H&M GROUP SUSTAINABILITY REPORT 2017

 
H&M GROUP SUSTAINABILITY REPORT 2017
H&M GROUP
SUSTAINABILITY
  REPORT 2017
H&M GROUP SUSTAINABILITY REPORT 2017
OVERVIEW
                                                                                                                                             OVERVIEW
Table of contents

                                                                                                                                             VISION & STR ATEGY
                                                                                                                                             100% LE ADING THE CHANGE
 1. OVERVIEW                                                     3    5. 100% FAIR & EQUAL                        53
        About H&M group                                          4       Key facts & figures 2017                 54
        Our value chain                                          5       KPIs and goals                           55
        Letter from CEO                                          6       100% Fair & Equal explained              56
        Executive summary                                        7       Fair jobs for all                        57
 2. VISION & STRATEGY                                            9       Stewards for diversity & inclusiveness   68
        Our vision & strategy                                    10   6. STANDARDS & POLICIES                     73

                                                                                                                                             100% CIRCU L AR & RENEWABLE
        Our ambitions                                            11      Key facts & figures 2017                 74
        Our Change-Making Programme                              12      Standards & policies explained           75
        Engaging our changemakers                                13      Working with standards & policies        76
        How we are organised                                     14      Our human rights policy                  77
        Interview with Head of Sustainability                    15      Policies within our own operations       79
 3. 100% LEADING THE CHANGE                                      16      Policies for our business partners       81
        Key facts & figures 2017                                 17      Products & materials policies            85
        100% Leading the Change explained                        18   7. HOW WE REPORT                            87

                                                                                                                                             100% FAIR & EQUAL
        Innovation                                               19      How we report                            88
        Transparency                                             21      Materiality matrix                       90
        Rewarding sustainable actions                            24      Our salient human rights issues          91
 4. 100% CIRCULAR & RENEWABLE                                    26      UN’s Sustainable Development Goals       93
        Key facts & figures 2017                                 27      Engaging with our stakeholders           94

                                                                                                                                             STANDARDS & POLICIES
        KPIs and goals                                           28      Key collaborations                       96
        100% Circular & Renewable explained                      29      Auditor’s report                         97
        Becoming 100% circular                                   30      Get in touch                             99
        Becoming climate positive                                47

                                                                                                                                             HOW WE REPORT
                                                                                                                       H&M.

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OVERVIEW   VISION & STR ATEGY   100% LE ADING THE CHANGE   100% CIRCU L AR & RENEWABLE   100% FAIR & EQUAL   STANDARDS & POLICIES   HOW WE REPORT
OVERVIEW
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                                                                                                                                      H&M.
                                                            OVERVIEW

                                                                                                                                             H & M G R O U P S U S TA I N A B I L I T Y R E P O R T 2 0 1 7
H&M GROUP SUSTAINABILITY REPORT 2017
OVERVIEW
                                                                                                                                 OVERVIEW
ABOUT H&M GROUP / OUR VALUE CHAIN / LETTER FROM CEO / EXECUTIVE SUMMARY

About H&M group

                                                                                                                                 VISION & STR ATEGY
                                                                                                                                 100% LE ADING THE CHANGE
H&M group loves fashion and design. We are                                                2017 FIGURES
always working to create the best offering for our

                                                                                        232
customers, in the most sustainable way. ​
                                                                                   SEK              billion in
H&M group includes eight clearly-defined brands
– H&M, COS, Weekday, Cheap Monday, Monki,                                           sales incl. VAT in 2017.
H&M Home, & Other Stories and ARKET. Together,

                                                                                                     69
our brands offer customers a wealth of styles and

                                                                                                                                 100% CIRCU L AR & RENEWABLE
trends in fashion, beauty, accessories and home-                                   4,739 stores in
ware – as well as healthy, modern food in selected
stores.​                                                                          markets and e-commerce
                                                                                       in 43 markets.
Through our integrated physical stores and digital
channels, we reach customers around the world.
Our customer proximity is amplified by our 171,000
colleagues globally, operating in both sales and                                        H&M group
production markets.                                                               welcomed approximately

                                                                                      10,000

                                                                                                                                 100% FAIR & EQUAL
     ABOUT H&M FOUNDATION
     H&M Foundation is a non-profit global foundation,                             new employees in 2017.
     privately funded by the Stefan Persson family,
     founders and main owners of H&M group. The
     foundation's mission is to drive long lasting positive                          We have more than

                                                                                                                                 STANDARDS & POLICIES
     change and improve living conditions by investing
     in people, communities and innovative ideas. Learn
     more about H&M Foundation’s work on pages 20,                                   171,000
     35 and 72, and read the annual report, A Catalyst                           colleagues around the world.
     for Change 2017 at hmfoundation.com
                                                                          H&M.

                                                                                                                                 HOW WE REPORT
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ABOUT H&M GROUP / OUR VALUE CHAIN / LETTER FROM CEO / EXECUTIVE SUMMARY

Our value chain

                                                                                                                                                                                                                                                                                                                                                                                                                                             VISION & STR ATEGY
                                                                                                                                                                                                                                                                                                                Check out where in the world
                                                                                                                                                                                                                                                                                                         the different stages of our value chain take
                                                                                                                                                                                                                                                                                                           place on an interactive world map here

                                                                                                                                                                                                                                                                                                                                                                                                                                             100% LE ADING THE CHANGE
We create fashion and quality at a great                                                               IMPACTS ALONG OUR VALUE CHAIN
price in a sustainable way. To do this,                                                                Our vast network of value chain con-
H&M group is responsible for the effi-                                                                 nections means that our social, envi-
cient and effective running of its own                                                                 ronmental and economic impacts are                                                                                In 1947, H&M opened its                                                                                                     H&M alone has
value chain. Our value chain describes
the full sequence of processes involved
                                                                                                       significant and far-reaching. Therefore,
                                                                                                       to maintain our business idea, we need
                                                                                                                                                                                                                          first store in Västerås,
                                                                                                                                                                                                                        Sweden. 2017 marked our
                                                                                                                                                                                                                                                                                                                                                            800
in the production and lifespan of all                                                                  to maximise the positive impacts and                                                                                                                                                                                              million customer
our products, from product ideation to                                                                 minimise the negative impacts we have
                                                                                                                                                                                                                                 70             th
                                                                                                                                                                                                                                                        anniversary.                                                                  transactions per year.

                                                                                                                                                                                                                                                                                                                                                                                                                                             100% CIRCU L AR & RENEWABLE
customer use and disposal.                                                                             along our value chain. We achieve this
                                                                                                       by using our size and scale to leverage
But our value chain does not operate                                                                   and catalyse changes that improve the
in isolation. With eight brands, sell-                                                                 operation of our own value chain as well                                                                              The supplier factories we                                                                          Our products are made in
ing products in over 4,700 stores, it is
connected to countless people, commu-
                                                                                                       as the wider industry.

                                                                                                                                                                                                               1.6
                                                                                                                                                                                                                                 work with employ over
                                                                                                                                                                                                                                  million people of
                                                                                                                                                                                                                                                                                                                                                     1,668
nities, ecosystems and other businesses                                                                Please see the illustrations below for a                                                                                                                                                                                  supplier factories around
around the world.                                                                                      more in-depth look at the impacts we have                                                                              which 62% are women.
                                                                                                       along our value chain. Please also visit
                                                                                                                                                                                                                                                                                                                                        the world.
                                                                                                       sustainability.hm.com for further information.

                                                                                                                                                                                                                                                                                                                                                                                                                                             100% FAIR & EQUAL
                                                                                                                                                                                                                                                                                                                                                                                                                                             STANDARDS & POLICIES
                                                                                                                          Fabric and yarn                                               Product
               Design                                           Raw materials                                               production                                                manufacturing                                                     Transport                                                          Sales                                                           Use

                                                                                                                                                                                                                                               Medium         2%            0%              Low              High          0%            0%              High            Low         21%            8%            Medium
     High         0%            0%              Low           Medium        9%             87%            High           Medium        46%            6%             High           Medium       18%             1%             High

     OUR      C L I M AT E     WAT E R        SOCIAL            OUR      C L I M AT E     WAT E R        SOCIAL            OUR      C L I M AT E     WAT E R        SOCIAL            OUR      C L I M AT E     WAT E R        SOCIAL            OUR      C L I M AT E     WAT E R        SOCIAL              OUR      C L I M AT E     WAT E R        SOCIAL            OUR      C L I M AT E     WAT E R         SOCIAL
  INFLUENCE   I M PA C T *   I M PA C T *   I M PA C T * *   INFLUENCE   I M PA C T *   I M PA C T *   I M PA C T * *   INFLUENCE   I M PA C T *   I M PA C T *   I M PA C T * *   INFLUENCE   I M PA C T *   I M PA C T *   I M PA C T * *   INFLUENCE   I M PA C T *   I M PA C T *   I M PA C T * *     INFLUENCE   I M PA C T *   I M PA C T *   I M PA C T * *   INFLUENCE   I M PA C T *   I M PA C T *    I M PA C T * *

                                                                                                                                                                                                                                                                                                                                                                                                                                             HOW WE REPORT
*Climate impacts are based on a scope 3 assessment made by Ecofys in 2016, based on 2014 data. Calculations in the footprint analysis are based on a combination of quality H&M group data (2014 material usage) combined with the best available public data sources on
CO 2 emissions. We are working to further improve the calculations by using primary data from our main suppliers. The water footprint is based on the Water Footprint Network’s methodology and includes green, blue and grey water footprints. Deviation from 100% due
to rounding effects.**For more information about our social impacts, see pg 92. A number of these issues related also to H&M group’s salient human rights issues, i.e. those human rights at risk of the most severe impact across our operations and supply chain.

