Trouble brewing for H&M on Labor Practices

Fast fashion is back under the ESG microscope. After a couple years of quietly rebuilding sentiment on its most material ESG drivers - Supply Chain Management, Labour Practices, Materials Sourcing - the Swedish clothing company H&M has run into another storm.

In particular, a tweet from More Perfect Union on 3 November stating that 'Tens of thousands of garment workers in Bangladesh who make products for brands like Zara, H&M and GAP are on strike. Their minimum wage is $75 a month, and they're demanding it rise to $208. The bosses are only offering $90. They've shut down over 300 factories so far.'

The tweet has gone viral (across social and traditional media) and is already impacting the ESG materiality and sentiment analytics conducting daily by Mettle Capital across 5,000+ of the largest global companies [see chart above]. Labor Practices are 14% of the conversation about H&M over the last 12 months to 5 November 2023. Sentiment on Labor Practices (on a 180-day trailing average to best correlate to share price) will now drop sharply from an already weak -14%.

Combined with the BBC Panorama expose of BooHoo on 6 November, and the 'Workers in the Value Chain' element of European Sustainability Reporting Standards (ESRS) just published by EFRAG, fast fashion is back under the ESG microscope and is being found wanting.