Fast Fashion’s Fast Feedback: H&M Commits to Sustainable Cotton

HM is one of the largest consumers of cotton globally. Does HM have a responsibility and/or incentive to source sustainable cotton?

Will Climate Change Affect H&M?

H&M, a ‘fast fashion’ brand that manufactures clothing quickly and inexpensively, relies on a readily available supply of cotton at cheap prices. Managing cotton resources is critical to H&M’s supply chain –  cotton is the most commonly used fiber in H&M’s clothing [i].

However, as global temperatures rise due to climate change, droughts will become more prevalent and the supply of cotton will be threatened [ii]. Growing cotton requires a significant amount of water – representing 10% of all water used for agriculture – and water shortages will therefore significantly reduce cotton yields [iii]. Global cotton shortages will result in greater competition among companies to secure raw materials, increasing the price of cotton and ultimately hurting H&M’s future profitability. H&M must focus on strategies to sustain and improve the supply of cotton in the long-term.

Furthermore, H&M is one of the largest consumers of cotton globally [i]. Fashion brands consume substantial quantities of cotton, and as a ‘fast fashion’ brand, H&M cycles through trends frequently and consumes textiles in significantly higher quantities than its luxury counterparts. Given its size and scale, H&M has a responsibility to drive change across the industry and influence other companies to follow suit [iv].

H&M’s Short-Term Strategy

H&M publicly committed to sourcing 100% of its cotton from sustainable resources, including organic and recycled cotton, by 2020 [iv]. Organic cotton is grown without pesticides, thereby sustaining the health of the soil and surrounding water sources, and is majority rain-fed, reducing pressure on local water sources. Overall, compared to non-organic cotton, organic cotton production could reduce water consumption by 90% and energy use by 60% [v].

H&M partnered with farmers and non-profit organizations to source sustainable cotton, increasing its use over three-fold from 13% of overall cotton consumption in 2012 to 43% in 2016 (Figure 1) [iv]. H&M remains dedicated to bridging the gap to reach its 2020 goal of 100% sustainable cotton use: H&M employs 220 people globally who focus on sustainability, the Head of Sustainability reports directly to the CEO and together they review progress biannually, and finally, H&M publishes an annual sustainability report, which is made available to the public [iv].

Figure 1: Sustainable Cotton as a % of H&M’s Total Cotton Consumption [iv]

H&M’s Medium-Term Strategy

In 2016, H&M commissioned a study to understand the impact of using recycled cotton to produce its clothing [iv]. The results revealed that by using recycled cotton instead of virgin cotton, water usage could be reduced by 80-90% for the stages up to when the fiber is ready for spinning. However, due to quality issues, H&M is unable to incorporate more than 20% of recycled cotton in its clothing. Going forward, H&M is investing in technology to overcome this challenge.

Further Recommendations

  • A 2017 study that evaluated the sustainable cotton practices of 75 global companies found that H&M had a low score with respect to traceability of its cotton supply chain [i]. H&M fails to publish an extensive list of its suppliers and its total volume of cotton consumed. H&M should be transparent with its supply chain so that other companies can easily reference its network, thereby increasing uptake of sustainable cotton across the fashion industry. However, if H&M has negotiated competitive prices with its suppliers, revealing its sources could cause H&M to lose its competitive advantage against peers with respect to raw material costs.
  • H&M should publish the volume of cotton that it consumes so that it can be easily compared to peers and held accountable for driving up demand. This would incentivize H&M to incorporate more recycled cotton in its clothing going forward.
  • H&M’s ‘fast fashion’ business model will exhaust cotton supplies in the future. ‘Fast fashion’ brands encourage a ‘throwaway mindset’ by encouraging consumers to buy more clothes by making them cheap and cycling through trends frequently. However, the fabric could last for decades. Over the medium-term, H&M management should consider decelerating their fashion trend cycles to reduce overconsumption and waste. As a leader in the ‘fast fashion’ space, H&M could set precedents for other companies to follow, potentially revolutionizing the industry.