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ABOUT H&M GROUP / OUR VALUE CHAIN / LETTER FROM CEO / EXECUTIVE SUMMARY

Letter from CEO

                                                                                                                                                                                      VISION & STR ATEGY
                                                                                                                                                                                      100% LE ADING THE CHANGE
                                                                                                                                                                                      100% CIRCU L AR & RENEWABLE
                                                                          We believe sustainable fashion and design should      This report presents the H&M group’s
                                                                          be available to everyone, not only to a privileged    achievements and progress within
                                                                          few. Since my grandfather founded the company         the sustainability field over the
                                                                          70 years ago we have had a long-term perspective.     past year. There are still challenges
                                                                                                                                ahead, but I am proud of what we
                                                                          To secure future business it is essential and natu-   have achieved so far and the positive
                                                                          ral for us to address sustainability proactively.     impact we are making.
                                                                          We are dedicated to continue making great fash-
                                                                          ion and design affordable, by having a circular

                                                                                                                                                                                      100% FAIR & EQUAL
                                                                          approach and being a fair and equal company.

                                                                          Thanks to our size and to our committed
                                                                          colleagues, H&M group is fit to lead the change
                                                                          towards a more sustainable fashion future. How-
                                                                          ever, this is not a task that we can manage on our

                                                                                                                                                                                      STANDARDS & POLICIES
                                                                          own; collaboration, new-ways of working and joint
                                                                          industry goals are key for accelerating the changes
                                                                          and results needed. Our continued commitment
                                                                          to the United Nations Global Compact and our
                                                                          ongoing collaborative work with stakeholders,
                                                                          including local and global experts and NGOs, are
                                                                          a few examples of how we work to achieve positive     Karl-Johan Persson, CEO
                                                                          change through shared responsibility.                 H & M Hennes & Mauritz AB

                                                                                                                                                                                      HOW WE REPORT
      Karl-Johan Persson, CEO.

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ABOUT H&M GROUP / OUR VALUE CHAIN / LETTER FROM CEO / EXECUTIVE SUMMARY

Executive summary

                                                                                                                                                                                                                                 VISION & STR ATEGY
                                                                                                                                                                                                                                 100% LE ADING THE CHANGE
We believe that sustainable fashion and                                      KEY 2017 ACHIEVEMENTS
design should be available to everyone today,                                                         I N N OVAT I O N I S T H E K E Y T O A C H I E V I N G    BY 2 0 3 0 , W E W I L L O N LY
                                                                                                         F U L L C I R C U L A R I T Y. T H AT ’ S W H Y W E    U S E 1 0 0 % R E CYC L E D O R
tomorrow and for generations to come. Our                                                               ARE SUPPORTING GROUND-BREAKING                          O T H E R S U S TA I N A B LY-
vision is to use our size and scale to lead the                                                           C O M PA N I E S S U C H A S R E : N E W C E L L ,    S O U R C E D M AT E R I A L S .
                                                                                                                                                                                                    100%
                                                                                                          WORN AGAIN AND TREETOTEXTILE.
change towards circular and renewable fash-                                                                                                                                                         GOAL 2030

ion, while being a fair and equal company.

                                                                                                                                                                                                                                 100% CIRCU L AR & RENEWABLE
To achieve this, we have developed an ambi-                                                          We’ve reduced emissions
tious strategy, with a broad range of external                                                       from our own operations                                                                         35%
and internal experts. Our strategy follows a                                                              by a further 21%.
science-based approach wherever possible.                                                              This takes us another                                                                  26%
                                                                                                      step closer to achieving                                                     20%
              OUR VISION AND STRATEGY ARE BUILT                                                       a climate positive value                                            13%
                   ON THREE KEY AMBITIONS                                                                  chain by 2040.                                       11%

                                                                                                                                                                                                                                 100% FAIR & EQUAL
                                                                                                         1 0 0 % O F T H E FAC T O R I E S W E W O R K
                                                                                                           W I T H I N B A N G L A D E S H H AV E N OW

                                                                                                                                                                13

                                                                                                                                                                          14

                                                                                                                                                                                    15
                                                                                                       C O N D U C T E D D E M O C R AT I C E L E C T I O N S

                                                                                                                                                                                               16

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                                             100% LEADING

                                                                                                                                                                20

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                                                                                                                                                                        20

                                                                                                                                                                                  20

                                                                                                                                                                                             20
                                              THE CHANGE                                                    O F W O R K E R R E P R E S E N TAT I V E S .

                                                                                                                                                                                                                                 STANDARDS & POLICIES
                                                                                                                                                     Our supplier list includes the
                                                                                                                                                  details of tier 1 factories for 98.5%
                       100% CIRCUL AR
                        & RENEWABLE
                                                                 100% FAIR
                                                                  & EQUAL
                                                                                                                                                  of our products and tier 2 factories
                                                                                                                                                       for 60% of our products.

                                                                                                                                                                                                                                 HOW WE REPORT
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                                                                                                                                                                                                                  OVERVIEW
ABOUT H&M GROUP / OUR VALUE CHAIN / LETTER FROM CEO / EXECUTIVE SUMMARY

                                                                                                                                                                                                                  VISION & STR ATEGY
                                                                                                                                                                                                                  100% LE ADING THE CHANGE
                                                                                                                                      Awards & recognitions
               4 5 8 S U P P L I E R FA C T O R I E S H AV E B E E N                        We’ve set a new
              TR AINED IN OUR WORKPL ACE DIALOGUE                                                                                     Dow Jones Sustainability Europe Index
              PROGR AMME, AND MORE THAN 620,000                                           chemical vision and
               W O R K E R S A R E N OW R E P R E S E N T E D BY                                                                       Dow Jones Sustainability World Index
               E L E C T E D W O R K E R R E P R E S E N TAT I V E S .                   roadmap to lead the
                                                                                                                                Fashion Revolution’s Fashion Transparency Index
                                                                                           change towards a
                                                                                                                                                       FTSE4Good
                                                                                       toxic-free fashion future.

                                                                                                                                                                                                                  100% CIRCU L AR & RENEWABLE
                                                                                                                                              Global Compact 100 index
                                                                                                                                    Global 100 Most Sustainable Corporations
                                                                                                                                              Newsweek Green Ranking
                                                                                     BOARD OF DIRECTORS GENDER SPLIT 2017
                                                                                            5 6 % W O M E N / 4 4% M E N              SIGWATCH – most praised company in
                                                                                                                                            the world by activists
                                                                                                                            Sustainable Cotton Ranking – category “Leading the way”
        Today, 59% of the cotton                                                                                            Textile Exchange Preferred Fiber & Materials Report 2017
           we use is sustainably-                                                         100% of our

                                                                                                                                                                                                                  100% FAIR & EQUAL
                                                                                                                              – second biggest user of organic and recycled cotton
           sourced. Our goal is                                                       commercial business                        The Business of Fashion – the Best Companies
         to use 100% sustainably-                                                     partners have signed                                to work for in fashion 2017

        sourced cotton by 2020.*                                                       our Code of Ethics.

                                                                                                                                                                                                                  STANDARDS & POLICIES
                                                           During 2017, we collected                                        Each year, we produce a sustainability report summarizing H&M group’s
                                                                                                                                sustainability work and progress. The report includes all brands
                                                       17,771 tonnes of textiles through                                      (H&M, COS, Weekday, Cheap Monday, Monki, H&M Home, & Other

                                                       our garment collecting initiative                                       Stories and ARKET) and is prepared in accordance with the GRI
                                                                                                                            Standards: Core Option. We also report on human rights in line with the
                                                            for reuse and recycling.                                         UN Guiding Principles Reporting Framework and are signatories to the
                                                                                                                            UN Global Compact. Our sustainability strategy is also well aligned with

                                                                                                                                                                                                                  HOW WE REPORT
                                                                                                                                       the UN’s Sustainability Development Goals (SDGs).
   *Which includes certified organic cotton, Better Cotton (BCI) and/or recycled cotton.
                                                                                                                                        To learn more, please visit sustainability.hm.com

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OVERVIEW   VISION & STR ATEGY   100% LE ADING THE CHANGE   100% CIRCU L AR & RENEWABLE   100% FAIR & EQUAL   STANDARDS & POLICIES   HOW WE REPORT
           VISION & STRATEGY
                                                                                                                                               9 OF 100
                                                                                                                                        H&M.
                                                STRATEGY
                                                 VISION &

                                                                                                                                               H & M G R O U P S U S TA I N A B I L I T Y R E P O R T 2 0 1 7
H&M GROUP SUSTAINABILITY REPORT 2017
OVERVIEW
OUR VISION & STR ATEGY / OUR AMBITIONS / OUR CHANGE-MAKING PROGR AMME / ENGAGING OUR CHANGEMAKERS / HOW WE ARE ORGANISED / INTERVIEW WITH HEAD OF SUSTAINABILITY

Our vision & strategy

                                                                                                                                                                                                                                  VISION & STRATEGY
                                                                                                                                                                                                                                                      VISION & STR ATEGY
                                                                                                                                                                                                                                                      100% LE ADING THE CHANGE
At H&M group, we believe that sustainable fashion and design should                                                                                       Our sustainability strategy
be available to everyone. Our vision is to lead the change towards a
circular and renewable fashion industry, while being a fair and equal                                                                                                           VISION
                                                                                                                                                                  Our vision is to lead the change
company. Using our size and scale, we are working to catalyse these                                                                                            towards circular and renewable fashion
                                                                                                                                                                while being a fair and equal company.
systemic changes across our own operations and the wider industry
to ensure that we can continue to create great fashion and design in a

                                                                                                                                                                                                                                                      100% CIRCU L AR & RENEWABLE
sustainable way for many generations to come.

