What will drive sustainability forward at H&M?
CEO Karl-Johan Persson meets with Jeremie Guillerme and Laura Brummer from ReputationInc, and tells them about his future plans.
How does sustainability at H&M support the overall business strategy?
Our core business idea is quality at the best price. We see sustainability as an integral part of quality. There’s no other option. In the short-term it has cost implications, but in the long-term there is a good business case for it. It will make us a more attractive employer because colleagues care about sustainability; customers also care more and more about it. They are not yet prepared to pay more for it, but they care about it. It is also an opportunity to increase the brand value. There is no doubt that our sustainability efforts are improving our business in the long run, even if it costs us hundreds of millions in the short term.
What have you learnt so far from the H&M sustainability journey?
I’ve learnt a lot from colleagues, from competitors, but also from the media. Especially the hits we took from Swedish media around our production in Bangladesh and in Cambodia. It’s been difficult, and sometimes frustrating because the knowledge of sustainability is often low, and we have to explain very complex issues around wage structures in these countries to the media and NGOs.
"Critical journalism is overall a good thing, as long as it’s pushing us in the right direction."
Critical journalism is overall a good thing, as long as it’s pushing us in the right direction. Even though we would have done a lot anyway, I think we have speeded things up as a result of the scrutiny. Overall, a great learning experience.
What have been the biggest challenges and opportunities on your sustainability agenda?
There are many!
Environment is a huge area, especially recycling. We have introduced garment collecting in all our stores, and we now aim to effectively take all those fibres and get them back in production. Closing the loop on fibres is a big opportunity, and something that we’re working on a lot with different innovation initiatives.
On the social side, our challenge is to find a good, sustainable model when it comes to wage development. There are a lot of different stakeholders that need to be involved. We have our part to play, together with suppliers, the unions, and the governments. But companies should not set the wage level. Fair living wages should be set by negotiations between workers, factory owners and the government. Our role as a buyer is to support the process and the both the Global Unions and the ILO share that opinion. One company cannot sit on the other side of the world and say, ‘this is what the wage level should be in Bangladesh’.
Finally, it’s to inform customers which is something that we are working on with the Higg Index. Ideally, sustainability information should be readily available on garments. We hope that in the future the consumer will have access to the total sustainability information of a product just by scanning the tag with a mobile phone. Then people will be able to decide to buy a product if it is good and made by a responsible company.
How do you hold people accountable on sustainability?
Until four years ago, we had a sustainability department that was responsible for sustainability while all the other functions were responsible for their business results. When the sustainability department got involved there could be a conflict despite the overall goodwill of business functions.
"Buying, logistics, marketing… All of them have a sustainability goal."
Now, sustainability is part of the management group and we have integrated sustainability into all of the functions and all the countries and they are measured against our sustainability objectives. Buying, logistics, marketing… All of them have a sustainability goal that we call “conscious”. There is no other way to deliver on sustainability: it has to be integrated and part of the DNA.