2024
H&M
Year
Sector
Textile
ACT assessment methodology
Fashion
Performance Score
Highlights of the climate strategy: The H&M Group has committed to several ambitious targets across its three emissions scopes. Market-based scope 1 and 2 emissions decreased by more than 40% between 2019 and 2021, and scope 3 emissions have decreased by 24% since 2019. A roadmap for the reduction of GHG emissions by item is available to achieve the 2030 targets. The company is deploying strategic actions on several levers concerning the decarbonization of transport activities, including carriers. In the development of its transition plan, H&M carried out an analysis of its risks and opportunities across its entire value chain and on 3 different scenarios (including 1 low-carbon scenario), although they did not necessarily participate directly in the construction of the transition plan. The commitment policy with suppliers is defined with a qualitative and quantitative monitoring of the actions to measure the success of the actions implemented. The company wants to phase out 100% of Tier 1 to 3 suppliers from coal by 2026.
Areas for improvement identified: FLAG emissions are not accounted for, making it difficult to assess the precise impact of products. The traceability system is not explicit, no clear monitoring is indicated. Similarly, no information on the emissions of the materials purchased is currently collected by H&M. There is little detail on the efforts made to ensure the durability and repairability of products, and no strategy or actions related to unsold products. In addition, Tier 4 suppliers are not included in its GHG footprint, nor are they traced. H&M could increase the reporting requirements for its suppliers' GHG emissions, and include phase-out mechanisms for suppliers that do not meet environmental commitments. In addition, no member of the executive committee has had any past professional experience on climate issues, nor a level of training attesting to maturity. Moreover, H&M does not have a clear long-term vision or a structured roadmap after 2030. It would be interesting for H&M to include a financial dimension in the transition plan, as "low-carbon" business models represent a tiny part of turnover. Finally, H&M does not expect a stabilization, let alone a reduction in sales, with a target of growth in volumes sold of +10% per year. This "Business As Usual" trajectory calls into question H&M's credibility in achieving its reduction targets.
Areas for improvement identified: FLAG emissions are not accounted for, making it difficult to assess the precise impact of products. The traceability system is not explicit, no clear monitoring is indicated. Similarly, no information on the emissions of the materials purchased is currently collected by H&M. There is little detail on the efforts made to ensure the durability and repairability of products, and no strategy or actions related to unsold products. In addition, Tier 4 suppliers are not included in its GHG footprint, nor are they traced. H&M could increase the reporting requirements for its suppliers' GHG emissions, and include phase-out mechanisms for suppliers that do not meet environmental commitments. In addition, no member of the executive committee has had any past professional experience on climate issues, nor a level of training attesting to maturity. Moreover, H&M does not have a clear long-term vision or a structured roadmap after 2030. It would be interesting for H&M to include a financial dimension in the transition plan, as "low-carbon" business models represent a tiny part of turnover. Finally, H&M does not expect a stabilization, let alone a reduction in sales, with a target of growth in volumes sold of +10% per year. This "Business As Usual" trajectory calls into question H&M's credibility in achieving its reduction targets.
Narrative Score
Business model and strategy: H&M presents a structured climate strategy with SBTi-certified decarbonization targets, clear governance, and associated levers that can claim to achieve the goal. The publication of its first transition plan in 2023 demonstrates a desire to engage in the decarbonization of its activities. Nevertheless, in parallel with its decarbonization objectives, H&M is targeting an annual growth of 10% in its volumes per year, raising the question of the evolution of its emissions and the maintenance of its current business model.
Data quality: H&M provides comprehensive, consistent and verified GHG data, in particular on its Scope 1, 2 and 3 emissions. The quality of the data on decarbonization levers is good. On the other hand, data remains limited or absent on some key aspects of the low-carbon model: revenues from circular models, carbon impacts, associated performance indicators (not included in the score).
Reputation: H&M is a member of climate-related industry coalitions (Fashion Pact). Nevertheless, H&M is the subject of recurring controversies ("fast fashion", greenwashing with their "Conscious" range, deforestation in Brazil for cotton, etc.) which reduce the company's credibility on its environmental issues.
Risks: Through its analysis of risks and opportunities, H&M has identified several risks that could impact its transition to a low-carbon world, however only 4 are analyzed in depth. The main risk identified for H&M is reputational and regulatory (carbon tax). Fast fashion is at the heart of H&M's business, increasing its exposure to reputational risk and could thus jeopardize its transformation to a low-carbon model. In addition, the strategy of continuous growth in the volumes produced weakens the group's resilience in the face of these risks, in the absence of breakthrough or structural adjustment scenarios.
Data quality: H&M provides comprehensive, consistent and verified GHG data, in particular on its Scope 1, 2 and 3 emissions. The quality of the data on decarbonization levers is good. On the other hand, data remains limited or absent on some key aspects of the low-carbon model: revenues from circular models, carbon impacts, associated performance indicators (not included in the score).
Reputation: H&M is a member of climate-related industry coalitions (Fashion Pact). Nevertheless, H&M is the subject of recurring controversies ("fast fashion", greenwashing with their "Conscious" range, deforestation in Brazil for cotton, etc.) which reduce the company's credibility on its environmental issues.
Risks: Through its analysis of risks and opportunities, H&M has identified several risks that could impact its transition to a low-carbon world, however only 4 are analyzed in depth. The main risk identified for H&M is reputational and regulatory (carbon tax). Fast fashion is at the heart of H&M's business, increasing its exposure to reputational risk and could thus jeopardize its transformation to a low-carbon model. In addition, the strategy of continuous growth in the volumes produced weakens the group's resilience in the face of these risks, in the absence of breakthrough or structural adjustment scenarios.
Trend score
H&M is starting to structure its climate strategy with its first transition plan and with ambitious commitments for 2030 and 2040. In addition, H&M is engaging its stakeholders, including suppliers in this decarbonization, which are the number 1 source of H&M's emissions. A negative rating would not be justified, as the company is undertaking an ambitious decarbonization process. Neither is a post-life note, because H&M does not want to slow down the pace with a target of 10% growth in volumes per year, questioning the credibility of the objectives set. The maintenance of a score of " = " was therefore preferred.
Source
ACT Eval 2
Evaluator
Ekodev
GLOBAL SCORE
Performance score (/100)
45
Disclosure score (/100)
100
ℹ️
Narrative Score (A > E)
C
Trend Score (- = +)
=
Scores by module
#1 : best score in the sample
N/A% = module not applicable to the sectoral methodology
Target Score : 30%
Material Investment Score : 61%
Intangible Investment Score : N/A%
Sold Product Performance Score : 53%
Management Score : 57%
Supplier Engagement Score : 66%
Client Engagement Score : 26%
Policy Engagement Score : 32%
Business Model Score : 26%
Indicator weight by module