This vision applies to every brand within                        relevant and successful in our rapidly                                                             100% LEADING THE CHANGE
H&M group. We all share the same val-                            changing world.                                                     100% CIRCUL AR & RENEWABLE                                   100% FAIR & EQUAL
ues, the same belief in fairness, diversity
and equality and the same ambition to                            We know that achieving our vision
lead the change towards a sustainable                            will not be easy, but we always strive                                                    CHANGE-MAKING PROGR AMME
fashion and design industry.                                     to embrace and tackle challenges. By

                                                                                                                                                                                                                                                      100% FAIR & EQUAL
                                                                                                                                  Our Change-Making Programme is at the heart of all our sustainability work. It includes
                                                                 continuing to work with and learn from                           goals, roadmaps, standards and methods that help us work towards our vision, enable
While we have a long and well-                                   stakeholders and industry experts who                                changemakers and ensure that sustainability is integrated in everything we do.
established history in sustainability,                           help set and shape our sustainability
projected population growth figures and                          work, we believe that we are in a strong
natural resource levels make it clear                            position to have a positive impact.
                                                                                                                                                                   ENGAGING CHANGEMAKERS
that a different approach to our work is                         Furthermore, by applying a science-

                                                                                                                                                                                                                                                      STANDARDS & POLICIES
needed, hence the creation of our latest                         based approach to our work, we can set
vision and strategy.                                             the best goals and roadmaps possible
                                                                 to drive positive change throughout our
But our vision is not only necessary from                        company and the wider industry.
a social and environmental perspective                                                                                                                 ALL COLLEAGUES                      ALL PARTNERS
– it also makes good business sense.
Long-term investments in sustainabil-                                                                                                                                    ALL CUSTOMERS
ity provide us with long-term business

                                                                                                                                                                                                                                                      HOW WE REPORT
opportunities that will keep H&M group

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OVERVIEW
OUR VISION & STR ATEGY / OUR AMBITIONS / OUR CHANGE-MAKING PROGR AMME / ENGAGING OUR CHANGEMAKERS / HOW WE ARE ORGANISED / INTERVIEW WITH HEAD OF SUSTAINABILITY

Our ambitions

                                                                                                                                                                                                          VISION & STRATEGY
                                                                                                                                                                                                                              VISION & STR ATEGY
                                                                                                                                                                                                                              100% LE ADING THE CHANGE
Our vision and strategy are built on three key ambitions
100% LEADING THE CHANGE                                              Our ambitions set a very high bar and
– Promote and scale innovation                                       that’s because we believe big change
– Drive transparency                                                 requires big ambitions. Solutions
– Reward sustainable actions                                         to many of the challenges facing the
                                                                     industry are simply not in place yet and
100% CIRCULAR & RENEWABLE                                            as such we need strong ambitions and

                                                                                                                                                                                                                              100% CIRCU L AR & RENEWABLE
– A circular approach to how products                               vision to help us find those solutions.
   are made and used                                                 It is our ambitions that give us the long-
– Use only recycled or other sustainably-                           term focus, direction and motivation                                                          100% LEADING
   sourced materials                                                 needed to really drive positive change                                                         THE CHANGE
– A climate positive value chain                                    across the industry.

100% FAIR & EQUAL
– Fair jobs for all
– Stewards for diversity and
   inclusiveness

                                                                                                                                                                                                                              100% FAIR & EQUAL
       “ Ahascompany  of our size and scale
                a responsibility as well as a great

                                                                                                                                                                                                                              STANDARDS & POLICIES
                                                                                                                                               100% CIRCULAR                      100% FAIR

              opportunity to lead the change                                                                                                    & RENEWABLE                        & EQUAL

              towards a more sustainable fashion
              and design industry.
                                                                           ”

                                                                                                                                                                                                                              HOW WE REPORT
                                                        ANNA GEDDA, HEAD OF SUSTAINABILITY, H&M GROUP

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OVERVIEW
OUR VISION & STR ATEGY / OUR AMBITIONS / OUR CHANGE-MAKING PROGR AMME / ENGAGING OUR CHANGEMAKERS / HOW WE ARE ORGANISED / INTERVIEW WITH HEAD OF SUSTAINABILITY

Our Change-Making Programme

                                                                                                                                                                                                                               VISION & STRATEGY
                                                                                                                                                                                                                                                   VISION & STR ATEGY
                                                                                                                                                                                                                                                   100% LE ADING THE CHANGE
While our strong vision and
ambitions help set the direction of our                                                     We turn our vision and strategy into action by working with:
sustainability strategy, it is our Change-
Making Programme that really turns
this strategy into action.

                                                                                                                                                                                                                                                   100% CIRCU L AR & RENEWABLE
As H&M group is comprised of multiple brands,
operating in a variety of functions across many                                               GOALS                               ROADMAPS                         STANDARDS AND              METHODS AND
different countries and cultures, we need a                                              Our vision and                       These are strategic                     POLICIES                 FOLLOW-UP
programme that systematically and effectively                                         ambitions are trans-                     plans, targets and                    Our sustainability          These are the
integrates sustainability into all aspects of our                                     lated into concrete                     actions for reaching                 standards ensure that      processes, routines
business. Our Change-Making Programme is our                                         goals at group, market                        our goals.                       we and our business      and methods we use
                                                                                      and function levels.                                                          partners operate in     to set goals and evalu-
solution.                                                                                                                      We have roadmaps                      a sustainable way.        ate our progress.
                                                                                       Each function and                     for specific sustainabil-
The programme brings together the goals, road-                                       market has ownership                    ity areas, for example                 They include our        They ensure that our
maps, standards and follow-up methods we need                                         of its own sustaina-                    energy, water, inno-                   Code of Ethics,          strategy is well-

                                                                                                                                                                                                                                                   100% FAIR & EQUAL
to work towards our vision, while leaving room for                                         bility goals.                        vation, waste and                     Sustainability         integrated across
                                                                                                                                  transparency.                    Commitment, Human           our business.
locally-tailored implementation and activities. This                                                                                                                Rights Policy, etc.
approach helps us make sustainability a relevant
part of all our colleagues’ daily working lives.                                                                                                                   See more on page 79 in
                                                                                                                                                                    Standards & policies.

                                                                                                                                                                                                                                                   STANDARDS & POLICIES
                                                                                                                                                    CULTURE AND VALUES

                                                                                                                                                                                                                                                   HOW WE REPORT
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OVERVIEW
OUR VISION & STR ATEGY / OUR AMBITIONS / OUR CHANGE-MAKING PROGR AMME / ENGAGING OUR CHANGEMAKERS / HOW WE ARE ORGANISED / INTERVIEW WITH HEAD OF SUSTAINABILITY

Engaging our changemakers

                                                                                                                                                                                        VISION & STRATEGY
                                                                                                                                                                                                            VISION & STR ATEGY
                                                                                                                                                                                                            100% LE ADING THE CHANGE
We believe that changemakers are the people who can help
H&M group achieve our vision of a sustainable fashion and
design industry.

STAKEHOLDERS & EXPERTS                                           OUR COLLEAGUES
Building and maintaining partnerships                            Everyone at H&M group should feel like

                                                                                                                                                                                                            100% CIRCU L AR & RENEWABLE
and dialogue with industry stakeholders                          they can contribute. We’re working to
and experts is crucial to achieving our                          enable all employees to use their talents,
vision. Stakeholders and experts provide                         skills and passions in their daily work to
us with direction and expertise that we                          lead the change our industry needs.
can then use to develop our long-term
goals and action plans. They also work                           OUR CUSTOMERS
together with us to address specific                             We are working to inspire our customers
challenges and help us to find the best                          to make more sustainable choices and
solutions.                                                       to join our sustainability mission. Our
                                                                 size and scale means that we have many

                                                                                                                                                                                                            100% FAIR & EQUAL
BUSINESS PARTNERS                                                customers, so every single action, no
We build rewarding partnerships with                             matter how small, makes a huge collec-
our business partners and are working                            tive difference.
with them to raise environmental and
social standards across our industry.

