Hennes & Mauritz AB, the Swedish retail giant known as H&M, is making a significant move towards sustainability by planning its inaugural green bond sale. This decision is part of the company’s ongoing efforts to enhance the environmental responsibility of its fast fashion business.
H&M has scheduled investor calls for Monday and Tuesday, paving the way for an anticipated €500 million ($843 million) eight-year green bond offering. The funds raised will be directed towards financing and refinancing projects that prioritize the use of recycled materials, renewable energy, and sustainable water management.
Fast fashion companies are under increasing pressure to make their production processes more sustainable and protect their brand reputation, following criticism in recent years. Their business model, characterized by the rapid turnover of new styles, has contributed to heightened carbon emissions and a surge in clothing waste.
H&M’s 2021 report highlights the potential adverse impact on its business if consumers increasingly favor products and services with low climate footprints from trusted, sustainability-focused companies. Other fashion brands like Burberry and Mango have also aligned their borrowing activities with green commitments.
Earlier this year, H&M faced accusations related to its garment collecting program, suggesting that clothes from the initiative were being disposed of in Africa, contributing to significant environmental issues. H&M’s CEO, Helena Helmersson, refuted these claims.
In response to these challenges, resale initiatives have gained traction as an avenue for fashion companies to reduce their carbon and water footprint and attract environmentally conscious consumers. However, so far, these efforts have accounted for only a small fraction of profits.
H&M’s revenue growth stagnated unexpectedly in its most recent earnings report as price-conscious shoppers turned to competitors like Shein, which offered significant discounts.
The green bond issuance for these sustainability projects is being managed by BNP Paribas SA, ING Groep SA, JPMorgan Chase & Co., SEB AB, and UniCredit SpA.