Climate reporting

We follow the GHG Protocol Corporate Accounting and Reporting Standard using an operational control approach. Most of the GHG emissions connected to our business operations and our value chain are carbon dioxide (CO2) from the combustion of fossil fuels to generate heat, electricity, or transport goods. However, we also include methane (CH4), nitrous oxide (N2O) and some man-made gases such as hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6). The total warming effects of these gases are measured in carbon dioxide equivalent (CO2e). Effects of the non-CO2 gases are recalculated to the same warming effects as CO2 – about 28 times for methane, and 265 times for nitrous oxide (GWP100, IPCC AR5).

Under the GHG Protocol, emissions are divided into three scopes, outlined below. Emissions of biogenic CO2, carbon dioxide that is part of the natural carbon-cycle such as crop residues, are not accounted for under any scope.

At H&M Group, we do not use carbon offsets or compensation to reduce our emissions.

To ensure robustness and credibility of our methods and data, auditors perform a limited assurance of our scope 1 and 2 emissions, as well as some scope 3 emissions – transportation, materials, fabric production and garment manufacturing. We aim to include additional emission sources from scope 3 in this assurance in the future.

Scope 1 emissions are direct emissions from our own operations: primarily from on-site fuel-use, company cars and other vehicles, as well as refrigerants leaking from cooling systems.

We calculate emissions related to our stores and warehouses by multiplying the amount of fuel used by emission factors for each fuel type. For company cars we use a per-kilometer emission value per fuel type to calculate the emissions, and for refrigerants we estimate an average annual impact based on the total square-meterage of our stores, offices and warehouses.

Scope 2 emissions are indirect emissions from purchased electricity, heat or steam connected to our own operations. Primarily they come from electricity use and district heating in stores, warehouses and offices.

We use the market-based approach in our accounting, which means that we calculate emissions based on the tracking of environmental attributes of the energy purchased, such as electricity certificates for renewable electricity. In our Sustainability Disclosure, we also report emissions using the location-based method where only the country, or grid’s, total production mix is taken into account. Read more about these accounting methods in the GHG Protocol Corporate Accounting and Reporting Standard. 

To calculate market-based scope 2 emissions, we multiply the amount of purchased energy of each type used in our stores, offices and warehouses by relevant emission factors for each energy type. In 2023, we purchased renewable electricity for 94% of our own operations using a variety of certification schemes. We have signed power purchase agreements (PPAs) for several solar parks, located in the UK and Spain, and in 2022 we signed Sweden’s largest solar PPA to provide us with renewable electricity.

Scope 3 emissions are all other indirect emissions from our entire value chain beyond our own operations. For example, cultivation of raw materials such as cotton, production, fabric dyeing, transports to warehouses and stores, customer washing and drying, and end of life. For us these emissions make up the majority of our total, about 99% when using the market-based approach for scope 2.

Garment goods

• Raw materials
  This includes emissions from production and processing of fibres such as cotton, viscose and polyester. All materials are included. We calculate emissions by multiplying the weight of each material by the relevant emission factor in the HIGG MSI database. This is often referred to as tier 4.
• Fabric production and garment manufacturing
  Fabric production, often referred to as tier 2 and 3, includes emissions from the fabric production processes, such as spinning, weaving, and knitting, as well as dyeing and other treatment processes. Garment manufacturing, or tier 1, is when the fabric is converted into a finished product through cutting, stitching, processing and finishing. All fabrics and garment manufacturing is included in our emissions reporting.

During 2023 we made significant improvements to the way we calculate our fabric and garment manufacturing emissions. First we determine the expected energy consumption. We use our internal order data to ascertain type of product and processes, Higg databases for the energy requirements of these processes, and independently verified energy consumption data from our suppliers for the energy mix. This expected energy consumption is combined with the climate impact of the energy mix to calculate the emissions from each product. When a process cannot be linked to a specific facility, we use country-specific assumptions based on the local electricity grid.

The improved model and data quality will support us to improve how we steer our business to reduce our climate impact, and enable us to better capture the outcomes of specific investments and initiatives. Read more in our 2023 Sustainability Disclosure on these individual improvements, and the impact of these on our results.

When we make changes to our methods, models or data-sources, we always update data for all years up to and including our base year. We do not claim these changes as emission reductions, and they will not affect our 2030 and 2040 targets.

