H&M quenching the thirst of the fashion industry
It takes up to 10,000 liters of water to make one pair of jeans, the equivalent of flushing your toilet approximately 2,000 times. H&M sold +22USDBn worth of clothes globally last year. How is the company addressing the challenge of water scarcity? Can the company set a new standard for water sustainability provided that it is competing in the fast-fashion space?
Today, clean freshwater is becoming an increasingly scarce resource. Only 3% of the world’s water is fresh water, and two-thirds of that is tucked away in frozen glaciers or is otherwise unavailable for consumption. Climate change is altering patterns of both weather and water around the world, causing shortages and droughts in some areas and floods in others. According to the WWF, by 2025, two-thirds of the world’s population may actually face water shortages[1].
In the textile industry, water plays a particularly critical role. Growing cotton, dyeing fabrics, creating washed-out looks and washing clothes at home all have an impact on water resources[2]. It takes about three years’ worth of drinking water to make your favorite cotton t-shirt using conventional manufacturing practices[3]. It takes up to 10,000 liters of water to make one pair of jeans[4], the equivalent of flushing your toilet approximately 2,000 times. And yet while textile supply chains are heavily dependent on water, many production and processing sites are located in the world’s most water-stressed and polluted river basins.
H&M sold +22USDBn[6] worth of clothes globally last year. In light of the increasing scarcity of water, it is in the company’s best interest to lead efforts to be more water conscious in its supply chain. H&M has already been working on water issues in the past. In fact, it established a partnership with WWF for the first time in 2013 to focus on water stewardship. The goal was to raise awareness, improve responsible water use throughout H&M’s entire supply chain, and inspire other companies to take action towards more responsible water management. In the words of H&M’s CEO, “We do this to minimize risks in our operations, to protect the environment and to secure the availability of water. We are proud of the partnership with WWF which we hope will inspire others to follow[7].”
In 2016, this partnership was renewed for five years and grew to also include climate action and a strategic dialogue. As for water stewardship, going forward, the partnership will focus on taking its achievements one step further, with an increased focus on collective stakeholder engagement[8]. For example, both entities aim to work together to bring stakeholders from business, civil society and politics together to contribute to more sustainable water management in river basins in China[9].
Even if some have criticized H&M’s position based on the argument that it cannot set a new standard for sustainability provided that its business model, fast fashion, is structurally unsustainable, I am a strong believer that H&M is a pioneer in the industry for its sustainability policies. In order to take their impact to the next level, there are two key areas I would encourage the company’s management to focus on. First, H&M should be open and more specific about their own goals in order to ensure efforts are targeted and progress is effectively assessed. An article from HBR states that “everyone who works for an organization must be familiar with the banal SMART acronym for setting goals. Goals must be Specific, Measurable, Attainable, Realistic, and Time-bound[10].” I see tangible value in H&M and WWF publicly setting concrete objectives for their five year partnership to enhance commitment and drive employees motivation.
Second, H&M should encourage the thousands of SMEs in the industry to improve their water efficiency. Although there are several big players, the fashion industry is still extremely fragmented (market share of the top 5 apparel brands is below 20% in key apparel countries and only in the EU are there more than 170k fashion companies[11]). As a result, the real shift in industry standards regarding water consumption H&M is pursuing will only be achieved if the entire range of smaller players buy into the idea and are able to execute it at a smaller scale. Drawing on its own learnings, H&M could launch mentorship programs for smaller businesses to guide, support and navigate the uncertainties that a challenge of such magnitude entails.
As stated above, H&M is seriously committed to sustainable fashion and has taken a circular approach to how fashion is made and used based on three levers: a more effective use of resources (including water), support of innovations within recycling technologies and an increased use of sustainable materials[12] (such as organic cotton). Interestingly, growing organic cotton actually requires more water than conventional water, and the lower yields of organic crops have even been linked to higher greenhouse-gas emissions on the industrial farms producing them[13]. Is the fashion industry’s impact on climate change therefore inevitable? How can H&M, and more broadly, fashion companies, ensure they are actually being “climate positive” with the different environmentally friendly initiatives they launch? (781 words)
References
[1] “Water Scarcity | Threats | WWF”. 2017. World Wildlife Fund. https://www.worldwildlife.org/threats/water-scarcity.
[2] “H&M Group | Water”. 2017. About.Hm.Com. https://about.hm.com/en/sustainability/sustainable-fashion/water.html.
[3] “Saving Water Is On Trend In The Apparel Industry”. 2017. Water Deeply. https://www.newsdeeply.com/water/community/2017/01/31/saving-water-is-on-trend-in-the-apparel-industry.
[4] “Cite A Website – Cite This For Me”. 2017. Gizmodo.Com. https://gizmodo.com/5920267/it-takes-a-hell-of-a-lot-more-water-than-you-think-to-make-jeans-burgers-pizza-and-other-stuff.
[5] 2017. Ebook. http://www.wwf.se/source.php/1714891/17-1071%20Partnerskapsrapport%20WWF%20och%20HM_170629.pdf.
[6] “Forbes Welcome”. 2017. Forbes.Com. https://www.forbes.com/companies/hm/.
