H&M AND SUSTAINABILITY ISSUES

Student ID – 22027930

Word Count - 2700

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 Table of Contents
1. Business client and their business problem............................................................................3

1.1 Briefing the summary and history of the company..........................................................3

1.2 Stating the problem faced by the company......................................................................3

1.3 Providing evidence of the business issue and graphical illustration................................4

1.5 Objective...........................................................................................................................4

1.5 Boundaries........................................................................................................................5

2. Disaggregation of problem structure and logic tree...............................................................5

2.1 Problem Disaggregation Logic Tree.................................................................................5

2.2 Solution Drivers and Hypothesis Solution Logic Tree.....................................................9

Prioritization Matrix for Solving H&M’s problem..................................................................14

The commodity Combined...................................................................................................14

Initiatives throughout Sustainability.....................................................................................14

Improved the advertisement Approaches.............................................................................15

The expansion of the landscape............................................................................................15

Optimization to the Supply Chain........................................................................................16

Work plan.................................................................................................................................16

References................................................................................................................................21

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1. Business client and their business problem

1.1 Briefing the summary and history of the company

Founded in 1947 by Erling Persson in Västerås, Sweden, H&M (Hennes & Mauritz) has
evolved into a global leader in fast-fashion retailing, offering clothing for men, women,
children, and teenagers. The Senior Management Team, responsible for translating the Board
of Directors' strategic vision into operational plans, faces pressing sustainability challenges.
As H&M grapples with the imperative to adopt more sustainable business practices (Makela,
2020), this Business Insights Project Report serves as a tool for the Senior Management
Team to assess current practices and make informed decisions regarding the implementation
of sustainable models, addressing the critical need for environmentally conscious strategies.

1.2 Stating the problem faced by the company

H&M faces a critical sustainability dilemma as its efforts, like recycled materials and
garment collection, are overshadowed by the environmental toll of its core business model.
Overproduction leads to vast textile waste, contributing to landfill overflow. H&M's high
production volume significantly impacts water usage and carbon footprint, potentially
surpassing industry averages. Synthetic materials worsen microplastic pollution. Critics
accuse H&M of "greenwashing" due to opaque reporting and unclear sustainability goals
(Makela,2020). With consumers increasingly valuing sustainability, H&M risks tarnishing its
brand reputation. A visual representation comparing production volume and environmental
impact metrics could spotlight the severity of the issue, urging H&M to address it promptly.

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1.3 Providing evidence of the business issue and graphical illustration

Figure 1: declining brand value of H&M in comparison to Zara.

(Source: Statista.com, 2023)

From 2016 to 2022, H&M's brand value witnessed a continuous decline globally, attributed
to sustainability and greenwashing concerns. In 2022, the brand was valued at approximately
£12.7 billion, a significant drop from £15.8 billion in 2019 (Statista.com, 2023). The
company's sustainability issues have sparked various challenges, notably diminishing brand
value. Stakeholders demand increased transparency regarding production conditions,
environmental impact, and social responsibility. This scrutiny highlights the pressing need for
H&M to address sustainability concerns effectively to regain consumer trust and stabilize its
brand value in the market. Despite setting science-based emissions reduction targets for 2030
and aiming for 100% sustainable materials by 2030, doubts persist regarding feasibility
within the fast fashion model (Robertson, 2022). Criticism arises from the predominant use of
non-eco-friendly materials and disregard for sustainable practices. Labor conditions suffer
from non-compliance with health, safety, and wage standards throughout the supply chain.
Animal welfare controversies emerge from fur and exotic skin usage.

1.5 Objective

To improve ethical supply chain practices by 10% and reduce carbon footprint by 15% for
H&M by 2025.

