Most water strategies focus on how ing with our suppliers and governments Partnership and partners of the 2030

(H&M PRODUCTION)
much water is used and disposed of. In to create the change needed to manage Water Resources Group, we are trying
contrast, our approach is connected to water responsibly across our value chain. to achieve similar action in Bangladesh.
holistic water management on the basins We are proactively engaging with a broad We are also supporting a WWF project in
level. This factors in the sources of water group of stakeholders that goes beyond Turkey and looking at other areas where
that are being drained (which acceler- our traditional areas of influence. One this kind of approach would be suitable.
ates water scarcity and decreases water of our key aims is to strengthen water
quality), as well as the local impacts, such governance. This includes ensuring that The second largest water footprint in our
105,000 m3
130,000 m3
65,783 m3
71,000 m3
as depletion of fish stocks and threat to regulations are properly monitored and value chain comes from customer use.

livelihoods. In collaboration with the enforced, that water-related government We provide our customers with infor-
WWF we are exploring the development bodies have clear mandates and that busi- mation on climate-friendly was of caring
of context based target settings. Fur- nesses, farmers and community members for clothes, to empower them to use less
thermore, we have identified access to are fully included in decision-making on water and change their habits in the
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water as a salient human rights* issue, water. For example, we are already acting long-term.
Data is estimated based on data collected since water usage affects people and their on this in China, and, as representatives
from wet processing units during 2015.
livelihoods. on the National Steering Board of While our operational water impact is
small compared to the lifecycle impact
of our products, it still matters. For
100% FAIR & EQUAL

L I T R E S ( M I L L I O N ) O F R A I N WAT E R
H A R V E S T E D I N OW N O P E R AT I O N S
example, we are installing water-efficient
equipment across our own operations,
which will be completed by 2020 (see
22,5
21,2 table on p. 52). We are also harvesting rain
water and raising awareness amongst
employees, and we are committed to

12,3 continually improving the compliance
11,0 rate of our suppliers when it comes to
wastewater quality requirements.
3,0
HOW WE REPORT
* That is human rights at risk of the most severe impact across our operations and supply chain, and where our company
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therefore has a particular opportunity to leverage progress for related sustainable development goals.
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ABOUT THE H&M GROUP
VISION & STR ATEGY

Our partnership
Water stewardship
PIONEERING
WATER
with the WWF

STEWARDSHIP

FOR FASHION
We have been collaborating with the Below are our water actions in 2016
WWF since 2011 on water stewardship along our value chain and within our WATER STRATEGY
issues along our value chain. This collab- own operations: The H&M group’s water
oration has been strengthened over the stewardship strategy has
years. During this time we have devel- – At the beginning of 2016, we renewed been developed in line
oped a strategy for water stewardship our WWF partnership for another five with the WWF’s water
stewardship steps.
that targets the following five key themes: years. It now also covers climate action

and our influence over our industry’s
1. Building water awareness within the broader sustainability challenges.
company, supplier factories and amongst
our customers. – We are continuously working with part-
ners to help our fabric producers improve
2. Measuring water impact and risk their environmental footprint, which also
within our stores, warehouses and sup- includes water management and impact
plier factories. assessment data. In 2016, we worked with
fabric mills involved in making 56% of our Water
100% FAIR & EQUAL

awareness
3. Improving the use of water within our products (2015: 50%, 2014: 35%) in our
stores, warehouses and supplier factories. supplier assessment systems.
Knowledge
of impact
4. Increased focus on collective action, – In China, we moved the water steward-
for example, our river basin engagements ship programme in the Taihu Basin from
Internal
in China. a pilot into a project. This is a collabo-
action

ration that proactively engages stake-
5. Increased focus on government influ- holders to improve basin governance.
Stakeholder
ence. We are currently scaling up the For example, we are engaging with the engagement
Industrial Park project from our previ- government on the need to address water
ous partnership, as well as bringing in challenges with improved legislation. Influence
other brands, to further impact water governance
use amongst suppliers in Industrial – We continued to work with the Sustain-
HOW WE REPORT
Parks in China. able Textile Water Initiative (STWI) to
ABOUT THE H&M GROUP
VISION & STR ATEGY

implement sustainability guidelines that – Since 2015, we have scored all of our % O F S U P P L I E R FA C T O R I E S I N F U L L % O F S T O R E S , O F F I C E S A N D WA R E H O U S E S
will improve water practices in factories denim products using Jeanologia’s C O M P L I A N C E W I T H WA S T E WAT E R W I T H WAT E R - E F F I C I E N T E Q U I P M E N T

QUALITY REQUIREMENTS (BSR)
connected to our business. Together Environmental Impact Measurement 100%
with our business partners the combined tool. This third-party tool helps us and 82% 2020 GOAL
result of our water saving programmes our suppliers measure, set targets and
has saved 2.3 million m3 water. reduce water, energy and chemical use in 75%
our denim production. About half of all 71%
– A total of 8,234 workers were trained our denim products reached the high- 51%
in four regions (Bangladesh, China, est ‘green’ level in 2016, which means 65%
India and Turkey) by the STWI on water, that they used a maximum of 35 litres of 37%

energy and resource efficiency. water per garment during the treatment
57% 24%
processes. 19%
– A total of 75 factories participated
in our cleaner production programme – 51% of H&M group stores, offices
through STWI and PaCT partnerships and warehouses have water-efficient
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n four regions.The cleaner production equipment installed. We aim to install
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programme aim is to reduce environ- water-efficient equipment across all of
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mental impacts that result from tradi- our operations by 2020.
Included are supplier factories with wet processes and their
tional practices in textile wet processing, own wastewater treatment plants. Excluded are factories
100% FAIR & EQUAL

using shared plants.
particularly excessive groundwater T O TA L WAT E R ( I N M I L L I O N S M 3 )
extraction and surface water pollution. W I T H D R AWA L F O R O U R OW N O P E R AT I O N S
It also includes energy and chemical use.
See more on PaCT and SWTI.
1,52 1,58
1,46 1,48
– In 2016, 82% of our supplier factories
“ Water

were in compliance with the BSR require-
ments (see graph). We apply the Business management is crucial to
main welfare and ecosystems.
”
for Social Responsibility (BSR) Water
Group’s quality definitions, which in many
locations go well beyond legal require-
ments. We have included these standards
in our Sustainability Commitment with
HOW WE REPORT
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the aim to reach full compliance.
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ABOUT THE H&M GROUP
VISION & STR ATEGY

GARMENT COLLECTING
STAGE D longer and that has a lower impact on
the environment:
from our customers and give them a new
life through reuse or recycling. Garment collection is an easy and acces-
Prolonging the lifespan

sible solution to decrease textile waste
of our products – All of our garments have the Clever – We have invested in the Swedish start- and save precious natural resources that
Care label included in their washing up Sellpy, which offers an on-demand works for customers and for our busi-
A large part of the envi- instructions. This label provides infor- service that helps people sell clothes and ness. Our garment collecting initiative is
ronmental impact of a mation on how our customers can reduce other items online. made possible through our global part-
product comes from its the environmental impact of our prod- nership with I:CO a solutions provider
‘use phase’. For the H&M ucts after the garments leave our stores, – We make and sell products using post for clothing and shoes reuse and recy-
group, it is important to for example by washing at lower tem- consumer textile waste and we both cling. The H&M brand started collecting

ensure our products that are used for as peratures and by hang drying instead of have regular products and special col- old clothes and home textiles, from any
long as possible, and that our customers using a tumble dryer. For more informa- lections made from collected garments brand and in any conditions, for reuse
can care for them in a sustainable way. tion, visit: in our assortment. For example, the and recycling on a global scale in 2013
Our aim is to avoid waste wherever possi- > clevercare.info H&M brands Close the Loop collection in its stores around the world, from any
ble and minimise what goes to landfill. launched in September 2016. We also brand and in any condition.* Our & Other
In the long term, we are working hard to upcycle second hand garments into new Stories brand also collects product waste
find a solution for reusing and recycling ones with the Cheap Monday Capsule in store. See case study on p. 54.
all textile fibres for new use. collection.
– In 2016, we have also launched an – We have developed and set a new goal
100% FAIR & EQUAL

There are a number of ways we can extended garment care information page for garment collecting in 2016. Our new
influence our customers to act more online. This information helps custom- goal is to increase collected volumes to
sustainably while using and disposing ers care for their clothes in a way that reach 25,000 tonnes annually by 2020.
of our products. This includes provid- makes them last longer, including mak- In 2016, we collected 15,888 tonnes of
ing information about long-life care, ing simple repairs and washing less. garments (a 29% increase from 2015 and
encouraging customers to use products a 107% increase from 2014). Between

for longer, and empowering them to REUSE AND RECYCLING the start of the initiative and November
reuse and recycle rather than throw We want to use more materials from the 2016, we collected more than 39,000
away. garments we collect in our products. We tonnes of garments.
work in several different areas when it
CARE AND REPAIR comes to the reusing and recycling our – In April 2016, we ran a campaign called
We help our customers look after their products. Through our garment collecting World Recycle Week, and beat our target
clothes in a way that makes them last initiative, we collect unwanted clothes to collect 1,000 tonnes of garments
HOW WE REPORT
globally in a single week. The initiative
* With the exception of our franchise markets. Other brands within H&M group (Weekday, Cheap Monday, Monki, & Other Stories) offer garment collection to customers now as well.
ABOUT THE H&M GROUP
VISION & STR ATEGY

allowed us to speak directly with our TONNES OF GARMENTS STORE WASTE AND RECYCLING
COLLECTED IN H&M GROUP* STORES
customers about how they dispose Being 100% circular also means Case study: Beauty recycling

of their clothes and raise awareness addressing our own store waste and
about why avoiding landfill through 15,888 recycling. While much of the waste at & Other Stories
reuse and recycling is important and generated in our stores is sent to
necessary. This is just one part of the our warehouses and recycled from
puzzle to reduce the amount of cloth- 12,341 there, we want to make sure that the
ing that end up in landfill. remaining waste is handled in the
best possible way. We are focusing our
– We continued to donate all of the 7,684 efforts on the most common types of

surplus income from our garment waste-cardboard, plastic and paper.
collection programme to the H&M
Foundation, which split it between Much depends on existing recycling
projects focused on equality and
3,047 systems in the country or region
inclusion of marginalised groups, where our stores are located. While
and recycling research with he these can pose challenges locally, over
Hong Kong Research Institute of the last year we further increased the
Textiles and Apparel (HKRITA). share of stores that have recycling
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Between 2013 and November 2016, systems for these types of waste to
100% FAIR & EQUAL

we collected almost 39,000 tonnes, 71% (2015: 61%, 2014: 58%, 2013: 47%).
which resulted in donations of EUR * With the exception of our franchise markets. Other Our aim is to further increase this
brands within H&M group (Weekday, Cheap Monday,
780,000. Examples of these include: Monki, & Other Stories) offer garment collection share and ultimately reach 100%. We maintain a sustainable approach across our
to customers as well. Please find an independent
assurance statement related to our tonnes of garment beauty products. For example, customers can
collected for reuse and recycling on page 119.
– T he social projects, initiated by recycle & Other Stories beauty packaging by
the H&M Foundation focus on returning any beauty containers to our stores.

improving equality and inclusion The packaging is sorted directly in the store and
of people in marginalised groups. – T he H&M Foundation has also then taken on to the nearest recycling station.
In addition, for each kg of textiles partnered with HKRITA to
that the H&M group collects, develop technologies for recycling We use standard packaging for the H&M group’s
EUR 0.02 will be donated to clothes made from textile blends beauty products and use of paper to a minimum
a local charity organisation into like-new fibres. See case by printing all necessary information on product
– Charity Star. study on p. 43. boxes instead of on a separate folder.
HOW WE REPORT
ABOUT THE H&M GROUP
VISION & STR ATEGY

100% Renewable
The science is clear: climate change is happening, and it’s
Decoupling Emissions from Sales Growth

happening because of humans. Most climate experts (as well
as governments, businesses and NGOs) agree that the release
of greenhouse gases is causing global temperatures to rise.
Unchecked, this change will lead to disastrous outcomes, 2014 GROWTH
including a dramatic rise in sea levels and an increase in the -4% total CO2 e emissions
(= -46% per million SEK)
to increase
the H&M group’s
number and severity of extreme weather events. 2015 sales by
10–15 percent
-56% total CO2 e emissions

(= -60% per million SEK) per year
In December 2015, countries from As a large business with a unique

around the world gathered in Paris scale and reach, we have a responsi-
for COP21* and agreed that to avoid bility to go beyond simply cutting our
this threat, we must do whatever emissions. We have to work to meet
it takes to limit global warming to the needs of the planet. This means 2016
2 degrees Celsius or preferably well setting an example in our own opera- CLIMATE -47% total CO2 e emissions
IMPACT (= - 50% per million SEK)
below that. Most governments have tions, driving change along our value
100% FAIR & EQUAL

Total CO2 e
now submitted their climate plans chain, and help leading our entire emissions
but despite unprecedented levels of industry towards its transformation.
commitment and mobilisation they We can only achieve a 100% circular
are not enough. We have to do more model if the system is powered by
to keep our climate stable. sustainable, renewable energy.

“ We can only achieve 100% circular
model if the system is powered by
”
sustainable, renewable energy.
HOW WE REPORT
* The 21st Conference of the Parties for the UN’s Convention on Climate Change.
ABOUT THE H&M GROUP
VISION & STR ATEGY

In 2016, we reduced our emissions

further by 47% compared to 2015.
CARBON EMISSIONS PER MILLION T O TA L C O 2 e E M I S S I O N S *
S E K S A L E S T U R N OV E R I N C L VAT T O P R E V I O U S Y E A R I N % ( S C O P E 1+2 ) V S .
(C O N S TA N T E XC H A N G E R AT E ) G R OW T H I N S A L E S ( I N L O C A L C U R R E N C I E S)

NET SALES EMISSIONS
2.04t 2.05t
1.72t 11% 7%
14%
9%
356,373t
341,675t
0.69t
100% FAIR & EQUAL

151,753t
0.36t
80,541t

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* Our GHG emissions accounting and reporting is aligned with the

GHG Protocol. Reported CO2e emissions are based on supplier
specific emission factors where available. For further details and
data, please see our CDP Climate Change Investor Response 2016.
CO2e emissions include carbon dioxide (CO 2), methane (CH4), nitrous
oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs)
and sulphur hexafluoride (SF6). An independent assurance statement
HOW WE REPORT
related to GRI 305-1 and 305-2 is included here on p. 119.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Becoming Climate ensure we are decreasing the pressure
Positive Climate Positive Value Chain by 2040 on global warming. Our ambition is to

reduce more greenhouse gases than our
The H&M group is commited to value chain is responsible for.
a Climate Positive Value Chain WTH

GRO 1. L eadership in energy efficiency To achieve this, we need to address
by 2040. many challenges along the way, such
TOTAL ENERGY DEMAND as worldwide access to viable renewable
Climate change is a key challenge for any energy and innovation that enables the
industry, including fashion. To address FOSSIL FREE efficient uptake of CO2. This will require
ENERGY

it, we need to change the way products collaboration. We will only succeed if we
are produced and enjoyed. We want to 2. 100% Renewable energy engage all participants along our value
support this transformation by making chain, from governments and suppliers
our value chain climate positive – all the FOSSIL BASED to our colleagues and customers. Within
way from cotton farms to our customers’ ENERGY our supply chain, our goal is to achieve a
washing machines. This means remov- climate neutral supply chain for first tier
3. Climat resilience and carbon sinks
ing more greenhouse gas emissions from and second tier suppliers by 2030. This
the atmosphere than our value chain TIME will require both energy efficiency and
is responsible for – making it climate a transition to renewable energy.
100% FAIR & EQUAL

positive.
PRIORITY 1 to support the transition into renewable We are encouraging and empowering our
We have been involved with a num- Leadership in Energy Efficiency energy for the whole world by using suppliers to become more energy efficient
ber of expert scientific organisations We are commited to reducing the needs renewable energy ourselves and helping and use renewable energy. Ultimately, we
to develop our strategy. With the help for energy across our value chain. This our suppliers and customers to transition want to pave the way towards a truly sus-
of the WWF Climate Savers, we have includes the energy need all the way from to fossil free energy. tainable fashion industry and demonstrate

gained insight and expertise empower- when the raw material is produced to our that climate positive fashion is possible.
ing us to design our long-term strategy. customers when caring for the products. PRIORITY 3
Using a science-based approach, we have Climate Resilience and Carbon Sinks
established short-term milestones that PRIORITY 2 We aim to strengthen the planet’s natu-
address our own operations and value 100% Renewable Energy ral systems to support stability in its eco-
chain. The strategy contains three key We are committed to maximizing the systems and climate. We need to identify
priorities to achieve a climate positive use of renewable and sustainable energy operative measures to reduce existing
HOW WE REPORT
value chain by 2040 at the latest. throughout our value chain. We want greenhouse gases in the atmosphere to
ABOUT THE H&M GROUP
VISION & STR ATEGY

Stakeholder interview WWF – Global Partner

their value chain. We helped them create vative approaches and overall collabora- address challenges and opportunities.
Name Manuel Pulgar-Vidal
a 2040 strategy and the pathways to tion across the H&M group’s value chain. Combining the H&M group’s size with the
Title Leader, WWF’s Climate &
achieve it. We also helped define short- WWF’s global network of sustainability
Energy Practice
er-term milestones under the WWF’s How can this partnership create scal- experts creates a strong platform for
Climate Savers programme. Together, we able change? What importance does bringing that change on.
the H&M group’s strategy have in the
PIONEERING
WATER
STEWARDSHIP
developed ambitious science-based tar-
gets for the H&M group’s emissions until industry? Looking ahead, I hope our partnership will
FOR FASHION

2020. We are committed to developing Leading by example is precisely what the inspire other brands to address their water
their renewable energy portfolio, engage- WWF expects from its business partners. and climate challenges – both on their own
Why has the WWF teamed up with the ment activities on climate and energy The H&M group has fully met this chal- and in collaboration with others. I expect
H&M group to address climate change? policy, and 2020 milestones on addressing lenge through its new climate strategy. the partnership will have influenced the
Businesses influence the world. The impacts with the value chain. Because the partnership addresses all the fashion sector in other important sus-
WWF seeks to transform businesses into relevant climate aspects and focuses on tainability areas, such as future business
leaders of the low-carbon economy and What are the most challenging aspects both long- and short-term, the H&M group models, landscape approaches for raw
ensure they become part of the solution. of implementing the Climate Positive can lead the way in showing the industry material sourcing and collaboration with
The H&M group is the second largest strategy? what can and should be done to address other industries and customers to create
100% FAIR & EQUAL

fashion retailer in the world, and has great The H&M group has committed to reduce climate impacts. Ambitious action always a more sustainable society.
potential to address both its own direct more greenhouse gas emissions than they spurs on the sector.
environmental impacts, and to realise are responsible for by 2040. This is hugely
positive change within its value chain and ambitious, especially considering the scale What is unique about this partnership,
the clothing industry. It can lead by exam- and complexity of their value chain. The and where will it be going in the next
ple within the sector and the business most challenging aspect is therefore also five years?

community. within the value chain. For example, how This is a transformational partnership,
to ensure that the H&M group’s suppliers and aims to bring long-term sustainable
How has the WWF supported the H&M adopt similar ambitions, how to influence change to the H&M group and the fashion
group in developing its Climate Positive customer behaviour, how to address industry. Because the partnership’s work
Strategy? impacts related to material needs and spans several sustainability areas (water,
The H&M group wanted to develop a recycling of garments. These will all take climate and strategic decisions), it enables
long-term climate positive strategy for capacity building, awareness raising, inno- us to take a more holistic approach to
HOW WE REPORT
ABOUT THE H&M GROUP
VISION & STR ATEGY

Leadership in energy ELECTRICITY USE REDUCTION PER H&M gies for lighting, heating, ventilation and – 20% of factories enrolled in an
BR AND STORES SQM (2007 BASELINE*) air-conditioning (HVAC) systems. energy efficiency programme by 2018.
efficiency

