Bachelor thesis
Successful actions to a sustainable future depend on the strategy
-An exploratory study of MNEs Corporate Social Responsibility in the Fast Fashion Industry
Author: Amanda Pfante & Victoria Rosso Supervisor: Selcen Öztükcan Examiner: Helén Anderson Term: VT20 Subject: International Business Level: Degree of Bachelor Course code: 2FE51E
Abstract
Corporate social responsibility is a well-discussed phenomenon where existing researchers within the field of MNEs have found an increased interest in the CSR topic. Existing research between the two topics is still at an early stage where the main reason is the complexity of defining the CSR concept, as well as the MNEs cross-border operations in multiple contexts. Further, the fast fashion industry is generally characterized by frequent production and squeezed margins to maximize profit. CSR is significantly important for MNEs operating in the fast fashion industry due to their environmental and social impact, where they have to reconsider the impact of their actions. This thesis will examine two MNEs originated from Sweden and Spain to understand the differences and similarities of the selected MNEs strategic CSR focus and actions. Further, a qualitative research method has been conducted in order to fulfill the purpose of this thesis, where the empirical data has been conducted through secondary data. The common findings of this thesis indicate that both MNEs engage in multiple CSR activities, where the strategy mainly focus on environmental and social aspects. Further, the findings illustrated a clear connection to Carroll’s Pyramid of CSR where all responsibilities were included in the strategies. The outcome of the thesis indicates that both MNEs strategies involves actions to take responsibility for global and local issues.
Key words
Strategy, Focus, Actions, Corporate Social Responsibility (CSR), Fast fashion industry, Multinational Enterprises (MNEs), Sustainability
Acknowledgments
We would like to express our gratitude to our supervisor Selcen Öztürkcan for the guidance and inspiration throughout the entire process of this thesis.
We would also like to thank our examiner Helen Anderson and the opponents for providing their valuable point of view which has encourage us to further improve our thesis.
Kalmar, May 27th, 2020
______
Amanda Pfante Victoria Rosso
Table of contents 1 Introduction 1 1.1 Background 1 1.2 Problem discussion 3 1.3 Research question 4 1.4 Purpose 5 1.5 Delimitations 5 2 Literature review 6 2.1 Fast fashion industry 6 2.2 Multinational enterprises 6 2.3 CSR 7 2.4 Carroll’s pyramid of CSR 8 2.4.1 Economical responsibility 9 2.4.2 Legal responsibility 10 2.4.3 Ethical responsibility 10 2.4.4 Philanthropic responsibility 10 2.5 The CSR positioning grid 11 2.6 Triple Bottom line 12 2.7 Stakeholder theory 13 2.8 Theoretical framework 15 3 Methodology 16 3.1 Research characteristics 16 3.2 Qualitative research 16 3.3 Selection of companies 17 3.4 Data collection 17 3.5 Data analysis 18 3.6 Research quality 19 3.6.1 Trustworthiness 19 3.6.2 Ethics 20 3.6.3 Methodology critics 21 3.7 Division of work 21 4 Empirical findings 22 4.1 Case 1 - H&M group 22 4.2 Case 2 - Inditex 22 4.3 Strategy 23 4.3.1 Ambitions 23 4.3.2 Achievements 28 4.4 Actions 33 4.4.1 H&M group 33 4.4.2 Inditex 33 5 Analysis 38 5.1 Carroll’s pyramid of CSR 38 5.1.1 H&M group 38 5.1.2 Inditex 40 5.2 The CSR positioning grid 42 5.2.1 H&M group 42 5.2.2 Inditex 43 5.3 Triple Bottom line 43 5.3.1 H&M group 43 5.3.2 Inditex 44 5.4 Stakeholder theory 45
5.4.1 H&M group 45 5.4.2 Inditex 46 5.5 Reflection of analysis 49 6 Conclusion 51 6.1 Theoretical implications 53 6.2 Managerial implications 55 6.3 Social and environmental implications 56 6.4 Limitations and future research 56 References 57
1 Introduction This chapter provides an introduction of the topic Corporate social responsibilities along with other relevant topics. Further, the problem discussion will be presented in order to identify the relevance of the thesis. Finally, the purpose, research question and delimitation of the thesis will be presented.
