H&M under pressure: Problem description – environmental and social impacts
Chemical scandal of H&M
One of many big problems is the environmental pollution in the fashion industry. The clothes of many fashion companies are produced with toxic chemicals. These toxic chemicals are in clothes and after dying particularly in the water. The sewages of the textile factories are poisoning the rivers and the drinking water especially in big production countries like Asia and Central America (Gaßner, 2014). In China the country with the biggest textile production, the colour of the rivers indicates the next trend colour of the season. More than 40 % of Chinese surface water is contaminated with hazardous substances that caused by dying and finishing of textiles (Beller, 2015). Consequently, in China alone 320 million people do not have access to clean drinking water (Gaßner, 2014). That are 23,4% of Chinas total population with 1.37 billions (Statistica, 2015). That means nearly one in four is affected by that problem. After dying and sewing toxic chemicals still are in clothes. By washing the clothes in the washing machine the toxic chemicals find their way also in our ground water (Gaßner, 2014). To draw attention to the abovementioned facts, Greenpeace started their Detox-campaign in 2011. Greenpeace is an international environmental organisation that fights directly by non-violent actions for protecting natural living conditions of human beings and nature. It shows detected problems, brings attention to social grievances and tries to bring positive changes. As a part of the Detox-campaign, the environmental protection organisation Greenpeace tested 141 clothing items from 20 major brands produced in 29 different countries. The items were tested and evaluated by independent laboratories. The items came, among others, from H&M, Zara and Nike. The laboratories were looking for evidence of phthalates, nonylphenol ethoxylates (NPEs) and azo dyes. Phthalates are a group of chemicals used to make plastic more flexible and harder to break. It is mixed in plastisol prints, polyester, buttons, and polyurethane coatings (Dr. Vanneste, 2013). Nonylphenol ethoxylates (NPE) are the most widely used members of the lager alkylphenol and alkyphenol ethoxylate family of non-ionic surfactants. It is used in large quantities in industrial detergents and has some additional uses that lead to releases to water. NPE is extremely toxic to aquatic organisms and is considering a hormone disrupting substances, mimicking estrogen (Mergel, 2011). Azo dyes are a large class of very effective synthetic dyes used among other things for colouring clothes, leather and other textiles. These chemicals that are used in the dying and processing of fabrics can become hormone disrupting and even cancer causing when they break down in nature, said Greenpeace’s Media Officer, Myriam Fallow. By wearing the clothes it is possible that a small proportion of the chemicals can be detected in the blood. The result of the test was that all of the 20 popular brands are making and selling clothes containing hazardous chemicals. There was no item without any toxic chemicals (Fallon, 2012). All 20 major brands are listed with their test results in the appendix. As you can see in the table on page 38, there were 6 tested items of H&M. Two of six were tested positive of NPE. As a result, H&M has committed to zero discharge of toxic chemicals by 2020 (Fallon, 2012). But that is not the sole problem of H&M.
Damaged image of H&M due to cut up clothes
Besides the fact of toxic chemicals, another well known mistakes of H&M was to cut new clothes of the winter collection into pieces and through it away instead of donates it to a charity – discovered from a Student of the City University of New York (Spiegel Online, 2010). She noticed piles of discarded winter clothes in rubbish bags on the 34th Street in New York. The bags were found behind the H&M store. H&M throw out lots of unused clothing people did not buy. Furthermore, they make sure that, after they throw stuff out, people can’t wear or resell the clothes. So H&M destroy the clothes by cutting holes in them with machines. Inside the bags were gloves with the fingers cut off, socks, damaged leather shoes, and jackets slashed across the body and arms. H&M also throws out plastic hangers in a perfectly good condition (Odell, 2010). That is very weird because clothes may go out of styles, but plastic hangers can be used more times. It was a very cold winter in New York with freezing temperatures. According to the Coalition for Homeless, the number of homeless people in New York City has reached its highest level since the Great Depression of the 1930s. According to estimates, there are about 39,000 people who do not have a home, including more than 10,000 families and 16,500 children. (Pilkington, 2010) H&M is not responsible for that but nevertheless, five blocks away from the H&M store is a group called "New York Cares", which mobilises support for the homeless people and poor families. H&M could donates the unsold clothes to charity like this and do not threat the clothes like garbage. The student who has found the rubbish bags, contacted H&M’s Swedish headquarters but she got no response. Because of that she took her story to the New York Times and published it on Facebook. On the social network Facebook she attracts high attention right up to a call for a boycott. After that the fashion giant H&M reacted and apologised for that incident and promised that it will never happened again. Normally, they donates the unsold clothes to charities, they have no idea how that could be happened. But experts do not believe in a slip-up, they suppose a purpose that H&M want to counteract competitors. Some distributors collect donors of clothes to sell them for low prices (Mik, 2010).