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Energy efficiency is a critical yet simple By 2030, every store we construct will – 100% of factories enrolled in an
concept, the optimizing of output from use 40% less energy per square metre energy efficiency programme by 2025.
the smallest necessary energy input. than the stores we construct today.
The principle of energy efficiency must – 30% GHG reduction per product by
be applied across our entire value chain. ACROSS OUR VALUE CHAIN 2025 compared to 2017 baseline.
Using less energy for more output is
WITHIN THE H&M GROUP a fundamental part of our strategy and – Through supplier energy efficiency

We are committed to using less electric- again, something that can be applied programmes in Bangladesh, China,
ity per square metre of sales area, also across our entire value chain. Within India and Turkey we have reduced green
–8% –8%
referred to as ‘electricity intensity’. So our supply chain we have committed to house gases emissions. During 2016, our
far, we have reduced this by 8.3% against achieving a climate neutral supply chain suppliers achieved savings of nearly 30
a 2007 baseline. Our original goal was for first tier and second tier suppliers million kWh as a result of our improve-
to achieve a 20% reduction by 2020, but –12% by 2030. This includes both energy ment programmes. These programmes
to strengthen our overall ambition to –14% –14% efficiency and transition into renewa- have also supported savings of nearly
become Climate Positive throughout our ble energy. This commitment includes 8 millon tonnes of natural gas and 1.5 kilo
*Energy intensity in 2007 was 190.39 kWh/m 2. Please find an
value chain by 2040, we have now raised independent assurance statement related to GRI 302-3 on p. 119. milestones such as: tonnes of coal. Combined, this adds up
100% FAIR & EQUAL

this to a 25% reduction by 2030 (with to over 200 kilo tonnes fewer greenhouse
2016 as a new baseline). This means we ENERGY USE gases emitted, which is equivalent to
2012 2013 2014 2015 2016
IN GIGAJOULES
will reduce a further 25% beyond our almost 30,000 homes’ total electricity
Building diesel 5,215 403 3,586 716 3,241
current reductions.* use for a year.**
District heating 61,894 67,901 68,208 44,953 43,347
– To meet this goal, we have allocated – We are also working to reduce the

Electricity* * 3,195,689 3,402,762 3,804,291 4,399,990 4,995,002
more resources to improve our ways of energy used in our logistics, transport
working, identify strategic opportuni- Building natural gas, oil and others 184,606 252,124 155,937 161,959 178,128 and warehouses. For example, we have a
ties and take appropriate action. This goal to ensure that 100% of our transport
TOTAL 3,447,404 3,723,190 4,032 ,022 4,607,618 5, 219,718
includes continuing to work with store service providers (TSPs) are controlled
rebuilds, and investing in new technolo- **Energy related to electricity based cooling consumption is included. CO2e emissions include carbon dioxide (CO2), methane (CH4),
by environmental programmes.
nitrous oxide (N2O), hydrofluoracarbons (HFCs), perfluorocarbons (PFCs) and sulpher hexaflouride (SF6). An independent assurance
statement related to GRI 302-1 is included here see page 119.
HOW WE REPORT
* This new KPI also includes opening hours to allow for better internal benchmarking. ** See epa.gov. All data has been verified and endorsed by our project partners STWI and International Finance Corporation (IFC). Independent consultants appointed by our
project partners assessed, verified and reported the savings of every factory at the end of the project.
ABOUT THE H&M GROUP
VISION & STR ATEGY

For land-based transport, we use
SmartWay in North America and Case study:

our own programme* in Europe. For
shipping, our TSPs must be are part More IT, less impact.
of the Clean Shipping Project. These The H&M group’s IT department is part of our
programmes allow us to measure operations and it is connected to stores, offices
and monitor the performance of our and data centres in more than 70 countries
TSPs, and therefore set targets for around the world. Our IT demands grow accord-
improvement. ing to our business growth (data storage grows
even faster) and historically, the environmental

– We can also help our customers impact of our IT has followed this growth.
be more energy efficient in how they
care for the garments they buy from Energy savings within IT such as from cash
us. Since 2014, all of our garments register systems, server centres and PCs, are an
have the Clever Care label included example of how growth can be decoupled from
in their washing instructions, which resource use. In the past five years, annual IT-
encourages decisions that use less related energy use has fallen by more than a third,
energy and water. We also have despite the H&M group’s substantial expansion.
information on our website to help
100% FAIR & EQUAL

customers care for their clothes in
a less impactful way. Thanks to
customers using our garment collect-
ing initiative, we can also increase
the share of recycled materials in
our products which enables energy

savings in our material processes.
However, we know we must do more
to help our customers use less energy
when caring for our products.
* The programme is part of CERES – the Conscious Energy

& REsource System, which measures the CO2 emissions
HOW WE REPORT
and waste from our operations (office, production, logistics, H&M, Bring it campaign.
stores, etc.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Renewable Energy – We have installed solar panels on some % O F R E N E WA B L E S I N O U R
T O TA L E L E C T R I C I T Y U S E
of our own buildings, including some of

Renewable energy is an essential compo- our distribution warehouses and one
nent of cutting global carbon emissions. of our IT parks. We are continuing to 96%
explore how we can put additional solar
WITHIN THE H&M GROUP panels on more of our buildings. 78%
Our goal is to source 100% of our total
energy in our own operations (scope 1 – We are working with a partner in the
and 2) from renewable sources. We cur- US to identify potential Power Purchase
rently source 96% of our electricity from Agreement (PPA) opportunities, which

renewable sources, compared with 78% would allow us to effectively finance
in 2015. This sourcing includes meth- renewable generation projects.
ods such as purchasing of certificates 27%
recognised by the GHG Protocol and ACROSS OUR VALUE CHAIN 18% 18%
generating our own renewable electricity. We are encouraging and empowering
We use various certification schemes* to our business partners to use renewable
purchase renewable energy, depending energy. Although some partners already
on where and how we buy it. We are also do, many find access to viable renewa-
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100% FAIR & EQUAL

sources of renewable energy ourselves markets. We believe the more renewable
energy the better, so we are working Please find an independent assurance statement
H&M, Barcelona. related to AF21 on p. 119.
– We have invested in GO2, an innova- closely with stakeholders – including
tive project that builds on the system of government bodies – to push for pro-
Guarantees of Origin, and bundles the gress. For example, we have conducted
cost of our renewable energy usage with workshops with our suppliers and gov-
“ Renewable

a contribution to new renewable energy
supply. The H&M group’s engagement
ernment representatives in Bangladesh
and India to push for renewable energy
energy is an essential
with GO2 in 2015 and 2016 has helped
make possible the construction of a
and identify possible ways forward.
component of cutting global
new wind park in Sweden. The Tågeröd
Wind Power Plant is expected to generate
16,000 to 18,000 MWh per year.
”
carbon emissions.
HOW WE REPORT
* These include Guarantees of Origin (GO), Renewable Energy Certificates (REC) and International Renewable Energy Certificates (I-REC) purchases.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Climate resilience and
carbon sinks Becoming Climate Positive

Climate
We are committed to fully eliminating neutral
greenhouse gas emissions from our own De cre ase em iss ion s u p ta k e
e GHG
operations. However, in our value chain In c r e a s
there will still be unavoidable emissions*
despite focusing hard on energy effi- Climate negative Climate positive
ciency and renewable energy. This is why
we will also engage in climate resilience

activities to absorb both the emissions Strengthen climate resilience
Total
Reduce Use renewable and Unavoidable to a larger extent than what
that we are responsible for acrosss our value chain
energy need sustainable energy emissions our unavoidable emissions
value chain and beyond to become emissions
burden the climate
Climate Positive.
Our approach is to support mechanisms 1. LEADERSHIP IN 2. 100% RENEWABLE 3. CLIMATE RESILIENCE AND
ENERGY EFFICIENCY ENERGY CARBON SINKS
that reduce existing emissions while
strengthening climate resilience.** This
is an area that we need to further develop
100% FAIR & EQUAL

and push forward in collaboration with
experts. Currently, we are exploring 2. Technological carbon sinks – tech- We urge innovators and experts in these for our chances to stay within the
opportunities in three areas: nological innovations to absorb exist- fields to collaborate with us and like- 2°C limitation.
ing greenhouse gases with the aim of minded partners to further develop these
1. Natural carbon sinks – nature’s exist- turning them into new products and opportunities and strengthen climate
ing mechanisms to absorb greenhouse materials. resilience. Resilience within planetary

gases. This could include programmes boundaries is crucial for many reasons,
that protect valuable biomass such as 3. Reductions outside of our value chain including the need to address global
rainforests or investments in more sus- – engagement activities that reduce warming and its consequences, and to
tainable agriculture. greenhouse gases coming from sources safeguard global social security. This is
unrelated to our value chain an area that science identifies as critical
* Unavoidable emissions are the remaining greenhouse gas emissions we create, even after a focused increase in energy efficiency and transition to renewable energy. These can include emissions from fossil-based household electricity when customers wash their
clothes. ** Resilience is the planet’s natural long-term system to handle tension in order to keep the climate and ecosystems stable. For an ecosystem, such as a forest it can be the capacity to endure storms, fires or pollution. For a farmer, resilience can be tolerat-
HOW WE REPORT
ing pest outbreaks or climate change. Resilience is the system capacity to withstand stress and changes as well as the ability to develop essential functionality. In the long term, this means the ability to adapt. More knowledge about for example, how biodiversity
and innovation can strengthen climate resilience is increasingly important to mitigate tension and manage the changes already taking place due to climate change.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Our climate impact
According to the Greenhouse Gas Pro- sions are scope 3, which means they lie
tocol, emissions can be categorised into outside of our own operations. To tackle

three groups: scopes 1, 2 and 3. Scope this, we have carried out a thorough
1 covers ‘direct’ emissions, which are materiality analysis to identify the emis-
defined as emissions that we – the H&M sion ‘hot spots’ along our value chain.
group – either own or have direct control Considering the complexity of our value
over. Scope 2 covers ‘indirect’ emissions, chain, this type of analysis requires
from the consumption of purchased elec- some assumptions for example, how
tricity. Purchased electricity is defined many times an average T-shirt is washed
as electricity that is bought or otherwise in different regions of the world. To this

brought into the organisational bound- end, we are working intensively to build
ary of the company. By looking at our systems that improve the collection and
value chain, we can see that our own accuracy of sustainability data from
operations as a business represent a our suppliers.
small proportion of our total emissions.
We can address our scope 1 and 2 emis- The main sources of greenhouse gas
sions through energy efficiency measures emissions in our value chain are fabric
and investments in renewable energy. production, product manufacturing
and use of sold products (that is, prod-
100% FAIR & EQUAL

A typical scope 3 emission comes from ucts that are used and cared for). This
anything outside of our operations insight enables us to work strategically
that we have indirect control over. This to decrease scope 3 emissions and report
includes our suppliers and the producers on our progress.* We intent to share
of raw materials used in our products, what we have learned because we want
as well as emissions from the use of our our work to help drive change across the

products, for example when our custom- industry.
ers use washing machines.
As with many companies, the majority

of the H&M group’s greenhouse gas emis-
H&M.
HOW WE REPORT
* Climate impacts are based on a scope 3 assessment done by Ecofys in 2016, based on 2014 data. The categories are based on GHG Protocol. Calculations in the footprint analysis are based on calculations on a combination of good quality H&M group
(2014 material usage) data combined with best available public data sources on CO2 emissions, using conservative assumptions. We are working to further improve the calculations by using primary data from our main suppliers.
ABOUT THE H&M GROUP
VISION & STR ATEGY

T O TA L S C O P E 3 C O 2 e E M I S S I O N S ** T O TA L C O 2 e E M I S S I O N S I N T O N N E S SCOPE 3: CO2e EMISSIONS IN KILO TONNES,
( S C O P E 1+2 ) – I N C L . R E N E WA B L E S **** I N C L . E N E R GY U S E , T R A N S P O R T, D I S T R I B U T I O N

A N D B U S I N E S S T R AV E L
SCOPE 1
11%
RAW MATERIALS* SCOPE 2 356,374
341,675
325,551
796kt
6%
GOODS NON-
GARMENT*

12% 48%
FABRIC
GARMENT
PRODUCTION*
MANUFACTURING*
339,939
325kt 328kt
330,952
279kt
310,269
151,753
16%
USE OF SOLD
PRODUCTS
142,445
80,541
100% FAIR & EQUAL

2%***
1% 2%
70,165
2%
UPSTREAM END-OF-LIFE OTHER
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20
TRANSPORT OF SOLD EXPENDITURES*
PRODUCTS 15,282 16,435 10,723 9,308 10,376

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20
*GHG Protocol Category 1: Purchased products **Climate impacts are based on a Scope 3 ****Our GHG emissions accounting and reporting is aligned with the GHG Please find an independent assurance statement related to GRI 305-3 on p.
assessment done by Ecofys in 2016, based on 2014 data. The categories are based on GHG Protocol. Reported CO2e emissions are based on supplier specific emission 119. Reported scope 3 emissions include energy use, goods transport and
Protocol. Calculations in the footprint analysis are based on calculations on a combination factors where available. For further details and data, please see our CDP distribution, and business travel. CO2e emissions include carbon dioxide
of high quality H&M group data combined with best available public data sources on Climate Change Investor Response 2016. CO2e emissions include carbon (CO2), methane (CH4), nitrous oxide (N2O), hydroflourocarbons (HFCs),
CO2 emissions, using conservative assumptions. We are working to further improve the dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons perflourocarbons (PFCs) and sulphur hexaflouride (SF6). Increase mainly due
calculations by using primary data from our main suppliers. Deviation from 100% due (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6). An to more accurate data collection and validation from our transport providers,
to rounding effects. ***Including fuel & energy related activities (0,3%), Employee independent assurance statement related to GRI 305-1 and 305-2 is included and a slight increase in air transportation. Emission data from previous years
commuting (0,2%), Business travel (0,01%), Waste generated in in operations (0,4%), here on p. 119. were likely underreported and actual historic emission data is unavailable.
HOW WE REPORT
franchises were not included in the study.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Key collaborations
BETTER COTTON INITIATIVE (BCI) We work with them to ensure our organisation. It is crucial we work ORGANIC COTTON ACCELERATOR
The BCI is a multi-stakeholder initia- viscose does not contribute to the deforest- together to protect animal welfare (OCA)

tive that aims to promote measurable ation of ancient or endangered forests. across our industry. Through a collective The H&M group was as a founding mem-
improvements in the environmental and approach – both with Humane Society ber of the Organic Cotton Accelerator
social impacts of cotton production. We CHEMSEC BUSINESS GROUP International and other stakeholders (OCA) and is actively involved in fur-
are one of the founders of BCI, and one The H&M group is part of the ChemSec – we can push our industry forward. ther strengthening the supply, demand
of the biggest user and financial contrib- business group – a collaboration between and the integrity of organic cotton. The
utors among retailer members. companies to inspire progress and push OCA’s mission is to build a fair, robust
for legislation in the reduction in the use organic cotton market that promotes
CANOPY of toxic chemicals. transparency and traceability, and makes

Canopy works with the forest industry’s it easier for farmers to switch to organic
biggest customers and their suppliers to CRADLE TO CRADLE PRODUCTS production.
develop business solutions that protect the INNOVATION INSTITUTE
world’s ancient and endangered forest. We are partner in the Cradle to Cradle MISTRA FUTURE FASHION
Fashion+ collective, along with several The H&M group is a member of the
other brands, designers and suppliers. Mistra Future Fashion programme
Together, we are working to improve the – a research programme that has a ‘system
sustainability and circularity of mate- perspective’ on the fashion industry. Its
rials used in the fashion industry, see vision is to close the loop on fashion and
100% FAIR & EQUAL

interview with the Institute on page 42. enable a systemic change in the Swedish
fashion industry.
ELLEN MACARTHUR FOUNDATION
(EMF) STOCKHOLM RESILIENCE CENTRE
As a Global Partner of the Ellen MacArthur (SRC)
Foundation (a key organisation in The Stockholm Resilience Centre

support of circular economic systems), researches how to improve social-ecolog-
I:CO
we are working together to explore ical systems, in particular their ability
further opportunities to apply circular to deal with change and continue to
economy principles. I:CO develop. As part of our research project
I:CO is a global service provider that col- with the EMF, we are working with the
HUMANE SOCIETY INTERNATIONAL laborates with the H&M group to collect SRC to find a way to create a circular
(HSI) the garments from our garment collecting fiber system that works within planetary
HOW WE REPORT
The HSI is a global animal protection initiative in our stores. boundaries.
ABOUT THE H&M GROUP
VISION & STR ATEGY

SWEDEN TEXTILE WATER INITIATIVE tegic dialogue. Starting from 2017 this
(STWI) partnership is now also including mem-

In 2010, the H&M group joined other bership in the WWF Climate Savers.
major Swedish textile and leather brands
and the Stockholm International Water ZERO DISCHARGE OF HAZARDOUS
Institute (SIWI) to launch the Sweden CHEMICALS (ZDHC)
Textile Water Initiative. The aim of the The H&M group is detox-committed and
collective was to gain a better under- an active part of the ZDHC group. This
standing of the water challenges facing programme takes a holistic approach to
the industry and to find the right mecha- tackling the issue of hazardous chemicals

nisms to address them. in the global textile and footwear value
chain. Together with other ZDHC brands,
TEXTILE EXCHANGE we are engaging with diverse stakeholders
Textile Exchange is a global nonprofit to raise the awareness of industry stand-
organisation that works closely with all ards and work collaboratively for change.
sectors of the textile supply chain to find
the best ways to minimize the industry’s
negative impacts on water, soil, air, ani-
mals and people. The H&M group has been
100% FAIR & EQUAL

a member of Textile Exchange since 2004.
WORN AGAIN
We have a partnership with the inno-
vation company Worn Again to develop
promising technologies for textile-to-

textile recycling.
WWF
Our long-term partnership with the
WWF enables us to take on a more holis-
tic approach to address broader chal-
lenges and opportunities, going beyond
HOW WE REPORT
water to also include climate and stra- The C/O Cheap Monday Capsule Collection.
ABOUT THE H&M GROUP VISION & STR ATEGY 100% LEADING THE CHANGE 100% CIRCUL AR & RENEWABLE STANDARDS & POLICIES HOW WE REPORT
100% FAIR & EQUAL
67 O F 1 24
100% FAIR
& EQUAL
Close the Loop.
ABOUT THE H&M GROUP
OVERVIEW / INTRODUCTION / FAIR JOBS FOR ALL: WITHIN THE H&M GROUP / FAIR JOBS FOR ALL: WITHIN OUR SUPPLY CHAIN / STEWARDS FOR DIVERSITY AND INCLUSIVENESS / KEY COLL ABOR ATIONS
100% Fair & Equal
VISION & STR ATEGY

Overview
100% Fair & Equal

–C
ommitted to ensuring that all colleagues have an annual dialogue discussion
To make sure we have the right people on board and in about how they performed, what else they can develop in their career and
the right positions. other opportunities in the H&M group. 
To offer all of our employees the opportunity to grow and –U
sing our Global Employee survey, we asked our employees how we could
– Implemented the H&M group Global Compensation and Benefit Policy.
FAIR JOBS FOR ALL develop in their roles and emphasise training towards this. improve dialogue discussions with them and received some useful feedback.
– Developed an enhanced and updated Global Health and Safety Policy.
WITHIN THE H&M GROUP To promote a values-driven way of working and empower all – Developed a new Health & Safety Environment Good Practice bank.
employees to be ambassadors for these values in their work. – Organised and ran a Global Safety Week to contribute to our safety culture.
– Developed a Global Labour Relations training programme for the H&M group.

To provide a solid foundation of fair, sustainable and –D
eveloped a Global Labour Relations Policy and training for the H&M group.
attractive working conditions for all of our employees. Actively participated in numerous global forums to discuss specific issues
with our social partners.
– Renewed the IndustriAll Global Framework Agreement.

