Dive Brief:
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Hennes & Mauritz AB, known as H&M, is working to improve working conditions and raise wages in the Asian factories that source 80% of its clothing and accessories.
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The Stockholm-based retailer, which has 3,649 stores across 59 markets worldwide, this year expanded a “fair wage method” to 68 factories in China, Cambodia, and Bangladesh. H&M tested the program in three factories in Cambodia and Bangladesh last year.
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The program also allows trade union participation. These issues are of increasing concern to H&M's many younger customers, and increasingly the source of unrest among workers in those countries.
Dive Insight:
H&M is Europe’s second-largest clothing retailer, and one that saw success in the U.S. even during the recession, with cheap clothes and a high turnover of styles that pleased its fashion-forward and budget-minded customer.
The retailer is one of the biggest companies dealing with factories in Bangladesh, where a deadly factory collapse a couple of years ago called attention to terrible working conditions and low pay. Since then, apparel retailers have been under pressure to address the issue. Retailers and their contract factories have had a mixed record even since, though, and it’s not clear that consumers are avoiding them despite their concerns.
But last year the company insisted that ethical production of even cheap apparel is possible. The retailer seems intent on clearing up its reputation in this area, but it says it also believes that improving worker conditions could prevent the kinds of disruptions in countries that could impede smooth operations.
“A lot of the riots and unrest we have seen in countries like Cambodia and Bangladesh is connected to the issue of wages,” Anna Gedda, H&M’s head of sustainability, told Bloomberg. “If we can address the issue of wages and industrial relations, that will lead to more stable production markets.”
The retailer has correlated its “fair wage method” with falling absenteeism and increased retention at its Cambodia factory. The company says the program will expand to all of its strategic suppliers by 2018, a set of factories that make some 60% of its offerings.