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1.5 Boundaries

Scope Sustainability Focus, Financial Considerations, and Recommendations

Off Limits Social & Ethical Issues, Business Model Shifts
Key Forces Profitability, Brand-reputation, Market Competition

2. Disaggregation of problem structure and logic tree

2.1 Problem Disaggregation Logic Tree

Figure 2: Component logic tree for the sustainability issues faced by H&M

(Source: Self-created)

The first problem of the company is to have the risk to witness unethical supply chain
practices. And the solution statement is how to maintain the ethics in supply chain practices
to achieve sustainability. Ethical supply chain practices are critical for H&M to address the
sustainability challenges it faces, particularly considering the company's goal to improve
these practices by 10% by 2025 (Gao,2024). Thus as per the interest of this report which
focuses on breaking down the sustainability issues in H&M regarding their development of
ethical supply chain practices, the above logic tree helps to analyse the main reasons that can
affect the problem in this firm.

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Components of the problem How can contribute to the problem components
logic-tree

High supplier bargaining power indicates that suppliers

Supplier’s bargaining power
have more influence over the terms and conditions of
supply, which can challenge H&M’s ability to enforce its
ethical standards. For example, if there are few suppliers
that can meet H&M’s requirements for sustainable and
ethical production, these suppliers can dictate terms,
potentially compromising H&M’s ethical supply chain
ambitions (Robertson, 2022). Moreover, differences in
trade regulations across countries can make it difficult for
H&M to maintain a uniform standard, as suppliers in
different regions are subject to different laws and
practices. The development of new suppliers is also
complex and time-consuming, which can lead to an over-
reliance on a few suppliers, thus increasing their
bargaining power.
This element reflects the well-being of workers within
Employee work-life
vulnerability the supply chain. For instance, lower payroll to workers
can indicate a failure to provide a living wage, leading to
a poor standard of living and potential exploitation.
Insufficient health and safety standards can result in
workplace accidents or long-term health issues for
workers, as seen in numerous incidents within the
garment industry (Álvarez, 2023). Furthermore, heavy
workloads and inflexible schedules can lead to burnout
and physical strain. These issues can harm H&M’s
reputation and are contrary to ethical practices.
Transparency is crucial for ethical supply chain
Lack of promoting brand
transparency management. Lack of supply chain transparency
disclosure means stakeholders, including customers and
investors, are unaware of where and how H&M’s
products are made. This can lead to skepticism and
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 distrust. Raw materials contribute to environmental
degradation in disguise and without publishing the
practices. Such practices may lead to the labeling of
greenwashing. When stakeholders hear that H&M
sources from unethical producers they may think that the
company is too involved with human rights abuses
(Álvarez, 2023). This may result in loss of brand image
and customer loyalty.

Detailed Analysis

Supplier’s Bargaining Power

If ethical and humane conditions remain in the background, the supplier’s power can put
H&M under tremendous pressure which might lead to a compromise of the ethical norms.
Consequently, if the supplier limited to using the particular fabric or manufacturing process
that meets H&M’s quality standards, he may tend to cope with the ethical requirements or
H&Ms conflict with its profitability or operational convenience. Let's say the scenario that
H&M attempts to introduce a new standard of organic cotton is drawn (Hole et al. 2019).
Such suppliers, who are mostly the only ones who can provide the textile materials for
sustainable products are few and aware that H&M’s options are limited might therefore hike
the prices or refuse to comply with additional ethical requirements, which might make
sustainable products cost-prohibitive (Perez et al., 2021). Real world applications are brought
to light in this case involving technology firms who are experiencing the same quandary as
these companies depend on rare earth minerals which they don't have and there will be
difficulties in enforcing ethical mining practices.

Employee Work-Life Vulnerability

The situation in most developing countries where H&M garments are produced is possibly
the adoption of less stringent regulations or poor enforcement giving room for exploitation.
One example is the Rana Plaza incident in 2013 in Bangladesh when a factory complex that
accommodated many garment factories supplying to major overseas brands collapsed,
exposing understated working conditions, safety prerequisites within the supply chain (Auke
and Simaens, 2019). Furthermore, the demand for fast fashion has resulted in a situation
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where the workers are frequently forced to work long hours to finish the tight schedules, and
in most cases, they lack job benefits which includes fair overtime pay. Such practices
contravene the ethical supply chain management principles and put the company's reputation
in the foreground.

