H&M shows fashion needn’t cost the Earth

The fashion world is learning to reduce how much energy it uses. For H&M’s CEO, Karl-Johan Persson, investing in sustainability is an investment in the company’s future as well as in the communities where the company operates. H&M has taken on the challenge to make fashion sustainable and sustainability fashionable.

With the company’s progressive actions for providing sustainable fashion creating positive effects throughout its value chain, Persson knows H&M is in an ideal position to show that sustainability and value can work together. H&M’s business idea is to offer fashion and quality at the best price in a sustainable way. It’s about the best value, not the lowest price. Sustainability is an essential part of the customer offer and how the company wants to contribute to the world. That’s why H&M has made a public commitment to get all of its electricity from renewable sources wherever it can. [1]

Big targets

H&M knows that most of its energy use—over 80% of it—is electricity for its stores, so this is the company’s primary focus. Starting this year, the plan is to obtain electricity only from renewable sources, wherever that can be done in a credible way. That should see the company’s total emissions reduce by over half, despite adding new stores every year.  And, by 2020, it plans to cut how much electricity it uses per square meter by 20%, compared to where it was in 2007. These achievements will set H&M way ahead of what climate science indicates the company should be doing to help keep the global temperature in check. [2]

Big challenges

H&M has said it will buy renewable energy “wherever this is credibly available and feasible.” This is because in some regions, like India and China, renewable energy sources are harder to find, or the structures and legislation needed to avoid double-counting are not in place.  One of the ways H&M is helping to combat this challenge is by collaborating with RE100 to help promote demand for renewable energy and make it more readily available around the world.[3]

Changing the way the future looks

In addition to purchasing 100% renewable electricity for their operations wherever possible, H&M is also supporting the delivery of new renewable power to the grid and market. The support for production of new renewable power plants is delivered through a groundbreaking financing vehicle called GO2 from ECOHZ. The funds are transferred directly to a dedicated foundation, which lends up to 15% of a renewable energy project’s cost, providing the last top-up tranche of the project financing. This is where too many projects often get stuck. This last piece in the project’s financing is leveraged between 6 and 15 times with the release of the project equity and bank loans. When the project repays the loan to the foundation, the funds are then re-loaned out to a new project, creating a multiplier effect on the foundation’s lending portfolio and on the impact of the initial GO2 money. All projects are subjected to third party verification and abide by a forthcoming CDP standard. H&M is the first to take advantage of this mechanism, which lets the company serve as a steppingstone to projects which make more renewable energy available for everyone.

Leading the way for business

Ben Ferrari, director of partnerships at The Climate Group, says, “We believe that the development of a thriving, global market for authentically renewable power will be a game-changer in securing the emissions reduction that climate science tells us it is critical to achieve. Business leadership is essential to making this change happen and it is very encouraging to see H&M making a public commitment to such a transition.” But he also sounds a note of caution—companies alone can only do so much: “The right policy frameworks need to be put in place by national and sub-national governments to make this happen.” [4]

[1] http://sustainability.hm.com/content/dam/hm/about/documents/en/CSR/reports/Conscious%20Actions%20Sustainability%20Report%202014_en.pdf
[2] http://sustainability.hm.com/content/dam/hm/about/documents/en/CSR/reports/Conscious%20Actions%20Sustainability%20Report%202014_en.pdf
[3] http://sustainability.hm.com/content/dam/hm/about/documents/en/CSR/reports/Conscious%20Actions%20Sustainability%20Report%202013_en.pdf
[4] http://sustainability.hm.com/content/dam/hm/about/documents/en/CSR/reports/Conscious%20Actions%20Sustainability%20Report%202014_en.pdf

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