Due diligence

To be a successful business we must act responsibly. Due diligence gives us a framework that identifies and mitigates risks to ensure we operate fairly and equally.

What does due diligence mean for H&M Group?

Due diligence is an ongoing process that enables us to identify and address risks in our own operations, our supply chains and the products or services we sell. These could be risks to the environment or to people, including human rights. For many years, it has supported our decision making and has been integral to operating a responsible business.

To be effective, due diligence requires collaboration and engagement with our stakeholders and business partners in a transparent and honest way. To tackle more complex or structural issues at industry or national levels, we need to engage with other actors and through public affairs. In the long run, good due diligence has the potential to bring about change for the most vulnerable people and communities.

With several countries like Norway and Germany, as well as the European Union, making human rights due diligence a legal requirement, due diligence will only become more important in the future

Our due diligence process

We continuously carry out due diligence and engage in remediation across our value chain following the process set out by the UNGP and OECD:

  1. Embed responsible business conduct into policies and management systems.
    We regularly update our standards and policies to ensure they remain valid and relevant.
  2. Identify and assess adverse impacts in operations, supply chains and business relationships.
    We use global and local procedures to continuously identify risks. Our teams located in production countries ensure we are up to date with local context and any changes. Our own employees, our business partners, plus employees working for suppliers in our value chain, can raise a grievance. Those received from production countries are often solved with our collaborating partners, such as unions. Tools such as our Global Framework Agreement with IndustriAll and IF Metall help to ensure peaceful resolution of grievances.
  3. Cease, prevent or mitigate adverse impacts.
    Our strategies include using monitoring programs across our manufacturing supply chain, establishing grievance channels, capacity-building programs, partnerships and multi-stakeholder initiatives.
  4. Track implementation and results
    We continuously track several programs. For example, our work with wages. Read more about our work in this area here.
  5. Communicate how impacts are addressed:
    We have reported on our sustainability work since 2002 and publish all the reports on our website.
  6. Provide for, or cooperate, in remediation where appropriate.
    Our stakeholder partnerships and dialogues help us identify potentially adverse impacts to ensure we work in a preventative way. Our collaborative approach is key to ensure lasting positive change.

Throughout this process, we work closely with stakeholders to ensure our continuous analysis is inclusive and remains up to date.

Find out more about our approach to due diligence in our Annual and Sustainability Report and our Modern Slavery Statement.

A due diligence example – onboarding a new supplier

Our production supply chain includes hundreds of businesses around the world. When we take on a new supplier, due diligence helps us assess if they meet our environmental and social sustainability requirements.

All business partners must sign up to our Sustainability Commitment and our Code of Ethics.  When evaluating a new supplier, we share these minimum requirements early in the process to create a common understanding and ambition from the start. These requirements span issues such as working conditions, environmental practices and corruption. In terms of wage payments, we also review public information to check if any disputes have been registered. In some cases, we will reassess a supplier if they carry out actions to raise standards and meet our requirements within a given period of time.

Due diligence doesn’t stop once we have onboarded a supplier. We conduct regular reviews to assess continued compliance and performance. If a supplier violates our minimum requirements, we have the right to pause business until the issue has been remedied. In some cases, we may need to cease the business relationship. If we take this decision, we abide by ACT’s Responsible Exit Policy.