1.1 Background
Corporate social responsibility (CSR) is a growing phenomenon that has received increased attention among corporations, along with the customers increased pressure regarding company’s impact on environmental and social aspects. Jhunjhunwala (2014) describes the importance of integrating CSR into the companies’ strategy in order to achieve long-term success. Studies from the European Commission have presented a changing attitude of customer interest in socially responsible manufactured products (European Commission, 2001). This pressure the corporations to become more transparent, honest, and consider their environmental footprint. Organizations have a large impact on the society and it is of great importance that they perform their activities to minimize the negative aspects that affects the environment, some organizations implement CSR because it is the right thing to do and not as a strategic choice (McAlister & Ferrell, 2002). During the twenty-first century it became more frequent for companies to produce a sustainable development report. In today’s society companies that do not include a framework of sustainable development could face consequences (Idowu & Lounche, 2011). On the other hand, some businesses implement actions to appear as responsible, however, these actions are only temporary and presents the company incorrectly (Lewis, 1999).
The phenomenon CSR has a broad meaning with various definitions in literature and Carroll (1999, p. 289) defines CSR as ”the conduct of a business so that it is economically profitable, law-abiding, ethical and socially supportive”, CSR also includes environmental responsibilities. Further, Carroll was the first researcher who expressed the importance of the CSR concept where the most important aspect of social responsibility was the economic category (Carroll 1979). Today firms use these CSR actions to create social and organizational benefits and the CSR activities create a competitive advantage and are therefore a tool for strategic branding (Morsing, 2006). It is important to combine the organizational benefits with the actions to be socially responsible (Carroll, 1999).
1(66)
During the period 1995 to 1998 the numbers of business leaders expressed increased interest to develop the businesses’ social responsibility (Lewis, 1999). The importance of CSR as a core component of brands have increased from the previous focus on product features such as quality and design, and the brand personality (Werther & Chandler, 2005). Companies’ CSR activities are becoming more important in today’s society since 35% of the firm’s brand image is influenced by CSR related activities (Idowu & Louche, 2011). Therefore, are the implementation of CSR activities important in brand management and it is according to Frankental (2001) not just a PR or marketing hype. Organization’s voluntary CSR activities includes further responsibilities towards the society beyond rules and policies which has become a part of the company’s brand position (Joshi & Yadav, 2013). Positioning strategy is a way for companies to differentiate from its competitors, where the strategy is a concept based on how the company will be perceived by the consumers, in comparison to the competitors. By implementing CSR in the positioning strategy, the company can build a socially responsible brand image, which can enhance the brand's value in the eyes of the customers (Joshi & Yadav, 2013).
Previous theory explains that Multinational enterprises (MNEs) implementing CSR actions involve managing the supply chain in a responsible manner while including the social and economic impact (Lam, 2009). Concerning the international trade activities, it has strengthened the ties worldwide, resulting in benefits for home- and host countries, which emerges when MNEs offers a competitive and attractive product or service. It is also important that MNEs exploit their resources in a fair-minded and efficient way. On the contrary, supply chains with an unequal implementation of CSR activities can lead to imbalance. Events that illustrate the imbalance of CSR are Nike’s outsourcing to Asia, where child labor existed, and the H&M scandal which revealed that they burned tons of unsold products (Napier & Sanguineti, 2018). Issues regarding CSR actions are common for MNEs operating cross borders (Husted & Allen, 2006). MNEs CSR strategies are defined in two different ways, either by implementing global CSR strategies where the CSR activities must be adjusted to all markets MNE are operating in. The global strategy involves proactive CSR activities, however, this entails a lack of legitimacy and ownership at a local level (Muller, 2006). The other approach is the local CSR strategy, where CSR activities need to be adjusted in line with local standards of the community (Husted & Allen, 2006) and is more responsive. Hence, a risk with a more decentralized local CSR
2(66)
strategy, that is in line with the host-country's lower standards, is that it will differ from the higher standard, expected in the home country (Muller, 2006).
