La sostenibilità aziendale e la percezione dei consumatori: il caso di H&M

Università degli Studi di Bergamo

Dipartimento di Economia Aziendale

Corso di Laurea Magistrale in Business Administration, Professional and Managerial Accounting – Classe n. LM-77 Scienze economico-aziendali

Corporate sustainability and consumers’ perception: the case of H&M

Relatrice: Chiar.ma Prof.ssa Silvana Signori

Correlatore: Chiar.mo Prof. Mauro Cavallone

Tesi di Laurea Magistrale

Martina Colleoni

Matricola n. 1043457

Anno accademico 2021 / 2022

Indice

• ......................................................................................................................... 5
• Introduction ........................................................................... 6
• Chapter 1 - Sustainable development ................................................................................................... 7
• 1.1 Sustainability governance ................................................................................... 9
• 1.2 UN Sustainable Development Goals ..................................................................................................... 11
• 1.3 The Triple Bottom Line ................................................................................ 13
• 1.4 Sustainable development in industry – ..................................................................................... 15
• Chapter 2 Fast fashion sector ......................................................................................................... 15
• 2.1 What is fast fashion? .......................................................................................... 16
• 2.2 Fast fashion and consumerism ...................................................................................................... 17
• 2.3 Impact on environment ............................................................................................................ 23
• 2.4 Sustainable fashion .... 26
• 2.5 The role of consumers awareness on the transition towards more sustainable systems ............................. 31
• Chapter 3 - Sustainability reporting and communication .......................................................................... 31
• 3.1 Sustainability report: what is it and aims ................................................................................................................... 33
• 3.2 GRI Standards ....................................................................................................... 35
• 3.3 The AA1000 Standard ...................................................................................................... 35
• 3.4 Principles for reporting ........................................................................................................... 37
• 3.5 Process of reporting ....................................................................................... 38
• 3.5.1 Key Performance Indicators .............................................................................. 40
• 3.6 Shadow accounting and greenwashing ........................................................................................ 41
• 3.7 Other information to consumers – ............................................................................................................ 44
• Chapter 4 H&M case ................................................................ 45
• 4.1 H&M Sustainability Performance Report 2020 ..................................................................................................... 45
• 4.1.1 Vision and strategy .............................................................................................. 46
• 4.1.1.1 Leading the change ............................................................................... 47
• 4.1.1.2 Circular and climate positive ...................................................................................................... 49
• 4.1.1.3 Fair and equal ............................................................ 54
• 4.2 Approach to the change: from fast to green brand ............................................................................................. 55
• 4.2.1 Green or greenwashing? ................................................................................................ 57
• 4.3 Consumers data collection ............................................................................................................. 58
• 4.3.1 Data collected ........................................................................................................... 72
• 4.3.2 Analysis report ........................................................................................................................... 75
• Conclusion ....................................................................................................................... 77
• Bibliography ........................................................................................................................... 81
• Sitography

Introduction

The aim of this research is to put the attention on the importance of sustainability practices inside company’s activities and to consumers awareness. Nowadays, sustainability is becoming part of our everyday life due to the urgent call for a change to safeguard planet Earth. We live in a society where people act in wrong ways driven by ideologies of consumerism, and we constantly contribute every day to increase the second most polluting sector: the fashion industry. The world is filling up with rags as well as plastic.

In developed countries, like our, consumerism and fashion are damaging the entire humanity at social and environmental levels, increasing the phenomenon of fast fashion. To contrast this situation, it is necessary to create a sense of urgency and awareness among the consumers: in this way people can purchase in a more conscious way.

Companies and consumers are able to influence each other regarding the urgent adoption of sustainable practices. Now, only few consumers are very attentive to the sustainability of the products they buy, for this reason a strong intervention by the sellers is necessary. Moreover, fast fashion brands are risking to damage their image, that is also the reason they are moving to change their production behaviours, bringing attention to sustainability.

One of the most striking examples is the famous fast fashion brand H&M, placed in the spotlight for its new green initiatives which seeks to redeem its image. This research analyses how this firm is trying to create the new green identity, modifying its habits at the eyes of stakeholders, through the creation of sustainability report and concrete initiatives in stores. Sustainability report is the main tool that companies can use to spread their commitment in sustainable behaviour.