Increasing public criticism because of exploitation, working conditions and child labour
Another over and over again upcoming sore subject is the exploitation of labour in the main textile production countries of H&M such as Bangladesh and China. In Bangladesh the situation appears to be dramatically. H&M is criticized for substandard working conditions concerning to working hours over 70 hours per week because of short lead times. While doing so, the workers only earn a monthly income of 19 Euro. That is too little to buy food. Furthermore workers complain about violence and sexual assault (spiegel.de, 2010). Another problem is the awareness and understanding of requirements of health and safety in the workplace. Many workers repeatedly complain of dizziness and nausea by evaporations of textile fabrics at work. In addition to it, the safety standards in textile factories are very bad in Bangladesh. There are still numerous reports of fire disasters in factories and potential danger of collapse. But the biggest catastrophe in the textile industry happened on 24th of April 2013, when a building named Rana Plaza on the outskirt of Dhaka collapsed. The trigger for that were cracks in the wall due to construction defects. In the eight-story building were among others five different textile manufacturers. The disaster claimed 1138 lives and more than 2000 injured people (EvB, 2014). Besides other companies, H&M also had produced in that factory (stern.de, 2015). Additionally, H&M is struggling with child labour. In Uzbekistan 450.000 children are working on cotton fields during the cotton harvest. H&M distance itself from child labour and advocate safe workplaces. But the crux of all these troubles is that H&M is producing by 700 different independent manufactures that are working together with 2.000 cotton production plants mainly in Asia and Europe. H&M pretend that it is impossible to control the subcontractors of the suppliers because they do not have contracts or direct business relations with each other (Pientka, 2007).
The solution: Corporate Social Responsibility
In 2001 the European commission noticed in their green paper that more and more European companies started to act social responsible because of economic, social and ecological pressure. The previous chapter was presenting the pressure of H&M that set up in the beginning of the 21. Century. In the following, shall be elaborated the theoretical basis of Corporate Social Responsibility (CSR) and the integration of CSR in the fashion industry.
Development and definition of CSR
The current debates about CSR have its origins in the USA. The American Howard R: Bowen gave the first discussion about social responsibility of the companies to society in his paper named "Social Responsibility of the Businessman" (Bowen, 1953). He argues that the economic has an influence of the workers live in many areas. This led him to the question; to what extent the companies are responsible for their actions (Loew, Ankele, Braun, & Clausen, 2004). Nowadays, CSR is a worldwide-accepted development on how companies can manage their business process to produce an overall positive impact on society and environment. CSR represents awareness for social and environmental aspects with a profitable business perspective. This is called the "People – Planet – Profit" philosophy.
The phrase "the triple bottom line" was first characterized in 1994 by John Elkington in his book "Cannibals with Forks: The triple bottom line of 21st century business". He argues that companies should consider three different bottom lines. The first one is the traditional measure of profit. The second is the bottom line of companies "people account". Its measure how socially responsible an organisation has been throughout its operations. The third company’s bottom line is the "planet" – a measure of the environmental responsibility of the company (Elkington, 1997).
Fig. 4: People – Planet – Profit (NIZO, 2015)
The Triple bottom line (TBL) aims to measure the financial, social and environmental performance of companies over a period of time. Elkington is convinced that the TBL will become vibrantly interactive because it adds real value for stakeholders and assists companies in successfully navigating their marketplace (Elkington & Wheeler, Business Strategy and the Environment, 2001).
