H&M encourages suppliers to pay workers digitally

H&M is encouraging its suppliers to pay their workforce digitally, rather than in cash, in a move it says will help to improve the lives of 2m workers.

The Swedish fashion group has officially joined the Better Than Cash Alliance, a United Nations-based partnership of governments, companies and international organisations which is accelerating the transition from cash to digital payments.

According to H&M social sustainability manager Gustav Loven digital payments, through mobile money or other digital forms, 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," he said. "Also, for our suppliers, paying wages digitally can generate savings, increase security and provide more accurate data on wages."

Around 65% of the 1.6m workers employed in the H&M supply chain are women and many of them have limited access to the financial services needed to improve their lives. Cash payments are also said to be cumbersome and often dangerous methods of payment for the both workers and factories.

"H&M group is taking a bold step in recognising how cash-heavy supply chains limit efforts to empower workers and prevent companies from 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," Goodwin-Groen added.

Research from the Better Than Cash Alliance demonstrates that garment manufacturing factories in Bangladesh transitioning to digital payments can save approximately 750 hours of production a month, due to workers spending less time away from the production line and can reduce costs by more than 85% within two years. At the same time it brings previously unbanked workers into the financial system and builds financial skills.

Image: Better Than Cash Alliance