SIPP Sustainable Impact Partnership Program Introduction

Valid for all brands in H&M group

SIPP INTRODUCTION
Sustainable Impact Partnership Program

Introduction

H&M is introducing a new ground breaking supplier assessment method. We call it SIPP - Sustainable Impact Partnership
Program. This document aims to give you a short introduction to the major changes with this new method and what
they will mean to you.

Until now we have focused on measuring compliance and legal requirements through audits, now we also want to be
able to reward the proactive steps towards sustainability each supplier takes. We want to partner with our suppliers,
share knowledge and support them with training that helps them to independently improve rather than us telling them
what to do and when.

Our four key messages are: reward the extra mile, driving supplier ownership, performance beyond compliance and
sustainability drives business performance. We want you to keep these messages with you while learning more about
SIPP.

Global Sustainability Department 1(5)

April 2015 Version 1.2
SIPP Sustainable Impact Partnership Program Introduction
Valid for all brands in H&M group

Table of Contents
Why? ....................................................................................................................................................................................... 3
How? ....................................................................................................................................................................................... 3
When? ..................................................................................................................................................................................... 3
Next Step ................................................................................................................................................................................. 4
H&M Business Minimum Requirements ................................................................................................................................. 5

Global Sustainability Department 2(5)

April 2015 Version 1.2
SIPP Sustainable Impact Partnership Program Introduction
Valid for all brands in H&M group

Why?
H&M is commercially successful and growing rapidly, making the brand globally well known among all different
stakeholders, from customers to influential decision makers.

H&M wants to be regarded as being in the forefront when it comes to sustainability. New added sustainability areas
such as energy, water, human rights, but also strengthening of existing areas such as chemicals, frequent data collection
on overtime and management systems are signs of that forefront ambition.

There is recognition that as a global actor, H&M’s relationship with its business partners throughout our value chain will
be scrutinized. It is also understood that sustainability challenges are a shared responsibility where suppliers need to
take a greater ownership in order to drive substantial change.

Monitoring and knowing our supply chain is essential for our work and external communication. However “audits”
alone does not recognize the business realities, which is why we now introduce SIPP. We believe the combination of
expanded use of KPI’s, a greater focus on business impact and an emphasis on supplier ownership will create the best
environment for sustainable change.

How?
The main objective of SIPP is to provide better visibility into factories. We will achieve this with a broader sub-set of
information collected more frequently.

Each PU will on a monthly and yearly basis report data to H&M and this data will then be validated and evaluated by
H&M. The questions will be a combination of management system and performance data. The self-assessment and the
validation of it will generate a score for each PU; a Sustainability Index. The supplier’s Sustainability Index will be the
aggregated result of their PU’s collected score. The analysis of the data will be shared with the supplier while at the
same time we will highlight areas of concern and provide capacity building support. The suppliers then need to take own
responsibility for achieving the improvements.

When?
We will start rolling out SIPP in May 2015 for all our commercial manufacturing units. From this time on we will end our
audit program FAP and will start self-reporting. During the spring you will get more information and training on how this
will affect you and how to use the new system we will ask you to use for self-reporting.

We hope you are as excited as we are to start working on this new, partner based approach to sustainability. Our strong
belief is that with transparency and mutual understanding we can achieve great things!

Global Sustainability Department 3(5)

April 2015 Version 1.2
SIPP Sustainable Impact Partnership Program Introduction
Valid for all brands in H&M group

Next Step
Before the launch of the SIPP method, we would like you to ensure and secure that the below Sustainability
requirements are in place for existing Production Units approved for H&M and the new Production Units that you are
planning to offer. These requirements are the Minimum Requirements to do business with H&M. These are not new but
we take this opportunity to remind you that these should be secured.

Failing to comply with any of these requirements will lead to issuing of “Letter of Concern” (previously called as Warning
letter). Three different “Letter of Concern” within 2 years period on a Production Unit/ facility, will result in stopping
business with that Production Unit.

