HM - Group - SustainabilityReport - 2018 - FullReport PDF

Sustainability Report 2018
OVERVIEW
OVERVIEW
Table of contents
VISION & STR ATEGY

100% LE ADING THE CHANGE
1. OVERVIEW 3 5. 100% FAIR & EQUAL 60
Letter from CEO 4 Key facts & figures 2018 61
Executive summary 6 KPIs and goals 62
Key Achievements 2018 7 100% Fair & Equal explained 63
Awards & recognitions 9 Fair jobs for all 64
About H&M Group 10 Enabling well-functioning industrial relations 66
Our value chain 11 Supporting a fair living wage 69
100% CIRCU L AR & RENEWABLE

2. VISION & STRATEGY 12 Addressing human rights issues 80
Our vision & strategy 13 Inclusion & diversity 83
Our ambitions 14 6. STANDARDS & POLICIES 88
Our Change-Making Programme 15 Key facts & figures 2018 89
How we are organised 16 Standards & policies explained 90
Engaging our changemakers 17 Working with standards & policies 91
Interview with Head of Sustainability 18 Our human rights policy 92
3. 100% LEADING THE CHANGE 19 Our salient human rights issues 93
100% FAIR & EQUAL

Key facts & figures 2018 20 Policies within our own operations 94
100% Leading the Change explained 21 Policies for our business partners 95
Innovation 22 Products & materials policies 98
Transparency 25 7. HOW WE REPORT 99
Rewarding sustainable actions 29 How we report 100
STANDARDS & POLICIES

4. 100% CIRCULAR & RENEWABLE 30 Materiality matrix 103
Key facts & figures 2018 31 UN’s Sustainable Development Goals 104
KPIs and goals 32 Key collaborations 105
100% Circular & Renewable explained 33 Auditor’s report 106
Becoming climate positive 53 Get in touch 108
HOW WE REPORT
ARKET.
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 8 2 OF 109
OVERVIEW VISION & STR ATEGY 100% LE ADING THE CHANGE 100% CIRCU L AR & RENEWABLE 100% FAIR & EQUAL STANDARDS & POLICIES HOW WE REPORT
OVERVIEW
3 OF 109
H&M.
OVERVIEW
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 8
OVERVIEW
OVERVIEW
LETTER FROM CEO / EXECUTIVE SUMMARY / KEY ACHIEVEMENTS 2018 / AWARDS & RECOGNITIONS / ABOUT H&M GROUP / OUR VALUE CHAIN
Letter from CEO
VISION & STR ATEGY

A little more than 70 years ago, my challenges. We know that we are a large
grandfather opened a shop selling wom- company and we therefore know that we
en’s apparel in the small Swedish town have an equally large responsibility to

of Västerås. He believed that everyone ensure that we have a positive impact on
should have the opportunity to express our planet.
their personality through fashion and
he saw it as his mission to democratise As such I am proud to say that our
fashion and make it available to all sustainability work is embedded in our
rather than the privileged few. The con- culture and our values. A long-term
cept of “Fashion for everyone, at a great approach is a natural and important
price” has remained with our company part of our overall business strategy. We
ever since. also believe that taking a long-term view
is crucial when it comes to dealing with
100% FAIR & EQUAL

In the same way that we took the lead 70 complex sustainability issues.
years ago by making fashion accessible According to the UN, climate change
to all, we now want to take the lead in and poverty are two of the most signi
ensuring a more sustainable fashion ficant challenges of our time and will
industry by tackling some of the most affect many generations to come. While
significant challenges that are facing our I have a great deal of respect for the vast

planet and society. complexity of both of these challenges,
I also strongly believe that we can make
We are part of an industry which a positive contribution towards facing
undoubtedly faces significant chal- them. We will continue to take a long-
lenges when it comes to environmental term approach to achieve sustainable
and social sustainability – but I want production, while at the same time cre-
H&M group to continue to be a positive ating good jobs and driving prosperity
force towards resolving these shared in the markets in which we operate.
HOW WE REPORT
OVERVIEW
OVERVIEW
VISION & STR ATEGY

In order for our company to take on innovation that is required to create a energy, transport and resources. We are environmentally hazardous system to
these challenges in an effective way circular fashion industry. switching to renewable electricity and a circular one that ensures long-term
I believe that sustainability must be streamlining our use of energy. With environmental and social sustain-

considered as an integral part of our Encouragement of and collaboration the help of innovation, we are not only ability. Big leaps towards new and
business rather than being treated as with other forces for positive change able to find new sustainable materials greener solutions, are usually taken
an after-thought. For this reason, we is especially important when it comes and recover textile fibres in a better by companies and countries that are
work to ensure that sustainability is to the complex challenges faced by the way than before, but we can also make developing and can therefore invest
integrated into all aspects of our busi- fashion industry, and indeed all other this scalable in the long term. I am in technological innovations. As such
ness – it should pervade everything industries. Just a few examples of our impressed every year by the winners of consumption that contributes to both
that we do, all the decisions we make collaborations include: our work with the Global Change Award challenge for reducing global poverty and enabling
and the everyday work of all our WWF on the responsible use of water innovation, which was founded by H&M investment in modern, sustainable
employees. in our value chain, our investment in Foundation – it presents solid proof that production is not the problem, but

innovations companies that are devel- a circular fashion industry is possible. instead part of the solution.
Taking this approach makes it possible oping technologies for textile recy- The transformation of orange peel and
for all of us to work towards the same cling, and our close partnership with algae into fabric and grape residue into This report is our opportunity to share
goal. For this reason, all functions the Ellen MacArthur Foundation that plant-based leather, are just a few of an honest and transparent account of
within H&M group are assessed on is helping drive the development of a the great ideas that have been realised. the positive steps that we have taken
the basis of sustainability objectives, circular economy as well as our work I’m convinced that technical innova- so far as well as the complex challenges
which are just as important as any with the UN and textile workers’ global tions will be the solution to many of the we continue to face. It helps us under-
other benchmark. trade union who are advising us about environmental challenges the textile stand both the areas in which we have
the best way to tackle the huge issue of industry is facing and will contribute to made progress, and those that we need
However, it is not possible to achieve wages in the textile industry. a more sustainable consumption. to re-think and further develop. While
100% FAIR & EQUAL

great change in isolation. We have I am proud of our achievements, I am
over 70 years of experience, but we are The values of H&M group also include The reality is that as our population aware that there is still a lot more for
entirely dependent on our partnerships a constant willingness to innovate grows, so does also consumption, us to do. However, I remain convinced
with experts from other fields to really and look at things in new ways. Today, which already today goes beyond what that our long-term approach coupled
drive our sustainability work forward. we are using AI to make it easier for the planet can afford. The key to our with our genuine determination, will
We therefore fully support the develop us to ensure a good match between future is therefore to ensure that we help us lead the way to creating a more

ment of the new technology and production and demand, thus saving move away from an old, linear and sustainable fashion industry.
Karl-Johan Persson, H&M Group
HOW WE REPORT
OVERVIEW
OVERVIEW
Executive summary
VISION & STR ATEGY

From the beginning, H&M
group’s role has been to democ-
ratise fashion. Today, that
means making it sustainable:
Our vision and
it’s the only way we’ll keep
strategy are built on
making great fashion and de-
three key ambitions

sign available today, tomorrow
and for generations to come.
Our sustainability vision is to

use our size and scale for good,
100% LEADING
and with the help of techno THE CHANGE
logy and innovation, lead the
100% FAIR & EQUAL

change towards circular and
renewable fashion while being
a fair and equal company. To
achieve this, we have developed
an ambitious strategy with the

100% CIRCULAR 100% FAIR
help of a broad range of exter- & RENEWABLE & EQUAL
nal and internal experts. Our
strategy follows a science-based
approach, wherever possible.
HOW WE REPORT
H&M.
OVERVIEW
OVERVIEW
Key achievements 2018
VISION & STR ATEGY

T H E TA K E C A R E C O N C E P T L AU N C H E D I N F U R T H E R
FOUR MARKETS, OFFERING CUSTOMERS
H&M Group has G U I DA N C E A N D H A N D S - O N S U P P O R T I N H OW
TO CARE FOR THEIR GARMENTS.
developed 2030 GHG
emissions reduction
goals that have been

W E H AV E AC C E L E R AT E D O U R approved by the
WORK WITH ARTIFICIAL INTELLIGENCE
BY C R E AT I N G A N A I D E PA R T M E N T
Science Based
W I T H I N H & M G R O U P. T H I S W I L L Targets initiative.
FURTHER HELP US MAKE THE BEST
A N D M O S T S U S TA I N A B L E B U S I N E S S
DECISIONS POSSIBLE. 655 factories and 930,000
garment workers are covered
by one or both of our key
100% FAIR & EQUAL

D U R I N G 2 0 1 9, H & M A N D H & M H O M E A R E
57% of all materials R O L L I N G O U T A N E W T R A N S PA R E N CY programmes for workplace
we use to make our TOOL IN THEIR ONLINE STORES,
ENABLING CUSTOMERS TO TR ACE MOST dialogue and Wage
products are recycled O F T H E I R P R O D U C T S T O T H E FA C T O RY
Management Systems.
T H E Y H AV E B E E N M A D E I N , A N D F I N D
or other sustainably F U R T H E R I N F O R M AT I O N T O M A K E M O R E
This represents 84% of
sourced materials. CONSCIOUS CHOICES.

our product volume.
Because investing in innovation H & M G R O U P WA S R A N K E D A M O N G S T

unlocks circularity, we support companies T O P 5 I N FA S H I O N R E VO L U T I O N ’ S
2018 INDEX WITH A SCORE OF 55%
such as Moral Fiber and Colorifix. ( H I G H E S T S C O R E 5 8 %) .
HOW WE REPORT
OVERVIEW
OVERVIEW
Key achievements 2018
VISION & STR ATEGY

We launched Afound, a brand
with the mission of giving unsold
products a new life.

95% of cotton used by We have developed
H&M Group is recycled a new Water Roadmap for
or other sustainably our supply chain which
We’ve reduced CO2 contains our key goals and
sourced.
emissions from our actions up until 2022.
own operations by a
further 11%. This takes
100% FAIR & EQUAL

We set a new circular us another step closer H&M Group has been included in
packaging strategy and to achieving a climate the Dow Jones Sustainability Index
roadmap for the entire positive value chain
for several years now, this year
value chain. by 2040.
reaching the highest possible score

in the categories of Quality & Recall
Management, Social Reporting,
W E C O L L E C T E D 2 0 , 6 49 T O N N E S O F T E X T I L E S F O R R E U S E A N D R E CYC L I N G Environmental Reporting and the
T H R O U G H O U R G A R M E N T C O L L E C T I N G I N I T I AT I V E . T H AT ’ S 1 6 % M O R E T H A N L A S T
Y E A R A N D R E P R E S E N T S T H E E Q U I VA L E N T O F 1 0 3 M I L L I O N T- S H I R T S .
best industry score in Supply Chain
Management.
HOW WE REPORT
OVERVIEW
OVERVIEW
Awards & recognitions
VISION & STR ATEGY

Here are some of the awards and recognitions that H&M Group
has received during 2018:
DOW JONES SUSTAINABILITY recognized by the Ethisphere® Institute as

WORLD INDEX one of the World’s Most Ethical Companies.
H&M Group has been included in the Dow
Jones Sustainability Index for several years NEWSWEEK GREEN RANKING

now, this year reaching the highest possible H&M group was ranked number 11 in the
score in the categories of Quality & Recall Newsweek Green Ranking among the 500
Management, Social Reporting, Environmen- most sustainable companies in the world
tal Reporting and the best industry score in for 2017 (2016: 63, 2015: 88, 2014: 95). The
Supply chain Management. ranking is annually produced by the maga-
zine Newsweek in collaboration with lead-
FASHION REVOLUTION’S FASHION ing environmental research organisations.
TRANSPARENCY INDEX
H&M group was ranked amongst the top 5 in TEXTILE EXCHANGE PREFERRED
Fashion Revolution’s Fashion Transparency FIBER & MATERIALS REPORT 2018
100% FAIR & EQUAL

Index with a score of 55% (highest score 58%). According to the Textile Exchange’s
Preferred Fiber & Materials Market Report
FTSE4GOOD 2018, H&M group was the biggest user of
H&M group has been independently preferred Man-made cellulosic fibres and
assessed according to the FTSE4Good the biggest user of Lyocell, as well as pre-
criteria and has satisfied requirements to ferred cotton, and the second biggest user

become a constituent of the FTSE4Good of recycled and organic cotton.
Index Series. Companies in the FTSE4Good
Index Series have met stringent social and DRAPERS SUSTAINABILITY AWARD UK
environmental criteria and are positioned For third year in a row, H&M group has
to capitalize on the benefits of responsible been recognised by the British retail pub-
business practice. lication Drapers for their contribution to
the retail industry. In the Annual Awards
ETHISPHERE® INSTITUTE Ceremony, H&M group won the Sustaina-
HOW WE REPORT
H&M group UK team accepting the Drapers
For the eight time, H&M group has been bility Award of The Year. Sustainability Award from host Russell Kane.
OVERVIEW
OVERVIEW
About H&M Group
VISION & STR ATEGY

Since day one, our business has ware – as well as healthy, modern 2018 FIGURES
been about bringing fashion and food in selected stores.
design to all people. Today, this
is reflected in all our brands. We We reach customers around the 4,968 stores in
71 markets and
are always working to create the world through our integrated
best offering for our customers, in physical stores and digital
the most sustainable way. channels. Our customer proxim-
ity is amplified by our 177,000
e-commerce in 47 markets.

H&M group includes nine brands, colleagues globally, operating
each with their own specific in both sales and production
210 billion
brand DNA – H&M, COS, Week- markets.
day, Cheap Monday*, Monki, H&M
*As previously communicated, Cheap Monday will
Home, & Other Stories, ARKET be ending operations in 2019. The H&M group’s
and Afound. Together, our
transition work in response to the extensive
changes within the fashion industry means that the
Swedish kronor in net sales.
company is prioritising and focusing on its core
brands offer customers a wealth business. Cheap Monday’s business model is based
on traditional wholesale, which is a model that
of styles and trends in fashion, has faced major challenges due to the shift in the
industry. The H&M group has therefore decided to
beauty, accessories and home- close Cheap Monday.
Our products are made in
100% FAIR & EQUAL

ABOUT H&M FOUNDATION
H&M Foundation is a non-profit global foundation, with a mission to
2,383 supplier
act as a catalyst for positive change and improve living conditions
factories around the world.
by investing in people, communities and innovative ideas. The foun-
dation is privately funded by the Stefan Persson family, founders

and main owners of the H&M group. Since 2013, the Stefan Persson H&M alone has nearly
800
family has donated 1.5 billion Swedish Krona ($200 million/€163
million) to the H&M Foundation. Learn more about the foundation’s
work on pages 24, 38 and 87, and read H&M Foundation’s annual
report, A Catalyst for Change 2018. million customer
Monki.
transactions per year.
HOW WE REPORT
OVERVIEW
OVERVIEW
Our value chain
VISION & STR ATEGY

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

Our vision is to lead the change towards a circular
and renewable fashion industry, while being a fair DESIGN
and equal company. To do this, it is our respon-
sibility to ensure our value chain works to its High 0% 0% Low
full potential. Our value chain describes the full OUR

INFLUENCE
C L I M AT E
I M PA C T *
WAT E R
I M PA C T *
SOCIAL
I M PA C T * *
sequence of processes involved in the production

and lifespan of all our products, from product idea- RAW MATERIALS
tion to customer use and disposal.
USE DESIGN
Medium 9% 87% High

OUR C L I M AT E WAT E R SOCIAL
But our value chain does not operate in isolation. INFLUENCE I M PA C T * I M PA C T * I M PA C T * *
With nine brands selling products in over 4,968 FABRIC AND YARN PRODUCTION
stores and online markets in 47 countries, it is
connected to countless people, communities, eco Medium 46% 6% High
systems and other businesses around the world.

SALES
H&M Group RAW MATERIALS
OUR
INFLUENCE
C L I M AT E
I M PA C T *
WAT E R
I M PA C T *
SOCIAL
I M PA C T * *
IMPACTS ALONG OUR VALUE CHAIN value chain PRODUCT MANUFACTURING

Our vast network of value chain connections Medium 18% 1% High
means that our social, environmental and eco-
100% FAIR & EQUAL

nomic impacts are significant and far-reaching.
INFLUENCE I M PA C T * I M PA C T * I M PA C T * *
To maintain our business idea, we need to TRANSPORT

maximise our positive impacts and minimise
our negative impacts throughout our value chain
Medium 2% 0% Low
FABRIC AND YARN

and along every customer’s journey with us. TRANSPORT OUR C L I M AT E WAT E R SOCIAL
PRODUCTION INFLUENCE I M PA C T * I M PA C T * I M PA C T * *
SALES

To make this happen, we use our size and scale PRODUCT
to drive change and innovation in all parts of MANUFACTURING High 0% 0% High
the value chain, from raw materials to customer OUR C L I M AT E WAT E R SOCIAL
experience.
INFLUENCE I M PA C T * I M PA C T * I M PA C T * *
USE
Please see the illustrations to the right for a more *Climate impacts are based on a scope 3 assessment made by Ecofys in 2017, based on 2016 data. Deviation from 100% is
due to omission of other emission sources not fitting the format of this illustration, the major one being the scope 3 category
in-depth look at the impacts we have along our
Low 21% 8% Medium
purchased products (other expenditures). The water footprint is based on the Water Footprint Network’s methodology and
includes green, blue and grey water footprints. Deviation from 100% is due to rounding effects.
value chain. Please also visit sustainability.hm.com
HOW WE REPORT
**For more information about our social impacts, see page 93. A number of these issues related also to H&M group’s salient INFLUENCE I M PA C T * I M PA C T * I M PA C T * *
human rights issues, i.e. those human rights at risk of the most severe impact across our operations and supply chain.
for further information.
VISION & STRATEGY
12 OF 109
H&M.
STRATEGY
VISION &
OVERVIEW
OUR VISION & STR ATEGY / OUR AMBITIONS / OUR CHANGE-MAKING PROGR AMME / HOW WE ARE ORGANISED / ENGAGING OUR CHANGEMAKERS / INTERVIEW WITH HEAD OF SUSTAINABILITY
Our vision & strategy
VISION & STRATEGY

VISION & STR ATEGY
At H&M group, we’ve always believed that great design should – Our sustainability strategy
and can – be available to anyone. From the beginning, our role
has been to democratise fashion. Today, that means making it VISION
sustainable: it’s the only way we’ll keep making great fashion and Our vision is to lead the change
towards circular and renewable fashion
design available to many people, for many years to come. while being a fair and equal company.
Our vision is to lead the change towards This vision is not only necessary from

a circular and renewable fashion indus- a social and environmental perspec-
try, while being a fair and equal com- tive, it also makes good business sense.
pany. Using our size and scale, we are Long-term investments in sustainabil-
working to catalyse systemic changes ity provide us with long-term business
across our own operations, our entire opportunities that will keep H&M 100% LEADING THE CHANGE
value chain and the wider industry. In group relevant and successful in our
100% CIRCULAR & RENEWABLE 100% FAIR & EQUAL
this way, we can continue to engage our rapidly changing world.
customers and provide great fashion
and design choices – today, and into the We know that achieving our vision
CHANGE-MAKING PROGRAMME
100% FAIR & EQUAL

future. will not be easy, but our openness to
Our Change-Making Programme is at the heart of all our sustainability work. It includes
tackling challenges keeps us alert goals, roadmaps, standards and methods that help us work towards our vision, enable
Our vision and strategy applies to all to opportunity. We are strongly posi- changemakers and ensure that sustainability is integrated in everything we do.
our brands, while allowing each of them tioned to make a positive impact, in
to maintain their own brand identity. part because of our continuing part-
nership with stakeholders and industry
ENGAGING CHANGEMAKERS
While our business has a long and well- experts who help set and shape our

established history in sustainability, sustainability work. Furthermore, by
projected population growth figures applying a science-based approach to
and natural resource levels make it our work, we can set the best goals and
clear that a more focused approach to roadmaps possible to drive positive
sustainable fashion is needed. Our role, change throughout our company and ALL COLLEAGUES ALL PARTNERS
as leaders in our industry, is to inno- the wider industry.
vate, influence, collaborate, and lead
ALL CUSTOMERS
HOW WE REPORT
the way towards a truly sustainable
fashion future.
OVERVIEW
Our ambitions
VISION & STRATEGY

VISION & STR ATEGY
Our vision and strategy are built on three key ambitions
100% LEADING THE CHANGE To find and implement solutions to the
• Promote and scale innovation scale and breadth of the challenges
• Drive transparency facing our industry, we must be clear,
• Reward sustainable actions bold and visionary. Our three ambitions
give us the long-term focus, direction
100% CIRCULAR & RENEWABLE and motivation we need to truly drive

• A circular approach to how positive change through our company
products are made and used and across our industry.
• Use only recycled or other
sustainably sourced materials 100% LEADING
• A climate positive value chain THE CHANGE
100% FAIR & EQUAL

• Fair jobs for all
• I nclusion and diversity
100% FAIR & EQUAL

“
100% CIRCULAR 100% FAIR
Big change requires bold actions and the courage to & RENEWABLE & EQUAL
aim high. At the same time, we have to be humble

to the challenges our planet is facing. So if we want
to make a real change, we have to be brave, push the
boundaries and not be afraid to fail.
”
ANNA GEDDA ,
HOW WE REPORT
HEAD OF SUSTAINABILITY,
H&M GROUP
OVERVIEW
Our Change-Making Programme
VISION & STRATEGY

VISION & STR ATEGY
By steering and integrating sustainability
across our business, our Change-Making We turn our vision and strategy into action by working with:
Programme turns our strategy into action
and drives long-lasting change.
H&M group is comprised of multiple brands, which
operate in a variety of functions across many different

countries and cultures. Similarly, our value chain is
vast and complex. Along with the obvious opportunity GOALS ROADMAPS STANDARDS METHODS AND
this scale offers, it also presents a big challenge: how Our vision and These are strategic AND POLICIES FOLLOW-UP
do we drive systematic and effective long-term change ambitions are trans- plans, targets and Our sustainability These are the
lated into concrete actions for reaching standards ensure that processes, routines
across both our business and value chain? goals at group, market our goals. we and our business and methods we use
and function levels. partners operate in to set goals and
HOW WE INTEGRATE SUSTAINABILITY We have roadmaps a sustainable way. e valuate our progress.
Sustainability is integrated as one of four equally Each function and for specific
important parameters in our company performance market has o wnership s ustainability areas, for They include our They ensure that
of its own example energy, water, Code of Ethics, our strategy is well-
score card. This means that each central function
100% FAIR & EQUAL

sustainability goals. i nnovation, waste and Sustainability integrated across
and brand is measured on a set of sustainability transparency. Commitment, Human our business.
KPI’s, alongside and in equal weight to sales figures, Rights Policy, etc.
customer satisfaction, etc. In addition to that, our
Change-Making Programme brings together the See more on page 88.
goals, roadmaps, standards and follow-up m ethods
we need to work towards our vision, while also

leaving room for locally tailored implementation and
activities. This enables our brands and functions
to take ownership and integrate our sustainability
strategy across the business, setting its own meas-
urable sustainability goals and activities. Within
CULTURE AND VALUES
each sales market, we employ a dedicated sustain-
ability manager who drives the implementation of
our s trategy from a local perspective to engage all
HOW WE REPORT
colleagues and customers.
OVERVIEW
How we are organised
VISION & STRATEGY

VISION & STR ATEGY
We want to make sure all our efforts our business partners to assess their
keep working together, even as our performance against our Sustaina-
vision, ambitions and strategy grow bility Commitment and support them Organisational chart
and change. This year we strength- in making improvements through
ened our sustainability steering by capacity-building programmes and
establishing a senior cross-functional activities. Read more about our Sus-
BOARD OF DIRECTORS
forum, which reviews strategy perfor- tainability Commitment on page 95.
mance and defines key priorities.

Reporting directly to our CEO, our
Head of Sustainability is responsi- Bi-annual
ble for the implementation of our performance
reporting
sustainability vision and strategy
together with the Executive Manage- CEO
ment Team. Twice a year, Head of
Sustainability reports performance
(against key sustainability indicators)
to our Board of Directors.
100% FAIR & EQUAL

GROUP FUNCTIONS,
Our global sustainability department HEAD OF BRANDS, RETAIL AND
consists of more than 30 experts SUSTAINABILITY PRODUCTION
responsible for setting strategies, COUNTRIES
targets, goals, policies and follow-up Cross-functional
procedures to ensure that our forum reviewing

strategy performance
sustainability work is carried out
and defining priorities
systematically. based on business
intelligence and inno-
Every retail market and H&M group vation process LOCAL AND
function has sustainability managers. GLOBAL FUNCTION-SPECIFIC
In our 20 production markets, we SUSTAINABILITY SUSTAINABILITY
DEPARTMENT MANAGERS AND
employ more than 150 people work- TEAMS
ing specifically with sustainability.
HOW WE REPORT
These colleagues work directly with ARKET.
OVERVIEW
Engaging our changemakers
VISION & STRATEGY

VISION & STR ATEGY
Changemakers are the people who help H&M group achieve
our vision of a sustainable fashion and design industry.
Through effective collaboration we can accelerate impact to
drive long-lasting change.
STAKEHOLDERS & EXPERTS OUR CUSTOMERS
Building and maintaining partner- Our size and scale means we have

ships and dialogue with industry many customers, so every single
stakeholders and experts is crucial to action, no matter how small, makes a
achieving our vision. Not only do they huge collective difference. That is why
give us direction and expertise for it is so important that we inspire and
our long-term goals and action plans, enable our customers to make sus-
they also work with us to find the best tainable choices for the environment,
solutions and address specific chal- people and communities. One exam-
lenges. ple of how we engage with customers
is the garment collecting initiative
100% FAIR & EQUAL

BUSINESS PARTNERS that we have across our group. Read
We always aim to build long-term more on page 29.
rewarding relationships with our
business partners. By becoming part- To read further on how we engage
ners, we can work together to raise with our stakeholders, please visit
H&M.
environmental and social standards sustainability.hm.com.
across our industry.

OUR COLLEAGUES
Everyone at H&M group should feel
they can contribute to our sustaina-
“Engaging with our many and diverse stakeholders gives
us new perspectives and helps us build partnerships for
bility vision and goals. By enabling
our employees to use their unique
talents, skills and passions in their
solutions that we could not achieve on our own.
” HENDRIK ALPEN,
daily work, our business can lead the
HOW WE REPORT
SUSTAINABILITY ENGAGEMENT
change our industry needs. MANAGER, H&M GROUP
OVERVIEW
INTERVIEW WITH ANNA GEDDA , HEAD OF SUSTAINABILITY, H&M GROUP
“We must continue to dare and push the boundaries”
VISION & STRATEGY

VISION & STR ATEGY
The fashion industry is going through a an important step in helping our customers I also wish that we could have come even
major transformation. How is H&M group care for their favorite pieces longer and in further. But the issue of wages goes far
positioning itself to be a part of this journey? that way prolong the lifespan of the product. beyond our own suppliers and their factories
As a major player in the industry, we are and we alone cannot change the industry.
well-positioned to not only be part of, but Looking back over the year, what has been This also goes for many other sustainability
to also lead the change on this journey. One the greatest achievement? challenges, such as scaling technologies for
area that we have been focusing on for a There are many things I’m proud to have garment recycling, developing solutions for
while is the shift from a linear to a circular been a part of, but one that stands out this microfibre shedding and driving transpar-

business model, where we have the ambi- year is our results from the five-year Fair ency on sustainability performance across
tion to become fully circular. Living Wage Strategy. We have not only the industry.
We are also constantly innovating and achieved, but exceeded in all our goals, Another important lesson from this year is
developing our sustainability work in line affecting the lives of almost one million the need to constantly keep sustainability
with other developments in the industry. For garment workers. This has been the result of integrated into the business, which can be a
example, we have accelerated our invest- many of my colleagues’ tremendous efforts challenge given the rapid change and trans-
ments in AI and algorithm-driven retail and to make an impact and drive change in a formation that the retail industry is under-
see them as important tools to not only very challenging area. There is still a lot to be going. In the light of the hoodie incident, we
grow our business in a sustainable way, but done and I can’t stress enough the need of have learned that we need to do even more
also reach our sustainability goals. alignment between different actors through- to integrate inclusion and diversity across
100% FAIR & EQUAL

out the whole industry. our operations and beyond.
How do you see the customer becoming a Another achievement is our new packaging
part of H&M group’s sustainability journey? strategy, which is an important milestone Back to H&M group leading the change
Today we see a positive trend in customer towards our circular ambition. With our goal in the fashion industry transformation.
behavior, where more and more customers to only use recycled or sustainably sourced Where do you see us in five years? Anna Gedda
(right) with
want to know where and how the garments packaging materials by 2030, we will be able I hope that we will continue to lead the colleagues during

are made, and how they can contribute to to have a big environmental impact, create a change towards a sustainable fashion the Fair Living
Wage Summit in
a sustainable fashion future. This year, we better shopping experience for our custom- industry. With all the technological advance- Cambodia.
have developed a customer-facing transpar- ers, and a better work environment for our ments and ever-changing expectations from
ency layer where our online customers can colleagues. customers, it’s hard to have a clear picture
see sustainability information such as mate- of what exactly will be happening five years boundaries. I hope that we will continue
rials used, or in which factory the product … and what are the biggest lessons learned? from now. But I am positive, that by then we to stay true to our long-term direction and
has been made. That big change takes a long time. For will see a wide use of both circular technol- at the same time keep our agility. And of
We have also expanded our Take Care con- example, even though I am very proud of ogies and renewable energy that will move course, that we continue to dare, push
HOW WE REPORT
cept across more markets, which we see as our results of our Fair Living Wage Strategy, the fashion industry within the planetary boundaries, test, and never be afraid to fail.
100% LEADING THE CHANGE
19 OF 109
Photo credit: James Morgan/WWF.
100% LEADING
THE CHANGE
OVERVIEW
KEY FACTS & FIGURES 2018 / 100% LEADING THE CHANGE EXPL AINED / INNOVATION / TR ANSPARENCY / REWARDING SUSTAINABLE ACTIONS
Key facts & figures 2018
VISION & STR ATEGY

During 2019, H&M and H&M Home
are rolling out a new t ransparency
tool in their online stores,
e nabling customers to trace most
of their products to the factory

they have been made in, and find Since 2013 we make names
further information to make of suppliers, addresses and
We have accelerated our other factory information
more conscious choices.
work with artificial intel- public. Today this includes
ligence by creating an AI 100% of our tier 1 sup-
department within H&M H&M Group was plier factories and tier 2
100% FAIR & EQUAL

group. This will further ranked amongst top 5 in factories who make about
help us make the best and Fashion Revolution’s 2018 65% of our products – and
most sustainable business index with a score of 55% f ulfills the r equirements of
decisions possible. (highest score 58%). the t ransparency pledge.