Corporate Social Responsibility is a request for companies to be social responsible for social benefits. The literature often refers to a definition of the European Commission. In July 2001, the Commission published a Green Paper entitled "European Framework for Corporate Social Responsibility", which intend to start a debate over the CSR concept and to identify how to build a partnership for development of a European framework for promotion of CSR. The Green Paper defined CSR as "a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis" as they are increasingly aware that responsible behaviour leads to sustainable business success (Commission of the European Communities, 2002). Stakeholders can be factory owners and managers, debt capital, suppliers, customers, NGO’s and workers. According to the stakeholder orientation, the company is responsible to act credibly in the common interest of all stakeholders (Prof. Dr. Lin-Hi, 2015). The term Corporate Social Responsibility is closely associated with Social Responsibility, Corporate Citizenship and Corporate Governance. Social Responsibility describes the obligation of an organization’s management towards the welfare and interests of the society in which it operates (businessdictionary.com , 2015). Corporate Citizenship is very similar to social responsibility and characterise the social engagement of a company (Pr. Dr. Günther, 2015). Corporate Governance referred to the legal and factual framework of managing and monitoring a company (Prof. Dr. Werder, 2015). The Maximum wealth is also part of CSR and can be describes in levels of social responsibility. The first level is about economic that required making profit. The second level is about "legal" to "obey the law". The third level is an expectation about "Ethical behaviour. The fourth level desired Charitable/philanthropic. It is about being a good corporate citizen. Please see the Fig.1 on page 31 in the appendix.
CSR is also associated with business ethics and sustainable economics. Till now, it is not possible to obtain a unique definition because there is no clear demarcation between the terminologies.
Fig. 5: CSR associations
The chart shows different associations of CSR. It includes different aspects of social, ecological and economic issues. A generally accepted definition of Corporate Social Responsibility does not exist so far (Hahn, 2013). This is one of the most important reasons for the lack of knowledge and its content and effectiveness. The term CSR provides only a vague definition, which leads to different expectations and paradigms. The Green Paper of the European Commission explains why there is no clear definition about CSR. CSR has no statutory specifications or standardized regulations. The reason is that companies can decide voluntarily whether and to what extent the CSR concept be integrated in their business strategy (Gabius, 2013). Nevertheless, the definition of the European Commission has established itself and is often used by the literature (Huber, Frederik, & Oguzhan, 2012). Following the interpretation of Gabius, CSR serves as a generic term that covers various fields of action of social responsibility (Gabius, 2013). Gabius has the same opinion like Elkington that in general there are three components associated with CSR: a social, economic and ecological dimension. Therefore, CSR comprises for companies to face the challenge on the one hand to be profitable and on the other hand to run an ecological economy.
Current practises in CSR in the fashion industry
Until the 20th century, the economy is considered as a closed system. One the one hand, the value of economic refers to the relation between sales of goods and services and one the other hand stimulation of exchange of offers and demands on the market. The fashion apparel industry has long been characterised by adversarial trading relationships (Jones, 2006) as well as complex, inflexible and uncooperative supply chains (Barnes & Lea-Greenwood, 2013). A common approach in the fashion industry is that the designer is responsible for creating a saleable product, generally with acceptable market prices and good manufacturing possibilities. Environmental or social issues are at best a peripheral concern (Gwilt & Rissanen, 2011) and moral values were as far as possible ignored, explained the social scientist Hillmann (Hillmann, 2003). Increasingly however, the one-sidedness is criticised by different stakeholders, which leads to more attention by companies for higher moral values. Over time, the issue about Corporate Social Responsibility were spread more and more by publicans and environmental events. Corporate Social Responsibility has taken flight into board/conference rooms and has emerged a topic of concern in corporate government and international business forums. Many companies, NGO’s and other public institutions pay more attention to this subject. CSR has emerged as an inescapable priority for business leaders and a response to new opportunities. The reasons for that are varied; they range from global warming pressures, wide divide of wealth, to customer preferences of ethical business practises and media support. As a result, the corporate responsibilities have to orient on the expectations and values of society (Ringeis, 2007). The increasing demand for