1.2 Problem discussion
Globalization is an ongoing trend where consumers have the option to choose between local and foreign brands, resulting in increased competition among companies (Hsieh, 2002). For this reason, it is important for businesses to obtain a competitive advantage. Researchers that study MNEs have found an increased interest in the CSR topic (Rodriguez, Siegel, Hillman & Eden, 2006). However, Cruz and Boehe (2010) agrees that the research between the two topics is at an early stage. The complexity of defining the CSR concept is the main reason for the lack of research along with the MNEs cross border operations in multiple contexts (Rodriguez et al., 2006) where Jamali (2010) observed the same complexities in the fields. MNEs face challenges when developing CSR activities since they have to consider the social issues both domestically and internationally and what to focus on (Aruthaud-Day, 2005). When implementing strategic CSR, it is difficult to assess how the stakeholders should prioritize the issues. Polonsky and Jevons (2009) suggested that petrochemical organizations operating in markets with different characteristics should examine how CSR issues differ and develop a strategy that considers both markets. Proactive organizations will eliminate the risk of criticism by implementing the highest standards in all markets.
MNEs implementation of strategic CSR faces complexities which includes the issue, organization, and communication. The discussion regarding how to communicate the CSR activities are limited and the complexity of the CSR identity is great since the actions will be interpreted differently by the stakeholders (Schlegelmilch & Pollach, 2005), the behavior will also be affected by the communication (Morsing, 2006). It includes the issue complexity which is explained by the different interpretations of responsibility as well as the social issues that are influenced by different factors. It can also be understood differently by stakeholders depending on the country (Guay, Doh & Sinclair 2004). CSR activities various sub-areas also vary in importance depending on the location (Bhate, 2003). If an organization promotes its brand as environmentally responsible, the actions can be perceived differently, and it will be difficult to address all fronts within the area. Managing global CSR actions is therefore complex since it will be difficult to satisfy the global stakeholders (Zyglidopoulos, 2002).
The measurement of CSR performance is also an issue (Goodpaster, 2003; Knox and Maklan, 2004). Firms that seek to integrate strategic CSR into their brand need to better understand how
3(66)
other organizations strategically implement CSR into the corporate philosophies (Polonsky & Scott, 2005). Companies face issues regarding how to communicate CSR activities in an ethical and still effective manner. The uniform strategy is commonly used where some companies implement the silent strategy, on the contrary some implement an unethical strategy where companies subject consumers with descriptive CSR messages (TerraChoice, 2010) which has increased the consumer skepticism towards the motives behind the company’s actions (Leonidou & Skarmeas, 2017).
Previous theories regarding stakeholders have presented processes for the organization’s engagement with stakeholders (Freeman, 1984). The theorists exclude the process of how the organization should evaluate these priorities (Polonsky & Scott, 2005). For organizations that seeks to implement strategic CSR to their brand and philosophies, it will be of importance to understand the internal process. The fast fashion is based on the phenomenon that garment are disposable which has been changed due to the cultural and social factors, along with the technological development that has changed the buying behavior of consumers from different socioeconomic backgrounds, mainly young women. Trends that are displayed on different platforms provides information about new styles which is creating customer demand (Barnes & Lea-Greenwood, 2006) due to social aspirations. The environment of new trends is rapidly changing and affect the supply chain time efficiency. The outcome of this is poor quality and the average garment can be washed maximum ten times (Joy, Sherry, Venkatesh & Chan, 2012) meanwhile, it requires tons of water to produce cotton, where the average water consumption for producing a t-shirt is 2700 liters (Naturvårdsverket, 2010).
The fast fashion industry has a significant impact on the environment, to illustrate an example of the environmental impact the average carbon footprint of clothing consumers in Sweden is approximately 330kg CO₂ equivalent (Sandin, Roos, Spak, Zamani & Peters, 2019). Further, the garment workers are essential for the fast fashion industry’s existence where the workers are the companies’ possibility to reduce costs and are thereby able to provide low-price products to the customers (Ourgoodbrands, 2020).
1.3 Research question
RQ: What are the main differences and similarities of MNEs, which originated from Sweden and Spain that operates in the fast fashion industry, regarding their strategic CSR focus?
4(66)
1.4 Purpose
The purpose of the thesis is to obtain a deeper understanding of CSR and how MNEs in the fast fashion industry implement CSR as a strategy. Furthermore, the CSR concept will be investigated by comparing the MNEs CSR strategies by analyzing their actions and focus.