Because investing in innovation
unlocks circularity, we support companies
such as Moral Fiber and Colorifix. OUR LEADING THE CHANGE AMBITION
C O N T R I B U T E S T O S D G 9, S D G 1 2 A N D S D G 1 7.
HOW WE REPORT
OVERVIEW
100% Leading the Change explained
VISION & STR ATEGY

100% Leading the Change is
our commitment to catalyse
change across the entire
fashion industry and improve
the way our products are
designed and made. To do

this, we bring diverse partners
together to identify and share The new brand Afound, which resells great fashion,
is H&M group�s most recent business venture.
the challenges and innovative
solutions that will push
boundaries and deliver results.
This approach to leadership underpins
our entire strategy, helping us fulfil our
100% FAIR & EQUAL

ambition to become both a 100% Circular
& Renewable and a 100% Fair & Equal
business. Our work centres on catalysing
business and industry-wide change in
three focus areas:

• Innovation
• Transparency
• Rewarding sustainable actions
HOW WE REPORT
Weekday collaboration with Peace Force
H&M Conscious Exclusive. for a non-violent world.
OVERVIEW
Innovation
VISION & STR ATEGY

Innovation is the key to
achieving industry-wide change. “Working with innovation is a constant adventure”
Many of the sustainability challenges At H&M group, we have an internal inno- towards changing the fashion industry and
facing our industry require intense innovation department called the Laboratory. are transitioning to a circular economy
vation to find solutions. These challenges It is our home for research and develop- model while building a socially and environ-
also present us with business opportuni- ment and it exists to challenge our think- mentally positive supply chain. That is a huge
ties. For example, there is not yet a viable ing and give us fresh perspectives, turning shift, and much more than a trend, it is the

technology for recycling of blended fibres research into action through co-creation, necessary future. We are proud to be one of
at scale, which means we cannot make launching new business and service the leaders on this journey.
new products from as many old products models. Laura Coppen works as Creative
as we would like. To tackle this, we are Business Development at the Laboratory. What projects are you working with right
currently working with experts who are now?
developing new scalable technological What is it like to work with innovation? We are working on a concept that is centred
solutions that will transform the way our Working with innovation is a constant around the future of local, smart and circular
industry works with materials. adventure, one has to navigate through a manufacturing. This model enables us to
global landscape of trends, both macro be faster to customers’ demands and test
and micro, identifying the key areas that new technologies like custom fit, customi-
100% FAIR & EQUAL

At H&M group, we have a responsibil-
ity, as well as an opportunity to iden- will disrupt our industry. For me, working zation and small batch collections with new
tify, invest in and promote sustainable with innovation means collaborating; we machinery. We are also looking into several
innovations, from digital systems that work with an external and internal net- areas within service models, from remaking,
provide traceability information to new work of experts to support us and make to renting and renewing products. Alongside
energy-saving solutions. Our size and our concepts come to life. In today’s new packaging solutions and the greater
global reach means we can take the most ever increasingly complex landscape it’s system around online logistics.
Laura Coppen.

promising sustainable innovations to necessary to look at the whole picture, the
scale and help create the transformation whole system. How can innovation help us achieve our
our industry needs. sustainability goals? ness models, which we are on the journey
What trends do you see when it comes Innovation is a necessary part of reaching of creating with many of our partners. Right
HOW WE APPROACH INNOVATION to innovation? our sustainability goals. With the huge shift now, an intrapreneurial spirit is needed – in
To make our business better, we use The trend I’m most focused on is the rise that we need to make in the fashion indus- all companies, including ours – to achieve
innovation to challenge our thinking in responsible businesses and service try, we can’t rely on what already exists. We the sustainability goals. It’s an ‘all hands on
and give us new perspectives. Across models. These have an action-driven agenda need new materials, processes and busi- deck’ time!
HOW WE REPORT
our company, we prototype ideas that
OVERVIEW
demonstrate – both internally and externally –

that our commitment to sustainability demands Moving towards sustainable fashion with the help of AI
VISION & STR ATEGY

both a new way of working and a new way of
thinking. Arti Zeighami, Head of Advanced even more relevant offering for our
Analytics and AI at H&M group: customers, we are reducing the envi-
Our approach to innovation always starts by How are your colleagues using ronmental impact of our operations.
looking at our customers’ needs alongside the AI tools in their work? AI and advanced analytics are great
macro and micro trends that are changing our When we talk about AI at H&M group, tools for reaching our sustainability

industry and the world around us. We then we mean Amplified Intelligence. goals, and it is equally important to
employ a design and system thinking approach to Advanced analytics and machine have a sustainable and ethical
problem solving and innovation. Finally, we take learning are tools that enhance our approach when we work with AI. This
the best and most promising innovations and use human intelligence. Amplified intelli- is a high priority for us, and our work
our size to help them scale. gence is the collaboration between on sustainable and ethical AI is part
machines and humans – between of the overall vision of leading the
This involves looking at the wider systems and science and art, data and gut feeling. change towards circular and renew-
trends we are a part of – both now and in the We are creating solutions that help our able fashion while being a fair and
future. We have an opportunity to rethink how colleagues make more precise deci- equal company.

we organise global production and consumer sions, and enable them to focus on the
demand, and to access cutting edge technologies most relevant and creative parts of If you look ahead, what part do
Arti Zeighami.
and innovative business models. We have a wide their work. you think AI will play in the journey
network of partners that help us identify and towards a circular business model?
pilot innovation and take them to scale. What is the connection between advanced analytics and AI, we can be I think it is one of the most powerful
AI and sustainability? much sharper in aligning supply and tools we have in the transition towards
ALGORITHM-DRIVEN RETAIL Circularity is ultimately about demand. This could also entail less a circular and sustainable fashion sys-
To further secure an organization that drives using resources sustainably, where transport and warehousing, which tem. With AI we can make sharper and
innovation and optimizes business decisions one central aspect is to avoid means less energy is used. It’s really better decisions that impact our world
which enable sustainable choices, H&M group over-production. With the help of a win-win situation: while creating an in a sustainable way.
100% FAIR & EQUAL

is working with advanced analytics and artifi-
cial intelligence. Our new AI department sup-
ports various processes across our entire value PROGRESS prototypes together as cross-company • We are in the process of identifying
chain – from design to customer experience. For • We have created an AI department and cross-industry teams. key stakeholders and partners to
example, by amplifying the decision making of within H&M group and are setting strate- drive ethical AI work within our field.
our designers and buyers we can ensure that we gies on how to advance algorithm driven • Our company’s extensive prototyping

are designing the right products. We also use retail technology in a sustainable way. and testing of new ideas means that LEARNING
advanced analytics and AI to better forecast different functions sometimes come • Advanced analytics and AI are
trends, make sure the right products are in the • H&M group’s the Laboratory joined up with the same ideas. To capitalise great tools in helping us reach our
right stores, and to give our customers even more IDEO’s Circular Economy CoLab, a col- on this culture of innovation and sustainability goals, and it is important
relevant and customized recommendations and laborative innovation lab with member ensure we’re all pulling in the same to have a sustainable approach when
offers. Used right, AI is one of the most powerful companies interested in exploring the direction, we have streamlined our pro- we work with AI. Sustainable and
tools we have to secure that we meet our future potential of circular economy busi- cesses and put cross-functional teams ethical AI is at the top of our agenda
in a sustainable way through the lens of a circu- ness models. We worked in a human- in place that can identify and push the and we appointed a Head of AI Policy
HOW WE REPORT
lar economy. centered design process, building best ideas forward. in 2018.
OVERVIEW
Investing in fashion future H&M Foundation’s Global Change Award
VISION & STR ATEGY

H&M CO:LAB is a business area which invests in The Global Change Award is one of
companies that can add value to our business. the world’s biggest challenges for
During the last few years, we have invested early-stage fashion innovation. Initiated
in innovative companies such as Worn Again, by the non-profit H&M Foundation,
Re:newcell, TreeToTextile, Thread, amongst others. it calls for ideas that accelerate the

In 2018, we have further expanded our portfolio shift from a linear to a circular fashion
with the following investments: industry. This means changing the way
garments are designed and produced,
Moral Fiber was among the first winners of the shipped, bought, used, and recycled,
Global Change Award in 2016. The American inno- by adding disruptive technology or
vation company focuses on chemical recycling of new business models.
polyester fabrics. Our investment in Moral Fiber
helps us speed up the acceleration of recycling With almost 15,000 entries from
technologies available at scale. 182 countries since its inception, the

award is the go-to competition for
Colorifix has developed the first commercial bio- circular innovation and has been
logical dyeing process to help the textile industry called the Nobel Prize of fashion.
reduce its environmental impact by using fewer
chemicals, and less energy and water. The tech- The award’s five annual winners are
nology is scalable and does not require existing selected by a panel of international
infrastructure to be rebuilt. We will work closely experts. Amongst this year’s innovators
with Colorifix to support their pilot projects in the was a company making sustainable
textile supply chain. bio-textiles by using left-overs from
food crop harvests. As well as their
100% FAIR & EQUAL

share of the € 1,000,000 grant, winners
are invited to an innovation acceler-
ator provided by H&M Foundation,
Accenture and KTH Royal Institute of H&M group’s CEO Karl-Johan Persson together
Technology in Stockholm, which offers with the winners of Global Change Award 2018
at the ceremony in the Stockholm City Hall.
focused support to further develop

their innovations.
raw material to a garment’s end of Neither the H&M Foundation nor H&M
During the fourth year of Global life. Digitalization has the potential to group take any equity or intellectual
Change Award, H&M Foundation kept disrupt at the root, reinvent how things property rights in the innovations. The
an extra eye on digital innovation. are done and help producers, sellers aim of the challenge is to find innova-
“Digital innovations can make signifi- and customers to become circular”, tions that allow major change for the
cant impact on efficiency planning and says Erik Bang, Innovation Lead, H&M entire industry, and the winners can
resource use – all the way from making Foundation. collaborate with whomever they want.
HOW WE REPORT
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 8 24 O F 1 0 9
OVERVIEW
Transparency
VISION & STR ATEGY

Transparency is the key to build trust and enable customers
to make conscious choices. It is also an important driver for Helping our customers make conscious choices
improved performance and creation of stronger impact across During 2018, a tight-knit team of sustain-
ability experts, IT architects, business
our value chain. Beyond disclosing where and by whom our
developers and other experts from
products are made, we also work to make the impacts of how across H&M group has worked intensely
they are made measurable and comparable. to develop a solution through system

integration and automation. Combin-
We are convinced that transparency is measurable and comparable across ing this solution with the results of our
the foundation for gaining trust and the industry. In this way, transparency in-depth customer research, during 2019
building strong relationships – with becomes a key tool to lead the change we will be offering the following in our
our customers, colleagues, investors, towards a sustainable fashion industry. online stores:
business partners and other stakehold-
ers. That’s why we provide transparent We are working on transparency in two • Information about each product’s mate-
information about our business and key areas: rial, including how sustainable it is, and
value chain through various channels our specific sustainability goals for it.
100% FAIR & EQUAL

and dialogues – this report being just 1. TRANSPARENCY TO EMPOWER
one of them. By sharing our ambitions, THE CUSTOMER’S CHOICE • Where each product is produced, down
challenges, solutions and progress in an We are committed to inspiring our cus- to a country, supplier and factory level.
open and honest way, we can collaborate tomers to make more sustainable choices.
more effectively with others, and gain One way we can do that is by bringing • Information about how to recycle the
mutual trust. the story behind the product closer to the garment and why it is important to do so.
customer, which means being transpar-

However, we believe there is more to ent about exactly where and how it has This function will be available for all our
be done. We want all the players in our been made, the materials used, and its own textiles, footwear, and accessory
value chain to be able to make conscious social and environmental impacts. In products in our online store at H&M and
and informed choices. That means we recent years, we started sharing product H&M Home. Looking ahead, we want to
need to make it easier for consumers to stories for H&M’s Conscious Exclusive see an industry standardised index for
understand where and how the products collection and ARKET’s regular assort- each product that makes it even easier
they buy have been made. It also means ment. For some ARKET products, we also for our customers to make sustainable
we need to create even greater traceabil- share the material supplier’s name. In choices.
HOW WE REPORT
ity in our value chain, and make impacts 2019, we will take this a step further and
OVERVIEW
make it possible for H&M and H&M Home cus-

tomers to see more specific information for most Enabling informed decisions through consumer-facing transparency
VISION & STR ATEGY

of our products. This includes information such
as in which factory a product was made and what Sarah Ditty, you are a Policy Director
materials were used to make it. at Fashion Revolution: What is con-
sumer-facing transparency for you?
Creating this transparency is a big and important For Fashion Revolution, transparency
step, but it doesn’t immediately show how sus- means credible, comprehensive and
tainable a product is. To answer this question,

comparable public disclosure of data
we need a common measurement for fashion and information about brands and
products that allows consumers to compare in a retailers’ supply chains, business prac-
simple and trusted way. This is why we have been tices and impacts of these practices on
involved in developing the Higg Index. workers, communities and the environ-
ment. Transparency is not just sharing
H&M group is one of the founding members of the good stories, nor disclosing only
the Sustainable Apparel Coalition (SAC), an compliant, well-performing suppliers.
industry-w ide alliance that, among other activ- It’s about presenting the full picture,

ities, is developing the Higg Index – a tool to both good and less good, in the effort
help create a more transparent and sustainable to allow for greater scrutiny and to
fashion industry. The Higg Index aims to score help drive faster improvements. There
sustainability performance, making it easier for is power in sharing the challenges we
customers to benchmark brands, manufacturers all face, as well as where progress has
and individual products so that they can make been made.
more sustainable choices.
Why is it important?
Creating the required alignment within the Transparency information allows Sarah Ditty.
fashion and design industry is taking longer consumers to make more informed
100% FAIR & EQUAL

than we expected. We have been pushing for this decisions about the impacts of the
alignment from the beginning but, as with other products they buy. If companies truly to publish a list of its manufacturers rable, easy-to-use and verifiable data
collaborations, bringing many actors together is want to build sustainable businesses and suppliers, a crucial step towards and information about H&M group’s
a significant challenge. Nevertheless, we are con- for the future, they need their custom- greater accountability. This information practices and impacts in the future. We
fident that the Higg Index will become a trusted ers to act more responsibly and sus- helps trade unions and other civil soci- are excited to see transparency infor-
tool for consumers. tainably and that requires awareness, ety organisations to better understand mation provided at the product level.

information and education. This is what where products are being made. H&M This is a huge step forward, enabling
consumer-facing transparency can do. scores within the ten highest brands in customers to make more informed
Companies can literally help create our annual Fashion Transparency Index, decisions about the products they buy
better future customers. and this shows that H&M is striving from H&M. Hopefully in the future this
year-on-year to provide more informa- sort of transparency will be available
How do you see H&M group’s role tion about its sustainability policies, to consumers on every product they
and performance in this area so far? practices and impacts. We hope to see purchase from any brand or retailer,
H&M was one of the first major brands even more comprehensive, compa- big or small.
HOW WE REPORT
OVERVIEW
PROGRESS H&M group hosted a

• We were ranked in the top 5 of Fashion Transparency Hack in
VISION & STR ATEGY

Los Angeles.
Revolution’s Fashion Transparency Index,
scoring 55% (highest score 58%). While
we acknowledge this recognition, we know
there is more for us to do.
• Scaling our transparency work, we

developed a solution that will provide our

customers with sustainability information
on products for H&M and H&M Home.
• We arranged a Transparency Hack in

Los Angeles, USA, bringing together
future generations, thought leaders and
change-makers with tech, sustainability
and fashion expertise for a day full of

ideation sessions. The aim was to pres-
ent scenario solutions for a transparent
fashion future. We believe that if we colla
borate across the industry and use new
technologies such as blockchain and AI,
we can push the fashion industry towards
becoming fully transparent.
• ARKET has conducted a pilot project to

better understand the usage of blockchain
100% FAIR & EQUAL

in connection to transparency. Blockchain
is a ledger or table that businesses use
to keep track of their credit and debit.
The distinguishing feature of block chain
is that it cryptographically chains verified
data into blocks. That means once info is

added into the system it can’t be modified
without everyone connected into the chain
being informed. diverse membership, each with their own • Over the years we have learned that it research to address this gap. H&M joined
commitments and timelines. While we are is very difficult to find solutions that suit an insight study with several other fash-
LEARNINGS confident that the Higg index will deliver customers’ needs for sustainability infor- ion brands in SAC to learn more about
• We are working hard to promote a con- as a ground-breaking tool for transparency mation. There is currently little knowledge customer expectations in China, Europe
sumer-facing Higg Index so our customers and comparability, we acknowledge that available on how exactly customers want and the US.
can compare a product’s sustainability creating a common standard for so many further information. That is why, amongst
HOW WE REPORT
performance across brands. SAC has a actors takes time. other things, we are conducting further
OVERVIEW
2. TRANSPARENCY TO DRIVE transparent supply chains and dis-

SUSTAINABILITY IMPACT IN closures on the impact on people and
VISION & STR ATEGY

SUPPLY CHAIN the planet. SAC’s Higgs Index creates
In 2013, we were one of the first fash- a ‘common language’ for transparent
ion retailers to make our supplier list product information, allowing compa-
public. This list includes tier 1 manu- rability across brands.
facturing supplier factories for 100%
of H&M group products and tier 2
factories, which account for 65% of our

products. Creating greater traceability
in our supply chain means knowing
exactly where our products (and their
materials) come from. One of the
biggest challenges in creating greater
traceability is collecting trusted data
throughout our supply chain. We see
that new emerging technologies such

as blockchain can potentially help us
tackle this challenge.
Mapping the apparel industry’s

complex supply chains is both a joint
& Other stories.
effort and a groundbreaking and
unparalleled initiative. Within the
frame of SAC, the sharing of data for PROGRESS
brands, textile manufacturers, mills • H&M group signed the Transparency
and material suppliers’ locations and Pledge and added more detailed
100% FAIR & EQUAL

sustainability performance on a joint information to our public supplier list.
platform is a significant step towards Our supplier list covers 100% of our
public transparency. However, because tier 1 and 65% of our products with
of some unanimity issues within SAC tier 2 suppliers. We have also added
membership, the timelines for devel- strategic tanneries this year.
oping a transparency platform for data

sharing are somewhat delayed. • 100% of our tier 1 and tier 2 supplier
factories* used the Higg Index Facility
H&M group recently joined the Exec- Environmental Module during 2018,
utive Board of SAC to further drive making us one of the widest users
industry-wide transparency of the of the first tool developed by SAC.
fashion and apparel industry. This is For more information on the perfor-
needed now more than ever, with the mance, see page 96.
increased expectations from custom-
HOW WE REPORT
*Apparel and footwear supply chains excluding
H&M Home. ers, stakeholders and legislators for factories with less than 25 employees.
OVERVIEW
Rewarding sustainable actions
VISION & STR ATEGY

We believe it is important to encourage and empower
sustainable actions throughout our value chain. Because we
know incentives and reward systems help achieve long-term,
positive behavioural changes, we are using them to engage
our business partners, colleagues and customers to accelerate
progress towards our sustainability vision.

We have developed and are using across functions within H&M group.
different reward systems, tailored to Crucially, this includes goals set at an
the needs of our three changemaker executive level. We include sustaina- H&M Paris. & Other Stories.
groups. bility goals in our overall management
evaluation process and we regularly
BUSINESS PARTNERS follow up on function specific goals. Rewarding customers for garment collecting
We are working with our business part- We encourage colleagues to contribute H&M All H&M stores ship with I:CO, & Other These can be found in all
ners through our Sustainable Impact to change in the workplace and in their around the world encour- Stories also encourages Monki stores, anywhere
Partnership Programme (SIPP) to raise communities through a range of strate-
100% FAIR & EQUAL

age customers to bring customers to return the in the world.
their environmental and social perfor- gies and activities. unwanted garments and brand’s empty beauty
mance. We reward high-achieving and textiles for recycling, containers for recycling. WEEKDAY All Weekday
ambitious partners with more orders, CUSTOMERS re-wear or reuse. Custom- Customers are rewarded stores in Sweden currently
training opportunities and long-term To achieve our sustainability ambi- ers can use the in-store for sustainable behaviour offer garment collecting.
contracts. This helps drive environ- tions and drive change across our garment collecting scheme with 10% off their next This initiative will be rolled
mental and social progress across our industry, we also need active partic- to return garments from purchase. out worldwide during 2019

whole industry. Read more about SIPP ipation from our customers. We offer any brand, in any condition. and will offer customers
on page 95. our customers incentives for sustai As a reward, we offer a MONKI All Monki custom- who bring in their unwanted
nable actions, which can increase voucher towards their next ers are rewarded with a garments a 10% discount
COLLEAGUES customer interest and knowledge in H&M purchase. “10% off your next pur- on their next purchase.
We want all our colleagues to contrib- sustainability and create positive chase” voucher when they
ute to our sustainability work and we behavioural change. In this way, we & OTHER STORIES As bring a bag of unwanted AFOUND Offers garment
reward them for doing so. This involves encourage our customers to re-wear, well as collecting textiles textiles for the garment and shoe collecting in all
implementing and measuring sustain- reuse and recycle unwanted clothes via H&M group’s partner- recycling service. physical stores.
HOW WE REPORT
ability goals at different levels and whenever possible.
OVERVIEW VISION & STR ATEGY 100% LE ADING THE CHANGE 100% FAIR & EQUAL STANDARDS & POLICIES HOW WE REPORT
100% CIRCULAR & RENEWABLE
30 OF 109
COS.
100% CIRCULAR
& RENEWABLE
OVERVIEW
KEY FACTS & FIGURES 2018 / KPIS AND GOALS / 100% CIRCUL AR & RENEWABLE EXPL AINED / BECOMING CLIMATE POSITIVE
VISION & STR ATEGY

We reduced CO₂ We set a new circular
emissions from our own packaging strategy
operations by a further and roadmap for the
11% compared with 2017. entire value chain.

W E H AV E D E V E L O P E D A N E W WAT E R R O A D M A P
We launched Afound, a brand F O R O U R S U P P LY C H A I N W H I C H C O N TA I N S O U R
KEY GOALS AND ACTIONS UP UNTIL 2022.
with the mission of giving
unsold products a new life.
H&M Group has developed 95% of cotton
100% FAIR & EQUAL

57% of all materials we use 2030 GHG emissions reduc- used by H&M Group
to make our products are tion goals that have been is recycled or other
recycled or other sustaina- approved by the Science sustainably sourced.
bly sourced materials. Based Targets initiative.

We collected 20,649 tonnes of textiles for reuse
and recycling through our garment collecting initiative.
That’s 16% more than last year and represents the
equivalent of 103 million t-shirts. O U R C I R C U L A R A N D R E N E WA B L E A M B I T I O N
HOW WE REPORT
C O N T R I B U T E S T O S D G 6 , 7, 1 2 , 1 3 , 1 4 , 1 5 , 1 7.
OVERVIEW
100% Circular & Renewable: KPIs and goals
VISION & STR ATEGY

Goal-setting is an ongoing process. We work with experts – both internally and externally – and follow a science-based approach to define targets and actions wherever possible.
The KPIs and goals below represent the initial key milestones along the way to achieving our ambition to become 100% Circular & Renewable.
100% Circular & Renewable

KPI 2015 2016 2017 2018 GOAL

% of recycled or other sustainably sourced materials of total material use (commercial goods) 20% 26% 35% 57% 100% by 2030 at the latest
% of recycled or other sustainably sourced cotton (certified organic, recycled or Better Cotton) 34% 43% 59% 95% 100% by 2020
Tonnes of garments collected through garment collecting initiative 12,341t 15,888t 17,771t 20,649t 25,000t per year by 2020
% of stores with recycling systems for main types of store waste 61% 71% 64% 63% 100%
% of facilities in own operations with water-efficient equipment 37% 51% 51% 64% 100% by 2020
100% FAIR & EQUAL

% supplier factories in compliance with ZDHC wastewater standard
75% 82% 84% 87% 100%
for conventional parameter*
% renewable electricity in own operations 78% 96% 95%** 96% 100%
% change in CO2 emissions from own operations (scope 1 + 2) compared with previous year –56% –47% –21% –11% Climate positive by 2040
% change in electricity intensity (kwh/sqm per opening hour compared with 2017) n/a n/a –2.7% –8.2% –25% by 2030

*2017 data is compliant with BSR, 2018 data and forward is compliant with ZDHC.
**Due to inaccuracy in calculation, the 2017 share has been corrected from 96% to 95%.
HOW WE REPORT
OVERVIEW
100% Circular & Renewable explained
VISION & STR ATEGY

Our planet provides us with an customers care for and dispose of our prod-
ucts. A business model can only be truly cir-
abundance of natural resources. cular if it’s powered by renewable electricity,
However, with global demand rapidly which is why we are planning to use 100%
renewable electricity throughout our own
outstripping supply, the fashion
operations. Ultimately, our goal is to achieve
industry cannot continue to operate a climate positive value chain – a value chain
as it has in the past. At H&M group, that creates a net positive impact on the

STAGE A climate by 2040.
we believe that an industry-wide shift Design
from a linear to a circular business Making fashion circular also presents a
strong business case. By designing for circu-
model is the only solution. larity, maximising resource use by working
Circular models maximise resources and with recycled or other sustainably sourced
minimise waste. Using the current linear Our materials, prolonging product lifespan and
STAGE E STAGE B
model, less than 1% of material used to pro-
Product reuse & circular Material choice
creating a climate positive value chain, we
duce clothes across the industry is recycled will increase the efficiency and the value of
into new products.* But in a circular model,
recycling approach our operations and products. This will ena-
100% FAIR & EQUAL

resources stay in use for as long as possible ble us to continue designing and producing
before being regenerated into new products great, sustainable products while creating
and materials, resulting in a reduction in positive social and environmental impacts.
waste and negative impacts. They also open
for new business opportunities, such as our To become 100% circular, we are focusing on
newly launched Take Care concept that offers five key stages within our value chain that
STAGE C

products, services, inspiration, and guidance are applicable to both commercial and non-
STAGE D Production
on expanding the life of garments (read more Product use processes commercial products:
on page 49).
A. Design
To fulfil our 100% Circular & Renewable B. Material choice
ambition, we are building circularity into C. Production processes
every stage of our value chain; from the prod- D. Product use
ucts we design and make, to the packaging, E. Product reuse and recycling
HOW WE REPORT
materials and processes we use, to how our * Source: A New Textiles Economy: Redesigning Fashion’s Future by
Ellen MacArthur Foundation and CFI.
OVERVIEW
STRATEGIC TARGETS FOR The project adopts a global perspective

SUSTAINABLE FASHION and incorporates the whole fashion Collaboration with MFC: Creating a fashion
VISION & STR ATEGY

H&M group is working strategically value chain. It combines the principles
on sustainability, using science and of the circular economy from the Ellen industry of the future
partnerships to help us lead the MacArthur Foundation with the science Make Fashion Circular (MFC) exists
change towards a circular and renew- of planetary boundaries from the Stock- to drive the level of collaboration and
able fashion industry. We are con- holm Resilience Centre. innovation necessary to create a fash-
tinuously developing new goals and ion industry that can thrive in the future.
roadmaps in all areas of our circular The principles of a circular economy

approach. act as guidelines for how the fashion The group brings together leaders
industry can thrive while remaining from a wide range of backgrounds,
One example is our research project within the earth’s limits. That means including brands, cities, philanthro-
with the Ellen MacArthur Foundation designing out waste and pollution, pists, NGOs and innovators. H&M
and Stockholm University’s Stockholm keeping products and materials in use, group is a core partner of MFC, which
Resilience Centre. The project, “A cir- and allowing nature to regenerate. Plan- means we are collaborating with other
cular fashion industry within planetary etary boundaries highlight the extent core partners to lead the transition to
boundaries”, is an ongoing collabo- to which human activities can impact a circular economy.

ration continuing through 2019. The the environment without harming our
project team is using a science-based planet’s critical ‘life support systems’. In This year, MFC has created working
approach to help H&M group and the other words, planetary boundaries mark groups to focus on new business
wider industry set targets for a more the edges of the playing field while the models that increase clothing use,
sustainable fashion future. circular economy shows us how to play. inputs that are safe and renewable,
and solutions for turning used clothes
into new ones.
a fashion industry
“Collaboration
100% FAIR & EQUAL

and innovation are key to creating
where clothes are used more
and never become waste. As a core partner of
Make Fashion Circular, and a brand with signif-

icant global presence, H&M group is playing an
essential role in driving momentum towards this

new vision for the industry.
”
FR ANCOIS SOUCHET, LEAD,
HOW WE REPORT
Photo credit: Tiffany Tsang. MAKE FASHION CIRCUL AR
OVERVIEW
OUR PACKAGING STRATEGY developed between the Ellen MacArthur CIRCULAR BUILT ENVIRONMENT
We take a holistic circular approach to Foundation and UN Environment. This We want to lead the change and take a
VISION & STR ATEGY

packaging, taking all the stages of the represents a unique opportunity for busi- holistic approach towards circular built
value chain into account. Packaging, nesses and governments to step forward environment, increasing our operational
particularly when it’s made from plastic, as global leaders working on solutions efficiency and the longevity of our stores
has a big environmental impact – from that address the root cause of plastic and offices. To do this, we are developing
raw materials, to manufacturing, to use waste and pollution. In the agreement, a strategy that covers the whole value
and disposal. Our industry, as well as we commit to: chain within our built environment.
others, need to shift from a linear to While we’re working on this, we continue

a circular packaging model. Plastic • Take action to eliminate problematic to collaborate with suppliers and exter-
packaging is front-of-mind for custom- and unnecessary plastic packaging nal experts to identify and implement
ers, colleagues and legislators, which by 2025. actions that can shift us from linear to
means we have a good opportunity for circular stores and offices.
rapid change in this area. • Take action to move from single-use
towards reuse models where relevant We have continued to work with the
During 2018, H&M group collaborated by 2025. Ellen MacArthur Foundation to develop
with the Ellen MacArthur Foundation to tools to assess the circularity of our

develop a circular packaging strategy that • 100% of plastic packaging to be non-commercial goods and suppliers.
covers the reduction of packaging used, reusable, recyclable or compostable We have started the implementation
& Other Stories beauty products.
circular design, material use and re-use, by 2025. and are continuing our work to achieve
and recycling systems. the already set goal, that at least 80% of
new store concepts (H&M brand to begin
We want to lead the change in circular with), should be circular by 2025.
packaging, both for commercial and
non-commercial goods, and have set For example, we recently rebuilt one of
the following goals: our H&M stores in Stockholm, Sweden,
using mainly building materials and
100% FAIR & EQUAL

• We have set a circular design goal that interiors from existing store materials,
all packaging should be designed to production samples or previous purchase
be reusable, recyclable or compostable leftovers. This shortened the lead-time
by 2025. along the entire value chain, maximised
the value and use of the resources, and
• We will use 100% recycled and other reduced our climate impact. We are cur-

sustainably sourced materials by rently looking into scaling this project.
year 2030.
• We will reuse or recycle 100% of packag-

ing waste from our own sites by 2025.
In addition to our circular packaging

strategy, H&M group has signed the New
HOW WE REPORT
Plastic Economy Global Commitment, H&M store in Stockholm built using mainly reused materials.
OVERVIEW
A. Design
VISION & STR ATEGY

Design is our first in sample rounds and use of resources.
Now, designers are able to iterate on
opportunity to bring products in 3D, until they are sure it’s
circularity into our value the right style. This removes the room
for error both in designing the desired
chain. Incorporating
products for our customers, but also
circular thinking early on paves the removes potential communication
way for later stages to follow suit. errors between us and factories.