Lack of Promoting Brand Transparency

H&M have developed transparency as tested that they reveal their supply chain practices to
the stakeholders. Not declaring the origin of the products or the conditions in which they
were produced increases stakeholders' doubt on whether there are any unethical practices
involved. A rather negative consequence of no transparency might be protests against
companies which are accused of using sweatshop labor at the beginning of the 1990s and
2000s (Brewer, 2019). Such actions forced many of them to revise their supply chain
disclosures. Besides, environmental problems are in danger. Such as the pollution of water by
the production of patterns for the fashion industry with the processes of dyeing. Failure to
disclose the company's attempts to reduce pollution can lead to H&M being categorized in
the group of the least environmentally conscious brands of the industry.

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2.2 Solution Drivers and Hypothesis Solution Logic Tree

Figure 3: Solution logic tree for sustainability issues by H&M

(Source: Self-created)

In addressing H&M’s objective to improve its ethical supply chain practices by 10%, we can
analyze how the Solution Drivers and Hypothesis Solution Logic Tree might address the
issues in the problem tree. The solution tree branches into three main strategic components:
Supplier Collaboration Program, Worker Empowerment Initiative, and Transparency
Platform Implementation.

Supplier Collaboration Program

Code of Conduct Implementation A supplier code of conduct establishes a clear
framework for suppliers’ ethical behavior. This might
include, for example, no tolerance for child labor,
requirements for safe working conditions, and
environmental protection measures. H&M can take
inspiration from the Electronics Industry Citizenship
Coalition (EICC) Code of Conduct (Wren, 2022),
which has been effective in improving the electronics

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 supply chain.
Audits and Compliance Checks Regular audits, possibly using third-party auditors, can
ensure compliance with the code of conduct and reveal
areas needing improvement. An example would be
Nike’s response to child labor criticisms in the 1990s
(TFL, 2019); the company now publishes a detailed
annual sustainability report that includes information
on its audits.
Training and Capacity Building- Investment in supplier development such as training
programs can enhance suppliers' capabilities to meet
ethical requirements. Patagonia’s “Footprint
Chronicles” initiative illustrates how supplier
education can be part of a successful strategy for
sustainability and ethical production (Patagonia,
2022).
Incentives for Suppliers Financial incentives or long-term contracts can reward
suppliers who meet ethical standards. A relevant
example is Starbucks’ Coffee and Farmer Equity
(C.A.F.E.) Practices, which provide price premiums to
coffee growers who meet certain social and
environmental standards (Starbucks, 2024).
Supplier Development Programs Collaborative development programs might focus on
improving the sustainability of materials and
production processes. H&M could, for instance, work
with suppliers to find alternatives to harmful dyes or to
optimize water usage in cotton farming, as Levi’s
Water < Less program has done (Fashion Network,
2019).

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Worker Empowerment Initiative
Fair Wages and Working Hours Ensuring fair remuneration and reasonable working
hours are fundamental to workers’ rights. The Fair
Labor Association (FLA) collaborates with brands like
Adidas to establish and uphold such standards.
Health and Safety Standards Adherence to safety standards is critical to prevent
disasters like the Rana Plaza collapse (Auke and
Simaens, 2019). Programs such as the Accord on Fire
and Building Safety in Bangladesh are direct responses
to such crises, aimed at preventing their recurrence.
Child and Forced Labor Strong enforcement of labor laws and regular audits
Prevention can help eliminate these egregious practices.
Hershey’s and other chocolate producers have faced
scrutiny over child labor, leading them to implement
comprehensive tracking systems to ensure child labor
is not part of their supply chains (Brewer, 2019).
Empowerment and Partnership Empowering workers through education and
Programs advocating for labor rights can contribute to a more
ethical supply chain. H&M can draw from examples
like the H&M Foundation’s partnership with the Hong
Kong Research Institute of Textiles and Apparel to
promote the recycling of garments as a way to
empower workers with new skills and reduce waste
(Zumente and Bistrova, 2021).