To contribute to well-functioning industrial relations in
our sourcing markets and for all of our business partners –C
ontinued our collaboration with ACT towards industry-wide collective – Set up five monitoring committees. See map on p. 78.
to pay their employees a fair living wage. bargaining. During 2016, the initiative established the ACT Foundation and
appointed an executive director.
To ensure democratically-elected worker representation –C

ontinued to scale up industrial relations project and workplace dialogue – See map on p. 78 for more details.
at business partners producing 50% of H&M group’s in existing markets. –2
90 factories received workplace dialogue training, which represents 42%
product volume by 2018. – Started a new industrial relations project in Ethiopia. of our total product volume.*
100% FAIR & EQUAL

FAIR JOBS FOR ALL –S
caled up wage management system in existing markets. – See map on p. 78 for more details.
To ensure improved wage management systems support-
WITHIN OUR SUPPLY CHAIN ing fair living wages at business partners producing 50% –E
xpanded wage management systems to business partners in Indonesia, – 1 40 factories using Fair Wage method, which represents 29% of our total
of H&M group’s product volume by 2018. India and Turkey. product volume.*
–M
ade remediation progress data that can be followed up on a montly basis
To reach 100% remediation and enrol all new factories publicly available on our website. –8
1% of our outstanding issues were remediated in December 2016 compared

in the Bangladesh Accord. –A
rranged a business partner summit in spring 2016 to which all Bangladeshi with 61% in March 2016.
business partners were invited to discuss the Accord and share best practice.
To ensure 90% of our business partners regard the H&M – Launched an updated strategy on purchasing practices internally to ensure a
– 83% of our business partners regard the H&M group as a fair business partner.
group as a fair business partner by 2018. consistent way to engage with our business partners in a fair and transparent way.
HOW WE REPORT
* This KPI currently shows factories that received the H&M group’s workplace dialogue training. When the system support for the SIPP is fully implemented, we will be able to show data on share of product volume with democratically-elected worker
representation from our complete factory base.
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

100% Fair & Equal

– Addressed social security issues in Turkey and Cambodia.

–E
ngaged in the Amsterdam Coalition (AMCO) to prevent and mitigate the
harmful impacts of working in the spinning mill industry in South India.
– A rranged internal training on modern slavery and forced labour in collaboration
with the ETI. In connection with the training, we also conducted an internal gap
analysis of modern slavery to identify areas for improvement. – 25 employees from various business functions and global and local
FAIR JOBS FOR ALL To continually identify, address and remediate human

– U pdated risk assessment for new and existing materials to further integrate sustainability employees received modern slavery and forced labour
WITHIN OUR SUPPLY CHAIN rights impacts in our value chain.
human rights perspective. training in collaboration with the ETI.
– C onducted an assessment on mica in cosmetic products to support our
ongoing strategy development and approach to mica and the likely risk of child
labour associated with mica production in India.
– Proactively protected land rights in Myanmar and Ethiopia and conducted
a cotton supply chain study in Ethiopia.
WITHIN THE H&M GROUP

–U
pdated and implemented our Anti-Discrimination and Harassment Policy,
as well as our Diversity and Inclusiveness Policy.
– O ffered internships to refugees in specific markets in collaboration with – Gender split in Board of Directors is 50:50.
To make sure all of the jobs created through our business Save the Children.
100% FAIR & EQUAL

activities are accessible to all and reflect the diverse mix – Employee survey result showed that 90% of employees agreed with the
– Promoted equal opportunities for retail workers in India. statement “People here are treated fairly regardless of age, ethnicity, sex,
of people in the world around us.
– Ran campaigns on promoting diversity and inclusiveness (incl. For Every Victory sexual orientation and disabilities.”
DIVERSITY & INCLUSIVENESS To ensure all employees are treated fairly and equally and
and Monkifesto).
have equal opportunities to develop. – Share of females amongst all colleagues is 75%. Share of females in
management positions is 69%.
To positively influence people and communities by pro-
moting everyone’s right to be and express who they are. WITHIN OUR OWN SUPPLY CHAIN – Enterprise Based Training (EBT) in 2015 and 2016 – a total of 3,411 workers
received certification.
– A ll of our commercial business partners must have a policy for recruitment that
guards against anti-discrimination, harassment and abuse in the workplace.

– Promoted equal opportunities for women by providing certified skills training
through our continued support to the Centre of Excellence in Bangladesh.
HOW WE REPORT
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

Introduction
At the H&M group, we act on our
100% Fair & Equal ambition in two

focus areas: fair jobs for all and being
stewards for diversity and inclusiveness.
Fair jobs are important because employment is one

of the best ways for people to grow as individuals
and professionals. In addition, providing stable

employment with fair compensation helps lift
people out of poverty. The need for good, fair jobs is
already significant and growing fast. It is estimated
that globally, we will need over 600 million new
jobs by 2030.**
Our stewardship of diversity and inclusiveness

is also a critical part of our 100% Fair & Equal
ambition. For example, when women and girls
100% FAIR & EQUAL

enjoy the same access to opportunities as men
and boys, communities flourish and the economy
grows. According to a recent McKinsey report,***
a ‘full-potential’ scenario in which women partici-
pate in the economy identically to men would add
up to $28 trillion (26%) to the annual global GDP by

2025 compared with a business-as-usual scenario.
This impact is roughly equivalent to the size of the
combined US and Chinese economies today.
HOW WE REPORT
Monkifesto.
* ilo.org ** oxfam.org *** mckinsey.com
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

Human rights throughout their operations and busi- Our ambitions
ness relationships.
“ The H&M group

Fair jobs are inextricably linked to At the macro level, the H&M group has
human rights, from the fundamental
right to the food, health and housing that
Our focus on 100% Fair & Equal means
ensuring that our values and respect for
two broad commitments: to offer fair
jobs and to be stewards for diversity and
is commited to
an income should provide to the right
to freedom of association and collective
human rights are upheld and promoted
within our own company and across
inclusiveness. We understand that the
regions we operate in will have different
providing fair jobs
bargaining. our supply chain as well as fair and
equal treatment for everyone connected
challenges, so we must take local context
into account as we develop our strategy
with fair compen-
Human rights also recognise the fun- to our business. We want to use our and roadmaps.
sation and to

damentals: everyone’s equal value and influence to advance respect for human
equal entitlement to full enjoyment of
their rights. Advancing diversity and
rights, be a force for positive change in
the communities we touch and have a
We will continue our efforts to ensure
fair jobs for our colleagues, the people
being stewards for
inclusiveness is therefore important to
actively strive for and promote through
positive impact on people’s lives across
our industry. In return, this will make
employed by our business partners and
the people employed throughout our
diversity and
business. The UN Guiding Principles
on Business and Human Rights sets the
global standard of what businesses must
our business more resilient, productive
and relevant to our stakeholders and as
a result build loyalty with employees,
value chain. This means employment
where every employee is treated with
respect and where everyone’s equal value
inclusion.
”
do to embed respect for human rights customers and business partners. is recognised. No matter if it’s about our communities we touch – including our
100% FAIR & EQUAL

colleagues at H&M group or employees customers – by promoting our values
“ Atunity
company’s single greatest oppor- at the suppliers making our products. and sponsoring inclusion. It is about
It also means fair compensation, a safe recognizing, respecting and embracing
to contribute to the ‘people and healthy workplace, an environment

free from discrimination and respect
people’s differences and advancing their
ability to contribute and develop. We
part’ of sustainable development lies for every employee’s voice, including the work actively to achieve a diverse work-

right to freedom of association and col- force where all employees enjoy equal
in advancing respect for the human lective bargaining. opportunities for professional develop-
ment. We also work to promote diverse
rights of workers and communities The H&M group is also continuing to

make diversity and inclusiveness a natu-
and inclusive ideals through how and
what we communicate with our custom-
affected by their business.

”
ral part of our business. Being a steward ers and other stakeholders in our society.
means actively preventing discrimina-
HOW WE REPORT
CAROLINE REES, PRESIDENT OF SHIFT. Read the full interview on p. 96. tion in the workplace, influencing the
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

Fair jobs for all: Within the H&M group
The H&M group is one of the biggest In our Global Employee Strategy, we Employees behind the scenes during
fashion companies in the world. We strive to create a workplace that attracts the 2016 production of the H&M group's

corporate values film.
want everyone who works for us to know the talent that we need for our continued
that their career is full of potential. We success. That is a place with endless pos-
support and encourage a love of fashion, sibilities to grow and where employees
design and business amongst employees, make a conscious choice to stay. A place
and welcome ideas and feedback. With that is transparent and trustworthy, fair
our many unique brands all over the and equal. A place where our company
world, we always strive to be a fair and values are the red thread in everything
equal employer. we do.

Our diversity makes us strong. It creates OUR COMMITMENT TO CREATING FAIR
an inclusive and welcoming workplace in JOBS IS BUILT ON FOUR FOUNDATIONS
which everyone’s individuality is highly 1. We make sure we have the right people
valued. We believe that when a diverse on board and in the right positions. We
mix of people come together and share do this through how we attract, recruit
their knowledge, experience and ideas, and induct employees.
it inspires and attracts talented people
from all over the world. 2. We offer all of employees the opportu-
100% FAIR & EQUAL

nity to grow and develop in their roles,
Culture is important to the H&M group. and we emphasise leadership training
We believe that you can have fun while towards this. We enable development
achieving great results. Our shared through business growth, internal
values bring us together and guide us in recruitment and training opportunities.
our daily work; they are a part of who we

are, what we stand for, and how we act. 3. We promote a values-driven way of
They help create an open, dynamic and working and expect all employees to be
down-to-earth company culture where ambassadors for these values in their culture gives us a competitive advantage include fair labour standards, health
anything is possible. Every H&M group work. Our shared values (outlined in ‘the and ensures a sustainable way of working. and safety standards, fair and compet-
employee is part of leading the change H&M way’*) are the starting point for how itive compensation, a comprehensive
towards a sustainable future of fashion we do business and how we interact with 4. We provide a solid foundation of fair grievance procedure and a cooperative
and design. the world around us. Our strong company and attractive working conditions. These workplace dialogue.
HOW WE REPORT
* See about.hm.com
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

POLICY DEVELOPMENT Global Safety Week will become Global
“ We
– In 2016, we implemented the H&M Health & Safety Week in 2017 in line with
want everyone who works for

group Global Compensation and Benefit the global HR department’s launch of the
Policy, which aims to secure equal pay for new Group Health & Safety Policy.
equal work based on local context and us to know that their career is full
”
fair wage practices. We communicated – To clarify our position on Labour Rela-
the new policy to employees in all markets. tions, we developed a new Global Labour of potential.
Function Managers and HR Managers Relations Policy that was launched in
will use the policy to identify gaps to early 2017. This clarifies our commitment
becoming compliant and create an action towards neutrality, freedom of association

plan, time frame and follow-ups. and collective bargaining, and educates exists for local managers to search
employees on how to have a workplace through and learn from.
– We developed a Global Health & Safety dialogue with local partners.
Policy during 2016 that was launched WORKPLACE DIALOGUE AND LABOUR
in January 2017. The new policy is an TRAINING RELATIONS
upgrade to our existing Safety Policy and – We gathered 150 examples of ‘good – We actively participate in numer-
will help establish a strong health and practice’ health and safety initiatives ous global and local forums to discuss
safety culture across our operations. In from across our company around the specific issues related to the H&M group
2016, we completed another successful world. These examples make up the with our social partners and employee
100% FAIR & EQUAL

Global Safety Week and received strong foundations of our new Health & Safety representatives. These opportunities
engagement from employees via a ‘safety Environment Good Practice Bank, which provide a way for all employees to con-
selfie’ activity. This group-wide initiative we will launch in 2017 and maintain tribute to the development of the work-
helps to contribute to our safety culture. going forward. The Good Practice Bank place to achieve a fair, open and inclusive
work environment. Our global meetings
“ Our
include our well-established European
shared values bring us together

Works Council (representatives from
12 different countries who are H&M
and guide us in our daily work: employees). In addition, we have ongoing
dialogue with UNI Global Union on an
they are a part of who we are, what annual basis.
we stand for, and how we act.

”
HOW WE REPORT
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

Fair jobs for all: Within our supply chain
Our responsibility extends to all of the the markets we source from remain ing, systemic change within the factories GOALS
people who contribute to the success of stable and productive, even in the face of and the communities around them. All of our actions for 100% Fair & Equal

the H&M group. This includes the work- other global challenges such as climate are connected to our ambitions and
ers at our suppliers’ factories, who play change and economic uncertainty. What’s We know from experience that creating global group goals. The goals included in
such an important role in our company. more, fair jobs reflect people’s human systemic change around these issues is this chapter apply to the H&M group on
rights and enable their advancement in not easy – a complex problem rarely has a global level. As explained in our Vision
We want everyone who works within the line with the UN’s Sustainable Develop- a simple solution. Discrete or isolated & Strategy chapter (see p. 17), goal setting
fashion supply chain to have fair and ment Goals. See more in How We Report programmes do not work; instead, we is an ongoing process that continuously
decent jobs. That means a workplace that on p. 117. must work towards a similarly holistic adapts to our progress and external
respects workers’ voices and their right to collection of solutions and collaborate factors.

freedom of association and collective bar- Obviously, how we partner and manage with others to tackle the challenges in
gaining, is safe and healthy, provides a fair our suppliers is fundamental to achieving our industry. In December 2016, H&M Our goals for 100% Fair & Equal are:
living wage, offers career opportunities change in this area. For example, through hosted a conference on these issues in
through the recognition of skill and expe- our assessment approach (using our Myanmar, with over 100 industry pro- – To ensure democratically-elected
rience and that treats workers with respect Supplier Impact Partnership Programme), fessionals in attendance. The Fair and worker representation at business
while recognising their equal value. we enable, promote and reward good Equal conference saw discussion on how partners producing 50% of H&M group’s
performance from our suppliers – beyond to provide fair jobs, protect human rights product volume by 2018.
Creating fair jobs leads to countless the minimum requirements of stand- and strengthen freedom of association
positive impacts along our supply chain. ard audits. We measure performance on along the value chain. – To ensure improved wage management
100% FAIR & EQUAL

Fair jobs are a material issue for us and issues such as health and safety, overtime, systems supporting fair living wages
are part of our commitment to creating wages, use of energy, water and chemicals. Our industrial relations and wage pro- at business partners producing 50% of
a sustainable fashion industry. Fair jobs Improving these issues creates a collective grammes involve innovative collabora- H&M group’s product volume by 2018.*
are also the best way for us to make sure impact, which will eventually lead to last- tions between the International Labour
Organisation (ILO), the Swedish Inter- – To reach 100% remediation and enrol
“ We
national Development Agency (Sida), the new factories in the Bangladesh Accord
want everyone who works

Swedish trade union IF Metall, and the Inspection Programme by 2018.
IndustriALL Global Union and within
within the fashion supply chain to ACT where we collaborate with other – To have 90% of our suppliers regard
”
brands and IndustriALL. the H&M group as a fair business partner
have fair and decent jobs. by 2018.
* We have decided to measure and report on our goal by ‘percentage of product volume’ instead of ‘number of strategic business partners. This gives a better and more relevant picture on how we measure progress towards our long-term ambitions of well-functioning
HOW WE REPORT
industrial relations throughout our supply chain, and for every worker to earn a fair living wage. During the ongoing implementation, we have decided to redirect our focus for the 2018 milestones to countries and suppliers based on local needs, business priori-
ties and where we can scale up fast and effectively while still maintaining the initial scope of impact.
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

Our Industrial Relations lishment of democratic employee rep-
Strategy resentation. In time, these should create Industrial Relations Framework

the foundations for effective collective
We believe that well-functioning indus- bargaining systems.
trial relations and collective bargaining
are the ultimate keys to achieving our We are working on several different
fair jobs ambitions. However, many of levels to achieve our goals, most signifi-
these markets lack sufficient systems cantly with our supplier factories, as well Collective
to, for example, enable employers and as on the industry and government lev- bargaining
agreements
worker representatives to negotiate their els. And, as shown in the Industrial Rela-

wages collectively – the legislation may tions Framework diagram, we must have
not exist, or a supplier may use inade- certain foundations in place to achieve
quate structures for workplace dialogue. well-functioning industrial relations. Peaceful
conflict resolution
Our aim is therefore to contribute to We have been working on these issues
well-functioning industrial relations for two decades and have made consider-
and workplace dialogue in our sourcing able headway, but there is still important
Structures for dialogue between
markets. work to do. employers and employees at workplace,
industry and national levels.
In countries where unionisation is
100% FAIR & EQUAL

restricted by law or where systems are
insufficient, we work, for example, to Employee and employer awareness of workers’
rights and responsibilities
empower workers by raising their aware-
ness about their rights at work, to train
Effective legal framework
our suppliers and to support the estab-

THE H&M GROUP’S DEFINITION OF:

Our aim is to contribute to
well-functioning industrial relations
INDUSTRIAL RELATIONS
Refers to all relationships, interactions and
negotiations between the different stakeholders
in the labour market (employees and employers
including their respective organisations and govern-
WORKPLACE DIALOGUE
Broad term to describe all instances of
negotiation and exchange of views at the
enterprise level between employers, their
employees and employee representatives,
ments) at enterprise, industry and national levels. such as trade unions.
in our sourcing markets.
HOW WE REPORT
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

Our Fair Living Wage Strategy other brands to drive sustainable change
across the industry. Fair Living Wage Strategy

The H&M group wants suppliers to offer
their employees good working condi- We also engage with governments and
tions, including fair living wages. To us, other partners to promote the required
this is indisputable and has led us to legal framework for enabling negotia-
develop a global Fair Living Wage Strat- tions between employers and worker
egy.* We want to help ensure fair living representatives. This involves regularly
wages across the industry and in all of advocating stronger wage legislation in
our sourcing markets, but the challenges priority countries and meeting with min-

along the way are complex. For exam- isters every year. FAIR LIVING
WAGES
ple, many markets lack adequate wage
setting processes on a national level. We Another part of the puzzle is facilitat-
believe that well-functioning industrial ing the democratic election of effective
relations, including collective bargain- employee representation at factories
ing, are key to achieve fair living wages through trade unions or worker com-
and improved working conditions. mittees (dependent on local context
and choice of employees). Democrati-
Achieving systemic change requires cally-elected worker representatives are GOVERNMENTS FACTORY EMPLOYEES FACTORY OWNERS BRANDS SUCH AS H&M
100% FAIR & EQUAL

a huge amount of collaboration between an essential component of functioning Continue to engage govern- To ensure democratically- To ensure improved wage Continually make sure
stakeholders such as governments, industrial relations, which also forms ments in wage issues and free- elected worker representation management systems sup- that prices we pay suppliers
dom of association following at business partners producing porting fair living wages at enable them to pay fair living
suppliers, brands and trade unions. the base for fairly negotiated wages. By a strategic engagement plan. 50% of H&M group’s product business partners producing wages. By 2018, reach our
volume by 2018.** 50% of H&M group’s product goal for 90% of our suppliers
For solutions to work, they must con- incentivising and enabling factories to volume by 2018.** to regard the H&M group as
** See footnote on page 74. a fair business partner.
nect relevant stakeholders at the right create these systems, we can contribute
time and in the right way – as shown in to the building blocks for peaceful con-

Fair Living Wage Strategy diagram. For flict resolution and collective bargaining. to create management systems in which that our own purchasing practices sup-
example, because we share suppliers workers know what wages they are enti- port our suppliers in implementing fair
with many other retailers (and factory It is also important for factories to tled to (including overtime compensation living wages. Our practices should make
workers receive the same wage no matter implement improved wage management and benefits), as well as ensuring they are it possible to fulfil our business idea and
which brand they are making products systems. The H&M group is currently paid according to their skills, experience give long-term benefits to workers, sup-
for), we must build partnerships with using the Fair Wage method, which aims and performance. We also need to ensure pliers, customers and the environment.
HOW WE REPORT
* Our definition of a fair living wage is a wage which satisfies the basic needs of employees and their families and provides some discretionary income such as savings. It should be revised annually, and negotiated with democratically elected worker representa-
tives. ** See footnote on page 74.
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

AV E R A G E M O N T H LY WA G E S AT H & M G R O U P S U P P L I E R FA C T O R I E S V S . A P P L I C A B L E M I N I M U M WAG E S I N S E L E C T E D C O U N T R I E S I N U S D *
AVERAGE WAGE AT 550
521 533

SUPPLIER FACTORIES 515 520
475
MINIMUM WAGE 442
389 385 383
220
446
404 424 176
167 154 161 168 370 153
137 152 134 149
119 129 131 301 123
85 87 90 99 100 115 85 90 103
79 210 210 75 81
61 64 145 157 176 183 183

44 132 144 158 130 136
67 67 67 83 97 117 91 91 109 114 117 84 104 53 53 79 79 89 104 120
42 42 26
13
13
12
14
12
14
15
16
15
16
13
13
13
13
13
13
12
14
12
14
12
14
14
12
14
12
14
15
16
16
15
16
15
16
15
16
15
16
15
16
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Bangladesh Cambodia China Ethiopia India Indonesia Myanmar Turkey Vietnam
(Guangdong Province) (Bangalore)
AVERAGE WAGE AT WA G E I N C R E A S E I N % F R O M 2 0 1 2 -2 0 1 6
SUPPLIER FACTORIES 114%
“ The
100% FAIR & EQUAL

MINIMUM WAGE
86% 89% 88% H&M group

wants suppliers to
60%
43%
49%
44%
48% 53%
offer their employees

34%
19%
31% 29%
25%
20%
good working condi-
tions, including fair
living wages.
”
h
ia
sia
e) g
r
es
e)
m
pr uanghina
ma
inc on
ga a
y
od
lor
na
an di
ke
lad
ne
ov d
an
mb
( B In
et
r
(G C
do
ng
Tu
My
Vi
Ca
In
Ba
HOW WE REPORT
* Data based on assessment results from representatively-selected factories in each country/region. Average wage is based on basic wages applicable for machine operators (usually the largest group of employees), excl. overtime. In China, piece-rate systems often apply, hence wage data for China is not fully comparable.
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

Industrial relations, workplace BANGLADESH
dialogue and wage management TURKEY —N ational monitoring committee set up and trained.