Circular design involves addressing the quality and
durability of products, as well as their chemical
input, materials and production processes. It also
means finding ways to expand product lifespan,
enabling better care and repair for our products
and creating greater opportunities for rewear, reuse
COS: Repurposing cut offs through design
and recycling. We also apply circular design to our This hoodie was designed using COS has always worked according to cut offs are now collected, shredded,
NCG (Non-Commercial Goods), such as packaging 3D visualization technology. the principles of timeless, functional compacted, spun, knitted, dyed and
and stores, to increase their operational efficiency and considered design. This approach constructed into sweatshirts. The recy-
100% FAIR & EQUAL

and longevity. PROGRESS honours longevity and durability, and cled cotton is blended with some virgin
• We have set a circular design therefore translates well into circular cotton to ensure its quality meets our
CIRCULAR GARMENT DESIGN goal that all packaging should be thinking. Following the recent success customers’ high expectations.
All H&M group brands have their own teams of designed to be reusable, recyclable of the capsule collection “10”, which
designers and buyers. Having a circular approach or compostable by 2025. focused on clever patternmaking and COS used a new recycling supplier to
in the design stage is crucial for creating circular garment construction to reduce cut off process the fabric, but the sweatshirt

products. Our designers are trained in choosing the • H&M group has signed up to the waste, the brand launched the Repur- itself is produced in the same factories
right materials, which means choosing materials Global Fashion Agenda’s Circularity posed Cotton Project. and using the same high standards as
that are recycled or sustainably sourced and suited Commitment. This exists to encour- all other COS garments. That means not
to longevity, reuse and recyclability. age more companies in the fashion Despite minimising cut offs as much only is this product made from recycled
industry to support and practice the as possible, COS knew there was still fabric, it is also durable by design. It’s
We are continuing to develop our circular design principles of circularity, including some high-quality cotton going to early days, but the project could save
strategy. During the past few years we have been uti- circular design goals. We continue to waste in their supply chain. Through up to 1.5 tonnes of cotton cuttings from
lizing the latest technologies in 3D visualization of report progress on the Global Fashion the Repurposed Cotton Project, these going to waste every year.
HOW WE REPORT
fabrics and products, which has lead to a reduction Agenda Circularity Commitment.
OVERVIEW
B. Material choice
VISION & STR ATEGY

Our goal is to use 4 .1 . 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
100% recycled or other
sustainably sourced 100%
materials by 2030 at the GOAL 2030
latest. In 2018, we achieved 57%. RECYCLED

OTHER SUSTAINABLY
Recycled materials are a win-win: they stop waste SOURCED MATERIALS*

material from going to landfill and reduce the use
of virgin raw materials (as well as chemicals, energy 1.4%
and water used to make them). Similarly, sustain-
ablysourced bio-based materials are naturally
grown or cultivated, and better from an environ-
mental perspective. 0.5% H&M Conscious Exclusive.
55.2%
We use third-party verified lifecycle assessment data 0.7%
to evaluate the sustainability credentials of recycled
35% Recycled materials
0.5%
and sustainably sourced materials. This includes 26% H&M group uses several types of recycled mate-
100% FAIR & EQUAL

LCA data as well as external material benchmarks 0.2% rials, including recycled cotton, polyester, nylon,
19%
based on LCA data, such as the Material Sustaina- 13% wool, cashmere, plastic, silver and down. We are
bility Index within the Higg Index. constantly working to increase our use of recycled
materials. However, for many types of textiles, par-
We have specific sourcing policies for many of our ticularly blended fibres, viable recycling solutions
14
15
16
17
raw materials. These typically require the use of 18 either do not exist or are not commercially availa-
20
20
20
20
20

credible third-party certification schemes to ensure *Not all sustainably sourced materials can be naturally grown ble at scale.
or cultivated i.e. minerals or stones. In these instances, we
sustainable sourcing, such as Organic and recycled set up material-specific policies such as the use of external
standards, the Forest Stewardship Council (FSC) standard schemes to secure sustainable sourcing. To tackle this challenge, we are creating demand
and the Responsible Wool Standard (RWS). for solutions and working with scientists and
PLUS, an initiative which seeks to identify, optimise innovators, including investments in Worn Again,
We are collaborating with industry experts to and accelerate sustainable materials while making Re:newcell and Moral Fiber, and engagement in,
ensure we successfully integrate recycled and them widely available. So far, it has awarded grants for example, DEMETO/GR3N, Fashion Positive
sustainably sourced materials into our value chain. to three recycling technology developers – Worn PLUS and H&M Foundation’s Hong Kong Research
HOW WE REPORT
For example, we are working with Fashion Positive Again, Moral Fiber and Tyton BioSciences. Institute of Textiles and Apparel (HKRITA).
OVERVIEW
PROGRESS • H&M group is part of DEMETO, a

• 57% of the materials used by H&M research project for polyester recycling
VISION & STR ATEGY

group were recycled or other sustain- with an objective to build a pilot plant
ably sourced. This is an increase from designed to treat about 500 tons of poly-
35% in 2017. ester waste per year. The project is
funded by the EU and its partners.*
• We have set a goal to only use
recycled or other sustainably sourced LEARNINGS

material for packaging by 2030. • The use of any synthetic fibre creates
the challenge of microfibre shedding.
• H&M group is the second biggest We are taking this very seriously and are
user of recycled cotton in the world, looking for solutions. You can read more
and the sixth biggest user of recycled on page 48.
polyester. This is according to The
Textile Exchange’s Preferred Fiber • We want to further accelerate the use of
& Materials Market Report 2018. recycled fibres in our products. However,
to do this and to be able to recycle all

• We used the equivalent of over 325 fibre types and blends at scale we need
million plastic PET bottles in our recy- more technological advancement in recy-
cled polyester. cling technologies. H&M group supports
The award-winning hydrothermal recycling technology has been put into
this development by investing and col- practice at scale, using only heat, water and less than 5% of a biodegradable
• Several of our brands continued laborating with innovators such as Worn green chemical to recycle cotton and polyester blends into new fibres.
to replace conventional polyester Again, Re:newcell and H&M Foundation’s
and nylon with recycled alternatives. Hong Kong Research Institute of Textiles
ARKET and H&M worked with a 100% and Apparel (HKRITA). H&M Foundation launches ground-breaking
regenerated nylon fibre material called textile-blend recycling facility
Econyl®, while all Weekday swimwear
100% FAIR & EQUAL

was made from recycled nylon and In 2016, the H&M Foundation opened a recycling facility growing global population,”
recycled polyester. and the Hong Kong Research in Hong Kong, the first of its says Erik Bang, Innovation
Institute of Textiles and kind, putting the new tech- Lead at H&M Foundation.
• We used recycled silver to make Apparel (HKRITA) formed a nology into practice at scale.
jewellery in H&M’s Conscious Exclusive four-year partnership which, The H&M Foundation’s
collection 2018. By recycling metals, we in 2017, led to a technological “This is a significant step 5.8 million euro projected

avoid the negative impacts of mining. breakthrough. Using a hydro- towards a new fashion investment in HKRITA has
thermal method, HKRITA industry that operates within been made possible through
• We invested in Moral Fiber, an Ame presented a solution for the planetary boundaries. As the surplus from the H&M
rican innovation company developing recycling cotton and polyes- we scale up and make this group’s in-store garment col-
a unique technology for polyester ter blends into new fibres. technology freely available to lecting programs. The H&M
recycling. the industry, we will reduce Foundation allocates 50% of
In autumn 2018, the H&M the dependence on limited the total donated surplus to
*The DEMETO project has received funding Foundation and HKRITA natural resources to dress a research on textile recycling.
HOW WE REPORT
from the European Union’s Horizon 2020
research and innovation programme under
grant agreement no 768573.
OVERVIEW
Sustainably sourced COTTON formed to tackle sector-wide challenges PROGRESS

materials Our goal is to use 100% sustainably and accelerate the growth of the organic • 95% of our cotton was recycled or
VISION & STR ATEGY

sourced cotton by 2020, which includes cotton market. In 2018, prototype-sourcing other sustainably sourced cotton (Better
The production of many of the raw mate- certified organic cotton, Better Cotton pilot projects in India delivered results and cotton, organic or recycled cotton).
rials used in our products both depends (BCI) and recycled cotton. learnings to guide us in securing supply
on and impacts natural landscapes and chain transparency and integrity. It was • H&M group is the biggest user of
their biodiversity. We depend on eco- We are a founding partner of the Organic also an important year in the initiative’s preferred cotton (for H&M group this
system services like pollination, water Cotton Accelerator (OCA) and are an strategy formation for long-term farmer consists of better cotton, organic and
cleansing and carbon sequestration that active member of the board. The OCA was capacity building and sustainable sourcing. recycled cotton), and the second biggest

forests, wetlands and other natural sys- user of recycled and organic cotton,
tems provide. It is therefore critical that according to The Textile Exchange’s
the sourcing of our raw materials is done Preferred Fiber & Materials Market
4 . 2 . S U S TA I N A B L E C O T T O N 4 . 3 . B R E A K D OW N O F
in a responsible way that respects people, I N % O F T O TA L C O T T O N U S E S U S TA I N A B L E C O T T O N S O U R C E S Report 2018.
animals and the environment by protect-
ing and enhancing human rights, natural
100% • In autumn of 2018, Monki reached its
systems and biodiversity. We also aim to GOAL 2020 goal to source 100% of its cotton prod-
source materials that have the potential ucts sustainably. Monki’s sustainably-
to be used as closed-loop materials. This 0.3%

sourced cotton includes organic cotton,
means they can be recycled or regener- recycled cotton and Better Cotton
ated, making them typically less pollut- sourced through the Better Cotton Ini-
ing than other materials. tiative. Cheap Monday has also reached
95% RECYCLED COTTON
their goal to use 100% sustainably
BETTER COTTON
In 2018, H&M group joined sourced cotton, in their case, meaning
EFFECTIVE, a multi-national research ORGANIC COTTON
organic or recycled cotton during 2018.
project with a focus on developing bio- As for Weekday, all cotton in their denim
based polyamide (nylon) fibres to make
0.2%
79.9% and basics range is recycled or organic.
recyclable textile products. The project is
100% FAIR & EQUAL

funded by the EU and its partners*. • We joined the EU project EFFECTIVE,
59%
0.1% with a focus on developing 100% bio-
47% based and recyclable nylon.
43% 0.2%
28.3%
34%
0.1%

19.6%
22% 9.7%
14.5% 14.6%
12.4% 13.9% 12.1%
* This project has received funding from the
Bio-Based Industries Joint Undertaking (JU)
under grant agreement No 792195. The JU
receives support from the European Union’s
Horizon 2020 research and innovation
15
16
17
18
14
14
programme and the Bio-Based Industries

15
16
17
18
20
20
20
20
20
20
20
20
20
Consortium.
20
HOW WE REPORT
An independent assurance statement related to GRI 301-1 is provided on page 106.
OVERVIEW
WOOD-BASED MATERIALS PROGRESS fibres sourced from ancient or endan-

H&M group depends on forests for many • According to the Textile Exchange’s gered forests and other controversial
VISION & STR ATEGY

of our materials, including solid wood, Preferred Fiber & Materials Market Report sources, and to replace them with sus-
man-made cellulosic (MMC) fibres, paper 2018, H&M group was the biggest user of tainably sourced alternatives. H&M group
and board material. Forests make up preferred MMC fibres and the biggest user is one of the founding members of the
some of the world’s largest and most of preferred Lyocell. CanopyStyle Leader for Forest Conserva-
important ecosystems; tropical rain tion and has been actively working with
forests cover less than 10% of the planet’s • We released the updated version of the CanopyStyle initiative since 2014.
our man-made cellulosic sourcing policy This initiative is working to eliminate

surface yet contain at least two-thirds of
its biodiversity. in 2018. sourcing from ancient and endangered
forests, as well as closing the loop for tex-
However, forests are rapidly being • H&M group is committed to the C hanging tiles and supporting the development of
destroyed through illegal (or badly Markets Roadmap for responsible viscose alternative MMC fibres made from more
managed) logging and unsustainable and modal fibre manufacturing. The objec- innovative sources, such as agricultural
land conversion. Responsible sourcing tive of the roadmap is for viscose and modal residues and recycled textiles.
policies promote sustainable forest producers to move towards a closed-loop
management practices and help combat manufacturing system. By 2025 H&M group In our MMC sourcing policy (updated

illegal logging and deforestation. We will only use viscose and other man-made end of 2018), we commit that by the end
commit to not source wood and forest cellulosic fibre producers with good of 2020, 100% of our man-made cellu-
materials from: environmental practices that align with the losic fibres will be sourced from low risk
roadmap, such as closed-loop processing suppliers that have completed Canopy-
• Forests with threatened high of water and chemicals. We are working to Style audits and attained a “green shirt”
conservation values (HCV) reduce the chemical intensity of viscose in H&M Home. in the Hot button report*. This means
partnership with the Zero Discharge of Haz- they will indicate a low risk of sourcing
• Forest areas that have been illegally ardous Chemicals (ZDHC) initiative. Please from ancient and endangered forests. By
harvested read more about this work in the chemical MAN-MADE CELLULOSIC FIBRES the end of 2025, all H&M group MMC
management section on page 42. (VISCOSE, RAYON, LYOCELL) fibres will come from either FSC certified
100% FAIR & EQUAL

• Natural forests cleared for Man-made cellulosic (MMC) fibres are forests or from other, more sustainable
plantations or other use • H&M group is one of the investors in one of the world’s biggest group of fibres, and innovative sources, such as agricul-
TreeToTextile, a Swedish innovation com- and an important material group for us as tural residues or post-consumer textiles.
• Forest areas where traditional pany that is working with new technologies well. MMC fibres include viscose, lyocell
or civil rights have been violated that use wood pulp to make textile fibres in and modal, and are made by dissolv ing WOOL
an environmentally friendly way. pulp, which today is mainly produced Although wool represents a small share

We aim to exclude the above by increas- from wood. However, since the world’s of our total material use, it is still an
ing our use of FSC (Forest Stewardship • H&M group has contributed to the devel- forests face challenges such as forest important fibre and has benefits that
Council) certified materials, and by opment of ForestMapper, a new public depletion and deforestation, H&M group are currently hard to replace. Our goal
increasing our use of alternative fibre interactive tool that identifies ancient and has engaged with others to push this is that, by 2022, we will only source our
sources, such as agricultural residues endangered forests. ForestMapper was industry in a more sustainable direction. virgin wool from farms certified to the
and post-consumer textiles. These can developed to support the marketplace in Responsible Wool Standard (RWS).
work as replacements for wood fibre in, making responsible sourcing decisions. We are collaborating with the not-for-
for example, man-made cellulosic materi- You can take a trip through the world’s profit group Canopy and more than 160 *The Hot Button Report is a tool that enables brands and
HOW WE REPORT
retailers to assess producers’ impact on the world’s forests,
als and paper. forests here. other brands to eliminate the use of MMC as well as their leadership in finding solutions to eliminate
endangered forest fibre from their supply chain.
OVERVIEW
This will ensure we only source wool ARKET, one of the first brands We have teamed up with other brands and
fibres from farms that respect animals in the world to introduce
organisations to work together for a more
VISION & STR ATEGY

Responsible Wool Standard
and the environment. in their collection. sustainable leather supply chain. This
includes working with the Responsible
PROGRESS
Leather Roundtable, driven by the Textile
• 100% of our tier 1, 2 and 3 suppliers Exchange, the Leather Working Group
have been briefed on the new RWS. and its sub-group on animal welfare.
• ARKET became one of the first brands

We are systematically working to inte-
in the world to introduce the Responsible grate tanneries into our social and envi-
Wool Standard in their collection. ronmental sustainability assessments.
During 2018 we have further reinforced
LEARNINGS
our sustainability commitment for
• Industry challenges and lack of trace leather products, putting the focus on
ability and transparency in the mohair chrome-free solutions for the coming
supply chain made us act decisively. PETA years. By 2025, all our animal-based
revealed systematic animal abuse in the leather will be chrome-free and originate
mohair industry in May 2018. We stopped

from more sustainable sources.
buying products containing mohair in mid-
2018 and by 2020, we will have phased However, because leather has so many sus-
out mohair completely. tainability challenges – from farm level up
to finished product – we are also focused
• While cashmere is popular for its soft on finding more sustainable non-animal
texture and known as a high-quality mate- leather alternatives made using plants and
rial, it comes with both environmental and other bio-based materials. We are increas-
animal welfare challenges. As part of our ingly optimistic about the potential of
2030 goal to only use sustainably sourced these innovative alternatives.
100% FAIR & EQUAL

materials, we have decided to gradually
phase out conventional cashmere and OTHER SUSTAINABLY SOURCED
replace it with more sustainable options MATERIALS
with similar high value for our customers. All the virgin down we use in our prod-
ucts comes from farms certified to the
LEATHER Responsible Down Standard (RDS). In

We are continuously working towards 2018, we also introduced recycled down
a more transparent leather supply and feathers into our products, which
chain. Even though leather stands for a is collected from post-consumer goods.
very small fraction of our total material According to the Textile Exchange’s
use, we want all the animal-derived 2018 Preferred Fiber Market Report,
leather we use to come from sources H&M group is the world’s largest user
we know are proactively addressing of preferred down, which includes both
their environmental, social and animal RDS certified, and post-consumer
HOW WE REPORT
welfare impacts. recycled down.
OVERVIEW
C. Sustainable production
VISION & STR ATEGY

Sustainable production hazard-based scoring system to rate chemi-
processes are central cals and formulations based on human health
and environmental toxicity, and automatically
to circular systems. In designs hazardous substances out. This is a
the fashion and design prerequisite for circular economy.
industry, we rely on water and We have also re-launched a Positive List

chemicals in most of our production of chemicals that we promote throughout

our supply chain. This Positive List will be
processes. To achieve sustainable
included in the Zero Discharge of Hazard-
production and our larger 100% ous Chemical (ZDHC) Gateway, as a web-based
Circular & Renewable ambition, industry platform to choose the best chemi-
cals. We are working to align all the tools and
we must address our chemical and standards within the fashion industry, which
water management, and tackle the will help achieve our goal of zero discharge.
By 2030, all products on our Positive List
microfibre challenge that comes from should be assessed by their hazard to secure
using synthetic fibres.
100% FAIR & EQUAL

our vision for a toxic-free fashion future.
CHEMICAL MANAGEMENT We have continued to work alongside other

To ensure the safe use and reuse of materials brands and stakeholders on the ZDHC pro-
in the circular system, we must ensure good gramme, raising awareness and developing
chemical management. Our vision is to lead the shared industry standards and tools.
change towards safe products and a toxic-free

fashion future. Using recycled materials is a key element in
the circular economy. However, increasing
In 2018, we started the process to adopt the use of recycled materials while staying
Screened Chemistry to enable us to select the toxic-free presents a challenge. We have there-
best available chemicals for our production. fore initiated mapping of textile waste streams
Screened Chemistry goes beyond Restricted and assessing chemicals. In this way, we can
Substance List /Manufacturing Restricted Sub- make sure that textiles containing hazardous
stance List chemicals and identifies best-in-class substances are not allowed to re-enter the pro-
HOW WE REPORT
Photo credit: Sohail Na.
chemicals and safer alternatives. It includes a duction cycle.
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 8 42 O F 109
OVERVIEW
PROGRESS
• We adopted Screened Chemistry as
VISION & STR ATEGY

a method to choose the best available Chemical management roadmap
chemicals. Currently we have 5,300
chemical products on our positive list
and 53 chemical suppliers who apply WORKING AREAS LONG-TERM GOALS & AMBITIONS
Screened Chemistry, and we are
actively expanding this list by working
closely with the chemical industry. Traceability 100% traceability of input chemicals by 2030.

To further promote and develop
Screened Chemistry we hosted an
industry dialogue sharing our chemi- Leading the Push legislation and support public policies promoting progressive
Engagement chemical management.
cal vision and roadmap. Change
Push for higher ambition levels within the industry.
• 272 of our suppliers participated
in wastewater testing using ZDHC Transparency Share information with customers, right-to-know principle.
wastewater guidelines and the results Full public disclosure on wastewater discharge test data.

are published in the ZDHC Gateway.
• The Environmental Emissions Eval-

uator (a tool to help suppliers assess
and improve their chemical usage
and discharge) is now being used by Best
204 of our suppliers (49 suppliers in Safe Identify and promote better chemicals/technology to enable use
Available
Products of best available chemistries in supply chain.
2017) in China, Bangladesh, Pakistan, Chemistries
Cambodia, Vietnam, India, Turkey,
and Indonesia.
100% FAIR & EQUAL

• We participated in Re-Tex, a project
within the CE100, where mechani-
cally recycled cotton was tested for No discharge of hazardous chemicals in the supply chain;factories apply
restricted substances. We will further Zero Discharge 100% best chemical management practice and better chemistries/processes
evaluate and continue testing recy- without any impact of harmful chemicals on environment or health.

cled materials in collaboration with
other brands. Toxic Enable the circular goal to use 100% recycled or other sustainably
100% Circular sourced materials by 2030, from the chemical perspective (materials
Free
and processes).
• Together with ChemSec we pub-
lished a joint letter to push for stricter Clean factories.
legislation of recycled materials and to Cooperation Drive common practice in the development of industry standards,
put pressure on suppliers to increase systems and tools.
chemical transparency and use of
HOW WE REPORT
safer alternatives.
OVERVIEW
Water management
VISION & STR ATEGY

In 2018, a report on SDG 6 Clean Water and Sanitation Our 5-step water stewardship strategy
stated, “the world is not on track to achieve the global
SDG 6 targets by 2030 at the current rate of progress”.
With 2.3 billion people lacking basic sanitation services,
along with worsening worldwide water pollution, we are
resolved to push harder for action and progress on this 1. WATER AWARENESS 4. STAKEHOLDER ENGAGEMENT
issue, both within our value chain and beyond. Building water awareness at our Increased focus on collective action

company, at our suppliers’ facto- with other companies, governments
H&M group has been working to reduce water impacts ries and amongst our customers and NGOs in multi-stakeholder
to ensure high level understanding platforms to address water issues
throughout our value chain for over ten years. We began a
of the global water challenges and in specific focus regions.
long-term partnership with WWF in 2011, with the goal of their dependence on freshwater.
becoming a leading water steward within the fashion indus-
5. INFLUENCE GOVERNMENTS
try. With the help of WWF, we developed a five-step water 2. KNOWLEDGE OF IMPACT Increased focus on government
stewardship strategy.
Measuring water impact and risk influence by engaging with public
within our stores, warehouses and policymakers to manage water
During World Water Week in 2018, H&M group and

suppliers’ factories. basins in a sustainable way.
WWF called for action from the textile and apparel
industry to join forces with stakeholders, governments, 3. INTERNAL ACTION
development partners, wider industry and water users Improving the use of water within
to find solutions to today’s water-related challenges in our stores, warehouses and our
basins where we operate. suppliers’ factories.
OUR WATER STEWARDSHIP STRATEGY

H&M group’s water stewardship strategy takes an innova-
tive and integrated approach, going beyond factory lines to
100% FAIR & EQUAL

address large scale, local, environmental and social impacts
across our whole supply chain.
In 2018, we revised our Water Management requirements

for suppliers. This meant raising the bar for functional efflu-
ent treatment plants and requiring the measurement and
tracking of water streams for efficiency and benchmarking.

