h and m - about recycling

8/11/2019 H and M - about recycling

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CONSCIOUSACTIONS

SustainabilityReport 2012


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TABLE OF CONTENTS

CONSCIOUS ACTIONSSustainability Report 2012

INTRODUCTION

The CEO Interview 3

About H&M Conscious 6

Key Highlights from 2012 8

The Challenges Along Our Value Chain 11

Engaging with Our Stakeholders and

Joining Forces for Solutions 14How We Organise Ourselves 15

COMMITMENTS

Provide Fashion for Conscious Customers 16

Choose and Reward Responsible Partners 27

Be Ethical 47

Be Climate Smart 57

Reduce, Reuse, Recycle 65

Use Natural Resources Responsibly 70Strengthen Communities 81

INFORMATION

How We Report 90

Auditors Review Report 91

Get in Touch 93

H&M CONSCIOUS ACTIONS SUSTAINABILITY REPORT 2012


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The CEO interviewINTRODUCTION

How do you view the concept of

fashion in regards to sustainability?Fashion is and remains a form ofself-expression. Im proud to knowthat we play a part in that. We wantto help people create their personalstyle and love what they buy for sev-eral seasons. And we want to makeit easy for them to choose more

sustainable fashion and to take careof their clothes in a conscious way.

How does sustainability fit with

H&Ms business model and contin-

ued growth?Our business idea is to offer fashionand quality at the best price. Sus-tainability is an increasingly impor-tant part of this. I strongly believethat sustainability will more andmore become a hygiene factor in ourindustry. Our goal is for H&M to beat the forefront of sustainabil ity.

We work hard to always strengthenour customer offering. I think thatadding sustainable value to our prod-ucts is one of the keys to do so.

What opportunities do you see

in integrating sustainability into

the business model?

Adding sustainability valueto our products is one ofthe keys to strengthen our

customer offering.

Karl-Johan Persson, CEO

2012 was another success-ful and exciting year forH&M. But how do continuedstrong growth and sustain-ability go together? Readabout this and more in aninterview with our CEOKarl-Johan Persson.

We take a long-term view on ourbusiness. And there is no way forus not to think about and invest inour sustainability, because it simplymakes business sense.

To begin with, using resources effi-ciently often means reducing costs.But theres much more to this thanthe obvious.



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INTRODUCTION

The CEO interview

Im really happy to see that ourcustomers and colleagues show suchinterest in sustainability. This opensgreat opportunities to strengthen ourcustomer offering, build our brandsand attract and retain the talent weneed for our continued growth.

And contributing to economic

growth, jobs and stability in our pur-chasing markets and creating strongpartnerships with the best suppliershelps to secure the supply we needin the years to come. More thanthat, our strong presence in thesecountries provides us with the greatopportunity to improve the lives ofhundreds of thousands of people andhelp develop entire communities.

What were the biggest steps on

this journey in 2012?

We were named the biggest user oforganic cotton in the worldfor thesecond year in a row.

We are the first fashion retailer inthe world to launch a global systemto collect old clothes and help themto a new life. In the long run, wewant to upcycle these clothes into

new ones, reducing the impact onthe environment and providing uswith access to future resources formaking more sustainable fashion.

From 2013, together with WWF,we will set new standards for waterstewardshipin our industry. Again,this collaboration opens greatopportunities to engage our custom-ers on the important issue of waterand to help secure the availability

of clean water for all of us in theyears to come.

What are the challenges?

There are many challenges in ourindustry and our business. Im proudof all my dedicated colleagues whowork with great passion every dayto make H&M and our industry moresustainable. But in order to achievegreat results, we need to focus and,together with our stakeholders, bal-ance the right priorities. To name afew of these priorities, its about closingthe loop on textile fibres and waste andplaying our part in combating climatechange and growing water scarcity.

Ensuring that all workers in supplierfactories earn enough to live on ina decent number of hours is anotherkey challenge. Its a complex issueand solutions need to consider thecompetitiveness and developmentof entire countries. Our wholeindustry has more to do to find andimplement exactly such solutions.

And the tragic, recent factory firesshow again that safety cant betaken serious enough.

There is no way for us notto think about and invest

in our sustainability,because it simply makesbusiness sense.



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INTRODUCTION

The CEO interview

I also think that we have more to doto overcome common misconcep-tions such as that only expensiveproducts can be sustainable. In fact,the retail price of a garment doesntshow how hard a brand has workedto improve conditions. Obviously,it is our job to engage more closelywith our stakeholders and customers

on this matter.

How do you work to tackle these

challenges?

In a variety of ways. As an integralpart of our day-to-day work and ourstrategy. And of course in the closecollaboration with our suppliers andother stakeholders.

But many of these challenges cant besolved by one company alone. Thatswhy we play a very active role in ini-tiatives like the Sustainable ApparelCoalitionand the Global Compact.

And we need to support authoritiesin making the right decisions. Forexample, I met with Sheikh Hasina,Prime Minister of Bangladesh, toexpress H&Ms support to raise theminimum wagefor garment workersand for regular wage reviews.

At H&M we believe in a fast paceand sometimes I feel that thechanges we want to see do not hap-pen as fast as we would like. Butin order to create lasting improve-ments, we need to promote systemicchange that involves everyone con-cerned. Our size gives us the oppor-tunity to promote such change wellbeyond our own operations.

We see a lot of innovative smallersustainable fashion brands on themarket. I think this is a great devel-opment. At H&M, we can help liftsuch innovations to a larger scale.Together this will hopefully lead toa more sustainable fashion future.

30 years from now, where do you

see H&M and sustainability in

the fashion industry in general?

We take a long-term view on ourbusiness. My grandfather foundedthe company in 1947. I want to seeH&M continue to be successful andcreate jobs and growth all over theworld for many years to come. I wantH&M to be seen as a leader in termsof innovation, sustainability and, ofcourse, great fashion. I hope that

in the future, upcycling old clotheswill be a standard in our industry,that workers in supplier factoriescan negotiate wages and workingconditions in a fair dialogue withtheir employers, that making clotheswill have a minimal impacts onwaters and that consumers all overthe world can easily build their per-sonal style with sustainable fashion.

And that H&M has played its part onthis journey.

In order to create lastingimprovements, we need topromote systemic changethat involves everyone

concerned.

http://www.apparelcoalition.org/http://www.apparelcoalition.org/http://www.unglobalcompact.org/http://www.unglobalcompact.org/http://www.apparelcoalition.org/http://www.apparelcoalition.org/


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INTRODUCTION

About H&M CONSCIOUS

At H&M, we like to thinkof sustainability as a wordof action, something we dorather than something wesimply say. It is an ongoingprocess with a clear directionto be continuously improved.It is a journey that requires

determination, passion andteamwork. Because togetherwith our colleagues, stake-holders, business partnersand peers, real, lastingchange is possible.

Its about the 3 Ps.People, planet,andprofit. All highly interconnected. Allequally important. The earth is facingscarcity issues on many fronts. Cleanwater, energy and cotton, to name afew. Our business is no exception. Ourvision is that all our operations shouldbe run in a way that is economically,socially and environmentally sustain-able. Turning this vision into a realityhelps us do great business using fewerresources. It also allows us to con-tribute to better lives for people andcommunities around the world.

But it goes beyond that. We wantto make more sustainable choicesin fashion available, affordable andattractive to as many people as possi-ble. Together with our millions of cus-tomers we can bring massive change from improving the livelihood ofa cotton farmer to how our customerscare for the clothes they buy.

We want our colleagues to be proud ofwhere they work. We want our custom-ers to feel reassured about the fashionthey buy and that we have exceededtheir expectations. We can see thereare clear opportunities to furtherstrengthen our customer offering byadding sustainability value to ourproduct lines. We want to take on thechallenge of making fashion sustain-able and sustainability fashionable.

We have made great achievementson this journey, but together with ourentire industry we have much moreto do. The biggest challenges todayinclude climate change, impacts onwater across the textile value chain aswell as overtime and wages in supplierfactories. Another major challenge isthe growing resource scarcity, while

The global need for

energyis estimatedto increase by 45%

by 2030*

The need for fresh

waterby 30%*

And for foodby50%*

* SOURCEThe report of the United Nations Secretary-Generals High Level Panel on Global Sustainability .

We want to take onthe challenge of making

fashion sustainableand sustainability

fashionable.

http://www.un.org/gsp/sites/default/files/attachments/GSP_Report_web_final.pdfhttp://www.un.org/gsp/sites/default/files/attachments/GSP_Report_web_final.pdfhttp://www.un.org/gsp/sites/default/files/attachments/GSP_Report_web_final.pdfhttp://www.un.org/gsp/sites/default/files/attachments/GSP_Report_web_final.pdf


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INTRODUCTION

About H&M CONSCIOUS

OUR SEVEN COMMITMENTS

1.

Provide fashion for consciouscustomers

2.Choose and reward responsible

partners

3.Be ethical

4.Be climate smart

5.

Reduce, reuse, recycle6.

Use natural resourcesresponsibly

7.Strengthen communities

too many textiles end up in landfills.