— N ational monitoring committee set up and — Workplace dialogue training in 187 factories covering
CHINA
programmes trained.
— 7 factories are implementing the Fair Wage — W orkplace dialogue training in 66 factories
covering around 32,000 workers.
around 280,000 workers.
— 2 19 factories have received rights and responsibility
method. training for managers and workers.
— 5 6 factories are implementing the
— 4 0 factories are currently implementing the
This map summarises some of our most impactful Fair Wage method.
Fair Wage method.
— 3 ,197 students in skill development Centre
actions for our industrial relations, workplace dia- of Excellence.
—S et up 10 enterprise training programmes
logue and wage management programme ambitions. (in cooperation with the ILO and Sida).
In 2016, we continued to scale up our industrial rela-

tions and workplace dialogue programmes, reaching CAMBODIA
— N ational monitoring committee set

290 factories compared with 132 in 2015. We also up and trained.
— W orkplace dialogue training in
introduced a programme in Ethiopia for six factories, 24 factories covering around
48,000 workers.
covering 4,000 workers. In 2017, we plan to expand — 1 2 factories have signed collective
bargaining agreements.
this to cover Indonesia, Turkey and Myanmar. — 1 9 factories are implementing the
Fair Wage method.
In 2016, we scaled up the implementation of the

Fair Wage method reaching a total of 140 compared
with 68 last year. We introduced and implemented
the Fair Wage method to three new markets: Indo-
100% FAIR & EQUAL
100% FAIR & EQUAL

nesia, India and Turkey. In 2017, we plan to include
Myanmar.
The scale up of these programmes represents

important milestones towards our overall goal that
INDONESIA
by 2018, business partners representing 50% of — N
ational monitoring committee

ETHIOPIA set up and trained.
the H&M group’s production volume should have — I n partnership with the ILO, — 1 0 factories are implementing
Sida and IF Metall launched the Fair Wage method.
improved wage management systems and demo- a project aimed at improving
labour relations for decent work TOTAL FIGURES
cratically-elected worker representation. in the garment industry. — 1 40 factories using the Fair Wage
— W orkplace dialogue training method, which represents 29% of
in 6 factories covering around INDIA our total product volume, covering
MYANMAR around 250,000 workers.*
4,000 workers. — W orkplace dialogue training in — N ational monitoring committee
7 factories covering around —2 90 factories received workplace
set up and trained. dialogue training, which represents
7,000 workers. — I n partnership with the ILO,
— 8 factories are implementing 42% of our total product volume,
Sida and IF Metall launched covering around 371,000 workers.*
the Fair Wage method. a project aimed at improving
* This KPI currently shows factories that received the H&M group’s work-place — 5 national monitoring committees
dialogue training. When the system support for the SIPP is fully implemented, labour relations for decent set up.
HOW WE REPORT
we will be able to show data on share of product volume with democraticaly-elected work in the garment industry.
worker representation from our complete factory base.
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

IMPROVING INDUSTRIAL RELATIONS IMPROVING PURCHASING
Interview with Mi Qiaoyun, a worker representative In 2016, we renewed the Global Frame- PRACTICES

work Agreement (GFA) with IndustriALL In 2016, we had the internal launch of
Name Mi Qiaoyun How do you enjoy being a worker and IF Metall. The GFA is founded on the our updated strategy on purchasing
Title Worker representative in China representative? belief that collaboration and a well-func- practices. This helps ensure we consist-
at Suzhou Wanli Knitting Factory. Being a worker representative makes me tioning dialogue between the parties on ently engage with our business partners
happy and proud. It feels good to have the labour market is necessary for lasting in a fair and transparent way. We recog-
been elected twice by my colleagues, improvements to workers’ lives, for stable nise that our buying practices affect the
In China, freedom of association is and I have lots of training opportunities to production markets and ultimately, for ability of our suppliers to provide decent
restricted by law, which is why we are develop my communication skills and learn a mature textile industry. The goal is pay and conditions for their workers.

focusing our efforts in China on well-functioning from external service providers. I want to industrial relations that respect freedom This is why we constantly look for ways
worker participatory committees. do my job as well as possible, and I want to of association, give worker representa- to improve purchasing practices and pri-
make sure the dialogue between managers tives a voice and enable trade unions to oritise our actions according to feedback
Could you tell us a bit about yourself? and workers leads to a better factory. negotiate collectively. from suppliers and other stakeholders.
My name is Mi Qiaoyun. I’m 34 years old Highlights of our work include:
and I have worked in the linking depart- What successes have you and your So far, our collaboration within the GFA
ment for nine years. For the last four years, fellow representatives had? has been positive. It has led to setting – We are working to make our measure-
I have also been a worker representative. Most of the problems shared by our up and training national monitoring ment of capacity as accurate as possible.
colleagues are about salary levels, the committees in Bangladesh, Cambodia, This helps improve planning and order
100% FAIR & EQUAL

What does your role as a worker salary system and welfare issues – like the Indonesia, Myanmar and Turkey. These placement processes and helps our suppli-
representative involve? food in the canteen. Through our worker national monitoring committees consist ers use their capacity better. By ensuring
There are seven other elected worker representative process, we have started to of representatives from IndustriALL’s capacity is not overbooked, we reduce the
representatives at my factory. Our job is improve the canteen food. There are now affiliated trade unions and the H&M risk of excessive overtime and strengthen
to open up dialogue between employees more dishes to choose from and they taste group and are responsible for the on-the- our long-term partnerships and commit-
and managers. To do that, I talk to my better. We have also agreed on a future ground implementation of the GFA. That ments with specific suppliers.

colleagues about any problems they have, balanced wage structure to make sure means they support suppliers and local
and take any I can’t solve to our quarterly everyone starts receiving a fair wage. trade unions to negotiate and solve con- We want to create the right incentives
meetings with the factory management flicts peacefully and in good faith on the by promoting competition based on pro-
team. Together, we try to find solutions factory level. The committees therefore ductivity, product quality, delivery time
that work for everyone, and we follow up contribute to well-functioning workplace and other value-adding factors rather
to make sure everyone is happy. dialogue and industrial relations in the than on wages. To do this, we are work-
countries where we source our products.* ing to get a fuller picture of the costing
HOW WE REPORT
* See industriall-union.org for more detailed case studies.
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

breakdown of each product and increase through the use of short-term contracts throughout our value chain. We have ers below the statutory minimum age in
the transparency of this between ourselves or the failure to issue a working permit. several risk assessment processes to our suppliers’ factories. We have taken

and suppliers. Wage cost is one key part in ensure we continuously identify where a clear stance against all use of child
our costing method, and by refining the For example, we are currently tackling the these risks may occur and whether they labour for many years. It is a minimum
method and isolating the wage component misuse of limited fixed-duration con- have been adequately addressed. requirement for all factories producing
further, together with improved capacity tracts in Cambodia. When workers are for the H&M group, and we continuously
measures, we can better account for wage on open-ended undetermined-duration Apart from the initiatives already monitor compliance.
increases and reflect that in the negotia- contracts (UDCs), it improves their access running, we took additional steps to
tions process in a fair and transparent way. to social security and decreases the bar- address forced labour in the value In 2016, we updated our risk assessment
riers for workers to exercise the right to chain in 2016, see more on p. 114. This for new and existing raw materials to

ENGAGING WITH ACT organise and form unions. We wanted to included engaging in the Amsterdam further integrate the human rights risk
We continue to engage in ACT (Action adopt a constructive approach that could Coalition, an initiative between major perspective, including the risk of child
Collaboration Transformation), an ini- bring about sustainable change on this global brands and retailers that is sup- labour. The risk of child labour in our
tiative that brings international brands, issue, and in 2016, we engaged Solidarity ported by the OECD. The coalition aims value chain is known to be connected to
retailers and IndustriALL Global Union Centre, a labour rights organisation, to to help prevent and mitigate harmful raw materials.
together to address the issue of a living develop a training plan. Through this, impacts on workers in the spinning mill
wages. ACT supports collective bargain- suppliers and trade unions will be trained industry in South India, particularly in We also continued to make sure our
ing as one way to improve wages in the in Cambodian labour law and the advan- Tamil Nadu. Comprehensive informa- Child Labor Policy was implemented,
industry alongside purchasing practices tages of UDCs. tion about the steps taken to address and engaged in initiatives that strength-
100% FAIR & EQUAL

and manufacturing standards. forced labour in our value chain can be ened children’s rights. See Modern
We also took action on social security found in our Modern Slavery Statement. Slavery Statement for more details. If we
During 2016, the initiative established issues in Turkey. Together with other discover any person below the mini-
the ACT Foundation and appointed an members of the Ethical Trading Initiative We also arranged internal training on mum age working in any of our business
executive director. This will further (ETI), we lobbied for improved work per- modern slavery and forced labour. This partner’s factories, we have a clear policy
strengthen the initiative as it continues mit processes in this country, which were was provided to about 25 employees in place that guides us to act in the best

to support and facilitate the consultative adopted in January 2016 and ensure ref- from various business functions and to interests of the child. This can include
process towards industry bargaining in ugees are entitled to the same conditions global and local sustainability staff. The ensuring the individual enrols in school,
targeted countries. and social security as Turkish workers. training was organised in collaboration compensation to the family for the lost
with the ETI. income and partnering with civil society
ADDRESSING SOCIAL SECURITY ADDRESSING FORCED LABOUR organisations. For more information on
The H&M group continued to address Forced labour is identified as a salient ADDRESSING CHILD LABOUR our policies here.
issues regarding social security, which human rights issue that continues to Child labour is a salient human rights
HOW WE REPORT
include the risk to workers’ rights constitute an actual and potential risk issue. Today, it is rare to find any work-
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

We conducted an assessment on mica to support them and follow up on their
– an ingredient most commonly found progress. During 2016, we made remedi- Case study: Proactively protecting land rights

in cosmetic products – to support our ation progress data publicly available on
ongoing strategy development on the our website. For more information, see: Land is a source of livelihood for many nected to land issues. We apply these
risks of child labour associated with its about.hm.com. We arranged a supplier people; it is central to economic rights measures for any new suppliers. In Ethi-
production in India. summit in the spring 2016 to which all and often tied to social and cultural opia, we ran additional studies to help
Bangladeshi suppliers were invited to dis- rights. Land is therefore an issue that us get a clear picture of our value chain
We also entered a collaboration with cuss the Accord and share best practices. impacts directly on many human rights. in this country and inform our strategy
the Centre for Child Rights and Corpo- going forward.
rate Social Responsibility (CCR CSR) > bangladeshaccord.org Disputes over land can be a cause of

in a project to prevent child labour and conflict and dispute. Forcibly evicting or Land rights and land grabbing are often
protect young workers in our supplier displacing people from their land without related to raw material production. In col-
factories in Myanmar. The programme free, prior and informed consent to allow laboration with the Dutch government,
provides training in child labour aware- for large-scale development or business we are currently exploring the possibility
ness, prevention and remediation in constitutes land grabbing. This carries to use locally-sourced raw materials in
the workplace, as well as effective child the risk of severe violations of human our supply chain in Ethiopia. To this end,
protection at work and in the commu- rights. In certain countries where land we have set up a collaboration with Soli-
nity. The training is for both managers grabbing occurs, there is a risk (albeit daridad, an international network devel-
and workers, and has so far reached 309 a small one) that our value chain could opment organisation, and the Ethiopian
100% FAIR & EQUAL

management staff and 660 workers. The be connected to this issue. A lack of Cotton Producers Ginners and Exporters
CCR CSR also produced a baseline report material traceability and ownership from Association to research and develop
and a final report from this project. suppliers can make it difficult to identify a report detailing the key sustainability
and address this problem. issues in Ethiopia’s cotton sector.
ADVANCING THE BANGLADESH
ACCORD We always conduct an initial risk assess- The report provides practical guidance

We were amongst the first companies to ment for a country we’re considering for the H&M group and the Dutch and
sign the Bangladesh Accord with the aim entering. In recent years, we have identi- Ethiopian governments, and will form
to help improve fire and building safety fied land rights and land grabbing issues the basis of our sustainable strategy
in the textile industry in Bangladesh. in Myanmar and Ethiopia. Because we in Ethiopia.
We are actively engaged with the Accord decided to enter both of these markets,
team, and have been on the steering we introduced measures to ensure that
committee since day one. We are also our suppliers were (and remain) uncon-
HOW WE REPORT
closely engaged with all of our suppliers
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

Stewards for diversity and inclusiveness
We believe in the equal value of our suppliers, our business contrib- S H A R E O F F E M A L E S A M O N G S T A L L*
utes to job opportunities for around C O L L E A G U E S V S . M A N AG E M E N T P O S I T I O N S
every individual. As an employer

1.6 million people, of whom about
we represent, and as an influencer 76% 75%
65% are female. For many women 72% 69%
we connect with, a hugely diverse around the world, a job within the
garment industry is an important first
collection of people. We want to step to accessing formal employment
% O F E M P L OY E E S A G R E E I N G W I T H
T H E S TAT E M E N T T H AT “ P E O P L E H E R E
challenge prejudice wherever we find that provides improved job security, A R E T R E AT E D FA I R LY R E G A R D L E S S
skills and financial independence. O F A G E , S E X , E T H N I C I T Y, S E X U A L
it and wherever possible, help move O R I E N TAT I O N A N D D I S A B I L I T I E S ”

our global culture away from restrictive Unfortunately, there is still a lot of
work to do to make sure that men 89% 90% 90%
stereotypes and harmful norms. It
and women are treated equally in the
is part of who we are. And to us it is workplace and have equal access to
simply the right thing to do. opportunities. Our guiding principle
s nt
s nt
is ‘equal pay for work of equal value’
es
es
ion e
ion e
oll 1 5
po ana 1 5
oll 1 6
po na 1 6
gu
gu
s i t ge m
s i t ge m
lc 0
ma 2 0
l c 20
m 0
ea
ea
(across all inequality issues, not just
Al 2
In 2
Al
Our most direct area of influence is as a business gender), for both our internal opera-
In
that creates jobs. Jobs are the foundation for indi- tions and at our suppliers. We work *Average number of employees
100% FAIR & EQUAL

viduals to create livelihoods, for communities to actively to detect cases of wage dis-
develop and for economies to grow. However, crimination and duly ensure they are B OA R D O F D I R E C T O R S
prejudice and discrimination can prevent people corrected, including the gender dimen- GENDER SPLIT 2016
from accessing the labour market. As a global sion in the Wage Management System
employer with a significant platform, we can implemented in our supply chain.
14
15
16
20
20
20
promote and work for inclusion by demonstrating

everybody’s equal value. Our vision is that the Part of the challenge involves Source: Global Employee Survey 2016
jobs created through our business activities are empowering women to express and
accessible to all, and reflect the diverse mix of defend their interests with the view
50% 50%
people in the world around us. to reducing gender inequality in the men women
workplace. One way we are working
This position is particularly relevant when it comes to overcome this is through our col-
to gender. Of the 75 million people employed by the laboration with Sida and the ILO, and
HOW WE REPORT
garment industry, the majority are female. Through our support of democratically-elected
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

worker representatives. It seems to us
that gender-related issues are more Case study: Increasing opportunities for women in India

likely to be raised by women. Given
the share of women in the garment The H&M group wants all of its employees Niki Pandey, far right, with the team.
supply chain and that 38% of the to have the same opportunities to grow and
elected worker representatives are develop. Amongst other things, this means
women, we believe that a system of offering equal working conditions. However,
elected worker representatives will in certain countries where we operate,
mean more women start represent- women do not have the same access to
ing women. In turn, this will lead to the labour market as men. In India, the retail

gender-related issues being addressed sector has lower participation from women.
or recognised in workplace dialogue H&M is therefore working to increase women’s
in the workplace. opportunities to take part in working life and
build a career.
Of course, inequality is not just about
gender – discrimination comes in The local legislation for working hours for
many shapes and sizes. Every person women in most Indian cities means they can
who connects with our brands should only work after a certain time in the morning
feel represented and welcome. We are or before a certain time in the evening. By
100% FAIR & EQUAL

a global business that values diversity offering safe transport to and from work
and we want this to be clear to every- at these times and proactively working greater work-life balance. We offer paid Diversity, Inclusiveness and Equality
one who connects with us. Establish- together with local legislative authorities, parental leave to new fathers in the initial and the Global Non-Discrimination and
ing this reputation is grounded in H&M has been granted exemptions from period after a child is born, in addition to Non-Harassment Policy. They encompass all
how we run our business, but extends these rules. statutory maternity leave, as well as sickness of the group’s employees and aim to ensure
far beyond. As a large global business, insurance in connection with pregnancy and a workplace where respect for human rights

we can take a stand for these values “The benefits that H&M offers mean that we childbirth. At the recruitment stage, we have has the highest priority and there is zero
in the way we choose to advertise our women can work freely and choose working targeted initiatives to encourage as many tolerance of any kind of discrimination. The
products and promote our brands. hours without having to be afraid,” says women as possible to apply. H&M group’s social policies are based on UN
Niki Pandey, department manager at the and ILO conventions, amongst other things,
Our vision is to positively influence H&M store in Connaught Place, New Delhi. The initiative in India is an example of how and have their origins in the H&M group’s
people and communities by pro- H&M also has an indirect influence on the H&M group’s social policies are put into shared values. See more in the Standards &
moting everyone’s right to be, and women’s career opportunities by enabling practice. These include the Global Policy on Policies chapter on p. 107.
HOW WE REPORT
express, who they are.
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

Within the H&M group are adequately prepared to understand In our supply chain
the challenges a refugee may face when in

– During 2016, we updated our Global their new country. – In 2016, we replaced our Code of
Non-Discrimination and Non-Harassment Conduct with our Sustainability Com-
Policy and our Global Policy on Diversity, mitment. This included a revision of our
Inclusiveness and Equality. Our main requirements for business partners. One
focus was to implement the updated pol- of the new requirements is that all sup-
icies and increase awareness and shared pliers must have a policy for recruitment
understanding around expectations. that prevents discrimination, harass-
ment and abuse in the workplace. We

– We have taken steps to make sure we constantly monitor and measure the per-
provide equal access to opportunities formance of how factories monitor and
for men and women working in retail in manage these policies. See more in the
India. In particular, this includes pro- Standards & Policies chapter on p. 99.
viding safe transportation home in the
evenings so that women can legally work – Through a long-term collaboration
late, which in turn opens up develop- with the ILO and Sida, we support train-
ment opportunities. See more in our case ing and skills development opportunities
study on p. 83. through the Centre of Excellence for the
100% FAIR & EQUAL

