H&M Leads the Way for Sustainable Fast Fashion

H&M has committed to being Climate Positive by 2040 through a multi-step plan that focuses on the entire value chain.

The world of fast-fashion has dramatically changed consumer expectations and increased the production cycles of the retail industry, but at what cost?

The number of clothing items purchased by customers increases by 60% annually, and product lifecycles are half as long as they were 15 years ago.  With this immeasurable growth, fast fashion retailers are unable to match environmental efforts at the same rate [1].  Retailers have an especially important role as they have supply chain control, from agricultural inputs to customer education, and can act as a middle-man between the producer and the end-user [2].  Additionally, apparel production drives a significant use of chemicals and water.  Coupled with consumers’ increasing awareness of climate change and willingness to pay for social impact, sustainable practices can act as a competitive advantage [3].

[1] McKinsey
Enter H&M.

The Swedish-based apparel retailer has made it their responsibility to change the face of sustainable fast-fashion.  According to CEO Karl-Johan Persson, H&M’s vision is to “lead the change towards circular and renewable fashion” [5].  By 2040, H&M has committed to a climate positive value chain through a multi-step plan that focuses on using energy from renewable sources and reducing the energy need across 1) raw materials, 2) production processes, and 3) distribution/in-store activities [4].

 

A Sustainable Supply Chain in Today’s World

With a goal of using 100% renewable energy in its own operations, H&M has already made notable moves: in 2016, 96% of their energy came from renewable sources, up from 78% in 2015.  Carbon dioxide emissions were reduced by 47% in the same year [4].

H&M has incorporated both suppliers and consumers in their sustainability efforts:

They became a founding member of the Sustainable Apparel Coalition, an “industry-wide alliance working towards sustainable production”.  From which, the Higg Index was created to assess the performance of social and environmental measures, and to recognize areas of improvement.  H&M was one of the first global fashion houses to roll this initiative out to their Tier 1 and 2 factories [5].

H&M set up a garment collecting platform as a tool to empower the customer: for a 15% discount, customers donated no-longer-worn items, which were later re-used to produce new clothes.  Since 2013, they have collected 40,000 tons of clothing and aim to collect an additional 25,000 by 2020.  This program reduces the climatic impact of production and emphasizes H&M’s promise to increase their use of sustainable materials and to improve recycling technologies [6].

The company has also established key partnerships with organizations focused on creating systematic changes in the fashion industry, including: Canopy, Better Cotton Initiative, and Cradle to Cradle Products Innovation Institute [5].

 

By 2030, H&M has committed to the following across their supply chain as part of being “100% Circular and Renewable” [5]:

  • Raw materials: use 100% sustainable cotton by 2020, 100% recycled or other sustainable materials by 2030
  • Production Process: Zero discharge of hazardous chemicals, reduced waste, and introduction of water-efficient equipment. Climate neutral Tier 1-2 supply chain.
  • In-store: 25% reduction in electricity.

However, more action is needed to reach a carbon-positive footprint by 2040, an aggressive goal for a retailer this size [7].

Much of H&M’s plan highlights preventative measures and therefore lacks mindfulness on how to react to the current climactic issues that can be devastating for a company with a complex value chain.  Changing temperatures, rising sea tides, and unexpected storms will affect raw material costs, shipping routes, and manufacturing operations [8].  H&M’s focus on mitigation does not address what can be done in immediate times to protect shareholder value and customer satisfaction in the face of unpredictable weather patterns.

 

Looking to the Future of Fast-Fashion

As one of the world’s largest apparel retailers, H&M has the opportunity to be the leader in the sustainable fashion movement.

Sustainability, although a competitive advantage for now, will be the expectation for go-forward supply chain processes.  In the future, H&M should share best practices with other companies specifically as it relates to training suppliers, establishing benchmarks for factory and in-store operations, and implementing renewable energy sources.

As it relates to the customer, education is key.  Marketing and store associate training can complement H&M’s efforts and communicate the importance of eco-friendly purchases.  While there exists a subset of customers who are willing to pay premiums for impact-driven clothing, it is imperative to get everyone, from the producers to the consumers, on board.

 

Some questions I will leave you with:

  • Is it realistic for a company to continue growing and to minimize their carbon footprint, at the same time? Consider the emergence of e-commerce in the retail industry.
  • Who is responsible for bearing the additional costs these sustainable initiatives will demand: the company, the suppliers, or the customer?

 

[Word Count: 780]

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[1] Remy, N., Speelman, E. and Swartz, S. Style that’s sustainable: A new fast-fashion formula. (2016, October). McKinsey & Company: Sustainability & Resource Productivity. Retrieved from https://www.mckinsey.com/business-functions/sustainability-and-resource-productivity/our-insights/style-thats-sustainable-a-new-fast-fashion-formula

[2] Wiese, A., Kellner, J., Lietke, B., Toporowski, W. & Zielke, S. 2012, “Sustainability in retailing – a summative content analysis”, International Journal of Retail & Distribution Management, vol. 40, no. 4, pp. 318-335.

