Exclusive: 15 minutes with H&M Group CEO Karl-Johan Persson

Stockholm - H&M was founded over 70 years ago in Sweden by Erling Persson, the grandfather of current CEO Karl-Johan Persson. Since then, the company has become one of the biggest fashion businesses in the world, with stores in more than 70 countries and a portfolio of brands including Cos, Monki and &OtherStories.

Given its position, H&M Group’s practices regarding sustainability are followed closely by many. The changes H&M implements inevitably influence the rest of the fashion industry. That’s why Persson considers sustainability as key to the company’s future. Besides leading the business, he also serves as a board member of the H&M Foundation, an independent non-profit organization privately funded by his family, whose mission is to help the world reach the UN Sustainable Development goals by 2030.

FashionUnited spent 15 minutes with Persson in the H&M Group’s headquarters in Stockholm, right after the Global Change Award, an annual prize organized by the H&M Foundation to support sustainable innovation in the fashion industry.

You’ve stated several times that the only way forward for the H&M Group is to become more sustainable. How is the company planning to go about achieving that goal at the industry and retail levels?

One of the most important things we’re working on is to become more transparent about our sustainability efforts, to make things clearer for the consumer. I believe everyone benefits when consumers are informed, at the moment of purchase, about how products are made and what their social and environmental impact is. This information is a crucial part of the decision making process.

This obviously puts pressure on companies to take more steps [to become more sustainable] and to be transparent about the steps they’re taking, as consumers have a much better understanding of sustainability nowadays. Instead of just looking at the price tag and saying: “this must be more sustainable than a cheaper product”, they are now basing their purchasing decisions on facts. Therefore, it is extremely important for us to be more transparent about our sustainability efforts. We are far from perfect, but we’re in a good position now.

What challenges has the H&M Group faced in its efforts to become more sustainable and what are the main challenges the company is facing now?

One of the greatest challenges of our times is to make the fashion industry circular. We should stop using “virgin materials” the way we do now. The middle class is growing around the world, which is a good thing because it means there are more jobs and more economic prosperity, but at the same time it means we should tackle the negative impact that this growth causes to the environment. The Global Change Award has shown us again and again that it is possible to replace traditional materials with recycled materials which have the same characteristics and price but offer much less environmental impact. I’m optimistic, I think we can make these changes, but it is a huge challenge.

The H&M Group has been working to become more sustainable for several years. In a scale of 1 to 10, how far has the company come?

It depends on which target we’re talking about. When it comes to only using sustainable or renewable materials by 2030, we’re now at 57 percent, which is good. But the definition [of what constitutes a sustainable material] will change until then, which is why we hope to only use recycled materials in the long term. When it comes to the use of renewable energy, our value chain is currently at 95 percent. We still have a long way to go, but we’re at a good level.

Considering the entire fashion industry, what needs to change, in your opinion?

I believe cooperation is key for the industry to achieve the level of sustainability we need. We will not achieve much if we don’t work together. The H&M Group collaborated with governments, trade unions and suppliers on its fair wage system, for example. The same goes for the development of innovative materials. We select the winners of the Global Change Award in partnership with Accenture and the KTH Royal Institute of Technology in Stockholm.

The H&M Group is often criticized for not being a sustainable company. How do you feel about that?

‘Criticized’ may not be the right word, but I think it’s good that the public watches the big companies more closely because many good initiatives can come from that. Thanks to people’s critique, we’ve been able to discover points of improvement. I do feel, however, that media reports can sometimes be too sensationalist. H&M finds it crucial to base every single decision on facts, so that we can best inform our customers. After all, a knowledgeable society is a wonderful thing. It’s always dangerous when people aren’t well informed, no matter the subject. But sometimes people look at complex topics from a black-or-white perspective or they try to make the story more interesting by ignoring certain aspects, which is quite frustrating because it means they aren’t looking for the truth.

Once again, we’re far from perfect, but if you look at objective studies made by experts, I actually find it quite surprising that we’re not perceived as one of the most ethical fashion companies out there. In many countries, including our native Sweden, we’re not seen that way and we have to work on changing people’s perception of us. That’s ok. We are who we are and we want to improve, the position we occupy allows us to improve. So, yes, it is frustrating to be criticized when the critique is not based on facts as it may lead consumers to get the wrong idea about us.

Is the fact that many consumers get the wrong idea about the company the reason why it’s decided to become more transparent and sustainable?

We’ve always wanted to be an ethical company, but our sustainability efforts started when we decided to address certain things that came to light thanks to the criticism we received. So, it is good that the media keeps fashion companies under scrutiny, but that’s not what drives us to make changes. We’re doing this simply because it’s the right thing to do.

Of course we’re also doing this for business reasons, because consumers are growing aware of what’s at stake and we want to be able to compete with other companies. Besides, our fantastic staff wants to work for a company that does good. If we don’t walk the walk, if we don’t take the right steps, they notice it right away and that has a negative impact on their morale. We need to make significant investments in the short term to become more sustainable, but these steps are totally justified in the long term.

H&M is a family business. How does that affect its strive towards sustainability?

It’s about our long term vision. Since the H&M Group is a listed company, people always look at our quarterly results, but the return we’ll get on our investments in sustainability isn’t yet visible in these reports. We’ll only start seeing the return for increasing our use of sustainable materials in five years or so. The full impact may only be seen in 20, 30, perhaps even 40 years from now.

How is the company preparing for the next generation of the Persson family? Are your kids (currently 15, 10 and 5 years old) interested in working at H&M?

My 15-year old and my 10-year old do ask questions about the company, they’ve visited this building, but I would never force them to work here. They should do what they want to do -- as long as it’s a reasonable choice, of course! My father had the same opinion, he never forced me to join the company. You should only do something if you’re passionate about it.

This interview was originally published in Dutch at FashionUnited.NL. Translated and edited by Marjorie van Elven.

Photo: Karl-Johan Persson via H&M