     “ Achieving

                                                                                                                                                                                                            STANDARDS & POLICIES
                  systemic change is not
       something that can be done alone.
       Collaboration is essential.
                                  ”
              HENDRIK ALPEN, SUSTAINABILITY ENGAGEMENT MANAGER, H&M GROUP

                                                                                                                                                                                                            HOW WE REPORT
                                                                                                                                                                   & Other Stories.

H & M G R O U P S U S TA I N A B I L I T Y R E P O R T 2 0 1 7                                                                                                              13 OF 100
OVERVIEW
OUR VISION & STR ATEGY / OUR AMBITIONS / OUR CHANGE-MAKING PROGR AMME / ENGAGING OUR CHANGEMAKERS / HOW WE ARE ORGANISED / INTERVIEW WITH HEAD OF SUSTAINABILITY

How we are organised

                                                                                                                                                                                                                              VISION & STRATEGY
                                                                                                                                                                                                                                                  VISION & STR ATEGY
                                                                                                                                                                                                                                                  100% LE ADING THE CHANGE
As our Change-Making Programme illustrates, to drive long-                                                                                                     Organisational chart
term change throughout our entire value chain, it is crucial
that sustainability play an active role in the daily work of all our
colleagues and across every function within H&M group.                                                                                                             BOARD OF DIRECTORS

Reporting directly to our CEO, our                               In our 20 production markets, we employ

                                                                                                                                                                                                                                                  100% CIRCU L AR & RENEWABLE
Head of Sustainability is responsible for                        more than 150 people working specifi-
the implementation of our sustainability                         cally in sustainability. These colleagues
vision and strategy together with the                            work directly with our business partners                                        Bi-annual
                                                                                                                                                performance
Executive Management Team. Twice                                 to assess their performance against
                                                                                                                                                 reporting
a year, our CEO, CFO and Head of Sus-                            our Sustainability Commitment (which                                                                      CEO
tainability review the progress made                             replaced our Code of Conduct in 2016 –
and report performance (against key                              read more on page 82) and support them
sustainability indicators) to our Board                          in making improvements through capac-
of Directors.                                                    ity building programmes and activities.

                                                                                                                                                                                                                                                  100% FAIR & EQUAL
Our global sustainability department                             Each function within each sales market
consists of more than 30 experts respon-                         then additionally sets its own measur-
sible for setting strategies, targets, goals,                    able sustainability goals and activities                                       HEAD OF                                   JOINT GROUP FUNCTIONS
policies and follow-up procedures to                             based on the strategy set by our global                                     SUSTAINABILITY                                     AND BR ANDS
ensure that our sustainability work is                           sustainability department. Within each
                                                                                                                                                                           Define
carried out systematically.                                      sales market, we employ a dedicated                                                                priorities annually

                                                                                                                                                                                                                                                  STANDARDS & POLICIES
                                                                 sustainability manager who drives the                                                              based on business
                                                                 implementation of our strategy across                                                               intelligence and
                                                                 the entire market to engage all colleagues                                                             innovation
                                                                                                                                                                          process
                                                                 and customers.
                                                                                                                                                 GLOBAL                                          LOCAL
                                                                                                                                              SUSTAINABILITY                                 SUSTAINABILITY
                                                                                                                                               DEPARTMENT                                      FUNCTIONS

                                                                                                                                                                                                                                                  HOW WE REPORT
H & M G R O U P S U S TA I N A B I L I T Y R E P O R T 2 0 1 7                                                                                                                                                    14 OF 100
OVERVIEW
OUR VISION & STR ATEGY / OUR AMBITIONS / OUR CHANGE-MAKING PROGR AMME / ENGAGING OUR CHANGEMAKERS / HOW WE ARE ORGANISED / INTERVIEW WITH HEAD OF SUSTAINABILITY

Interview with Head of Sustainability

                                                                                                                                                                                                                      VISION & STRATEGY
                                                                                                                                                                                                                                          VISION & STR ATEGY
                                                                                                                                                                                                                                          100% LE ADING THE CHANGE
How have H&M group’s new sustainability                                                                                   innovation. Finding innovations to fill      I don’t believe that providing fashion on
vision and strategy been received since                                                                                   the technological gaps we have through-      a large scale and working in a sustainble
their launch last year?                                                                                                   out our supply chain and bringing these      way needs to be a contradiction. Like
I think our new sustainability strategy                                                                                   new innovations to market fast enough        many other industries, there are inherent
has been well received. As it was devel-                                                                                  are two of our biggest challenges.           challenges, but for truly systemic change
oped with the support and guidance of                                                                                                                                  to take place, industry-wide collabora-
leading industry experts with a great                                                                                     What are the three main priorities           tion is essential. At H&M group, we are
knowledge of the current sustainability                                                                                   going forward?                               positive that by working to achieve a

                                                                                                                                                                                                                                          100% CIRCU L AR & RENEWABLE
landscape, we believe that it resonates                                                                                   Accelerating the move towards full           100% circular and renewable value chain,
with many key challenges and opportu-                                                                                     circularity is one of our main priori-       that treats people in a fair and equal way
nities that face the fashion industry.                                                                                    ties. Here our focus is on the continued     and makes it possible for our customers
                                                                                                                          quest for more recycled and sustainably      to make more sustainable choices, we
Since the launch, our focus has been                                                                                      sourced materials, improved design, pro-     can lead the way to this systemic change
on the long-term implementation of the                                                                                    duction processes and product lifespan.      and provide truly sustainable fashion to
strategy across the entire H&M group.                                                                                     Innovation will be key to achieving our      all our customers around the world.
But alongside our work towards achiev-                                                                                    100% circular ambition.
ing our key long-term goals, we are also                                                                                                                               Is H&M group afraid to fail?
continuously adding short-term goals                                                                                      On the social side, our main priorities      We are, of course aware that our strat-

                                                                                                                                                                                                                                          100% FAIR & EQUAL
and milestones to really help drive our                                                                                   are to deliver the goals we set for 2018.    egy is very ambitious and the solutions
vision and ambitions forward.                                                                                             Looking beyond this, we will focus on        needed to achieve some of our goals are
                                                                                                                          maintaining the stability of our produc-     simply not in place yet. However, a com-
What are the biggest challenges to                                                                     Anna Gedda.        tion markets to ensure the provision of      pany of our scale and reach has a respon-
fulfilling your goals?                                                                                                    good, fair opportunities for workers. Our    sibility as well as a great opportunity to
The main challenges we face are not                                                                                       third priority is to further develop cus-    lead the change towards a more sus-

                                                                                                                                                                                                                                          STANDARDS & POLICIES
specific to H&M group, they are indus-                           and GFA, systemic change takes time.                     tomer engagement around sustainability.      tainable industry. The evidence is clear:
try-wide. Therefore, solutions cannot                            It is a complex undertaking that involves                We will, for example, continue our com-      our planet is running out of natural
be reached by us alone – they all require                        multiple players.                                        mitment to the SAC and the Higg Index,       resources and our population is growing
industry collaboration. For example, our                                                                                  as well as exploring other solutions.        exponentially so we must be bold and
goal to become 100% fair and equal is                            Similarly, on the environmental side,                                                                 ambitious in our work. Of course, there
very much dependent on industry collab-                          our core goals – to become 100% circular                 H&M group is one of the world’s leading      is always the risk of some failures along
oration. While we are seeing good pro-                           and climate positive – depend heavily                    design companies and to many, associated     the way, but I would rather fail having
gress with industrial relations and wage                         on collaborations that will further the                  with fast fashion. Can a fast fashion com-   pushed the boundaries as far as possible

                                                                                                                                                                                                                                          HOW WE REPORT
systems through our work with ACT                                development of new technology and                        pany ever really be sustainable?             than having only done what’s expected.

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OVERVIEW   VISION & STR ATEGY   100% LE ADING THE CHANGE   100% CIRCU L AR & RENEWABLE   100% FAIR & EQUAL   STANDARDS & POLICIES   HOW WE REPORT
                                100% LEADING THE CHANGE
                                                                                                                                               16 OF 100
                                                                                                                                        H&M.
                                                   100% LEADING
                                                    THE CHANGE

                                                                                                                                               H & M G R O U P S U S TA I N A B I L I T Y R E P O R T 2 0 1 7
OVERVIEW
KEY FACTS & FIGURES / 100% LEADING THE CHANGE EXPL AINED / INNOVATION / TR ANSPARENCY / REWARDING SUSTAINABLE ACTIONS

                     100% Leading the Change: Key facts & figures 2017

                                                                                                                                                                                                                          VISION & STR ATEGY
                                                                                                                                                                                                100% LEADING THE CHANGE
                                                                                                                                                                                                                          100% LE ADING THE CHANGE
                                                                          In addition to all tier 1
                                                                       supplier factories, the Higg
                                                                      Index facility module is now
                                                                       applied to 60% of our total
                                                                         tier 2 supplier factories.

