H&m’s green shift: progress, but the supply chain challenge remains

H&M’s latest sustainability report paints a cautiously optimistic picture: the fast-fashion giant is making strides in decarbonizing its operations, but the fundamental hurdles of a sprawling, fragmented supply chain loom large. The 2025 report details tangible reductions in emissions, yet underscores the complex reality of achieving true sustainability in a sector notorious for its environmental impact.

Renewable energy and material innovation drive early gains

The numbers are compelling, at least on the surface. H&M reports a 41% reduction in Scope 1 and 2 emissions compared to 2019 levels – a direct result of aggressively transitioning to renewable electricity, now powering 95% of its supply chain. Furthermore, Scope 3 emissions, representing the lion’s share of the industry’s footprint, dipped by 34.6%. Leyla Ertur, H&M Group’s chief sustainability officer, attributes this progress to a multi-pronged strategy encompassing material innovation, energy and water efficiency initiatives within supplier factories, and a concerted push for renewable energy adoption. The most visible success, Ertur notes, lies in the near-complete elimination of coal-fired boilers in factories partnered with H&M.

But the devil, as always, is in the details. While H&M's internal assessment of environmental impact, social risks, and traceability guides its definition of 'sustainably sourced materials,' the broader challenge of electrifying production processes – many of which still rely on fossil fuels – persists. The lack of widespread access to renewable energy in key manufacturing regions, compounded by the absence of robust legal frameworks for power purchase agreements, further complicates matters. Ertur acknowledges this, stating that H&M remains committed to advocating for change, a recognition that internal efforts alone are insufficient.

Investment and supplier collaboration: a new model?

H&M’s commitment isn't merely rhetorical. The company invested a significant SEK 2.8 billion (approximately $298 million) in 2025, channeling funds into decarbonization efforts and material innovation. This investment is coupled with a revised approach to supplier relationships—a shift away from transactional engagements towards longer-term partnerships. The number of suppliers reporting coal boiler usage has plummeted by 108 since 2022, with a complete phase-out targeted for 2026. A remarkable 91% of H&M’s materials were deemed recycled or sustainably sourced by the brand’s standards in 2025.

Beyond emissions, H&M is tackling resource intensity, particularly water usage. The company achieved a 22.8% reduction in absolute freshwater consumption in wet processing across its Tier 1 and 2 suppliers – exceeding its initial 10% target. This success, Ertur emphasizes, is driven by investments in heat pumps, heat storage, and waterless technologies, measured not by financial return but by greenhouse gas reduction.

Beyond fashion: setting a precedent for nature-based targets

H&M's recent adoption of science-based targets for nature, mirroring luxury conglomerate Kering’s move in 2024, signals a broadening of its sustainability ambitions. This includes strict sourcing criteria to prevent ecosystem conversion, a commitment to 50% recycled materials by 2030 to minimize the land footprint of agricultural raw materials, and financial support for restoration projects—like WWF’s cotton farming and sheep grazing initiatives in India and South Africa.

The financing of decarbonization at the supplier level remains a persistent roadblock across the industry. Many manufacturers operate on tight margins and lack access to capital. H&M’s strategy emphasizes shared responsibility, fostering relationships with suppliers who align with its values and ambitions. The company acknowledges its role in developing financing solutions for green investments, recently publishing a white paper with EY to share its learnings.

Ultimately, H&M’s progress validates a growing industry consensus: decarbonizing the supply chain is a structural transformation, not just a series of isolated investments. While the company’s results are encouraging, they also highlight the limits of individual action. Wider access to renewable energy and supportive regulatory frameworks are essential for true, industry-wide change. As Ertur plainly states, “There is a long journey ahead.”