Apparel Industry in Bangladesh. The
– To prevent the exploitation of refugees Caitlyn Jenner, For Every Victory. project is showing promising results with
by suppliers and service providers, we are a more structured certification of skills,
actively monitoring the situation in all – During 2016, we brought attention a growing availability of Enterprise Based
risk markets. As a company that provides to the values of equality, diversity and Training (EBT) and – in 2015 and 2016
jobs, we can also help the situation by inclusiveness using various marketing – a total of 4,083 workers who received

providing opportunities for vulnerable campaigns and collections, such as skills certification. This recognition
groups to access the labour market. In For Every Victory and Monkifesto. Our of competencies opens the door to better
response to the ongoing refugee crisis in advertising policy is clear: rather than positions and higher salaries; as well
Europe and to promote integration, we promoting a specific ideal, we want to as better productivity at workplace.
decided to offer internships for refugees show a representative variety of styles It also helps workers, especially women,
in specific markets. We have initiated a and individuals. to re-enter the workforce at the same
collaboration with Save the Children to or higher level should they leave for
HOW WE REPORT
develop training to ensure our mentors Monkifesto. any reason.
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

Key collaborations
THE ACCORD ON FIRE AND ACT (ACTION, COLLABORATION,
BUILDING SAFETY IN BANGLADESH TRANSFORMATION)

(THE ACCORD) ACT is an initiative between interna-
The Accord is a legally-binding agree- tional brands, retailers and the Industri-
ment between global brands, retailers ALL Global Union to address the issue of
and trade unions designed to build a safe living wages in the textile and garment
and healthy Bangladeshi Ready Made supply chain. ACT aims to improve
Garment (RMG) Industry. With this com- wages in the industry by establishing
mitment together with other companies, collective bargaining in key garment and
trade unions, employer organisations textile sourcing countries, supported by

and the Government of Bangladesh, we world-class manufacturing standards
are able to influence and contribute to and responsible purchasing practices.
safe and healthy working conditions in
the textile industry in the country. AMCO (AMSTERDAM COALITION)
This is an initiative of major global
brands and retailers that aims to con-
tribute towards the prevention and
mitigation of harmful impacts on the
workers in the spinning mill industry in
100% FAIR & EQUAL

South India, particularly in Tamil Nadu.
The OECD is supporting this initiative
and providing technical assistance as
part of its sector work on due diligence orate on in-country programmes that around the globe. It offers a platform for
and responsible business conduct within include assessments, training, advocacy collaborating with peers and stakeholders
the garment and footwear sector. and research that change policies, atti- to collectively and strategically address

tudes and behaviour. concerns and issues in our supply chain.
BETTER WORK
The International Labour Organi- ETHICAL TRADING INITIATIVE (ETI) FAIR WAGE NETWORK (FWN)
zation (ILO) started the Better Work We were accepted as a full ETI member in The FWN is our partner and service
programme with the aim of bringing 2016 after two years as a foundation stage provider to support the implementation
employees and employers together to find member. The ETI is a leading alliance of wage management systems in our
solutions to workers’ issues and ensure of companies, trade unions and NGOs supply chain. The Fair Wage method
HOW WE REPORT
a sustainable labour market. We collab- that promotes respect for workers’ rights was developed by the Fair Wage Network
ABOUT THE H&M GROUP
100% Fair & Equal
VISION & STR ATEGY

ers’ representatives have a voice and trade on the implementation of the UN Guid- in cooperation with the OECD and the
unions can negotiate collectively. We have ing Principles on Business and Human ILO in 2016 to address the challenges

also worked to ensure that IndustriALL Rights. They support and help govern- in the global labour markets through
and IF Metall are key partners in the ments, businesses and their stakeholders enhanced social dialogue. H&M is a part-
project carried out under partnership put the UN Guiding Principles into prac- ner of the Global Deal in line with our Fair
agreements with the ILO and Sida. tice. Shift supports us with their expertise Jobs and Industrial Relations strategy.
(we participate in their business learning
ILO programme) and helps us improve in our UNI GLOBAL UNION
We partner with the ILO to improve human rights management approach. Together with UNI Global, we have formed
global, national and enterprise labour the H&M Alliance, an annual meeting

relations; strengthening legal frame- THE GLOBAL DEAL intended to improve our workplace dialogue
works and institutional capacities for The Global Deal is an initiative that was where neutrality, freedom of association
labour inspection and dispute resolu- launched by the Swedish Prime Minister and the right to collective bargaining are
tion; and supporting the formulation of acknowledged and enforced.
sound policies for strengthening work-
place dialogue and wages.
Sida
The Swedish International Develop-
100% FAIR & EQUAL

ment cooperation Agency (Sida) is a
and exists to improve wage management government agency with a mission to
systems, to create more regular wage reduce poverty. In 2014, Sida and the
adjustments and to enhance communi- H&M group signed a memorandum of
cation and workplace dialogue between understanding that focuses on support-
management and worker representatives. ing decent jobs and sustainable devel-

opment opportunities with respect for
INDUSTRIALL/IF METALL human rights, both at a programme level
Under the GFA with IndustriALL/IF and policy level depending on the coun-
Metall and the partnership agreements, try and region.
we have increased resources and commit-
ment to improving industrial relations Shift
and workplace dialogue to ensure that An independent non-profit expert organ-
HOW WE REPORT
freedom of association is respected, work- isation that provides practical guidance
ABOUT THE H&M GROUP VISION & STR ATEGY 100% LEADING THE CHANGE 100% CIRCUL AR & RENEWABLE 100% FAIR & EQUAL HOW WE REPORT
8 7 O F 1 24
Cheap Monday.
STANDARDS &
POLICIES
ABOUT THE H&M GROUP
GOALS & ACTIONS OVERVIEW / INTRODUCTION / HOW WE WORK WITH OUR STANDARDS AND POLICIES / OUR HUMAN RIGHTS POLICY / OUR CODE OF ETHICS / OUR SUSTAINABILITY COMMITMENT / ANIMAL WELFARE AND MATERIAL ETHICS / CHEMICAL RESTRICTIONS / SOCIAL POLICIES
Standards & Policies
VISION & STR ATEGY

Overview

– 50% of concerned employees have taken the new e-learning training module.
– Rollout of new dilemma workshop. – 100% of all commercial goods business partners signed the Code of Ethics.
CODE OF ETHICS To detect all violations of our Code of Ethics.
– Launch of new e-learning training module. – Investigated and closed 39 incidents of potential non-compliance. These
led to action in 26 cases.
– 100% of all commercial business partners signed the Sustainability Commitment.

– 100% of our first tier business partners have implemented the SIPP methodology.
– L aunched and rolled out Sustainability Commitment to all of our – S econd tier business partners accounting for 56% of our production volumes
business partners. have implemented the SIPP methodology.
SUSTAINABILITY To move beyond compliance and promote sustainability
performance at our business partners and further down – Extended rollout of the SIPP to our first tier business partners. – 96% factories assessed before first order placement.
COMMITMENT in the supply chain. – E xtended rollout of the SIPP to selected second tier business partners. – 1 ,194 minimum requirement assessment performed at first tier supplier.
– 4 59 desktop validation.
– 1 ,247 onsite validations.
– 80% of the factories assessed according to the SIPP method.
– U pdated our HR due diligence process for existing production markets.

– U pdated risk assessment for new and existing materials to further integrate
human rights perspective.
100% FAIR & EQUAL

HUMAN RIGHTS To continuously ensure human rights are an integral part – 100% of new retail markets (no new production markets) assessed for
– C onducted annual review of our salient issues. See more in How We Report
POLICY of relevant processes.
chapter p. 113.
human rights and environmental risk and impact.
– Conduct regular country risk assessment for potential new retail and
production markets.
– Provided regular training to our internal and external stakeholders on our

animal welfare policies.
– A ppointed a full-time manager that will promote, train and ensure compliance of
ANIMAL WELFARE AND To source animal-based raw materials in a way that our wool standards internally and with business partners throughout our value

MATERIAL ETHICS meets tough requirements and that is fully traceable. chain.
– Introduced the standard to our supply chain, establishing relationships further
down our supply chain including the farm level to make sure our supply chain
is ready for RWS-certified wool.
To guide and support our facilities to phase out restricted

– C onducted nearly 44,500 chemical tests together with our business partners to
CHEMICAL RESTRICTIONS chemicals used in production (i.e. zero discharge of
ensure compliance with our Restricted Substances List (RSL).
hazardous chemicals) by 2020.
The H&M group must be a place where customers and – M easured our status by completing store audits in all stores/brands worldwide.
– C ompleted 8,930 safety and security store audits worldwide, reaching a
staff feel safe. – Developed a new, more comprehensive scoring system to calculate safety
SECURITY POLICY compliance level of 85%.
HOW WE REPORT
To achieve a yearly compliance status of 85% for safety and security standards – still focusing on safety, loss prevention and
– Every store had at least one store audit.
and security standards in our stores. information security.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Introduction
Our vision for a sustainable fashion industry guides everything we ing our standards and policies. First, we Occasionally, we work with partners to
identify a need, risk or opportunity, which develop external standards, such as our
do. This vision is underpinned by our sustainability strategy, which

is done either via an internal or exter- collaboration with the Textile Exchange
defines the steps we need to take as an organisation to achieve our nal source. We then develop a standard on the Responsible Wool Standard.
in response with the help and input of
goals. Our sustainability standards and policies are an essential
experts and relevant stakeholders from
component because they communicate our operational framework inside and outside our business. Next,
and make sure we work in a sustainable way. we create an implementation plan for the
new standard, as outlined in the section
below. All of our standards are regularly

Our sustainability standards and poli- to manage our supplier relationships and reviewed and updated.
cies help us avoid, mitigate or remediate enable them to aspire to greater sustain-
negative impacts and enhance positive ability performance.
impact. This is particularly important
in countries where laws and regulations As well as guidance, these standards
fall short of our own standards and and policies also help us address mate-
requirements. Whenever relevant and rial risks and opportunities in a con-
available, we refer and comply to inter- sistent way. It is with our standards and
national standards and widely-recognised policies that we are setting the bar and
100% FAIR & EQUAL

initiatives related to the topic, such as defining what kind of company we want
ILO Conventions or the UN Guiding to be.
Principles on Business and Human
Rights.
For more information on our material
When we do business ‘the H&M way’ issues and how we defined them, see

we do so ethically, honestly and respon- p. 110. We have grouped the key sustain-
sibly, and we continually encourage our ability standards and policies most mate-
suppliers and other business partners rial for this report into the areas below,
to do the same. see more on p. 112.
Another important part of our manage- HOW WE DEVELOP OUR STANDARDS

ment is the SIPP (our Supplier Impact AND POLICIES
HOW WE REPORT
Partnership Programme), which we use We have a set process in place for develop-
ABOUT THE H&M GROUP
VISION & STR ATEGY

How we work with our standards and policies
We are continously working to principle that encourages employees
to talk to managers to solve issues.
integrate new learning and develop our

We ensure every employee has access
standards and policies. This helps us to a formal grievance procedure. Any
work in a sustainable way, reduces our grievances that cannot be solved
locally are escalated to the senior
negative impact and where possible, management of the H&M group or
enhances our positive impact. raised through the global grievance
email address.
Whenever we implement a standard or policy,

we create a tailored strategy for making sure it We also have a whistleblowing
has been done so correctly and effectively. Our system for anyone to report serious
follow-up methods therefore vary per policy or cases of corruption suspicions or
standard. When we discover non-compliance, we violations of our business ethics.
take action; our response depends on the issue
and severity of the breach. We believe it is important to be
accountable and transparent, so
The content of the sustainability standards and we report any findings through the
policies, except for the social policies described right channels and to relevant stake-
100% FAIR & EQUAL

in this chapter, are owned by the Global Sustaina- holders. All relevant information is
bility team who also coordinate different policies shared through our sustainability
and oversee their implementation. The Global report, which also includes our
HR team is responsible for the social policies and human rights reporting.
oversees implementation and follow-up. It is the
responsibility of relevant local business functions

to follow up and take any required action. There
is also a dedicated person for each standard/policy
that is responsible for the implementation and
updating the standard/policy whenever needed.
Another system that helps ensure our standards

and policies are upheld is our grievance report-
HOW WE REPORT
ing mechanism. Internally, we have an open-door & Other Stories.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Our sustainability standards and policies overview

THE H&M GROUP BUSINESS PARTNERS MATERIALS/PRODUCTS

CODE OF ETHICS
CODE OF ETHICS ANIMAL WELFARE AND MATERIAL
OPERATIONS ETHICS POLICY
— Tax Policy
SUSTAINABILITY COMMITMENT
— Advertising Policy
RESTRICTED SUBSTANCES LIST (RSL)
— Global Security Policy
CHILD LABOUR POLICY
— Privacy Policy
PVC POLICY
— Whistleblowing Policy
MANUFACTURING RESTRICTED
SUBSTANCES LIST (MRSL) COTTON BAN FOR UZBEKISTAN/
GLOBAL SOCIAL POLICIES (HR) TURKMENISTAN BAN/SYRIA
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— Global Compensation and Benefits Policy
SANDBLASTING POLICY
— Global Grievance Policy
— Global HIV&AIDS Policy
— G lobal Diversity, Inclusiveness
and Equality Policy
— G lobal Non-Discrimination and
Harassment Policy

— Global Health & Safety Policy
— Global Labour Relations Policy
HUMAN RIGHTS POLICY
HOW WE REPORT
We can group our main sustainability standards and policies into three ‘categories’: our own internal operations, our supply chain, and our products and material use. Our business activities connect with human rights in internal operations and across our
value chain, either through business partners or in connection to the material and/or processes used to make our products. Below, we describe our main and most significant sustainability policies and standards. More can be found at sustainability.hm.com.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Our Human Rights Policy
Our approach

Respect for human rights is a funda-
mental part of any successful business.
Our business activities and decisions
can impact people and their human
rights both directly and indirectly,
as well as positively and negatively.

These activities and decisions can include
everything from the data integrity of customers and
how we treat our employees to the raw materials in
our products and working conditions in factories.
We have operations and suppliers in countries

where serious human rights breaches may occur so
we need to be proactive in our protection of them.
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We want our policies and standards to go beyond
our formal, legal responsibilities for human rights
to help ensure respect for human rights across our
operations and value chain, leading to positive
change for the communities and people we touch.

Our approach to human rights is based on the
UN Guiding Principles on Business and Human
Rights (UNGP) and the recognition that while
states have a duty to protect human rights, compa-
nies have a responsibility to respect the same.
Our Human Rights Policy applies to all entities
within the H&M group.
HOW WE REPORT
H&M Conscious Exclusive.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Human rights due diligence Key processes and activities integral
to our human rights management

Our aim is to ensure that our human rights due include:
diligence is conducted in a systematic and consist-
ent manner and to continuously ensure that human – Our process for identifying and
rights is an integral part of relevant processes. This reviewing our salient human
is an important part of our Human Rights Policy rights issues.
and meeting our responsibility to respect human
rights in practice, as well as to ensure we act with – Our annual sustainability risk
accountability. assessment, conducted by all

business functions.
For the H&M group, human rights due diligence
is the ongoing process to identify, address (which – Business partner due diligence
means to prevent, mitigate and/or remediate prior to entering a new contract.
human rights risks and impacts connected to our
business) and account for how we respect human – Country sustainability risk assess-
rights in practice. We integrate multiple processes ment for both production and retail
for our assessment of risks to human rights, for markets.*
example, risk management and business partner
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due diligence. Other key components of our human – Supply chain management/
rights management include stakeholder engage- business partner follow-up
ment, grievance handling, internal training and through SIPP material/process/
external reporting. product risk assessment.
– I ncident-handling routines with

integrated analysis according to
the UNGPs.
– Our in-depth training on UNGPs

and our Human Rights Policy.
HOW WE REPORT
*100% of new retail markets opened in 2016
were assessed.
ABOUT THE H&M GROUP
VISION & STR ATEGY

In 2016, we updated our material risk assessment
process to further ensure that the risk of human Our human rights due diligence and incident management process

rights abuses connected to new and existing mate-
rials is identified and addressed. We also further
systematised a method to identify and prioritise
which human rights issues to address locally in
our production markets. The intention is to ensure
that local issues that are not currently part of our
long-term goals and focus areas are still adequately
Integrate Incident
addressed. This updated process will be put into learning with a human

practice in 2017. to improve rights impact
practice
IDENTIFY ADDRESS
Processes in place Actions and programmes
to identify risks and to prevent, mitigate and
impacts remediate
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ACCOUNT

Sustainability reporting according to
UNGP RF and stakeholder feedback
incl. responding to grievances
Define Define
appropriate level of
remedy and responsibility
action
HOW WE REPORT
ABOUT THE H&M GROUP
VISION & STR ATEGY

Embedding respect for Identifying and addressing
human rights human rights breaches: Our

incident management process
Embedding respect for human rights throughout
our business activities is about continuously work- When we identify a case of human rights impact,
ing to put our Human Rights Policy into practice. we respond with our incident management rou-
Our aim is to ensure that a human rights perspec- tine. For situations with a human rights impact
tive is a natural, integral part of how we operate (that goes beyond what is dealt with through our
and make decisions across all business functions. Sustainability Commitment), we apply a systematic

Internal training is a key step in the process of approach to analyse our responsibility according
increasing awareness and competence. to the UNGPs and apply appropriate measures.* We
make sure to integrate what we learn from analys-
We run ongoing in-depth training on human ing each situation into our practices going forward.
rights, our responsibilities as per the UNGPs,
human rights due diligence and handling of cases,
situations and incidents with a human rights
impact. We prioritise training for key positions and
roles, for example, sustainability managers in our
100% FAIR & EQUAL

production markets and country managers, as well
as key business functions such as sustainability
department, HR and legal.

Mi Qiaoyun, worker representative in China at Suzhou
Wanli Knitting Factory. Read her interview on p. 79
HOW WE REPORT
* See How We Report p. 114 for our salient issues overview and our modern slavery statement here.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Stakeholder interview with Shift

Shift is a non-profit organisation that facilitates dialogue, builds capacity and develops
new approaches with companies, governments, civil society organisations and international
institutions to enable them to implement the UN Guiding Principles.
contribute to the ‘people part’ of sustaina- opportunity to empower people, lift them
Name Caroline Rees ble development lies in advancing respect out of poverty or abuse and enable them

Title President for the human rights of workers and com- to enjoy real development while reducing
Organisation Shift munities affected by their business. business risk at the same time.

