H&M: Root of the Problem or Key to a Solution?
Will a fast fashion giant save the apparel industry from the effects of climate change?
Having worked in the fashion industry, I am the first to admit that it can be extremely frivolous. However, in the context of climate change and the global economy, it’s anything but inconsequential. The apparel industry accounts for 10% of global carbon emissions and remains the second largest industrial polluter after oil [1]. The production of apparel is highly dependent on weather patterns (for agriculture), water use (for dyeing, finishing, and washing), and energy consumption (for industrial activity, transportation, and retail operations). So, not only has the industry played a significant role in the progression of climate change, but it will also face many of the consequences.
Take a brand like H&M for example. Started as a single store in 1947, the H&M Group has grown to be the world’s second-largest fashion retailer, bringing in $24 billion in 2015. The H&M Group is comprised of six fashion brands, with more than 4,200 stores in 64 markets [2]. H&M’s value proposition is to offer consumers fashionable clothing at affordable prices. The consequence of this has been the proliferation of fast fashion and unprecedented levels of clothing consumption and disposal. Americans throw away 14 million tons of clothing per year, totaling to 80 pounds per person [8]. H&M may be the root of the problem, but because of its scale, influence, and dedication to environmental sustainability, it may also be an integral part of the solution.
I believe change and innovation in the apparel industry will be largely driven by brands. The apparel supply chain is long and rarely vertically integrated. At the top of the supply chain, brands hold much of the power. Brands create demand for products from farmers, textile mills, and factories, and brands with scale have the leverage to drive change throughout the entire value chain.
Roughly two thirds of the 500+ suppliers that make clothes for H&M and use wet processes, are located in areas suffering from water scarcity. In 2013, H&M formed a three-year partnership with the World Wide Fund for Nature (WWF). Together they set a three-year water strategy focused on improving H&M’s use of water, building water awareness, collective action, and measuring water impact and risk. In 2016 this partnership was renewed for another five years, with an increased focus on climate action [3].
Upon measuring their water usage, H&M discovered that 87% of the water footprint in their supply chain occurred in raw material production. H&M has taken two major steps to decrease their reliance on water for raw material production. The first step is a commitment to use cotton solely from sustainable sources by 2020, which they define as recycled, organic, or Better Cotton Initiative (BCI) certified fiber [4]. On average, organic cotton requires less water—an estimated 75-80% is rain fed. The average water consumption of organic cotton is 182 liters/kg lint, versus conventional cotton at 2,120 liters/kg lint [5]. H&M’s second step towards reducing the water footprint of its raw materials is a sizeable investment in research on textile recycling [3]. Investing in sustainability can drive innovation, in addition to helping manage risk [6]. Innovation in recycling technology would reduce H&M’s reliance on virgin materials.
In addition to water scarcity, increasingly ambitious greenhouse gas emissions policies will affect H&M and their supply chain partners’ operations. In 2015, H&M reduced carbon emissions from internal operations by 56% by heavily increasing use of renewable electricity. However, only 10% of carbon emissions associated with H&M occur within their retail operations. 17% of emissions are attributed to raw materials and packaging, and the remaining 73% are attributed to fabric production, garment manufacturing, transportation, and consumer care. H&M plans to collect climate impact data from suppliers, and create an incentive system that rewards strong sustainability performance. H&M has partnered with Clevercare to educate and encourage customers to make washing decisions that are more energy efficient [7].
I have only scratched the surface—H&M is doing a lot. However, I would argue that it’s time for H&M to shift their focus to designing for disassembly. In 2013, H&M launched a used garment collection program. So far they have collected over 32 tons of garments. Some garments are re-sold, and some are downcycled into cleaning cloths or insulation materials. Only 0.1% of the collected clothing is recycled into new textile fiber [8]. With a business model that requires the constant creation of new products, and that is faced with constrained resources, H&M will need to figure out how to close the loop in order to create a truly sustainable business.
Word Count: 753
[1] James Conca, “Making Climate Change Fashionable – The Garment Industry Takes On Global Warming,” Forbes, December 3, 2015, http://www.forbes.com/sites/jamesconca/2015/12/03/making-climate-change-fashionable-the-garment-industry-takes-on-global-warming/#6ba24d36778a, accessed November 2016.
[2] H&M, “Group at a Glance,” http://about.hm.com/en/about-us/h-m-group-at-a-glance.html, accessed November 2016.
[3] H&M, 2015 Water Engagement Report, http://sustainability.hm.com/content/dam/hm/about/documents/masterlanguage/CSR/WWF/HM%20Water%20engagement%202015.pdf, accessed November 2016.
