To improve the lives of nearly 2 million workers, H&M group will encourage suppliers to pay workers digitally
March 8, 2017
H&M group becomes the first global fashion brand to join the United Nations’ Better Than Cash Alliance
The Swedish fashion company H&M group announced today that it will encourage its suppliers to pay their workers through mobile money or other digital forms to improve the livelihoods of its workforce, enhance transparency and cut factory costs.
This effort comes as the company officially joins the Better Than Cash Alliance, a United Nations-based partnership of governments, companies and international organizations accelerating the transition from cash to digital payments.
“Digital payments are an efficient and scalable way to improve the lives of the employees of our suppliers. They offer a faster, safer and more transparent way to receive their salary, increase financial inclusion and support women’s economic independence,” said Gustav Loven, Social Sustainability Manager at H&M group. “Also, for our suppliers, paying wages digitally can generate savings, increase security and provide more accurate data on wages.”
Sixty-five percent of the 1.6 million people employed along H&M group’s supply chain are women, many of them with limited access to the financial services they need to create a better life for themselves and their families. Many factory workers worldwide are paid entirely in cash, which entails cumbersome, expensive and dangerous processes for both factories and workers. Encouraging suppliers to pay wages through digital channels, such as bank accounts, cards or mobile money, will build on H&M group’s sustainability commitment to work with its business partners to promote good working conditions, fair living wages and sustainable economic growth.
As the majority of the benefits will be realized by female workers, this move is a prime example of a corporation working to achieve the Sustainable Development Goals on Gender Equality (SDG 5) and Decent Work and Economic Growth (SDG 8).
“H&M group is taking a bold step in recognizing how cash-heavy supply chains can hinder companies from empowering their workers and increasing transparency. And, it’s inefficient,” said Dr. Ruth Goodwin-Groen, Managing Director of the Better Than Cash Alliance. “H&M group’s leadership will help inspire other companies in the industry, and beyond, to make the shift to digital payments and contribute to inclusive growth, as well as to the Sustainable Development Goals, in emerging markets.”
In addition, H&M group is one of the leading users of organic cotton and Better Cotton in the world, and it adheres to socially and environmentally sustainable standards and actions. Expanding digital payments to the world’s cotton supply chain could potentially reach 250 million people, including smallholder farmers who currently have limited access to digital payment systems and financial services in general. Digitizing payments, when designed responsibly and responsively to consumer needs, can enable H&M group to grow its supplier base and help create a sustainable, productive agricultural sector, the promotion of which is a cornerstone of the Sustainable Development Agenda.
The Better Than Cash Alliance has published new research examining a selection of garment manufacturing factories in Bangladesh that have transitioned workers’ wage payments from cash to digital in the past five years. From a factory perspective, the analysis shows that transitioning to digital payments can save factories approximately 750 hours of production a month, due to workers spending less time away from the production line and reduce costs by more than 85 percent within two years of paying workers via a hybrid mobile money/bank account model. At the same time, moving toward a digital economy supports financial inclusion by drawing previously unbanked workers into the formal financial system and building financial skills.
H&M group joins 55 other Better Than Cash Alliance members, and will have access to the knowledge and technical expertise offered by the Alliance and its members to accelerate the shift to digital payments, helping to advance economic growth and expand financial inclusion.
About Better Than Cash Alliance The Better Than Cash Alliance is a global partnership of governments, companies, and international organizations that accelerate the transition from cash to digital payments in order to reduce poverty and drive inclusive growth. The United Nations Capital Development Fund serves as the secretariat. To learn more, www.betterthancash.org, follow @BetterThan_Cash. and subscribe for news.
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