Fast-fashion behemoth H&M has released its latest sustainability report, showing progress on cutting its greenhouse gas emissions.
The report covers all of its brands, including flagship brand H&M, Arket, Cos, Weekday, Monki and & Other Stories, as well as its H&M Home line and sales platform Afound for 2022.
The 90-page report is heavy on numbers in an effort to show the company’s sustainable achievements as it seeks to decouple financial growth from its carbon output, as well as where it finds making changes most challenging.
“I am seeing great progress in the company, but of course, the challenges are getting bigger, the more the world emergencies are increasing,” Leyla Ertur, H&M Group head of sustainability told WWD.
The company’s investment in decarbonization is paying off slowly but surely. The group spent 2.6 billion Swedish kronor, or 229 million euros at current exchange, on programs to phase out coal in factories and increase energy efficiency in stores in 2022.
The group continued to cut its greenhouse gases in absolute terms, including 8 percent at scopes 1 and 2, which covers own operations and indirect emissions from purchased energy. It cut GHGs 7 percent across scope 3, or all the indirect emissions from sourcing, production, manufacturing and transportation using a baseline of 2019.
Deep diving into its scope 3 GHGs, 40 percent comes from fabric production, at 2.85 kilotons of emission, while 7 percent is from manufacturing and 5 percent from transport.
It’s still just a dent in the company’s overall goal of cutting GHGs by 56 percent by 2030.
“We aim to grow our business in a way that we decouple our financial growth and profitability from the use of natural resources,” Ertur said. The first step is traceability and reporting, she noted, so that the company can accurately track its impact. “We are transparent on where we are.”
To wit, the report delves into the company’s efforts to reduce emissions, curb plastic use and move to recycled materials.
The company has come under fire for greenwashing, with lawsuits filed for misleading claims in the U.S. But the company is willing to take the heat as it pushes for transparency even if it isn’t perfect, Ertur said. She noted that this is the 20th sustainability report from the company and that being one of the first to address these issues has left it open for questioning.
“It’s always quite clear, you will be the first target in questions, and we welcome that. We welcome stricter questions [and support] clear regulations connected to transparency and sustainability claims,” she said. “It will just help us as an industry to push forward. So we will not step back but learn to adapt and do it better. This will also help us improve our sustainability communication with our customers.”
H&M previously used the Higg Index as the basis for a consumer-facing sustainability scorecard, but after controversy over misleading info and criticism from the Norway Consumer Authority, the program was put on pause.
The company “has no intention” of replacing the public scorecards, Ertur said. She noted that issuer Sustainable Apparel Coalition is updating its program, while H&M is continuing to develop its in-house criteria. “In time they might come together as one, but we are driving two separate streams because if we wait for each other that would become very bulky for us.”
However, the largest part is starting at the material stage and the company has created internal tests on how many times a material can withstand washing, for example, which guide material selection at the beginning of the design process. The company’s in-house guidelines cover the overall scale of the product as a more “holistic” way of looking at product impact, she said.
It’s also supporting the EU’s sprawling regulation frameworks that touch on everything from labeling to end-of-life-cycle disposal. “That will set a level ground for the ones who are truly investing in this area,” she said. “This will give us comparability and hopefully improve the industry. So even though you might say that this is a challenge for us, we take it more like welcoming all new legislations and guidelines.”
But traceability relies on information, and gathering that in the extensive global supply chain is an ongoing — and industry-wide — challenge, she noted.
As the group is preparing for the rollout of those regulations, the company is looking to France, which has the most stringent reporting and anti-waste laws, called AGEC.
“AGEC is one of our guiding stars right now,” Ertur said. The company is looking at pending environmental legislation in the countries where it operates and “choosing the highest standards” to apply to all its markets as its basic in-house compliance structure.
The group goal is to source 30 percent of materials from recycled sources by 2025, and 100 percent of the company’s polyester. It hit 23 percent this year, and says it is looking to technology to help find solutions to the microplastics the synthetic material can shed.
H&M reduced use of plastic packaging 44 percent from a 2018 baseline, but packaging remains one of its biggest challenges, particularly in ecommerce and transport as it switches to paper, which is heavier and requires more wrapping. Using recycled paper is less durable, too, so the company is researching alternatives as it aims to achieve its goal of making 100 percent of its packaging from recycled or other more sustainably sourced materials by 2030.
It also aims to reuse or recycle 100 percent of its own in-store packaging by 2025, and eliminate all polystyrene hangers by the end of this year.
Relative water consumption per product was reduced by 38 percent to 2017 baseline, through 21 percent rate of wastewater recycling and improvement in efficiency. Waterless dyeing is one promising tech, though it’s not yet at scale. Ertur said the company is not deterred. “But we have to continue trying this again and again and again, to make sure it fits the purpose, but also fits the quality and price and lead time,” she said, as price point is a main driver for the company’s customers.
H&M collected nearly 15,000 tons of used clothing through in-store take-back programs last year, an improvement over the last two years but down slightly from 2019 as stores recovered from pandemic closures and the war in Ukraine. Fifty-five percent was reused as a product, 15 percent reused as material and 22 percent downcycled. The remaining 8 percent was incinerated so as to avoid landfill, the company said.
In financial results released Thursday morning, the company revealed it is integrating its secondhand platform Sellpy fully at the group level. The challenge with resale is that it is “often labor intensive with low margins,” Ertur said. There is also no standardized way to measure GHG reductions with reuse and repair models.
Its distribution centers are now repairing faulty returns so that they can be resold, and one project repairs jeans with embroidery before sending them to the sales floor.
Customer education is also a key challenge, “so we are reaching our customers through all our brands to tell them there are different ways to give multiple lives to a product,” Ertur added. Improving overall sustainability will also “come with a huge behavior change” from customers.
What does work? Charging for shopping bags saw an immediate reduction of 40 percent use, the report noted.