Non-garment goods

This includes all emissions from raw material sourcing through to product manufacturing from non-garment commercial products within our assortment. For example, H&M HOME interiors, cosmetics, accessories, footwear and toys. Manufacturing emissions are calculated by multiplying ordered pieces with average emission per piece per production unit. Where it is not possible to match order data with supplier data, a fallback method is used based on average emissions for production country and type of non-garment production group. Raw material and processing emissions are calculated using product weights combined with HIGG MSI data for the relevant materials.

Transport

Upstream transport between suppliers, e.g. yarn spinner to fabric producer, are included in emission factors for materials, and therefore not in the transport category. Transport covers all emissions connected to transportation of products to our warehouses, internal line haul within our warehouse network and delivery to customers and stores.

• For transport to our warehouses
  Emissions related to transportation are calculated by identifying how far goods have travelled per mode of transport (sea, rail, road, air) multiplied by relevant emission factors for each mode of transport. The calculation methodology uses a stepwise approach, combining multiple internal data sources. For road transports from port to warehouse, the method described below is used.
• For road transport from our warehouses to stores, internal line-haul between warehouses, from port to warehouse and for customer deliveries
  Emissions from road-transport are calculated by collecting fuel consumption data from carriers multiplied by relevant emissions factor per fuel type. A few of our carriers report emissions based on their own calculations, using the same methodology as H&M Group. Transportation by air, ocean and rail is calculated based on weight and distance of goods transported, multiplied by relevant emission factor for each mode of transport.

Packaging

Packaging emissions relate mostly to the raw materials, process energy and transport. To calculate these emissions we use material weights for packaging materials, combined with emission factors from the Higg MSI database. 

This method was developed and introduced during 2023. It has increased the accuracy of our emissions calculations including capturing historical improvements such as lowering our dependency on plastics in packaging material. We have updated all years up to and including our base year to reflect this. We do not claim these method changes as emission reductions, and they will not affect our 2030 and 2040 targets.

Use of sold products

These emissions come from the customer use phase, including energy used for washing, drying and ironing the bought products. To calculate this, we take the total amount of products sold in each product category and geographical area during the reporting period and apply use-phase factors to calculate total energy consumption. Then we apply a local geographical energy emission factor to sum up the total emissions from the energy consumption.

End of life – sold products

This category covers the emissions that arise when customers stop using our products. We estimate the share of the total produced weight that is re-worn, reused, recycled, incinerated, or disposed of in landfills. These estimates are based on our garment collecting partner’s data and industry end-of-life estimation models. Each of these end-of-life scenarios are then combined with an emission factor for the relevant waste management practice.

Other expenditures, and other emissions

In addition to the categories described above, there are emissions related to a number of other activities. For example, items that are used in our operations like hangers, visual merchandising used in our stores, IT equipment, business travel, investments, our franchise partnerships and employee commuting.

To calculate emissions across these categories we have used different approaches depending on data availability. For some activities we used a spend-based method and multiplied the spend on each activity with a relevant emission factor. For the rest we used an average data method and multiplied amounts of activity data (such as km driven) by average emission factors for those activities.

The following scope 3 categories are not included in our GHG inventory, as there are no significant emission sources within these, or they do not apply to our business (numbers reflect the GHG-Protocol scope 3 categories):

2. Capital goods
8. Upstream leased assets
10. Processing of sold products
13. Downstream leased assets

This is continuously evaluated as the business changes.

Improving the accuracy of our emissions data is ongoing. During 2023, these improvements led to some alterations in our reported emissions for previous years. Most notably, in scope 3 emissions and reductions for our science-based targets.

In our 2022 Sustainability Disclosure the reduction was reported as -7% compared to 2019. After updates to the method described above, it was reported as -15% compared to 2019 in our 2023 Sustainability Disclosure.

The absolute scope 3 emissions for 2022 excluding use phase, was reported as 5 651 kilotonnes CO2e in the 2022 report. This is updated to 7 498 kilotonnes CO2e in the 2023 report for the 2022 result.

In 2023, we moved Sellpy’s scope 1 and 2 emissions from the scope 3 investments category into H&M Group’s scope 1 and 2 category.
Improving our data and calculation methods is crucial for us to track the actions we take to reduce our emissions.

Whenever we make a change to our methods or data sources, we update our base-year data to reflect it. We never claim these changes as emission reductions and they will not affect our 2030 and 2040 targets.

Our Emissions Recalculation Policy.