HOW WE REPORT
OVERVIEW
Water roadmap for supply chain
VISION & STR ATEGY

Water roadmap 2018–2022 As part of our water stewardship strategy, in 2018
we launched our new Water roadmap for our supply
chain, which contains our key goals and actions up
until 2022. It addresses the water-related challenges
we face around the world in a way that puts our
WATER WATER WATER
industry, and others, on the right path to SDG6, to
FOCUS
QUANTIT Y QUALITY CIRCUL ARIT Y

“ensure availability and sustainable management of

water and sanitation for all”.
Reduction of production 100% Effluent Treatment 15% of water will
water usage by 25% in Plant (ETP) functionality be recycled
comparison to baseline assessments to achieve out of total The roadmap represents a paradigm-shifting move
of 2017 for tier 1 and green grading production water towards integrated water management that values
GOAL
tier 2 (l/kg, l/pc, l/m) consumption

water as a shared resource. For example, we set an
100% ETP discharged ambitious goal to recycle 15% of wastewater back
Maximize the use of rain water quality are ZDHC 5% of discharge
water harvesting where
into production processes by 2022. We have started
wastewater compliant– wastewater will be reused
feasible Foundation Level within the facility to use five new water recycling solutions for tex-
tile and apparel production processes, which will

improve the quality and create opportunities for
water recycling in many of our production countries.
H&M group operates in many medium-to-high risk

Our vision is to have a positive impact on water water basins where challenges vary from water
in our value chain by stewardship actions. scarcity to water pollution. We have assessed the
risk of our suppliers’ production facilities with the
WWF Water Risk Filter and integrated the neces-
sary actions and goals in our roadmap. We have also
100% FAIR & EQUAL

aligned our ambition with SAC/Higg FEM3.0, which
we will use to measure the water sustainability per-
COLLECTIVE
FOCUS
ACTION
COMMUNICATION formance of our suppliers’ facilities.
Build and enhance relationships 100% H&M group PO staff to

in two prioritized driver basins receive basic water education

stakeholders via e-learning
GOAL
Progressive support for Raise supplier awareness on

science-based target water-related risks, mitigation
for water and efficiency measures
HOW WE REPORT
OVERVIEW
PROGRESS • 30.8% of our denim products have

• We have assessed all onsite industrial Efflu- achieved a green level EIM (Environmental
VISION & STR ATEGY

ent Treatment Plants (ETP) in our value chain Impact Measurement), which means they
and worked with our suppliers to secure used a maximum of 35 litres of water per
appropriate technology, operational control garment during the treatment processes.
and high levels of relevant competence.
We now have 93% functional ETPs in our • We have installed water-efficient equip-
supply chain. ment in 64% of our own stores, offices and
distribution centres. Our goal is to install

• Our current rate of compliance with ZDHC water-efficient equipment across all our
wastewater standard for conventional operations by 2020.
parameters is 87%.
• Our partnership with WWF contributed
• We trained all our tier 1 and tier 2 facilities to bringing in more global fashion brands
on Higg FEM 3.0. This supported them in to the WWF water stewardship program
making self-assessment of their environ- in Taihu, China. The first standardized
mental performance. We also rolled out our supplier training material was digitized

Towards Circular & Renewable training for and implemented for suppliers in autumn
facilities, which includes capacity building 2018.
on cleaner production with a focus on water,
energy and chemicals. LEARNINGS
• In many countries where we operate,
• Our work with resource efficiency and water is not considered as a valuable, natural
cleaner production programmes has resource. This lowers awareness and creates
continued to help our suppliers to reduce a perception that water is dispensable. We
their water consumption. In 2018 our efforts are supporting the Bangladesh govern-
projected water consumption reduction by ment’s Water Valuation Study to develop an
100% FAIR & EQUAL

4.7 million m3. operational shadow price for water, so its
value can be considered in policy, projects
• We also encourage our suppliers to use a and investment decisions in the public and
rain water harvesting system to efficiently private sector.
capture, store and use natural water sources
whenever feasible. In 2018, our partner • Many countries lack the required innova-

Hamza Textiles Ltd in Bangladesh harvested tion to provide solutions for reducing water
18.9 million litres of rain water. consumption. Processes for washing and
dyeing textiles still depend on water as a
• We have further improved our understanding carrier, and often require huge volumes of
of where the water in our supply chain comes water. Newer technology and innovation can
from. 38% of water comes from the ground, significantly reduce water usage in textile • Most existing water management plat- water management means there are both
5% from surface water, 52% from municipal processing. We are exploring new recycling forms work in silos, making it much more gaps and overlaps. If we could join forces,
water, 5% from Produce /Process Water. (Self techniques for textile processes with more challenging to reach common industry goals. it would help us align and use available
HOW WE REPORT
reported data Higg FEM 3.0 in 2018). efficient water consumption. The many organisations working to improve resources more effectively.
OVERVIEW
Promoting cleaner
VISION & STR ATEGY

production in the
Büyük Menderes
basin
Water facilities often require

financial support to adopt
cleaner production processes. In
many basins where we oper-
ate, such financial mechanisms
are either absent or not pro-
moted. Providing easy access
to finance increases resource
efficiency and maximises profit Photo credit: Charlotta Järnmark/WWF.
for the facility. Between 2017

tems arerivers
and 2018, we worked with WWF
to promote cleaner production
in the Büyük Menderes river
basin in Turkey. This involved
“ Healthy and freshwater ecosys-
central to achieving the Sus-
engaging relevant ministries
and industrial bodies, as well tainable Development Goals. WWF’s
as contributing with training partnership with H&M group has set
programmes, feasibility studies,
favourable financing programmes ambitious targets on water steward-
and knowledge-boosting activ-
ship, reducing supply chain water
100% FAIR & EQUAL

ities for programme partici-
pants. Through this project, we impacts, supporting collective action
are facilitating financing options
for the textile facility so they can and strengthening water governance
adopt cleaner production tech-
niques in their production. in key regions – targets which will help

In May 2018, several major
Photo credit: Cenk Oruç. to restore and protect rivers and fresh
brands emphasised the impor-
tance of cleaner production water ecosystems for the benefit of
”
to their global supply chains “We will continue our work in the will also join us, which is excel-
at a textile engagement event. Büyük Menderes region and scale lent. We feel that we are gaining people, business and nature.
This was followed by a Cleaner to the heart of the textile indus- momentum”. says Julia Bakutis,
Production Guideline launch in try in Turkey, the Ergene region, Sustainability Manager, H&M STUART ORR,
WWF PR ACTICE LEAD,
September 2018. during 2019. Other companies group Europe.
HOW WE REPORT
FRESHWATER
OVERVIEW
VISION & STR ATEGY

Microfibres work overview
DESIGN PRODUCTION SALES USE END OF USE

RISK Construct yarns Map and prioritise Offer laundry bags Standardise Develop
MITIGATION and fabrics to contributing processes for minimising test method technologies
minimise microfibre and programmes to
shedding Identify and implement emissions Set shedding enable reuse and
actions to stop microfibre during wash requirements recycling
Support the emissions
development Offer repair Support
of alternative Engage stakeholders to service development of
materials scale actions laundry machine
filter systems

RISE/MinShed Currently Our RISE/ Our textile collection
project, exploring Take Care MinShed programme with our
H&M Sport. PARTNER / Bilateral options Concept project, partner I:CO
PROGRAMME actions Bilateral
actions Investing in and
MICROFIBRES supporting recycling
technology
When synthetic fabrics like polyester, nylon and acrylic development
are washed, they release microfibres into the water
system, which disturbs natural ecosystems. Each year,
approximately 500,000 tonnes of microfibres – the
100% FAIR & EQUAL

equivalent of 50 billion plastic bottles – enter the ocean PROGRESS • We are developing a research pro- kets. Microfibre-reducing laundry
as a result of clothes-washing.*
• We joined the Swedish research gramme to create a better under- bags aim to prevent the release of
group RISE in their project MinShed, standing of how and where to best microfibres into the water system
H&M group is highly concerned about the environmental
which aims to find methods of reduce microfibre emissions in tex- during the wash. We recognize this
impact of microfibres and is engaged in driving research
designing clothes with minimized tile production. The purpose of this is a short term solution, and more
and contributing to a global solution, together with many
microfibre shedding. Testing and programme is to study microplastics robust system solutions must be
others in the fashion and design industry. The issue

evaluation of fabrics to find param- generation and management in the developed for the long term.
of microfibres needs to be addressed at several stages
eters that affect the shedding textile production processes.
throughout the value chain, including design, produc-
behavior is currently in progress. This covers polyester, recycled poly- • We are closely monitoring the
tion, usage and end-of-life. We are also investigating our
Through MinShed, we also support ester, nylon, and acrylic. development of alternative bio-de-
own synthetic textiles to see how the fibre composition
an investigation to understand gradable fibres that potentially could
sheds during the washing process. This way, we will be
how and if washing machines can • We have added laundry bags that be used as alternatives for today’s
able to see if we can make any adjustments in the making
be equipped with filters to reduce specialize in filtering microfibres to synthetic fibres.
of the fibres to reduce the shedding.
microfibre emissions. Read more the assortment and are rolling this
HOW WE REPORT
*A New Textiles Economy: Redesigning Fashion’sFuture by Ellen MacArthur about MinShed here. initiative out to more and more mar-
Foundation & CFI page 39.
OVERVIEW
D. Product use
VISION & STR ATEGY

Circular products stay in use as long as
possible before they are recycled. For most Take Care concept expands to more markets
products, a major part of the lifespan is with Our Take Care concept inspires and reflecting their brand don’t know how. With Take
their owner. We have a responsibility to and enables our customers in identity. Together we can Care, we can offer them
caring for their fashion favourites make fashion last longer. guidance and provide the
ensure we create long-lasting products and that we help
– from the moment they leave the services and products to
our customers keep them for longer. store with their new clothes up “Many customers want to make it happen”, says Johan

to the time they bring them back take care of their favourite Lindström, Take Care Group
We can prolong the lifespan of our reduce the environmental impact for reuse and recycling. Because wardrobe pieces, but often Manager at H&M.
products and create a truly circular of our products after they leave 21% of the climate impact in a
system by designing durable prod- our store, as well as increasing garment’s life occurs after it has
ucts and empowering our custom- their overall lifespan. left the store, we want to help
ers to care for and use the products our customers keep their clothes
in a sustainable way. Now we have taken further steps fresh and prolong their life. The
to create more products with Take Care concept does this by
CUSTOMER USE emotional durability through offering guidance and hands-on
We encourage our customers to H&M’s Take Care concept, Mon-
100% FAIR & EQUAL

support for smart repairs and
make sustainable choices while ki’s Re:Love event and Weekday’s easy modifications. We also offer
using our products. We do this by in-store workshop. Read more on a range of products to support
providing information about gar- these initiatives on page 51. this behaviour change, including
ment care, encouraging custom- eco-friendly detergents, sewing
ers to use products for as long as PROGRESS kits, deco-patches and innovative
possible and offering opportuni- • After the initial pilot project in washing bags that collect micro

ties for reuse and recycling, rather Germany we launched the Take fibres, to mention a few.
than disposal. For many years, our Care concept in several markets
garments have had the Clevercare including France, UK, Sweden, During 2019 we will roll out the
label included in their washing and Norway. Take Care concept to more mar-
instructions. This encourages kets. Several brands in the H&M
washing at lower temperatures group have ongoing initiatives
and hang drying instead of tum- similar to the Take Care concept,
ble drying. Simple behavioural personalized to their customers H&M.
HOW WE REPORT
changes like this can dramatically
OVERVIEW
E. Product reuse & recycling
VISION & STR ATEGY

At H&M group, we work We collaborate with I:CO (a global 4 . 4 . T O N N E S O F GA R M E N T S
partner for collection, reuse and recy- COLLECTED IN H&M GROUP STORES
hard to increase the
number of our products
cling of used textiles and shoes) to run
our garment collecting scheme. I:CO
20,649
and their partners sort all collected
that are reused or recycled.
textile and shoes according to the
17,771
We run renewal and remake projects, EU Waste Hierarchy which promotes 15,888
turning old clothes into new fashion reuse before recycling.

favourites through reprinting, re- About 50–60%* of the textiles are
12,341
purposing and remaking. sorted for re-wear or reuse: wearable
pieces are kept in their current con-
We also continue to collect unwanted
dition and marketed as second hand 7,684
clothes and home textiles from our garments. Some are even used to create
customers through our garment new products in both regular and spe-
cial collections for H&M group brands.
collection initiatives. In 2016, H&M
14
brand set a goal to collect 25,000
15
16
17
18
About 35–45%* of the textiles are
20
100% FAIR & EQUAL

20
20
20
20
recycled to become products for other Used clothing and shoes are sorted for reuse
tonnes of unwanted clothes annually and recycling at I:CO’s partner facility plants. Please find an independent assurance statement related to our
industries or made into new textile Photo credit: I:CO/SOEX. tonnes of garment collected for reuse and recycling on page 106.
by 2020. In 2018, we collected over fibres. For example, some textiles are
20,649 tonnes. used to make cleaning cloths. Other into new textile fibres and yarns We are constantly working to
textiles are mechanically shredded for our closed loop collections. This increase the share of textile-to-
We started collecting unwanted textiles (from any into fibres and used to make insula- is something we want to change textile recycled materials in our

brand, in any condition) in H&M stores in 2012 in tion materials or painters’ drop cloths. and dramatically increase through products. As new recycling technol-
Switzerland, rolling out the initiative globally in During this process, buttons and investing and engaging in solutions ogies become available at scale, we
2013. We also offer the service in all & Other Stories, other hard materials are sorted out. for scalable recycling technologies will be able to create more prod-
Monki and selected Weekday stores. & Other Stories Even the dust, which is left over from available for all types of textile fibres ucts from the post-consumer waste
also offers instore collection and recycling of beauty shredding is kept and used for felt and blends. The remaining 3–7%* we collect via our garment collect-
product containers. Our new brand Afound offers board production. that can’t be reused or recycled are ing scheme. This will help us reach
collection service not only for garments, but also used as combustibles for energy pro- our goal to use only 100% recycled
shoes. A still rather small share of the duction. Sending textiles to landfill or other sustainably sourced mate-
HOW WE REPORT
*Sorting results vary due to geographical and seasonal changes. recyclable textiles is also recycled is not an option. rials by 2030.
OVERVIEW
Product re-use and on-demand production
VISION & STR ATEGY

MONKI recently teamed up longer in their wardrobes and be
with the University of Borås on worn more frequently. Weekday’s
Re:Textile, a project that finds experiment has proved success-
new ways for fashion to be kinder ful: customers become more
to the environment. The brand interested in how products are

hosted a two-day Re:Love event in made and are eager to be part of
Gothenburg and Stockholm. Cus- new experiences, like printing in
tomers were invited to bring old store and on-demand production.
Weekday.
clothes or find new Monki favour- This initiative has resulted in per-
ites. Over half of those attending manent printing services in one of
brought old Monki favourites and Weekday’s stores in Stockholm.
customised them for free with
graphics, stickers and prints. CHEAP MONDAY launched their
yearly C/O collection for AW18,

Cheap Monday. WEEKDAY launched the Week- which in this capsule creates new
day Workshop in August 2018, a products by upcycling workwear.
mini manufacturing hub inside the The collection consists of jackets,
store in Stockholm. Customers work chinos, t-shirts, sweats and
were offered production on- a shopper bag, all made from
demand of local trends, testing discarded workwear with that
new designs before producing sought-after worn look. The pro-
in bulk, and replenishing stock ject aims to shift the context from
on the fly – all in all reducing the workwear to fashion, rescuing the
amount of unsold products and value of pieces that have become
100% FAIR & EQUAL

increasing accuracy to demand. worthless for their primary
The workshop also invited purpose. By saving old, quality
Weekday customers to co-create garments from going to waste, the
products with prints to their liking. collection is saving virgin mate
After the success of the work- rials, carbon emissions, water and
shop, Weekday is scaling up to chemical use.

nearshore facilities that make use
of new printing, embroidery and The project was initiated by
custom fit technologies, all part of Cheap Monday together with
a circular production innovation Re:Textile, a project within Sci-
plan. We’ve seen in research, if a ence Park Borås in Sweden that
customer is part of the process of focuses on developing structures
creating their product, it is more for circular processes and re
likely that the product will last design in the textile industry.
HOW WE REPORT
Monki. Cheap Monday.
OVERVIEW
PROGRESS FAULTY PRODUCTS However, if they occur, we follow a strict ban PROGRESS
• With our newly created brand Afound, Waste, particularly product waste, is on landfill. Due to lack of solutions and to • 0.453% of our total product assort-
VISION & STR ATEGY

we use a new business model that gives an emerging topic in our industry. We keep the risk of circulating unsafe materi- ment was reused (including charity
unsold fashion new life by selling overstock, believe one product going to waste is one als to an absolute minimum, such products donations) or recycled due to the
both from H&M group brands as well as too many, whether that’s after customer unfortunately have to be destroyed (prioritiz- products being faulty.
over 100 external brands. use or before. We have a strict policy in ing incineration for energy recovery where
place that prohibits the destruction of possible). • 0.052% of our total product assort-
• We collected 20,649 tonnes of garments any products that could be sold, used ment was destroyed due to the prod-
or recycled. We naturally want to avoid STORE & DISTRIBUTION CENTRE WASTE ucts having failed certain chemical

through our garment collecting initiatives.
This is an increase of 16% from last year, any overstock; it’s in our interest to sell We focus on managing the most common tests, were contaminated by mould,
meaning we have achieved our 2018 goal. everything we produce. We put a lot forms of waste within our stores and distri- for example, during transportation, or
of time and effort into forecasting the bution centres (DCs) – cardboard, plastic and when there was no viable recycling or
LEARNING demand of our customers as accurately as paper. These materials are usually collected downcycling solution available.
• Mechanical recycling techniques are possible, which involves using advanced in our stores and then sent to our local DC
advancing, but are restricted as to which AI tools. If we plan incorrectly, we will facilities for recycling. We occasionally face • This year, the share of stores with
fibres they can be used for and how the discount a product and sell it, but we will a challenge when a country or region does recycling systems is 63%.
fibres are affected by the process. We know never destroy it. not have the necessary recycling systems

it takes time for new recycling techno available. In 2018, the share of stores that • We recycled 92% of waste originat-
logies to scale and are therefore involved in We also apply very strict quality require- had enough recycling systems for our waste ing at our DCs and waste delivered to
research projects such as DEMETO and H&M ments to all our products. If, despite equated to 63%. This indicates a decrease our DCs from our stores (2017: 93%).
Foundation’s Hong Kong Research Institute preventive measures, a product is made from last year’s result (2017: 64%), which can
of Textiles and Apparel (HKRITA), to support that does not meet these quality require- be attributed to improved data collection. • In 2018, we launched the Sustainable
breakthroughs and make solutions more ments, we have a responsibility not to sell Workplace Standard and plan to roll it
mainstream. Through H&M group’s invest- it. When this happens, we either give the In 2018, 92% of waste originating in our DCs out to all our offices, distribution cen-
ments in Worn Again, Re:newcell and Moral product to charity or recycle it. The same and waste delivered to our DCs from stores tres and stores worldwide during 2019.
Fiber, we also speed up the acceleration of goes for samples or any damaged or faulty was recycled compared to 93% in 2017. Our
recycling technologies available at scale. products returned to us by our customers. aim is to recycle 100% of the waste collected
100% FAIR & EQUAL

There are very rare instances in which a in all our stores and 95% of waste originating
WASTE MANAGEMENT WITHIN product cannot be sold, given to charities or delivered to our DCs.
OUR OWN OPERATIONS or recycled. This is the case if a product
To make sure we operate in a truly circu- has failed certain chemical tests, has been PRODUCTION WASTE
lar way, we always aim to reuse or recy- contaminated by mould, for example, In 2018, H&M group started developing a
cle the waste generated within our own during transportation or when there is no strategy that focuses on the management of

operations. During 2018, we rolled out viable recycling or downcycling solution waste generated by our group’s supplier fac-
Sustainable Workplace Standard (SWS). available. In those rare cases the product tories. Over the next two years, we aim to set
SWS is our commitment to create the best unfortunately can’t be reused, donated to goals and roadmaps that will help in man-
possible sustainable working environment charities or recycled. aging the waste resources through reduc-
in our offices, distribution centres and tion, reuse and recycling. In 2019, we will
stores, such as waste management and We work preventively to minimize any focus on waste sources and waste disposal,
recycling. The other categories within such instances wherever possible and to and continue to evaluate options for waste
waste management are faulty products accelerate new recycling technologies that recovery in the different production markets
HOW WE REPORT
and store and distribution centre waste. can handle these challenges. we operate.
OVERVIEW
Becoming climate positive
VISION & STR ATEGY

Becoming circular and climate
positive are closely linked. Climate positive value chain by 2040
Climate change remains one Climate Climate positive
Climate negative neutral
of the greatest challenges of
our time. Its consequences De cre as e em iss ion
s
will affect our entire planet

and everyone living on it. Inc rea se car bon sin ks
To tackle the challenge of
climate change, we need to Total Strengthen climate resilience
value chain Reduce Use renewable and Unavoidable to a larger extent than what
collaborate across sectors. emissions energy needs sustainable energy emissions our unavoidable emissions
burden the climate
For example, by creating
energy-efficient products and
1. 2. 3.
services, sustainable and
100% FAIR & EQUAL

LEADERSHIP IN 100% RENEWABLE CLIMATE RESILIENCE
innovative material use, and ENERGY EFFICIENCY ENERGY AND CARBON SINKS
improvements in supply chains.
We at H&M group are determined to 1.5°C of warming to avoid the worst yet have all the solutions we will need to • Priority 2 tackles our 100% renewable
take the lead in tackling the challenge of impacts of climate change and called for achieve this goal, but the urgency of immi- energy goal, which will help us to ensure

climate change. That means going way all sectors to hasten the transition to nent climate change means we must start the energy sourced by H&M group and our
beyond simply cutting our emissions, climate neutral or positive operations. taking bold, decisive action now. Together supply chain is renewable.
committing instead to make a significant with the help of expert scientific organisa-
contribution to help our planet stay below We have set an ambitious goal to become tions and the WWF Climate Savers, we have • Priority 3 targets climate resilience and
the 2°C global warming limit as set by the climate positive by 2040, which includes identified three key priorities for action. carbon sinks to address unavoidable
Paris Climate Agreement. In addition, a everything from raw materials to the emissions and emissions beyond what our
recent landmark report by the UN Inter- consumers’ use of our products. It means • Priority 1 focuses on leadership in energy value chain is responsible for. These three
governmental Panel on Climate Change removing more emissions from the atmos- efficiency to enable us to use as little priorities relate to both our own opera-
HOW WE REPORT
(IPCC) described how we must stay below phere than our value chain emits. We don’t energy as possible. tions and those across our value chain.
OVERVIEW
OUR KEY COMMITMENTS

Besides the efforts across our value chain to reach Our emissions throughout our value chain (scope 1 + 2 and 3)
VISION & STR ATEGY

our climate positive goals, we are also engaging with
other actors within the industry and beyond in driv- 4 . 5 . 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 4 . 6 . T O TA L S C O P E 3
ing policy change, by adopting science-based targets (S C O P E 1 + 2 ) I N C L . R E N E WA B L E S * CO2e EMISSIONS*: 18, 215KT
and committing to global climate reduction goals: 341,675
10,723
9%
SCOPE 1
RAW MATERIALS**
SBTs As testament to H&M group’s leadership, and 7%
SCOPE 2
as an important milestone on the journey towards

GOODS NON-
becoming climate positive by 2040, our science- GARMENT**
based targets aligned with the Paris agreement have
been approved by the Science Based Targets
11%
initiative (SBTi). H&M group commits to reduce GARMENT 46%
absolute GHG emissions 40% in our own operations
330,952
151,753 MANUFACTURING** FABRIC
(scope 1 + 2) by 2030. H&M group also commits to 9,308 PRODUCTION**
reduce scope 3 GHG emissions from raw materials,
fabric production and garment manufacturing 59% 20%
80,541 USE OF SOLD

per product by 2030. Both targets are set against a
142,445
10,376 63,690 56,978 PRODUCTS 1%***
2017 baseline. 12,484
11,818
70,165
2% 1% 3%
51,206
45,160
TCFD H&M group has publicly endorsed the Task UPSTREAM END-OF-LIFE OTHER
force on Climate Related Disclosure (TCFD) and TRANSPORT OF SOLD EXPENDITURES**
PRODUCTS
aims to comply with its recommendations. We are in 14
15
16
17
18
the process of analysing our climate risks according
20
20
20
20
20
to the TCDF guidelines and will follow the recom- *Our GHG emissions accounting and reporting is aligned with the GHG protocol. *Climate impacts are based on a scope 3 assessment done by Ecofys in 2017, based
Scope 2 emissions under the market-based approach is equal to 45,160 tonnes on 2016 data. The categories are based on GHG Protocol. Calculations in the footprint
mendations for disclosure. CO2e. Under the location-based approach (using grid average emission factors), analysis are based on calculations on a combination of high-quality H&M group
comparable to emission figures in our 2013, 2015, 2016 and 2017 reports, data combined with the best available public data sources on CO2 emissions, using
100% FAIR & EQUAL

scope 2 emissions were 662,739 tonnes. For further details and data, please conservative assumptions. We are working to further improve the calculations by using
UNFCCC We are a signatory of the Fashion Industry see our CDP Climate Change Investor Response 2018. CO2e emissions include primary data from our main suppliers.
carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons ** GHG Protocol Category 1: Purchased products.
Charter on Climate Action initiated by UNFCCC. (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6). An independent *** Including fuel & energy related activities (0,1%), employee commuting (0,2%),
The UNFCCC’s Fashion Industry Charter for Cli- assurance statement related to GRI 305-1 and 305-2 is included on page 106. business travel (0,4%), waste generated in operations (0,02%), franchises (0,1%).
mate Action is an industry-wide collaboration to set

a decarbonization pathway for the fashion industry,
complementing and supporting other fashion sector What are scopes?

initiatives, and aimed at increasing climate action.
According to the Greenhouse Gas “indirect” emissions created from the side of our own operations and that
Protocol, emissions can be catego- consumption of purchased electric- we therefore have indirect control
Policy Push Through a series of seminars, meetings
rised into three groups known as ity. Purchased electricity is defined over. This includes our suppliers and
and correspondence, together with IKEA Group,
scopes: as electricity that is bought or other- the producers of raw materials used
WWF and RE100, we informed the European
Scope 1 emissions: are defined as wise brought into the organisational in our products, as well as emissions
Parliament and the Council about the importance
“direct” emissions the we (H&M group) boundary of the company. from the use of products, for exam-
of high ambitions in The Clean Energy for All
either own or have direct control over. Scope 3 emissions: are defined as ple when our customers use washing
Europeans Package, with special focus on energy
Scope 2 emissions: are defined as any emissions that are produced out- machines to wash their clothes.
HOW WE REPORT
efficiency and renewable energy.
OVERVIEW
Priority 1 group’s own electricity consumption. We PROGRESS • We are gradually replacing all existing
Leadership in energy efficiency have increased our store energy goal from • In line with our 2025 goal, we lighting with LED, while phasing out
VISION & STR ATEGY

We need different approaches to energy a 20% reduction in electricity intensity by achieved a 8.2% decrease in electricity high-intensity discharge (HID) lighting.
efficiency in different parts of our value chain. 2020 to 25% by 2030. With 2016 figures as use per store square meter in 2018
We have a varying level of control over energy our baseline, we are measuring this by taking (2017: 2.7%), compared to 2016 base- • We have made substantial energy
efficiency across our value chain, with greater into account the amount of electricity used line. This decrease was mainly driven savings in the US and Poland. In 2017 and
control over some parts than others. Despite per square metre of sales area and opening by ‘low hanging fruit’ initiatives, such 2018, the US saw decreases of around
this, we are committed to increasing energy hours. Our store energy management strategy as improving behavior and routines to 5% both years; Poland has decreased
prevent wasteful light consumption. by 20% over the last five years. These

efficiency at all stages of our value chain by targets improvements in lighting and HVAC
optimising maximum possible energy output (heating, ventilation, air-conditioning), which At scale, these simple actions had a results have mainly come from replacing
from the smallest, necessary energy input. accounts for 90% of the electricity we use in significant impact. older HVAC units with newer technology
our stores. By putting more specific demands and focusing on building management
OUR STORES on HVAC systems and replacing HID with • In 2018, we reduced carbon emis- steering.
We have a primary focus on improving LED lighting systems, we are confident that sions from our own operations by a
energy efficiency in our stores, because – with by 2030 every store we construct will use 40% further 11% compared to 2017.
over 4,968 stores – our bricks-and-mortar less energy per square metre and opening
portfolio accounts for the majority of H&M hour than those we constructed in 2016.

4.8. ELECTRICITY USE REDUCTION
PER SQM AND OPENING HOUR
4.7. Energy use within our own operations (2016 BASELINE)
14
15
16
17
18
20
20
20
20
20
ENERGY USE IN GIGAJOULES 2014 2015 2016 2017 2018
n/a n/a n/a
100% FAIR & EQUAL

Building diesel 3,586 716 3,241 3,791 4,355
Direct heating 68,208 44,953 43,347 98,921 134,801
–2.7%
Electricity* 3,804,291 4,399,990 4,995,002 5,575,996 5,841,296

Building natural gas, oil and others 155,937 161,959 178,128 214,558** 205,826
TOTAL 4,032,022 4,607,618 5,219,718 5,893,266 6,186,278
–8.2 %
An independent assurance statement related to GRI
HOW WE REPORT
*Energy related to electricity based cooling consumption is included. CO2e emissions include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), 302-3 is included on page 106.
hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6). An independent assurance statement related to GRI 302-1 is included on page 106.
**We unfortunately reported the wrong figure of 214,451 in 2017 report. The correct figure is 214,558.
OVERVIEW
TRANSPORT & DISTRIBUTION CENTRES Network for Transport Measure Path-

We work to reduce energy emissions in several ways ways Coalition. We are also working
VISION & STR ATEGY

within our transport and distribution centre opera- with the Global Logistics Emissions
tions. We monitor our own energy consumption Council (GLEC) to support work to
and ensure that our distribution centre operations find a global standard that accurately
and logistics are as energy efficient as possible. measures logistics-derived emissions.
We work with transport companies and ensure PROGRESS

we use the most energy-efficient options where • We formed a transport coalition with
possible. This involves optimising routes, as well Scania, Eon and Siemens called the
as looking at energy efficient vehicles and alterna- Pathways Coalition. Its vision is to create
tive fuel options. Transport represents 2% of our fossil-free heavy commercial transport
Pathways Coalition.
emissions and, with a growing online business, this by 2050 or earlier, in line with the Paris
is becoming an important focus area for reducing Agreement. The group aims to acceler-
our impact. ate decarbonisation of heavy transport PROGRESS
OUR SUPPLIERS
and increase electrification. By collabo- Our goal is to create a climate neutral • We are reducing greenhouse
We are members of the Clean Shipping Network, rating across sectors, we can speed up gas emissions at a factory level
supply chain for our tier 1 and tier

Clean Cargo Working Group, Green Freight Asia and the pace of change and form a louder through supplier factories
2 suppliers by 2030. This commit-
voice for advocacy and leadership. ment will involve both an increase in energy efficiency programmes
4 .9. C O 2 e E M I S S I O N S I N K I L O T O N N E S energy efficiency and a transition to in Bangladesh, China, India and
F R O M U P S T R E A M T R A N S P O R T A N D B U S I N E S S T R AV E L* • We hosted our second Global Logis- renewable energy. It includes Turkey. The energy savings from
tics Sustainability Week. The event the following: our 2018 efficiency improvement
587kt aims to engage our logistics and dis- programs in Europe, China, Indo-
tribution centre teams in our sustaina- • 100% of factories enrolled in an nesia, Vietnam and Pakistan are
bility work and raise awareness about energy efficiency programme by 633,587,214 kWh, which equals
414kt the importance of improving energy 2025. a reduction of 183,296 tonnes of
374kt
100% FAIR & EQUAL

efficiency, reducing CO2 emissions for GHG emissions.
325kt 328kt transport, improving waste recycling • 30% GHG reduction per product by
and reuse, and collecting unwanted 2025 compared to 2017 baseline. • We have created a new engage-
garments. 80% of distribution centres ment strategy to achieve our goal
participated, 12.7 tons of garments • 30% of factories will be enrolled in for energy efficiency and GHG
were collected. energy efficiency programme by the reduction in the supply chain. This
end of 2019. For 2018, the goal was strategy allows us to work with

LEARNING to enroll 20% of factories in energy our remaining suppliers who are
• Increased air shipments in some of efficiency programme. If we calcu- diverse in size, energy profile and
15
16
17
18
14
our markets in Southeast Asia due to late our progress using the number maturity of energy management.
20
20
20
20
20
expansion to new geographical areas, of factories we had at the time of this Having conducted a supplier cat-
has caused our upstream air trans- goal-setting, we reached this goal. egorisation exercise, we created
*Please find an independent assurance statement related to GRI 305-3 on page
106. Reported scope 3 emissions include energy use, goods transport and port emissions to increase. We are However, because the number of targeted strategies and actions
distribution, and business travel. CO2e emissions include carbon dioxide (CO2), concerned about this and will look for
methane (CH4), nitrous oxide (N2O), hydroflourocarbons (HFCs), perflourocarbons factories has substantially increased that directly address each group’s
(PFCs) and sulphur hexaflouride (SF6). Increase in emissions from transport is other ways to distribute our garments unique level of maturity, capacity
HOW WE REPORT
mainly related to an increase in air freight. Emission data from previous years was
since we set the goal, programme
likely underreported and actual historic emission data is unavailable. in these areas. enrolment is currently at 18%. and resulting needs.
OVERVIEW
Priority 2 4 .1 0. % O F R E N E WA B L E S
100% renewable energy I N O U R OW N O P E R AT I O N S T O TA L
VISION & STR ATEGY

ELECTRICITY USE
We are committed to maximising the use
of renewable energy in our value chain.
96% 95%* 96%
We know that by using more renewable
energy and helping our suppliers and
customers do the same, we are supporting 78%
the transition to fossil-free energy use.