                                                                                                                                                                                                                          100% CIRCU L AR & RENEWABLE
                                                                                                                              In 2017, we trialled a new
                                                                                                                           customer-facing transparency
                                                                                                                          layer for the launch of our H&M
                                                                                                                         Conscious Exclusive Collection on
          Innovation is the key to                                      H&M group launched a new                         hm.com. This allowed customers
         achieving full circularity.                                    brand called ARKET in 2017.                     to see where garments were made,

                                                                                                                                                                                                                          100% FAIR & EQUAL
      That’s why we are supporting                                    The brand is all about well-made,                    what materials were used and
       ground-breaking companies                                     sustainable design, while providing                 who made them. This feature runs
     such as re:newcell, Worn Again                                   customers with transparency of                        again for the 2018 Conscious
             and Treetotextile.                                           the origin of its products.                            Exclusive Collection.

                                                                                                                                                                                                                          STANDARDS & POLICIES
                                                Our supplier list includes the details of
                                             tier 1 factories for 98.5% of our products and
                                                tier 2 factories for 60% of our products.
                                                                                                                             OUR LEADING THE CHANGE AMBITION
                                                                                                                             C O N T R I B U T E S T O S D G 1 2 A N D S D G 1 7.

                                                                                                                                                                                                                          HOW WE REPORT
H & M G R O U P S U S TA I N A B I L I T Y R E P O R T 2 0 1 7                                                                                                                      17 OF 100
OVERVIEW
KEY FACTS & FIGURES / 100% LEADING THE CHANGE EXPL AINED / INNOVATION / TR ANSPARENCY / REWARDING SUSTAINABLE ACTIONS

                     100% Leading the Change explained

                                                                                                                                                                                                                        VISION & STR ATEGY
                                                                                                                                                                                              100% LEADING THE CHANGE
                                                                                                                                                                                                                        100% LE ADING THE CHANGE
100% Leading the Change is our
commitment to act as a catalyst for
change across the entire fashion
industry. By bringing partners together
to identify challenges and share
innovative ideas and solutions, we

                                                                                                                                                                                                                        100% CIRCU L AR & RENEWABLE
want to push boundaries and break
new ground to improve the way our
                                                                                                                                                                                    COS.
products are designed and made.

This leadership approach is core to our strategy
and will empower us to fulfil our ambitions to
become both a 100% Circular & Renewable and a
100% Fair & Equal business.

                                                                                                                                                                                                                        100% FAIR & EQUAL
To lead the change across our own operations and
those of the industry, we are working to catalyse
three core focus areas:

– Innovation

                                                                                                                                                                                                                        STANDARDS & POLICIES
– Transparency
– Rewarding sustainable actions

                                                                                                                                                                                                                        HOW WE REPORT
                                                                                                    Our collections are created by our own designers, patternmakers and buyers.    H&M.

H & M G R O U P S U S TA I N A B I L I T Y R E P O R T 2 0 1 7                                                                                                                    18 OF 100
OVERVIEW
KEY FACTS & FIGURES / 100% LEADING THE CHANGE EXPL AINED / INNOVATION / TR ANSPARENCY / REWARDING SUSTAINABLE ACTIONS

                     Innovation

                                                                                                                                                                                                                                                  VISION & STR ATEGY
                                                                                                                                                                                                                        100% LEADING THE CHANGE
                                                                                                                                                                                                                                                  100% LE ADING THE CHANGE
We believe that innovation is the key
to achieving industry-wide change.                                               Case study: Interview with Nanna Andersen – Head of H&M CO:LAB
Many challenges that the industry currently faces                                What is H&M CO:LAB?                                                                    Worn Again are developing a
can and will be overcome through new innovation.                                 H&M CO:LAB is a business area within                                                   ground-breaking chemical separation
For example, there is currently no viable technology                             The Laboratory. The Laboratory is a                                                    and recycling technology for blended
for recycling blended fibres on a large scale, there-                            think-tank within H&M group that works                                                 fibre textiles.
fore, we simply cannot make new products from as                                 to take an outside-in perspective on

                                                                                                                                                                                                                                                  100% CIRCU L AR & RENEWABLE
many old products as we would like to. But we are                                our business and challenge our think-                                                  re:newcell have developed a unique
working with experts who are developing technol-                                 ing. H&M CO:LAB invests in companies                                                   technology for recycling textiles made
ogies to tackle this and when a scalable solution                                that can add value to our business. We                                                 from cellulosic fibres (such as cotton,
comes to fruition, it will transform the way the entire                          look to help these companies thrive                                                    lyocell and viscose) into a pulp, which is
industry works with materials.                                                   and reach their vision. H&M CO:LAB                                                     used as input for making fully circular
                                                                                 invests in three areas: sustainable fash-                                              viscose or lyocell.
At H&M group, we are working to identify, invest in                              ion – that develop the technologies the
and promote all types of sustainable innovations from                            industry needs to become fully circular                                                Treetotextile are developing a new
digital systems that provide traceability information                            and sustainable, innovative business                                                   sustainable process to make textile
to new energy-saving solutions. We want to use our                               models – companies that explore how                                                    fibres from forest raw material in a

                                                                                                                                                                                                                                                  100% FAIR & EQUAL
size and global reach to take sustainable innovations                            consumers will shop fashion in the                                                     sustainable way.
to scale because for us, innovation means transfor­                              future and enablers – companies that                                Nanna Andersen.
mation and that is exactly what our industry needs.                              provide technology and solutions that                                                  Thread is a marketplace focusing on
                                                                                 makes us better. By investing in these                                                 personalization. By combining tips from
           2017 PROGRESS & LEARNINGS                                             types of companies, we support the          By doing this we learn and challenge       real stylists with machine-learning algo-
           INNOVATION                                                            long-term growth of H&M group.              ourselves in a way that, besides provid-   rithms, Thread reduces the millions of

                                                                                                                                                                                                                                                  STANDARDS & POLICIES
     • We invested in a new innovation company called                                                                        ingthe opportunity for financial return,   style options available by only suggest-
     re:newcell which has developed a new technology                             How does H&M CO:LAB decide what             can improve and develop our business       ing things that are perfect for you.
     for recycling materials.                                                    projects to invest in?                      in a positive way.
                                                                                 H&M CO:LAB only invests when we                                                        Sellpy is a service helping people
     • In 2017, the HKRITA innovation and H&M                                    think we can make a big difference for      Which projects are H&M CO:LAB              to easily sell their unwanted clothes,
     Foundation saw further positive developments                                the companies we invest in with our         currently supporting?                      giving fashion a second life.
     (read more on page 35). Funding for the project is                          knowledge and resources, and always in      We currently support around ten
     made possible thanks to the surplus funds generated                         collaboration with the existing business.   companies including:

                                                                                                                                                                                                                                                  HOW WE REPORT
     from H&M’s garment collecting scheme.

H & M G R O U P S U S TA I N A B I L I T Y R E P O R T 2 0 1 7                                                                                                                                              19 OF 100
OVERVIEW
KEY FACTS & FIGURES / 100% LEADING THE CHANGE EXPL AINED / INNOVATION / TR ANSPARENCY / REWARDING SUSTAINABLE ACTIONS

                                                                                                                                                                                                                                                  VISION & STR ATEGY
                                                                                                                                                                                                                        100% LEADING THE CHANGE
                                                                                                                                                                                                                                                  100% LE ADING THE CHANGE
     Case study:                                                  WINNERS OF THE GLOBAL
     H&M Foundation’s Global                                      CHANGE AWARD 2017:
                                                                  €300,000: Grape Leather – using leftovers
     Change Award                                                 from winemaking to create fully vegetal
     The Global Change Award, initiated by the                    leather (Italy)
     non-profit H&M Foundation in 2015, is one of
     the world’s biggest challenges for early stage               €250,000: Solar Textiles – harvesting

                                                                                                                                                                                                                                                  100% CIRCU L AR & RENEWABLE
     innovation, calling for ideas that will help pro-            the sun’s energy to make fashion fabrics
     tect the planet by accelerating the shift from               (US/Switzerland)
     a linear to a circular fashion industry.
                                                                  €150,000: Content Thread –facilitating
     Every year, a panel of international experts                 sorting and recycling of clothes using
     helps to select five winning innovations,                    a digital thread (US/UK)
     and the global public distributes a €1 million
     grant between the winners through an                         €150,000: Denim-dyed Denim – letting
     online vote. The winners also gain access to                 used denim give colour to new denim
                                                                                                                                                                                Global Change Award 2017 winners.
     a one-year innovation accelerator provided                   (Australia)

                                                                                                                                                                                                                                                  100% FAIR & EQUAL
     by H&M Foundation, Accenture and KTH
     Royal Institute of Technology in Stockholm,                  €150,000: Manure Couture – making cow                 Global Change Award is calling for          equity or intellectual property rights in
     offering tailor-made support to further                      manure-based fabric (the Netherlands)                 game-changing ideas that can help           the competing innovation ideas.
     develop their innovations.                                                                                         reinvent the entire industry. Neither H&M
                                                                                                                        Foundation nor H&M group takes any          Learn more at globalchangeaward.com
     “Now in its third year, the Global Change