[3] Shen, B. (2014). Sustainable Fashion Supply Chain: Lessons from H&M. Sustainability, 6(12), pp.6236-6249. Retreived from http://www.mdpi.com/2071-1050/6/9/6236/htm#B1-sustainability-06-06236

[4] H&M Kicks Off Climate Week In New York. (2017, September 29). Market Watch. Retrieved from https://www.marketwatch.com/story/hm-kicks-off-climate-week-in-new-york-2017-09-19

[5] THE H&M GROUP SUSTAINABILITY REPORT 2016. (2017, April 4). H&M. Retrieved from https://sustainability.hm.com/content/dam/hm/about/documents/en/CSR/2016%20Sustainability%20report/

[6] Marfil, L. H&M Launches Campaign to Recycle Clothing. (2017, January 25). Women’s Wear Daily. Retrieved from http://wwd.com/business-news/marketing-promotion/hm-launches-campaign-recycle-clothing-10766946/

[7] Winston, A. There’s a Leadership Vacuum on Climate Change. Business should fill it. (2017, April 21). Harvard Business Review. Retrieved from https://hbr.org/2017/04/theres-a-leadership-vacuum-on-climate-change-business-should-fill-it

[8] Boynton, J. H&M’s Bold New Journey to ‘Climate Positive’. (2017, April 4). Triple Pundit. Retrieved from http://www.triplepundit.com/2017/04/hms-bold-new-journey-climate-positive/

 

 

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5 thoughts on “H&M Leads the Way for Sustainable Fast Fashion

  1. Is fast fashion inherently at odds with the environment? Much like the Ikea case; the whole point of cheap furniture is to encourage additional purchases in the future. With H&M, clothes are only designed to be worn a couple of times, only to fall apart but have consumers look on point and in trend with the latest fashions. Therefore, the same question arises – is this another version of Greenwashing? As I’m sure you are aware, the manufacturing process for apparel is one of the most poisonous for the environment, and while recycling materials is a good first step – is it enough? Ultimately, and unfortunately, as with most public goods, governments may need to implement regulations to not only implement but enforce sustainable practices.

  2. Great essay! Compared to other retail store chains, H&M seems to be on the lower end of the spectrum with regards to price. How are they keeping costs low on clothing while investing so much on a green supply chain? I think H&M needs to do a lot better job of marketing this to their customers, I used to shop there on a regular basis and was unaware of all their sustainability efforts. On the recycling front, I think consumers expect lower prices when a product is made from 100% recycled materials. How is H&M going to implement that strategy while maintaining prices? I assume their margins are already low enough.

    Overall their business model seems to have two tensions. One is trying to grow fast fashion (which is inherently not environmentally friends) and at the same time trying to implement a more sustainable footprint. The other is marketing fast fashion recycled clothing with consumers, while also trying to keep prices competitive. Could this lead to a brand tension? I see articles like the guardian who criticize their mission given the nature of the business as something that will not stop: https://www.theguardian.com/business/2012/apr/07/hennes-mauritz-h-and-m

    How does H&M take into account all these risks to their brand?

  3. On the topic of customer education, how necessary is it for H&M and other firms to take responsibility for their customers’ behaviors as it concerns their interaction with their products, like laundry and its detrimental effect on climate change? For example, as we consider energy efficiency in residential laundry, large strides have been made in energy-efficient washers, but dryers remain a major problem as they use 81% of energy of the laundry cycle. There are remedies to this like encouraging customers to air dry their clothing or to use front-loading rather than top-loading machines. The question becomes: should H&M factor this consumer laundry cost (and other similar costs) for its products in calculating its carbon footprint when setting its target? Is it sufficient for it to only consider its internal supply chain carbon footprint without considering the footprint impacted by its consumers’ behavior?

    http://www.greenbuildingadvisor.com/blogs/dept/musings/all-about-washing-machines

  4. H&M’s sustainability efforts certainly sets the organization apart from its retail competitors (Zara and Forever21). However, it is still debatable whether these initiatives are a prominent criterion in its customers purchase decisions. It seems to me that the most salient factors at the top of likely consumers’ minds are aesthetic appeal, trendiness, and affordability. While H&M has made great strides in these sustainability efforts, the key question remains: who bears the costs for them as it tries to keep its prices competitive? Labor cost and materials costs invariably rise, at least in the immediate term, as organizations engage in CSR related initiatives such as these. As Jason suggests in his comment, my cynical intuition leads me to believe H&M is only engaging in this as a form of green-washing. I read an article a while back that details how the goal of sustainability and fast fashion by an organization the size of H&M, while noble, is inherently at odds. It manufactures at least 600 million items and has over 3,200 stores in 55 countries. Maintaining an enterprise of this scale requires a staggering amount of resources, from cotton, electricity, oil, and water…

  5. Great article, Melissa! I think that the similarities between H&M and IKEA in terms of the underlying strategic reasons for their sustainability actions is remarkable. Just as IKEA, H&M is taking a “first mover” approach to setting sustainability standards in this industry. By being a founding member of the Sustainable Apparel Coalition, they are able to decide the objectives for the industry in this regard and their timeline of implementation, which gives them an interesting competitive advantage. This is very similar to IKEA being able to define the parameters governing sustainable wood certification. Consumers are becoming increasingly more aware of the environment and demanding sustainable products increasingly more, especially in developed markets. It’s a question of time before the industry adapts, and by being a first mover H&M is gaining the priviledge of sitting at the small table that decides when and how to comply with this.

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