1.5 Delimitations
This thesis is focusing on MNEs operating in the fast fashion industry. The two companies’ origin from Sweden and Spain and possess a variety of fashion brands. The focus is on the selected companies’ CSR strategies, along with the differences and similarities regarding CSR actions and focus. The thesis focus on annual and sustainability reports, and the empirical findings are therefore limited to the external process.
5(66)
2 Literature review This chapter provides a review of the key concepts by displaying existing literature in the field. Further, existing theories within the field will be presented in order to provide a basis for the analysis.
2.1 Fast fashion industry
The fast fashion industry is competitive which creates pressure on offering the lowest prices and the newest trends (Christopher, Lowson & Peck, 2004). During the last 30 years, fast fashion companies have outsourced their production to developing countries (MacCarthy & Jayarathne, 2010), enabling the fast fashion industry to produce apparel for low prices due to the competitive environment, where factory owners are competing against each other. Further, the competition lead to social consequences which means harsh work conditions and low wages (Davidson 2013). However, apparels are perceived as disposable and have a limited quality which affects the environment since the purchase frequency is increasing. All activities in the supply chain affect the MNEs brand reputation and CSR is essential in all the activities, including the partners (Li, Zhao, Shi & Li, 2014). Further, consumers have a high expectation of the fashion industry since they get more public attention due to the emerge of media platforms (Caniato, 2012), and it is essential to implement sustainable strategies due to market- sensitivity (Smith, 2003). Sustainability is also an important aspect considering the industries’ large production volumes and a continuous stream of apparel (Choi, 2013; Choi, Hui, Liu, Ng & Yu, 2014). The implementation of sustainable strategies is essential for the fashion industry where a re-design of the supply chain is conducted in order to balance the economic, environmental, and social performance (Clarke & Clegg, 2000).
2.2 Multinational enterprises
MNEs are enterprises that engage in foreign direct investments and value-added activities in more than one country market, where the company establishes a subsidiary or obtain controlling interest in a company in a foreign country (Markusen, 1995). MNEs operate in complex cross- border activities which makes them encounter several institutional forces. The diverse environment affects the MNEs CSR activities. Further, the MNEs actions are influenced by the institutional environment where laws and regulations are key components (Meyer & Rowan, 1977). The local institutions vary depending on the different markets and therefore are the MNEs CSR actions generally country specific (Williams & Aguilera, 2008). MNEs face challenges due to global and local issues and how to priorities their actions while balancing the
6(66)
requirements and manage expectations (Surroca, Tribo & Zahra, 2013). Social and environmental issues can be perceived as both opportunities and issues for MNEs due to the absence of extended international regulations (Kolk & Tulder, 2010).
2.3 CSR
CSR is a comprehensive and well-discussed phenomenon and includes the debate regarding whether what companies owe the society and (Davis, 1967) if companies can afford to ignore their societal responsibilities (Davis, 1960). When social responsibility first became applicable it was clearly connected to the economic input of the society. The first general school of thoughts defines the company's responsibility to maximize profit with minimal ethical constraints and without the restraints of the law (Friedman, 1970). When the CSR concept soon began to develop, it became clear to presume that corporations did not only have economic and legal obligations, but also responsibilities regarding the society which includes political, education and welfare obligations, which is the second school. However, this development was criticized since the social responsibility will eliminate the attention from gaining financial assets which will harm the corporation’s success. The globalization has during the past years incised the organizations, especially MNEs, interest toward global problems to contribute to sustainable development. For instance, actions against climate change, human rights violations, and poverty (Kolk & Tulder, 2010).
Professor Theodore Levitt explained that social welfare was the government's responsibility, and not the companies due to the risk of losing the primary focus of making profit (Farcane & Bureana, 2015). Archie Carroll (1979) was the first to venture the gap between the different objectives. Further, the various definitions of CSR have created confusion among researchers where the lack of a proper definition has made it difficult to develop a theory and compare the outcomes of CSR studies (Rodriguez et al., 2006). In this thesis, CSR is defined as companies’ actions and strategies towards social and environmental responsibilities that goes beyond legal compliance and the company’s own interest (McWillams & