Sector News — October 2019
H&M partners with social enterprise & business gets a new definition: This month’s top conversations in social impact
H&M is focusing on the people behind the products by partnering with artisan makers from social enterprises.
H&M Partners with Social Enterprises for New Line of Products
Fast fashion giants H&M and Zara have drawn considerable attention for their recent pledges to switch to more sustainable production methods. In 2018, H&M first made headlines for announcing its plans to have a fully sustainable and recycled-fabric line by 2030, Zara followed suit a year later with a similar commitment from. Zara, the biggest fashion company in the world, has committed to produce zero waste, source 80% of its energy from renewable sources and use 100% sustainable fabrics by 2025. Though the green pledges from both companies were encouraging, critics were quick to point out that workers making the products for both these companies still don’t earn a living wage.
In a recent announcement, H&M is focusing on the people behind the products by partnering with artisan makers from social enterprises. Though a small step, in lieu of the company’s 600 factories and 930,000 textile workers, these new partnerships will still do some good. The retailer’s new line of home goods will feature products from Bangalore Greenkraft and All Across Africa, two social enterprises creating jobs for marginalized individuals with barriers to employment.
The philosophy that the sole responsibility of a corporation is to “maximize profits at all costs” for its shareholders is a maxim that’s been widely held by the business industry since the 1970s.
Big Corporations Are Redefining the Profit-Focused Role of Business in Society
Last month nearly 200 chief executives associated with the Business Roundtable met to redefine the role of business in society. The philosophy that the sole responsibility of a corporation is to “maximize profits at all costs” for its shareholders is a maxim that’s been widely held by the business industry since the 1970s. Now, executives from industry giants like Apple, JPMorgan Chase and Walmart are amending the widely held definition to include a few other priorities: community impact, investing in employees and fair production methods. According to a statement from the participating executives “These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.” Triple Pundit outlined these examples of how corporations are looking to enact change:
- Companies are to do more to bring value to customers, while striving to exceed customers’ expectations.
- Employees can expect more training and education to help them adapt in a rapidly changing world.
- Suppliers can expect to be treated fairly and ethically.
- There will be more support for communities where companies have a presence; and, companies must promise more of a commitment to preserving the environment.
- As for shareholders, they can expect more transparency and a commitment to generating long-term value.
Though many are skeptical the discussions will lead to real change, the conversation points to an increasing shift in perspective about how business can be done and a desire to disrupt tradition for the sake of impact. The update is promising. As more leaders in the private sector become receptive to shifting the status quo, more space becomes available for social enterprise to grow, receive support and create lasting change.
Employee Activism Catalyzes a New Wave of Company Accountability
In the last couple years, the power of consumer demand to influence company behavior has been a major topic of discussion. Research shows that 88% of millennials think businesses should play a role in solving social issues, and 55% would pay more for products with a social mission. Even corporations like investment firm Blackrock are challenging business leaders to care about “making an impact” in response to growing pressure from consumers. Now, it seems challenges for change are happening from within companies as well. In the last year, employee activism, defined by the Daily Star as “the collective effect that employees have on how a company is managed and run under the influence of socio-political changes,” is making waves in corporations across America.
- In April, Google employees led a successful petition to stop the company from lending its technology to the Pentagon for usage in drones.
- Amazon employees organized their shares to push a proposal through to Amazon’s board calling for climate action.
- This summer, Wayfair employees staged a walkout to protest the treatment of immigrants at the border and the company’s involvement, demanding Wayfair cease the sale of furnishings to detention facilities.
Though historically a tool for unionizing or securing better working conditions, employee activism has become a way for workers to stand up for the social issues they care about and put internal pressure on companies to do the same.