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At least one fast-fashion retailer is heading toward total transparency about its sourcing.
This story first appeared in the March 21, 2013 issue of WWD. Subscribe Today.
As the fashion industry continues to suffer a black eye over tragic factory fires in Bangladesh and unsafe working conditions in nations such as Cambodia, H&M is stepping up its efforts in corporate sustainability by publishing a full list of its suppliers.
H&M’s 11th annual sustainability report, which is being released today, reveals the Swedish fast-fashion giant’s modus operandi in countries such as Bangladesh and Cambodia, where it continues to push for improved wages and conditions for factory workers.
The biggest revelation is the publication of H&M’s supplier factory list. Retailers have long held supplier factory information close to the vest, viewing it as proprietary and not to be shared with their competitors. The list made public in H&M’s 2012 Conscious Actions Sustainability Report, represents 95 percent of the retailer’s supplier factories.
According to Helena Helmersson, H&M’s global head of sustainability, the retailer is one of the few fashion companies to take this step. “We’ve seen a few sports brands doing this,” she said. “We are the first [fashion retailer]. Obviously, we haven’t done this before because we were worried about the competition” trying to use our factories.
H&M works with a total of 785 suppliers, according to the report, 340 in the Far East, 242 in South Asia and 203 in Europe, the Middle East and Africa. A total of 1,798 factories manufacture goods for H&M. About 760 are in the Far East, 499 in South Asia and 539 in EMEA. In addition, H&M has 148 strategic partners, which are manufacturers committed to the retailer’s sustainability program and have the best record. These companies manufacture at 440 strategic factories and make more than 50 percent of H&M’s merchandise, the report said.
H&M hopes other retailers will be encouraged to follow its lead. “Transparency as a concept is really out there and there’s more consumers looking for this,” Helmersson said. “Many groups of stakeholders are looking for increased traceability.”
Another reason for publishing the supplier factory list is to “put demands on suppliers that they take responsibility for sustainability,” Helmersson said. The November factory fire in Bangladesh that killed 118 workers is a cautionary tale for the industry. Wal-Mart Stores Inc. has acknowledged that one of its suppliers subcontracted work to the Tazreen factory, where the blaze occurred, unbeknownst to the retailer and in violation of its policy — which Wal-Mart has since tightened.
“The fire in Bangladesh was so terribly tragic because we’ve known of the problem for years,” Helmersson said. “The way workers are treated in Bangladesh in general is a societal problem. [Other retailers] have had discussions about leaving Bangladesh. I’ve never seen a company actually leave a country. When you leave a country it’s really not good for the country and the workers.”
H&M sources more apparel from Bangladesh than any other retailer in the world, followed by Wal-Mart. There was no evidence that H&M suppliers were using Tazreen. However, an H&M supplier was sourcing goods from a Bangladesh factory, Garib & Garib, where in 2010 at least 21 workers perished in a fire. At the time, H&M said it had recently audited the factory and was satisfied with the way its code of conduct was being followed.
Factory audits are one way to keep abreast of safety issues in factories. H&M in 2012 conducted 2,646 audits on factories and 9,815 worker interviews. About 25 percent of potential new factories were rejected at the first audit, the company said. But H&M said after the 2010 fire, “As far as we know, this terrible accident was not caused by poor working conditions or safety measures.”
“Fire safety is an industry problem where it’s more about electrical safety,” Helmersson said. “A brand coming to do an inspection cannot tell if a wire is correctly connected or not.”
Karl-Johan Persson, H&M’s chief executive officer, recently met with Bangladesh Prime Minister Sheikh Hasina to discuss the importance of raising the country’s minimum wage. The meeting followed two letters sent in 2010 by H&M to the government. After the letters were sent, the country’s minimum wage was increased by up to 81 percent, but systems for annual reviews are still lacking.
H&M said 18 percent of factories in EMEA have union representation, 78 percent in the Far East and 6 percent in South Asia. Collective bargaining for wages has led to violence in Bangladesh and Cambodia, while in China, freedom of association has proven challenging for political reasons.
H&M has made a commitment to ethics. “H&M has shown awareness of their company’s exposure to corruption challenges in its supply chain and has put great efforts into transparency and reporting on their activities,” Birgitta Nygren of Transparency International Sweden is quoted in the report.
The retailer tracks energy efficiency and studies climate impact from a product’s life cycle. Its goal is to source 100 percent of electricity from renewable sources and reduce electricity used in stores by 20 percent. Its goal of reducing emissions by five percent relative to sales each year was achieved in 2012 and the retailer is setting new targets.
H&M in 2012 was the number-one user of organic cotton in the world for the second consecutive year. Helmersson said the company is well positioned to meet its goal of using 100 percent organic cotton by 2020. The retailer is also a leading member of the Better Cotton Initiative, where farmers receive know-how and tools to produce more cotton while reducing their impact on the environment and raising profitability.
H&M wants to become the industry leader on water. Last year, it saved 450 million liters of water during production and entered into a three-year partnership with the World Wildlife Fund. H&M will see how it can work more efficiently with water, beginning at the design stage through teaching customers how to wash the fibers.
Helmersson declined to give a figure for the cost all of H&M’s sustainable and ethical investments. “H&M doesn’t even calculate the total cost of it because it’s so integrated into our business,” she said. “Different functions and departments have their budgets. Some things we can calculate, but it’s not something we disclose. We can talk about how much we’re investing in WWF — 27 million Swedish Krona [$4 million at current exchange].”
H&M was the first fashion company give customers around the world a way to recycle old clothes from any brand in any condition. The retailer partnered with Global Green, the beneficiary of the H&M program. In the long run, the retailer wants to make new clothes from the garments and close the textile loop.
H&M today will launch its new Conscious Collection, backed by an ad campaign featuring Vanessa Paradis. The Exclusive Conscious Collection, inspired by Hollywood’s Golden Age, will launch on April 4 in 140 stores and online. Made with organic cotton, recycled polyester, recycled polyamide and Tencel, the line is red carpet-ready. Helen Hunt wore a strapless navy gown from H&M’s Conscious Collection to the 2013 Academy Awards, accessorized with $700,000 worth of jewelry.