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Transparency Platform Implementation
Documentation of Supply Chain Full disclosure about the supply chain ensures
accountability. For example, the blockchain initiative
by Everledger provides transparent tracking of
diamonds, which could be adapted by H&M for
garment tracking.
Traceability of Raw Materials Knowing the origin of materials is essential to ensuring
they are sourced ethically. The Responsible Down
Standard (RDS) certifies that down in bedding and
clothing comes from ethically treated ducks and geese
(Niinimäki et al., 2020), which H&M could emulate for
its own products.
Investment in Digital Platforms Blockchain technology can ensure the integrity of
supply chain data. H&M can look to De Beers’
diamond tracking platform, Tracr, which ensures
ethical sourcing through blockchain technology (De
Beers, 2022).
Stakeholder Communication Transparent communication with stakeholders,
including the public, can build trust and brand loyalty.
An example is Adidas’ partnership with Parley for the
Oceans, which not only recycles ocean plastic into
sneakers but also widely communicates these efforts,
thereby enhancing brand reputation (Arias-Meza,
2022).

Connecting Problem Statement with solution drivers to meet the objective

Ethical supply chain practices so, the analysis finds that ethical supply chain practices are a
part and parcel of H&M's sustainability targets because they in the first place are labor right,
the environment and brand reputation (Street et. al, 2023). Nonetheless, these principles can
only be attained after overcoming the obstacles attached to the fast fashion practice. Very
basic of labor rights like minimum wages, working hours and safety conditions are far from
being met in garment producing countries around the globe. Whilst in the last few years
H&M has done things like implementing supplier codes of conduct and audits, enforcement

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is still challenging as H&M is having limited resources and loopholes in the regulations
(Zumente & Bistrova, 2021). Achieving these objectives shall be possible by joining efforts
with the suppliers, NGOs and governmental agencies aiming at systemic transformations and
imposing regulations focused on ethical labor standards. Moreover, transparency and
traceability are also necessary for identifying and solving the loss in ethics within H&M
supply chains. Nevertheless the challenge is quite complicated due to the fact that supply
chains are usually fragmented and to companies` insufficient visibility to subcontractors and
raw material sources. Investing in technologies and data systems can help in achieving this
aim, but H&M must also include suppliers into the partnership to improve the transparency
standards and build a culture of accountability (Maiti, 2023). The management of the
suppliers is yet another facet which contributes to the supply chain ethics. While H&M has
some power and ability to oversee supplier behavior from enforcing contracts to monitoring
through audits, the need to maintain ethical standards uniformly across a wide chain of
suppliers remains a challenge. H&M has to take into account the compliance requirements
combined with the practicalities of the global supply chain, some of which could be brought
about by local regulations, resource shortages and also cultural differences.
These solutions comprise of both strategies coupled with practical initiatives that would
enable the company to become more responsible towards quality product delivery and
lowering its carbon footprint (Perez et. al,2021). In another exemplar, suppliers collaboration
program could include ongoing training and advice, suppliers involvement in sustainability
matters, and supplier performance enhancements- linked with ethical and environmental
performance measures. In most cases, suppliers are the ones directly producing the items that
H&M offers to the ever-growing consumer so by working closely with suppliers, the
transparency, accountability, and improvement could be first promoted as well (Dewalska-
Opitek et al., 2021). On the same cap, the worker empowerment program could comprise an
education program and a system that workers can use to learn it. Beside that, the program
could support such initiatives as improvement of working conditions and labor rights through
the mechanism of worker representation and feedback. Through accepting workers’ will and
making them a party to the decision-making process, H&M can establish a model of equality
that benefits both workers and the supply chain in a sustainable manner (Choi et. at,2023).
The model of a digitalised transparency platform could be the development of a digital
app/platform that would give consumers instantaneous information about farming and
production processes, including supply chains, factories and green certifications. This can be

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done by making information about the progress on the sustainability initiatives widely
available and collecting feedback from the consumers to prove that H&M is taking actions to
reduce its impact on the environment.