OUR OPERATIONS
We want to source 100% renewable
energy in our own operations. This
year, 96% of the electricity purchased
was renewable. We understand that
Electric fleet on the roads of Italy.
adding new renewable energy (RE) gen-
eration capacity is needed to contrib-
ute to the necessary decarbonisation 27% Going electric in transport operations

of energy systems, and we see that it
To guide our work in terms of electric trucks in late 2018. ier for our transport service
makes good business sense too. As a
reducing CO2 emissions from In Italy, we are working providers. The widespread
result, our RE purchasing strategy will
transportation we have put with a pioneering trans- lack of infrastructure for
evolve from today’s focus on Environ-
together a Renewable fuel port service provider that electric vehicle charging is
mental Attribute Certificates (EACs) to
strategy. The key compo- is advocating the usage of also a challenge, as is the
a balanced portfolio of Power Purchase
nents are to support the use electric vehicles in the Ital- relatively short lifecycle
15
16
17
18
14
Agreements (PPAs) supporting large- 20

20
20
20
20
of electrical vehicles and ian market. This makes up for batteries, and the fact
scale renewables projects, rooftop solar
*Due to inaccuracy in calculation, the 2017 share has second generation bio-fuels. 19% share of total transport that electric vehicles can
PV and EACs. We are also members of been corrected from 96% to 95%. in Italy, and 79% of the total spend less time on the road
RE100, a group of businesses commit-
100% FAIR & EQUAL

An independent assurance statement related to In recent years, we have transport in the major cities because they need longer
ted to using renewable electricity. GRI AF21 is included on page 106.
actively supported the shift of Milan, Brescia, Florence, to charge.
to more last-mile deliveries Turin and Rome. All deliver-
PROGRESS environmental impact. Despite a 75% by electric vehicles. So far, ies for & Other Stories and In addition to electrical
• 96% of the electricity purchased increase in the number of H&M group we use electric trucks in COS in Italy are served by trucks and renewable fuel,
was renewable. stores, we reduced our IT operations’ Cyprus, France, China, Italy electric vehicles. we are striving to reduce
energy consumption by 48%. This is and Finland. Although this the carbon impact of our

• Solar panels covering 800 m² were thanks mostly to new capacity from represents a small share We are working to overcome operations through other
installed at our Head Office in Stock- solar panels and heat recovery from globally, in certain markets several obstacles that are measures, including opti-
holm. A production of 105 000 kWh data centres. The initiative was lim- a significant percentage of currently slowing the intro- mising transport routes
clean energy is expected annually. ited to in-store IT systems, office IT deliveries are performed by duction of more electrical and number of deliveries
systems, servers and data centres. In electric trucks. For example, vehicles. This includes a per trip, filling grade, and
• This year we have concluded our total, we saved over 27 million kWh, in China, 50% of last-mile changing policy and taxation training drivers to reduce
five-year initiative ‘Double Sales – Half the equivalent of 10.9 million kilograms deliveries for store distri- landscape, which makes fuel consumption through
Impact’ for our IT operations to break of carbon dioxide and electricity cost bution were made using long-term investments risk- efficient driving techniques.
HOW WE REPORT
the link between business growth and savings of EUR 4 million.
OVERVIEW
OUR SUPPLIERS
To reach our climate positive goals,
VISION & STR ATEGY

we want to help all our suppliers use
renewable energy. However, although
some partners already source clean
energy, many have limited access to
viable renewable energy, particularly
in new markets. We are working
closely with stakeholders, including

government bodies, to change this.
PROGRESS
• In Vietnam, we signed a Declaration
of Support to encourage the gov-
ernment in its efforts to simplify and
expand access to renewable energy.
We stand ready to offer further sup-

port and advice in pursuit of smart,
clean and secure economic growth.
• We continued working with the

International Finance Corporation
(IFC) to finalise low-carbon roadmaps
in our sourcing markets. Working
together, we engaged suppliers in
several rooftop solar projects and
Solar energy is one of the most
demonstrated the business case
100% FAIR & EQUAL

feasible clean energy solutions.
using results of feasibility studies Photo credit: Angie Warren.
conducted last year.
• We have initiated several projects with Accelerating solar energy in our supply chain
our suppliers in China and India for the We are engaging our suppliers to Like other suppliers, Wuxi Shilead Dyeing erate 2,133,200 kWh electricity every year;
installation of rooftop solar panels. accelerate the adoption of renewa- Co., Ltd was convinced by the feasibility >90% of this will be used on-site. The pro-

ble energy. The installation of solar studies to embrace rooftop solar. Once ject should make a return-on-investment in
panels on factory rooftops is one of live, the 1,98MWp rooftop solar project less than six years and have GHG reduction
today’s most feasible clean energy will generate significant positive eco- of 1,755 tonnes.
solutions. In China, we have been nomic and environmental impacts, such as
working with stakeholders to educate annual 1,883-ton reduction in greenhouse This is just one of the rooftop solar
suppliers and support feasibility gas emissions, along with the reduction projects commissioned by our suppliers
studies, as well as project design and of other air pollutants. On average, the in 2018, as a result of our low carbon
HOW WE REPORT
implementation. 22,000 m² rooftop solar system can gen- roadmap.
OVERVIEW
Priority 3 PROGRESS
Climate resilience & carbon sinks • We partnered with WWF to launch
VISION & STR ATEGY

SCALE (the Supply Chain and
Our commitment to the elimination of greenhouse Landscape approach) in the Eastern
gas emissions from our own operations remains as Plains Landscape (EPL) of Cambo-
strong as ever. However, we know there will still be dia – home to diverse habitat types
unavoidable emissions in our value chain, whatever and endangered species, as well as
action we take. We are therefore engaging in activ- valuable ecosystems services. SCALE
ities to absorb carbon (both within and beyond our exists to design a landscape invest-

direct control) to become truly climate positive. ment program that will transform the
textile industry and energy supply
These activities include supporting mechanisms chains, starting in one of Cambodia’s
that reduce existing emissions while strengthening most precious areas of biodiversity,
climate resilience. We need to further develop this while bringing multiple benefits to
approach and collaborate with experts to move an important but threatened forest
solutions forward, and are currently exploring region. This is a pilot project, which
opportunities in three areas: we will use to define a broader set of

strategic actions across our produc-
1. Natural carbon sinks – these are nature’s exist- tion areas and supply chains.
ing mechanisms for absorbing greenhouse gases.
Potential strategies include protecting valuable
biomass (such as rainforests) and investing in more
sustainable agriculture.
2. Technological carbon sinks – these are tech-

nological innovations that absorb existing green-
house gases and turn them into new products
100% FAIR & EQUAL

and materials.
3. Reductions outside our value chain – these activi-

ties reduce greenhouse gases coming from sources
unrelated to our value chain. We urge innovators
and experts to collaborate with us and like-minded
partners to develop these opportunities.

HOW WE REPORT
SCALE project in Cambodia.
100% FAIR & EQUAL
60 OF 109
H&M.
100% FAIR
& EQUAL
OVERVIEW
KEY FACTS & FIGURES 2018 / KPIS AND GOALS / 100% FAIR & EQUAL EXPL AINED / FAIR JOBS FOR ALL / ENABLING WELL-FUNCTIONING INDUSTRIAL REL ATIONS / SUPPORTING A FAIR LIVING WAGE / ADDRESSING HUMAN RIGHTS ISSUES / INCLUSION & DIVERSITY
VISION & STR ATEGY

H&M Group’s global
supply chain directly
contributes to 1.6
million jobs in our tier 1
and tier 2 factories.

Our Board of Directors is
represented by a 60%:40% 655 factories and
(female:male) gender split. 930,000 garment work-
ers are covered by one
or both of our key pro-
grammes for workplace
93% dialogue and Wage
100% FAIR & EQUAL

100% FAIR & EQUAL
Management Systems.
We have signed a new of our business partners This represents 84% of
partners hip agreement rate H&M Group as a fair our product volume.
with ILO. business partner.

H&M Group hosted a Fair Living Wage Summit in Phnom Penh in
December to share the impact, results and main learnings from the
last five years� work with the Fair Living Wage Strategy.
O U R FA I R A N D E Q U A L A M B I T I O N C O N T R I B U T E S
HOW WE REPORT
T O S D G 1 , 2 , 3 , 4 , 5 , 8 , 1 0 , 1 6 , 1 7.
OVERVIEW
100% Fair & Equal:

Equal KPIs and goals
VISION & STR ATEGY

Our goal-setting process is ongoing. We work with internal and external experts and, wherever possible, follow a science-based approach to defining targets and actions.
The KPIs and goals in the table below represent key milestones towards our ambition to become 100% Fair & Equal.
100% Fair & Equal

KPI 2015 2016 2017 2018 GOAL

No. of supplier factories implementing improved Wage Management Systems
69 140 (29%) 227 (40%) 500 (67%) 50% of product volume by 2018
(% of production volume covered)
No. of supplier factories that have implemented democratically-elected worker representation
132 290 (42%) 458 (52%) 594 (73%) 50% of product volume by 2018
(% of production volume covered)
% of business partners regarding H&M group as a fair business partner 84% 83% 94% 93% 90% by 2018
% of employees agreeing with the statement “I feel comfortable being myself at work”,
n/a n/a n/a 83%, 81% Year on year improvement
and % of employees agreeing with the statement “I am treated with respect and dignity”.*
% of remediated issues (defined by the Bangladesh Accord**) 61% 81% 90% 98% 100%
100% FAIR & EQUAL

100% FAIR & EQUAL
*New baseline replacing our previous KPI % of employees agreeing with the statement “People here are treated fairly regardless of age, ethnicity, sex, sexual orientation, disabilities”, as we have made a shift to a new engagement survey platform.
**From beginning of 2019, orders will only be placed with supplier factories that are 100% compliant with the Accord requirements.

HOW WE REPORT
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 8 62 O F 109
OVERVIEW
100% Fair & Equal explained
VISION & STR ATEGY

We believe that everyone connected to our business deserves fair
and equal treatment. At H&M group, being 100% Fair & Equal
means living by our values and respecting human rights – within
our own company and across our supply chain. By providing
fair jobs, promoting diversity and growing our business in an
increasingly inclusive way, we can contribute toward fair and

equal societies.
Our 100% Fair & Equal ambition has tribute to a more open society where every-
two focus areas: one is welcome, and we recognise we can
promote diversity and equality through
1. Providing fair jobs for all our actions, products and marketing.
• within H&M group
• within our supply chain Ultimately, by providing fair jobs, being
2. Inclusion and diversity inclusive and encouraging diversity and
100% FAIR & EQUAL

100% FAIR & EQUAL
equality, we can make a positive impact
A fair job is defined as one with fair on the lives of employees within H&M
compensation, a safe and healthy work- group, workers within our supply chain,
place, an environment free from discrim- our customers and wider society. We also
ination and one in which every employee believe our approach is good for busi-
is heard. At H&M group, we believe that a ness. It makes us an attractive employer

fair job should make every individual feel and business partner, it contributes to
valued, respected and engaged within stable markets in which we operate, and
their workplace. Fair jobs enable people it makes our business more resilient,
to enjoy life and provide for themselves productive and sustainable.
and their families.
Alongside this, we believe we have a

responsibility and an opportunity to drive
HOW WE REPORT
inclusion and diversity. We want to con- Embroidery work at one of our supplier factories.
OVERVIEW
Fair jobs for all: within H&M Group
VISION & STR ATEGY

As one of the world’s biggest PROGRESS
We are one team We believe in people Entrepreneurial spirit Constant improvement
• We recognised all winners of the Erling
fashion and design groups, Persson Award in early 2018. This award
we strive to be a fair and gives all H&M group employees the
opportunity to nominate colleagues who
equal employer to 177,000 contribute to our company culture by
colleagues. living our values and creating great results.

We work hard to create a transparent, • We focused on supporting and empow-
trustworthy, fair and equal workplace ering our leaders to navigate change in a
with great opportunities for everyone. global, fast-paced business. We provided
Our values are the red thread that runs Cost-conscious Straightforward Keep it simple workshops and tools, including the Lead
through the fabric of our company. They and open-minded
the Way podcast where inspirational inter-
come to life in our everyday work and nal leaders and external influence experts
create a unique culture that attracts the share their insights.
people we need for our continued busi-
ness success. • Because the engagement of our employ-
ees is critical for our business success, we
100% FAIR & EQUAL

100% FAIR & EQUAL
Creating fair jobs within H&M group GROUP launched the People Engagement Pulses
is about: (PEP) in October. This is a new survey plat-
form where our employees can voice their
• Providing a solid foundation of fair and Our shared values. EN-GEN
opinions and give feedback that helps us

attractive working conditions. These improve. Overall PEP score for employee
include fair labour standards, high engagement was 75 out of 100.

health and safety standards, fair and They give us a competitive advantage recruitment processes and by providing
competitive compensation, a comprehen- and ensure a sustainable way of work- quality introductory trainings. Offering
sive grievance procedure and a coopera- ing. We expect all employees to contrib- all our employees the opportunity to
tive workplace dialogue. ute to our company culture by being grow and develop within their role or
ambassadors for our values. move on to new roles and responsibil-
• Promoting a values-driven way of ities in different parts of our company.
working. Our values are the starting • Making sure we have the right peo- Our leaders are role models who lead
point for how we do business and how ple in the right positions. We secure the way, and we provide them with clear
HOW WE REPORT
we interact with the world around us. this through our internal and external expectations and ongoing support.
OVERVIEW
Fair jobs for all: within our supply chain (production)
VISION & STR ATEGY

We are working with our suppliers to achieve our ambition that
everyone in our supply chain has access to a fair job. Although
the concept of a fair job sounds simple, many of the production
markets in which we operate are developing countries and they
either lack or face challenges in implementing the legislation
that would make fair jobs available to all. This creates an

industry-wide challenge.
H&M group directly contributes to collaboration and structural change at

1.6 million jobs*, and the textile industry factory, industry and country level.
has helped many people and countries
out of poverty. H&M group has been Our assessment programme contin-
working for many years to ensure that ues to provide a solid foundation for
all jobs within our supply chain are our work and is an integral part of our
fair jobs. Back in 1998, we started an company risk and human rights due
100% FAIR & EQUAL

100% FAIR & EQUAL
assessment programme to help moni- diligence framework (read more on
tor working conditions in supply chain page 92). The programme ensures our
factories, which has led to improvements requirements are met, drives contin-
ever since. However, certain issues are uous improvement and informs our
complex and require collaboration and core social sustainability strategy. Our
systemic industry-level action to ensure strategy covers salient global and local

lasting change. human rights issues, with a focus on the
rights we believe will help us meet our
In 2013, in close dialogue with a variety ambition to ensure fair jobs for all.
of external experts, unions and inter-
national organisations, we updated our
social sustainability strategy. It now
takes a more holistic approach with an
Worker at Seduno Cambo
increased focus on capacity building,
HOW WE REPORT
Knitting factory in Cambodia.
Photo credit: Tiffany Tsang.
* Tier 1 and tier 2.
OVERVIEW
Enabling well-functioning industrial relations
VISION & STR ATEGY

We believe well-functioning industrial relations are crucial to the
creation of fair jobs. We have seen how good working conditions Collaboration towards well-functioning
and better wages are more likely to come from good relationships industrial relations
between workers, their representatives and management, and
effective interactions and negotiations between social partners at
a factory, industry and country level. Good labour relations also COLLABORATION

PARTNERS
support stability and performance in our production markets.
Collective bargaining
ACT, IndustriAll, IF Metall
However, many markets lack the neces- and collective agreement
local factory employees and factory man-
sary systems to make well-functioning agement. For example, they implement
industrial relations a reality. That is our workplace dialogue programmes
why, as part of H&M group’s strategy with workers and management to raise Peaceful conflict resolution IndustriAll, IF Metall
to achieve 100% fair jobs in our supply awareness of rights and obligations,
chain, we are working to improve indus- including the importance of freedom of
trial relations across our industry and association and collective bargaining. PO
100% FAIR & EQUAL

100% FAIR & EQUAL
Structures for social dialogue between ILO, Better Work,
in all our production markets. This is a teams can also provide worker and man- employers and employees IndustriAll, IF Metall
highly complex challenge and involves agement training around the democratic
working to: election of workers’ representatives in
the factories. Employees and employers awareness about ILO, Better Work,
• make sure workers are heard worker rights and responsibilities IndustriAll, IF Metall
• build industry collaborations Worker representatives, trade unions

• engage with local governments and workers’ committees are impor-
tant components for making sure
MAKING SURE WORKERS ARE HEARD workers are heard. These can address
H&M group has a production office (PO) issues such as working hours, health
team in almost every country in which and safety, grievances, etc. Unions are
our products are made. Each PO team is particularly well suited to negotiate from management to bridge the gap that representatives, it creates an important
responsible for working with our vari- wages in good faith with employers, often exists between the two parties. communication channel and provides
ous industrial relations programmes to while worker representatives can use When workers are represented by a a crucial first step towards enabling
HOW WE REPORT
facilitate stronger relationships between the trust from their peers and respect trade union or democratically-elected well-functioning industrial relations.
OVERVIEW
BUILDING INDUSTRY COLLABORATIONS
Meeting an elected worker-representative We believe that industry-wide collaboration is
VISION & STR ATEGY

essential to establish the agreements and strate-
gies needed to further improve industrial rela-
Our supplier, Newage Apparels LTD, elected their first tions. One of the key relationships we have built is
worker participation committee in June 2014. Here, with the trade unions, IndustriALL and IF Metall.
we meet Ms. Shahida Khanom, who joined the factory We have a Global Framework Agreement (GFA) in
place to improve industrial relations in our supply
in 2010 and works as a machine operator. She was
chain. The GFA focuses on the right of freedom of

elected as Vice Chair of the nine-person committee in association and collective bargaining.
2014 and re-elected to the position in September 2017.
We have set up National Monitoring Committees
I was re-elected because I really (NMC) as a collaborative mechanism under the
enjoy contributing to a better Global Framework Agreement (GFA) in Bangla-
dialogue between management desh, Cambodia, Indonesia, Myanmar and Turkey.
and workers. NMCs are composed of local IndustriALL-
affiliated trade union representatives and local

What do you think is important H&M group production office representatives.
in your role? NMCs work with partners to co-develop action
The Executive Director at plans, establish long and short-term goals for the
My role is to gain trust from the Newage Apparels LTD during
workers by always listening info session with trainees. implementation of the GFA and deliver agreed
carefully to what they have to say action points, most of which concern the facilita-
so I can deliver their messages tion of conflict resolution for both employers
to the managers. I always try to In Newage Apparels LTD, absenteeism and employees.
explain the overall picture of a decreased from 4.8% in 2017 to 3.56% in 2018.
challenge in the factory so that The Managing Director, Arif Ibrahim, thinks The role of an NMC is:
workers are not disappointed if the improved dialogue between managers and
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they don�t see quick fixes. workers in the factory is one of the key factors • To create, monitor and evaluate national strate-
behind this improvement. gies to implement the GFA.
What are the best things about
being a Vice Chair? • To create collaboration between trade unions,
“Efficient
Name Shahida Khanom workers’ representatives and H&M group suppliers
Role Machine operator
It has been great professional
and personal development for
workplace to support well-functioning industrial relations,
dialogue is the key to

me. I have improved my communi- with a focus on dispute prevention and resolution.
Why did you want to be cation skills and strengthened
re-elected as Vice Chair? my dialogue with both workers become one force, together H&M group is also a founding member of Action
Collaboration Transformation (ACT), a partner-
I find my daily communication and managers. I am more
we can build a better ship between international brands, retailers and
”
and dialogue with workers and confident overall. It is also a great
managers in my factory inspiring, feeling to know I am contributing future! trade unions that exists to address the issue of
so I decided to stand for re-elec- to improving the workplace a living wage through industry-wide collective
tion in 2017. I am very happy dialogue in this factory. ARIF IBR AHIM, MANAGING DIRECTOR, bargaining. Read more about our work with ACT
HOW WE REPORT
NEWAGE APPARELS LTD on page 75.
OVERVIEW
ENGAGING WITH GOVERNMENTS

Enabling legal and institutional
VISION & STR ATEGY

frameworks is crucial for well-func-
tioning industrial relations. We engage
with governments and policy mak-
ers directly and indirectly, conduct
advocacy work and have an agreement
with ILO to cooperate and collaborate
around the implementation of the

Decent Work Agenda. Through our
partnerships, we are in a good position
to engage with governments and other
national stakeholders.
As a partner of ILO, we promote ILO

conventions and engage in the debate
on important public policy issues that

affect the well-being and rights of
the workforce.
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PROGRESS • In December 2018, we held our annual • We have been working with Ethical Trading LEARNING
• Our industrial relations and workplace global meeting for National Monitoring Com- Initiative (ETI) to raise our concerns about • Our Global Framework Agreement (GFA)
dialogue programmes reached 594 mittees (NMCs) in Phnom Penh, Cambodia. Cambodia’s change in trade union law. with IndustriALL and IF Metall is an agree-
factories in 2018 (2017: 458, 2016: 290, Each NMC reported on its progress during ment between the global union of textile

2015: 132). Our 2018 programmes included for 2018 and shared experiences from • Our Memorandum of Understanding (MOU) workers and its affiliated unions to collabo-
factories in China, Bangladesh, Cambodia, the past year. The meeting was attended with the Swedish development agency Sida rate for well-functioning industrial relations
India, Indonesia, Turkey, Ethiopia, Myanmar, by experts from both the Organisation for shares the common goals of supporting in our supply chain. The GFA is a framework
Pakistan and Vietnam. In total, we reached Economic Co-operation and Development ILO’s Decent Work Agenda and developing that can create awareness and maturity
840,000 workers. (OECD) and the International Labour Organ- opportunities that contribute to sustainable between labour market parties to effec-
isation (ILO), who hosted workshops on due development in our supply chain. tively negotiate and engage in dialogue.
• Factories producing 73% of our product diligence in supply chains, procedures for It will take time to build up the necessary
volume implemented democratically- dispute resolution, and the definition of Inter- structures, and we are only at the beginning
HOW WE REPORT
elected worker representation. national Labour Standards. of this long journey.
OVERVIEW
Supporting a fair living wage
VISION & STR ATEGY

A living wage is a human right. Unfortunately,
it is not a reality for many people working in
many different industries around the world.
The fashion industry is no exception.
In 2013, we launched our Fair Living Wage Strategy in
an endeavour to change this. As part of this, we set out a

vision for all textile workers to earn a fair living wage. This
vision was supported with concrete goals and actions, in
our supply chain and across the textile industry.
OUR FAIR LIVING WAGE STRATEGY

We launched our global Fair Living Wage Strategy in
2013 with guidance from multiple experts, trade unions,
suppliers and NGOs.
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HOW WE REPORT
OVERVIEW
GOALS AND RESULTS

When we devised our Fair Living Wage Strategy, we set measurable goals, milestones
Our Fair Living Wage Strategy
VISION & STR ATEGY

and actions to be achieved between 2014 and 2018. As we started to accomplish these,
Our strategy sets out clear goals and actions we used what we’d learned to increase our ambitions, setting further goals, expanding
for four target groups: governments, factory owners, our scope and improving our measurements. This process led to the development of
brands and, most crucially, factory employees. five key goals for 2018:
Governments H&M Group

Goal Continue to advocate Goal 90% of business partners
governments and the public should regard H&M group as a
on wages. fair business partner by 2018.
Result In 2017, ACT was recognized as Result We exceeded this goal, 93% of our
a credible initiative to work on living business partners see H&M group as
H&M wages by G20. a fair business partner. We assess this
GROUP figure on an annual basis through an
GOVERNMENTS Factory management extensive anonymous supplier survey.
Goal Ensure that supplier

factories producing 50% of Factory employees
H&M group’s product volume have Goal Ensure that supplier
democratically-elected worker rep- factories producing 50% of
resentation in place by 2018. H&M group’s product volume are imple-
Result We exceeded the goal. 73% of our menting improved Wage Management
product volume is made in factories Systems by 2018.
FACTORY FACTORY that have democratically-elected worker Result We exceeded the goal. 67% of
MANAGEMENT EMPLOYEES
representatives in place. This covers 594 our product volume is made in factories
factories and about 840,000 workers. that are implementing improved Wage
You can find more information about Management Systems. This covers 500
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this goal and other elements of our strat- factories and about 635,000 workers.
egy to strengthen industrial relations on
page 66. You can find an overview of all our goals
and results here.
Goal Ensure that 100% of supplier
factories in Bangladesh have democrat-

ically-elected worker representation in
place by 2018.
Result We reached this goal ahead of
FAIR schedule. 100% of our tier 1 supplier
LIVING
WAGES factories in Bangladesh had democrat-
ically-elected worker representation by
December 2017.
HOW WE REPORT
OVERVIEW
KEY IMPACTS OF OUR FAIR UNDERSTANDING THE DIFFERENT

LIVING WAGE STRATEGY COMPONENTS OF WAGES
VISION & STR ATEGY

Achieving our goals means that today, Wages are a complex issue. In order to
930,000 garment workers work in achieve fair living wages for all garment
factories that are either implementing workers, it is important to understand
improved Wage Management Systems the components of a textile worker’s
or have democratically elected worker monthly take-home wage and how they
representation – or, in most cases, can be influenced. In general, there are
both. This is an important achievement two components:

that lays the foundation for structural
changes by making sure workers’ voices The biggest component is minimum
are heard in a better way. wages which are stipulated by govern-
ments and the lesser component is indi-
Over the last five years, we have ana- vidual wage setting and factory benefits.
lysed data from hundreds of factories Combined, these components make up
in some of our most important sourcing the take-home wage for garment workers.
markets to gain further understand-

ing of the impacts that have and can We believe that improved Wage Manage-
be created at a factory level. We have ment Systems will help factories become
learned that our work can achieve great fairer and more transparent in the way
progress in individual factories, but it they work with individual wage setting
has limitations – we need broader per- and bonuses. We have supported our
spectives, involvement at industry level suppliers in establishing transparent
and legislation. wage grids in their factories, which show
Seamstress in one of our supplier factories.
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Functional wage management system should include: Wage components
1. P
roper and correct payment of wages 3. A
progressive and coherent pay system
Benefits and other additions
according to individual contracts, legal that rewards workers according to Wage
(such as skill or performance
management
regulations and existing collective their skills, education, performance and

recognition, etc.)
systems
bargaining. experience, etc. in the
factory TAKE-
HOME
2. Internal development of human 4. Proper mechanisms for workers’ involve- WAGES
Government
resources policies and processes to ment in factory decisions, including those Minimum wages regulations
ensure competitiveness, high motiva- that generate a process of communica- and collective
bargaining
tion and sustainable social climate in tion and possible negotiations on the con-
agreements
the factory. tent of wages and payment structures.
HOW WE REPORT
OVERVIEW
orkers how they are rewarded for differ-

w those which don’t (see tables no. 5.1. and dies, medical insurance, free child care or is important for factories to implement
ent skills, tasks, education, and seniority, 5.2.). In 2017, the difference ranged from health services, and transport subsidies. improved Wage Management Systems
VISION & STR ATEGY

etc. This allows workers to understand 8% higher take-home wages in Bangladesh This is not reflected in the take-home and similar measures, this is not the
how they can influence their wage by to 29% in Indonesia. In 2018, the differ- wage figures mentioned in graph 5.1., but whole solution to a future of fair living
improving their skills and performance, ence ranged from 2% in Turkey to 11% it means workers spend less money or wages for workers.
etc. At the same time, the improved Wage in Indonesia. In Myanmar first factories receive additional benefits.
Management Systems strengthen and started implementing improved Wage For this reason, our strategy has always
mature Human Resources management Management Systems in late 2017 which By creating incentives and structures looked beyond individual factories to
systems, which should lead to increases is why first results show a positive devel- that reward workers’ skills, performance find solutions that can increase mini-

in motivation, retention and productivity opment since 2018. and loyalty, etc., we can make significant mum wage in a sustainable and compe-
among the workforce. improvements to the situation of work- tition-neutral way. These solutions bring
Besides higher take-home wages, the ers and the operations of our supplier together all relevant actors, from govern-
When analysing the data from supplier factories that are enrolled in our Wage factories. However, there is a limit to both ments, factory owners and other brands,
factories in our key market suppliers, we Management System programme (but also how much can be achieved at a factory to workers and trade unions. Learn more
can see that the factories which are imple- all other factories) increasingly provide level, and to how much above the indus- about how we work with Wage Manage-
menting improved Wage Management workers with non-monetary benefits, such try standard a factory can pay without ment Systems here.
Systems pay higher take-home wages than as subsidised or free meals, housing subsi- losing their competitiveness. So, while it