[4] H&M, “Cotton,” http://about.hm.com/en/sustainability/sustainable-fashion/materials/cotton.html, accessed November 2016.
[5] Textile Exchange, “Material Snapshot Organic Cotton,” 2016, http://textileexchange.org/wp-content/uploads/2016/03/TE-Material-Snapshot_Organic-Cotton.pdf, accessed November 2016.
[6] Whelan, Tensie and Fink, Carly, “The Comprehensive Business Case for Sustainability,” Harvard Business Review, October 21, 2016, https://hbr.org/2016/10/the-comprehensive-business-case-for-sustainability, accessed November 2016.
[7] H&M, 2015 Emissions Report, http://sustainability.hm.com/content/dam/hm/about/documents/masterlanguage/CSR/2015%Sustainability%20resport/HM_SustainabilityReport_2015_final_com_4.pdf, accessed November 2016.
[8] Wicker, Alden, “Fast Fashion is Creating an Environmental Crisis,” Newsweek, September 1, 2016, http://www.newsweek.com/2016/09/09/old-clothes-fashion-waste-crisis-494824.html, accessed November 2016.
What are your thoughts regarding the future of their garment recycling program? From what I understand they’re currently constrained by both the pure financial disincentives of mass-producing recycled garments and technological limitations of how much a garment can utilize recycled materials before its quality is meaningfully impacted. Do you think it can actually play a meaningful role in both H&M’s core operations and its aim to be seen as a sustainable fast-fashion player by global consumers? In addition, why do you think we haven’t seen a similar degree of dedication to sustainability initiatives from other players in the fast fashion space (aside from Zara)?
Thanks for the post. Though I have definitely shopped there before, I had no idea H&M was such a massive business, nor did I appreciate that the retail industry was the second most pollutive after oil, accounting for 10% of carbon emissions.
You mentioned the staggering figures around the amount of clothes that are thrown away in the United States alone. It would be interesting to know what proportion of discarded clothing is accounted for by fast fashion. Given their ability to underprice most competitors, it would be fair to assume that fast fashion shops must, at least to some extent, compromise on quality. Taking that one step further, would it be fair to assume that we are more likely to do away with our H&M clothing due to lack of quality or durability? Should they consider upping their price point in order to mitigate the corresponding environmental impact?
Good to know that they are exploring initiatives that involve recycled materials. On the point of inputs though, it would be helpful to learn whether they are operating efficiently in the steps leading up to the assembly of finished products. As we saw with IKEA, perhaps a combination of increasing their standards, vertical integration, in addition to the incorporation of recycled materials, would best mitigate their carbon footprint.
Thanks for sharing! I would not have guessed that the retail industry was responsible for such a large percent of overall carbon emissions. Having said that, it’s very impressive that H&M has already implemented various initiatives to cut down its carbon footprint. Based on the IKEA case, your post, and several other posts (Coca-Cola, Starbucks, etc.), it seems like multiple companies across industries are facing the same problem in terms of incentivizing and motivating their suppliers and partners. Have you seen other retailers who have successfully executed an effective incentive program? If so, what does such a program look like?
Thank you for this! H&M’s scale is staggering. $24Bn.. Wow!
I agree with you that “H&M may be the root of the problem, but because of its scale, influence, and dedication to environmental sustainability, it may also be an integral part of the solution.”
I would offer an alternate solution – instead of taking on the logistical challenges of a full recycling program, why wouldn’t they partner with one of the many clothing resale startups? There are several companies that are trying to take the traditional consignment model online, some appealing to the high end of the market and some are targeting mass market. Poshmark (www.poshmark.com) is a mobile app where users can easily take a photo of an item in their closet and set a price. The seller gets a prepaid shipping label and the buyer can rate the seller on the amount of time until shipped. There are shirts on sale for as low as $5! And often times multiple things are sold at once (would need to evaluate environmental impact of the shipping… but that’s for another post). There is also Material World (https://www.materialworld.co/), that buys your old clothes in exchange for gift certificates. It’s on the higher end of the market.
While it will take H&M a significant amount of time and resources to build out their own clothing recycling program, a partnership or investment in a resale startup could reap benefits down the line. They could position themselves top of mind with customers who are cleaning out their closets. It seems like other retailers are beginning to test these partnerships. Target tested a pilot with Thredup in 2015 [1], but it operated on a consignment model.
1) https://consumerist.com/2015/10/21/target-thredup-end-partnership-that-let-customers-exchange-old-clothes-for-gift-cards/