Prioritization Matrix for Solving H&M’s problem

This contributed to padding retailer H&M investigating several challenges that crop towards
in the fabrics industry, meaning that changes constantly the landscape. It might be extremely
important for making decisions about innovative approaches or suggestions from peers. to
achieve we can react to all of these kinds of problems that arise in a useful way. Prioritizing
the structure known as the scaffold as you enjoy the final stage is the best means aimed at
helping with an in-depth assessment and definition of particular important techniques with us
(jablonsky, 2015).
Identification of potential Pathways:
 The commodity Combined
 Initiatives throughout Sustainability
 Improved The advertisement Approaches
 The expansion of the landscape
 Optimization to the Supply Chain:

The commodity Combined

H&M continues diversifying its product broadening the scope through product diversification
because to provide a case to a particular greater number of clients. The suitable foundations
that were good for this method, at least those which want to concentrate on advertising and
company philosophy, are slightly a long-term objective. Of capturing certain market sectors
and losing risks associated specifically as a result of one of the categories (Benito‐Osorio et
al, 2012). Another benefit is that H&M could escalate numerous sources of revenue and adapt
to purchaser morphing tastes thereby broadening its product line. H&M will be able to
diversify its goods no matter it has to invest in R&D current advances given the way it
currently operates and spot in the market.

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Initiatives throughout Sustainability

Sustainable business practices are constructed into H&M's Organization across a few
divisions including its supply, wrapping or and geographic distribution, to be a component of
their support of the environment. Initiatives like this. The foregoing phenomena approach,
that has been its origins in private companies' social responsibility, seeks to respond to the
increasing demands of shoppers for more sustainably produced goods.
Making environmentally friendly actions extends the image of a business, attracts
ecologically responsible customers who might be interested, and encourages optimal turnover
among the long term (Darus et al., 2020).
Prosperous if partners from vendors absorb around them as well invest in environmentally
friendly procedures. In any case, the location could have been full squandering proportions.

Improved the advertisement Approaches

Improved strategies for marketing maximize on by executing cutting-edge methods to raise

brand recognition, engage end users, and additionally boost revenue. This theory highlights
an amount of efficient promotion and communication and is based on marketing concepts.
Revenue growth can have beneficial effects with regard to effective marketing, as well as the
client base and customer perception.
Prospective with politically relevant resources as well as expertise, but he must include
constant retraining to bending what consumers want and emerging markets (Nguyen, 2018).
Helps the brand achieve the goals set of interacting with clients and being meaningful in a
highly competitive marketplace.

The expansion of the landscape

The strategy developed by businesses to broaden the firm's market share and explore yet
untapped the geographic or community-focused jurisdictions is known as "an increasing the
one called outdoors." The statement refers to market growth strategies used by private
companies with perspectives to grow rather than sticking to their current market condition
segments.
The promise effects on the growing prominence are boosting ways to finance it, capturing the
remainder of the marketplace, then and then which in turn minimizes sacrifice in specific
locations or advocates breaks (Sumita at al.,2010).

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Economical as long as it is allied to research into a market, for example, regional advertising
programs that are and then strategic alliances; nonetheless, it requires a detailed examination
of the competition landscape additionally market trends.

Optimization to the Supply Chain

All of these factors—which add to flexibility, lower costs, additionally ultimately increase
effectiveness—are components that make up a logistics system that is tailored for H&M. This
manner of thought is founded on the ideas of operational leadership and denotes the
importance of application code, developing interface, and collaboratively and count
standards.
Impact: Reduced prices mean shorter periods of time from concept to executed. Additionally,
improved both performance and sustainability are all at risk throughout an adequate supply
path algorithm for optimization. Easily attained by performing information-driven making
choices, process the improvement, and permission of contemporary technological
advancements; naturally, a connection to a small number of stakeholders must seek while to
some for the entire cost belonging to their funds.

In summary, obstacles facing apparel manufacturing, and H&M confirms thoughtfully

thought-out choices to overcome them. Their sensors strive to produce a broader palette of
clothing, use environmentally conscious production processes, employ inventive methods of
marketing, improve purchasing products via the internet, expedite extraction as well as
shipping of clothing, and be certain prospective clients have an excellent shopping
experience. In order to meet the demands of a broader circle of end users. By acting in a
certain way, H&M hopes that it can keep growing and retaining its appeal to customers.