Minimum Requirements on the next page.

Global Sustainability Department 4(5)

April 2015 Version 1.2
SIPP Sustainable Impact Partnership Program Introduction
Valid for all brands in H&M group

H&M Business
Last updated Mar 2015 Minimum Requirements

Area Requirement
Business practices The Supplier and Production unit should be Transparent in their reporting

The Supplier/Production Unit should not use Undeclared Unit

No Supplier or Production Unit should work on Sandblasting

The supplier/Production unit should not employ children (any person(s) under the age of 14 years, or local minimum age,
whichever is higher )
All Facilities/ Production Unit approved for H&M should have Legal Licences, as part of the legislation of each country

Recruitment and Hiring Facility/Production Unit should have a anti-harassment and anti-discriminatory recruitment policy

All workers should have a copy of Employment Contract

Facility/Production unit should not subcontract to prison

Facility/Production Unit should have a Forced Labour policy and facility/ Production unit does not engage in any form of forced
labour
Facility/Production Unit should have a Child Labor policy
Facility/Production Unit should not employ any person(s) under the age of 14 years, or local minimum age, whichever is higher

Facility/Production Unit should not conduct medical testing in order to determine pregnancy when not legally required to do so

Compensation Facility/ Production Unit should ensure that at least the legal minimum wage for all regular hours worked, is paid to all workers

Facility/ Production Unit should ensure that all workers, including foreign workers and homeworkers, receive wage premiums
for overtime and work performed on weekends and holidays, as required by law
Worker involvement & Facility/ Production Unit should have a written policy on Freedom of Association(If applicable) and violation to freedom of
communication association is not acceptable
Facility/ Production Unit should have a written grievance policy

Worker treatment Facility/ Production Unit should have a written anti-harassment and anti-abuse policies and procedures for the workplace.
& development
Emergency Planning & Fire Facility/Production Unit should have a Fire alarm (audible and visual) that is maintained and fully functioning ( including
Safety dormitory)
Facility/Production Unit should have at least 2 unlocked exits on every floor ( including dormitory)

Facility/Production Unit should have aisles that are clearly marked with emergency exit routes and maintained clear of
obstructions ( including dormitory)
Facility/Production Unit should have fire extinguishers that are of the type and quantity suitable for the fire hazards that exist
(documented by extinguisher servicing company or local officials) ( including dormitory)
Chemical Hazards Facility/Production Unit should have a maintained/updated chemical inventory list.
Chemical Inventory list is a list of all chemical substances kept or used in the facility. The content of chemical inventory should include the chemical
commercial name, identification numbers (CAS no.) , hazard information, amount of storage or amount of consumption and storage location.
Facility/Production Unit should have documented chemical purchasing procedures to prevent the purchase of
Restricted/Banned substances
Chemical Management Facility/Production Unit should not use H&M banned organic solvents in any production processes
Refer to H&M Chemical restrictions
Energy use & GHG emissions Facility/Production Unit should track and measure purchased electricity and purchased natural gas with METERs on a unit level
(for grid based electricity)
Water Use Facility/Production Unit should have water METERs tracking and measuring water usage installed at all water inlets (only
industrial water use)
Minimum requirement for all Industrial water /wet process only
Facility/Production Unit should have water METERs installed at all industrial effluent discharge points (applicable for all units
with internal/onsite ETP)
discharge Points- means where the water to external water body or municipal or external wastewater piping network.
Facility/Production Unit wastewater quality meets BSR /legal water quality standards, whichever is stricter.
Water quality parameters will be followed on BOD, COD and TSS
Waste water/ Effluent Facility/Production Unit's all wastewater that is produced is being treated with primary or secondary treatment or both
whatever is needed
If the wastewater treatment is occurring off-site, facility/ production unit should have an evidence of the treatment service
agreement

Global Sustainability Department 5(5)

April 2015 Version 1.2