We want to use our scale to bringabout systemic change to our indus-try and across our entire value chain.In doing so, we are at the forefrontof sustainability.

That is why we have created H&M

Conscious. With seven ambitiousstrategic commitments at its heart,this is the name for all the workwe do for a more sustainable fashionfuture. Hundreds of what we callConscious Actions big and small,short and long term work to putthese commitments into practice.

This is our 11th sustainability report.While we remain humble before ourchallenges, we are very excited bythe Conscious Actions we have takenand the progress we have made. Thisreport outlines some of the Conscious

Actions we have taken or workedtowards during 2012.

This report has been prepared usingthe GRI G3.1 guidelines. Please findfurther details on how we reporthere (page 90).



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INTRODUCTION

KeyHIGHLIGHTSfrom 2012

Game-changing WAT ERPARTNERSHIPwith W W F

DONTlet FASHIONgo to WAST E!

According to the organisation Textile Exchange,we are topping the charts in organic cotton usefor the second year in a row. But wait, theresmore. Aside from further increasing our use oforganic cotton in the future, were investing heav-ily in Better Cotton and gradually increasingour use of recycled cotton. All together, we areright on track with our target to use only cottoncoming from these sources by 2020 at the latest.

For the past ten years, we have worked hard toreduce water impacts along our value chain. Now,together with WWF, we are taking this to a wholenew level. In a three-year partnership, we willwork towards implementing a holistic water stew-ardship strategy that aims to be a game-changerfor our industry and beyond. Starting with thedecisions our designers make at the drawing tableall the way through to promoting better watermanagement amongst public policy-makers.

No.1 in ORGANIC COTTON The story continues

Too much fashion ends up in landfills. We lovefashion and thought: Does this really have tobe the end of the story? We think not. Thatswhy we are now the first fashion company in theworld that offers its customers around the globethe opportunity to hand in clothes, from any

brand, that they no longer want. In return, theyreceive a small reward as thanks. We will thenhelp to reuse and recycle all of them, ultimatelyaiming to close the textile loop.

http://textileexchange.org/access_to_TE_2011_OC_market_reporthttp://wwf.panda.org/what_we_do/how_we_work/businesses/corporate_support/business_partners/handm.cfmhttp://wwf.panda.org/what_we_do/how_we_work/businesses/corporate_support/business_partners/handm.cfmhttp://textileexchange.org/access_to_TE_2011_OC_market_report


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INTRODUCTION


TRANSPARENCYtothe NEXT LEVEL

Together with IF Metal, one of Swedens largestunions, we are starting up a unique project tostrengthen the dialogue between employees andemployers in the Cambodian textile industry.Todays relations are often confrontational. Theaim is to help both trade unions and employers,to find lasting solutions in fair collective bargain-ing processes that benefit the workers and createa stable market.

For many years we have worked hard to buildstrong, long-term relations with our suppliersbased on trust and transparency. We investedtime, money and a lot of heart. Now, were takingthis work to the next level and have just publishedour supplier factory list. Why? Because we think

that transparency brings positive change. Andbecause we want to incentivise our suppliers totake ownership over their sustainability and rec-ognise the progress they are making.

JOININGforces for fairdialogue in CAMBODIA

Did you know that 36 percent of the climateimpact in a garments life happens when beingwashed or tumble dried in our homes? Well, ifnot, youre certainly not alone. To make it easierfor all of us to care for our clothes in a consciousway, we collaborated with Ginetex, the owner of

the current global care label standard to developthe new so-called clevercare label. Our first gar-ments will carry this label in Summer 2013.

Clever CARELABELSare a go

http://www.hm.com/supplierlisthttp://www.hm.com/supplierlisthttp://www.hm.com/supplierlisthttp://www.hm.com/supplierlisthttp://www.if-metall.se/http://www.ginetex.net/http://clevercare.info/http://clevercare.info/http://www.ginetex.net/http://www.if-metall.se/http://www.hm.com/supplierlisthttp://www.hm.com/supplierlist


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INTRODUCTION


We extended ourAll for Childrencollaborationwith UNICEFto now include Bangladesh. Withone of the largest garment industries in the world,the country is experiencing strong economicgrowth. That said, half of the 60 million childrenstill live below the international poverty line. Theproject will run for five years to support about onemillion people in and around the capital Dhaka.

With almost USD 8 million, this also marks ourbiggest single community investment to date.

All for Childrengoes BANGLADESH

We believe that everyone in the fashion industryshould earn a fair wage that is enough to live on.In 2012, our CEO Karl-Johan Persson met theBangladeshi Prime Minister, Sheikh Hasina, tounderline H&Ms support for higher minimumwages and regular wage reviews. Its a complexchallenge, but we keep working hard togetherwith our suppliers, their workers, industry peersand governments and by setting up model facto-ries to achieve the needed systemic change.

For FAIRwages

Perfluorinated compounds (PFCs) are commonlyused to make products water repellent. As practi-cal as they are, once released into the environ-ment they remain for a long time and can harmthe reproduction of organisms. For many years,we have worked hard to find better alternativeswhich meet our quality requirements. In 2010, we

launched our first products made with a PFC-freealternative. And weve continued the work to scalethis up. Now, we are one of the first brands thathas banned PFCs from all its products.

No to PFCs

http://www.hm.com/allforchildrenhttp://www.unicef.org/http://www.unicef.org/http://www.hm.com/allforchildren


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INTRODUCTION

The CHALLENGESalong ourVALUE CHAIN

H&M Conscious aims totackle the challenges acrossour entire value chain and,in doing so, creates newopportunities for long-termbusiness success.

For those challenges most closely

related to our core operations, wehave the ability to directly influencethe impact we make. For others,our influence is indirect; for exam-ple, we can make a difference bychoosing conscious raw materialsor responsible business partners, orby collaborating with our stakehold-ers to tackle the challenges that weshare with our industry and with thecommunities in which we operate. Sustainability starts with the very

first design idea. Our challengeis to create affordable fashion thatour customers love from seasonto season and that is easy to carefor in a conscious way. Its aboutthe materials we chooseand usingthese as efficiently as possible,while considering impacts on people,costs and the environment rightfrom the start.

Working conditions, intense waterand chemical use are concerns asso-ciated with processing raw materials(e.g. cotton). We do not purchaseraw materials directly, but by makingconscious choiceswe can signifi-cantly reduce impacts. We need touse raw materials as efficiently aspossible and work towards closingthe loop. Our active involvementwith the BCI, Textile ExchangeorUNICEFincreases our influence.

Fabric processing also raises con-cerns regarding water, chemicalsand working conditions as well ascarbon emissions. Usually, we donot have direct business relation-ships with mills but we work witha dedicated mill development pro-gramand with important stakeholderssuch as Solidaridadand NRDC. Wealso work to increase the traceabil-ity of fabricused for our clothes toincrease our influence.

INFLUENCE High INFLUENCE Low INFLUENCE LowIMPACT High IMPACT High IMPACT High

DESIGN RAW MATERIALS FABRIC PROCESSING

http://www.bettercotton.org/http://www.textileexchange.org/http://www.unicef.org/http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Use-Resources-Responsibly/Water/Mill-Development-Program.htmlhttp://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Use-Resources-Responsibly/Water/Mill-Development-Program.htmlhttp://www.solidaridad.nl/http://www.nrdc.org/http://www.nrdc.org/http://www.solidaridad.nl/http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Use-Resources-Responsibly/Water/Mill-Development-Program.htmlhttp://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Use-Resources-Responsibly/Water/Mill-Development-Program.htmlhttp://www.unicef.org/http://www.textileexchange.org/http://www.bettercotton.org/


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INTRODUCTION


Ensuring high social and environ-mental standards with our 785 sup-pliers can be a challenge especiallyin terms of complex industry-wideissues such as wages, overtimeand safety. We not only monitorfactory compliancebut also providetraining for our suppliersand theirworkers, promote social dialogueand collaborate with others such asBetter Work, the Fair Labor Associa-tionand the Fair Wage Network.

Transport represents approximately3 percent of the carbon emissionsin a garments lifecycle. However,by choosing the right modes oftransportwe can reduce this impactfurther. And, as a customer, we alsouse our influence to promote envi-ronmental consciousnessamongstour transport providers.

Our more than 2,800 stores in48 countries across 4 continents(incl. franchises) are where mostof our colleagues work. This isalso where about 90 percent of ourdirect energy use occurs. Our chal-lenge is to ensure that we live ourcorporate values and that we workin a resource-efficient way wher-ever we operate, including energyefficiencyand increasingly sourcingrenewable energy.

The way our customers take careof our products has a major envi-ronmental impact. From a life cycleperspective, about 36 percent ofall carbon emissions occur whenconsumers wash and tumble drytheir clothes. We are working toinspire our customers towardsconscious garment careand rewardthem for bringing old clothes toH&M stores. We will then helpto reuse and recycle all of them.