Work plan

Hypothesized Research Data Used Data Data Analysis

Solution Question Collection Techniques

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 Method
Evaluating the Customer Exterior sales We'll use
The commodity effects of reviews and records will be statistical
Combined: diversity information on characterized in indicators for
involving sales served as order to absorb studying sales
product additional data on trends information in
expansion on sources of data and revenue order to identify
H&M's income used in this from sales. A themes in
and the particular series of efficiency of
participation of investigation. interviews with products.
customers is Responses from consumers will Secondly, the
the clients provide help form purchaser of the
investigators' insightful criticism on segmentation
main goal. The information novel type study will assist
precise goal is about extent to offers, which in categorizing
to ascertain the satisfaction and can mean clients allegedly
likely scenario preferences, opinions about to their
that and While the design, purchase
introducing statistics on craftsmanship, behaviors,
new product sales and cost. which lets
lines will illuminates focused
appeal to a what makes advertising
greater number new brands plans.
of clients and perform (Bilgili
generate at al., 2016)
income.
Initiatives The mission of The primary Learning on An examination
throughout this research producers of environmentall is undertaking
Sustainability. subject is to data for this y friendly an evaluation
evaluate how analysis are behaviors and between the
H&M's brand customer their results pre- and after its
perception and surveys and the will be taken by implementation
net profit suffer environmental working with times during

17
 from an illness effects reports. internal which
by measures to Feedback sustainability sustainability
foster surveys record papers. Added activities to see
sustainability. attitudes and to that, hunt how brand
It aims in order sketches input from their perception
to evaluate how referring to clients will be changes in
many sustainable sent shut down years to come.
implementing practices, in to find out how Furthermore, by
eco-friendly comparison to they feel about doing a
methods helps environmental H&M's an situation of
the financial impact studies attempt to be emotion
performance that shed light non-toxic to the analysis of
and consumers on how environment. input from
(Zilahy at successful clients,
al.,2009) sustainability significant
initiatives are. themes and
sentiments
pertaining to
environmentally
friendly
standards will
be discovered.
Improved The This study The primary Learning on A study of
advertisement argues over the data sources for performance contrasts will be
Approaches ways that assessing are during performed to
various social media campaigns, evaluate
marketing analytics and including indicators like
approaches marketing metrics like return on
ripple through campaign data. impact, investment and
H&M's the While websites interaction, and the involvement
reputation of like Facebook higher rates of of customers
the brand and metrics conversion, will rates in order to
consumer compare be built through compare the

18
 reaction. It is audience the use efficacy of
used to attitude and associated with multiple
determine how involvement marketing the methods of
well unlike and marketing advertisement marketing.
anything voter tracking tools. Moreover,
marketing information Furthermore, emotional state
initiatives raise sheds light on social media analysis of
consumer the tracking social platforms
education of effectiveness of technologies mentions will
brands and various forms will be utilized begin to shed
encourage of marketing. that will track light about the
interaction with mentions and manner
them. sentiment consumer base
corresponding feel about
to the H&M H&M's its
brand. advertising
campaigns.
Optimization to the The findings of Data Used: By gaining Because it
Supply Chain this Cost figures access to determines the
investigation and financial difference
topic looks at economically records, between
the negative viable information on implementation
effects of the measuring supply chain -related and
oversight of the criteria are the costs will be benefit-related
supply chain on main sources of acquired, expenses, the
cost control data for this including analysis of the
and conserving question. Cost information on expenditures
the data might purchase, and advantages
environment show the costs production, and will be used to
fulfillment at associated with distribution determine the
H&M features. the supply expenses. financial
The chain, and expenses of
determination environmentall supply chain

19
of the y friendly activity
successful metrics will optimization.
outcome of evaluate the The
optimizer deals success of examination of
in reducing things like performance
expenses pollutants data which
related to emissions and involve
maintenance the practice of sustainability
and moderating ethical sourcing can also reveal
sustainable (Geunes ,2005). areas for
development additional
all over the growth and
globe may be assess the
its aim. severity of
which
objectives
related to
sustainability
have been
achieved.

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