We need to scale alternative ways of doing business to make sure our products are used more and we recover the materials they are made from when they are no longer usable. This way, we can move away from relying on virgin natural resources to grow our business.
We need to take responsibility for the impact fashion has on climate and the environment. Circular business models (CBMs) can help us reduce and limit this negative impact by decoupling our growth from resource use, while continuing to deliver fashion and style for our customers.
Our customers’ needs and expectations are changing. Research shows that circular business models are growing up to ten times faster than the traditional fashion market, with generation Z driving the shift. They are motivated by getting more for their money, finding fashion one-offs and a desire to shop more sustainably.
Moving to a circular economy will decrease the amount of virgin resources we use to make products, reduce carbon emissions and pollution, and reduce our impact on biodiversity and natural ecosystems.
CBMs can help us build a resilient and relevant business that is equipped for future legislation, such as EU laws around waste, sorting and collecting. Research by the Ellen MacArthur Foundation shows that business models such as resale and repair could generate USD 700 billion by 2030 and make up to 23% of the global fashion market.
Traditionally, fashion has followed a linear business model – take, make, waste. CBMs break this chain to keep garments in use for longer through care and repair services and by increasing the number of users through resell and rental. Once they have come to the end of their useful lifespan, collection schemes make sure they are not wasted and help maximise the value of the resources that went into making them.
In early 2022, we introduced a new goal to double our sales while at the same time halving our carbon footprint. By doubling sales, we don’t mean doubling volume or selling twice as many products – we mean doubling revenue – and CBMs are key to us reaching this target. In a circular system, products generate revenue more than once. A single garment can be rented several times or sold, resold, repaired and remade, offering multiple opportunities to help us reach our goal.
Across the H&M Group, we are trialing different types of circular business models to give our customers new ways to experience and engage in circular fashion and choose more sustainable options. These models help us learn what works and what doesn’t so we can scale up services that meet our customers’ needs. They fall into four broad categories – access, use and care, repair and collect.
Offering customers different ways to enjoy and experience fashion, while keeping products in use for as long as possible.
Encouraging customers to love their clothes for longer and extend the life of their fashion favourites.
Helping customers prolong the life of their clothes through repair tips, products and services.
Encouraging our customers to recirculate products ensures that valuable resources don’t go to waste.
We need to trial different services to find the ones that work best for us and our customers. Then we need to scale them. If these new models are going to help us reach our climate and biodiversity goals, they need to grow into being part of our core business.
We’ve already learnt a lot about resale. To make it a sustainable business, we need to build solutions that can help close the gap between customer intentions to shop more sustainably and their actions. We need to make second-hand as convenient and attractive as the traditional linear model. This is why we offer an integrated second-hand offer at hm.com in Germany and Sweden.
It needs to make economic sense to scale initiatives. We address this challenge and discuss how to incentivise a scalable transition in our position paper on circular business models as a means to prevent waste.
We publish our Sustainability Disclosure annually. In this document, we set out our goals and the progress we’ve made in the previous year. Find the latest version here. More up to date information can be included on this page.