INFLUENCE Medium INFLUENCE Medium INFLUENCE High INFLUENCE MediumIMPACT High IMPACT Low IMPACT Medium IMPACT High

MANUFACTURING TRANSPORT SALES USE

http://www.betterwork.org/http://www.fairlabor.org/http://www.fairlabor.org/http://www.fair-wage.com/http://www.fair-wage.com/http://www.fairlabor.org/http://www.fairlabor.org/http://www.betterwork.org/


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INTRODUCTION

Challenges in the life of a T-shirt and ways to tackle them

10%of all pesticides in the world areused in cotton production.

Conventional cotton used in a T-shirt needs as

many as

15 bathtubsof water to grow.

4 m 2of agricultural land has been used. The spacerequired to produce 100 T-shirtsis enough togrow 700 kg of potatoes.

36%of its climate impact occurs when it iswashedand tumble-dried at home.

5%of all waste in US landfillsis textiles.Enough to fill 32,750 Boeing 747s.

Choosing organic cottonmeans zero pesticides.

H&Ms current organic and Better Cotton usage

means over 140,000 kgfewer pesticidesused in 2012 alone.

Better Cotton requires 20% less water.

Switching from 60 to

40 degreeswhen washing

saves 41%of the energy used. With an average of3 wash loads per week, German households could save

more than 440 million euroseach year.

95% of all textiles can be recycled .FIGURES ARE ESTIMATIONS BASED ON FOLLOWING SOURCESpanna.org; epa.gov; landtechnik.uni-bonn.de. The impact reduction figures fromBetter Cott onare based on results from BCI projects in India (water & pesticides), Pakistan and Mali (pesticides).


Recycled materialsdo notneed to be grown on any agricultural land.

http://www.panna.org/resources/cottonhttp://www.epa.gov/osw/conserve/materials/textiles.htmhttp://www.landtechnik.uni-bonn.de/research/appliance-technology/publications/08-01-01-lot-14-domestic-washing-machines-dishwashers-2/view?set_language=enhttp://www.bettercotton.org/http://www.bettercotton.org/http://www.landtechnik.uni-bonn.de/research/appliance-technology/publications/08-01-01-lot-14-domestic-washing-machines-dishwashers-2/view?set_language=enhttp://www.epa.gov/osw/conserve/materials/textiles.htmhttp://www.panna.org/resources/cotton


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ENGAGINGwith our STAKEHOLDERSand joining forces for SOLUTIONS

9,815 interviewswith garment workers

423 responsesto anonymoussupplier satisfaction survey

86%ofcolleaguesfilled in employee survey

No one understands the situ-ation of a garment workerbetter than the garmentworker. Or the experiencesof a sales advisor than some-one actually working on thestore floor. This is why theconstant and open dialogue

with our stakeholders is soimportant to us.

Close collaboration with our stake-holders, both internal and external,is essential in enabling us to tacklethe challenges we face throughoutour value chain. Diversity and a mul-titude of voices lead to innovationand the insight into our stakeholdersknowledge and viewpoints helps usprioritise the Conscious Actions wetake and the resources we invest.

Throughout the year, we work tomaintain regular dialogue with eachmajor group*. We do this on day-to-day basis, through regular formalstakeholder roundtables on a globaland local level, dedicated surveys,media analyses, our active partici-

pation in several multi-stakeholderinitiatives and as part of our strate-gic business intelligence.

JOINED FORCES

But more than that, we seek to joinforces with our stakeholders in orderto tackle some of the major chal-lenges in our industry. Challenges

that affect everyone along our valuechain and that no company cansolve on its own.

In order to find and implement therequired solutions, we need to teamup with our peers, suppliers, NGOsand many more players. We see shar-ing best practice and developing waysto jointly tackle common challengesas key to taking our sustainabilitywork further and making the wholeindustry more sustainable.

Collaborating with others can help toincrease the level of influence we haveand set new standards voluntary orlegislative, well beyond our sphere ofdirect influence.To this end, we are involved ina number of local and global indus-

try collaborations, partnerships andmulti-stakeholder initiatives, suchas the Better Cotton Initiative (BCI),Sustainable Apparel Coalition (SAC),Fair Labor Association (FLA), Fair

Wage Network (FWN), Better Workand the Roadmap to Zero Dischargeof Hazardous Chemicals.>

hm.com/memberships>hm.com/stakeholderdialogue

*Including custom ers, colleagues, communities,suppliers and their employees, industry peers,NGOs, IGOs, policy-makers and investors.

INTRODUCTION

AcknowledgementsKnowledge bears weight, butachievement bears lustre as the say-ing goes and here are some of theindeces, rankings and awards thatassessed and recognised our sustain-ability performance during the year.

Dow Jones Sustainability Index

FTSE4Good

Global 100 List

Worlds Most Ethical Companies

Newsweek Green Ranking

Source Award Finalist

Textile Exchange Future Shaper

Rank a Brand

>hm.com/whatotherssay

13million fans

on Facebook

http://bettercotton.org/http://www.apparelcoalition.org/http://www.fairlabor.org/http://www.fair-wage.com/http://www.fair-wage.com/http://betterwork.org/globalhttp://www.roadmaptozero.com/http://www.roadmaptozero.com/http://www.hm.com/membershipshttp://www.hm.com/membershipshttp://hm.com/stakeholderdialoguehttp://hm.com/stakeholderdialoguehttp://www.sustainability-index.com/http://www.ftse4good.com/http://www.global100.org/http://ethisphere.com/http://ethisphere.com/http://ethisphere.com/http://www.thedailybeast.com/newsweek/features/2012/newsweek-green-rankings.htmlhttp://source.ethicalfashionforum.com/article/source-awards-2012-the-finalistshttp://farmhub.textileexchange.org/learning-zone/future-shapers/hmhttp://www.rankabrand.org/Retailers/H%26Mhttp://www.hm.com/whatotherssayhttp://www.hm.com/whatotherssayhttp://www.hm.com/whatotherssayhttp://www.rankabrand.org/Retailers/H%26Mhttp://farmhub.textileexchange.org/learning-zone/future-shapers/hmhttp://source.ethicalfashionforum.com/article/source-awards-2012-the-finalistshttp://www.thedailybeast.com/newsweek/features/2012/newsweek-green-rankings.htmlhttp://ethisphere.com/http://www.global100.org/http://www.ftse4good.com/http://www.sustainability-index.com/http://hm.com/stakeholderdialoguehttp://www.hm.com/membershipshttp://www.roadmaptozero.com/http://www.roadmaptozero.com/http://betterwork.org/globalhttp://www.fair-wage.com/http://www.fair-wage.com/http://www.fairlabor.org/http://www.apparelcoalition.org/http://bettercotton.org/


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How we ORGANISEourselves

Our sustainability ambitionsare born from our corporatevalues and our drive forconstant improvement. Thisis demanded and monitoredthroughout our business.

Sustainability is an integral element

of our business strategy. Our Head ofSustainability reports directly to ourCEO and the responsibility for theimplementation of our sustainabil-ity strategy is held by our executivemanagement team.

We have a total of around 170 col-leagues who work with sustainabilityas a core task. Our over 20 peoplestrong, head office Sustainability teamis responsible for developing global tar-gets, reviewing progress, encouragingand advising all relevant departmentson the development and implementa-tion of material Conscious Actions.

With this support, all our depart-ments are then individually respon-sible for developing and carrying outthe Conscious Actions necessary tofulfil our seven commitments.

INTRODUCTION

Our CEO, CFO and Head of Sustain-ability review the progress madetwice a year. Just as frequently as ourHead of Sustainability reports per-formance against key sustainabilityindicators to our Board of Directors.

Major sustainability issues influenc-ing more than one department or

conflicting interests are discussedin a decision-making forum calledthe Green Room with the involve-ment of our CEO.

About 100 people from our sustain-ability team operate from our 15 pro-duction offices around the world. Theywork directly with our suppliers tosupport them in complying with ourCode of Conductand help to makeour supply chain more sustainable.

Around 50 so-called ConsciousCoordinators work in our differentdepartments and country officessupporting the implementation ofour global sustainability strategyin their organisations.

ORGANISATION CHART

BOARD OF

DIRECTORS

CENTRAL SUSTAINABILITY

DEPARTMENT

CONSCIOUS

COORDINATORS

OTHER SENIOR

EXECUTIVE FUNCTIONS

HEAD OF

SUSTAINABILITY

CEO

Bi-annualperformance

reporting

Around 170 people work withsustainability as a core task.

Our Head of

Sustainability reportsdirectlyto our CEO

http://www.hm.com/codeofconducthttp://www.hm.com/codeofconduct


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COMMITMENT ONE

Provide fashion

for conscious customers Our business concept is tooffer fashion and quality at

the best price. To us, qualityis so much more than the fabric youcan touch between your fingertips.Quality includes that our productsshould be designed, produced, trans-ported and sold with care for peopleand the environment.

Its about every facet along ourentire value chain. And of courseabout listening to our customers.Because its all about the fashion

they love and what inspires them.More sustainable fashion is an addedvalue to our offering that our cus-tomers are increasingly looking for.