This will be analysed in the third chapter, understanding the fundamental notions for editing, the principles and standards to which references must be made to obtain a consistent report. There are international standards and guidelines that provide the correct way to build the report.

Finally, to support the research of this paper, a poll has been created to know the purchasing’s attitude of people, their knowledges regarding sustainability issues, and how the brand H&M is perceived by consumers. In this way, we can understand the actual sustainability approach that consumers have and if the reputation assigned to the brand by consumers reflects the values, the objectives and the actions reported in the brand's sustainability report, recognising if this tool is effective for a fast fashion brand. 5

Chapter 1 - Sustainable development

The need for sustainable development and environmentally friendly economic growth began in the seventies, when society became aware that the traditional model of development will cause the collapse of the Earth's ecosystem in the long term. Over the years, environmental efforts by the international community, including the Paris Climate Agreement¹, have concretely demonstrated that the planet's limits are real (Balocco, 2021).

Climate change and the deterioration of the environment are destroying the ecosystems and this has negative repercussions on development, health and natural resources. The environmental crisis, climate change, rising temperatures are strong and understandable signs of the dramatic impact we are experiencing. These signals should conduct people and companies to reflections and actions with a new sustainable view.

The economic development model that characterizes the West countries cannot be sustainable in the medium-long term and it is therefore necessary to identify new strategies in order to think of a long term that also includes respect for the environment (Daly H.E., 2014). The concept of sustainability requires new ways of thinking about the world and new ways of acting in the economic, science, technology, politic areas and even the daily life of individuals, able to create a system of values that respects and promotes life in its entirety. Each Earth’s citizen can act in a better way to improve the future, but companies and international organisations play a fundamental role, as they are able to move the masses leading them on a sustainable path.

¹ The Paris Agreement is a legally binding international treaty on climate change. It was adopted by 196 Parties at COP 21 in Paris, on 12 December 2015 and entered into force on 4 November 2016. Its goal is to limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels. https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement 6

1.1 Sustainability governance

Never like today, there is a competitive business environment where companies have pressure to improve their sustainability practices reducing footprints and continuing to maximize profit. Sustainability governance helps the company to implement sustainability practices across business, ensure responsibility and manage the goals set. Business sustainability processes are not the same for all companies, for this reason governance is defined as the way in which sustainable development is built.

From consumers’ research is underlined the request to seek additional sustainability education from brands themselves, adopting a more active role in increasing awareness for consumers (Amed et al., 2019). Corporate Social Responsibility² demonstrates corporate awareness, citizenship, and social performance integrated into the business model. The World Business Council for Sustainable Development (WBCSD) defines CSR as “the ethical behaviour of a company towards society”.

CSR guides the organization toward its mission and support its consumers. It is also an integral component of corporate governance, useful when there is a conflict between the corporate goals of maximizing profits and social goals (Idowu, 2012)³. In 2001 the European Union spoke first about CSR in one of its green books, defining the CSR in terms of voluntary integration of the social and environmental concerns in their commercial operations and in their relations with interested parties.

At the beginning, the CSR initiatives were voluntary and defined as self-regulation, but over time, new mandatories and impositions have intervened that have pushed companies towards greater compliance at a social level.

² Corporate social responsibility (CSR) is defined as the sense of responsibility that a company or any other economic entity demonstrates towards the community and the environment. https://www.insidemarketing.it/glossario/definizione/corporate-social-responsibility/

³ Bruxelles, 18.7.2001 COM(2001) 366, Promote a European framework for corporate social responsibility. http://www.csspd.it/download/ALLEGATI_CONTENUTI/csrgreenpaper_it.pdf 7

426000 is defined as the recognized international standard for CSR. It is socially accepted that CSR adheres to analogous principles but with no formal act of legislation. Conflicts inside the business lead to the establish of CSR policies and programs, act to ensure taking the social interest seriously and to maintain legitimacy with the public.

ISO 26000 covers several ranges of activity inside the organization, from economic to social, environmental, ethical, and governance issues. This standard goes beyond profit-maximization and social performance to cover all dimensions of sustainability performance, providing also a guideline for companies to contribute to sustainable development.

In 1987 the World Commission on Environment and Development (WCED) published the article “our common future”, also known as Brundtland report. This publication is considered the first guidance in principles for sustainable development, and it is still used today. The Brundtland Report defines the term sustainable development as a development that satisfy the present needs without compromising the need of the future generation.

