The H&M group sells an estimated three billion articles of clothing per year. Its revenue makes it among the top three fashion retailers in the world.
Clothing for its brands, including H&M, Arket and & Other Stories, is manufactured in 40 countries, the company said; in Bangladesh alone, it sources from 275 factories that employ half a million workers.
As it sprawls ever farther around the globe, hopping from trend to trend, how can H&M keep track of how the skirts, pants and sweaters it sells are made? How, for example, can it monitor whether, in faraway countries, workers are being paid less than they need to live, forced to work hours of overtime in precarious conditions?
This spring, after almost three years of preparation and coordination by 40 team members from Hong Kong to Stockholm, and at a time when scrutiny of the global fashion industry and its shadowy supply chain is greater than ever, H&M introduced an effort to do exactly that — and to make it public for shoppers.
Now, the company says, it can be held accountable for the origins of its products. If consumers care to look.
They Made Your Leggings
Browsing the H&M website this month, you may find yourself taken with a ladies’ amber sweater with “Hiver” written on the front, or else a pair of pink children’s leggings, with smiling bunny faces and ears that stick out from the knees for $4.99.
Click on the “product sustainability” tab on the page, and you will learn they were made in Bangladesh by some of the 13,000 workers at the Jinnat Apparels & Fashion plant in Gazipur, a dense manufacturing neighborhood near Dhaka.
This is part of the company’s new “consumer-facing transparency layer.” H&M shoppers can now find out not only the country where clothing was manufactured, but also details on materials and recycling, the name of the supplier or authorized subcontractor where a garment was made; the factory address; and the number of workers employed there.
Customers shopping in physical stores can also have access to this information by using the H&M app to scan the product price tag.
There are limits to how much information you’ll get, of course. The sustainability tab won’t tell you that Jinnat sprawls over seven floors, each the size of a football field, or that employees perch in front of whirring sewing machines making white cotton T-shirts, monitoring 337 high-tech embroidery appliances and snipping at stray threads.
And you won’t find out that this single company makes 400,000 pieces (roughly 110 tons) of clothing per day, or around 10 to 12 million units per month, up to a quarter of which will be bound for H&M.
Nevertheless, it is the first effort of its kind by a retailer of this scale.
H&M created the system by building a bridge between its supplier and production databases and then linking it to its retail interfaces. (The company declined to say what the project cost.)
Pascal Brun, the head of sustainability for the H&M brand, said the new public transparency layer showed that the company had nothing to hide regarding labor or environmental practices, or how H&M products were made.
“It is not going to change the world,” he said. “But it is about building a foundation for real change, given we can’t build this industry from the ground up all over again.”
Seeing Through Transparency
“Transparency has become the key driver of change in the fashion industry, which used to be about as untransparent an industry as it could possibly be,” said David Savman, the head of production for the H&M group, from a factory floor in Dhaka.
Tanned and golden haired, the Swede filed between rows of workers and inspected sequined T-shirts, asking line managers about different cotton hybrids and admiring fire doors.
Change came crashing down on the industry with the Rana Plaza disaster in Bangladesh in 2013, a factory collapse that led to the death of more than 1,000 workers, with scores more disfigured or disabled for life.
In the wake of the catastrophe, several Western retailers found they had sold clothes sourced from the factory, or had little to no idea where the clothes they sold were sourced from. All have since come under increasing public pressure to investigate, police and invest in exactly where and how their products were made.
There is also pressure for them to be as transparent about their findings as possible (though some have been far more forthcoming than others about taking action).
The creation in Bangladesh in 2013 of two five-year fire and safety monitoring agreements between retailers and unions made significant improvements and reforms.
The Accord on Fire and Building Safety, which is legally binding, was signed by more than 200 retailers including H&M and Inditex (neither of which had any ties to Rana Plaza, but plenty of other alleged supply chain abuses). The other agreement is the nonbinding Alliance for Bangladesh Worker Safety, which was signed by Walmart, Gap and Target.
Both have spurred improved working conditions in many Bangladeshi factories, and calls for other countries to adopt similar standards.
These agreements, now up for renewal, have sidelined some of the country’s most dangerous factories, and cut their ties to most Western retailers, though not all. A Wall Street Journal investigation in October found that Amazon continued to sell clothes from Bangladeshi factories that other retailers had blacklisted because of their inability to pass safety requirements.
Pressure from consumers has also prompted brands like H&M to proactively support local suppliers who create safe and profitable businesses in places like Bangladesh.
“We choose not to work with a lot of suppliers that other rivals work with so they can save on costs,” said Karl-Johan Persson this fall. (In 2018 six suppliers in Bangladesh were phased out by H&M because of their poor sustainability performance.)
Mr. Persson, the billionaire chief executive of H&M, sat in the “hygge”-style library for the company’s army of young designers in Stockholm as he defended his family company’s business model and its contributions.
He declined to specify how much H&M spent annually on transparency efforts, other than to say the investment had continually hurt short-term profit in order to ensure the long-term survival and growth of the company.
His argument is that by working in low-cost areas, H&M is creating jobs and investing in the economy; by making its partnerships public, it is accepting its own liability.
“But often,” Mr. Persson said, “the focus ends up on what we don’t do.”
The new “transparency layer” project has been cautiously applauded by some human rights and fashion advocacy groups and union leaders. But many have also said that H&M’s efforts do not go far enough, questioning whether improvements like this are worthwhile if they merely prolong the existence of a system where profits and shareholder interests are continually placed ahead of employees, suppliers and the environment.
Currently, customers do not have access to information on workers’ wages at individual factories, or local minimum fair living wage commitments and calculation methodology. Nor does the transparency layer offer a breakdown of the pricing structure that could specify how labor costs are calculated.
“Transparency is primarily a means to an end, and mere information about where a garment is produced does not automatically guarantee meaningful changes in factory labor conditions,” said Aruna Kashyap, senior counsel for the women’s rights division at Human Rights Watch, which is part of a coalition that started the Transparency Pledge (of which H&M is a signatory).
“H&M is among the leaders on supplier transparency, and other companies should follow this practice,” Ms. Kashyap said. “But that doesn’t mean that H&M and other companies that are transparent have fixed an industry model that is replete with problems.”
The Model and the Problems
Even after the Rana Plaza tragedy, the global business model for producing low-cost clothing remains the same. Most brands don’t own their own production facilities, but instead contract with independent factories to make their garments. Generally, in these factories, located in mostly developing economies, very low wages are paid to workers using manufacturing processes that are geared toward expediency rather than the environment.
Subcontraction or homeworking remain common, and make it even harder to track where clothes come from.
The industry is operating at an almighty scale. In total, across the fashion industry, 80 billion garments are produced each year, according to Greenpeace, with consumer demand and appetite for trend-fueled fashion only growing stronger, in part thanks to a digital culture powered by social media and the wallets of a young emerging global middle class.
The worldwide apparel and footwear market’s expected growth, pegged at roughly 5 percent through 2030 by Euromonitor analysts, would risk “exerting an unprecedented strain on planetary resources” by raising annual production of fashion to more than 100 million tons, according to a Euromonitor report.
The pressure to meet those demands, and the demand for ever-cheaper labor, are at odds with the move toward transparency and tightly managed supply chains. Many major brands in Europe and North America continue to have limited information about the factories and workers producing their wares.
Inspections are usually delegated to third-party auditors, which have proven to be far from foolproof and at the mercy of the often uneven tides of developing nations.
Revelations of egregious failures within the garment industry still emerge on a regular basis. A Guardian story in October reported that the active wear company Lululemon had been sourcing clothing from a factory where Bangladeshi female factory workers said they were assaulted.
This month, in Delhi, India, a fire broke out in a factory that made school bags and killed 43 workers, including children, who were asleep on the floors inside.
Last year, Transparentem, a nonprofit focused on investigating human and environmental abuses in the apparel industry, published a report about abusive conditions and forced labor at a set of Malaysian apparel factories that made wares for brands in North America and Europe such as Primark, Asics, Nike and Under Armour.
Servitude and Lack of a Living Wage
According to the Transparentem report, many workers, often migrants from Bangladesh and Nepal, said that they paid steep recruitment fees to acquire jobs. These could take years to pay back, resulting in “debt bondage,” a common form of modern slavery that occurs when a person is forced to work to pay off debts for little or no pay.
Factories limited employees’ movements by withholding their passports; it wasn’t unusual for them to live jammed together in squalid conditions. Many also had to pay a government levy on foreign workers out of their own paychecks (a practice that was legal when Transparentem interviewed workers in 2016 and 2017).
“The physical distance, cultural distance, and often time zone difference have all meant that there are inherent challenges in understanding the labor conditions in any manufacturer supply chain,” said Benjamin Skinner, the founder and president of Transparentem.
Brands have largely trusted suppliers to follow certain rules with employees and the environment and then verified that those policies were being followed, Mr. Skinner said.
But based on his organization’s work, he added, “the ‘verify’ part can be pretty weak.” Because auditors would alert factory owners to their visits, or only interview workers in the presence of their bosses, it created an environment where noncompliance was easy to hide.
This gap between intent and reality also emerged in a May report from University of Sheffield researchers in Britain on apparel companies not delivering on promises to pay workers a living wage.
Generally set by governments (sometimes with input from foreign and local businesses, unions and NGOs), living wages can differ significantly between countries, with benchmarks sometimes geared to maintaining a country’s competitiveness as a low-cost manufacturing destination rather than the needs of workers.