Our Conscious Collections showthat choosing more sustainablefashion does not mean compromis-ing on design or price. Our perma-nent Conscious range applies theseinnovations on a larger scale andmakes a better choice easily acces-sible all year long. Together we cancontribute to a more sustainablefashion future.

Conscious fashion, however, is notjust about our customers choices.We keep working hard to make allour products more sustainable, pieceby piece. Because, quite simply, itsthe right thing to do.



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COMMITMENT ONE

Provide fashion for conscious customers

HIGHLIGHTS FROM 2012

COMMITMENT ONE

Provide fashion for conscious customers STATUS

CONSCIOUS ACTION STARTED MORE TO DOON TRACK/ACHIEVED

1.1 Use only more sustainable cotton*

1.2 Support innovation in sustainable fibres

1.3 Promote more sustainable leather

1.4 Make 7 mil lion pairs of sho es using water ba sed adhesive s

1.5 Inspire our customers to join our Conscious Actions

1.6 Introduce conscious wash and care instructions

1.7 Help set industry standard for measuring product sustainability

1.8 Collaborate with French government in pilot on product lifecycle assessment

1.9 Provide best possible sustainability training for buyers and designers

1.10 Increase the knowledge amongst our sales advisors about our sustainability work

1.11 Translate new sustainability website into multiple languages

We used more certified organiccotton than any other companyin the world, for the second year ina row.

11.4% of the cotton we used camefrom more sustainable sources,

including 7.8% organic cotton and3.6% Better Cotton. By 2020 at thelatest, we want to reach 100%.

We launched a collection of even-ing dresses made of conscious mate-rials worn by celebrities around theworld, clearly showing that afford-able more sustainable fashion isready for the red carpet.

Our support for innovation insustainable materials continues. Forexample, we used as much recycled

27%of our leather shoeswere made from leather certifiedby

the Leather Working Group (LWG)

2,200 hoursof training on

sustainabilityfor our designers and buyers

PROGRESS REPORT

Performance overview

7.4 millionpairs of shoes made

usingwater-basedadhesives

375,000 visitors toour sustainability

website

polyester as is equivalent to 7.9 mil-lion plastic bottles.

To make it easier for consumers tocare for their clothes in a consciousway, we collaborated with Ginetex,the owner of the current global care

label standard to develop a new clev-ercare label.

We became a member of the boardof the Sustainable Apparel Coalition(SAC).

* Please find an independent assurance statement related to GRI 3.1 indicator E N1 (cotton)here (page 91-92).



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NIELS OSKAM,

FOUNDER, RANK A BRAND

Through the use of clear and trans-parent labelling, H&M is enablingthe rapidly-increasing number ofconscious consumers to make moresustainable shopping choices. H&M

labelling indicates, for example,when clothing is made of preferredmaterials such as organic cotton.

The annual Sustainability Reportpublished by H&M gives goodinsight into the companys policiesand performance around: reducingcarbon emissions, environmen-tal impact and improving labourconditions in the countries whichproduce their goods. This allowsconsumer organisations like Ranka Brand to use the information andprovide consumers with clear facts,empowering them to make sustain-able shopping decisions.

Rank a Brand encourages H&M toexpand its investments in sustain-ability projects such as the Better


Stakeholder Voice

Cotton Initiative and the Roadmaptowards Zero Discharge of Hazard-ous Chemicals. In addition, we wouldlove to see H&M shift their targetsfrom reducing carbon emissions rela-tive to sales to reducing their abso-lute annual carbon emissions. Asthe turnover of H&M grows year after

year, planet earth does not.All together there is a long way to go,to make fashion garments in a waythat is fair and sustainable, but thatis what consumers expect from com-panies, and its totally worth it!

H&M is enabling the

rapidly-growing numberof conscious consumersto make more sustainable

shopping choices.Niels Oskam, Founder, Rank a Brand

COMMITMENT ONE

http://www.rankabrand.org/http://www.rankabrand.org/


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COMMITMENT ONE


Cottonis the material we use most.

It is a natural, renewable materialwith many advantages, but it alsoraises a number of concerns. Forexample, conventionally-growncotton can have a heavy impactson the environment such as intenseuse of water and pesticides. Organiccotton, Better Cotton and recycledcotton reduce this impact signifi-cantly. Thats why, by 2020 at thelatest, we aim for all our cotton tocome from such more sustainablesources. Doing so also helps farm-

ers and their communities improvetheir standard of living.

Looking at our 2012 figures, weare on track on this journey. Wemaintained our position as the larg-est user of certified organic cottonfor the second consecutive yearaccording to Textile Exchanges

latest Organic Cotton MarketReport 2011. Since then we havecontinued to increase the volume oforganic cotton we use by more than20 percent and it now represents7.8 percent of our total cotton use.

We also took big steps into BetterCotton, which now makes 3.6 per-

cent of our cotton use. This meanssignificant reductions in water andchemical use and better liveli-hood for hundreds of thousands ofcotton farmers who are trainedinbetter farming techniques throughthe Better Cotton Initiatives (BCI)implementation partners Solidari-dadandWWF.

Recycled cotton is still a nicheproduct today, but we believe thatin line with our ambition to close

the textile loop, more recycled cot-ton will be available in the future.

CONSCIOUS ACTION 1.1

Use only more sustainable cotton% OF MORE SUSTAINABLE COTTON

ON OUR TOTAL COTTON USE

2011 2012

11.4%

7.6%

ORGANICCOTTON

7.8%

ORGANICCOTTON

7.6%

BETTERCOTTON

3.6%

H&MS RANK AS USER OF ORGANIC

COTTON 20082011

2008 2009 2010 2011

5

4

1 1

WH AT IS MOR E

SUSTAINABLE COTTON?

Conventional Cotton no no no no no yes

Better Cotton yes no yes yes no yes

Organic Cotton no yes yes no yes no

Recycled Cotton yes yes yes no no no

RED

UCED

WATER

USE

NOCHEM

ICALFE

RTILISER

ORPE

STICIDEUS

E

SIGNIFIC

ANTL

YRED

UCED

CHEM

ICAL

FERT

ILISER

SORPEST

ICIDES

USE

SOCIAL

CRITER

IAAPPL

IED

BAN

ON

GMO

COTT

ON

LARG

E-SC

ALE

AVA

ILA

BILITY

STARTED MORE TO DO ON TRACK

TIME SCALE2020

STATUS11.4% more sustainable cotton

Latest available data according to Textile ExchangesOrganic Cotton Market Report 2011, published in

Autumn 2012.

H&Ms world-leading use of organic cotton contin-

ues to drive demand. This supports cotton farmers,

encourages innovation and with its fashion forward

Conscious Collections, H&M lifts more sustainable

fashion to scale.

LaRhea Pepper, Managing Director, Textile Exchange

As requested by many of our stakeholders and forcomparability reasons we report our use of moresustainable cotton in percentages and not by weight.Please find an independent assurance statement relatedto GRI 3.1 indicator EN1 (cotton)here (page 91-92).

We consider certified organic cotton, Better Cottonand recycled cotton as more sustainable cotton.

0.6% OF THEGLOBAL COTTONPRODUCTION ISESTIMATED TO

BE ORGANIC

Estimationabove basedon Textile

Exchange andICAC data.

http://www.hm.com/cottonhttp://textileexchange.org/access_to_TE_2011_OC_market_reporthttp://textileexchange.org/access_to_TE_2011_OC_market_reporthttp://www.bettercotton.org/http://www.solidaridad.nl/http://www.solidaridad.nl/http://www.wwf.org/http://textileexchange.org/http://textileexchange.org/http://www.wwf.org/http://www.solidaridad.nl/http://www.solidaridad.nl/http://www.bettercotton.org/http://textileexchange.org/access_to_TE_2011_OC_market_reporthttp://textileexchange.org/access_to_TE_2011_OC_market_reporthttp://www.hm.com/cotton


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What are the benefits of Better

Cotton?

Better Cotton is a holistic andinnovative approach to changethe cotton sector. It strives for

continuous improvement on eco-nomic, social and environmentalissues that have a very negativefootprint if cotton is cultivatedconventionally. Its scope is global,aiming for a mainstream solution.The Better Cotton Initiative is setup in a multi-stakeholder setting,and backed by major brands andretailers, farmer organisations,traders and manufacturers andcivil society organisations. Theinteresting aspect of Better Cotton

is that brands and retailers arentsimply complying with a standard;they are also investing in train-ing farmers to help them cultivatemore sustainable cotton.

Why do you support Better Cotton

in addition to organic cotton?

JANET MENSINK, INTERNATIONAL PROGRAM COORDINATOR

SUSTAINABLE FASHION, SOLIDARIDAD NETWORK

Both standards have proven toimpact the lives of cotton farmersand their environment. Solidaridadis working with the two systemsin the field, meaning that we train

and support farmers to convertto smarter and more sustainableagriculture. More cotton with fewerresources. We have first-hand expe-rience that both better and organiccotton lead to measurable improve-ments at the farmer level, includingless pesticide use, increased incomeand better conditions for labourers.

What difference does it make for

people and the environment if a

company like H&M switches from

conventional cotton to more sus-tainable cotton?