5.1. Impact of Wage Management Systems* 5.2. Progress of take-home wages 2017–2018*
2017 2018 2017 IN USD 2018 IN USD INCREASE
Bangladesh +8% +5% Bangladesh 123 136 11%
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Cambodia +19% +10% Cambodia 250 294 18%
China +8% +5% China 553 636 15%
India +12% +5% India 164 199 21%
Indonesia +29% +11% Indonesia 235 255 8%
Myanmar –6% +3% Myanmar 115 152 32%

Turkey +10% +2% Turkey 615 706 15%
Difference in take-home wages, between supplier factories implementing improved Increase in take-home wages at factories implementing improved Wage
Wage Management Systems vs factories not yet enrolled in such a programme Management Systems
HOW WE REPORT
*The figures are based on data gathered from tier 1 textile supplier factories. Time frame of data for 2017 is 1 Jan–31 December 2017. Time frame of data for 2018 is 1 Jan–30th June 2018 . The data has been collected through our SIPP method and has been validated
by H&M group’s developers in the different production markets. The data is weighted by factory in flat averages. We are currently working to further improve our data method and instead report wage data as a weighted average per worker, since we see it as a better and
more representative measure of salary in a country. We plan to report according to this new method with our 2019 report. The Conversion to USD is based on Swedish Central Bank average exchange rate for the period.
OVERVIEW
Improving Wage Management Systems at Ekpen Tekstil
VISION & STR ATEGY

H&M group is working with Manager at our production Ahmet Yavuçehre, the factory
suppliers in ten production office in Turkey, says the work owner, is convinced of the
countries to implement creates a ‘win-win situation’: benefits of this new approach:
improved Wage Management “The steps taken by Ekpen “I believe this system gives
Systems. We want factory Tekstil to implement improved workers more opportunities

management to understand Wage Management Systems and increases their trust in the
why and how they should be taking employees’ individual company. It also contributes to
rewarding their workers for skills, education and a happier work environment as
their skills, experience, etc. experience into account, well as improved productivity”.
supported by open and
Ekpen Tekstil, a supplier constructive communication, The changes have also been
factory in Turkey, is one of contribute to a more positive well received by employees:
500 factories we’re working work environment.” “I worked in some other
with in this way. It has been companies before and the

producing for H&M group for As part of the improvements salary was the same for all
16 years and today, employs to its Wage Management Sys- employees. I find the pay-
about 200 workers. We’ve tem, Ekpen Tekstil has involved ment system in Ekpen quite
been working with employers worker representatives in fair. It is linked to the perfor-
and employees locally for choosing which parameters mance and effort, and open
two years to improve their wages should be based on to workers’ feedback.”, says
Wage Management System. and what development skills Hatice Ertekin at packing
Melek Bozova and Aynur Akbaba. Durmus Bozkurt and Huseyin Bakir.
Julia Bakutis, Sustainability should be offered. department.
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“Iway
work in a more motivated
as I already know how
my salary can be increased

by my performance.
DUDU OZALTUN, MACHINE OPER ATOR,
”
SEWING DEPARTMENT
Ekpen Tekstil.
HOW WE REPORT
Julia Bakutis, H&M group.
OVERVIEW
When looking at all H&M group’s We share the view of the UN body ILO
supplier factories, including those not and many other experts, that the only
VISION & STR ATEGY

enrolled in our Wage Management lasting and viable way to achieve sub-
System programme and excluding any stantial and sufficient increases in the
overtime compensation, we can see that minimum wage for all workers is through
H&M group supplier factories pay signif- fair negotiations between workers, trade
icantly higher wages than the relevant unions and employers. This requires
minimum wage. For 2018, this ranges collective bargaining agreements that
from 24% more in Cambodia to 122% empower workers’ representatives to

more in China (Guangdong). engage in fair negotiations. This approach
replaces the idea that global brands
Increases are in most markets often should impose specific wage levels, a
above inflation rates according to the short-sighted tactic that undermines the
IMF. However, even if the wage incre- role of workers, unions, employers’ organ-
ments are higher than the inflation rate isations and governments to effect lasting
in a majority of the countries, workers are change. Wages are an industry-wide chal-
facing increments of housing rents, food lenge, and therefore need to be solved at

prices, etc. which leads to no real wage an industry level to stand the test of time.
increment for the workers in the end. Instead of imposing specific wage levels,
5.3. Average monthly wages (excluding overtime) brands should ensure that our purchas-
at H&M Group factories vs applicable minimum FROM MINIMUM WAGES TO INDUSTRY-

WIDE COLLECTIVE BARGAINING
ing practices facilitate the payment of a
living wage and enable collective bargain-
wages in key production markets* To achieve industry-wide living wages, ing. Brands also need to advocate govern-
minimum wages must increase. The ments because they can set the necessary
Difference
minimum wage is the most important legal framework, ensuring the right to
Average Average between average benchmark for wages in the industry freedom of association and enabling col-
Minimum wage (excl. Minimum wage (excl. wages (excl.
and usually defines the biggest portion lective bargaining.
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wages overtime) wages overtime) overtime) and
2013 2013 2018 2018 min. wages 2018 of a worker’s income. Today, it is usually
in USD** in USD** in USD** in USD** in USD**
defined by minimum wages, which are This is not an easy thing to achieve,
Bangladesh 42 64 67 100 49% set by governments. especially considering trade union
Cambodia 97 99 177 219 24% representation is low in many sourcing
Over the past five years, minimum wage markets and industrial relation sys-
China (Guangdong) 183 385 225 501 122%
levels have increased substantially in tems are often immature or even legally

India (Bangalore) 91 115 115 145 26% several countries – wages are up by 82% restricted. However, we believe this is the
Indonesia 104 149 155 194 25% in Cambodia and 60% in Bangladesh. only way that workers wages can increase
While this is a positive development, these in a sustainable way, with a level playing
Myanmar 53 75 79 116 47%
increases are not enough. Too often, they field. While it takes time to change com-
Turkey 370 475 432 598 38%
simply reflect the poverty line in these plex systems like this, we can see signif-
countries and neither keep up with infla- icant progress and a growing consensus
tion nor the growth in industry in these between relevant stakeholder groups to
*The scope is all tier 1 and tier 2 suppliers, all product types. markets. As a result, the minimum wage collaboratively drive structural change at
HOW WE REPORT
**Conversion to USD based on Swedish Central Bank average exchange rate for the period. Time frame of data for 2013 is 1 Jan–31
December 2013. Time frame data for 2018 is 1 Jan–30th June 2018. in most markets is not a living wage. an industry and country level.
OVERVIEW
ACT: ACTION, COLLABORATION, PURCHASING PRACTICES

TRANSFORMATION A brand’s purchasing practices are an
VISION & STR ATEGY

The formation of ACT represents a sig- important contributor to achieving fair
nificant milestone on the journey to fair living wages. We developed a purchas-
wages. ACT is a ground-breaking coali- ing practice guide as part of our 2013
tion of 22 global brands, including H&M roadmap. It helps ensure best possible
group, and IndustriAll Global Union. The capacity planning, timely payments and
group’s mission is to transform the gar- much more. Thanks to these measures,
ment, textile and footwear industry and 93% of our suppliers regard H&M group as

achieve living wages for workers through a fair business partner.
collective bargaining at industry level.
We also developed a ‘scientific pricing
One particularly game-changing com- method’. This involves suppliers sharing
ponent in ACT’s approach is to include with us all the major cost components
brands’ purchasing practices in the that contribute to a product’s price,
equation. While local employers and including the labour cost component.
trade unions should negotiate wage levels This means merchandisers can and will

and working conditions with each other, negotiate the price of a garment with our
brands can contribute with a commit- suppliers around all component costs
ment to responsible purchasing practices. except one: labour. This takes garment
For example, they can offer long-term workers’ wages out of the equation for
commitments to source from suppliers price negotiations. If wages increase
and markets that are willing to enter such as a result of a collective bargaining
a collective bargaining agreement. To agreement, our method ensures the
support this, all ACT brands have signed money needed to pay for these wages is
a Memorandum of Understanding with accounted for. Together with the other
IndustriAll Global Union, which commits brands within ACT, we are committed
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them – amongst other things – to ensure to ensure that higher wages are covered
that their purchasing practices facilitate by our purchasing price. We believe this
the payment of a living wage. systematic isolation of the labour cost is
important as an enabler to an industry-
“
You can read more about ACT and wide collective bargaining agreement.
By addressing the structural barriers to living the meaning of an industry-wide collec-
wages, ACT has the best chance of increasing

tive bargaining agreement here.
garment workers’ wages in a way that is scalable,

sustainable and enforceable.
”
JENNY HOLDCROFT, ASSISTANT GENER AL SECRETARY,
INDUSTRIALL GLOBAL UNION
HOW WE REPORT
OVERVIEW
Creating win-win-win situations with
VISION & STR ATEGY

good purchasing practices
DAVID SÄVMAN, HEAD OF PRODUCTION, H&M GROUP
What does the term we can be more concrete and

purchasing practices credible towards both suppli-

mean to you? ers and production countries,
It simply means doing good and show that we can and
business! Our purchasing prac- will stand by our purchasing
tices should make it possible practices. It also means that
to fulfil our business idea and we can do better business
give long-term benefits to and minimize challenges for
workers, suppliers, customers workers to get better working
and the environment. During conditions.
2018 we focused on suppliers’

production plans, our execu- How does the scientific
tion and follow up of produc- pricing method work?
tion volumes, as well as how We transparently look at all
we can secure ring-fencing parts of producing a product
labour costs in price negoti- and make sure we have the
ations. This means when we right cost that creates win-win-
negotiate price with a supplier, win situations: for the workers,
the labour cost is taken out of our business partners and for
the equation. H&M group.
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How do you isolate the You developed an app based
labour cost? on this method that other
We exclude the labour cost from companies can use to isolate
our price negotiations with the labour costs in the same
David Sävman. supplier. When we negotiate way?
the price, it can only affect the Yes! The app is called SEA

material and quality, for example, (SMV Estimation Application),
“Ooururbusiness
purchasing practices should make it possible to fulfil and not the workers’ wages. and it’s basically old facts
packaged into a modern and
idea and give long-term benefits to workers, What does the isolation of user-friendly way! We believe
”
the labour cost mean to that the only way to create
suppliers, customers and the environment. workers, suppliers and our change in the industry is to get
DAVID SÄVMAN, HEAD OF PRODUCTION, business? as many brands as possible to
H&M GROUP By isolating the labour cost, join us.
HOW WE REPORT
OVERVIEW
WORKERS AND SUPPLIERS ARE PROGRESS • In December 2018, we shared the LEARNINGS
BETTER PREPARED FOR COLLECTIVE • We reached and exceeded the Fair ETI’s feedback from 150 key stake- • Together with trade unions and other
VISION & STR ATEGY

BARGAINING AGREEMENTS Living Wage Strategy goals we set holders at an event in Phnom Penh. experts, we have learned that the best
As part of our Fair Living Wage Strategy, we in 2013. In five years, this work has Through this kind of openness, we can way to achieve wage increases in a
have placed a strong focus on establishing well- reached 655 factories and more than jointly advance best practices, learn scalable, lasting and competition-neutral
functioning dialogue and democratically elected 930,000 garment workers in ten differ- from shared challenges, and set the way is through industry-wide collective
worker representation in factories. We exceeded our ent countries. Read more on page 79. framework for joint steps forward to bargaining agreements.
2013 goal for 50% of our product volume to come ensure fair living wages for all garment
from factories with democratically elected worker

• ACT has brought together 22 differ- workers. • We recognise that we cannot achieve
representation, reaching 73% by 2018. Democrati- ent brands as well as trade unions to industry-wide living wages only through
cally elected representation provides workers with work together to achieve industry-wide • In Ethiopia, the Government has not factory level interventions. To achieve
better opportunities to make their voices heard and collective bargaining agreements, ratified the ILO Minimum Wage and sustainable increases, minimum wages
resolve any issues that arise. supported by brands’ common com- has not set a minimum legal wage for have to increase. Although there have
mitments on purchasing practices. As the private sector. In 2018, together been significant increases in minimum
Democratically elected worker representation part of this, all signatory brands have with the ILO we have engaged with the wages in several markets, the change has
also helps prepare suppliers for an industry with signed Memorandums of Understand- Ethiopian Government to advocate for been too small and too slow to achieve
maturing industrial relations. Many of our supplier ing, which commit them, amongst a minimum wage-setting mechanism industry-wide living wages.

factories undergo a mindset shift when they initiate other things, to ensure their purchasing for the textile industry. Although we
this kind of change, in which they recognise the practices facilitate the payment of a believe this process might take a long
benefits of improved dialogue with their workers living wage. time, we are fully committed to support
and worker representatives. In turn, this leads to an the ILO driven agenda.
openness in addressing specific key issues such as • H&M group developed and imple-
worker well-being, health and safety, or wages and mented a ‘scientific pricing method’,
compensation. which systematically removes labour
costs from price negotiations with sup-
Alongside this mindset shift, we have also seen an pliers, therefore ensuring that labour
increase in the number of supplier factories with costs are paid and accounted for with
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one or more trade unions. While this is a positive each product order.
development that we will continue to support, more
needs to be done by all actors involved. You can find • We asked the Ethical Trading Initiative
out more about our Industrial Relations strategy on (ETI) to review our Fair Living Wage
page 66. Strategy and implementation, and to
compile an independent evaluation

report. We recognise and have already
addressed several of the report’s
findings, such as further developing
our purchasing practices using the
above-mentioned scientific pricing
method. With help from other stake-
holders, we’ll continue to address
issues as we develop our strategy. ETI’s
HOW WE REPORT
Panel discussion at the Fair Living Wage
report is publicly available here. summit in Phnom Penh, Cambodia.
OVERVIEW
NEXT STEPS with various actors. Therefore,

Interview with Frank Hoffer, Executive Director of ACT We remain committed to our vision we will further expand our work
VISION & STR ATEGY

of achieving fair living wages for all with key partners in the industry
ACT (Action Collaboration workers in the garment and not up for negotiation, which textile workers. We will continue moving forward. This includes
Transformation) is a group of textile producing countries. ensures that workers’ wages to work with our supplier factories continuing to work with ACT and
22 brands and retailers that are not negatively affected. to further build on the positive its ground-breaking approach to
are working together with What role does H&M group learnings and impacts from the achieving fair living wages.
IndustriALL towards a future play in ACT? Why does the industry need implementation of improved Wage
Management Systems, as well as the We will continue to take a leading

in which all textile workers H&M group has been at the ACT?
earn a fair living wage. forefront of our discussions, We are trying to prove that implementation of democratically role in driving such collaboration
particularly around finding worker representation can elected worker representatives. forward, and continue to contribute
What makes ACT different? practical solutions. For exam- lead to positive change. Some Beyond this, we know we’ll con- by sharing our future learnings,
ACT is something that has ple, it is important that the of the countries we work tinue to need strong collaboration challenges and achievements.
never been tried before. It’s a brands buying from textile with have experienced other
joint initiative between major suppliers make sure their forms of worker representa-
brands in the garment and respective purchasing prac- tion, including bargaining by
textile industry, plus Indus- tices support a living wage. riot. We show these countries

triALL, which has a clear One of the agreements H&M a different way – that it is
objective to work together group helped with is that the possible to build systems to
to achieve living wages for wage cost on a product is create stable and predictable
development.
What has ACT achieved so

far?
targets already
“Progress
Bringing all these stake-
holders together was our against the H&M group’s 2018
first achievement. Our
points to the measurable
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second was to agree to use
industry-wide collective contribution such strategies can make
bargaining to engage with
national actors in countries towards key Sustainable Development
like Cambodia, Myanmar,
Turkey and Vietnam. Our
Goals. The company’s next targets must
maintain and increase the pace of change.

third achievement was to
present the shared message
that international brands – And even more companies within and
like H&M group – will make a
beyond the apparel sector should feel
”
country a preferred country
of sourcing if they share our challenged to follow suit.
vision of a living wage for
textile workers. CAROLINE REES,
Frank Hoffer.
HOW WE REPORT
BUSINESS & HUMAN RIGHTS EXPERT,
PRESIDENT AND CO-FOUNDER OF SHIFT
OVERVIEW
Overview of our industrial relations,
VISION & STR ATEGY

workplace dialogue and wage
management system programmes
This map shows the number of factories and workers
CHINA
covered through our industrial relations, workplace
•W
orkplace dialogue training
dialogue and wage management programmes. in 182 factories, reaching

70,707 workers. BANGLADESH
• 1 95 factories are imple- •W

orkplace dialogue training in 183
menting the improved Wage factories, reaching 490,722 workers.
Management System,
reaching 76,412 workers. • 1 08 factories are implementing the
improved Wage Management System,
reaching 321,287 workers.
TURKEY
•W
factories, reaching 16,577 workers.
• 6 2 factories are implementing the

improved Wage Management CAMBODIA
System, reaching 15,798 workers.

•W
orkplace dialogue training in
20 factories, reaching 42,286
workers.
• 2 1 factories are implementing

the improved Wage Management
PAKISTAN S ystem, reaching 45,539 workers.
•W
• 1 2 factories are implementing the

improved Wage Management
VIETNAM
• Workplace dialogue training in 11

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ETHIOPIA
• 1 3 factories are implementing
S ystem, reaching 37,026 workers.
•W
• 1 factory is implementing the

improved Wage Management
INDONESIA
• Workplace dialogue training in 25

MYANMAR
INDIA
•W
f actories, reaching 12,402 workers. • 2 3 factories are implementing
•W
orkplace dialogue training • 1 5 factories are implementing the System, reaching 51,327 workers.
in 66 factories, reaching improved Wage Management
72,819 workers. System, reaching 17,034 workers.
• 6 2 factories are implement-
ing the improved Wage
Management System,
reaching 69,049 workers.
HOW WE REPORT
OVERVIEW
Addressing human rights issues
VISION & STR ATEGY

Respecting human rights is a fundamental part of H&M group’s paid his schooling fees. Read more PROGRESS
about our requirements on page 96. • H&M group actively participated in
responsibility as a company and vital to the sustainable If we find any person below the mini- the multi-stakeholder Responsible Mica
operations of our business. mum age working in any of our supplier Initiative (RMI), which is working towards
factories, then our Child Labour Policy responsible Indian mica mining. We took
Our Human Rights policy requires us to example, our Fair Living Wage strategy guides us (and our supplier) to act in part in working groups for ‘Traceability and
have sound due diligence and risk assess- can make an indirect positive difference the best interests of the child. This can Specifications’ and ‘Community Empower-
ment processes in place to identify any to children’s lives because it helps parents include ensuring that the individual ment’, in which 40 villages were selected

risk of doing harm in our operations and earn a sustainable living. We also collab- enrols in school, providing compensa- for empowerment programmes. We have
our supply chain. Our due diligence pro- orate with the Centre for Child Rights tion to the family for lost income and also had continued dialogue regarding
cess is described on page 92, along with and Corporate Social Responsibility partnering with civil society organisa- mica mining with stakeholders in our own
how we identify salient human rights (CCR CSR) to improve and develop young tions. Please find a full list of our Salient supply chains.
issues. Read more about H&M group’s workers’ life skills. This is described in a Human Rights issues here and further
policies at sustainability.hm.com. film produced by Global Child Forum and details on how we address human rights • In Myanmar, we are in the third year of a
CCR CSR. issues in our supply chain on page successful collaboration with Centre for
We have identified a living wage, freedom 80–82. Child Rights and Corporate Social Respon-
of association and collective bargaining We make it an absolute, minimum sibility (CCR CSR). In 2018, we engaged
as human rights issues that are most requirement for all factories producing 10 of our factories in a project to prevent
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important to address in securing fair jobs for H&M group to be free from child child labour and protect young workers.
for all. Not only are they important rights labour and this compliance is contin- The project aims to train factory manage-
by themselves, but they also enable the uously monitored. The likelihood of ment and raise awareness among workers
establishing of other rights. In the pre- child labour taking place in an H&M on the prevention and remediation of child
vious section of this report, we describe group-supplying factory is very small. labour. We have now covered all our sup-
how we address them. In this section, we During 2018 we identified 1 case of an plier factories, in total 45 in Myanmar over

will describe how we identify and address underage worker in a factory in China. the course of our work with CCR CSR.
additional human rights issues. The boy was 15 years and 10 months
old (in China minimum working age is • We engage and support UNICEF and
ADDRESSING CHILD RIGHTS 16 years). In dialogue with the boy and NBIM’s (Norges Bank Investment Manage-
AND CHILD LABOUR his family it was agreed, that he should ment) work on the framework to the Chil-
We recognise the importance of contrib- attend a vocational training school until dren’s Rights Principle in the Garment and
uting and strengthening children’s rights he reached legal working age. During Footwear Supply Chain, which focuses on
by improving life for children and young this time, the factory compensated him the fashion industry’s impact on children
HOW WE REPORT
people, both directly and indirectly. For in line with the legal minimum wage and with working parents.
OVERVIEW
ADDRESSING FORCED LABOUR PROGRESS ADDRESSING HEALTH & SAFETY PROGRESS

As with our approach to child labour, • We collaborated with Mekong Club, Our priority is to ensure that all • The High Court of Bangladesh inter-
VISION & STR ATEGY

we continuously monitor compliance Hong Kong, which produced training workplaces in our business and supply vention has changed the scenario and
with the absolute minimum require- material on forced labour and modern chain are places that always prioritise we keep monitoring the situation closely.
ment that all factories producing for us slavery. We incorporated this material health and safety for workers. Where H&M group has a close and constant
are free from forced labour. into the relevant training for various func- hazards do occur, these workplaces dialogue with the Bangladesh authorities,
tions within H&M group. must take preventative measures to BGMEA, ILO and other stakeholders. Our
We have due diligence processes in safeguard and protect workers’ safety. position is that the timeline must secure
• We engage with AMCO (Amsterdam One of these preventative measures is the possibility for a smooth and progres-

place to ensure we identify and address
any risks of forced labour. We describe Coalition), a group of leading brands who to involve workers in health and safety sive transition of the Accord to a national
our ongoing work to address the are developing a sector-wide approach awareness-raising, and to secure griev- regulatory body. Our presence and
specific risks of forced labour in our that focuses on due diligence and ance channels that enable workers to commitment in our production markets is
Modern Slavery Statement, which is responsible sourcing from India. This raise safety concerns. This requires long-term. H&M group has been sourcing
published each financial year alongside group consults regularly with impor- worker representation, dialogue with from Bangladesh over three decades and
our annual sustainability report. tant civil society stakeholders, and in factory management about issues of currently we source from around 250 pro-
2018 established an industry platform concern, and worker involvement in duction units. For further reference, our
for responsible business conduct with decisions that affect workplace-related supplier list has been public since 2013 at

Indian manufacturing businesses and the health and safety issues. sustainability.hm.com.
OECD’s Responsible Business Conduct
unit. The platform exists to address due ADVANCING THE BANGLADESH • 98% of our suppliers have remediated
diligence challenges and opportunities ACCORD issues as defined by the Bangladesh
in Indian supply chains through shared H&M group actively supports the Accord. Effective January 2019 we only
research and capacity-building activities. Bangladesh Accord, which was set up place orders with factories that 100%
in May 2013 to help improve fire and comply with the Accord requirements.
• In India, three of our spinning mill suppli- building safety in the textile industry
ers are participating in the Ethical Trading in Bangladesh. We were one of the first
Initiative’s Tamil Nadu Multi-Stakeholder companies to sign the Accord and have
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programme (ETI TNMS). This programme been on the steering committee since
focuses on awareness training around day one. The Bangladesh Accord is now
workers’ rights, health, safety and nutrition monitoring over 1,600 factories.
in spinning mills in south India.
Initially, the Accord was meant to be
• We continue to refine the due diligence transferred to a local national regula-

process in our supply chain. We have tory body by May 2018. However, this
included target outcomes in our goal-set- transfer process depended on the local
ting process at a global and national level. body satisfactorily demonstrating its
capacity to inspect factories, protect
• In Vietnam, together with IOM (Inter- workers, provide transparency and
national Organization for Migration) we offer confidential complaints mech-
have provided awareness training to anisms. A Transitional Accord was
Worker at one of our supplier 13 of our suppliers on forced labour signed in 2017 and became effective in
HOW WE REPORT
factories in Cambodia.
Photo credit: Tiffany Tsang. and modern slavery. June 2018.
OVERVIEW
ADDRESSING SOCIAL SECURITY PROGRESS

Social security is a human right, and • In Cambodia, the legislation regarding
VISION & STR ATEGY

includes benefits such as healthcare, Fixed Duration Contracts (FDCs) and
sick pay, work-related injury coverage Undetermined Duration Contracts (UDCs)
and maternity leave. Social security can was amended by the government during
be undermined by recruiting and hiring 2018 to better facilitate the use of UDCs
methods that exclude people from social – which are typically more secure for
security schemes. Modern slavery is the workers. We have started to map the ratio
of UDCs to FDCs in our supply chain, and

worst example of this. Permanent forms
of employment usually entitle employees in 2019 we will work with suppliers and
to social security benefits, but in many workers to increase the transition from
countries, employment schemes do not FDCs to UDCs. Although progress on this
always entitle their workers to the same issue has taken longer than expected
kind of protection. In fact, some schemes since we first identified the problem,
can limit a worker’s ability to exercise we have recently started to see signs of
their rights. positive change.

At H&M group, we seek to minimise • In Turkey, H&M group is building capacity
these limitations by working with sup- and collaborating with various stakehold-
pliers to improve the terms they offer ers to enable the formal employment of
their workers. This starts by ensuring Syrian refugees in our supplier factories
suppliers and factory management are in Turkey. As of 2018, more than 300
both aware of and meeting their obliga- Syrian refugees are employed in over 20
tions under labour and social security approved units in Turkey, supported by the
laws. We then look to identify instances United Work programme. The ILO SCORE
in which social security obligations initiative invited factory units employing
are being systematically avoided. For Syrian refugees to participate in a training
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example, some suppliers avoid providing programme. Four facilities have partici-
better employment schemes through pated so far, and the programme focuses
the continued use of short-term con- on functional workplace dialogue and
tracts rather than the offer of full-time health and safety committees.
employment.
• In Italy, we engaged in a working group

We also ensure that especially vulnera- to map resources amongst local trade
ble groups such as refugees can access unions and government programmes
social security system through proper that ensure responsible conditions for
registration. migrant workers.
HOW WE REPORT
OVERVIEW
Inclusion & diversity
VISION & STR ATEGY

Through relationships with our employees, business partners and H&M colleagues
starring in “Love for
customers, and through our global presence, H&M group represents All” campaign in
Amsterdam during
and connects with a huge number of people around the world. This Pride week.
presents us with a unique opportunity to drive inclusion and diversity.