The wages can also be significantly less — sometimes even falling below the poverty line — than the living wage as defined by outside groups, which broadly incorporates food, housing, medical care, clothing and transportation.
Many companies, including Adidas and Puma, referred to components of a living wage in their supplier codes of conduct, the researchers said, but the wording around requirements was “very vague,” leaving fulfillment an option and the legal minimum wage the only requirement.
On top of all this, the researchers noted that companies relied heavily on outside auditors to ensure codes of conduct were being followed, running into the same issues outlined by Mr. Skinner.
Many of these firms are “beholden by financial conflict of interest since they are hired by companies who could decide not to continue to hire them if they identify too many problems,” they wrote. Often, they visited only top suppliers, leaving out the many subcontractors where abuses can be the worst.
Who Polices the Supply Chain?
After Transparentem revealed the Malaysian abuses to 23 companies with direct or indirect buying relationships with the factories, most said that they would take action.
Buyers and suppliers were able to negotiate the return of passports and secure the reimbursement of recruitment fees for workers at several facilities. (By November 2018, the total amount of fees paid and scheduled to be paid exceeded $1.4 million.)
Still, under the current system, the industry status quo means major garment manufacturers are mopping up mistakes, rather than not making them at all. This is the problem H&M is trying to solve.
Mr. Savman of H&M said that because H&M did not own factories, all sustainability efforts and investments like a Dhaka training center ultimately focused on supporting and promoting processes and mechanisms between suppliers, unions and workers that made them self-sufficient when it came to problem solving.
A self-reporting system called the Supplier Partnership Impact Program allowed H&M to see issues and regulate what sort of monitoring was needed and where. National Monitoring Committees — round table discussions between H&M employees, union representatives and factory owners — attempted to resolve pay disputes and abuse allegations at factory level.
Alongside regular auditing by independent groups, Mr. Savman said, H&M still frequently sent its own employees to monitor factories, sometimes by prearrangement but often unannounced.
His colleague Payal Jain, the sustainability manager for H&M’s global supply chain who started her career as a factory worker in India, said that H&M visited its factories several times per week, and 2,500 audits were made in the country per year.
That may sound like a lot, but it is an average of 10 per factory — in 365 days. Or less than once per month. The company was also criticized by the Clean Clothes campaign last year, which said H&M had not met a 2013 commitment made to ensure suppliers would pay a living wage to 850,000 textile workers by 2018.
(H&M said it had reached at least 600 factories and 930,000 garment workers with its fair living wage strategy, and did not share the Clean Clothes Campaign’s view of how to create change in the textile industry.)
Additionally, some factory owners say that despite support from H&M’s sustainability teams, they experience pressure from the company or from production teams who still want more product at a cheaper price — or they threaten to pull their business and go to even less expensive hubs, like Ethiopia.
Ms. Jain said cost of labor was not a negotiable part of a supplier contract. But if suppliers are paid less, or overtime is required to complete a contract, the likelihood is that shortfall will get passed down the chain.
“Brands like H&M offer training, help union members establish themselves in my factory and guide us on investing in the business, which are all very good and important things,” said Lutful Matin, the manager of Natural Denims, another factory near Dhaka. It employs 6,900 workers to make garments for H&M, Zara, Mango and Esprit.
“But then their buying teams still drive down order values and I feel such pressure,” Mr. Matin said.
He had proudly shown off the conditions and quality of his products. But, he said, while “I know I’ve invested more in my factory than competitors, they still get orders. There are always new certificates and alliances that need to be passed. Globally the trading market is getting tougher. Sometimes I don’t know how easy it will be to survive.”
The Shopper’s Role
While the work it does is recognized by its recognition in projects like Fashion Revolution’s Transparency Index, H&M believes the best way to get consumers thinking about who made their clothes is to talk to them close to the point of sale.
“Consumers have a lack of trust and say they don’t always know how to make the right choices,” said Anna Gedda, the head of sustainability for the H&M group. She added that it was “a constant struggle” to work out how much information a customer may want versus what might make them switch off or walk away from a sale.
From Dhaka, Mr. Savman was more forthright. “We are still at the stage where if you put two T-shirts, one cotton and one recycled cotton, which is 30 percent more expensive, the majority of consumers will still take the first option,” he said. “We put a lot of information out there, like the product transparency layer. But how much do customers engage with it? Not a lot — yet.”
Nearby, the managers and owners were keen to show off the scope and quality of their Jinnat complex, from their high-quality Italian knitting machines and subsidized food store and medical facilities to the anonymous complaint boxes on every floor and payment system so that workers can be compensated directly and efficiently.
As tens of thousands of workers streamed back into the steamy streets for their lunch break, Abdul Wahed, the chairman, looked on.
“We are extremely proud of the factory here, and the work we have done,” he said. “People can know when and where we make their clothes.” The onus is on them to click.
