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H&M Commits Almost $300 Million Per Year to Address Supply Chain Emissions

Updated: Jan 5, 2023

H&M Group, a manufacturer of fashion and design brands, announced today a series of funding measures focused at decarbonizing its supply chain, including assistance for suppliers to transition to renewable energy and increase energy efficiency.

The corporation has set an annual budget of approximately 3 billion Swedish crowns ($287 million) for projects to cut emissions throughout its whole value chain. Investments will focus on eliminating coal and boosting the proportion of sustainable materials.

H&M has declared a goal of achieving net zero emissions by 2040, and the corporation has recently established interim plans to cut absolute Scope 1, 2, and 3 emissions by 56% by 2030.

Scope 3 value chain emissions, or that outside of a company's direct control, make for the great bulk of the company's environmental footprint, as is typical for fashion retailers. According to H&M's 2021 Sustainability Report, over 99 percent of the company's emissions come from Scope 3. More than sixty percent of these come from the supply chain, including fabric production, garment manufacture, raw materials, and transportation.

Several of the steps the organization is pursuing to lower its carbon footprint and value chain initiatives were highlighted. These include supporting fashion supply chain initiatives aimed at increasing clean energy use, energy efficiency, and sustainable materials, such as the Green Fashion Initiative and its recent participation as a lead funder of the $250 million Fashion Climate Fund, launching a Sustainable Supplier Facility with consulting firm Guidehouse to facilitate decarbonization-related funding for suppliers, and implementing an internal carbon price to influence behavior.

H&M has also inked a multi-year arrangement for the removal of 10,000 tonnes of carbon dioxide with Direct Air Capture provider Climeworks.

Leyla Ertur, H&M Group's Head of Sustainability, stated:

"We are committed to contributing to the limitation of the global temperature increase to 1.5 °C, and aligning our climate strategy with the most recent science-based frameworks for setting targets is essential for us to have an impact beyond our own organisation and value chain."

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