H&M says decarbonisation ‘rarely’ has financial benefit for suppliers

Fast fashion giant calls for innovations in bundling and blended finance, as it adopts new science-based land targets.

Clothing retailer H&M has warned that significant investments in decarbonisation “rarely” makes financial sense for suppliers.  

In a white paper about cutting emissions in the fashion industry, the Swedish firm noted that, “while energy efficiency measures are often profitable with relatively quick payback periods, more substantial upgrades – such as replacing carbon-based energy sources with renewable energy – rarely have a direct financial benefit, or the payback time is very long”. 

H&M’s chief financial officer, Adam Karlsson, said the challenge came not from a lack of capital or viable solutions, but “because the value chain lacks aligned incentives, clear governance, or a direct link between climate impact and financial value”. 

The company called on fashion retailers to collaborate more when working with suppliers, and said financial innovations were needed to enable firms to “bundle supplier projects and unlock blended capital through aggregated, de-risked platforms”.

It also stressed the importance of “reframing decarbonisation as a driver of risk mitigation, resilience, and long‑term enterprise value”. 

“Internal sustainability investment functions can align KPIs and capital allocation with targeted decarbonisation outcomes and set the cost of action against the long-term cost of doing nothing,” it added.  

Earlier this month, consultancy Position Green worked with academics to create a tool it claims can help businesses put a price on their sustainability efforts – helping put green investments in terms that “CFOs and investment committees understand”.  

H&M also had its land-based nature targets validated by the Science Based Targets Network this week.  

The three goals include a 3.85% reduction in upstream agricultural land-based impacts  2030, compared with 2019, and the regeneration and prevention of ecosystem conversion in India and South Africa.