This is a presentation my group put together for our Strategic CSR class. We were assigned the task of recommending a Sustainability Strategy that fit within the core business strategy of our our selected business. What's really exciting is that H&M is actually starting to do this. Not on our recommendation, of course, but as a reaction to recent press around their practice of throwing unsold clothing into the trash. As always in fashion, one man's trash...

1. A CSR Strategy for Danielle Brown Jennifer Fedor Alison Kimenker Susanna Schick September 30, 2008 MBA 831 C: Strategic Corporate Social Responsibility

3. CURRENT FINDINGS CURRENT CORPORATE STRATEGY CSR STRATEGY BENCHMARKING AGAINST COMPETITORS ISSUES, VULNERABILITIES, AND OPPORTUNITIES

4. THE CORPORATE STRATEGY REVOLVES AROUND TRENDS AT AFFORDABLE PRICES Current Findings Current Corporate Strategy

5. H&M’S STRATEGY PERMEATES EACH STAGE OF THE BUSINESS PROCESS. Current Findings Current Corporate Strategy

6. Current Findings Current CSR Strategy H&M HAS STRONG INITIATIVES AND INTEGRATION, BUT ITS CSR STRATEGY LACKS CLARITY. Focus on the environment: climate change and water usage Sustainable fabrics: Some organic, some recycled, responsibly sourced Supplier Ownership: managing supply chain relationships and standards Dedicated Team: CSR Manager and team to uphold CSR issues While H&M has taken great strides in incorporating CSR into their overall strategy, the company claims to take on everything and nothing – we see many great ideas but are not sure how actionable they are.

7. THE COMPETITION HAS MANY BEST PRACTICES THAT H&M CAN USE TO IMPROVE THEIR OWN CSR STRATEGY 1 Current Findings Benchmarking Mango is a leader for employee rights and responsibility. There are endless examples for H&M (free lunch, permanent contracts, group transportation, etc.). Target strives to make their CSR report transparent to all readers. Their viewing options make details clear & transparent. Zara’s social responsibility in manufacturing can be learned from as a majority of their products are produced internally, while at the same time they audit & educate suppliers. Old Navy wins points for their efforts to show social impact on direct labor locations (i.e., both Africa & China). Eco designers lead the industry in the use of recycled textiles. Patagonia is known worldwide for their environmental efforts & employee relations. 1: Appendix

8. CURRENTLY, H&M FACES MANY ISSUES, VULNERABILITIES, AND OPPORTUNITIES. Current Findings Issues, Vulnerabilities, and Opportunities H&M 2- The world is watching 1- What happens to in-store leftovers 3- Employee turnover in-store 4- Auditing Team 5- Factory Ventilation 6- Education in the local community 7- chemical irritants 8- Can workers ever move up? 9- Lifetime Contracts 10- Constant apparel changeover creates excessive waste 11- Taking advantage of employees 12- R&D team to constantly check chemical safety and new chemical options 13- Organic Cotton disconnect 14- Organic Cotton and shipping/ factory concerns 15- Recycled goods

9. RECOMMENDED AMENDMENTS TO CSR STRATEGY ENVIRONMENT COMMUNITY WORKPLACE MARKETPLACE

10. H&M HAS THE OPPORTUNITY TO PRODUCE SUSTAINABLE DISPOSABLE FASHION. Recommendations Environment 10

11. MANY SOLUTIONS EXIST TO THE ENVIRONMENTAL CHALLENGES FACED BY H&M. Recommendations Environment Environmental Solutions Raw materials (textiles, etc.) Demand responsibly sourced materials from all suppliers Organically grown? Choose organic as much as possible Recycled? Strictly recycled: polyester. Recycled when feasible wool, rayon, others Sustainably sourced? Wool, wood, paper, linen, rayon, etc. Certified by reputable agency? Organic, forest stewardship, etc. Dyes and treatments Demand biodegradable, natural dyes Contractors & subcontractors Reward for compliance, or going beyond compliance EMS in practice? Train employees and managers to effectively uphold EMS Employees protected? Fine contractors for safety violations Treating effluent? Fine contractors for environmental impact Energy use? Consider rewarding suppliers who use green power Logistics (DC's and Transport) Reduce energy consumption Energy use at DC's Solar? Cogeneration? Wind? Explore cost/benefit of green power Fuel efficiency and type Trucks efficient as possible? Drivers measured & rewarded re: efficiency? efficient communication Minimize redundancies and overstock, continually improve efficiency

12. ENVIRONMENTAL SOLUTIONS CONTINUED. Recommendations Environment Environmental Solutions Continued Stores Responsible interior design Energy use, especially Lighting Switch from halogen to LED as much as possible Building and Display Materials Sustainably sourced (already does this), low VOC, lasting (replace less often) Proximity to other destinations H&M already places their stores in high-traffic shopping destinations Customers Ask your customers: how long do they keep it? What is the average lifespan of H&M garments in various categories? How often is it washed? Do certain styles, fabrics require less maintenance? Dry clean or launder? This is a difficult dilemma, but will be easier once viable alternatives to Perc are implemented Sell, donate or dispose? Offer store credit for old H&M clothes returned to stores Corporate Offices Where the magic happens Healthy workplace Low VOC's, adequate natural light, clean HVAC Measure entire lifecycle Perform full LCA on selected typical garments from major categories, materials Measure full carbon footprint H&M seems to already be doing this, as deep as reasonably possible into supply chain Design for environment Choose recycled, organic or sustainable materials, non-blended textiles, organic dyes

13. H&M’S COMMUNITY INITIATIVES FOCUS ON THE COMMUNITIES WHERE ITS CLOTHING IS PRODUCED. Recommendations Community Cambodia India Bangladesh Tanzania Mozambique Madagascar Bangladesh Bangladesh Worldwide

16. THE COMPANY CAN ALIGN PROGRAMS WITH ITS CURRENT STRATEGY FOR POSITIVE GROWTH. Recommendations Marketplace Customer Service Business Concept Exciting shopping experience New ideas/inspiration with every visit Unlimited options for every occasion In-Store opportunities to collect used clothing Solution for Re-distribution using existing logistics network Existing Operations Flaws Excess Stock-outs Disposable clothing has a short life No existing strategy for waste disposal

17. EXISTING LOGISTICS AND DISTRIBUTION SYSTEM PROVIDES OPPORTUNITY TO IMPLEMENT THESE PROGRAMS. Efficient system required for merchandise replenishment daily Recommendations Marketplace

18. In 2007 H&M’s product, environmental, human rights and supply chain policies were analyzed in a survey. Assessed in a group of 35 fashion companies, H&M’s social and environmental practices received the best score with 73 of a maximum 100 points. FACT: H&M has taken great strides and is recognized as a leader in CSR… but they still have room to improve and grow. Implication: Conclusion

19. APPENDIX

20. THE BIG COMPLAINT: H&M MAKES DISPOSABLE CLOTHING. The Solution : Store credit for returns-Brings customers back! Potentially uses existing logistics to reverse-source back to… 20 Recommendations Environment

21. MARKETPLACE: Benchmarking CSR Recommendations Marketplace