[7] “CEO Message”. 2017. Sustainability.Hm.Com. http://sustainability.hm.com/en/sustainability/about/about/ceo-message.html.
[8] Zimmer, Lori. 2017. “WWF, H&M Ink Five-Year Sustainability Partnership”. Ecouterre.Com. http://www.ecouterre.com/wwf-hm-ink-five-year-sustainability-partnership/.
[9] “H&M Expands Partnership With WWF – Sourcing Journal”. 2017. Sourcing Journal. https://sourcingjournalonline.com/hm-expands-partnership-with-wwf/.
[10] “3 Popular Goal-Setting Techniques Managers Should Avoid”. 2017. Harvard Business Review. https://hbr.org/2017/01/3-popular-goal-setting-techniques-managers-should-avoid.
[11] “European Textiles And Fashion: Facts & Figures”. 2017. EURACTIV.Com. https://www.euractiv.com/section/innovation-industry/infographic/european-textiles-and-fashion-facts-figures/.
[12] “Inside H&M’s Design For A New Water Management Strategy”. 2017. Greenbiz. https://www.greenbiz.com/blog/2013/02/14/inside-hm-water-management-strategy.
[13] Bain, Marc. 2017. “Your Organic Cotton T-Shirt Might Be Worse For The Environment Than Regular Cotton”. Quartz. https://qz.com/990178/your-organic-cotton-t-shirt-might-be-worse-for-the-environment-than-regular-cotton/.
Thanks for writing this! I agree with your premise that in order for the goals to mean anything, they need to be SMART. However, I’m wondering if it makes sense for H&M to put more specifics around their goals given their current business model. As you mentioned, H&M is based on fast fashion and typically comes in at a much lower price point than its key competitors. Since sustainability usually comes hand in hand with higher costs (at least in the short term), would they continue to execute on their low-cost business model if they were the only large player that was setting tough goals to hit with the WWF?
Additionally, I agree that fashion may simply be structurally wasteful, and luckily the industry has not caught the wrath of environmentalists in the way that other water-intensive industries (e.g., nut growing in California during the drought) have. The idea behind fashion is typically to buy new clothes that look different even though you currently own perfectly suitable ones, with the only difference being a particular style or color. Since there don’t seem to be many innovations that are clearly better for the environment in the industry, one of the best ways to increase sustainability would be to raise consumer awareness about the harmful effects of clothes production on the environment and encourage less excessive purchasing. However, that message would directly contradict H&M’s business, and I doubt that is something they would ever consider.
Paula,
Thanks for this interesting read on how one of the world’s leading fashion players is doing its share in addressing climate issues. I am particularly struck by the tension between the push towards organic products and the need for reduced resource consumption, which you raise at the end of your article. For almost any crop, the single biggest priority for centuries in a row has been to achieve yield improvements, with the objective to feed an increasingly large population and to reduce resource consumption (per unit of output). More recently, we are witnessing a move towards organic production, mainly triggered by a “back to the roots” consumer trend. As you correctly indicate, the issue here is that such organic production eliminates much of the yield drivers we historically developed (e.g. synthetic fertilizers, pesticides) and hence tends to demand more resources. I am wondering if we aren’t fooling ourselves when associating “organic” with “sustainable”, especially in world that is designed to thrive on economic and population growth.
As I read your analysis, which was shocking as I didn’t know much about this issue, my initial reaction was similar to your concern that H&M has not been specific enough in articulating what they are actually doing to improve their water inefficiencies and how they are going about doing it. Given the lack of concreteness around their actions, their efforts read more like something they are doing for their public image. I think it is also the responsibility of companies like H&M to educate not just SMEs, but also their consumers on these issues because most people don’t know how much water goes into clothes. Perhaps, if they did they would push companies to think about these issues more seriously. Due to their high amount of water usage, H&M really does have the power to lead and influence the rest of the industry to make long-lasting changes.
As I read your analysis, which was shocking as I didn’t know much about this issue, my initial reaction was similar to your concern that H&M has not been specific enough in articulating what they are actually doing to improve their water inefficiencies and how they are going about doing it. Given the lack of concreteness around their actions, their efforts read more like something they are doing for their public image. I think it is also the responsibility of companies like H&M to educate not just SMEs, but also their consumers on these issues because most people don’t know how much water goes into clothes. Perhaps, if they did they would push companies to think about these issues more seriously. Due to their high amount of water usage, H&M really does have the power to lead and influence the rest of the industry to make long-lasting changes.
Paula – I enjoyed reading your article on H&M. I agree with Matt Michel’s point above that as a fast fashion company, H&M’s profits are driven by high turnover of their customer’s wardrobe. As such, fast fashion has led to more clothes being produced and accelerated the negative impact on our environment. I believe that H&M’s water initiative is impacted for two self-serving reasons: (1) to avoid negative public perception surrounding the environment (e.g., avoid Nike fiasco) and (2) to increase regulatory standards that increase barriers to entry. Given their meteoric rise in a declining sector, H&M and Zara have seen several competitors mimic their fast fashion approach. By establishing themselves as the fast fashion player, and then preventing new entrants through high regulation, H&M is able to sustain their position in the market.