Converting to a more sustain-able economy is only possiblewhen the private sector is drivingthis change. H&M can be a gamechanger! That H&M switches tomore sustainable cotton, such as

COMMITMENT ONE


organic and Better Cotton can lit-erally change the lives of hundredsof thousands of farmers and thecommunities they live in.

That H&M switches to moresustainable cotton canchange the lives of hundredsof thousands of farmers.Janet Mensink, Solidaridad Network

No. 1userof organic

cottoninthe world

Stakeholder Voice

http://www.solidaridad.nl/http://www.solidaridad.nl/


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Alongside our target to use only

more sustainable cotton, H&M is animportant user of many innovativefabrics like Tencel, recycled wool,recycled cotton, organic linen andorganic hemp.

By driving demand, we want tostrengthen the market for thesematerials and encourage furtherinnovation. This is a key totackling some of the challenges inour industry and offers businessopportunities like turning PET-

bottles into exclusive red carpetdresses. This reduces both theneed for virgin resources as well asconsumer waste. We used as muchrecycled polyester as is equivalent to7.9 million PET bottles in 2012.

We use the fibre benchmarkcreatedby the organisation MADE-BY

COMMITMENT ONE


H&M plays a leadershiprole by showing otherbrands in the same spacethat it is possible to create

fashion collections thatare more environmentallyresponsible.Al lanna McAspurn, CEO,MADE-BY

to inform our material choices.Besides promoting the best options,we are working to gradually phaseout those materials classified asleast sustainable (class D). We alsosupportMistra and their FutureFashion project, which promotessystemic change in the fashionindustry. It produces detailed

research on textile recycling andamongst other things, on how tospeed up the market introductionof material innovations.

>hm.com/consciousmaterials

CONSCIOUS ACTION1.2Support innovation in sustainable fibres


TIME SCALEongoing

STATUSwe used 1,450 tonnes of recycled wool

Leather products can require

intense chemical treatment usingsubstances that can harm theenvironment. While we restricthazardous chemicals through ourChemical Restriction List, we do notsource any leather directly and havetherefore less direct influence overthis stage of our value chain. This iswhy in 2009 we joined the Leather

Working Group (LWG)to promotesustainable business practices inthis sector. Tanneries must complywith high environmental standards

before being certified by the Group.

We work to ensure that as muchof the leather used to make ourproducts as possible comes fromLWG-certified tanneries. In 2012,27 percent of the leather shoes inour stores were made of such leather.

Most of the leather used, however,

CONSCIOUS ACTION 1.3Promote more sustainable leather

came from Portugal which has notbeen prioritised for certificationdue to high EU standards. Chinais another important sourcingmarket for leather with greaterenvironmental challenges. As aconsequently, 63 percent of Chineseleather used came from LWG-certified tanneries.

H&M only accepts productsmadeof leather from animals that havebeen bred for meat production. Novulnerable or endangered speciesmay be used. We do not sell exoticanimal skins and do not allow cowleather originating from India dueto poor transport conditions.

> leatherworkinggroup.com

27%of our leather

shoeswere made fromLWG-certified

leather


TIME SCALEongoing

STATUS27% of leather shoes made with certi-fied leather

http://www.made-by.org/sites/default/files/benchmark/benchmark_environmental_condensed_03082011_pdf_16507.pdfhttp://www.made-by.org/http://www.mistrafuturefashion.com/en/Sidor/default.aspxhttp://www.mistrafuturefashion.com/en/Sidor/default.aspxhttp://hm.com/consciousmaterialshttp://hm.com/consciousmaterialshttp://www.leatherworkinggroup.com/http://www.leatherworkinggroup.com/http://hm.com/productpolicyhttp://leatherworkinggroup.com/http://leatherworkinggroup.com/http://leatherworkinggroup.com/http://hm.com/productpolicyhttp://www.leatherworkinggroup.com/http://www.leatherworkinggroup.com/http://hm.com/consciousmaterialshttp://www.mistrafuturefashion.com/en/Sidor/default.aspxhttp://www.mistrafuturefashion.com/en/Sidor/default.aspxhttp://www.made-by.org/http://www.made-by.org/sites/default/files/benchmark/benchmark_environmental_condensed_03082011_pdf_16507.pdf


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COMMITMENT ONE


Solvent-based adhesives are often

used in shoe and bag production, butthey can be harmful to workers infactories if not handled with suffi-cient protection. In 2009, we startedworking with chemical manufactur-ers, adhesive producers and acces-sory, bag and shoe suppliers to iden-tify possible water-based alternatives.Trials showed that the content ofvolatile organic compounds (VOCs)could be reduced by 65 percent with-out compromising quality.

In 2010, 450,000 pairs were pro-duced this way. By the end of 2011,we had increased these numbers bymore than 400 percent to more than2.4 million pairs. Since then, 100percent of our bags are also pro-duced using water-based adhesives.

For 2012, our goal was to produce


Make 7 million pairs of shoes using water-based adhesives7 million pairs. We exceeded thatgoal as well and produced 7.4 millionpieces. We aim to further increasethis figure in the future.

450,000

2.4 MILLION

NO. OF SHOES PRODUC ED USI NG

WATER-B AS ED ADHESIV ES

2010 2011 2012

7.4MILLION(TARGET 7 MILLION)

Using water-based adhe-

sives is betterfor the health ofthose who make

the products.

TIME SCALE2012

STATUSwe achieved 7.4 million pieces

ACHIEVEDSTARTED MORE TO DO



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COMMITMENT ONE


CONSCIOUS ACTION 1.5Inspire our customers to join our Conscious Actions

While we need to keep working hardto make fashion more sustainable,we know that our customers playan important role, too. Thats whywe want to inspire them to join ourConscious Actions. To achieve this,we want to make conscious choiceseasy, available, affordable andattractive to as many people as pos-sible. But more sustainable productchoices alone are not enough.

We involve our customers on anumber of fronts. Through dedicated

collections and campaigns we teamup with them to help communitiesand raise awareness of importantmatters. Our Fashion Against Aidscampaign focused on HIV/Aidsawareness, H&M for Wateron waterissues in some of the poorest com-munities in the world and ourAllfor Childrencollections support

our work with UNICEF in India andBangladesh on childrens rights. Weare also expanding our communityinvestments through in-store dona-tion campaigns.

We want to create fashion thatour customers love from season toseason and that helps them buildtheir personal style. But if the pointcomes when some clothes are nolonger right, we want to make iteasy for customers to not let themgo to waste. Through our new globalinitiative we are collecting unwantedclothes, from any brand, in H&Mstores in all our markets to helpreuse and recycle them.

We also try to inspire climate andwater-conscious garment care. Andwe are working in several ways to

make informed choices as easy aspossiblefor consumers, for examplethrough the Sustainable ApparelCoalition.

H&M has the strength and ability to bringsustainability ideas to the marketplace

at scale. In the future I would like to seenew business models fewer productsand different ideas about fashion.Kate Fletcher, author of the book Sustainable Fashion and Texti les:

Design Jour neys (2008)and reader at the Centre for SustainableFashion, London College of Fashion


TIME SCALEongoing

STATUSglobal system to collect old clothes forreuse and recycling laun ched

http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Communities/Community-Projects/Fashion-Against-Aids.htmlhttp://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Communities/Community-Projects/Water-Aid.htmlhttp://hm.com/allforchildrenhttp://hm.com/allforchildrenhttp://www.apparelcoalition.org/http://www.apparelcoalition.org/http://www.sustainable-fashion.com/http://www.sustainable-fashion.com/http://www.sustainable-fashion.com/http://www.sustainable-fashion.com/http://www.apparelcoalition.org/http://www.apparelcoalition.org/http://hm.com/allforchildrenhttp://hm.com/allforchildrenhttp://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Communities/Community-Projects/Water-Aid.htmlhttp://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Communities/Community-Projects/Fashion-Against-Aids.html


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COMMITMENT ONE


CONSCIOUS ACTION 1.6Introduce conscious washand care instructions

Making fashion more sustainableincludes inspiring our customers tochoose conscious garment care.

The user phase accounts for about36 percent of the climate impact ofa garments li fecycle. Water eutroph-ication resulting, for example, fromwashing detergents and softeners also arises to about 30 percent whenclothes are washed in our homes.

There are many ways to reduce thisimpact in a smart way without com-

promising on comfort or increasingcosts. For example, reducing thewashing temperature from 60 to40 degrees can save 41 percent inenergy use. What s more, it keepsclothes just as clean and fresh and it saves money!

We want to play a part in inspiring

our customers to reduce this impact.Thats why we started discussionswith Ginetexin 2011. Ginetex is theowner of the current global standardcare labeling system. Our aim wasto develop a globally-applicable carelabel that encourages consumersto care for their clothes in a moreconscious way.

We chose to collaborate with Gine-tex in order to create a commonstandard for all brands globally toavoid a patchwork of different stand-ards and labels, that would makethings more confusing for everyone.This new so-called clevercare labelis now available to all apparel brandsglobally. The first orders carryingthis new label are planned to reachour stores in summer 2013.

