H&M Group

The entity appears to support a mandatory human rights due diligence legislation

The company states in response to Question 1: "... we recognise a value in harmonising expectations on due diligence on EU level..." It goes on to indicate in Question 2: "Yes, an EU legal framework is needed. We recognize there is a value in ensuring a more holistic approach for due diligence and setting common and achievable expectations for companies of various sizes and sectors on EU level, with the ultimate purpose of implementing due diligence processes across industries. It is important to avoid fragmented legislation among individual EU states. If designed and implemented in a coherent and proportionate way, an EU framework could have an effect on levelling the playing field and support positive impact." H&M agrees "to a certain extent" with the definition in Question 14. "The adequate due diligence definition should reflect the principles of the UN Guiding Principles and OECD Guidance.- Due diligence should be risk-based. Adequate measures will depend on factors such as impact, context and a company's involvement with an impact. Furthermore, companies will have to prioritise risks, connected to their products or services, and shall do so based on the risks of potential of most negative impacts. This prioritization is what is defined as a company’s salient human rights issues, based on the indicators of severity and likelihood. The company’s ongoing efforts to identify risks, assess their severity and track how effectively it addresses them are informed by the perspectives of affected stakeholders and/or their legitimate representatives.- Legislation should distinguish between the due diligence responsibility of companies towards their legally owned operations versus the supply chain." For question 15 it selects Option 3. “Minimum process and definitions approach as presented in Option 2 complemented with further requirements in particular for environmental issues”. This approach would largely encompass what is included in option 2 but would complement it as regards, in particular, environmental issues. It could require alignment with the goals of international treaties and conventions based on the agreement of scientific communities, where relevant and where they exist, on certain key environmental sustainability matters, such as for example the 2050 climate neutrality objective, or the net zero biodiversity loss objective and could reflect also EU goals. In response to Question 15b it states "We recognise an EU framework needs to find a balance of both being clear at the same time being flexible and achievable for companies of all sizes and sectors. We welcome a horizontal approach combined with sector specific “guidelines”.- We recommend the EU framework to follow a ‘smart mix’ approach, as indicated in the UNGPs, where additional measures that encourages continued progress should be developed.- We call on the EU Commission to ensure a harmonised approach between the various policies being launched in 2021 (due diligence, taxonomy, review of the Non-Financial Reporting Directive, etc) to avoid confusion, unnecessary administration or possibly even contradictions."

Based on the joint letter “Support for EU framework on mandatory human rights and environmental due diligence,” signed by this entity: “We... welcome the announcement by the European Commissioner for Justice... that the European Commission will launch a legislative initiative on mandatory human rights and environmental due diligence.” “Mandatory human rights and environmental due diligence is key to ensure that efforts by companies that respect people and the planet... are not undercut by the lack of a uniform standard...” “Legislation introducing an obligation to conduct due diligence as defined by the UNGPs... is critical to bring all companies to the same standard...”

The statement, demonstrates clear and direct support for the creation of mandatory legislation on human rights and environmental due diligence, recognizing the importance of standardizing business conduct. The statement actively supports the creation of a binding directive on due diligence, advocating for it as essential to establishing a uniform and competitive standard.

The entity appears to support a broad coverage of companies with small caveats regarding flexibility depending on size

Question 15: "Option 3. “Minimum process and definitions approach as presented in Option 2 complemented with further requirements in particular for environmental issues”. This approach would largely encompass what is included in option 2 but would complement it ... Further guidance and sector specific rules could complement the due diligence duty, where necessary." Question 15a: "Any framework should be inclusive to many companies yet flexible recognizing different nature of companies in different contexts. We welcome a horizontal approach combined with sector specific “guidelines”. We believe sector-specific requirements would make the legal framework unnecessarily complex and would ignore the fact that supply chains of different sectors are interlinked. We recognise the need of any EU framework to be clear and applicable for many, thus a minimum process and definitions as suggested in option 2 or 3 would be most suited. Any approach however should be aligned with the UNGP and OECD guidelines and further sector guidelines can be developed." Question 16: "Micro-enterprises (less than 10 people employed) should be excluded; SMEs should be subject to lighter requirements (“principles-based” or “minimum process and definitions” approaches as indicated in Question 15); SMEs should have lighter reporting requirements; Toolbox/dedicated national helpdesk for companies to translate due diligence criteria into business practices. The scale of the impact, thus also risks, may not necessarily be linked to the number of employees of a company. It’s important that as many companies as possible should be included. However, the proportionality principle should be considered, leading to reasonable and flexible obligations for SMEs."

Based on the joint letter “Support for EU framework on mandatory human rights and environmental due diligence,” signed by this entity: “...legislation introducing an obligation to conduct due diligence as defined by the UNGPs and covering all business actors is critical to bring all companies to the same standard…”“EU-wide cross-sectoral legislation... should harmonise these expectations…”

The letter explicitly advocates that all companies, regardless of sector or size, should be subject to the legislation, reinforcing the idea of a "level playing field." The statement supports the universal application of the regulation, without sectoral or business-size exceptions, fully meeting the indicator.

The entity supports an enforcement mechanism, however the response does not reflect a proactive call for regulation or more stringent regulation than proposed

Question 19a: "Supervision by competent national authorities (option 2) with a mechanism of EU cooperation/coordination to ensure consistency throughout the EU; Other, please specify: Any enforcement mechanisms should ensure consistent application to prevent situations where companies operating in different countries would be subjected to different expectations or reporting obligations. Any rule should be transparent, clear and avoid unreasonable administrative burden."

Based on the joint letter “Support for EU framework on mandatory human rights and environmental due diligence,” signed by this entity: "Mandatory legislation can... clarify legal consequences for when responsibilities are not met...”

The statement advocates that the legislation should establish clear legal consequences for non-compliance with due diligence obligations. Implicit support for enforcement mechanisms. Although it lacks detailed specifications (such as civil or administrative sanctions), the acknowledgment of the importance of legal consequences justifies a positive score

The entity is in favour of option 2 ‘Supervision by competent national authorities (option 2) with a mechanism of EU cooperation/coordination to ensure consistency throughout the EU’.

In response to question 19a, the entity states that ‘Any enforcement mechanisms should ensure consistent application to prevent situations where companies operating in different countries would be subjected to different expectations or reporting obligations. Any rule should be transparent, clear and avoid unreasonable administrative burden.’ The entity has not mentioned judicial enforcement.

The entity is selecting option 1 (an EU legal framework is needed). Regarding the value chain, the entity prefers the framework is risk-based and the scope of supply chain is within legally owned operations versus the supply chain.

In response to question 2, the entity states that ‘We recognize there is a value in ensuring a more holistic approach for due diligence and setting common and achievable expectations for companies of various sizes and sectors on EU level.’ The entity indicates that global value chains are long and complex, ‘the framework needs to reflect this and be risk based and proportionate where focus should be to support a long-term positive impact on the ground rather than unproportionate level of reporting or administration.’

In response to question 3, the entity chooses option 1, 2, 3 and 6, stating that ‘Ensuring that the company is aware of its adverse human rights, social and environmental impacts and risks related to human rights violations other social issues and the environment and that is in a better position to mitigate these risks and impacts…’

In response to question 14, the entity states that it agrees to a certain extent with the definition of due diligence. Regarding supply chain, the entity states that ‘Legislation should distinguish between the due diligence responsibility of companies towards their legally owned operations versus the supply chain’ and ‘a supplier should be define as a ‘contractual relationship’.’

In response to question 15, the entity picks option 3 ‘Minimum process and definitions approach as presented in Option 2 complemented with further requirements in particular for environmental issues’.