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H&M Sustainability Report: 95% of Factories Revealed

H&M has published a supplier factory list alongside its 2012 sustainability report. The retailer says it is one of the first and largest fashion companies in the world to take this step.

The list of supplier factories covers about 95 percent of total production volume. H&M says the publication is a step towards a more transparent and ultimately more sustainable fashion industry – but one that required a great deal of preparatory work with suppliers.

According to the sustainability report, factories’ compliance with H&M’s code of conduct continued to improve last year, with sustainability performance scores increasing from 79.3 to 81.7 percent. In 2012, the retailer audited 485 potential new supplier factories and rejected a quarter of them.

Carbon and energy

Also last year, the company reduced CO2 emissions by five percent relative to sales, from 3.16 metric tons per SEK of sales (20.5 metric tons per dollar) in 2011 to 3 mt/SEK in 2012, through energy efficiency and offsetting. Since 2009, H&M has cut CO2 by 14 percent.

The chain has now committed to reduce absolute operational emissions by 2015, even though its store count is growing by 10 to 15 percent per year. Current operational emissions stand at 574,611 metric tons, with electricity accounting for the largest chunk of this at 50 percent.

The company says it wants to achieve this aim without offsetting. Efficiency is therefore a key focus. H&M reduced electricity use in its stores by 15 percent per square meter from 2007 to 2012 – up from an 11 percent reduction from 2007 to 2011. The company says it is on track to achieve its goal of a 20 percent reduction by 2020. But the report did not say how much electricity H&M uses per square meter.

On an absolute basis, scopes 1 and 2 energy consumption increased from 3.3 million GJ in 2011 to 3.4 million in 2012.

H&M is working to install energy monitoring devices in all stores this year. It is also helping business partners set up supplier energy efficiency programs (SEEP), which in some cases connect supplier factories to energy service companies to identify potential efficiency gains. By the end of 2012, 44 factories had completed a SEEP and another 110 were undergoing planning or implementation. Based on this, H&M has developed data baselines and says it will evaluate the factories’ performance against these through 2013.

The company says its goal of sourcing 100 percent of electricity from renewable sources is a key aim, although it hasn’t specified a target date. In 2012, H&M’s photovoltaic panels generated about 784,200 kWh of electricity. Beyond this, the report doesn’t supply information on how much renewable electricity the company used, or what proportion of electricity came from renewables.

H&M says monitoring progress towards the renewables goal has been difficult because the firm lacked a robust framework for defining renewables and for tracking associated CO2 reductions. But it says forthcoming guidelines from the World Resources Institute and the Carbon Disclosure Project will aid this process.

The company says its biggest climate impacts take place outside of its direct operations, with Scope 1 accounting for only 3 percent of emissions, and Scope 2 accounting for 59 percent. It estimates that 39 percent of emissions come from fabric processing, 36 percent from product use, 15 percent from raw materials, 4 percent from production, 3 percent from transport and 3 percent from sales.

To address product use emissions, H&M worked with Ginetex, the owner of the standard care labeling system, to develop a label that encourages more sustainable clothing care. This Clevercare label is now available to all apparel brands, and will start to reach H&M stores this summer.

Since 2010, the company’s transport-related emissions have increased by 4 percent, while sales increased by 11 percent. About 90 percent of transportation from production countries to H&M distribution centers is by sea or rail.

Water use and wastewater

In January H&M and WWF signed a three-year agreement to develop a global water strategy, to be implemented across the company’s 48 markets and 750 direct suppliers. The company says it will measure water impacts across all of its operations and supply chain.

But in the 2012 report, H&M does not say whether it managed to reduce water use in the past year. It did estimate that it used 1.7 million cubic meters in its stores, 240,751 in its distribution centers and 69,720 in its offices, based on extrapolation from measurements at six percent of its stores, its head office and three of its biggest distribution centers. The company also says it saved 450 million liters of water in 2012 by applying water-saving techniques to its production of denim and other water-intense products.

Last year the percent of H&M’s suppliers in the best threshold on wastewater quality against Business for Social Responsibility standards increased across all three categories: chemical oxygen demand, biological oxygen demand and total suspended solids. At the same time, however, the number of reporting facilities fell.

Lifecycle assessment and disposal

In 2012, H&M tested the pilot version of the Higg Index, the Sustainable Apparel Coalition’s tool for measuring environmental impacts across clothing supply chains. The company says it found great value in the pilot, but applying the index on a larger scale will be a challenge. Ultimately it hopes to translate the index into consumer labeling.

H&M says it is the first fashion retailer in the world to launch a global system to collect customers’ old clothes, of any brand and any condition. All the clothes are reused or recycled. One challenge is that yarn from recycled textiles is often not strong enough for new garments, but the company says it is starting to address this by creating demand for innovation, and says it invests in this innovation using profits from its sales of old textiles.

The company’s distribution centers recycled 92 percent of the waste they handled in 2012, close to H&M’s 95 percent goal for 2013.

Other issues

The company banned perfluorinated compounds (PFCs) from all its products starting January 1. In 2012, it launched the first products made with water-based polyurethane, which it says avoids the hazard posed to workers by solvent-based chemicals. H&M says it is working to scale up this pilot.

The retailer says is working to lead the industry to zero discharges of hazardous chemicals by 2020, and has conducted extensive benchmark studies including in-depth chemical audits with all its strategic suppliers in China, India, Bangladesh and Cambodia.

H&M is also aiming to move all its catalogues to FSC-certified paper this year.

The 2012 sustainability report uses the GRI 3.1 guidelines, self-declared at level B.

Coverage of the company’s 2011 sustainability report is here.

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