We believe each and every individual step in implementing our strategy was
should be treated fairly and equally, and the roll out of a new training programme

are therefore dedicated to advancing on inclusion, diversity and unconscious
inclusion and promoting diversity. We bias, which raises awareness and helps
aim to understand, reflect and advance us shape our goals, as well as identify
the inclusion of every person we connect improvement areas. Several markets,
with – from suppliers to customers – in including South Africa and USA, have
all the diverse markets in which we oper- teamed up with external partners to
ate. We believe this is the foundation for customise their own training on inclusion
great customer experience and key to our and diversity.
ongoing success.
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Our ambition is to be inclusive and
In 2018, we intensified our continuing become more diverse at all levels of our
work around inclusion and diversity. One company. This will optimise our deci-
of the reasons was the key learning from sion-making and team performance, and
the children’s hoodie, which many per- ensure we reflect and respect the diversity
ceived as racist. This was unintentional around us. We want to be inclusive across
and consequently had to be addressed our wide customer offering, continue to

comprehensively. As a result, we have promote diversity through our marketing
increased our emphasis and attention to and campaigns, and contribute to posi-
our inclusion and diversity work. Dur- tive social impact through inclusion and
ing 2018 we updated our strategy on diversity initiatives where we are present.
inclusion and diversity and broadened
the scope of our ambitions. We use our Rooted in our values, and through our
size and scale to advance inclusion and global reach, we also want to be advocates
HOW WE REPORT
diversity towards our customers and the for everyone’s right to be included and
communities around us. An important accepted, and to express who they are.
OVERVIEW
PROGRESS – INTERNAL has been around for three years and has had the executive management team and the also participated in the Anti-Racism Network
• According to our employee survey, 83% a positive impact for all participants. Going CEO, have completed our internal training conference. In the USA, we partnered with
VISION & STR ATEGY

of H&M group employees agree with the forward, we will work to strengthen our programme for inclusion and diversity and Accenture to offer internal training, and put
statement ”I feel comfortable being myself social impact measures as well as look into unconscious bias, which covers aspects a Diversity Officer in place to drive our inclu-
at work”. 81% of H&M group employees possibilities to scale up. across our value chain. sion and diversity strategy forward.
agree with the statement “I am treated with
respect and dignity”. • Our initiative to provide safe transport to • In 2018, we initiated a further roll-out of LEARNING – INTERNAL
and from work for our female H&M store trainings to reach most of our employees. • During the roll-out of internal training on
• In 2018, 74% of all H&M group employees employees in India continued. In addition, The training programme aims to ensure inclusion, diversity and unconscious bias,

were female and 72% of management posi- we are working with vocational schools, more intentional goal-setting around inclu- we realized there are a lot of learnings for
tions were filled by female employees (2017: such as the World Class Skill Centre and sion and diversity throughout the employ- us as an organization. We are a global com-
76%, 72%). Infrastructure Leasing and Financial Services ment lifecycle, and to identify clear action pany but need to adapt to, and address,
Skills Development Corporation Limited, and points related to an inclusive customer issues of local relevance. This is why we
• Our Board of Directors was represented by NGOs such as the Magic Bus and Oasis, to offer, advancing inclusion and promoting have started to review our policies and
a 60%:40% (female:male) gender split. attract and recruit new colleagues from less diversity. processes to further improve an inclusive
advantaged socio-economic backgrounds. approach and way of working. A key insight
• Our Internship for Integration programme Approximately 5% of our employees have a • We have worked with different focus mar- from the training on unconscious bias is

focuses on providing refugees in Germany, chance to be hired through these partner- kets throughout the year. For example, we that we constantly need to challenge our
Sweden and Italy with work experience ships. partnered with the Institute for Justice and perspectives. In 2019, we will continue to
opportunities. In 2018, Spain launched a Reconciliation in South Africa to conduct look into how we can effectively measure
similar programme. The internship initiative • All our head office functions, including internal training for the ZA organisation. We inclusion and diversity.
“We commend H&M group for its investment in a series

5 . 4 . % O F F E M A L E E M P L OY E E S AT H & M G R O U P I N M A N AG E M E N T P O S I T I O N S
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of our interventions. The increasing complexity of the
issues facing society often make people long for simple
72% 69% 72% 72% answers. However, for H&M group to provide an opportu-
nity for their staff to engage with the issues is a p
roactive

move to c ontribute positively, not only to internal
15
16
17
18
20
20
20
20
company culture and values, but also to building a more

cohesive and inclusive society.
”
STANLEY HENKEMAN, EXECUTIVE DIRECTOR AT THE
INSTITUTE FOR JUSTICE AND RECONCILIATION IJR
HOW WE REPORT
IN CAPE TOWN, SOUTH AFRICA
OVERVIEW
Advocating for gender equality in Turkey
VISION & STR ATEGY

Ms. Nur Ger is the founder that we offer to our female
“Inworka global society, there is still

of the Suteks group, an H&M employees during pregnancy
group supplier since 1982. She and the first period of mother-
is also the Chair of the Board hood, but also all employees to be done to achieve gender
of Suteks group, the Business taking advantage of the oppor-
equality. It is an explicit priority

Spokesperson for the UN on tunities to keep a good work
Women�s Empowerment Prin-
ciples (WEPs) and the founding
and family balance in life. Non-
hierarchical management, as
for the world, through the sus-
President of the Yanindayiz well as the profit share system tainable development goals, and
Association. are unique management tools.
it is a priority for us. As a large
Why is it important for you to
work with gender equality?
How can we advance gender
equality?
company where the majority of
I have always cared about par- In my opinion, women’s access people employed by us directly

ticipation in civil society activi- to education is one of the
ties, as well as business life. As a best ways to eliminate gen- or indirectly are women, we need
student and as an entrepreneur,
I have experienced various
der inequality. As the level of
education increases, so does
to ensure that we address both
difficulties and realized the women’s participation in the structural and unconscious ine-
sacrifices that women need to labour force. But gender equal-
make in order to succeed in the ity isn’t possible without includ- qualities. We are signatories to
business world. This should not
be the case, women and men
ing men. For many years now,
women in this country have
the Women’s Empowerment Prin-
should have equal opportunities been alone in their struggle ciples and use these principles to
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in all aspects of life, at home for women’s rights and social
and at work. gender equality. That is why guide our strategy development,
goals and actions.
”
I founded Yanindayiz (Stand
What kind of role can your By You) together with 40 male
business play? members, all advocating for SOFIE NYSTRÖM, STR ATEGY LEAD
The business world has a great gender equality in Turkey. In INCLUSION AND DIVERSITY,

responsibility in this area in order to get changes in the H&M GROUP
addition to government policy. laws, institutions and social life,
Gender equality is at the very we aim for the better aware-
heart of human rights and a ness and active involvement of
cornerstone on which I founded men in the struggles against all
my company. Suteks is based obstacles and prejudices that
on gender equality which not cause gender inequality and
only involves the opportunities sexual discrimination.
HOW WE REPORT
Nur Ger.
OVERVIEW
PROGRESS – EXTERNAL an unrestricted opportunity to create the inspired by an H&M employee who
• Monki HQ was LGBTQ certified by sort of images they wanted to see. survived breast cancer and couldn’t
VISION & STR ATEGY

the Swedish Federation for Lesbian, find affordable and functional under-
Gay, Bisexual and Transgender Rights • Weekday collaborated with UNHCR, the garments. H&M created this collection
(RFSL). This certification came as a UN Refugee Agency, to create a collec- for her and all those fighting breast
result of employee-participation in tion of five original designs that encour- cancer around the world, and to shine
workshops held by RFSL that pro- aged action in support of the millions of a light on the social stigma sometimes
vided education in norms and the refugees and forcibly displaced persons experienced. In the USA, 100% of sales
impact they have on the working con-

worldwide. The collection’s designs were from the collection was donated to the
ditions and health of LGBTQ people. printed on organic cotton t-shirts and American Cancer Society.
totes, a belt, a key chain and a porcelain
• Monki also entered into a part- coffee cup; 100% of all proceeds (30% of • We continued to support a project
nership with Mental Health Europe sales price) was donated to UNHCR. providing equal opportunities for people
(MHE), a non-governmental organiza- with disabilities in Indonesia. In this pro-
tion committed to the promotion of • H&M launched the first collection of ject, suppliers involved ensure the hiring
positive health that works closely with bras for breast cancer survivors. The and accommodation of people with
a large network to end mental health “Close to My Heart” collection was disabilities in supplying factories.
Weekday.

stigma. Monki and MHE collabora-
tively launched the Monki campaign,
“All the Feels”.
• H&M launched a Pride collection to

advocate for equal rights and to cel-
ebrate that everyone should be free
to love who they want. We donated
10% of the sales from the collection
to the UN Free & Equal Campaign,
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which was set up by the Office of the
High Commissioner of Human Rights
(OHCHR) and advocates for equal
rights and fair treatment for LGBT+
people.
“My body. My image.” Weekday.

• Weekday launched a swimwear
collection and accompanying cam-
control
“We
paign that was created by women for
women. “My Body, My Image” was a want to engage women to take
collaborative campaign that invited 25 and reflect over how the female
”
women to contribute self-portraits of
themselves in one of the brand’s eight body is portrayed in media.
new swimwear designs. With com-
HOW WE REPORT
NADINE SCHMIDT, HEAD OF MARKETING AT WEEKDAY
plete creative control, the women had “All the feels.” Monki.
ON THE CAMPAIGN “MY BODY, MY IMAGE”
OVERVIEW
VISION & STR ATEGY

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Participants at TEDx event at Kakuma Refugee Camp.
H&M Foundation supported the world’s first TEDx event at a refugee camp
In June 2018, the Kakuma Refu- empowered refugees can shape a Iran, Kenya, Malaysia, Pakistan, the world’s first TEDx in a refu- Speakers included current and
gee Camp in the north of Kenya peaceful and tolerant future. Rwanda, Sudan, South Sudan, gee camp, we want to highlight former Kakuma Camp refugees.

hosted the world’s first TEDx Syria, Uganda and Yemen. perspectives and stories from Pur Biel spoke about growing up
event in a refugee camp. The The TEDx was part of a 30 million people with their own experience in Kakuma Camp and competing
theme was “Thrive” and it focused SEK collaboration between UNHCR “H&M Foundation wants to of being on the run. It is crucial to at the 2016 Summer Olympics as
on life as a refugee away from the and H&M Foundation. The pro- contribute to positive change counter prejudice and contribute a member of the first ever Refu-
image of suffering, and towards ject’s main focus is supporting for refugees, and we do this by to important knowledge, needed gee Olympic Team. Halima Aden
stories of resilience, contribution half a million refugee children with supporting UNHCR efforts in now more than ever,” says Diana spoke about her journey from a
and creativity. The event was a the school supplies they need to many different countries. By also Amini, Global Manager at H&M childhood in Kakuma Camp to
powerful demonstration of how attend school in Chad, Ethiopia, supporting the arrangement of Foundation. becoming a supermodel.
HOW WE REPORT
88 OF 109
Monki.
STANDARDS
& POLICIES
OVERVIEW
KEY FACTS & FIGURES 2018 / STANDARDS & POLICIES EXPLAINED / WORKING WITH STANDARDS & POLICIES / OUR HUMAN RIGHTS POLICY / OUR SALIENT HUMAN RIGHTS ISSUES / POLICIES WITHIN OUR OWN OPERATIONS / POLICIES FOR OUR BUSINESS PARTNERS / PRODUCTS & MATERIALS POLICIES
VISION & STR ATEGY

We launched an After completing 9,715
updated version of the safety and security audits
Animal Welfare and in our stores, we reached
Material Ethics policy. a worldwide compliance
level of 85%.

We measured
the sustainability
performance of
our tier 1 and tier 2
supplier factories
100%
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by conducting 884 We have rolled out a new
desktop validations of our suppliers standard for Sustainable
and 1,430 onsite have signed our Workplace, which addresses
validations. Code of Ethics. everything from reducing waste

to using LED lights. The standard
makes s ustainability part of our
daily working lives and helps us
100% of our suppliers have signed
set a good example across our
our Sustainability Commitment.
business and beyond.
HOW WE REPORT
OVERVIEW
Standards & policies explained
VISION & STR ATEGY

Our standards and policies are critical to achieving our
sustainability vision and goals. Our values are essential for Our sustainability
us – they define who we are and what we stand for. We use standards and policies*
our standards and policies to integrate and implement these
values for all our employees and business partners. HUMAN RIGHTS POLICY

Where applicable, we base our poli-
cies and standards on international
norms and well-recognised initiatives.
Among others, these include ILO Con- H&M GROUP
ventions and the UN Guiding Princi-
ples on Business and Human Rights.
We group our standards into three

categories: OUR OWN OUR BUSINESS OUR MATERIALS/
OPERATIONS PARTNERS PRODUCTS
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• our own operations
Code of Ethics Code of Ethics Animal welfare and
• our business partners
material ethics policy
• our materials/products Global security policy Sustainability
Commitment Chemicals policy
Our human rights policy sits above Whistleblowing policy
these categories and applies to all Child labour policy Food policy

Global social policies
areas of our work. In this chapter, we
Home working policy
will show you how we implement our Tax policy
standards and policies along our value
chain, and how we assess and mon- Sustainable Workplace
itor them to ensure compliance and Standard
improvement.
HOW WE REPORT
& Other Stories. *
A list of our policies can be found at sustainability.hm.com.
OVERVIEW
Working with standards & policies
VISION & STR ATEGY

Our business is always changing, with and policies, together with a strategy to same steps: we identify, we address, we experience, and external sources such
new needs, risks and opportunities implement and evaluate it. Our sustainability standards
implement, evaluate and report. and Country
as the Maplecroft policies
Risk*Tool and
arising all the time. Sometimes this is a the Transparency International Percep-
result of external factors, such as explor- Our standards and policies are part of 1. WE IDENTIFY tion Index.
ing a new business model; sometimes it our change-making programme and We identify new risks and opportunities
comes from within our business, such as are an essential component in turning by looking at our key long-term sustain- We use the results of this mapping to
setting a new sustainability goal. We are our strategy into action and making our ability needs and conducting in-depth identify high-risk countries and to allocate
aware of changes and respond appropri- vision a reality. assessments of our own and our business our resources in the best way. We have a

ately. When we become aware of a new partners’ operations. We use both inter- zero-tolerance policy for corruption.
need, risk or opportunity, we address it To ensure we work with the correct nal and external assessment tools. Three
through a range of different actions. One standard and policy for the given need, focus areas require particular attention: 2. WE ADDRESS
action is to create a new set of standards risk or opportunity we always apply the Having identified a new need, risk or
Human rights To respect human rights opportunity, we use a framework to
throughout our value chain, we require address it in the best possible way. For
ongoing due diligence processes. We con- risks, this means prevention, mitigation
tinuously work to ensure human rights are and remediation. The framework is either
an integral part of all relevant processes. prescribed by an existing standard or pol-
Our processes help us identify risks and icy, or is developed along with a new and
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impacts, and address them effectively. more suitable standard or policy.
Environment We make sure to conduct 3. WE IMPLEMENT,

daily assessments on water, chemicals, EVALUATE & REPORT
climate change, biodiversity and animal We use a tailored strategy to implement
welfare as part of our basic risk manage- the standard or policy that addresses

ment operations. the need, risk or opportunity we have
identified. We track and evaluate this
Corruption We assess levels of risk for implementation to gain insight on how
corruption according to country, indus- we can further strengthen and improve
try and position/function. Once we know our programmes. We report our progress
the level of risk, we set short and long- and findings to internal and external
terms goals for mitigation. Every year, we stakeholders through continuous dia-
map our biggest corruption risks using a logues, public communication channels
HOW WE REPORT
combination of our own assessments and and regular reports.
OVERVIEW
Our human rights policy
VISION & STR ATEGY

Respect for human rights is funda- • Identifying and addressing salient TRAINING take a stand. For example, in Myan-
human rights issues. We provide ongoing in-depth training mar, when the military-led operations
mental to any successful business. across our business to raise aware- in northern Rakhine intensified in
As our human rights policy states, we • A nnual sustainability risk assess- ness and competence in human rights 2017, H&M group and other brands
ments, conducted by all functions issues. We customise our training to used their leverage to express con-
work to integrate this respect across
within the business. suit different functions and roles, but cerns to the government on a number
all operations and relevant activities. it all covers the following: of occasions, increasingly so after the
To do this, we must both understand • Business partner due diligence UN Fact Finding Mission was released

conducted prior to entering a new • A basic introduction to human end of August 2018. EUCham Gar-
the risks and impacts on human rights contract. rights. ment Advocacy Group was formed in
in our value chain and seek ways to March 2018, and met with ministries
• Country sustainability risk assessment • A n outline of our responsibilities as in September 2018 to discuss the
prevent, mitigate and remediate these for production and retail markets. per the UNGPs. Rakhine situation. Read more on our
risks and impacts. advocacy work here and here.
• Business partner management • A n explanation of how we work with
HUMAN RIGHTS DUE DILIGENCE follow-up through SIPP (Sustainable human rights due diligence and how
Our human rights due diligence is an ongoing pro- Impact Partnership Programme). we address situations that may have
cess that monitors the practice of and respect for a human rights impact.
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human rights throughout H&M group. We conduct • Human rights due diligence process
this due diligence systematically during relevant in production markets. INCIDENT MANAGEMENT
assessment processes including, for example, risk We have specific policies and stand-
management processes, business partner due dili- • Material/process/product risk ards to help prevent human rights
gence, stakeholder engagement, grievance handling assessments. impacts from occurring. Despite this,
and all internal training. Each assessment process incidents may still arise that we need

contains a clear component that enables us to iden- • I ncident-handling routines with to address and resolve. If an incident
tify, address and report on any risks or impacts that integrated analysis according to the should occur within the factory walls,
relate to human rights. UN Guiding Principles (UNGPs). our Sustainability Commitment and
Minimum Requirements apply. This
HUMAN RIGHTS MANAGEMENT • I n-depth training on UNGPs and is handled in accordance with our
Our human rights due diligence serves as the basis our Human Rights Policy. set routines. However, when human
for implementing our human rights management. rights violations occur in a country
The main processes and activities connected to our • Continuous stakeholder engagement but not directly linked to textile
HOW WE REPORT
human rights management include: at global and local levels. industry, we as a company need to to Monki.
OVERVIEW
Our salient human rights issues
VISION & STR ATEGY

We conducted a thorough process to iden- PROGRESS
tify our salient human rights issues in • Having increased our knowledge of
2015. Salient human rights issues are the the UN Guiding Principles and how
human rights at risk of the most severe to approach them, we will update our
negative impact because of our operations Human Rights Policy during 2019.
and supply chain. This process supple-
ments our materiality analysis in the area • We assessed human rights issues for
of human rights, with an understanding all our production countries to inform

of risk to people. our prioritisation going forward. Actions
on identified issues can be found on
Besides guiding us on the human rights page 80.
issues relevant to report according to the
UNGP’s Reporting Framework, the process • We see a trend where the migrant work-
also informs our strategies and works to force is growing, contributing to a higher
address these issues going forward. To risk for forced labour in several areas of
ensure our list of salient human rights our value chain. Alongside our ongoing
issues remains relevant, we will review work with our manufacturing partners, Afound.
these issues annually. The full process, we’ve initiated a review of how we work
100% FAIR & EQUAL

including input from external stake with human rights issues in our logistics
holders, will be conducted approximately operations, as well as construction and
every three years, or more frequently if facility management services. This will
necessary. While we take steps to mitigate ensure that we can better identify and
all risks, salience guides us in what to address human rights risks related to, for
focus on within human rights and hence example, forced labour.

informs our strategies and work.
• We fine-tuned the Human Rights due
Consequently the most recent review diligence processes for our main produc-
took place in 2017, and resulted in slightly tion markets.
adjusted definitions on, for example Child
Labour changed to Child Rights. • We trained staff from the Legal depart-
ment, as well as Expansion functions, coun-
Here is the full list of our Salient Human try managers and functions� sustainability
HOW WE REPORT
Rights issues. managers on the risk assessment process. H&M.
OVERVIEW
Policies within our own operations
VISION & STR ATEGY

CODE OF ETHICS We follow up on all reported incidents reported by H&M group employees confi- TAX POLICY
(FOR H&M GROUP EMPLOYEES) or suspicions of violation. Our Security dentially without any risk of reprisal. H&M group works in accordance with
Working in an ethical manner is an department conducts the investigations the tax laws and regulations set by each
important part of our business. H&M and consequences can vary from a warn- GLOBAL SOCIAL POLICIES and every country in which our business
group conducts business based on the ing to termination of employment. Our business is global and has a grow- operates.
principles of honesty, integrity, transpar- ing presence in many markets around
ency and fair play. We have developed a Every six months, our Head of Security the world. We are expanding rapidly, See the full list of our policies on
Code of Ethics to make sure our employ- reports on the number of breaches and which means a lot of new recruits. We sustainability.hm.com.

ees know and practice these values. This case progress to the Board. We analyse recognise that our success depends on
code has a zero tolerance for bribery and cases to help us further improve our our people, so we take care to implement PROGRESS
corruptive practices and can be read in risk mapping for the future. We report and improve our social policies. These • In 2018 we rolled out a new Sustainable
full on sustainability.hm.com. the number of cases in our Annual include our global policy on inclusion, Workplace Standard (SWS), which states
Report and our Sustainability Report. diversity and equality, and our global a minimum level of sustainability require-
The Code of Ethics is the same in all non-discrimination harassment policy, ments ensuring colleagues are working in
markets and we have translated it into GLOBAL SECURITY POLICY labour relations policy and grievance sustainably functioning workplaces. The
all languages spoken at H&M group. All It is our responsibility to make sure our policy, all of which are founded on our SWS also describes an aspirational level
employees are required to sign the Code customers and colleagues feel safe. We respect for human rights and on UN and of performance, designed to encourage
of Ethics and receive practical training conduct an annual store audit con- ILO conventions, amongst others. colleagues to tailor further sustainable
100% FAIR & EQUAL

on how to act, and how to talk about and sisting of safety, loss prevention and adaptations in their workplaces.
report violations. They will also learn information security. We have iden- Our social policies set our minimum
about our whistleblowing procedure, tified employee training, as the area expectations and complement our • In 2018, our goal for the global store
through which potential breaches can be with most opportunity to improve our company values. They contain clear audit was 90% compliance. We com-
reported confidentially without any risk compliance rates. Training our employ- directions that help managers and pleted 9,715 store audits and achieved
of reprisal. ees includes how to work safely, prevent employees to meet daily business needs, 85% compliance, where the safety area

loss and comply with local legal safety understand how to work and act towards result of the global store audit was 87%
Our security, IT and expansion func- training demand. We are working with business partners, and create fair and compliance across all stores and brands.
tions, along with several others, conduct HR to increase the safety and security equal working conditions in safe and In 2019 we’re aiming to be 90% with the
internal audits of their department’s awareness amongst our people through healthy workplaces. Our social policies e-learning security-awareness training.
routines and policies. These audits trainings. are global and set the minimum stand-
include an analysis of how the Code of ard regardless of local legislation where
Ethics is being implemented. We also WHISTLEBLOWING POLICY we operate. Our guiding principle is to
conduct random assessments on specifi- We have a whistleblowing procedure in use whatever gives the greatest protec-
HOW WE REPORT
cally risky markets or positions. place so that potential breaches can be tion for all colleagues.
OVERVIEW
Policies for our business partners
VISION & STR ATEGY

In order to be an H&M group business a firm line on bribery will encourage Commitment. The Sustainability Com-
partner, all new (and existing) business others in our markets to share our values. mitment summarises the areas we are How we assess our
partners must sign and comply with our
policies. Two of our most crucial policies
We focus our efforts on high-risk coun-
tries, such as Cambodia, Bangladesh,
working on to make our supply chain
more sustainable. The three major focus
suppliers’ performance
are our Code of Ethics and our Sustaina- India, and Russia, by providing training areas are healthy workplaces, healthy beyond compliance
bility Commitment. and awareness-building activities to both ecosystems and animal welfare. The Sus-
employees and business partners. tainability Commitment also describes 1. Self or joint assessment within
CODE OF ETHICS how we work with our suppliers to create agreed timeline

(FOR OUR BUSINESS PARTNERS) We provide all our new commercial progress in these areas.
2. V
alidation of self-assessment via
We set an expectation of mutual trust suppliers with face-to-face training desktop and/or onsite review
and transparency in all our business on our CoE. This training is focused on We use a performance evaluation (see
partner relationships. We underpin this our zero tolerance of bribery and cor- “How we assess our suppliers’ perfor- 3. S
ustainability index score (incl. Higg
expectation with our Code of Ethics ruption, gifts and hospitality, and on our mance beyond compliance”) to identify facility score and additional own
criteria)
(CoE) and by building awareness, provid- position on confidential information and and reward those partners that commit
ing education and maintaining a strict compliance. to and meet the aspirations. 4. Supplier ownership and capacity
no-gift policy. building based on strengths and
SUSTAINABILITY COMMITMENT ASSESSING OUR SUPPLIERS weaknesses
We define business partners as any We launched our Sustainability COMPLIANCE AND PERFORMANCE
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5. Monitor progress through annual
business that supplies us with goods and/ Commitment in 2016; it replaced our Code SIPP is our Sustainable Impact Partner-
SIPP cycle (i.e. repeat from step 1
or services, acts on behalf of our busi- of Conduct, which had been in place since ship Programme, and it applies to our above)
ness or collaborates with us. That means 1997. It outlines our basic requirements suppliers. We use SIPP to assess levels
business partners include suppliers (com- for all H&M group’s suppliers for commer- of compliance with the Sustainability
mercial and non-commercial), vendors, cial goods and frames a long-term aspi- Commitment and to further measure our
consultants, landlords, agents, service rational level of performance we expect suppliers’ performance over time and

providers, and organisations. Our biggest them to aim for. We want our suppliers to drive constant improvements beyond
group of business partners is our com- take this ownership of their sustainabil- compliance. SIPP consists of five major
mercial goods suppliers; 100% of them ity performance because we believe it is components: minimum requirements
have signed our CoE. the best way to achieve long-lasting and verification, self-assessment, validation,
sustainable change. capacity building and case handling.
We will always address any kind of brib-
ery (including facilitation payments), and Any suppliers that want to start or
this may result in terminating a business continue working with any H&M group
HOW WE REPORT
relationship. We believe that taking such brand must sign the Sustainability
OVERVIEW
6 .1 . H & M G R O U P S U P P L I E R FAC T O RY
HIGG FEM SCORE*
40 Becoming an H&M Group business partner for commercial goods
VISION & STR ATEGY

37
New supplier
New Minimum Regular
Supplier signs our Minimum New supplier
supplier requirements performance
identified Code requirements signs our
needed checks assessments
met Sustainability

of Ethics
performed begin*
Commitment
23
19
Minimum
requirements not met Full-day sustainability
training on our:
14
15
17
16
20
20
20
20
Relationship terminated • policies

*Scores 2014, 2015 and 2016 follow the SAC/Higg FEM 2.0 • requirements
module. Score 2017 follows the SAC/Higg FEM 3.0 and is • issues
preliminary, pending SAC correction of a limited but known End
score calculation malfunction. Data is self reported and *Learn more about how we assess our business • processes
covers tier 1 and tier 2 factories in the apparel and footwear partners’ performance on page 95.
supply chain with more than 25 employees.
MINIMUM REQUIREMENTS SELF-ASSESSMENT zero and 100, which we assign based on 2015 (who base their self-assessment on
Before starting any working relation- We empower our suppliers to use their the Higg Facility Modules and our own the previous year’s data) and by 2018 it
ship with a supplier, we conduct an initiative to further their s ustainability criteria. was rolled out to 100% of tier 1* and tier 2
“entry level minimum requirement ver- credentials. Once our suppliers have factories representing 65% of our products
100% FAIR & EQUAL

ification”. All suppliers must pass the passed our initial minimum requirement We were one of the first brands to incor- in 2018. The SAC which owns the tool has
verification to begin working with us. verification, we provide them with the porate the Higg Facility Modules (both developed the content over the years, so
(See Becoming an H&M group business training and tools to self-report their sus- environmental and social) into our supply the comparability over time is not perfect.
partner for commercial goods illustra- tainability credentials and performance chain sustainability programme. The However, we still want to share the jour-
tion). Within the apparel and footwear on an ongoing basis. main advantage of the Higg facility scores ney of the supplier factories using the Higg
supply chain an additional, “basic is that all brands can use them, so suppli- FEM (see graph 6.1.). The Facility Social
level” is required in order to begin We assess our partners’ capacity to man- ers only need to complete one assessment and Labor Module has been under devel-

working together. Other supply chains age their sustainability issues and track rather than several brand-specific ones. As opment for years and will be launched by
are permitted an agreed timeline (max- their performance. This component of a result, factory assessments are fairer and SAC for the 2019 reporting cycle.
imum 18 months) in order to fulfill SIPP is closely linked to the evaluation more comparable, regardless of the brand.
the basic level. We also have ongoing methodology of the Sustainable Apparel So far we are the only brand disclosing our
minimum requirement checks and in Coalition’s (SAC) Higg Facility Modules, Manufacturers use the Higg Facility results, but we hope our industry peers
2018 performed 2,223 across our tier 1 part of the Higg Index suite of tools. Environmental Module (Higg FEM) to will follow. To learn more about the Higg
and among our tier 2 suppliers. Please The results of this SIPP assessment are measure the environmental performance facility modules, visit SAC’s webpage.
see more on minimum requirements captured in our Sustainability Index of their facilities. Higg FEM began being
HOW WE REPORT
*Factories in the apparel and footwear supply chain,
verification findings on page 97. (SI). This index has a score of between used by all our tier 1 apparel suppliers in with more than 25 employees.
OVERVIEW
VALIDATION CAPACITY BUILDING ones. This consistent presence helps us recent years. As a result of expanding our
Our suppliers self-report through SIPP We use the validated assessments of our build long-term and mutually rewarding scope, we have seen an increase in the
VISION & STR ATEGY

and we validate the results. We deter- suppliers’ sustainability performance partnerships. number of violations. All these cases have
mine what level of validation is appro- to identify their strengths and weak- been resolved according to our standards
priate for each factory based on their nesses. We use this information to ask Our capacity-building programme is a tool and policies, with a total of 108 Letters of
history, overall performance and risk our suppliers to set their goals and act to support our suppliers in different focus Concern sent. We had 0 terminations of
assessments, among other indicators. We to strengthen their capacity to better areas, such as industrial relations, clean business relations with our factories.
perform an onsite check at least once a manage their sustainability performance. water, climate neutral supply chain, etc.

