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A RETAIL GIANT'S EVOLUTIONARY APPROACH TO WATER ISSUES

By RL Expert Leesa Soulodre

RL EXPERT Leesa Soulodre talks to WWF and H&M about their evolutionary approach to managing water issues in their globally complex supply chain.
According to WWF’s 2012 Living Planet Report, today 2.7 billion people – roughly 40 per cent of the world’s population – live in river basins that experience severe water scarcity during at least one month of the year.

The textile industry is an important focus area, as raw materials and processing locations are often based in some of the world’s most water stressed and polluted river basins. Water is an important resource in textile production as well as being essential for biodiversity. Furthermore, reducing negative water impacts is not something a single company or organization can do.
WWF believe that with a collective approach, industry leaders can provide the foundation for
change. About a third of the units which perform wet processes for H&M are located in areas that are now, or will by 2025, be considered extremely water scarce. This has provided the impetus for WWF and H&M to forge a three-year global partnership for better water management. WWF and H&M spent 2012 conducting a comprehensive evaluation of the company’s efforts and challenges in relation to water in order to formulate the new
strategy.
The project assessed all water-related aspects of the H&M value chain using WWF’s Water
Stewardship and Water Risk Filter tools. The analysis addressed agricultural production of
fibers, as well as dyeing and washing processes. WWF’s innovative model of water stewardship encompasses all aspects of a business’ approach to water. Water Stewardship can be described as actions made by companies who seek to improve the efficiency and cleanliness of their internal operations and in their supply chain, while also facilitating the sustainable management of shared freshwater resources through collaboration with other businesses, governments, NGOs, communities, and others.

The strategy considers H&M’s complex global supply chain and goes beyond the factory lines to address impacts in nearby river basins. According to WWF, this is the first time a fashion company has applied such a comprehensive model across their whole business and it demonstrates that it can be commercially viable.

The partnership builds on 10 years of H&M’s work to reduce negative water impacts and aims to inspire responsible water practices and projects within the sector and beyond.
From 2013 on, H&M designers and buyers will receive additional training on the water impacts
of raw material production and wet processes for different styles, to promote greater sustainability. WWF and H&M will also work in collaboration with public policy makers, NGOs, water institutions and other companies to support better management of river basins in Asia. In particular, the focus will be on the Yangtze in China and Brahmaputra in Bangladesh.

The new water strategy will be implemented across all of H&M’s 48 national markets, with the aim of reaching all 750 direct suppliers and many fabric manufacturers. H&M will initially engage on water management with 190 suppliers manufacturing the majority of its products. Approximately 1,000 H&M staff in buying offices, production and sales will be directly
involved in implementing the strategy.
All 94,000 H&M employees will learn about water issues. Furthermore, the company will improve its internal water efficiency and inspire customers to use the resource responsibly.
“Water is a key resource for H&M and we are committed to ensure that it is used responsibly
throughout our value chain. We do this to minimize risks in our operations, and to protect the environment, as well as to secure the availability of water. We are proud of the partnership with WWF, which we hope will also inspire others to follow,“ says Karl-Johan Persson, CEO of H&M.
WWF is one of the world’s largest and most respected independent conservation organizations, with over five million supporters and a global network active in more than 100 countries. The NGO’s mission is to stop the degradation of the earth’s natural environment and to build a future in which humans live in harmony with nature, by conserving the world’s biological diversity, ensuring that the use of renewable natural resources is sustainable, and promoting the reduction of pollution and wasteful consumption.
This interview was published in the March 2013 issue of RepRisk Insight, an ESG Risk publication co-founded by RL Expert and its partner RepRisk AG for the financial markets and their investee multinational corporations.
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