                                                                  “ The

                                                                                                                                                                                                                                                  STANDARDS & POLICIES
     Award has really become a positive force
     in the fashion industry. It has proven to be
     a true catalyst for the winners, giving them
                                                                         Global Change Award has opened so many doors.
     support and access to a valuable network                       If we hadn’t won the award, I think it would have taken
                                                                                                                             ”
     so they can bring their innovations to the
     market quicker and better prepared,” says                      us at least five years to reach the point we’re at today.
                                                                  
     Karl-Johan Persson, Board member of H&M
     Foundation and CEO of H&M group.                                                                                              ANN RUNNEL, ONE OF THE GLOBAL CHANGE AWARD WINNERS

                                                                                                                                                                                                                                                  HOW WE REPORT
H & M G R O U P S U S TA I N A B I L I T Y R E P O R T 2 0 1 7                                                                                                                                              20 OF 100
OVERVIEW
KEY FACTS & FIGURES / 100% LEADING THE CHANGE EXPL AINED / INNOVATION / TR ANSPARENCY / REWARDING SUSTAINABLE ACTIONS

                     Transparency

                                                                                                                                                                                                                                             VISION & STR ATEGY
                                                                                                                                                                                                                   100% LEADING THE CHANGE
                                                                                                                                                                                                                                             100% LE ADING THE CHANGE
Transparency is key to building trust and credibility along
our supply chain and empowering our business partners and                                                                            An example of the tiers in a supply chain
customers to make more sustainable choices. Transparency
means knowing how and where our products are made and
sharing that information wherever possible. As such, supply chain                                                                                                       H&M
                                                                                                                                                                       GROUP
transparency creates greater accountability for both ourselves

                                                                                                                                                                                                                                             100% CIRCU L AR & RENEWABLE
and our business partners, allowing us to pinpoint priorities, set
better goals, take smarter actions and communicate confidently
about our progress.                                                                                                                                                1

At H&M group, we believe that greater                            of 2016, it also includes tier 2 factories
                                                                                                                                                                   2
transparency will help lead the change                           which account for 60% of our products.
towards a more sustainable industry and                          We are working towards greater trans-

                                                                                                                                                                                                                                             100% FAIR & EQUAL
therefore, we are working with transpar-                         parency across our tier 2 and tier 3 sup-
ency in two key ways:                                            pliers as well, however, the challenge lies
                                                                 in the fact that in most instances neither
                                                                                                                                                                   3
– We share information in a                                     we nor our competitors have a direct                                                                          TIER 1
   transparent way.                                              business relationship with those tier 2                                                                       Garment production
– We collaborate on industry-wide                               and tier 3 suppliers.
                                                                                                                                                                               TIER 2

                                                                                                                                                                                                                                             STANDARDS & POLICIES
   transparency tools.                                                                                                                                                         Fabric production
                                                                 In spite of these challenges, we believe
                                                                                                                                                                               TIER 3
1) WE SHARE INFORMATION IN                                       that we can do more. We want our cus-                                                             4
                                                                                                                                                                               Yarn spinning
A TRANSPARENT WAY                                                tomers to have faith in the operations we
                                                                                                                                                                               TIER 4
In 2013, we were one of the first fashion                        run and the products we create, so we are              Different supply chains involve
                                                                                                                        different numbers and levels of tiers.                 Raw material sold
retailers to make our supplier list cus-                         working to build transparency layers into              The purpose of this illustration is to                 at wholesale
tomer-facing. Our supplier list includes                         our brands that go beyond our supplier                 show the complexity of supply chains,
                                                                                                                        however this is purely an example of       5           TIER 5
tier 1 manufacturing supplier factories                          list i.e. sharing more than business name              one type of supply chain and is not

                                                                                                                                                                                                                                             HOW WE REPORT
                                                                                                                        intended to represent all supply chains.               Raw material sourcing
for 98.5% of H&M group products. As a                            and address details.

H & M G R O U P S U S TA I N A B I L I T Y R E P O R T 2 0 1 7                                                                                                                                         21 OF 100
OVERVIEW
KEY FACTS & FIGURES / 100% LEADING THE CHANGE EXPL AINED / INNOVATION / TR ANSPARENCY / REWARDING SUSTAINABLE ACTIONS

                                                                                                                                                                        VISION & STR ATEGY
                                                                                                                                              100% LEADING THE CHANGE
                                                                                                                                                                        100% LE ADING THE CHANGE
         2017 PROGRESS & LEARNINGS                               Case study: How does
         CUSTOMER-FACING
     TRANSPARENCY                                                ARKET work with
     • In 2017, we trialled a new type of                        transparency?
     customer-facing transparency for our
     H&M Conscious Exclusive Collection on                       With transparency as a core pillar of its
     hm.com. This feature allowed customers                      business model, ARKET is taking an industry

                                                                                                                                                                        100% CIRCU L AR & RENEWABLE
     to see where garments were made, what                       lead with a new and innovative way of
     materials were used and who made them.                      making supplier information customer-
     This feature will be offered again for the                  facing. Using a simple search function,
     2018 Conscious Exclusive Collection.                        customers visiting the ARKET website, are
                                                                 immediately provided with the option to
     • In 2017, we launched ARKET, the                           select and buy products based upon the
     latest brand within H&M group. Built                        products’ country of origin. As such, the tier
     with principles of transparency and                         1 supplier details of each individual ARKET
     sustainability at its core, the brand allows                product are presented to the customer
     customers to search all ARKET products                      directly alongside the product itself. Details

                                                                                                                                                                        100% FAIR & EQUAL
     on its website based on the country of                      listed include supplier name and produc-
     production and material type.                               tion unit. Selected products also provide
                                                                 customers with supplier stories, giving them
                                                                 an in-depth look at the facility responsible
                                                                 for making the product. Not only does this
                                                                 level of transparency increase awareness

                                                                                                                                                                        STANDARDS & POLICIES
                                                                 amongst our customers, it also provides
                                                                 suppliers with recognition for their contri­
                                                                 bution to the brand’s products.

                                                                                                                                                                        HOW WE REPORT
                                                                                                                        ARKET Brussels.

H & M G R O U P S U S TA I N A B I L I T Y R E P O R T 2 0 1 7                                                                    22 OF 100
OVERVIEW
KEY FACTS & FIGURES / 100% LEADING THE CHANGE EXPL AINED / INNOVATION / TR ANSPARENCY / REWARDING SUSTAINABLE ACTIONS

                                                                                                                                                                                                                                                        VISION & STR ATEGY
                                                                                                                                                                                                                              100% LEADING THE CHANGE
                                                                                                                                                                                                                                                        100% LE ADING THE CHANGE
2) WE COLLABORATE ON INDUSTRY-
WIDE TRANSPARENCY TOOLS                                                                   The Higg Index                       MEASURING ENVIRONMENTAL, SOCIAL & LABOUR IMPACTS
In 2010, H&M group joined the Sustaina-
ble Apparel Coalition (SAC) as a founding
member. The SAC is an industry-wide
alliance between brands and stakehold-
                                                                                                                                                HIGG
ers who are all working towards a more                                     BUSINESS PARTNERS                                                                                                       CUSTOMERS
                                                                                                                        Total score           FACILITY           Total score
transparent and therefore sustainable                                        & ALL BRANDS                                                     MODULE

                                                                                                                                                                                                                                                        100% CIRCU L AR & RENEWABLE
fashion industry.

Since its inception, the SAC has been
focusing on the ground-breaking devel-
                                                                                                                                               HIGG
opment of the Higg Index, a measure-                                                                                    Total score           BRAND              Total score
ment tool which assesses sustainability                                                                                                       MODULE
performance. Using self-assessment and
verification tools, the Higg Index meas-
ures the environmental, social and/or
labour impacts that are associated with

                                                                                                                                                                                                                                                        100% FAIR & EQUAL
                                                                                                                                               HIGG
a brand, a facility (i.e. a factory) or a                                                                                                    PRODUCT             Total score
                                                                          IMPROVE SUSTAINABLE                           Total score                                                                MAKE MORE
product and generates a holistic score.                                                                                                      MODULE
                                                                               PRACTICES                                                                                                       SUSTAINABLE CHOICES
This score adds comparability and
enables areas for improvement to be
readily identified and addressed.

                                                                                                                                                                                                                                                        STANDARDS & POLICIES
The Higg Index is an industry first – it is                      The brand module of the Higg Index                          The ambition is for the Higg Index to                    2017 PROGRESS & LEARNINGS
currently the only assessment tool that                          is currently used internally while the                      become a customer-facing, universal                      TRANSPARENCY TOOLS
provides transparency information of                             product module is still in development.                     benchmark for sustainability performance          • In addition to all tier 1 factories, the
this nature and detail and H&M group                             Once the product module is complete, we                     assessment across all brands. This will           Higg Index facility module is now applied
were one of the first global fashion com-                        will be able to assess the sustainability                   allow customers to compare the perfor-            to 60% of our total tier 2 factories.
panies to implement it. The facility mod-                        performance of a single product within                      mance of our products to those of our
ule was applied to all our tier 1 suppliers                      H&M group.                                                  competitors. We see this as healthy com-          • In 2017, we began to use the brand
in 2015. We also began using the assess-                                                                                     petition that is needed to drive real pro-        module of the Higg Index internally.