>hm.com/care

>clevercare.info

41% LESS ENERGY USE

60 40


TIME SCALE2013

STATUSnew clevercare label laun ched

CONSCIOUS ACTION 1.7Help set industry standard for measuringproduct sustainability

Joining forces with industry peersand other stakeholders is key totackling the major sustainabilitychallenges in our industry. Thisis why we joined the Sustainable

Apparel Coalitionin 2011. Thisquick-growing multi-stakeholder ini-tiative today brings about 50 percentof the global apparel and footwearproduction including brands suchas Patagonia, GAP Inc., Nike Inc.and many more together with otherkey stakeholders such as suppliers,academics, and NGOs. Together,

we are working to build a commonapproach for evaluating product sus-tainability performance, using whatis known as the Higg Index.

Created in 2012, the index providesall members with a common toolto measure and benchmark theenvironmental and social impacts of

their products. This in turn helps tohighlight areas ripe for technologi-cal innovation and to set the rightpriorities. At H&M, we tested thepilot version of the Higg Index duringthe year and found great value in it.

A challenge of how to apply the indexon a larger scale, however, remainsand will require continued work.

Ultimately, taking this groundbreak-ing work another step further, theSustainable Apparel Coalition aimsto translate the Higg Indexintoconsumer labelling, allowing cus-tomers to compare the sustainabilityperformance of apparel and footwearproducts across products and evenbrands. In line with our aim to makemore sustainable choices as easy aspossible for consumers, we fully sup-port this ambition.

>apparelcoalition.org


TIME SCALEongoing

STATUSSustainable Apparel Coalition l aun-ched the Higg Index

http://www.ginetex.net/http://hm.com/carehttp://hm.com/carehttp://clevercare.info/http://clevercare.info/http://www.apparelcoalition.org/http://www.apparelcoalition.org/http://www.apparelcoalition.org/higgindexhttp://apparelcoalition.org/http://apparelcoalition.org/http://apparelcoalition.org/http://www.apparelcoalition.org/higgindexhttp://www.apparelcoalition.org/http://www.apparelcoalition.org/http://clevercare.info/http://hm.com/carehttp://www.ginetex.net/


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COMMITMENT ONE



Collaborate with French government inpilot on product lifecycle assessment

During 2011, we started collaborat-ing with the French government in aninitiative called the Grenelle Project.The project involves identifying meas-urements for environmental impactand finding the best ways to make thisimpact transparent for customers.

As part of the project, we looked atone of our t-shirts and evaluated thetotal water use, CO2emissions andeutrophication impacts throughoutits life cycle, from growing the cot-ton to the disposal or recycling of

the garment.

Collecting the necessary qualitydata for this ambitious undertakingwas a challenge that helped us ingaining valuable knowledge. In 2012,we launched a dedicated websitedisclosing the exact results of thisanalysis to our French customers.

The results underline the impor-tance of the user phase on CO 2emissions and water eutrophicationand the high water-intensity of cot-ton cultivation.

The take-home from this projectwill be of great help in our con-tinued work to analyse and mini-mise impacts of apparel productsthroughout their lifecycle. It willhopefully also support the process ofdeveloping legislation for transparentproduct impact disclosure in the EU an ambition that we support.

WATER USE

4.34 m

CARBON4.47 kg/CO2e

WATER

EUTROPHICATION4.83 gr/phosphateequivalents

ENVIRONMENTAL IMPACT OF A T-SHIRT

THROUGHOUT ITS LIFECYCLE

STARTED MORE TO DO ACHIEVED

TIME SCALE2012

STATUSpilot conducted

CONSCIOUS ACTION 1.9Provide best possible sustainabilitytraining for buyers and designers

In order to offer more sustainablefashion to our conscious customers,buyers and designers have to be wellinformed about the sustainabilityvalues and the impact of differentproducts and their decisions.

To this end, we provide dedicatedmandatory training for these col-leagues.

Additional internal and external in-depth training courses are encour-aged for people in key positions and

on a voluntary basis, for examplein collaboration with the Sustain-able Fashion Academy. In 2012, weprovided a total of 2,200 hours ofsustainability training for our buyersand designers.


TIME SCALEongoing

STATUS2,200 hours of training provided

http://www.legrenelle-environnement.fr/-Version-anglaise-.html?rubrique33http://www.sustainablefashionacademy.org/http://www.sustainablefashionacademy.org/http://www.sustainablefashionacademy.org/http://www.sustainablefashionacademy.org/http://www.legrenelle-environnement.fr/-Version-anglaise-.html?rubrique33


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COMMITMENT ONE


CONSCIOUS ACTION 1.11Translate new sustainability website

into multiple languages

We want to make a conscious andinformed choice as easy and attrac-tive to our customers as possible.

As part of this, we translated ournew sustainability websiteinto eightmajor languages spoken in someof our most important markets.The aim is to provide as transparentinformation as possible to both ourinterested customers as well as otherstakeholders, complementing ourannual sustainability reporting.

The website also features a regularly

updated blog from our Head of Sus-tainability, keeping our stakeholdersinformed about our progress andactivities.

>hm.com/conscious

STARTED MORE TO DO ACHIEVED

TIME SCALE2012

STATUSwebsite translated into 8 languages

375,000visitorsto our

sustainabilitywebsite

CONSCIOUS ACTION 1.10Increase the knowledge amongst our salesadvisors about our sustainability work

We want our colleagues to feel proudof where they work and confidentthat they can deliver the best pos-sible customer service. So togetherwith the launch of our first ConsciousCollection in 2011, we rolled out amandatory training programme forall our sales advisors.

A study showed that while ourcolleagues were well-versed inconscious materials, other aspectsof our sustainability work were notalways as well known.

That is why in 2012, we starteddeveloping a broader sustainabilitytraining ladder including exten-sive mandatory training for allour colleagues. Additional manda-tory role-specific and voluntarytraining courses are planned from2013 onwards.


TIME SCALE2013 onwards

STATUSnew training programme indevelopment

I would like to see moresustainability training for

staff and more sustainabi-lity communication to ourcustomers in store, suchas signs or posters.Marcel K rink, Sales Adv isor in H&M storeDE714, Karlsruhe, Germany

http://www.hm.com/conscioushttp://hm.com/conscioushttp://hm.com/conscioushttp://hm.com/conscioushttp://www.hm.com/conscious


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COMMITMENT TWO

Choose and reward responsible

partners

We set high standards forour suppliers and regularlymonitor how well they live

up to them. Likewise, in order forthem to deliver their very best weneed to be a good partner ourselves.

The challenge is that garmentproduction is often located wherehuman rights are at risk and envi-ronmental awareness is less devel-oped. As a labour-intense industry,for many of these countries thismeans the first step in industrialdevelopment, contributing to jobsand economic growth. As a com-pany, we want to make sure that

sourcing from these countries con-tributes to a positive development forthe community and to better livesfor the people working in this sector.

Respect for people and the envi-ronment is an essential part of ourvalues. We use our influence topromote better working conditions

and environmental consciousnessthroughout our value chain.

Our commitment is to choose andreward responsible partners whoshare our values and who are willingto be transparent and work with us

to improve their social and environ-mental practices. We provide train-ing and support for improvements.

Production takes place at around1,800 factories that are owned orsubcontracted by 785 suppliers. Welook for long-term partnerships withour suppliers and engage in strate-gic partnerships with the best ones.

And we reward good sustainabilityperformance with better business.

As a result, our some 150 strategicpartners make more than 50 percentof our products.

We focus on working towardsgreater involvement of the workersthemselves and on empowering oursuppliers to take ownership of theirsustainability issues. A close col-laboration with our industry peersand many other stakeholders is keyfor change.

All this in turn can contribute togreater stability in the producingcountries and tends to translate intomore efficient operations and higherquality products.

Increasingly, we are also working toimprove conditions in other partsof our value chain.



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Choose and reward responsible partners

HIGHLIGHTS FROM 2012

COMMITMENT TWO

Choose and reward responsible partners STATUS

CONSCIOUS ACTION STARTED MORE TO DOON TRACK/ACHIEVED

2.1 Be a responsible partner to our suppliers

2.2 Choose responsible partners

2.3Have best possible knowledge about our value chain and our suppliers sustainability performance*

2.4 Go beyond monitoring and help suppliers strengthen their sustainability ownership

2.5 Further increase sustainability performance amongst supplier factories

2.6 Reward good sustainability performance with better business

2.7 Increase workers awareness of their rights

2.8 Promote higher wages for garment workers across the industry

2.9 Set up model factories

2.10 Ensure freedom of association and promote social dialogue

2.11 Reduce overtime in supplier factories

2.12 Support better health for factory workers in Cambodia

2.13 Continue to promote improved fire safety in Bangladesh

2.14 Continue to promote an end to Sumangali schemes in the Indian textile industry

2.15 Request ban on Uzbek cotton

We conducted 2,541 audits atour supplier factories (first tier).Together with training and othersupport, this totals an average of3.6 activities per factory, all workingto improve their sustainability.