social responsibility and moral behaviour of companies has led to a broad field of research about Business and Corporate Ethics. To this complex of topics were published numerous scientific articles, many research projects has been initiated and many universities deal with this topic. According to Homann/Blome-Drees business ethics deals with a continuous field of tension between economic and moral. Because there is no standardized definition about CSR, Dickson and Eckman collected the view of 74 professors and grad students to establish a working definition of social responsibility for the apparel industry. Most important were topics related to labour practices with developing countries, consumerism, aspects of environmental protection, and body image. The outcome was "Socially responsibility businesses consider the entire system of stakeholders associated with apparel supply chains, including production workers, sales help, and consumers, and the entire product life cycle from the inception of raw materials and components to product design, use and discard." (Dickson & Eckman, 2006). In Dickson’s opinion the lack of an industry-wide accepted definition has led to ambiguity over whether social responsibility includes the environment. For the fashion industry Dickson and Eckman have resolved that the environment is generally included in social responsibility and the aim should be balance ethics with profitability through the production of fashion industry that minimally harms humans and the environment (Dickson & Eckman, 2006). This view about sustainable management is further strengthened by the Sustainable Apparel Coalition (SAC). The SAC is a multi-stakeholder engagement, founded in 2011, by a group of global apparel, footwear and home textile companies and non-profit organisations. These industry leaders representing nearly one third of the global market share for apparel and footwear. There are fourteen apparel brands belonging to the SAC, including H&M. Their goal is to addressing the problems of environmental pollution and social impacts. SAC seeks to build a common approach for measuring evaluating textile product sustainability performance. This based on the "Higg Index". The Higg Index is an "indicator based tool for apparel that enables companies to evaluate material types, products, facilities and processes based on a range of environmental and product design choices" (Sustainable Apparel Coalition, 2012).
The practical implementation of CSR by H&M
Growing environmental awareness among increased public attention forces H&M to deal with social challenges. As a major international company, H&M has a social responsibility. In 2002, H&M started to formulate new corporate guidelines, which refers to Corporate Social Responsibility. In the following year, for the first time H&M published a CSR vision and their objectives for the implementation of H&M’s Code of Conduct in its supply chain. The report is evaluating H&M’s work in 2002 and is helping to develop targets and action plans for specific areas of improvement where the work is not meeting the ambitions of H&M. From now on, H&M publish every year a CSR report of the previous year. One of their objectives for reporting on CSR has been to create a base for improvement of their performance. H&M’s approach to CSR has a strong focus on the supply chain. Most significant changes towards sustainability are to integrate in the production of garments (Schullström, 2003). Like many other companies, H&M presents its social engagement on Facebook, Twitter and its homepage. The intention is that the people get the impression of a sustainable and responsible behaviour of H&M. H&M is positioning itself as the ethical solution that can make ethics and fast fashion synonymous (Siegle, 2012).
Conscious actions of H&M
The "Conscious" collection is part of the "Conscious" actions of H&M. These include sustainable materials, cotton, sustainable use of water, fair wages, better working conditions, animal welfare and collecting garments for recycling. Sustainable materials contain cotton, organic leather, organic linen, organic hemp and organic silk. But also recycled materials like recycled wool, FSC natural rubber, recycled polyester & polyamide, recycled plastic and Lyocell refers to it (H&M, 2014). Generally, worldwide the demand for textile fibre is growing constantly – synthetic fibres mostly cover it. In the textile industry is polyester the most important fibre. As there is always a growing fibre production the use of raw materials becomes more and more important. (Schlomski, Hövelmann, & Sachsenmaier, Nachhaltige Leistung, 2015). H&M is engaged intensively with this problematic by recycling materials from the waste or cut-offs created during the production, or from clothes gathered via garment collecting initiative (H&M, 2014). Cotton is the most important material of H&M. But it takes a lot of water to grow. According to WWF, the cotton in one pair of jeans needs 8,500 litres of water to grow. Furthermore many farmers are using chemicals and pesticides to improve their harvest. These are hazardous substances for humans and the environment. H&M pretend to be aware about that problem and has the aim to get all cotton from more sustainable sources till 2020 – which means it is either organic or recycled.