                                                                                                                                                                                                                                                        HOW WE REPORT
ment tool on tier 2 factories in 2015.                                                                                       gress in transparency across the industry.

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KEY FACTS & FIGURES / 100% LEADING THE CHANGE EXPL AINED / INNOVATION / TR ANSPARENCY / REWARDING SUSTAINABLE ACTIONS

                     Rewarding sustainable actions

                                                                                                                                                                                                                                                                 VISION & STR ATEGY
                                                                                                                                                                                                                                       100% LEADING THE CHANGE
                                                                                                                                                                                                                                                                 100% LE ADING THE CHANGE
We believe that it is important to encourage and empower
sustainable actions throughout our value chain. We know that                                                            Case study: Rewarding                                  each other to see who can collect the
                                                                                                                                                                               biggest volume of unwanted garments
incentives and reward systems help to achieve long-term, positive                                                       sustainable actions at                                 through the in-store H&M, garment col-
behavioural changes. Therefore, we want to work with reward                                                             H&M UK & Ireland                                       lecting scheme. The winning store is then
                                                                                                                                                                               selected, announced and rewarded with
systems that engage our changemakers and accelerate progress                                                            To encourage colleagues to take an                     a trip to visit the I:CO recycling facility in
towards our sustainability vision.                                                                                      active role in our sustainability vision, the          Germany. Not only does the competition

                                                                                                                                                                                                                                                                 100% CIRCU L AR & RENEWABLE
                                                                                                                        H&M UK & Ireland management team                       help H&M group work towards its goal to
                                                                                                                        runs a garment collecting competition                  collect 25,000 tonnes of unwanted tex-
                                                                                                                        across all UK & Ireland stores every quar-             tiles each year by 2025, it also provides
                                                                                                                        ter. As such, store teams compete against              colleagues with a deep understanding
To achieve this, we have developed and                           COLLEAGUES                                                                                                                           of how garment
will continue to use different reward                            We ensure that all our colleagues are                                                                                                recycling works and
systems that are tailored to the needs of                        encouraged to contribute to our sus-                                                                                                 why it is so impor-
three different groups of changemakers:                          tainability work and we seek to reward                                                                                               tant. Colleagues can
– Business partners                                              them for doing so. We implement and                                                                                                  then return to their
– Colleagues                                                     measure sustainability goals at every                                                                                                stores with a greater

                                                                                                                                                                                                                                                                 100% FAIR & EQUAL
– Customers                                                      level and across all functions within                                                                                                understanding of how
                                                                 H&M group and crucially, this includes                                                                                               we work with I:CO and
BUSINESS PARTNERS                                                goals set at an executive level. Sustain-                                                                                            a greater belief in our
Using the Sustainable Impact Partner-                            ability goals are included in our overall                                                                                            sustainability work.
ship Programme (SIPP), we are working                            management evaluation process and we                                                                                                 Rewarding colleagues
with our business partners to raise their                        regularly follow up on function specific                                                                                             in this way has proven

                                                                                                                                                                                                                                                                 STANDARDS & POLICIES
environmental and social performance.                            goals. Through a range of activities and                                                                                             to be very successful
This involves rewarding high-achieving                           strategies, we encourage colleagues to                                                                                               in the UK & Ireland
and ambitious partners with more                                 contribute to change in the workplace                                                                                                – it builds loyalty,
orders, training opportunities and                               and in their communities.                                                                                                            pride and trust while
long-term contracts. This helps improve                                                                                                                                                               increasing knowledge
environmental and social standards                                                                                                                                                                    and engagement in
across our whole industry. Read more                                                                                                                                                                  H&M group's sustaina-
about SIPP in our Standards & policies                                                                                   UK colleagues visiting the ICO facility in Germany.                          bility vision.

                                                                                                                                                                                                                                                                 HOW WE REPORT
chapter on page 83.

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OVERVIEW
KEY FACTS & FIGURES / 100% LEADING THE CHANGE EXPL AINED / INNOVATION / TR ANSPARENCY / REWARDING SUSTAINABLE ACTIONS

                                                                                                                                                                                                                                            VISION & STR ATEGY
                                                                                                                                                                                                                  100% LEADING THE CHANGE
                                                                                                                                                                                                                                            100% LE ADING THE CHANGE
CUSTOMERS
We know that we have a responsibility to                                                                                Fact box: Rewarding                     & OTHER STORIES – As well as collect-
take sustainable actions on behalf of our                                                                                                                       ing customers’ unwanted textiles, which
customers, but we also need active par-                                                                                 customers for garment                   are also reworn, reused or recycled via
ticipation from our customers to really                                                                                 collecting                              the H&M group’s partnership with I:CO –
achieve our 100% Circular & Renewable                                                                                                                           & Other Stories also encourages custom-
ambition and drive this change across                                                                                   H&M – At all H&M stores around the      ers to return empty beauty containers for
the whole industry. By providing our                                                                                    world, customers are encouraged to      recycling. In return for either sustainable

                                                                                                                                                                                                                                            100% CIRCU L AR & RENEWABLE
customers with optional incentives for                                                                                  bring unwanted garments and textiles,   action, customers are rewarded with 10%
sustainable actions, we can increase cus-                                                                               by any brand and in any condition,      off their next in-store purchase.
tomer interest and knowledge in sustain-                                                                                to be recycled, reworn or reused via
ability and create positive behavioural                                                                                 the brand’s in-store garment collect-   CHEAP MONDAY – By 2020, 5% of all
change. We therefore use incentives to                                                                                  ing scheme. In return, customers are    cotton used in Cheap Monday denim will
help encourage our customers to rewear,                                                                                 rewarded with a voucher that they can   be recycled cotton from post-consumer
                                                                                                   Cheap Monday.
reuse and recycle unwanted clothes                                                                                      use towards their next H&M purchase.    waste. To encourage customers to recycle
wherever possible. We reward customers                                                                                                                          with them, Cheap Monday offers them
for sustainable actions in several ways                                                                                                                         10% off their next purchase every time
across H&M group brands.                                                                                                                                        they hand in a bag of unwanted textiles.

                                                                                                                                                                                                                                            100% FAIR & EQUAL
                                                                                                                                                                Unwanted textiles are reused or recycled.

                                                                                                                                                                MONKI – All Monki stores around the
                                                                                                                                                                world offer an in-store garment recycling
                                                                                                                                                                service. Customers are rewarded with
                                                                                                                                                                a “10% off your next purchase” voucher

                                                                                                                                                                                                                                            STANDARDS & POLICIES
                                                                                                                                                                when they bring a bag of unwanted tex-
                                                                                                                                                                tiles into any Monki store.

                                                                                                                                                                                                                                            HOW WE REPORT
                                                                   & Other Stories.

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OVERVIEW   VISION & STR ATEGY   100% LE ADING THE CHANGE   100% CIRCU L AR & RENEWABLE   100% FAIR & EQUAL   STANDARDS & POLICIES   HOW WE REPORT
                                                           100% CIRCULAR & RENEWABLE
                                                                                                                                               26 OF 100
                                                                                                                                        H&M.
                                               100% CIRCULAR
                                                & RENEWABLE

                                                                                                                                               H & M G R O U P S U S TA I N A B I L I T Y R E P O R T 2 0 1 7
OVERVIEW
KEY FACTS & FIGURES / KPIs AND GOALS / 100% CIRCUL AR & RENEWABLE EXPL AINED / BECOMING 100% CIRCUL AR / BECOMING CLIMATE POSITIVE

                     100% Circular & Renewable: Key facts & figures 2017

                                                                                                                                                                                                                                                              VISION & STR ATEGY
                                                                                                                                                                                                                                                              100% LE ADING THE CHANGE
                                                                                          We’ve set a new chemical                                            T O TA L S H A R E
                                                                                                                                                              O F R E CYC L E D O R
                                                                                         vision and roadmap to lead                                           O T H E R S U S TA I N A B LY-
                                                                                                                                                              S O U R C E D M AT E R I A L S            100%
                                                                                           the change towards safe                                                                                     GOAL 2030
                                                                                          products and a toxic-free
                                                                                                fashion future.

                                                                                                                                                                                                                                  100% CIRCULAR & RENEWABLE
                                                                                                                                                                                                                                                              100% CIRCU L AR & RENEWABLE
           We are the biggest buyer                                                                                                                                                                       35%
               of Better Cotton,*
          and the second biggest user                                                                                                                                                          26%
             of organic cotton and                                                                                                                                                  20%
               recycled cotton.**                                                                                                                                         13%
                                                                                                                                                                11%
                                                                                                   Our cleaner

                                                                                                                                                                                                                                                              100% FAIR & EQUAL
               In 2017, we reduced                                                          production programmes
             emissions from our own                                                               have reduced
            operations by a further 21%                                                      water consumption by

                                                                                                                                                               13

                                                                                                                                                                          14

                                                                                                                                                                                     15

                                                                                                                                                                                                16

                                                                                                                                                                                                           17
                                                                                                                                                             20

                                                                                                                                                                                                         20
                                                                                                                                                                        20

                                                                                                                                                                                   20

                                                                                                                                                                                               20
                compared to 2016.                                                               7.82 million m3.