Outstanding Questions

  • Should H&M be praised for its sustainability efforts despite its high clothing turnover contributing to waste?
  • Can H&M successfully change its business model to reduce overconsumption of cotton?

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Bibliography

[i] Sustainable Cotton Ranking. “H&M: Create internal alignment and know your supply chain.” http://www.sustainablecottonranking.org/interview/h-and-m, accessed November 2017.

[ii] Center for Climate and Energy Solutions. “Drought and Climate Change.” https://www.c2es.org/content/drought-and-climate-change/, accessed November 2017.

[iii] Stanford Value Chain Innovation Initiative. “Socially and Environmentally Responsible Supply Chains: A Focus on Trends in Organic, Traditional, and Sustainable Cotton.” https://www.gsb.stanford.edu/sites/gsb/files/publication-pdf/other-trends-organic-traditional-sustainable-cotton.pdf, accessed November 2017.

[iv] H&M, 2016 Sustainability Report. Stockholm: H&M, 2017.

[v] Textile Exchange. “Life Cycle Assessment (LCA) of Organic Cotton.” PE International, 2014.

Cover Image: Self constructed.

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3 thoughts on “Fast Fashion’s Fast Feedback: H&M Commits to Sustainable Cotton

  1. While I agree that cotton sustainability is important contributor to combating climate change, I am skeptical whether H&M, given its business model, will in practice be able to implement the stated recommendations to increase sustainability. Regarding the transparency of its supply chain, a key issue is that H&M may not even be able to trace its entire supply chain itself, since subcontracting is prevalent in the apparel industry, and particularly more so in the fast-fashion business which has large volumes, short times frames and low cost. [1] While the company can try to set standards for subcontractors, these are often difficult to enforce across different geographic reasons, and often times will result in increased cost for H&M. This leads to the main issue that holds back H&M to be sustainable in its supply chain – the fast-fashion industry is extremely competitive with thin margins and even though H&M is currently a leader, it will likely fall out of favor with its customer base pretty quickly if it reduces its fashion cycles and/or raises prices due to sustainability efforts. This is because the customers of a fast fashion brand care more about price and trendiness than about sustainability. It would require a complete overhaul of the fast fashion industry to increase environmental sustainability, and with the exception of mandatory regulations, I find it difficult to believe that any company will be willing to be the first to take a hit in revenue and margins to fulfill this promise.

    [1] Starting at the source: Sustainability in supply chains. McKinsey Insights. “https://www.mckinsey.com/business-functions/sustainability-and-resource-productivity/our-insights/starting-at-the-source-sustainability-in-supply-chains”

  2. Thanks for an interesting read! While I applaud H&M, I’m skeptical at how realistic the 100% sustainable sources target is, without understanding the cost implications of switching suppliers. Sustainability is a longterm strategic initiative, however, at which point should they consider the impact on the bottom line or on the competitive prices it has built its consumer base off of?

  3. Thank you for this essay – interesting to see how climate change is affecting the fast-moving fashion industry.
    While I appreciate the actions that H&M is taking towards more sustainable cotton sourcing, I wonder what the motives are. In particular, how do prices of organic cotton compare to those of non-organic cotton when long-term yield is taken into consideration? Drawing on your earlier point that non-organic cotton destroys farming soil rather quickly, will a long-term view (assuming same farming plot) yield different results?
    Also, I would like to build on your point of changing consumer behavior – it seems that the effects of this shifting mindset towards a faster-moving apparel industry are significantly larger than the benefits of H&M’s actions. Are these effects being measured? Does H&M provide any information on the effectiveness of its actions?
    Furthermore, should H&M do more to encourage consumers to recycle H&M products?
    Finally, what are the implications of using more synthetic fibers or different fibers than cotton in this industry? Would that be a more sustainable practice?
    In short, it appears to me that H&M is tackling ‘peripheries’ or ‘symptoms’ of the issue rather than the root cause itself. I wonder whose responsibility it is to hold them (and others in the industry) accountable and/or guide their immediate actions.

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