When H&M laid out its roadmap to decarbonize its supply chain, the challenge was clear: the vast majority of fashion’s emissions sit upstream, in a fragmented network of factories not owned by the brand, making them difficult and expensive to transition away from fossil fuels. Its latest sustainability report offers an early indication of whether its ambitions are translating into measurable progress.
In 2025, H&M achieved a 41% reduction in Scope 1 and 2 emissions against a 2019 baseline, driven largely by an increase in renewable electricity (which reached 95% of the group’s supply chain in 2025). Meanwhile, Scope 3 emissions — which account for the bulk of the industry’s footprint — fell 34.6%. H&M Group chief sustainability officer Leyla Ertur attributes this to “investments in material innovation, our activities to reduce the energy and water demand in our suppliers’ factories, increase their use of renewable electricity, and replace fossil fuels”.
“The most tangible progress has been in replacing fossil fuels and sourcing materials that are either recycled or sourced in a more sustainable way,” says Ertur. (H&M defines sustainably sourced materials through an internal assessment of environmental impact, social risks, and traceability). “When looking at the supply chain, we have seen big progress by almost fully phasing out onsite coal boilers in the factories we work with.” The challenge is that many production processes are not fully electrified and some countries lack access to renewable electricity, or the legal frameworks to create power purchase agreements, she says. “Having said that, we are committed to continuing to advocate for that.”
H&M says it invested SEK 2.8 billion (around $298 million) in decarbonization and material innovation in 2025. That investment is paired with shifts in how H&M works with its suppliers. The number of garment suppliers (in Tiers 1, 2, and 3) reporting the use of onsite coal boilers has decreased by 108 since 2022, with a full phase-out targeted by 2026. In 2025, 91% of H&M’s materials were recycled or sustainably sourced, by the brand’s own definition. The share of recycled materials was 32%, ahead of the company’s 30% target for the year, and Ertur says the company is “well on track” to meet its 50% target for 2030.
Alongside emissions, reducing resource intensity — particularly water use — is another key lever in lowering supply chain impact. The use of absolute freshwater in wet processing among H&M’s garment suppliers (Tiers 1 and 2) reduced by 22.8% in 2025, against a 2022 baseline, surpassing the company’s 10% reduction target for the year. H&M’s current priorities are to invest in heat pumps, heat storage solutions, and waterless technologies in supplier factories to help them reduce their energy and water use. Ertur says these investments are measured in greenhouse gas emissions reductions, rather than in financial gain.
Along with its decarbonization strategy, H&M recently set science-based targets for nature, following in the footsteps of luxury conglomerate Kering, which was the first fashion company to do so in 2024. This includes avoiding conversion of natural ecosystems by solely sourcing materials that meet H&M’s sustainability and risk mitigation criteria; increasing its share of recycled materials to 50% to reduce the land footprint associated with agricultural materials such as cotton, wool, and leather; and financially supporting restoration initiatives such as WWF’s cotton farming and sheep grazing projects in India and South Africa, respectively.
A key barrier identified across the industry has been how to finance decarbonization at supplier level, particularly in markets where manufacturers face tight margins and limited access to capital. H&M says it is approaching supply chain decarbonization as a shared responsibility with suppliers. “Partnering with best-in-class suppliers with whom we share our values and ambitions, and building long-term relationships with them, has always been our way of developing our production and sourcing strategies,” says Ertur. “As a brand, we recognize our role to play when it comes to developing a framework of financing solutions for our green investments.”