What are some of the tangible What else can the H&M group do
outcomes from the companies that to increase our positive impact on
have reported according to the UNGP human rights?
Reporting Framework since its launch The key to wide-scale positive impact
How are human rights connected to the in 2015? is two-fold: collaborating with others to
UN’s Sustainable Development Goals These companies are providing meaning- address systemic human rights problems
100% FAIR & EQUAL

(SDGs)? ful explanations of how they understand and scrutinizing the company’s own busi-
Human rights are about the basic dignity human rights challenges as well as how ness model and purchasing practices. The
and equality of all human beings. They they are tackling them and making improve- H&M group should continue to do both.
are at the heart of what sustainable devel- ments. The reporting process also
opment means for people. We cannot helps them improve their management
achieve the SDGs without respect for processes and stakeholder dialogue.

human rights.
Are companies missing out on opportu-
Why should human rights be at nities when they are mainly focusing on
the center of a business strategy to reducing the negative impacts?
contribute to sustainable development When a company takes serious steps to
and SDGs? tackle negative impacts in its supply chain
A company’s single greatest opportunity to it isn’t just ‘doing no harm’. It is realizing an
HOW WE REPORT
ABOUT THE H&M GROUP
VISION & STR ATEGY

Our Code of Ethics
Corruption is a challenge in
“ By
We have had our Code of Ethics in place
many of the markets where we

since 2003. In 2012, we updated it to taking a firm line on refusing to

clearly state that any kind of bribery
operate. We have a strong anti- (including facilitation payments) will
always be addressed and may lead to the
accept any kind of contribution or
corruption programme in place,
apply a zero-tolerance policy
termination of our business relationship. bribery, we aim to encourage others
”
By taking a firm line on refusing to accept
and take a proactive approach any kind of contribution or bribery, we
aim to encourage others in our markets
in our markets to share our values.
towards preventing corruption. to share our values. We are focusing on

high-risk countries such as Cambodia,
At the H&M group, we make it a rule to Bangladesh, India and Russia where we
always act with integrity. To make our provide training and awareness build-
expectations clear to our employees* and ing activities. High-risk countries are
business partners, we have a Code of identified through our own assessments
Ethics for each, which often goes beyond and through external sources such as
the strictest regulations and legislation the Transparency International’s Global
in our markets. Corruption Perception index.
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We set an expectation of mutual trust In 2016, we investigated and closed 39
and transparency in all of our business incidents** of potential non-compliance
relationships. Our Code of Ethics under- (2015:33, 2014:30, 2013:36). These
pins this, as does building awareness, investigations led to action in 26 cases
providing education and maintaining (2015:25, 2014:18, 2013:18) of which 11
a no-gift policy. We accept no gifts of were terminations and 15 were warnings.

any form from any business partners, This included both colleagues and busi-
regardless of value. This keeps everyone ness partners. We currently have 11 open
objective when doing business on behalf cases that are still under investigation.
of the H&M group. We have an open-door Investigations were conducted based on
policy for reporting any violations of the direct reports from our busness partners open-door policy, complaint procedure as conflicts of interest and theft. There
Code of Ethics. and employees who made use of our and whistleblowing instruments. Most of were no public legal cases regarding
the cases concerned corruption, requests corruption brought against the company
HOW WE REPORT
* All employees with the exception of our sales advisors. ** Please find an independent assurance statement related to for money and personal favours as well or any employees in 2016.**
GRI Standard disclosure 205-3 on p. 119.
ABOUT THE H&M GROUP
VISION & STR ATEGY

classroom or online training on the Code For business partners
of Ethics. The training provides a deeper

understanding of the Code, including All of our business partners sign our
how it relates to daily work and how it Code of Ethics. Partners include any
helps employees know how to act when business that supplies us with goods
representing the H&M group in a busi- and/or services, acts on behalf of our
ness context. To further extend this business or has a collaboration with
training, in 2016 we launched both a us. Partners include suppliers, vendors,
new e-learning module and a three-hour consultants, landlords, agents, service
Dilemma Workshop. The latter involves providers and organisations. To date,

hands-on practical examples of ethical 100% of our commercial goods suppliers,
dilemmas that managers, HR and pur- our biggest group of business partners,
chasing staff could encounter. So far, we have signed our Code and received dedi-
have trained about 25 ‘master trainers’, cated training.
who will now train and support other
trainers throughout our operations. We provide training on the Code of Ethics
Thus far, 50% of concerned employees for all new commercial suppliers. This
have taken the new e-learning course. training focuses on our zero tolerance of
bribery and corruption, gifts and hospi-
100% FAIR & EQUAL

We follow up on reported incidents tality as well our position on confidential
thoroughly. If a violation is reported, information and compliance.
For employees from employment agencies (and simi- the security department will start an
lar) to sign our CoE. To maintain this investigation. Anyone who deliberately
Our Code of Ethics (CoE) is the same process in a systematic way, signing the violates the Code of Ethics will receive a
around the world and is translated Code of Ethics is routine procedure when warning and can, in serious cases, lose

into all languages in the H&M group. entering new employment contracts. The their employment.
It secures our position and makes it Code includes guidance on advantage
clear what we expect from employees (i.e. taking bribes or gifts), conflicts of As above, we have a whistleblowing
when doing business on our behalf. It interest, confidential information and procedure in place whereby potential
is mandatory for our Board of Direct- company assets. breaches can be reported confidentially,
ors and senior executives, as well as anonymously and without any risk
all employees in contact with business We also make it mandatory for employ- of reprisal.
HOW WE REPORT
partners, in-house consultants and staff ees who sign the CoE to undergo either
ABOUT THE H&M GROUP
VISION & STR ATEGY

Our Sustainability Commitment
We launched our Sustainability Commit- Compliance with the law is fundamental Our Sustainability Commitment is
ment (SC) on 1 February 2016. It replaced for all businesses, but with our Sustain- complemented by the SIPP, our Supplier

our Code of Conduct, which had been in ability Commitment we are saying ‘it Impact Partnership Programme. The
place since 1997. With the SC, we want doesn’t stop there’. To be successful in SIPP supports suppliers in improving
to take our work to support our business the future, we must continuously push their sustainability performance and
partners and their sustainability work to beyond compliance to more aspirational helps us monitor and measure suppliers’
the next level. We want to move beyond improvements. That is why our SC has compliance against the fundamental and
compliance and promote sustainability two levels of performance: fundamental aspirational levels and assess the level
performance at our suppliers and further and aspirational. of implementation of our Sustainability
down the supply chain. The SC is shared Commitment.

by all brands within the H&M group and The fundamental level is the basic com-
everyone who has a business relationship pliance level that we expect all business
with us must sign it if they want to start partners to meet. The aspirational level
or continue working with us.* demonstrates where we want to go in the
long term through constant improve-
Over the years, the scope of sustainabil- ments and shows that compliance with
ity issues has grown and with that, so legal requirements is only the first step
has our sustainability work. The Sus- in creating a sustainable business. In our
tainability Commitment clearly commu- performance evaluation, we will reward
100% FAIR & EQUAL

nicates all of the areas we are committed business partners that commit to and
to work on to make our supply chain meet their aspirations.
more sustainable. It also expresses how
the H&M group wants to work together The three major focus areas of our
with all of our business partners to Sustainability Commitment are:
advance sustainability when it comes to

healthy workplaces, healthy ecosystems – Healthy workplaces
and animal welfare. We want to grow – Healthy ecosystems
with business partners who share our – Animal welfare
values and are willing to work transpar-
ently with us to improve their social and
environmental performance.
* We require all commercial business partners, both new and existing, to sign and comply with the SC. As of 1 February 2016, all
HOW WE REPORT
new non-commercial and service business partners are required to sign the SC. Our existing long-term non-commercial business
and service partners are required to sign the SC when they renew their contracts.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Supporting our business partners

The SIPP is our Sustainable Impact formance because we believe it is the ner. This component of SIPP is closely
Partnership Programme. We started
using it in 2015 to support our business
best way to achieve long-lasting and
sustainable change. The SIPP empow-
linked with SAC’s Higg facility mod-
ules. We were one of the first brands to
96%
OF FACTORIES ASSESSED
partners to become more environmen- ers our business partners to do this. incorporate the Higg facility modules**
BEFORE 1st ORDER PLACEMENT
tally and socially sustainable. The SIPP (both environmental and social) into
represents a shift from a relationship
that is focused on compliance to one
We use the SIPP to follow up on our
business partners’ implementation
our supply chain. The main advantage
of this is that all brands can use them, 1,194

that is about dialogue, collaboration of both levels of our Sustainability so business partners only need to com- MINIMUM REQUIREMENT
and progress towards shared long-term Commitment – compliance and aspi- plete one assessment rather than sev- ASSESSMENTS PERFORMED AT
goals. By working together, we can drive ration.* We share the expectations and eral brand-specific ones. This makes FIRST TIER MANUFACTURING AND
positive impact in the value chain. guidance that will help our business factory assessments fairer and more PROCESSING FACILITIES
partners aspire beyond meeting the comparable, regardless of the brand.
We use the SIPP to assess the sustain-
ability performance of our business
requirements of local laws and interna-
tional conventions. HOW WE WORK WITH THE SIPP
459
DESKTOP VALIDATIONS
partners and to identify ways to support We use the SIPP to ensure a ‘minimum
them. The programme brings together When they ‘take ownership’, business requirement assessment’, which we
1,247
100% FAIR & EQUAL

our leadership principles of trans- partners set their own goals, priorities physically carry out before starting a
parency, innovation and reward. It is and focus areas. They provide us with relationship with a business partner, ONSITE VALIDATIONS
designed to reward the extra mile, drive self-assessment data and then act on and then repeat when a facility is visited
business partner ownership of sustain- the results. We work with them to iden- as part of our programme (see Becoming 80%
ability, encourage performance beyond tify areas where the H&M group can a H&M group business partner on OF FACTORIES ASSESSED
compliance and show how sustainabil- best provide support through, for exam- p. 103). ACCORDING TO THE SIPP

ity can drive business performance. ple, capacity building and training. METHOD 2016*
A facility is approved after it meets the
EMPOWERING BUSINESS PARTNERS Our business partners self-report minimum requirement assessment.*** *Above numbers are until 30 November 2016
(our sustainability reporting period), however our annual
We want our business partners to take through the SIPP and we validate the Its sustainability performance is then assessment period only ended on 31 December 2016.
ownership of their sustainability per- results and give them back to the part- self-assessed annually. Its overall
*Our Sustainability Commitment replaced our Code of Conduct in 2016 and is signed by all of our commercial business partners. **The Higg facility module is part of the Higg Index suite of self-assessment tools which also includes brands and product
modules. The facility module is used by manufacturers to measure social and environmental performance in their facilities. ***‘Fundamental requirements’ and ‘minimum requirements’ are similar, but not the same – the former expects a slightly higher
HOW WE REPORT
level or performance than the latter. We will use the term ‘minimum requirements’ to be consistent throughout the rest of this report.
T H E H & M G R O U P S U S TA I N A B I L I T Y R E P O R T 2 0 1 6 1 0 0 O F 1 24
ABOUT THE H&M GROUP
VISION & STR ATEGY

performance and country risk assess- As described above, we use the Higg

ments, amongst other indicators, facility modules in our SIPP assess-
will help us to determine the level ments. Although these modules are up Sustainable Impact Partnership Programme
of validation that is needed for each and running, they are still in develop-
factory. For high-risk and new business ment. Therefore, for now, we include
partners, we perform an onsite check some of our own sustainability perfor- SUSTAINABILITY
at least once a year. If the business mance (KPI) questions in the assess- INDEX
partner is low risk (i.e. they achieved ment to provide a more comprehensive
a high score on the audit), a ‘desktop and balanced review.

validation’ is usually sufficient. This ADDITIONAL
involves checking data and paperwork OUR SUSTAINABILITY INDEX KPIs
for anomalies and inconsistencies. We One of the outputs of this assessment
assess each business partner’s capacity is our Sustainability Index (SI). Each
to both manage their sustainability factory is given an SI score between CAPACITY
issues and track actual performance 0 and 100 (based on the Higg facility BUILDING
using environmental and social sus- module and our own KPIs) and is then
tainability metrics. ranked according to their environ-
mental and social sustainability
100% FAIR & EQUAL

We have rolled out the SIPP to all of performance. HIGG FACILITY
our manufacturing and processing MODULE
business partners. These units have Since we are currently updating this,
performed self-assessements or joint we are unable to share aggregated SI
assessments, and we have validated scores in this year’s report. However,
the results via desktop and/or onsite as we receive scores, we will com-

visits. For second tier suppliers, we municate and further integrate them
have conducted joint assessments on into our purchasing decisions.
the component units producing 56%
of our production volume. These joint CAPACITY BUILDING THROUGH SIPP
assessments are done with our busi- Our presence and purpose in our sup-
ness partners to educate and create
ownership.
pliers’ factories goes far beyond assess-
ment. Through the SIPP, the H&M
Sustainability Commitment
HOW WE REPORT
ABOUT THE H&M GROUP
VISION & STR ATEGY

group also provides capacity building, term business partner relationships

workshops, training and management that are characterised by trust and
systems analysis. Our suppliers are also transparency.
in contact with other functions at our
production offices such as our merchan-
dising and quality departments.
Through these relationships, we

encourage our suppliers to develop

their own strategies and solutions to
challenges, as well as providing incen-
tives to shift impacts from negative to
positive ones. This regular presence
helps us build long-term mutually
rewarding partnerships.
HOW WE REWARD OUR BUSINESS

PARTNERS
100% FAIR & EQUAL

We systematically reward suppliers
with sustainability ambitions and good
performance with long-term business
commitments and growth opportu-
nities. And we offer our best business
partners strategic partnerships, which

bring mutual benefits such as joint
capacity planning up to five years in
advance. We have over 3,000 of our
colleagues in 21 production offices
around the world maintaining close
relations with our business partners.
Their focus is on building strong, long-
HOW WE REPORT
Monki.
ABOUT THE H&M GROUP
VISION & STR ATEGY

Becoming a H&M group business partner

ONBOARDING SELF- OR JOINT-
NEW SUPPLIERS FACTORY DUE DILIGENCE PROCESS BEGINS ASSESSMENT WITHIN
NEEDED IDENTIFIED CHECK Becoming a H&M group supplier AGREED TIMELIN E
VERIFICATION OF
SELF-ASSESSMENT
THROUGH ONSITE
All minimum
requirements met? AND/OR DESKTOP
VALIDATION

Check includes: Signing of Sustainability
— a ssessment of Commitment, Code of
country risks Ethics and others
– environmental risks
– social risks Full-day sustainability
— building safety training on our:
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— legal checks — policies
— quality of output — requirements
— capacity check — issues
—m inimum requirement — processes
assessment (incl. onsite
check and validation) Full self- or joint- ASSESS AND SUSTAINABILITY
assessment within MONITOR INDEX SCORE

an agreed timeline Follow up
Monitor progress
Minimum Continuous support
requirements
not met? DRIVING CHANGE
Create ownership
Develop plan of action
Provide support through capacity
End building programmes
HOW WE REPORT
ABOUT THE H&M GROUP
VISION & STR ATEGY

Stakeholder interview with our business partner

How long have you been a H&M group fully elected worker representatives and the importance of sustainability and how
partner? know how to approach them with problems. social dialogue is a part of this. We have
We started processing some partially In the long run, our factory will become a growing understanding of sustainability
prepared products back in 2000, so we’ve more productive, which will increase our issues and this approach is starting to
been working with the H&M group for 16 profits and drive down costs. spread throughout our factory. Although
years. Today, between 70% and 80% of we make mistakes, we know the H&M
our total output is specifically produced How do you think this will help you in group will help us understand how to

for the H&M group brands. the future? correct them ourselves, so that we can
The H&M group is helping us understand continue to be partners for a long time.
What value does social dialogue bring
to your factory?
Social dialogue facilitates communication
between workers and managers and the
H&M group has helped us see the value
of this. Social dialogue leads to increased
profit margins, customer satisfaction and
100% FAIR & EQUAL

happier, more productive and loyal employ-
ees. Through communication, we are learn-
ing how to solve problems together.
How has the H&M group supported you

Lu Yue Hua. in achieving this?

The H&M group provided lots of training for
our workers to help them understand their
Name Lu Yue Hua responsibilities and their rights, and how
Title General Manager social dialogue can help them. The H&M
Organisation Suzhou Wanli group also arranged for third-party consult-
Knitting Co., Ltd, a supplier to ants to visit our factory and give onsite guid-
the H&M group ance. As a result, our workers have success-
HOW WE REPORT
ABOUT THE H&M GROUP
VISION & STR ATEGY

Animal welfare and material ethics
We believe that animals are entitled to tionships further down our supply chain
humane treatment and to having their including the farm level to make sure our

basic needs met. Our Animal Welfare Pol- supply chain is ready for responsible wool
icy outlines our responsibility to source standard certification.
animal-based raw materials in a way that
meets tough requirements and is fully We also train our suppliers in our animal
traceable. All of our suppliers must meet welfare and material ethics policy – both
high standards of animal husbandry and as part of the onboarding process, and
fulfil our animal welfare requirements. through refresher courses. We conduct
random bi-monthly checks to ensure that

Our Sustainability Commitment requires compliance and traceability documen-
all relevant suppliers to follow our tation is being collected and verified for
animal welfare and material ethics each order.
requirements. Any product that involves
animal-based materials and merchandise
must follow a checklist of strict routines
and instructions to ensure that the policy
is being followed. We regularly train any
merchandisers that work with suppliers
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when it comes to compliance and trace-
ability documentation. For example, we
have introduced the new wool standard
to our supply chain and established rela-

“ We believe that animals are entitled
to humane treatment and to having
”
their basic needs met.
HOW WE REPORT
ABOUT THE H&M GROUP
VISION & STR ATEGY

Chemical restrictions
Our chemical restrictions are, as a
minimum, always based on the highest

legal standard in any of our sales coun-
tries, as well as on information from
authorities, NGOs and scientific reports.
Our Restricted Substances List is one of
the most comprehensive in the apparel
industry.
We have separate restriction lists for our

various product groups. These include
packaging, apparel, cosmetic products,
candles, aerosols and toys. Our Man-
ufacturing Restricted Substances List
(MRSL) focuses on chemical use in
factories. The Restricted Substances List
(RSL) is focused on chemicals found in
finished products. We have conducted
nearly 44,500 chemical tests together
100% FAIR & EQUAL

with our business partners to ensure including our MRSL and RSL. This
compliance with our RSL. means it is the supplier’s responsibility
to assure compliance with our restric-
In line with our ambition to imple- tions and we expect our suppliers to
ment a clean factory approach (i.e. zero implement it into their supply chain and
discharge of hazardous chemicals) in with subcontractors.

our supply chain by 2020, we will guide
and support our facilities in phasing out Read more on p. 48 and online here.
restricted chemicals used in production For more details on other sustainability
by setting up specific timelines. policies and/or standards visit our web-
site at sustainability.hm.com.
When suppliers sign our Sustainability
Commitment, they are also committing
HOW WE REPORT
to comply with our chemical restrictions,
ABOUT THE H&M GROUP
VISION & STR ATEGY

Social policies
We are present in many markets around status of at least 85% compliance
the world. We are expanding rapidly and annually with safety and security in

recruiting new employees every day. Our our stores.
success depends on our people.
The 2017 goal for the global store audit,
Our social policies, such as our Global which consists of safety, loss prevention
Policy on Diversity, Inclusiveness and and information security, is 85% compli-
Equality and our Global Non-Dis- ance. In 2016, we completed 8,930 store
crimination and Harassment Policy, audits and the global store audit result
are founded on our respect for human was 85%. The safety area result of the

rights and on UN and ILO conventions, global store audit was 87% compliance
amongst others. They set the minimum across all stores and brands. We have
expectations for the H&M group and identified employee training as the area
complement our company values. These with most opportunity to improve our
policies contain clear directions that help compliance rates. Training our employ-
managers and employees to meet daily ees includes how to work safely, prevent
business needs, understand how to work losses and comply with local legal safety
and act towards business partners and training demands and we are working
create fair and equal working conditions with HR to improve this further in 2017.
100% FAIR & EQUAL

in safe and healthy workplaces.
Our global policies set the minimum

standard regardless of local legislation
where we operate. Whatever gives the
greatest protection for all colleagues is

always the guiding principle.
Global Security Policy

The H&M group must be a place where
customers and colleagues feel safe and
HOW WE REPORT
our goal is to achieve a yearly compliance Monki.
ABOUT THE H&M GROUP VISION & STR ATEGY 100% LEADING THE CHANGE 100% CIRCUL AR & RENEWABLE 100% FAIR & EQUAL STANDARDS & POLICIES
HOW WE REPORT
1 0 8 O F 1 24
H&M Home.
HOW WE
REPORT
ABOUT THE H&M GROUP
INTRODUCTION / MATERIALITY MATRIX / OUR SALIENT HUMAN RIGHTS ISSUES / SUSTAINABLE DEVELOPMENT GOALS / ENGAGING WITH OUR STAKEHOLDERS / AUDITOR REVIEW STATEMENT / AWARDS & RECOGNITION
How we report
VISION & STR ATEGY

Introduction
We are committed to transparent report- All data is collected by our sustaina- to inherent uncertainties due to and factories that were active and
bility team from the relevant func- incomplete scientific knowledge approved for production during the

ing on the progress we make towards tions within our organisation and used to determine emission factors reporting period. Factories included
meeting our sustainability strategy. from external parties such as suppli- and resulting effects on measure- in our scope are first tier manufac-
ers or implementing partners. This ments and estimations. The reported turing or processing (i.e. washing or
data is always reviewed by our inter- energy usage is based on invoiced dyeing), factories that are owned or
The H&M group’s Sustainability Report is pro- nal controlling team, relevant experts data, data from real-time electric- subcontracted by our suppliers, and,
duced annually and covers our material sustain- in our sustainability team and expert ity meters and data as reported by where stated, selected second tier
ability strategies, challenges, activities, goals and functions following a two-tier quality transport providers. Conversion suppliers and suppliers for non-com-
performance for the global group operations of control principle. Any extrapolations between fuel usage and energy mercial goods (such as store interior

