In connection with Kalla Fakta’s programme

We think it is important that our stakeholders get a balanced and accurate picture of H&M and our work, and that is why on Monday we published our correspondence with Kalla Fakta’s editorial team (in Swedish).

Below is information on how we at H&M are working on the wage issue, among other things, and taxes.

Tax in Bangladesh

Obviously we abide by current tax legislation and rules, and we also comply with the OECD guidelines. Under these guidelines, tax is not payable in Bangladesh based on our current group structure. We only have a representative office in Bangladesh and do not have any sales in the country. Consequently, we do not pay tax in Bangladesh, which is entirely in line with current tax legislation. The guidelines issued by the OECD (Organisation for Economic Co-operation and Development) specify how profits, and thus taxes, are distributed between countries.

The wage issue

H&M does not own any factories, but instead buys its goods from independent suppliers in Asia and Europe. We therefore do not set the wages at any of our suppliers’ factories. However, we work intensively to influence developments so that wages for textile workers are increased. Among other things, we do this together with other clothing companies. For example, H&M’s Managing Director also met with the government of Bangladesh in September, when we put forward demands for higher wages and annual wage revisions. All the workers are paid the same wage regardless of which company they are making clothing for. That is why it is important to influence things at a political level, so that the statutory minimum wage is increased and benefits all workers.

Living wage

H&M does not own any factories. However, we feel that our suppliers’ employees should be able to live on their wage and we have also incorporated this requirement into our Code of Conduct, which is based on the UN declaration. There is no uniform definition at present of what a living wage is. Until then, we will support the definition chosen by the UN. H&M feels that it is more responsible and more sustainable in the long term to work for all workers throughout the textile industry to be paid higher wages.

Working in partnership with other companies

We are aware that there are challenges in the industry and therefore we are working with other companies, organisations and also at a political level to implement lasting changes in the textile industry. It is important what a large company such as H&M does in practice. We therefore work on a daily basis to drive progress on the issue, and in this work we make it clear that we support the workers’ fight for better wages.

Pricing

The same factories from which H&M buys its products also make clothes for many other clothing brands, even though there are substantial differences when it comes to prices in the stores. It is important to realise that the employees at a factory are paid the same wages regardless of which brand they are producing garments for and regardless of what the final price will be in the store. Consequently, more expensive does not necessarily mean better. H&M maintains low prices by having small mark-ups, buying in large volumes, having effective logistics, having no middlemen, designing the products ourselves and having our own stores.

H&M’s production countries

H&M buys products from suppliers in both Asia and Europe. Many countries in Asia have had a well-developed textile and clothing industry for many years. In Bangladesh, for example, 80 percent of exports are textiles.

International trade plays an important part in a country’s development because it is a source of economic growth and helps to lift people and nations out of poverty. Through our suppliers, H&M indirectly helps to create more than 1 million jobs for people around the world, primarily women, and by being present in these countries we influence developments in a positive direction.

Overtime

Overtime is a challenge for the entire textile industry. Under our Code of Conduct, overtime at our suppliers must be within statutory limits and must be voluntary and compensated. According to the requirements that we impose on suppliers, the textile workers in Bangladesh must not work more than 2 hours of overtime per day and the total hours must not exceed 52 hours per month. H&M does not own any factories and we do not order overtime. On the contrary, we require our orders to be able to be completed without overtime. Where we see a need, we also help the suppliers – for example, with improving production planning and increasing productivity in order to reduce the need for overtime.

H&M’s social commitments in Bangladesh

Bangladesh is an important sourcing market for H&M. Garment production, which employs several million people in Bangladesh, accounts for a large proportion of exports and the development of the industry is therefore important for the country’s future. As a long-term buyer, H&M wants to help strengthen the workers’ influence by educating them in their rights, improving their skills at negotiating conditions with employers and supporting functioning labour market policies. To support social development in Bangladesh in the long term, H&M has expended its sustainability work further. Among other things, H&M contributes to improving the availability of healthcare for the suppliers’ employees. Along with suppliers, H&M has also started and financed a helpline for women in Bangladesh to which they can turn for support. Read more about our commitments in Bangladesh here.

Since 2009 H&M has been working in partnership with UNICEF on our All for Children project in Tamil Nadu, India. Since summer 2012 the project has been extended into Bangladesh. The main aim of All for Children in Bangladesh is to get take a holistic approach to child development in the slum areas of Dhaka. The project aims to provide around 40,000 children aged from 3 to 14 years who live in the slum areas in and around Dhaka with better access to nursery and primary schooling, knowledge that promotes better health and social security. In the long term this will help fight poverty in that we are indirectly creating more job opportunities, as well as contributing to social development in general. In total, H&M will contribute nearly USD 8 million to the All for Children project in Bangladesh over the coming five years.

Read more about All for Children in Bangladesh:

H&M extends collaboration with UNICEF in Bangladesh
Community projects – All for Children

Comments on the report by ActionAid

As far back as 2010 H&M invited ActionAid to a meeting in order to engage in dialogue on the tax issue. During this meeting H&M explained how we pay tax and the rules we have to follow. We comply with the local tax rules in the countries in which we operate. Last year H&M paid SEK 5.1 billion in tax for the Group. We also comply with the OECD guidelines on transfer pricing, which provide the basis for how profits are to be distributed and taxed in international companies. It goes without saying that this does not involve any tax avoidance on our part. As we have said, we have no sales activities in Bangladesh and we do not own any factories either. As H&M has no revenues in the country, it does not pay corporation tax there either. However, tax revenues are generated in the country via H&M’s employees at the local office in Bangladesh.

Dividend

As a listed company, H&M has a responsibility to its approximately 195,000 shareholders to deliver a return. Among others, around 60 percent of H&M’s shareholders are Swedish and foreign pension funds and small savers. It is up to each shareholder to choose what it wishes to do with its return. Stefan Persson and his family have chosen to support social development in various ways, and these include donating some of these particular returns to charity.

Tax affairs of Stefan Persson and family

Over the past ten years the Persson family has paid more than SEK 6 billion in tax in Sweden. Stefan Persson has been registered as resident in Sweden for many years, and in recent years has also been Sweden’s largest private taxpayer.