How H&M creates shared value?
Nowadays, the main purpose of the enterprise should not focus on creating profit, they should also consider to creating the shared value. The shared value theory state that the competitiveness of enterprise is closely related to the development of society. Society not only provides the product demand, but also provides a steady environment for enterprise to running.
In the clothing industry, for instance, labor rights and efficiency of resource utilization are always two major challenges toward the multinational enterprise. As a giant of the clothing industry, H&M is a globe brand with 872 suppliers and 1946 factories, this company create about 1 million 600 thousand job opportunity. H&M aware the importance of both economic and social value. In order to create shared value, the executor of H&M takes a strategy which ally the stakeholder to participate in the business decision.
For the employee, H&M believes that only when employees understand the company's brand value and agree with it, enterprises will have a better development. By collaborating with the World Wide Fund for nature (WWF), H&M has provided a total of 2300 hours of training toward employee and emphasized the importance of the fair salary. Compared with other brands, these companies are likely to move factories to the poorer area in order to get a lower labor cost and squeeze the works’ welfare to obtain more profits.
H&M’s strategy requires the collaboration among the supplier and retailer and try to improve the working environment and environmental awareness of the whole supply chain through its influence. H&M has set a high standards system to its suppliers and constantly monitors their performance.For those who share the same philosophy, H&M is willing to cooperate with it, even to developing a long-term and strategic partnership with it.
H&M make a cooperation with its business partners, social service organizations, university academics and the "sustainable clothing alliance" (Sustainable Apparel Coalition), jointly built a measurement standard, Higg index, to identify the sustainability of clothing and footwear industry. In the future, this index will be added into the trademark of other products enables consumers can make an accurate comparison among different brands. This action will enhance the performance of the fashion industry in the sustainable environment.
Finally, H&M found that many of the disused clothes will eventually enter the garbage dump that causing a huge waste. Thus, H&M launched a textile fiber recycling activities, as long as the consumer put their useless clothes into H&M recycle box, they can enjoy the shopping discount. After that, H&M will use these recycled clothing to create new products, called the "closed-loop products". The first batch of recycled products was available in 2013, about 20% of the material comes from recycled clothing. This proportion will continue to improve with technological innovation.
Above all, once the company correctly realize the importance coexistence of economic and social value, not only for the business as a whole but for each of actions, decisions, and they need to collaborate with other organizations which have the same concept, abandon the out of date idea, and taken step to adjust self-conditions to fix local environment, the company will continually enjoy a tremendous advantage over those that don’t create shared value.