H&M Hennes & Mauritz AB (also called the H&M or estimations are clearly indicated. content has been done using energy suppliers). The second tier suppliers
group in this report), including all its brands The same goes for any changes in values specified by the supplier or we have selected so far are mostly
(H&M, H&M Home, COS, Weekday, Monki, Cheap data methodologies or scope that may by using tabled values provided by fabric and yarn suppliers that account
Monday, & Other Stories), as well as its wholly- or influence data comparability. national bodies. for about 56% of our products.
partially-owned subsidiaries globally during our
financial year from 1 December 2015 to 30 Novem- All data is based on the best possible Our material reporting requires Monetary amounts are reported
ber 2016, unless stated otherwise. (For a full list systems that are currently available us to make assumptions on waste mainly in the currency of transaction
of entities, please see our Annual Report 2016). to us, and where applicable aligned factors, weight per sizes, etc. We are (usually SEK). Additional currency
with recognised standards. However, continuously working to improve values are conversions as approxi-
100% FAIR & EQUAL

We aim to address key impacts (positive and neg- this needs to be seen in the light of those aspects of reporting that may mate figures based on the conversion
ative) across our value chain, and this is reflected continued improvements in data sys- lead to minor updates in our yearly rate on 30 November 2016, unless
in our reporting wherever possible. Information tems, methodologies and scientific material consumption reporting. For stated otherwise.
limited in scope to only one of these brands or uncertainties. For example, while this year, the material data has been
any other limitations or deviations in scope are our GHG emissions accounting and restated due to the fact that histor- Additional information is provided
clearly stated in the respective section of this reporting is aligned with the GHG ical data has been updated using a at sustainability.hm.com and in our

report. Unless stated, franchise operations are not Protocol, the emission factors we use new, more detailed system. We are financial and corporate governance
included. The report was reviewed by the highest are from publicly available sources continuously working to improve our reporting. Our most recent sustain-
executive management and external assurance such as the International Energy data systems and accuracy to report ability report was published in April
has been performed for selected indicators (clearly Agency (IEA), the Network for Trans- on material consumption. 2016.
marked where applicable, as well as in regards to port Measures (NTM), Reliable dis-
materiality and stakeholder engagement). Addi- closure system for Europe (RE-DISS) Unless otherwise specified, all data We are signatories to the UN Global
tional stakeholder comments and interviews have and supplier specified emission concerning suppliers and supplier Compact and our annual Sustain-
HOW WE REPORT
been included throughout this report. factors. GHG emission data is subject factories includes all suppliers ability Report also serves as our
ABOUT THE H&M GROUP
How we report
VISION & STR ATEGY

Communication on Progress (COP) for supplement this for human rights with Report was based on the following steps: sions), as well as social and environmen-
the UN Global Compact as well as the the identification of our salient human tal impacts (weighted x1) and importance

CEO Water Mandate. rights issues, based on an understanding 1. Identification: Mapping aspects to business strategy (weighted x2) (to
of risk to people. This process to define and creating a gross list determine the significance of economic,
GLOBAL REPORTING INITIATIVE (GRI) our salient human rights issues was We regularly update a gross list of environmental and social impacts).
This report is prepared in accordance comprehensively conducted in 2015 and aspects based on an analysis of external Scores were given by at least two inter-
with the GRI Standards: Core Option. included many internal and external standards, such as the GRI Standard nal experts per category and were based
We have additionally included material stakeholders. Going forward, we plan topic list, legislation, investor and on lifecycle assessment (LCA) data and
indicators from the pilot of the Apparel to conduct this comprehensive process NGO questionnaires, peer reviews, existing strategy documents.
and Footwear Sector Supplement. every third year, or as deemed necessary. business intelligence, lifecycle assess-

The detailed GRI index can be found Annually, we will review the relevance ment results, stakeholder dialogues and During 2016, we reviewed the gross list
at hm.com/gri. and definitions of the issues identified stakeholder reports, and media cover- and added further aspects based on the
and discuss additional emerging issues. age. The gross list has been checked analysis described under step 1, which
UN GUIDING PRINCIPLES REPORTING against GRI’s Sustainability Context were also in line with our new sustain-
FRAMEWORK PROCESS FOR IDENTIFYING THE and Stakeholder Inclusiveness tests. ability strategy. We reviewed previous
In 2015 we were one of the first compa- MOST MATERIAL TOPICS AND THEIR scoring for several aspects based on feed-
nies in the world to report on human BOUNDARIES* 2. Prioritisation: Scoring and back received from external and internal
rights in line with the UN Guiding Princi- During 2016, we aligned our materiality prioritising topics** stakeholders as part of the development
ples Reporting Framework. This frame- matrix with our new sustainability strat- To prioritise the most material topics process of our new sustainability strat-
100% FAIR & EQUAL

work is the first comprehensive guidance egy. We developed this strategy in close from this gross list, we scored the differ- egy. In this way, about 17 topics were
for companies to report on human rights dialogue with external and internal key ent aspects in regards to their influence identified as material. For the sake of
issues in line with their responsibility stakeholders and updated our previous on stakeholder assessment and decisions, user friendliness, these were themati-
to respect human rights set out in the materiality matrix with key takeaways and their significance for economic, envi- cally clustered into 26 focus areas and
UN Guiding Principles on Business and from this process. We reviewed scores ronmental and social impacts. Both cat- gathered in a materiality matrix on
Human Rights. The detailed references provided for all relevant aspects and egories were broken down into a number p. 112. In line with our new strategy,

to the UN Guiding Principles Reporting added several new aspects to our materi- of different categories, such as frequency some material topics were re-grouped
Framework can be found at sustainabil- ality assessment. In line with our strate- raised by key stakeholders (weighted x3), in these focus areas. Some new material
ity.hm.com gic ambition to take a leadership position frequency featured in media (weighted focus areas were identified, and some
on sustainability, we also expanded the x1) and frequency raised in key sustaina- previously identified ones underwent
Below, we set out our approach to boundaries for some aspects. This scor- bility benchmarks, rankings and indices minor adjustments. The impact scoring
assessing the materiality of sustainabil- ing process to define the report content (weighted x1) (to determine the influence and boundary descriptions were checked
ity issues for our business and how we and the aspect boundaries from our 2016 on stakeholder assessment and deci- against the GRI’s reasonability tests.
HOW WE REPORT
* Please find an independently verified assurance statement on defining report content and topic Boundaries GRI 102-46. ** Please find an independently verified assurance statement on list of material topics GRI 102-47 on p. 119.
ABOUT THE H&M GROUP
How we report
VISION & STR ATEGY

3. Regular review of our materiality One new topic named ‘supply chain trans-
matrix with key stakeholders* parency’ has been added. Throughout

We conducted a broad validation of our this process, we have used the principles
matrix and assessment process in 2013. of defining report content in order to
We selected at least one representative secure a robust process.
from each of our key stakeholder groups
(which includes customers, colleagues, REVIEW OF MATERIALITY MATRIX
communities, suppliers and their IN 2016
employees, industry peers, NGOs, IGOs, We gathered feedback on our 2015
policymakers and investors). Eleven sustainability report from various

stakeholder representatives were asked stakeholders. This included a review of
to provide feedback on this materiality the materiality matrix and no objections
matrix. These organisations were chosen or concerns were raised. Through close,
based on their expertise, their ability regular dialogue with our stakeholders,
to make professional and critical judge- and as part of the process for developing
ments and on the coverage of aspects our new sustainability strategy, we
that were potentially material. have incorporated additional forward-
looking strategies and priorities into
While updating our sustainability our matrix. For 2017, we plan to conduct
100% FAIR & EQUAL

strategy, we also adjusted our materiality more stakeholder surveys, helping us to
matrix based on feedback from internal further validate our materiality assess-
as well as external stakeholders involved ment and further integrate stakeholder
in this process. The feedback widely feedback in our strategy development
confirmed the material topics presented, and decision-making processes.
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.
HOW WE REPORT
Weekday.
*Please find an independently verified assurance statement on stakeholder engagement on GRI 102-40 and 102-44.
ABOUT THE H&M GROUP
How we report
VISION & STR ATEGY

Materiality matrix
AMBITION OUR FOCUS OUR IDENTIFIED TOPICS GRI STANDARD & OWN DISCLOSURES REPORTED
REPORTED AT LEAST IN NARRATIVE, MATERIAL TOPICS REPORTED IN DETAIL, WHEREVER AREAS AREAS
WHEREVER POSSIBLE WITH MEASURABLE KPI POSSIBLE WITH MEASURABLE KPI OR PREFERABLY GOAL,
PROMOTE AND

AIM FOR EXTERNAL ASSURANCE WHEREVER USEFUL 100% 1. Promote and scale innovation
SCALE INNOVATION
LEADING THE
CHANGE 2. S upply chain transparency &
DRIVE General disclosures (GRI 102), supplier environmental assessments (GRI 308),
21 traceability (incl. consumer
TRANSPARENCY supplier social assessments (GRI 414), GRI-AF1-10
15 12 access)
18
1 REWARD SUSTAIN- 3. R eward sustainable actions Rewarding sustainable behaviour of business partners and customers
ABLE ACTIONS amongst suppliers
2 4
4. R ecycled and sustainably Materials (GRI 301), list of environmentally preferable materials used in apperal
13 8 sourced materials and footwear products (GRI-AF19)
3
5. Animal welfare Animal welfare
14 100%
10 11
7 CIRCUL AR & 6. Water Water (GRI 303), wastewater quality (own disclosure)

5 RENEWABLE 100% CIRCUL AR
Customer health & safety (GRI 416), practices to source safer alternative substances
F R E Q U E N CY R A I S E D BY S TA K E H O L D E R S
7. Chemical management to those one the restricted substances list (GRI-AF19)

6
8. Garment collecting Tonnes of garments collected for reuse and recycling (own disclosure)
9. Waste Effluents and waste (GRI), recycling systems stores (own indicator)
10. Climate Emissions (GRI 305)

100% RENEWABLE
11. Energy Energy (GRI 302), Renewable energy (GRI-AF21)
17
Human rights assessment (GRI 412), non-discrimination (GRI 406, UNGPRF),
child labour (GRI 408, UNGPRF, GRI-AF12), forced or compulsory labor (GRI 409,
16 12. Human rights UNGPRF), harassment (UNGPRF), actions to address gender discrimination and to
22 20 provide opportunities for advancement of women workers (GRI-AF32), land rights
(UNGPRF), supply chain workers health & safety (UNGPRF)
100% FAIR & EQUAL

9
100% Freedom of association and collective bargaining (GRI 407, UNGPRF), percentage
23 13. Industrial relations of workplaces where, in the absence of a trade union, there are worker-manage-
FAIR & EQUAL FAIR JOBS FOR ALL ment commitees (GRI-AF30)
24 19
Employment (GRI 401), labour/management relations (GRI 402), occupational health &
14. Fair jobs safety (GRI 403, UNGPRF), training and education (GRI 404), supplier social assessment
(GRI 414), working hours policy (GRI-AF26), fire and building safety (own indicator)
26 25
Fair living wages in supply chain, policy and practices on wage deductions that
15. Fair living wages are not mandated by law (GRI-AF25), worker representation (own disclosure)

Diversity and equal opportunity (GRI 405), non-discrimination (GRI 406, UNGPRF,
STEWARDS FOR 16. Diversity & inclusiveness GRI-AF32), maternity rights (GRI-AF11), gender discrimination (GRI-AF13)
DIVERSITY AND
INCLUSIVENESS
17. Community development Local communities (GRI 413)
Supplier environmental assessment (GRI 308), supplier social assessment

18. Supply chain assessments (GRI 414), human rights assessments (GRI 412, UNGPRF)
STANDARDS
& POLICIES 19. Anti-corruption Anti-corruption (GRI 205), public policy (GRI 415)
NO REPORTING REPORTED AT LEAST IN NARRATIVE, 20. Responsible marketing Marketing and labelling (GRI 417 )
OR REPORTING ON REQUEST WHEREVER POSSIBLE WITH MEASURABLE KPI
21. Economic performance Sales growth and profitability (own indicator)
HOW WE REPORT
S I G N I F I C A N C E O F E C O N O M I C , E N V I R O N M E N TA L A N D S O C I A L I M PA C T S Other identified non-material topics 22. Packaging, 23. Market presence, 24. Biodiversity, 25. Env expenditure, 26. Anti-competitive behaviour
ABOUT THE H&M GROUP
How we report
VISION & STR ATEGY

Our salient human rights issues
The H&M group conducted a thorough tions were held with experts, organisa-
process of identifying its salient human tions, academia and local stakeholders.

rights issues in 2015. Salient human This process does not only guide us
rights issues are the human rights at on the human rights issues relevant
risk of the most severe negative impact to report on according to the UNGP’s
because of our operations and sup- Reporting Framework, it also informs
ply chain. This process supplements our strategies and work to address these
our materiality analysis in the area of issues going forward. To ensure our list
human rights, with an understanding of salient human rights issues remains
of risk to people. relevant, we will review these issues

annually, and the full process, including
We started out by defining who we input from external stakeholders, will
impact through our business activities be conducted approximately every three
throughout our value chain, especially year, or more frequently if necessary.
recognising those who potentially are While we take steps to mitigate all risks,
more vulnerable and hence are more at salience guides us in what to focus on
risk, such as migrant workers, women within human rights and hence informs
and children. The result of this mapping our strategies and work.
was a list of both potential and actual
100% FAIR & EQUAL

human rights impacts. From this list, The most recent review took place at
we identified those which were salient the end of 2016 and resulted in slightly
by applying two criteria: the severity of adjusted definitions on for example
the potential impact and the likelihood social security, highlighting that we
that this impact will occur. refer to social security linked to employ-
ment. We also expanded child labour to

Consultations regarding the method the broader children’s rights, due to the
and input to the identified salient various ways our activities directly and
human rights issues were held (both indirectly impact children, while still
internally and externally) with almost recognizing child labour as an issue of
100 people. Internally, consultations great severity.
were held through workshops and dia-
logues on all levels of the company and
HOW WE REPORT
across functions. Externally, consulta-
ABOUT THE H&M GROUP
How we report
VISION & STR ATEGY

Update on salient issues 2016

WHERE IN THE VALUE CHAIN THE ISSUE IS EXAMPLES OF ACTIONS 2016 AND WHERE
SALIENT HUMAN RIGHTS ISSUES
A MORE PROMINENT RISK TO FIND MORE INFORMATION
FAIR LIVING WAGE
A wage level covering workers and their families’ basic needs and provides We take a collaborative approach to improving wages in the garment industry and continued to drive and
Mainly in the supply chain.
some discretionary income. advance our Fair Living Wage strategy, see p. 76. Link to goals, actions and results in 2016, see pp. 68–69.

HEALTH AND SAFETY
Compliance figures and management system scores of SIPP (see link: sustainability.hm.com). Review, revision and
Working conditions that ensure the well-being and safety of workers
In the supply chain and internal operations. update of our Global Health & Safety Policy, p. 73. Continued engagement in the Accord in Bangladesh, p. 81 and
and employees.
bangladeshaccord.org.
FORCED LABOUR
100% FAIR & EQUAL

Modern Slavery Statement for the financial year 2015/2016 (go to sustainability.hm.com for full statement).
Continued engagement in the ETI initiative addressing exploitative labour practices in Tamil Nadu in India – especially
targeting the Sumangali Scheme, see p. 80. Joined the AMCO, Amsterdam Coalition – an initiative to engage in
All work or services that are exacted from any person under the menace Potential risk in the supply chain, often linked to specific raw materials
addressing Sumangali Scheme in India, see p. 80. Conducted a modern slavery gap analysis (see link: Modern
of any penalty and for which the said person has not offered himself/herself and processes but also a potential risk connected to internal operations,
Slavery Statement). Updated our annual Production Human Rights Due Diligence Process, see p. 93. Updated our
voluntarily (ILO Convention 29) for example, in connection to staff outsourcing.
Material Risk Assessment for new and existing materials, see p. 80. Internal training on modern slavery held by
the ETI, see p. 80. Continued ban on Uzbekistan, Turkmenistan and Syrian cotton, see p. 91. Continued engagement
in the Better Cotton Initiative, see p. 48.

DISCRIMINATION AND HARASSMENT
In hiring and/or in the workplace – Discrimination: unfair or humiliating treat-

ment on the grounds of gender, sexual orientation, race, colour, age, preg- A risk in the supply chain, where, for example women’s rights are of great Updated our Global Diversity, Inclusiveness and Equality Policy. Introduced the minimum requirement on policy
nancy, marital or social status, religion, political opinion, nationality, ethnic importance to recognise due to the large share of women in the garment regarding anti-discrimination in recruitment and anti-discrimination/harassment/abuse for business partners of
origin, disease or disability. Harassment: humiliating or corporal punishment industry. Also of great importance for own operations. commercial goods. See p. 84 and our supplier compliance site.
or subject to physical, sexual, psychological or verbal harassment or abuse.
HOW WE REPORT
ABOUT THE H&M GROUP
How we report
VISION & STR ATEGY

Update on salient issues 2016

WHERE IN THE VALUE CHAIN THE ISSUE IS EXAMPLES OF ACTIONS 2016 AND WHERE
SALIENT HUMAN RIGHTS ISSUES
A MORE PROMINENT RISK TO FIND MORE INFORMATION
CHILDREN'S RIGHTS
The rights of children as per the UN Convention on the Rights of the Child
Myanmar project with CCR CSR on child labour, see p. 81. Continued engagement in the Better Cotton Initiative,
(UNCRC), which sets out the civil, political, economic, social, health and Children are directly and indirectly impacted by business activities
BCI. Link. Conducted a comprehensive assessment on mica in cosmetic products to support strategy development
cultural rights of children. Child labour is defined as work that deprives children throughout the value chain. Child labour is a potential risk in the supply
and our approach to mica and the likely risk of child labour associated with mica production in India, p. 81.

of their childhood, their potential and their dignity, and that is harmful to chain, especially in connection to specific raw materials.
Updated our Materials Risk Assessment for new and existing materials. See our Child Labour Policy.
their physical and mental development (UN CRC, CRBP, ILO Conventions).
FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING
We take a collaborative approach to achieving well-functioning industrial relations through a Global Framework
A person’s right to join, and/or form, organisations of his/her own choosing Agreement with IndustriALL and IF Metall, which was renewed in 2016. Continued to drive and advance our
Mainly in the supply chain but also relevant for own operations.
and to bargain collectively (ILO Convention 87, 98, 135, 154). Industrial Relations Strategy, including advocacy efforts in production markets like Bangladesh and Cambodia,
see p. 75. We also have a Global Framework Agreement with UNI Global Union.
SOCIAL SECURITY
100% FAIR & EQUAL

Continued to address the issue of short-term contract in Cambodia to pave the way for undetermined duration
Mainly an obligation belonging to the responsibility of the State as defined contracts that will improve access and coverage of social security and increase the likelihood of workers organising
Social security involves access to health care and income security, particularly
by the UN Guiding Principles, but relevant especially in supply chain countries and engaging in unions to negotiate conditions, see p. 80.
in cases of old age, unemployment, sickness, invalidity, work injury, mater-
and some retail markets, where lack of legal frameworks or institutional
nity or loss of a main income earner.
capacity sufficiently addressing this issue is common. Ensuring work permits for Syrian refugees in Turkey, entitling them to the same social security as Turkish workers,
see p. 80.
WORKING HOURS

Working hours that comply with national law, the ILO conventions or
Mainly in the supply chain countries due to high prevalence of overtime Continuously monitored through our supplier assessment programme SIPP and linked to, and addressed through,
collective agreement, whichever affords the greater protection of the
in the garment industry. our Fair Living Wage strategies. See p. 76 and supplier compliance site for compliance figures and data.
worker. Connected to the workers’ right to health and family life.
ACCESS TO WATER
Safe water and enough supply, accessible and affordable for personal Addressed through our work with water in our Water Stewardship programme, see p. 49. Apart from continuous
Communities in both production and retail markets.
and domestic use. implementation of this strategy, no further actions were taken in 2016.
HOW WE REPORT
ABOUT THE H&M GROUP
How we report
VISION & STR ATEGY

