H&M Group 2025 Sustainability Report: decoupling growth from resource use and driving industry transformation

H&M Group’s 2025 Annual and Sustainability Report underscores a decisive shift toward sustainable growth, circular fashion, and transparent governance. The Swedish fashion retailer continues to align its business model with global climate and social ambitions seeking to “liberate fashion for the many” while decoupling growth from finite resource use.

“When business and sustainability go hand in hand, we reduce emissions on a large scale – and show that fashion can be both affordable and have a lower climate impact.”
– Daniel Ervér, CEO

Leading on climate and resource efficiency

H&M Group maintained its position as an industry frontrunner in climate action. According to the report, the company reduced its absolute Scope 3 greenhouse gas (GHG) emissions by 34.6% compared to 2019 levels, staying on track to meet its 2030 science-based target of a 56% reduction. The progress reflects significant investment in energy efficiency, renewable energy sourcing, and sustainable materials.

• 91% of commercial product materials were either recycled or sustainably sourced.
• 32% of materials were fully recycled, meeting the 2025 target ahead of schedule.
• Over 108 factories have phased out on-site coal boilers since 2022, with a complete phase-out planned for 2026.
• 23% reduction in freshwater usage achieved in Tier 1 and Tier 2 wet processing units since 2022.

These achievements come alongside SEK 2.8 billion invested in decarbonisation and material innovation, and SEK 1.8 billion generated in turnover from resale, reflecting the growing commercial potential of circular business models.

Empowering people across the value chain

With more than 1.1 million workers in its Tier 1 factories (59% of whom are women), H&M Group continues to emphasise fair working conditions, gender equality, and grievance accessibility.

• 100% of Tier 1 workers now have access to grievance and dispute resolution mechanisms.
• 92.6% of chemicals used in production meet ZDHC standards, guaranteeing safer manufacturing and water stewardship.
• Nearly half of all employees across H&M Group are covered by collective bargaining agreements or are union members.
• The global employee satisfaction score reached 77, the highest since surveys began.

The company’s ten-year partnership with IndustriALL Global Union was highlighted as a cornerstone in promoting labour rights, freedom of association, and constructive social dialogue throughout the supply chain.

Driving a sustainable industry transition

H&M Group expanded its leadership in sustainable fashion innovation through collaborations that target deep systemic change. Partnerships with WWF, Circulose, and Syre reflect a strategic focus on renewable materials and textile-to-textile recycling, while participation in platforms like the Apparel Impact Institute’s Fashion Climate Fund supports the industry’s decarbonization goals.

The company also renewed its global partnership with WWF, focusing on water, biodiversity, and climate transition. As part of the group’s circularity ambitions, resale services expanded to 26 markets, and in-store garment collection reached 17,608 tons, with over 80% directed to reuse and recycling.

Transparent, accountable governance

H&M Group’s sustainability governance structure integrates environmental, social, and governance (ESG) oversight at every level. The board of directors, which comprises 50% women and 57% independent members, reviews sustainability performance quarterly. The audit committee ensures data accuracy in both financial and sustainability reporting.

Sustainability performance now also influences executive compensation. The 2025 long-term incentive programme links leadership rewards to ESG performance, including GHG reduction metrics consistent with the company’s net-zero strategy.

A comprehensive climate transition plan

Aligned with the Paris Agreement and validated by the Science Based Targets initiative, H&M’s climate transition plan sets its sight on achieving net-zero emissions by 2040. The roadmap includes:

• Scaling renewable energy through virtual power purchase agreements (VPPAs) — already covering nearly 50% of electricity use.
• Phasing out fossil fuels in its garment supply chain by 2026.
• Adopting internal carbon pricing of USD 20 per tonne of CO₂ to guide sourcing and production decisions.
• Expanding climate resilience through water stewardship and biodiversity protection projects in India and South Africa.

Accountability through EU taxonomy and ESRS alignment

In a clear move toward regulatory transparency, H&M Group prepared its sustainability disclosures in alignment with the European Sustainability Reporting Standards (ESRS) and the EU Taxonomy Regulation. The company reported eligible economic activities in both Circular Economy (CE 5.4) resale of second-hand goods and Climate Change Mitigation (CCM) activities such as energy-efficient equipment and renewable energy installations.

Turnover from taxonomy-aligned activities, mainly resale, represented 0.8% of total revenue, illustrating early adoption of EU-compliant frameworks for non-financial disclosure.

Building a fairer and more resilient future

From its environmental milestones to strong social safeguards, H&M Group’s 2025 Sustainability Report reflects tangible progress on its core mission: delivering fashion and quality sustainably. The company’s integrated approach connecting biodiversity, resource efficiency, and human rights positions it as one of the sector’s most transparent and forward-looking actors.

Looking ahead, H&M aims to achieve:

• 100% recycled or sustainably sourced materials by 2030
• 100% waste prevention and recycling alignment with the EU Waste Hierarchy
• 56% absolute GHG emission reductions across Scopes 1–3 by 2030
• Net-zero climate impact by 2040

In an industry long criticized for overconsumption, H&M Group’s 2025 progress marks a measurable step toward redefining what responsible fashion can be proving that sustainability and growth can coexist when innovation, transparency, and accountability lead the way.