H&M and controversies: it’s all about the company‘s responses?

12-12-2011 | Swedish clothing giant Hennes & Mauritz makes and sells affordable fashion produced in low-wage countries. The company often faces criticism on labour standards and on its impact on the environment. So why then does Triodos invest in H&M?

Hennes & Mauritz, or H&M as most will know it, is often the target of campaigners, both non-governmental organisations and consumers. The issues raised vary from labour rights at supplier factories to the use of hazardous substances. Despite the various campaigns, Triodos still sees the company as having proper mechanisms in place that adequately deal with the controversies that are raised, which despite of the allegations puts it still ahead of its peers in the apparel sector.

Labour standards on the factory floor…

The main criticism of H&M is the production of clothes in developing countries – places such as India, China and Cambodia – where labour standards are notoriously low. From time to time, reports are published that include accusations of child labour, unhealthy working environments, and low wages at the factories supplying H&M. In considering these criticisms Triodos finds it important to understand how H&M responds to such accusations. What we found is that H&M takes an advanced approach in dealing with these labour issues. H&M evaluates each controversy and is transparent, publishing information about any difficulties it faced, how it solved the issue, and the measures taken to avoid repeat occurrences. The company’s labour policies and standards are strong, and it has programmes to uphold them, including regular audits, the results of which are also published. When a supplier is found to be in breach of the standards, H&M works with the supplier to improve the situation rather than ending the relationship. Moreover, H&M encourages its suppliers to implement sustainability programmes for themselves and also further down the supply chain: The supplier’s suppliers. H&M has also used its influence to improve labour conditions at a legislative level in some  countries by lobbying governments for improved minimum labour related standards

. …and those on the shop floor

H&M has also been accused of maltreating employees in its own stores, for example in Germany. The accusations include the hiring of young and inexperienced staff, the use of flexible contracts, the lack of career prospects, and the patronising attitude towards works councils and unions. However, these general accusations seem mainly to be based on minor incidents. In contrast to workers in developing countries, those in retail stores can rely on a solid legal framework to negotiate with management, as the location of those stores is in countries where labour standards are comparatively high. H&M is not involved in any large lawsuits regarding employee rights.

Hazardous chemicals on the decrease

Recently Greenpeace International criticised H&M for the use of hazardous chemicals in its products. Again the company did not close the door to the activists. The company is now cooperating with the global campaigning organisation, and is aiming for zero discharge of hazardous chemicals in its textile production. The company is responding adequately to the accusations and works to ensure that its chemical restrictions are understood and applied in its supply chain. 

Despite the constant flow of allegations towards H&M, Triodos still considers H&M a frontrunner in the industry. According to us the company tries it’s very best to improve the situation of workers and its impact on the environment. Of course we will closely monitor the behaviour of H&M, as we do with all companies in our investment universe, to see if the company continues to meet our investment criteria in the future.

Note: The issues explored in this article are relevant for sustainable investments on the stock market. Triodos Bank believes that our socially responsible investments are a powerful means of promoting our values and working for greater sustainability, while enabling us to offer a complete range of attractive investment options to customers who choose to invest on the stock market.