Our CEO visited the Prime Ministerof Bangladesh, Sheikh Hasina, toemphasise H&Ms support for higherminimum wages and regular wageadjustments in the country.

Together with the Swedish union,IF Metall, we initiated a project inCambodia aiming to improve thedialogue between employers andunions and to strengthen collectivebargaining.

More than 100,000 workersand middlemanagersin Bangladesh have received additional

trainingin fire safety

9,815 interviewswith workers in our supplier

factories

570,821workersin Bangladesh

trained in their rightssince 2008

PROGRESS REPORT

Performance overview

Our supplier sustainability perfor-mance index (ICoC) increased from76.5 to 78.4 during 2012.

As a result of our work to buildstrong, long-term relationships withour suppliers, we decided to publishour supplier list.

COMMITMENT TWO

* Please find an independent assurance statement related to GRI 3.1 indicator A F 14here (page 91-92).



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VIVEKA RISBERG,

DIRECTOR, SWEDWATCH

What are the biggest challenges

of the fashion industry from your

perspective?

Garments are produced mainly incountries with repressive regimesthat do not promote human rightsand sound wage processes based onUN standards and gender equality.

Women especially, who constitutea majority of the workforce in thefashion industry, are deprived of theirrights. Therefore a major challengefor the industry is to both supportgarment workers and at the sametime use its leverage on a nationaland international level for increasedwages and improved working condi-tions. Less water consumption, clean

cotton production and replacingcotton with other materials are ofcourse important challenges for theindustry, too.

What role do you think H&M plays

in tackling these challenges?

H&M is a forerunner and in some

aspects a role model in the industry:On a strategic level because of itscontinuous dialogue with decisionmakers and on the operational levelbecause of the focus on workersrights in the factories.

Where do you see H&Ms

strengths?

The companys size and expansionare natural strengths that give H&Ma mandate and possibility to influ-ence. The top managements engage-ment stands out as a good examplein the sector. The companys effortsin measuring and rewarding compli-ant suppliers shows that CSR is notonly an external issue but on its wayto be core.

What actions would you like to see

from H&M in the future?I would like to see H&M upgradingthe Code of Conducts demand forminimum wage to a wage to live onas well as greater actions for respect-ing human rights in Bangladesh andextra attention to the situation ofworking women.

H&M is a forerunner and in someaspects a role model in the industry.Viveka Risberg, Director, Swedwatch

COMMITMENT TWO


Stakeholder Voice

http://www.swedwatch.org/http://www.swedwatch.org/


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We have high expectations of oursuppliers in terms of quality, prices,lead times and sustainability. Butdemanding positive change from oursuppliers starts with us. We havea responsibility to ensure that ourpurchasing processes enable oursuppliers to live up to our demandsby providing fair lead times, fairpricing, on-time payments and clearcommunication. We work with themin close partnership to learn fromand understand each other and toreward suppliers with good sustain-

ability performance.

Having our own production officesclose to our suppliers allows us tohave a constant dialogue with them.

We strive for long-term relationships.Key for our suppliers are long-termpartnerships and mutual growth,together with good planning in order

to utilise their capacity as effectivelyas possible and plan their continuedgrowth. Thats why as part of oursupplier relationship managementwe offer our strategic partners up tofive-year mutual capacity planning.In order to check how well we l iveup to our partnership approach, wesurveyed our suppliers to see howthey feel about working with us.It was the first time we conductedsuch an extensive supplier surveyand we received 423 responses tothe anonymous questionnaire. Theresults indicate that the vast major-ity of the respondents were satisfiedwith their business relationshipwith us (around 90 percent), whilesatisfaction was even higher amongstour strategic partners. More than 70percent said that their partnership

with H&M has improved since weintroduced our supplier relationshipmanagement programme in 2011. Italso shows that most of our suppliersthink that we have reasonable andclear demands on lead times, pricesand flexibility.

>hm.com/responsiblepurchasing

CONSCIOUS ACTION2.1

Be a responsible partner to our suppliersSTARTED MORE TO DO ON TRACK

TIME SCALEongoing

STATUS423 responses from suppliers to firstbroad supplier survey

Long-termpartnerships

and mutualcapacity plan-ning are key to

suppliers.

COMMITMENT TWO


Our 148strategic partnersmake 53%of our products

http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Responsible-Partners/Responsible-Purchasing.htmlhttp://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Responsible-Partners/Responsible-Purchasing.htmlhttp://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Responsible-Partners/Responsible-Purchasing.html


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CONSCIOUS ACTION 2.3Have best possible knowledge about our value chain

and our suppliers sustainability performance

Through our 15 production officesaround the world, more than 1,800of our colleagues work to maintainclose relations with our suppliers andsupport their performance in variousareas. This gives us the opportunityto understand each market and sup-plier on an in-depth level. Throughour strong presence, we can alsowork as closely as possible togetherwith our suppliers on a daily basis,integrate what we learn in our busi-ness decisions and interact with localstakeholders.

There are around 100 sustainabil-ity experts based in our produc-tion offices who regularly audit oursupplier factories compliance withour Code of Conductand supportimprovements. Our audits followa constantly updated list of around300 questions and include an

inspection of the factory, manage-ment interviews, document checksand interviews with workers. Auditsare complemented with thoroughmanagement system analysis, aimingto prevent any non-compliance ina sustainable manner.

Initial head audits are largely unan-nounced (2012: 66 percent). Our Codeof Conduct covers 100 percent of ourcommercial goods suppliers, withaudit intensity varying based on ourrisk assessments and the importanceof the factory to our business. Anynon-compliance detected requiresthe supplier to draft a remediationplan which is followed up on by us.

Wherever needed, we provide or facili-tate additional support in implement-ing the remediation plan. We publishall detailed audit results here.

Results from our audits are aggre-gated in our Index Code of Conduct(ICoC index). Each factory and each-supplier is rated with an ICoC score(max. 100 percent) based on theircompliance. These scores are clearlycommunicated to each factory. Itsalso an integrated working tool in


TIME SCALEongoing

STATUS2,646 audits and 9,815 workerinterviews con ducted

NO. OF AUDIT S O N

ACT IV E FACT OR IES

TOTALAUD ITS

2,646

HEADAUD ITSTOTAL

792

FOLLOWUP

AUD IT STOTAL

1,854

FACTORIES(CUT & SEW + PROCESSING)

SECOND-TIER SUPPLIERS

NON- COM MER CIA LPRODUCTS

2,541

747

1,779

5862

3015

2847

FLA VERIFICATIONS: 14(7ASSESSMENTS/ 7WORKER SURVEYS)

2,646audits conducted

COMMITMENT TWO


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our purchasing processes. Our datashows that strategic factories showa stronger performance than facto-ries that we have just started work-ing with a clear indication of theimprovements that our partnershipapproach promotes.

Additional independent verificationaudits conducted by the Fair Labor

Association (FLA)ensure the qualityof our audit programme and help usto constantly improve our methods aswe strive to tackle root causes of non-compliance in a transparent, trustfuland sustainable manner.

We have continued our work toincrease our influence over stagesfurther down in our value chain.For the past few years, we haveincreased our engagement through

ourMill Development Programme,which we continue to work with.In 2012, we conducted a total of 58audits on second-tier suppliers andwe now require all our first-tier sup-pliers to provide us with informationon the fabric mill for each order. Theaim is to deepen our knowledge andinfluence over fabric mills. We are

also extending the use of our Codeof Conduct to include suppliers ofnon-commercial products such asstore interiors and marketing mate-rial and conducted a total of 62head- and follow-up audits.

Seeking to further expand the trans-parency of our supply chain, we havedecided to disclose the list of oursupplier factories, covering about95 percent of our production volume.This publication is a consequenceof our focus on strong and long-termpartnerships with suppliers, allowingus to disclose their names withoutmajor concerns about competitionon production capacity.

> hm.com/monitoring

> hm.com/supplychain

> hm.com/supplierlist

AVER AGE SUS TAINAB ILI TY PER FOR MA NCE

SCORE (ICoC) PER FACTORY CATEGORY

NEWFACTORIES

71.4

AL LFACTORIES

78.4

STRATEGICFACTORIES

81.7

New factories = results at first auditAll and strategic factories = results fromexisting factories by 1 Dec 2011

62%of our suppliers

emloyees are

female

9,815worker interviews

conducted

NO. OF SUPPLIERS A ND FACTORIES BY REGION

SUPPLIERS (ALL)

785

FAR EAST

340

SOUTH ASIA

242

EMEA

203

STRATEGICPARTNERS

148

FACTORIES (ALL)

1,798

FAR EAST

760

SOUTH ASIA

499

EMEA

539

53% OF PIECESPRODUCED BY

STRATEGICPARTNERS

SUPPLIER FACTORY COMPLIANCE LEVEL

PER AREA OF REQUIREMENTS

The data shows the compliance level of all supplierfactories approved for production as of 30 Nov 2012.Further details including a regional breakdown areavailable at hm.com/suppliercompliance.

