H&M Wants to Revolutionize the Apparel Industry

Last week's Global Change Awards in Stockholm showed a window into Swedish culture.  Crown Princess Victoria of Sweden presented the awards, beaming in a couture H&M gown after sitting for hours on a hard bench listening to the contest judges quibble over the finer points of systems thinking. She's nine months pregnant and even smiled politely when the master of ceremonies indicated that she looked about ready to pop.

The H&M Conscious Foundation gave away over a million euros -- no strings attached -- to five startup companies that prototyped technologies for improving the apparel industry’s environmental footprint. The award ceremony took place in the Golden Hall, where the Nobel Prize has been presented every year since 1901. We were there to eat dinner. After serving a five-course, vegetarian, locally-sourced meal for the hundreds of attendees who showed up an hour late (due to the aforementioned judges' quibble), the chef humbly presented himself to tell the story of the funny-looking carrots he’d included in course three and to explain that we were a much bigger crowd than he usually served in his 30-seat restaurant. Over dessert, I expressed bemusement to one of H&M’s PR reps about the emcee’s pregnancy gaff and she laughed, saying she appreciated his candor and the princess herself is quite good-humored.

I was in town to learn more about H&M’s sustainability program. Over my three days with the company, I found this same unusual mix of candor, understatement and delight imbued its business operations. It’s a mix that is certainly key to the company’s leading fashion empire – 3,900 stores and 142,000 employees. It is also key to the company’s sustainability performance – a performance which, humbly, appears to be seriously kicking sustainability ass.

Last year, H&M amended its business concept, “Fashion and quality at the best price,” to include “in a sustainable way.” That in itself is a huge change for a company that is not in the sustainability business.

At this time, none of the company's sustainability goals has a direct impact on the design process. The designers figure out what they want to produce for new seasons via a mix of trendcasting and customer feedback, and then they seek materials to make it so. “Doing something sustainable that isn’t fashionable isn't sustainable because no one will buy it,” explains Ann-Sofie Johansson, creative advisor and head of design, who has been with the company for over two decades. Instead H&M is using the circular economy to bring sustainability to the forefront.

Circular economy thinking, where waste equals food, is all the rage in Sweden, explains Amir Rashid, a researcher at the KTH Royal Institute of Technology and an expert on corporate implementation of closed-loop systems. “Most companies think this is a good way forward. But there’s a challenge with implementation because this is a radical way of thinking. When we are living in a linear environment, it’s a big adjustment. All the current tools are built for linear thinking." When making his business case for adopting circular thinking, Rashid points to economic opportunities like cost savings, product-development innovations and consumer appeal.

These are all the same levers H&M uses to manage the short-term costs of changing scope. In its case, product recovery and recycling to the fiber level are the challenges it is trying to overcome to make the joy of consumption guilt- and impact-free. H&M CEO Karl-Johan Persson is not scared to make his personal goals for an apparel industry sea-change public. In many ways, the company is "like Tesla,” he explains, admitting he’s a proud owner of one of the electric cars. Elon Musk's goals for a transportation industry overhaul mirror Persson's goals for fashion.

Of course, one wonders if an industry where growth means increased consumption can ever be truly sustainable.  Persson agrees. “Do we really need all the things we buy? Of course not," he explains, gesturing around him. "We could do without this glass, this mobile phone; we could manage with out a lot of things.” However, he went on, “There is something good about economic growth.” If Ikea, for example, were to be shut down, “It would be very bad for the world. Jobs would be lost, people would have to pay more for furniture, and you would lose a big responsible company,”

In addition to spearheading efforts with the Sustainable Apparel Coalition to create the Higg index and set strong standards across the industry, H&M is taking things into its own hands, seeking a closed-loop system where the inputs -- cloth fibers – come from a renewable source – old clothes. It’s a big goal, and the company still has a ways to go.

H&M collected 20,000 tons of clothes through an in-store recycling partnership with I:CO. The donations are hand-sorted for reuse and recycling: Forty to 60 percent can be re-worn as-is and are sold on the secondary market (H&M donates the revenue to charity in local markets); 5 to 10 percent require a small repair (which I:CO manages); 0.30 percent can be upcycled into something more valuable while 30 to 40 percent are downcycled into something like insulation or another product.

This is by no means a closed loop, but it is the beginning of one. H&M has set a standard: “Fashion is a resource that can be used again and again,” explains Anna Gedda, head of sustainability at H&M. "It’s a new way of thinking about fashion.”

Indeed, the apparel industry needs to make some big changes. In addition to being materials-intensive, it requires a global supply chain packed with human rights issues from the cotton fields to the factory floor. H&M recently caught negative attention for a fire in a Bangladeshi factory as well as for Syrian children found working in a Turkish apparel factory. Persson explained that the company worked hard to mitigate these issues when they arose, phasing out the Turkish supplier and funding local NGOs to support the Syrian families that were caught in the middle. The reason H&M was singled out in a recent report, Persson claims, is because it is one of the few companies that makes its supplier list public.

Rather than integrate factories into its own supply chain, which might solve H&M’s people problem but would raise costs in the meantime, the company is working with the ILO to improve working conditions globally.  While this approach is more time consuming, it presents a better opportunity to make lasting change. H&M has also lobbied governments in the countries where it contracts with factories to set strong workplace standards such as exist in Sweden.

H&M's big, hairy, audacious goal to revolutionize the apparel industry is laudable -- big thinking is something that we need in order to turn our path of over-consumption around and set a new standard. Let's hope other brands answer H&M's siren call.

Image credit: Jen Boynton 

Travel and accommodations via H&M. Opinions are my own.