year for all new and high risk suppliers. We work with our partners to identify Read more about our capacity-building
PROGRESS
We may use desktop validation (checking areas where H&M group can best provide programmes on pages 46, 58 and 68.
• 100% of our suppliers have signed
data and paperwork for anomalies and support through capacity-building work-
our Code of Ethics and Sustainability
inconsistencies) if the supplier is low risk. shops, training and management systems CASE HANDLING
C ommitment.
analysis. We also build connections If we learn about a problem or incident
We encourage our suppliers to set their between our suppliers and other func- linked to a supplier, our sustainability
• We performed 2,223 minimum require-
own goals, priorities and focus areas. We tions at our production offices, such as team will log the case and investigate.
ments verifications across tier 1 and tier 2
reward those who set ambitious goals our merchandising and quality depart- Cases cover a broad range of issues and
suppliers.
and maintain good performance, which ments. We use these connections to can concern anything from a specific

incentivises our suppliers to improve encourage our suppliers to develop their facility to a regional natural disaster. If we
• The self-assessment component of SIPP
their sustainability performance. These own strategies and solutions to chal- have a confirmed case of non-compliance
has been improved with the new 3.0 ver-
rewards include long-term business com- lenges, as well as providing incentives to towards our minimum requirements by a
sion of SAC’s Facility Environment Module
mitments and growth opportunities. shift impacts from negative to positive supplier, we send a Letter of Concern, and
Higg FEM. With contributions from H&M
further action depends on the number and
group, the methodology has upgraded
kind of violation. We require a corrective
content and a more customized question-
action plan to be submitted by the relevant
naire leading to fairer scoring. This year we
supplier, which we must approve before
released the first Supplier Environmental
any further business is conducted. At this
Performance Score and for 2017 our score
stage, we evaluate if the supplier involved
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is 40 (2016: 37). See graph 6.1. on page 96
is the right type of partner for H&M group.
for historic data and reporting boundaries.
If we decide it is not, we phase them out
and cease conducting business with them.
• We continued to align SIPP and indus-
try standards and tools by piloting the
During previous years, we have seen the
assessment framework of the Social
year-on-year decline continuing in what
Labour Convergence Project.

we call “business practice” violations, such
as use of child labour (read more on page
• We investigated and closed 47 inci-
80 on one remediated case for 2018) or any
dents* of potential non-compliance with
lack of transparency on the part of a sup-
the Code of Ethics (2017: 41, 2016: 39).
plier. Among our tier 1 suppliers non-com-
These investigations led to terminations
pliance against our social and environmen-
or written warnings to employees or busi-
tal minimum requirements has remained
ness partners in 12 cases.
at a consistent level, despite expanding and
HOW WE REPORT
*Please find an independent assurance statement related to
H&M Home. strengthening these requirements over GRI standard disclosure 205-3 on page 106.
OVERVIEW
Products & materials policies
VISION & STR ATEGY

H&M group’s standards and policies We also support the use of recycled chemical management on page 42.
cover both our operations (ours and animal fibres, as well as innovative and We require all our suppliers to take
our suppliers’), and our products and more sustainable materials that offer responsibility for their own chemical
materials. When our suppliers sign our the same qualities but are from non- management and we monitor compli-
Sustainability Commitment, they are animal origin. ance via a series of self-assessment
also legally agreeing to comply with our processes. Suppliers send samples
Animal Welfare and Material Ethics For a full list of our animal welfare poli- for third-party testing and the test
policy, and our Chemical Restrictions cies please visit sustainability.hm.com. results are submitted to H&M group

policy. for review and final approval. We also
PROGRESS conduct dedicated chemical audits at
ANIMAL WELFARE AND • We launched a new updated version our suppliers’ factories and work with
MATERIAL ETHICS POLICY of the Animal Welfare and Material H&M.
experts and our suppliers to promote
Securing our supply of raw materials Ethics policy at end of 2018. better chemical management practice
ethically is very important and we are throughout our industry.
committed to ensuring that the natural CHEMICAL RESTRICTIONS minimum, our chemical restrictions
raw materials used in our products are To ensure the ongoing safety of our are based on laws and regulations in PROGRESS
produced in a way that respects human products and to limit negative impacts each of our sales markets, as well as • Together with our suppliers, we have
rights and animal welfare, preserves on the environment and surrounding up-to-date information from author- conducted 48,700 chemical tests to
100% FAIR & EQUAL

natural resources and helps maintain communities, we implement a strict ities, NGOs and scientific reports. We ensure compliance with our Restricted
biodiversity. global chemical management pro- apply the precautionary principle, Substances List.
gramme and work towards alignment which means we preventively restrict
We define our standards on responsible across our industry. Our vision is to chemicals even where there is sci- • We have invested in the train-the-
sourcing in our Animal Welfare and lead the change towards safe products entific uncertainty. Accordingly, our trainer programme based on Best
Material Ethics Policy, as well as setting and a toxic-free fashion future. Our requirements usually go further than Chemical Management Practice

our long-term direction in line with our key goal is to achieve zero discharge of the law demands. In 2018, we adopted (BCMP) to implement cleaner pro-
goal for 100% recycled or other sustaina- hazardous chemicals throughout our Screened Chemistry to enable us to duction. Our BCMP guidelines help
bly sourced materials by 2030. supply chain by 2020. select the best available chemicals for our suppliers to minimise the use of
our production. Screened Chemistry hazardous chemicals by developing a
We aim to have all our virgin animal- H&M group’s Chemical Restrictions goes beyond Restricted Substance List strong chemical management system.
derived materials coming from farms List bans and/or limits any chemi- /Manufacturing Restricted Substance BCMP is also closely linked to the new
that are certified to a credible cals that are considered hazardous. List chemicals and identifies best-in- Higg FEM 3.0, ensuring that chemical
animal welfare standard and are It is mandatory for all our suppliers class chemicals and safer alternatives. performance is captured in suppliers’
HOW WE REPORT
fully traceable. to comply with our restrictions. As a Please see more information about overall evaluation.
HOW WE REPORT
99 OF 108
H&M Home.
HOW WE
REPORT
OVERVIEW
HOW WE REPORT / MATERIALITY MATRIX / UN’S SUSTAINABLE DEVELOPMENT GOALS / KEY COLL ABOR ATIONS / AUDITOR’S REPORT / GET IN TOUCH
How we report
VISION & STR ATEGY

We are committed to transparent Unless otherwise stated, we do not cover col, the emission factors we use are from
franchise operations. The report has publicly-available sources such as the
reporting on the progress we been reviewed by the highest executive International Energy Agency (IEA 2017),
make towards achieving our management and external assurance has the Network for Transport Measures
been performed for selected indicators (NTM), Reliable Disclosure System for
sustainability strategy.
(clearly marked where applicable, as well Europe (RE-DISS) and supplier-specified
H&M group produces an annual sus- as in regards to materiality and stake- emission factors. The global warming
tainability report that covers sustaina- holder engagement). We have included potential (GWP) factors used in the cal-

bility strategies, challenges, activities, stakeholder comments and interviews culation of CO₂e are based on the IPCCs
goals and performance for the global throughout this report. Fourth Assessment Report (AR4) over a
group operations of H & M Hennes & 100-year period.
Mauritz AB (also called H&M group in Our sustainability teams collect data
this report). The report includes all H&M from the relevant functions within H&M The scientific knowledge used to deter-
group brands (H&M, COS, Weekday, group and from external parties such as mine emission factors is incomplete. This
Cheap Monday, Monki, H&M Home, & suppliers or implementation partners. means GHG emission data, as with other
Other Stories, ARKET, Afound), as well This data is always reviewed by our inter- data, is subject to inherent uncertainties
as its wholly- or partially-owned subsid- nal controlling team, relevant experts in that ultimately affect all measurements
H&M Conscious Exclusive.
iaries globally during our financial year our sustainability team and expert func- and estimations. Our reported energy
100% FAIR & EQUAL

from 1 December 2017 to 30 November tions following a two-tier quality control usage is based on invoiced data, data
2018 unless stated otherwise. Please see principle. We clearly indicate any extrap- from real-time electricity meters and data data systems and accuracy to report on
our Annual Report 2018 for a full list olations or estimations. The same rule as reported by transport providers. We material consumption.
of entities. applies for any changes in data method- convert between fuel usage and energy
ologies or scopes that may influence data content using energy values specified by Unless otherwise specified, all data con-
Wherever possible, we report how we are comparability. We always base our data the supplier or by using tabled values cerning business partners and supplier

addressing our key positive and negative on the best possible systems that are cur- provided by national bodies. factories includes all suppliers and fac-
impacts across our value chain. This rently available to us and, where applica- tories that were active and approved for
often involves reporting beyond or even ble, align it with recognised standards. We are required to make certain assump- production during the reporting period.
outside our own operations, for example However, it is important to understand tions about waste factors, weight per We include the following factories in our
when we report on the suppliers manu- that there are continued improvements sizes, etc. for our material reporting. We scope: tier 1 manufacturing or processing
facturing our products. We always clearly in data systems, methodologies and are continuously working to improve (i.e. washing or dyeing), factories that are
state when information is limited in scientific uncertainties. For example, those aspects of reporting that may lead owned or subcontracted by our suppliers
scope, such as for specific brands, parts while our GHG emissions accounting and to minor updates in our yearly material and, where stated, selected tier 2 sup-
HOW WE REPORT
HOW WE REPORT
of our operations or our value chain. reporting is aligned with the GHG Proto- consumption reporting, as well as our pliers and suppliers for non-commercial

OVERVIEW
goods (such as store interior suppliers). Guiding Principles Reporting Framework

The tier 2 suppliers we have selected so can be found at sustainability.hm.com.
VISION & STR ATEGY

far are mostly fabric and yarn suppli- We identified our salient human rights
ers that account for about 60% of our (page 93) in 2015, following a compre-
products. We report monetary amounts hensive process that involved a variety
mainly in the currency of transaction. of internal and external stakeholders.
Additional currency values are conver- We plan to conduct this process every
sions as approximate figures based on the third year, or as deemed necessary. On

conversion rate on 30 November 2018, an annual basis, we will review the
unless stated otherwise. We provide relevance and definitions of the issues
additional information at sustainabil- identified and discuss emerging issues.
ity.hm.com and in our financial and This complements our materiality assess-
corporate governance reporting. Our ment (described below), which identifies
most recent sustainability report was human rights as a highly material topic.
published in April 2018. We are signato-
ries to the UN Global Compact and our PROCESS FOR IDENTIFYING
annual sustainability report also serves THE MOST MATERIAL TOPICS

as our Communication on Progress (COP) AND THEIR BOUNDARIES*
for the UN Global Compact as well as the 1. Identification: Mapping aspects
CEO Water Mandate. and creating a gross list
We conduct an annual review of our gross
GLOBAL REPORTING INITIATIVE (GRI) list of aspects. This is based on an analy-
H&M Beauty. Fabric samples.
We have prepared this report in accord- sis of external standards, such as the GRI
ance with the GRI Standards: Core Standard topic list, legislation, investor
Option. We have also included material and NGO questionnaires, peer reviews, we look at frequency raised by key ees, industry peers, NGOs, IGOs, policy-
indicators from the pilot of the Apparel business intelligence, lifecycle assess- defined sustainability stakeholders and makers and investors). We asked eleven
and Footwear Sector Supplement. You ment results, stakeholder dialogues and experts (weighted x3), frequency featured stakeholder representatives to feedback
100% FAIR & EQUAL

can download a detailed GRI index at stakeholder reports, and media coverage. in media (weighted x1) and frequency on our materiality matrix.
sustainability.hm.com. The gross list has been checked against raised in key sustainability benchmarks,
GRI’s Sustainability Context and Stake- rankings and indices (weighted x1). For 3. Regular review of our materiality
UN GUIDING PRINCIPLES holder Inclusiveness tests most recently impact, we look at social and environ- matrix with key stakeholders***
REPORTING FRAMEWORK in 2016. mental impacts (weighted x1) and impor- We review our materiality matrix on an
We were one of the first companies in the tance to business strategy (weighted x2). annual basis. This can mean conducting

world to report on human rights in line 2. Prioritisation: Scoring At least two internal experts per category a full materiality analysis (as conducted
with the UN Guiding Principles Report- and prioritising topics** gave scores, which were based on lifecy- in 2013 and 2016) as described in points
ing Framework. This framework is the We prioritise the most material topics cle assessment (LCA) data and existing 1 and 2 or a review of previous year’s
first comprehensive guidance for compa- from this gross list by scoring different strategy documents. matrix considering feedback received.
nies to report on human rights issues in aspects on their frequency (how often
* Please find an independently-verified assurance statement on
line with their responsibility to respect they are raised by stakeholders) and their We also chose at least one representative defining report content and topic Boundaries GRI 102-46 on
page 106.
human rights set out in the UN Guid- significance for economic, environmental from each of our key stakeholder groups ** Please find an independently-verified assurance statement on
list of material topics GRI 102-47 on page 106.
ing Principles on Business and Human and social impacts. We then break these (which includes customers, colleagues, *** Please find an independently-verified assurance statement
HOW WE REPORT
HOW WE REPORT
on defining report content and topic Boundaries GRI 102-46 on
Rights. Detailed references to the UN categories down further. For frequency, communities, suppliers and their employ- page 106.

OVERVIEW
REVIEW OF MATERIALITY In 2017 we conducted our first stake-

MATRIX IN 2018 holder survey developed with Business
VISION & STR ATEGY

In spring 2017, we launched our updated for Social Responsibility (BSR). The
sustainability strategy, developed in survey assesses both the quality of
close cooperation with several external our stakeholder engagement work, as
and internal key stakeholders, part- well as feedback on our strategy and
ners and experts. In connection to this, performance towards it. For this year’s
we arranged a large-scale stakeholder survey, the feedback we received widely

meeting inviting over 300 represent- confirmed our materiality matrix,
atives from our stakeholder commu- with some adjustments made, such as
nities to a full day of workshops and an increased focus on inclusion and
discussions, including feedback on our diversity.
report and the focus areas chosen in
our strategy. PROCESS FOR DEFINING OUR
SALIENT HUMAN RIGHTS ISSUES
We started the process by defining
who we impact through our business

activities along our value chain. We
paid special attention to those who are
potentially more vulnerable and hence
are more at risk, such as migrant work-
ers, women and children. This map-
ping process resulted in a list of both
potential and actual human rights
impacts. From this list, we identified
salient impacts by applying two crite-
ria: the severity of the potential impact
100% FAIR & EQUAL

and the likelihood of occurrence.
We then held internal and external

consultations about the method and
input to the identified salient human
rights issues with almost 100 people.

Internally, we conducted workshops and
opened dialogues across all levels and
functions of our company. Externally,
we held consultations with experts,
organisations, academia and local stake-
holders. We review our salient human
rights issues annually and adjust them
accordingly. For an update on our salient
HOW WE REPORT
HOW WE REPORT
MoschinoXH&M. human rights issues, read more here. H&M Home.

OVERVIEW
Materiality matrix
VISION & STR ATEGY

REPORTED AT LEAST IN NARRATIVE, REPORTED IN DETAIL, WHEREEVER POSSIBLE WITH AMBITION AREAS OUR FOCUS AREAS OUR IDENTIFIED TOPICS BOUNDARIES
WHEREVER POSSIBLE WITH MEASURABLE KPI MEASURABLE KPI OR PREFERABLY GOAL, AIM FOR
EXTERNAL ASSURANCE WHEREVER USEFUL Design, raw materials, fabric and yarn production, product manufacturing,
100% INNOVATION 1. Innovation transport, sales, use
LEADING THE
CHANGE DRIVE 2. Drive transparency Product manufacturing, fabric and yarn production
TRANSPARENCY
REWARD SUSTAIN- Design, raw materials, fabric and yarn production, product manufacturing,
3. Reward sustainable actions
14 15 ABLE ACTIONS transport, sales, use
18 23
4 4. R ecycled and other sustain- Design, raw materials, fabric and yarn production, product manufacturing,
ably sourced materials sales, use
2 1

13 6 5. Animal welfare Design, raw materials
100%
3 CIRCUL AR & 6. A circular approach to how Design, raw materials, fabric and yarn production, product manufacturing,
10 12 RENEWABLE fashion is made and used sales, use
100% CIRCUL AR
11 16
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
5 7. Water Design, raw materials, fabric and yarn production, product manufacturing, sales, use
Design, raw materials, fabric and yarn production, product manufacturing,

7 8. Waste transport, sales, use
9. Packaging Product manufacturing, transport, sales, use
10. Chemical management Raw materials, fabric and yarn production, product manufacturing, sales
8 100% RENEWABLE
17 Raw materials, fabric and yarn production, product manufacturing, transport,
11. Climate sales, use
20 Raw materials, fabric and yarn production, product manufacturing, transport,
100% FAIR & EQUAL

9 12. Fair jobs sales
13. Industrial relations Product manufacturing, sales

24 100% FAIR JOBS FOR ALL
FAIR & EQUAL 14. Fair living wages Product manufacturing, sales
22 19
Design, raw materials, fabric and yarn production, product manufacturing,
15. Human rights transport, sales, use
21
STEWARDS FOR 16. Inclusion & diversity Design, product manufacturing, transport, sales, use
DIVERSITY AND
INCLUSIVENESS 17. Community development Product manufacturing, sales

18. Supply chain assessments Fabric and yarn production, product manufacturing
STANDARDS
Raw materials, fabric and yarn production, product manufacturing, transport,
& POLICIES 19. Anti-corruption sales
20. Responsible marketing Sales, use
21. A nti-competitive Fabric and yarn production, product manufacturing, transport, sales
behaviour
22. Biodiversity Raw materials, fabric and yarn production, product manufacturing
NO REPORTING REPORTED AT LEAST IN NARRATIVE, OTHER
OR REPORTING ON REQUEST WHEREVER POSSIBLE WITH MEASURABLE KPI IDENTIFIED 23. Economic performance Sales
HOW WE REPORT
HOW WE REPORT
TOPICS
24. Market presence Raw materials, fabric and yarn production, product manufacturing, sales
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

OVERVIEW
UN’s Sustainable Development Goals
VISION & STR ATEGY

The UN’s Sustainability Development Goals (SDGs) and
the 2030 Agenda for Sustainable Development call on Our business activities directly contribute
governments, business and civil society to take action to to the following SDGs
address social and economic challenges. We believe this
collaborative approach is essential and, as you can see
below, our sustainability strategy aligns well with the SDGs.

CONTRIBUTION
THROUGH PARTNERSHIPS 100% LEADING THE CHANGE
SDG2 Zero hunger SDG9 — Industry, innovation
SDG4 Quality education and infrastructure
SDG5 Gender equality
SDG12 — Responsible consumption
SDG6 Clean water and sanitation and production
SDG7 Affordable and clean energy
SDG17 — Partnership for
SDG8 Decent work and the goals
economic growth
100% FAIR & EQUAL

SDG9 Industry, innovation
and infrastructure
SDG10 Reduced inequalities
SDG12 Responsible consumption
and production 100% CIRCULAR & RENEWABLE 100% FAIR & EQUAL
SDG13 Climate action
SDG6 — Clean water and sanitation SDG5 — Gender equality
SDG16 Peace, justice and

strong institutions SDG7 — Affordable and clean energy SDG8 — Decent work and
SDG17 Partnership for the goals SDG12 — Responsible consumption economic growth
and production SDG10 — Reduced inequalities
INDIRECT INFLUENCE AND IMPACT
SDG13 — Climate action SDG17 — Partnership
SDG1 No poverty
SDG14 — Life below water for the goals
SDG3 Good health and well-being
SDG11 Sustainable cities SDG15 — Life on land
and communities
HOW WE REPORT
HOW WE REPORT
SDG14 Life below water
SDG15 Life on land

OVERVIEW
Key collaborations
VISION & STR ATEGY

• Accord on Fire and Building Safety • Humane Society International (HSI) • Sweden Textile Water Initiative
in Bangladesh (The Accord) (STWI)
• I:CO
• ACT (Action, Collaboration, • Textile Exchange
• IFC
Transformation)
• T he Climate Group (RE100; EP100)
• ILO
• Afirm Group
• T he Global Deal
• IndustriALL /IF Metall
• Amsterdam Coalition (AMCO)
• T he Pathway Coalition
• Make Fashion Circular

• Better Cotton Initiative (BCI)
• T ransparency International Sweden
• Mekong Club
• Better Than Cash Alliance (BTCA)
• UNDP
• M istra Future Fashion
• Better Work
• UNFCCC
• Network for Civil Rights Defenders
• Canopy
• UN Global Compact (UNGC)
• Network for Transport Measures
• CCWG (Clean Cargo Working
(NTM) • UNI Global Union
Group)
• New Plastic Economy Global • WRG
• Chemsec Business Group
Commitment
• WWF
100% FAIR & EQUAL

• Clean Shipping Index (CSI)
• Organic Cotton Accelerator (OCA)
• Zero Discharge of Hazardous
• Cradle to Cradle Products
• Responsible Mica Initiative (RMI) Chemicals (ZDHC)
Innovation Institute
• Shift
• Ellen MacArthur Foundation
• Sida
• Ethical Trading Initiative (ETI)

• Social & Labour Convergence
• Fair Wage Network (FWN)
Project (SLCP)
• Global Deal
• Solidaridad
• Global Fashion Agenda
• Stockholm Resilience Centre (SRC)
• Global Logistics Emissions Council For more information about the
• Sustainable Air Freight Initiative
(GLEC) above listed collaborations
• Sustainable Apparel Coalition and memberships please visit
HOW WE REPORT
HOW WE REPORT
• Green Freight Asia (GFA)
(SAC) sustainability.hm.com. ARKET.

OVERVIEW
Auditor’s report
VISION & STR ATEGY

AUDITOR’S LIMITED ASSUR ANCE REPORT ON SPECIFIED INFORMATION IN H&M HENNES & MAURITZ AB’S GROUP SUSTAINABILITY REPORT

TO H & M HENNES & MAURITZ AB, volume, limited to cotton (Disclosure tors in the H & M Group Sustainability sented information in the H & M Group
CORP ID 556042-7220 301-1), p. 39 Report based on the limited assurance Sustainability Report is to be consid-
We have been engaged by the management Tons of garments collected for reuse and procedures we have performed. The ered in connection with the explanatory
of H & M Hennes & Mauritz AB (H & M) to recycling, p. 50 selection of indicators to be reviewed has information on data collection, consol-
perform a limited assurance engagement been made by the management of H & M idation and assessments provided by
on the information in H & M’s Group’s Sus- • Anti-corruption: Confirmed incidents Hennes & Mauritz AB. We do not accept, H & M. This independent limited assur-
tainability Report 2018 w ith regards to the of corruption and actions taken (Disclo- nor assume responsibility to anyone ance report should not be used on its
following indicators referred to in the GRI sure 205-3), p. 97 else, except to H & M for our work, for own as a basis for interpreting H & M’s

index that can be found in the ‘GRI content the limited assurance report, or for the performance in relation to its principles
index 2018’: The H & M Group Sustainability Report conclusion that we have reached. of corporate responsibility.
2018 covers the period 1 December 2017
• Identified material topics and bound – 30 November 2018. We conducted our limited assurance Our review procedures are designed to
aries (Disclosures 102-46, 102-47), engagement in accordance with the obtain limited assurance on whether
p. 101–103 MANAGEMENT’S RESPONSIBILITY International Standard on Assurance the above specified indicators are
The Management of H & M is respon- Engagements (ISAE) 3000 ‘Assurance presented in accordance with the
• Stakeholder engagement (Disclosure sible for preparing and presenting the Engagements Other than Audits or Sustainability Reporting Guidelines of
102-40, 102-42, 102-43, 102-44), H & M Group Sustainability Report Reviews of Historical Financial Infor- the Global Reporting Initiative, in all
p. 17, 101–103 2018 in accordance with the reporting mation’. The ISAE 3000 standard material respects. A limited assurance
100% FAIR & EQUAL

criteria as set out in the company’s own requires that we comply with ethical engagement consists of making inquir-
• Energy: Energy consumption within reporting guidelines as well as the Global requirements and plan and perform the ies, primary of persons responsible for
the organization (Disclosure 302-1), p. 55 Reporting Initiative’s (GRI) Standards. assurance engagement to obtain limited the preparation of the H & M Group
Energy intensity (Disclosure 302-3), p. 55 As discussed in the section “How we assurance on whether any matters have Sustainability Report and applying
Percentage of renewable energy (AF21), p. 57 report”, page 100 in the H & M Group come to our attention that would cause analytical and other evidence gathering
Sustainability Report 2018, greenhouse us to believe that the above specified procedures, as appropriate. The proce-

• Emissions: Direct (Scope 1) GHG gas quantification is subject to inher- information in the H & M Group Sus- dures performed in a limited assurance
emissions (Disclosure 305-1), p. 54 ent uncertainty because of incomplete tainability Report 2018 has not been engagement vary in nature from, and
Energy indirect (Scope 2) GHG emissions scientific knowledge used to determine prepared, in all material respects, in are less in extent than for, a reasonable
(Disclosure 305-2), p. 54 emissions factors and the values needed accordance with the reporting criteria. assurance engagement conducted in
Other indirect (Scope 3) GHG emissions, to combine emissions of different gases. A limited assurance engagement is accordance with International Stand-
limited to transportation (Disclosure 305- provided only on the information dis- ards on Auditing and generally accepted
3), p. 56 AUDITOR’S RESPONSIBILITY closed in the H & M Group Sustainability auditing standards in Sweden. The
Our responsibility is to express a con- Report, not on information linked to and procedures performed consequently do
HOW WE REPORT
HOW WE REPORT
• Materials: Materials used by weight or clusion on the above specified indica- disclosed on other web pages. The pre- not enable us to obtain assurance that

OVERVIEW
we would become aware of all signifi- Our procedures are based on the criteria
cant matters that might be identified defined by the Management as described
VISION & STR ATEGY

in a reasonable assurance engagement. above. We consider these criteria suita-
Accordingly, we do not express a reason- ble for the preparation of the Sustaina-
able assurance conclusion. bility Report.
The firm applies ISQC 1 (International We believe that the evidence we have
Standard on Quality Control) and obtained is sufficient and appropriate to
accordingly maintains a comprehensive provide a basis for our conclusion below.

system of quality control including docu-
mented policies and procedures regard- CONCLUSION
ing compliance with ethical require- Based on our work described in this
ments, professional standards and report, nothing has come to our atten-
applicable legal and regulatory require- tion that causes us to believe that the
ments. We are independent of H & M in information regarding the above speci-
accordance with professional ethics for fied indicators in the H & M Group Sus-
accountants in Sweden and have other- tainability Report has not, in all material

wise fulfilled our ethical responsibilities respects, been prepared in accordance
in accordance with these requirements. with the reporting criteria stated above.
100% FAIR & EQUAL

H&M.
Stockholm, March 29, 2019

Ernst & Young AB
Åsa Lundvall Charlotte Söderlund
HOW WE REPORT
HOW WE REPORT
Authorized Public Accountant Authorized Public Accountant

OVERVIEW
Get in touch
VISION & STR ATEGY

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, standards and policies,
please contact:
Laura.Cars@hm.com or

Nathalie.StjernfeldtGrumme@hm.com
We appreciate your feedback.
100% FAIR & EQUAL

HOW WE REPORT
HOW WE REPORT
Monki.

THANK YOU

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Sustainability Report 2018

VISION & STR ATEGY

100% CIRCU L AR & RENEWABLE

100% FAIR & EQUAL

STANDARDS & POLICIES

Letter from CEO

VISION & STR ATEGY

100% CIRCU L AR & RENEWABLE

100% FAIR & EQUAL

STANDARDS & POLICIES

VISION & STR ATEGY

100% LE ADING THE CHANGE

100% CIRCU L AR & RENEWABLE

100% FAIR & EQUAL

STANDARDS & POLICIES

Karl-Johan Persson, H&M Group

VISION & STR ATEGY

100% CIRCU L AR & RENEWABLE

Our sustainability vision is to

100% FAIR & EQUAL

STANDARDS & POLICIES

VISION & STR ATEGY

100% CIRCU L AR & RENEWABLE

100% FAIR & EQUAL

STANDARDS & POLICIES

Because investing in innovation H & M G R O U P WA S R A N K E D A M O N G S T

VISION & STR ATEGY

100% CIRCU L AR & RENEWABLE

100% FAIR & EQUAL

STANDARDS & POLICIES

Awards & recognitions

VISION & STR ATEGY

DOW JONES SUSTAINABILITY recognized by the Ethisphere® Institute as

100% CIRCU L AR & RENEWABLE

100% FAIR & EQUAL

STANDARDS & POLICIES

About H&M Group

VISION & STR ATEGY

100% CIRCU L AR & RENEWABLE

100% FAIR & EQUAL

STANDARDS & POLICIES

Our value chain

VISION & STR ATEGY

100% LE ADING THE CHANGE

full potential. Our value chain describes the full OUR

sequence of processes involved in the production

100% CIRCU L AR & RENEWABLE

systems and other businesses around the world.

IMPACTS ALONG OUR VALUE CHAIN value chain PRODUCT MANUFACTURING

means that our social, environmental and eco-

100% FAIR & EQUAL

To maintain our business idea, we need to TRANSPORT

FABRIC AND YARN

STANDARDS & POLICIES

Our vision & strategy

VISION & STRATEGY

100% CIRCU L AR & RENEWABLE

100% FAIR & EQUAL

STANDARDS & POLICIES

VISION & STRATEGY

100% CIRCU L AR & RENEWABLE

100% FAIR & EQUAL

100% FAIR & EQUAL

“We must continue to dare and push the boundaries”