CHILDLABOUR

100%

REQUIRE-MENTS FOR

YOU NG

WOR KER S47%

WOR KER SBASIC

RIGHTS

76%

WOR KER S RIGHTS

75%

HEALTH& SAFETY

82%ENVIRONMENT

67%

HOUSINGCONDITIONS

91%

HOMEWOR KER S

61%

CHEMICALHANDLING

72%

METALPLATING

75%

TRANSPARENCY& MONITORING

97%

COMMITMENT TWO


Please find an independent assurance statement related to GRI 3.1 indicator AF 14here (page 91-92).

One supplier can own or subcontract to one or morefactories. Strategic factories are normally factoriesowned or subcontracted by our strategic partners.

STRATEGICFACTORIES

440

http://www.fairlabor.org/http://www.fairlabor.org/http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Use-Resources-Responsibly/Water/Mill-Development-Program.htmlhttp://hm.com/monitoringhttp://hm.com/monitoringhttp://hm.com/supplychainhttp://hm.com/supplychainhttp://hm.com/supplierlisthttp://hm.com/supplierlisthttp://hm.com/supplierlisthttp://hm.com/supplychainhttp://hm.com/monitoringhttp://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Use-Resources-Responsibly/Water/Mill-Development-Program.htmlhttp://www.fairlabor.org/http://www.fairlabor.org/


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CONSCIOUS ACTION 2.5Further increase sustainability performance amongst supplier factories

Ultimately, by being a good partnerto our suppliers, continuously moni-toring and strengthening our sup-pliers sustainability management,and rewarding good performance wewant to increase their sustainabilityperformance further. In addition, byincreasing awareness of their rightsamongst factory workers, promot-ing social dialogueand rewardingthe best performing suppliers withbetter business, we hope to con-tribute to a positive development inthe factories and their surrounding

communities.

We focus on our strategic factorieswhere we have the strongest impact.

We use our ICoC index to measuretheir sustainability performance,consisting of compliance results fromour audits. Each factory and eachsupplier holds an ICoC score that is

clearly communicated. Through ourin-house production office organisa-tion, they are closely integrated intoour purchasing systems. We conductannual dialogue meetingswith oursuppliers in which we amongst otherthings discuss their sustainabilityperformance and their achieved ICoCscore and together set priorities forfurther improvements.

Over the year we have seen continuedprogress across our entire supplierbase with constantly increasing ICoCscores, while our strategic factorieshave shown an overall higher per-formance level as well as a strongerincrease throughout the year. Wewill continue our work to promoteimprovements and closely monitorand report on the progress made.

>hm.com/monitoring


TIME SCALEongoing

STATUSsustainability per formance (ICoC)increased from 76.5% to 78.4%

H&Ms efforts inmeasuring and

rewarding compli-ant suppliers showsthat CSR is on its

way to be core.Viveka R isberg, Director,

Swedwatch

The sus-tainability

performanceamongst our

supplier facto-ries improves

measurably.

PROGRESS IN FACTORY

SUSTAINABILITY PERFORMANCE

(IN ICoC SCORES)

AL LFACTORIES

STRATEGICFACTORIES

COMMITMENT TWO


Applies to comparable factories that were used forproduction from 1 Dec 2011.

Dec2011

Q12012

Q22012

Q32012

Q42012

79.3% 79.3%78.8%

80.0%

81.7%

76.5% 76.6% 76.4%

77.5%

78.4%

http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Responsible-Partners/Responsible-Purchasing.htmlhttp://hm.com/monitoringhttp://hm.com/monitoringhttp://www.swedwatch.org/http://www.swedwatch.org/http://hm.com/monitoringhttp://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Responsible-Partners/Responsible-Purchasing.html


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CONSCIOUS ACTION 2.6Reward good sustainability performance

with better business

In order to sustain and incentivisegood sustainability performance, weneed to ensure that we reward oursuppliers with what they would appre-ciate most - long-term business rela-tionships and growth opportunities.

Our strong in-house sustainabilityteams, based in our productionoffices close to our suppliers, helpus integrate results from audits intoour order placement and sourcingprocesses. We have integrated theperformance score (ICoC) for each

supplier factory into our planningand order systems, aiming to placemore and bigger orders with the bet-ter performing factories.

In order to measure how well weperform in terms of this ambition,we compare the ICoC scores of oursupplier factories weighted by order

volume with scores weighted againstthe available capacity in our factorybase. The data show that we choosebetter performing factories in ourorder placement. Our supplier surveyindicates that our suppliers experi-ence and appreciate such reward.

We have also integrated sustainabil-ity closely in our supplier relation-ship management, offering long-termstrategic partnerships with our bestperforming suppliers. Such strategicpartnerships provide mutual ben-efits, for example by securing stablebusiness through long-term capac-ity planning up to five years ahead.Out of our 785 suppliers, cur-rently 148 strategic partners(19 percent) make 53 percentof our products.

>hm.com/supplierrelations


TIME SCALEongoing

STATUSwe choose better performing factori esin our order placement

5.8yearsaverage

length of supplier

relations

How long have you been working

as supplier of H&M?

We have been working with H&Mfor around 20 years, since we startedour business in 1992. Back then weonly had 120 workers. Since thenwe have been growing together withH&M year by year and today, weemploy more than 3,000 people.

And we keep expanding we openeda new factory in 2010.

What has changed since the start?

In our industry, production hasmoved from Turkey to China andrecently from China to Bangladesh.

We have continued to grow, but weneed to continuously improve inorder to keep up with demands on

quality, on-time delivery, capacity,prices and sustainability. During thepartnership, H&M has perfected therelated systems and continuouslyincreased the focus on sustainability.

As a supplier, we receive in-depthtraining to improve our sustainabil-ity and H&M itself is driving several

projects on workersrights andenvironmental protection backed byclear values and targets to achieve.

How would you decribe your

partnership with H&M?

Its a close collaboration betweenbusiness partners. H&M has highdemands on transparency and inturn offers the same. The feedbackis fast, helping us to react quicklyand keep a fair mutual dialogue.Long-term capacity planning andcontinuous increases in orders areimportant for our business andclosely linked to H&Ms sustainabil-ity requirements.

What would you like to see

from H&M to further improvethe partnership?

Most important is stable orderplacement also during the lowseason. I would also like to seeeven more sharing of best practiceamongst suppliers when it comesto quality and sustainability.

JOYCE CHEN, MERCHANDISE MANAGER, HEMPEL (CHINA), CO. LTD

ICOC

WEI GHT ED

COMMITMENT TWO


BYORDER

VOLUM E

78.8BY

SUPPLIERCAPACITY

77.3

Stakeholder Voice

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Choose and reward responsible partnersCOMMITMENT TWO

DAN REES, DIRECTOR,

BETTER WORK

How long have you been col-

laborating with H&M?

We started our collaboration withH&M in 2005 in the Better FactoriesCambodia Programme.

What was your first impressionof H&M?

Our impression was that H&Mwas a company that took CSRseriously, focusing on improvingfactory conditions and not just fol-lowing a tick-the-box approachin auditing, which was commonat that time.

How did the partnership evolve?

Better Work is now partnering

with H&M in more countries.We have seen how the businesshas developed more strength anddepth in its efforts to improvefactory conditions. H&M is honestabout what they want and whatthey can and cannot do. And theydeliver on promises.

What do you think are H&Ms

strengths when it comes to sus-

tainability?

H&M is ahead of the curve in CSR.Their commitment to sustain-ability is supported by all levels oftheir organisation. The companyhas strong and decisive leadership,good relations with key stakehold-ers, skilled staff and it is largeenough to drive real change in thesupply chain.

What actions would you like

to see from H&M in the future?

We would like to scale up ourimpact and make the most ofH&Ms leadership. We wouldencourage H&M to get moresuppliers involved in Better Work.Sustainability should be placed at

the heart of H&Ms business strat-egy, decision-making and negotia-tions with suppliers.

Stakeholder Voice

http://www.betterwork.org/http://www.betterwork.org/


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CONSCIOUS ACTION 2.7Increase workersawareness of their rights

Workers in supplier factories areoften unaware of their rights. Webelieve that only workers who areaware of their rights can construc-tively claim them and contribute toa more sustainable garment industry.

In 2008, we teamed up with suppli-ers and local NGOs in Bangladeshto develop a series of five short filmsand training packages in order toincrease this awareness. 570,821workers and middle managersreceived this training since the start

of the project in 2008. During 2012,128,790 workers and middle manag-ers were trained.

In 2012, we developed similar shortfilms also in India together with fourother brands. We will implement theprogram in 2013.

We also work to increase workersawareness on their rights throughour regular work with all our sup-plier factories, requiring the avail-ability of our Code of Conductforworkers in local language and put-ting focus on functioning grievancesystems and social dialogue.

Each year we conduct thousandsof worker interviews through which among other things we check thelevel of awareness for example ontheir right to freedom of associationor how their wages are actually cal-culated. Looking back into the pastfour years, we can see good improve-ments in workers awareness partic-ularly in China making us confidentto further focus on this strategicelement of our work.

>hm.com/beyondmonitoring


TIME SCALEongoing

STATUS570,821 workers trained since 2008

570,821workershave been educated

about t

h and m - about recycling

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