Sustainable development goals
The UN’s Sustainability Development
Goals (SDGs) and the 2030 Agenda for Our business activities contribute to the following SDGs

Sustainable Development call for world-
wide action amongst governments, busi- SUSTAINABLE DEVELOPMENT GOALS
ness and civil society to address social
and economic challenges. We welcome this
collaborative approach and, as you can
see below, our sustainability strategy is
well aligned with the SDG goals.
CONTRIBUTION THROUGH
PARTNERSHIPS

The nature of our business means we have
SDG2 — Zero hunger
the potential for both direct and indirect
SDG4 — Quality education
impact and influence on a wide range of
100% LEADING THE CHANGE SDG9 — I ndustry innovation and
SDGs. Progress towards our three ambi- infrastructure
SDG12 — Responsible consumption
tions will create the most obvious impact and production SDG10 — Reduced inequalities
– as outlined below. However, our partner- SDG16 — P
eace, justice and strong
institutions
ships and other areas of influence such
SDG17 — Partnership for the goals
as advocacy will also contribute to progress
towards certain goals.
100% FAIR & EQUAL

INDIRECT INFLUENCE
AND IMPACT
100% CIRCULAR & RENEWABLE 100% FAIR & EQUAL SDG1 — No poverty
SDG3 — Good health and well-being
SDG6 — Clean water and sanitation SDG5 — Gender equality

SDG9 — Innovation and infrastructure
SDG7 — Affordable and clean energy SDG8 — Decent work and
economic growth SDG11 — S
ustainable cities and
SDG12 — Responsible consumption communities
and production
SDG14 — Life below water
SDG13 — Climate action SDG15 — Life on land
HOW WE REPORT
ABOUT THE H&M GROUP
How we report
VISION & STR ATEGY

Given our business activities, to more people and businesses around
the world. Our goal is to source 100%
these are the key SDGs

of our total energy in our own opera-
to which our sustainability tions from renewable sources, to encour-
strategy contributes. age and empower our suppliers to use
renewable energy and to explore ways
to build capacity for new sources of
SDG5 – GENDER EQUALITY renewable energy ourselves.
We want everyone connected
to our business to have SDG8 – DECENT WORK AND

access to the same opportu- ECONOMIC GROWTH
nities – man or woman, girl or boy. As a thriving, global business,
We’re committed to making sure every- we create jobs for millions
one in our business and supply chain of people around the world – a large
is treated equally, and to drive positive percentage of whom are in developing
change across the rest of the industry. markets. We will continue our efforts to
ensure fair jobs for our colleagues, the
SDG6 – CLEAN WATER people employed by our business partners
AND SANITATION and the people employed throughout our
100% FAIR & EQUAL

In line with our 100% Circular value chain.
& Renewable ambition,
we must manage water responsibly SDG12 – RESPONSIBLE
across our value chain. We have been CONSUMPTION AND
collaborating with the WWF since 2011 PRODUCTION SDG13 – CLIMATE ACTION SDG17 – PARTNERSHIP
on water stewardship issues and are We are building circularity We are eliminating fossil FOR THE GOALS

currently developing a new roadmap into our business in how we source, fuels from our operations Collaboration underpins our
for our water goals and actions. design and make our products, and and directly supporting the entire sustainability strategy.
how we dispose of our waste. With our reduction of more greenhouse gases We are proactively seeking out and facili-
SDG7 – AFFORDABLE vision of 100% circularity across our than our value chain emits. Our goal is tating (often financially) the partnerships
AND CLEAN ENERGY value chain, we are also empowering our to achieve a Climate Positive Value Chain that will help solve the challenges we
Our commitment to renewa- partners and customers to adopt more by 2040 through a combination of energy – and the rest of our industry – face.
ble energy will build capac- sustainable patterns of consumption. efficiency, renewable energy and carbon
HOW WE REPORT
ity and access, making it more available sinking/offsetting.
ABOUT THE H&M GROUP
How we report
VISION & STR ATEGY

Engaging with our stakeholders
SUPPLY CHAIN ACADEMIA &
CUSTOMERS COMMUNITIES COLLEAGUES SUPPLIERS EMPLOYEES AND THEIR INDUSTRY PEERS POLICY-MAKERS NGOS AND IGOS INVESTORS
SCIENCE

REPRESENTATIVES
The H&M group is a The H&M group is We want all employees to Our suppliers are our Our suppliers employ over Many challenges are best The H&M group and our We are striving to take a NGOs are expert advisers The H&M group is a publicly
customer-focused company. closely connected with feel proud to work for the valued business partners. 1.6 million people, most of addressed collectively. We suppliers are subject to science-based approach on standards and practices listed company. As such,
Understanding and meeting communities around the H&M group. Motivated and Stable and long-term them women in emerging work with industry peers rules set by policy-mak- as part of our sustainability throughout our value chain. we are accountable to our
the needs of our customers world in which our stores, satisfied employees mean relations are key to mutual markets. This provides and even companies oper- ers. Maintaining dialogue strategy. Innovation is key investors. We prioritise our
We rely on their expertise
is at the core of everything offices and warehouses better customer interactions growth. Strengthening and a great opportunity to ating in other sectors to with them helps us to to address some of our most important investors in
and independence to
we do. are located, and those that and a better and more enabling their ownership improve the livelihood of define industry standards stay informed about, and industry’s greatest chal- a direct dialogue wherever
ensure that we meet the
host our supplier factories. productive workplace. over their sustainability workers, their families and and common responses to sometimes to help shape, lenges and opportunities. possible and integrate
most up-to-date standards
issues is important in ena- communities. Hearing their shared challenges. our legal and regulatory Therefore, engaging with feedback we receive in our
and to make us aware of
bling long-term sustainable voices is essential to our context. academia and science is strategies and to inform
any concerns.
development. work – and even more so vital to our continued strat- our sustainability reporting,
helping to systematically egy development and to striving for the greatest
give them a voice in fair and meet our ambitious goals. possible transparency.
constructive negotiations

and social dialogue.
HOW WE ENGAGE
– In-store customer – Through community – We have an open-door – Close relations and – A nonymous worker – M ulti-stakeholder – Individual meetings and – Individual meetings and – Wage advisory board –A
nnual General Meeting
interactions partners policy, encouraging constant dialogue with surveys initiatives such as the specific meetings or specific events such as
– Regular meetings or ad – A nnual and quarterly
constant feedback our suppliers through Ethical Trading Initiative conferences dedicted “H&M Labs”
– Customer service – Interactions with local – Global FrameworkAgree- hoc dialogue on global reports and related
our local presence (ETI), Sustainable Apparel
organisation authorities – Store or union rep- ment with IndustriAll – Participation in EU – C ontinuous consultations and local level press and telephone
with offices in all major Coalition and Better
resentation in many Global Union and IF Metall consultation processes as part of our strategy conferences
– S ocial media – Through NGO interaction production locations Cotton Initiative – Specific programmes
markets individually and through development
(for example, 28 million (local + global) – Supplier survey with global local NGOs – Monthly sales figures
– A nonymous supplier – Various regional and local membership organisa-
facebook fans) – European Works Council – Joint research projects
– Interactions with IGOs surveys – Regular direct dialogue initiatives such as Sector tions such as Sustainable – Direct partnerships – Individual meetings and
(EWC)
– Market research and governments with local trade unions Roundtables Apparel Coalition specific events such as
– Supplier Relations Man- – Partnerships through
– M eetings facilitated dedicted “H&M Labs”
– Consumer media – Interviews with workers agement system – Interviews with workers in – Different forms of – Industry-wide meetings membership organi-
through our global
in supplier factories supplier factories pre-competitive sations, like the Better
100% FAIR & EQUAL

framework agreement – Individual meetings – Responses to official
collaboration Cotton Initiative
with Union Network throughout a partnership, – Partnership with ILO consultations
International (UNI) performance reviews and – MoU with Sida – Individual meetings and
– Specific collaboration
joint capacity planning specific events such as
– Regular individual perfor- – Active support for Global forums such as
dedicted “H&M Labs”
mance reviews – SIPP and verifications Deal the German “Textil-
buendnis”
– Employee surveys in – Training modules and – Fair and Equal lab
some markets capacity building
KEY ISSUES

– Product design – C ommunity investments – Job security and growth – Long-term relationships – Developing or advancing – Industry-wide social and – Regulatory and legal – Innovation for a circular — L abour rights and supply — Sales development
negotiation structures environmental challenges, compliance economy chain working conditions,
– Product quality and – Employment opportu- – Pay and working – Order/capacity planning — Long-term profitability
and skills such as supply chain particularly wages for
durability nities and impacts on conditions – Local labour and environ- – Climate impacts and
– C apacity building and working conditions and supply chain workers — Expansion
growth and development – Developing worker mental standards innovations
– Product affordability – Equal opportunities skills transfer environmental impacts
representation structures —S
ocial and economic
– Environmental impact – Product safety and – Material innovations
– N ew store locations and – Training and career – C ompliance with our in absence of functional – B est practice in pre-com- development contri-
quality standards
markets – C ommunity support progression requirements industrial relation systems petitive matters – Research supporting fair bution
(i.e. disaster relief or or absence of Freedom of – Climate change living wage implemen-
– Supply chain working – Supply chain working – Workplace dialogue and – L egal and regulatory —W
ater and chemicals
garment donations) Asscociation tation and industrial
conditions conditions worker involvement requirements – Specific local issues and management
relations
– H elping to develop func- challenges in various
– Chemicals used in – C onscious Actions — Environmental impacts
tional industrial relations markets
production processes in store
system and strengthening
– Green transport and Freedom of Association
waste management
HOW WE REPORT
– Peaceful conflict resolution
ABOUT THE H&M GROUP
How we report
VISION & STR ATEGY

Auditor review statement
TO H & M HENNES & MAURITZ AB – Anti-corruption: Confirmed incidents of H&M Hennes & Mauritz AB. We do the explanatory information on data
We have been engaged by the manage- of corruption and actions taken (Disclo- not accept, nor assume responsibility collection, consolidation and assess-

ment of H&M Hennes & Mauritz AB sure 205-3), p. 97. to anyone else, except to H&M for our ments provided by the H&M group. This
(H&M) to perform a limited assurance work, for the limited assurance report, independent limited assurance report
engagement on the information in The H&M group Sustainability Report or for the conclusion that we have should not be used on its own as a basis
H&M’s group’s Sustainability Report 2016 covers the period 1 December 2015 reached. for interpreting H&M group’s perfor-
2016 with regards to the following indi- – 30 November 2016. mance in relation to its principles of
cators referred to in the GRI index that We conducted our limited assurance corporate responsibility.
can be found in the ‘GRI index 2016’: MANAGEMENT’S RESPONSIBILITY engagement in accordance with the
The Management of H&M group is International Standard on Assurance Our review procedures are designed to

– Identified material topics and bound- responsible for preparing and presenting Engagements (ISAE) 3000 ‘Assurance obtain limited assurance on whether
aries (Disclosures 102-46, 102-47), the H&M group Sustainability Report Engagements Other than Audits or the above-specified indicators are
pp. 110–112, 114–115. 2016 in accordance with the reporting Reviews of Historical Financial Infor- presented in accordance with the
criteria as set out in the company’s own mation’. The ISAE 3000 standard Sustainability Reporting Guidelines of
– Stakeholder engagement (Disclosure 102- reporting guidelines as well as the Global requires that we comply with ethical the Global Reporting Initiative, in all
40, 102-42, 102-43, 102-44), p. 110, 111, 118. Reporting Initiative’s (GRI) Standards. requirements and plan and perform the material respects. A limited assurance
As discussed in the section “How we assurance engagement to obtain limited engagement consists of making inquir-
– Energy: Energy consumption within report”, on p. 109 in the H&M group assurance on whether any matters have ies, primary of persons responsible
the organisation (Disclosure 302-1), Sustainability Report 2016, greenhouse come to our attention that would cause for the preparation of the H&M group
100% FAIR & EQUAL

p. 59. Energy intensity (Disclosure 302-3), gas quantification is subject to inherent us to believe that the above-specified Sustainability Report and applying
p. 59. Percentage of renewable energy uncertainty because of incomplete information in the H&M group Sus- analytical and other evidence gathering
(AF21), p. 61. scientific knowledge used to determine tainability Report 2016 has not been procedures, as appropriate. The proce-
emissions factors and the values needed prepared, in all material respects, in dures performed in a limited assurance
– Emissions: Direct (scope 1) GHG emis- to combine emissions of different gases. accordance with the reporting criteria. engagement vary in nature from, and
sions (Disclosure 305-1), p. 64. Energy are less in extent than for, a reasonable

indirect (scope 2) GHG emissions (Disclo- AUDITOR’S RESPONSIBILITY A limited assurance engagement is assurance engagement conducted in
sure 305-2), p. 64. Other indirect (scope 3) Our responsibility is to express a con- provided only on the information accordance with IAASB’s Standards on
GHG emissions (Disclosure 305-3), p. 64. clusion on the above-specified indica- disclosed in the H&M group Sustain- Auditing and Quality Control and other
tors in the H&M group Sustainability ability Report, not on information generally accepted auditing standards.
– Materials: Materials used by weight Report based on the limited assurance linked to and disclosed on other web The firm applies ISQC 1 (International
or volume (Disclosure 301-1), pp. 44–45. procedures we have performed. The pages. The presented information in Standard on Quality Control) and
Tons of garments collected for reuse and selection of indicators to be reviewed the H&M group Sustainability Report accordingly maintains a comprehen-
HOW WE REPORT
recycling, p. 54. has been made by the management is to be considered in connection with sive system of quality control including
ABOUT THE H&M GROUP
How we report
VISION & STR ATEGY

documented policies and procedures
regarding compliance with ethical

requirements, professional standards
and applicable legal and regulatory
requirements. The procedures per-
formed consequently do not enable
us to obtain assurance that we would
become aware of all significant matters
that might be identified in a reasonable
assurance engagement. Accordingly, we

do not express a reasonable assurance
conclusion.
Our procedures are based on the

criteria defined by the Management
as described above. We consider these
criteria suitable for the preparation of
the Sustainability Report.
100% FAIR & EQUAL

We believe that the evidence we have
obtained is sufficient and appropriate to
provide a basis for our conclusion below.
CONCLUSION
Based on our work described in this

report, nothing has come to our atten- Stockholm, 4 April 2017
tion that causes us to believe that the Ernst & Young AB
information regarding the above-
specified indicators in the H&M group Åsa Lundvall
Sustainability Report has not, in all Authorised Public Accountant
material respects, been prepared in
accordance with the reporting criteria Charlotte Söderlund
HOW WE REPORT
stated above. Authorised Public Accountant
ABOUT THE H&M GROUP
How we report
VISION & STR ATEGY

Awards & recognition
Here are some of the indices,

rankings and awards that assessed
and recognised our sustainability
performance.
2015 and 2016

World’s Most Ethical Companies

Dow Jones Sustainability Europe Index
Dow Jones Sustainability World Index
FTSE4Good
Global 100 Most Sustainable Corporations

2015 and 2016
Green Power Leadership Awards
100% FAIR & EQUAL

Green Ranking Global Top 100
PETA’s Libby Award as Most

Animal-Friendly Clothing Company 2015
Corporate Register Reporting Award 2016

Drapers Award 2016
RobecoSAM’s sustainability award for

Industry Mover in the retailing industry
Sustainable Brand Index 2015

> hm.com/whatotherssay
HOW WE REPORT
H&M.
ABOUT THE H&M GROUP
Get in touch
VISION & STR ATEGY

Contact

Please send your questions or
comments regarding this report to
kaying.lau@hm.com or
micaela.kokko@hm.com.
We appreciate your feedback.

More information
Because of our updated strategy, this
year’s sustainability report is in a
new format compared with previous
years. Most issues covered in previous
reports are still included in this year’s
report, but while we have made every
effort to make the content as acces-
100% FAIR & EQUAL

sible as possible, we appreciate some
issues may be difficult to locate. A few
issues have been removed because
they were deemed not material
enough to report on.

If you have any questions about the
report, need help locating specific
information or want to find out the
latest on our sustainability work
including our strategy, goals, stand-
ards and policies, as well as success
stories, please visit sustainability.
HOW WE REPORT
hm.com H&M Conscious Exclusive.
ABOUT THE H&M GROUP
Appendix
VISION & STR ATEGY

Our KPI overview
Main sustainability KPIs for the H&M group

KPI GOAL 2014 2015 2016
% recycled or other sustainably sourced material of total material use 100% by 2030 13% 20% 26%
% of cotton from more sustainable sources 100% by 2020 22% 34% 43%
100% CIRCULAR &

25,000t per year
RENEWABLE Tonnes of garments collected through garment collecting initiative by 2020 7,684t 12,341t 15,888t

% of stores with recycling systems for main types of store waste 100% 58% 61% 71%
% of facilities in own operations with water-efficient equipment 100% by 2020 24% 37% 51%
% of business partner factories in compliance with wastewater quality requirements as defined by BSR 100% 71% 75% 82%
% renewable electricity in own operations 100% 27% 78% 96%
Climate Positive by
% change in CO2 emissions from own operations compared with previous year 2040 -4% -56% -47%
100% FAIR & EQUAL

-20% compared
% change in electricity efficiency (kwh/m2 compared to 2007) -12% -8% -8%
to 2007
No. of supplier factories using Fair Wage method (% of production volume) 50% by 2018 3 69 140 (29%)
100% FAIR & EQUAL

No. of supplier factories that have received workplace dialogue training (% of production volume*) 50% by 2018 — 132 191 (42%)

% of business partners regarding the H&M group as a fair business partner 90% by 2018 76% 84% 83%
% of employees agreeing with the statement “People here are treated fairly regardless of age,
Increase 89% 90% 90%
ethnicity, sex, sexual orientation and disabilities”
No. of confirmed cases of Code of Ethics violations Detect all violations 18 25 26

% of production volume of second tier supplier factories included in Sustainability Assessment (SIPP) Increase 35% 51% 56%
HOW WE REPORT
* This KPI currently shows factories that received the H&M group’s workplace dialogue training. When the system support for the SIPP is fully implemented, we will be able to show data on share of product volume with democratically-elected worker
representation from our complete factory base.
THANK YOU

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THE H&M GROUP

VISION & STR ATEGY

100% LEADING THE CHANGE

100% CIRCUL AR & RENEWABLE

100% FAIR & EQUAL

STANDARDS & POLICIES

About the H&M group

VISION & STR ATEGY

100% LEADING THE CHANGE

100% CIRCUL AR & RENEWABLE

100% FAIR & EQUAL

with 1,826 first tier

STANDARDS & POLICIES

About the H&M group

VISION & STR ATEGY

100% LEADING THE CHANGE

Around 75% of the average

100% CIRCUL AR & RENEWABLE

Women hold 69%and

100% FAIR & EQUAL

Over 161,000 employees

STANDARDS & POLICIES

Vision & Strategy

VISION & STRATEGY

100% LEADING THE CHANGE

100% CIRCUL AR & RENEWABLE

100% FAIR & EQUAL

STANDARDS & POLICIES

Our sustainability work is built on three

Vision & Strategy

VISION & STRATEGY

100% LEADING THE CHANGE

100% CIRCUL AR & RENEWABLE

This is why we very much welcome

100% FAIR & EQUAL

STANDARDS & POLICIES

Vision & Strategy

VISION & STRATEGY

100% LEADING THE CHANGE

100% CIRCUL AR & RENEWABLE

100% FAIR & EQUAL

STANDARDS & POLICIES

Vision & Strategy

VISION & STRATEGY

100% LEADING THE CHANGE

100% CIRCUL AR & RENEWABLE

100% FAIR & EQUAL

STANDARDS & POLICIES

Vision & Strategy

VISION & STRATEGY

100% LEADING THE CHANGE

100% CIRCUL AR & RENEWABLE

NET SALES EMISSIONS

100% FAIR & EQUAL

Source: Better Cotton Initiative (BCI)

STANDARDS & POLICIES

The factories where our suppliers make

Vision & Strategy

VISION & STRATEGY

100% LEADING THE CHANGE

100% CIRCUL AR & RENEWABLE

100% FAIR & EQUAL

STANDARDS & POLICIES