                                                                                                                                                                                                                                                              STANDARDS & POLICIES
                                                 We’ve collected 17,771 tonnes of textiles through
                                                  our garment collecting initiative for reuse and
                                                recycling. That’s 12% more than last year, and the
                                                         equivalent of 89 million t-shirts.
                                                                                                                                                            O U R C I R C U L A R & R E N E WA B L E A M B I T I O N

                                                                                                                                                                                                                                                              HOW WE REPORT
                                                                                                                                                      C O N T R I B U T E S T O S D G 6 , S D G 7, S D G 1 2 & S D G 1 3 .
   *Source: Better Cotton Initiative’s (BCI) latest annual report (2016).**Source: Textile Exchange Preferred Fiber & Materials Market Report 2017.

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OVERVIEW
KEY FACTS & FIGURES / KPIs AND GOALS / 100% CIRCUL AR & RENEWABLE EXPL AINED / BECOMING 100% CIRCUL AR / BECOMING CLIMATE POSITIVE

                     100% Circular & Renewable: KPIs and goals

                                                                                                                                                                                                                                VISION & STR ATEGY
                                                                                                                                                                                                                                100% LE ADING THE CHANGE
Goal-setting is an ongoing process. We work with experts – both internally and externally – and follow a science-based approach to define targets and actions wherever possible.
The below KPIs and goals represent the initial key milestones along the way to achieving our ambition to become 100% Circular & Renewable.

                                                                                                       100% Circular & Renewable
                                                                          KPI                                                        2014     2015      2016      2017             GOAL

                                                                                                                                                                               100% by 2030
   % of recycled or other sustainably-sourced material of total material use (commercial goods)                                       13%      20%       26%       35%

                                                                                                                                                                                                    100% CIRCULAR & RENEWABLE
                                                                                                                                                                                                                                100% CIRCU L AR & RENEWABLE
                                                                                                                                                                                at the latest

   % of cotton from sustainable resources (certified organic, recycled or Better Cotton)                                             22%       34%       43%      59%          100% by 2020

                                                                                                                                                                              25,000t per year
   Tonnes of garments collected through garment collecting initiative                                                                7,684t   12,341t   15,888t   17,771t
                                                                                                                                                                                  by 2020

   % of stores with recycling systems for main types of store waste                                                                  58%       61%       71%       64%             100%

   % of facilities in own operations with water-efficient equipment                                                                  24%       37%       51%       51%         100% by 2020

                                                                                                                                                                                   100%
   % business partner factories in compliance with wastewater quality requirements as defined by BSR                                  71%      75%       82%       84%

                                                                                                                                                                                                                                100% FAIR & EQUAL
   % of renewable electricity in own operations                                                                                      27%       78%       96%       96%             100%

                                                                                                                                                                              Climate positive
   % change in CO 2 emissions from own operations (scope 1 + 2) compared with previous year                                           -4%     -56%       -47%     -21%
                                                                                                                                                                                  by 2040

   % change in electricity intensity (kwh/m2 per opening hour compared with 2016)                                                     n/a      n/a        n/a     -2.7%        -25% by 2030

                                                                                                                                                                                                                                STANDARDS & POLICIES
                                                                                                                                                                                                                                HOW WE REPORT
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KEY FACTS & FIGURES / KPIs AND GOALS / 100% CIRCUL AR & RENEWABLE EXPL AINED / BECOMING 100% CIRCUL AR / BECOMING CLIMATE POSITIVE

                     100% Circular & Renewable explained

                                                                                                                                                                                                                                   VISION & STR ATEGY
                                                                                                                                                                                                                                   100% LE ADING THE CHANGE
                                                                                                                                            Our 100% Circular & Renewable
Our planet provides us with an
                                                                                                                                            ambition represents our commitment
abundance of natural resources.                                                                                                             to achieve the shift from a linear to a
However global demands are rapidly                                                                                                          circular model. We are approaching
                                                                                                                                            this ambition holistically by building
outstripping supply. If population growth                                                                                                   circularity into every stage of our value
continues as expected, the volume of                                                                                                        chain, including the products we design
                                                                                                                                            and make, the materials and processes
clothes sold across the world will triple to

                                                                                                                                                                                                       100% CIRCULAR & RENEWABLE
                                                                                                                                                                                                                                   100% CIRCU L AR & RENEWABLE
                                                                                                                                            we use and how our customers care for
160 million tonnes by 2050.* This level                                                                                                     and dispose of our products.
of demand would require the equivalent
                                                                                                                                            But a business model can only be truly
of 2.3 planets’ worth of resources.** Put                                                                                                   circular if it is powered by renewable
simply, the fashion industry is running                                                                                                     energy. As such, we are working to use
                                                                                                                                            100% renewable energy throughout
out of the natural resources it uses to                                                                                                     our own operations, which will signifi-
make products and cannot continue to                                                                                                        cantly reduce our climate impact.
operate in the same way. At H&M group,

                                                                                                                                                                                                                                   100% FAIR & EQUAL
                                                                                                                                            Beyond switching to renewable energy
we believe that an industry-wide shift                                                                                                      and cutting our emissions, we also
from a linear to a circular business                                                                                                        want to set an example in our own
                                                                                                                                            operations, drive change along our
model is the only solution.                                                                                                                 entire value chain and lead our indus-
                                                                                                                                            try towards positive transformation.

                                                                                                                                                                                                                                   STANDARDS & POLICIES
                                                                                                                                            Our goal is therefore to achieve a
Circular models maximise resources and minimise                                                                                             climate positive value chain – a value
waste. Using the current linear model, less than                                                                                            chain that creates a net positive impact
1% of material used to produce clothes across the                                                                                           on the climate by 2040.
industry is recycled into new products.*** But in
a circular model, resources stay in use for as long
as possible before being regenerated into new
                                                                                                                                            * Source: A New Textiles Economy: Redesigning Fashion’s
products and materials, resulting in a reduction in                                                                                         Future by Ellen MacArthur Foundation & CFI – pg 20.

                                                                                                                                                                                                                                   HOW WE REPORT
                                                                                                                                            ** Source: footprintnetwork.org. ***Source: A New
waste and negative impacts.                                                                                                          H&M.   Textiles Economy: Redesigning Fashion’s Future by
                                                                                                                                            Ellen MacArthur Foundation & CFI pg 21.

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OVERVIEW
KEY FACTS & FIGURES / KPIs AND GOALS / 100% CIRCUL AR & RENEWABLE EXPL AINED / BECOMING 100% CIRCUL AR / BECOMING CLIMATE POSITIVE

                     Becoming 100% circular

                                                                                                                                                                                                                                                                          VISION & STR ATEGY
                                                                                                                                                                                                                                                                          100% LE ADING THE CHANGE
Making the shift from a linear to a circular model is
not only necessary for the planet, it also presents a
                                                                                                                                                    Our circular approach
strong business case. Once customers are finished
with products, 87% of the material fibres used by the
industry to create those products end up in landfill.
This represents a lost opportunity of more than
USD 100 billion every year.*
                                                                                                                                                                         STAGE A

                                                                                                                                                                                                                                              100% CIRCULAR & RENEWABLE
                                                                                                                                                                                                                                                                          100% CIRCU L AR & RENEWABLE
By designing for circularity, maximising resource                                                                                                                         Design
use by working with recycled or other sustainably
sourced materials, prolonging product lifespan
and creating a climate positive value chain, we will
increase the efficiency and the value of our opera-
tions and products. This responsible production and
consumption will enable us to continue designing                                                                                        STAGE E                                                             STAGE B
and producing great, sustainable products while                                                                                      Product reuse &                                                      Material choice
creating positive social and environmental impacts.                                                                                     recycling

                                                                                                                                                                                                                                                                          100% FAIR & EQUAL
To become 100% circular, we are focusing on five key
                                                                                 I:CO facility in Germany.
stages within our value chain that are applicable to
both commerical and non-commerical products:
A. Design, B. Material choice,
C. Production processes, D. Product use,
E. Product reuse and recycling.                                                                                                                                                               STAGE C
                                                                                                                                                   STAGE D

                                                                                                                                                                                                                                                                          STANDARDS & POLICIES
                                                                                                                                                                                             Production
                                                                                                                                                  Product use                                processes

“ AInitiative,
      s a core partner of the Circular Fibres
                H&M group acts as an industry
      pioneer in the transition to a circular economy.
                                                                                                                                     ”

                                                                                                                                                                                                                                                                          HOW WE REPORT

                                                                                                                                             * Source: A New Textiles Economy: Redesigning Fashion’s Future by Ellen MacArthur
                                                          ELLEN MACARTHUR, FOUNDER OF ELLEN MACARTHUR FOUNDATION                               Foundation & CFI – pg 36.

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