The document underlies the importance of join forces between states to reach common goals, in peace and in collaboration. Despite it was published more than thirty years ago, it deals with all current arguments relating how to run our society in a sustainable way. This because years ago there were signals and evidence of unsustainable development of economy and society, but only in the last recent years the call towards sustainability became urgent.

Today companies adopt all the measures to act fairly and create a governance inside the firm able to fulfil its goals, spread awareness through clothes consumers, showing results and action in the sustainability report. Recently, the United Nation established the UN sustainable development goals, a way to give common goals to every company who join the fight against unsustainable development.

⁴ Kyoto Protocol, ISO 26000 (2010) Guidance on social responsibility 8

1.2 UN Sustainable Development Goals

The United Nations Development Goals⁵ are global goals, defined by United Nations in 2015 to achieve common results in end poverty, save planet resources and maintain peace and prosperity. UNDP operates in about 170 countries, reducing inequalities, eliminating poverty, hunger, discrimination and sustains progress helping countries to achieve Sustainable Development Goals.

The UNSG are 17 and to achieve them by 2030, in every context is necessary high knowhow, technology and financial resources. For this reason, the developed countries try to help the developing countries in realising these goals, and that is the essence of the last goal, the seventeenth. Collaborations between countries and economies are fundamental to achieve common goals: this is not a challenge to see who arrives first, but it is a race against time, to save Planet Hearth and to give equity to the entire population.

Below there are the exact list of UN Development Goals⁶:

• 1. No poverty;
• 2. Zero hunger;
• 3. Good health and well-being;
• 4. Quality education;
• 5. Gender equality;
• 6. Clean water and sanitation;
• 7. Affordable and clean energy;
• 8. Decent work and economic growth;
• 9. Industry innovation and infrastructure;
• 10. Reduced inequalities;
• 11. Sustainable cities and communities;
• 12. Responsible consumption and production;
• 13. Climate actions;
• 14. Life below water;
• 15. Life on land;
• 16. Peace, justice and strong institutions;
• 17. Partnership for the goals.

⁵ The United Nations organization was born in 1945 with the main objective of maintaining peace, providing international security, guaranteeing the respect for human rights, the provision of humanitarian aid and the promotion of sustainable development. (www.un.org)

⁶ https://www.undp.org/sustainable-development-goals 9

Figure 1. The sustainable development goals

Source: official site of UN

According to the Human Development Index (HDI), present on the official page of UNDP⁷, in 2020 the country at first rank is Norway and Italy is at 29th ranks.

Every company, in its own small way, can contribute to the achievement of these goals on a global scale, but also the citizens of planet Earth are called to respect these goals in order to enhance the respect for the environment and to help companies in achieving them (reference to UNSDG n.17). These goals connect several areas: they consider the human respect, the environmental protection and the economic development. Therefore, the call for a sustainable behaviour does not concern only the environmental sphere, but also the social and economic area. The concept of Triple Bottom Line encloses the three areas where companies must put the attention to ensure a sustainable development.

⁷ https://hdr.undp.org/en/data 10

1.3 The Triple Bottom Line

The term Triple Bottom Line, or “three Ps”, was coined in 1994 by John Elkington⁸ and it is an economic concept that sustains a company should commit to three level at the same time to reach sustainability goals: people, planet, and profit. Business decisions are usually made by comparing the costs and expected benefits, expressed in monetary terms, and only then the other dimensions could take into account in decisions. According to TBL, only companies who undertake these three aspects together are running the business well.

People do not have to consider the term sustainability only with reference to environmental issues, but it is related to ethic issues at a much broader level. The three variables involved in this model, summarize the macro areas necessary to incorporate the sustainable concept inside the company.

Figure 2. The triple-bottom line

Source: Earth Accounting on twitter

• Planet: this environmental variable is related to water, air, depleting and renewable resources, energy, land, and pollution. The introduction of sustainable environmental practices is fundamental to reduce the ecological footprint and wastes. The creation of a circular economy is not instant, the results of environmental practices will be visible in the medium-long term, but climate change is in place now. In fact, it is important to implement right now new decision-making and create new way of production able to stop the climate change immediately. The presence of topics regarding the planet-safeguarding in a

⁸ https://www.economist.com/news/2009/11/17/triple-bottom-line 11