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H&M Tussles with Norway Over Unsold Clothing

Norwegian regulators and H&M Group are locking horns again, this time over how much clothing the Swedish retailer doesn’t manage to sell.

The dispute arose last year over an effort by the Norwegian Consumer Council, together with the nonprofit Future in Our Hands, to map the extent of unsold clothing in Norway. To suss out some stats, the organizations approached the country’s largest apparel purveyors with questions about their surplus inventories: How much overstock did they produce between 2019 and 2021, for example, and what proportion of their production consists of so-called “redundant” textiles, including returned goods?

But many businesses, they said, did not supply this information, among them H&M and Zalando. Both had argued that the data requested was a trade secret, not environmental information that they were required by law to hand over, the Consumer Council said.

Both H&M and Zalando later submitted estimates after the Complaints Board for Environmental Information ruled that the companies were obliged to comply with the request.

That a “major player” such as H&M, the world’s second-largest apparel company by revenue, should refuse to put into hard numbers how much clothing it overproduces is an issue, said Inger Lise Blyverket, director of the Consumer Council.

“If we don’t know the extent of the problem, it becomes impossible to solve. We must have full transparency in the value chain about the environmentally harmful overproduction of clothing,” Blyverket said. “We need to know where we are to get where we are going.”

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H&M said that it does disclose figures in the interest of transparency, but that it generally does this as global percentages.

It also provides data on stock-in-trade, which represents its inventory turnover worldwide. As of Aug. 31, for instance, the Cos and Monki owner was sitting on 47 billion Swedish kronor ($4.5 billion) of unsold goods, a 28 percent increase from the year before, according to its nine-month report.

“H&M Group was one of the first companies in the textile industry to disclose data on products that cannot be sold, donated or recycled, as well as ways to avoid products end[ing] up in landfills or incineration,” a spokesperson said. “We believe sharing these data in percentage figures provides the most relevant and comparable information, as it gives external parties the opportunity to compare different brands, regardless of each individual brand’s size and revenue.”

The high-street giant said it also needs to clarify what the Consumer Council and Future in Our Hands mean by the term “surplus textiles,” since there is no clearly defined industry-wide definition. Nor did the organizations’ questions make it clear what they meant. If “surplus products” refer to products that are made in quantities beyond what there is customer demand for, meaning they’re not sold even after discounting, then H&M is “happy to see” that the amount in Norway has been 0 tons in 2021—a result, it said, of accurate production planning.

“As we understand it, Future in Our Hands and the Consumer Council are, however, looking for a wider scope than this, also including products that could not be sold due to quality issues or as a result of customer returns,” the spokesperson said. “Most of the customer returns are being sold again in our own sales channels. However, if they should be too damaged, we might not be able to sell these in our regular sales channels. Depending on the condition of the garment they will either be donated, sold for re-wear (outlets), or if not usable, they will be recycled.”

In total, roughly 75 tons of product was been donated, sold for re-wear or recycled in 2021, with the “vast majority,” 93 percent, comprising customer returns. In 2019 and 2020, the quantities were 113 and 63 tons, respectively. None of the products have ended up in landfill or incineration, H&M said.

“[It’s] only when products are not safe to be used by our customers due to not passing chemical or safety standards or being contaminated by mold, or when there is no viable recycling or downcycling solution available [that] we have no other option [but] to, in these rare cases, destroy these products,” the spokesperson said. “Such rare cases did not occur in 2021, meaning 0 tons.”

H&M said that it remained committed to increasing its level of transparency “in all areas.”

Ultimately, the companies that responded to the Consumer Council and Future in Our Hand produced a collective 468 metric tons of clothing that they weren’t able to shift in Norway. Through a process of extrapolation, “based on knowledge of the rest of the industry,” the organizations put the “real,” more inclusive number closer to 825 metric tons, though even this is likely to be an underestimate, they said.

Transparency from brands is important when it comes to their environmental impact, said Anja Bakken Riise, head of Future in Our Hands.

“Secrecy and environmental problems are two sides of the same coin,” she said. “There many more [companies] than just H&M [that] are going to have challenges answering for overproduction,” Bakken Riise said. She called for a standardized requirement for brands to report how much surplus textiles they produce.

Last summer, the Norwegian Consumer Authority warned H&M that using Higg Materials Sustainability Index data in its environmental claims could be considered “misleading” and a breach of the nation’s greenwashing rules.

The retailer hadn’t yet debuted on its Norwegian website the Higg Transparency Program, a now-paused consumer-facing platform that was meant to provide easy-to-parse information about the impact of apparel and footwear items across factors such as water, greenhouse-gas emissions and fossil fuels. Norrøna, which did roll out the scheme, was told by authorities that it was “breaking the law,” leading to a cascade of questions about the MSI’s reliability and triggering a third-party review of its methodology.

Amid the furor, H&M expressed its continued support for the MSI, which it called the “most developed industry-wide method available at scale today.”

“We see this as a starting point for the industry, not the end destination,” a spokesperson told Sourcing Journal at the time. “We also would like to see primary data being used and we are encouraging our suppliers to gather and share their primary data that is necessary to fill the gaps. But the industry is not there yet. In order to create progress, the industry needs to start taking collective action now.”

The & Other Stories parent began phasing out its “Conscious Choice” label last fall after the ​​Netherlands Authority for Consumers and Market told it that the criteria for inclusion in the category was ill-defined and any assertions nebulously substantiated. This didn’t stop H&M from getting sued in Missouri and New York, where it’s being hit with allegations of false and misleading sustainability marketing, however.

Zalando, too, dropped its sustainability “flag” after a Norwegian jury led by the Consumer Council awarded the Berlin-based fashion purveyor with its inaugural grønnvaskingsprisen, or greenwashing prize, in October. By marketing its clothes under the tab “sustainability,” Zalando was also giving the impression that “we can buy our way out of environmental challenges,” the jury said.

Zalando told Sourcing Journal at the time that it will be replacing the flag with information about a product’s specific environmental attributes, such as whether it uses organic or recycled materials. These hallmarks, it said, will be underpinned by “explicit” certifications, trademarks or licensed materials.

“While we are sad to receive this award, we acknowledge the challenges related to transparent and specific communication about sustainability in fashion,” a spokesperson said. “We will continue to take our responsibilities seriously in tackling this fundamental challenge by pushing ourselves, our partners and the industry forward.”

On Wednesday, H&M joined Decathlon, Mango, Ikea, Zara owner Inditex and others to form the Association for the Management of Textile Waste, a Spain-based group that will address textile and footwear waste generated in the country with an eye on complying with a recently passed extended producer responsibility law mandating their separate collection by Dec. 31, 2024. The governing board will include a representative from each company, while the presidency of the association will be held on a rotating basis, beginning with Mango.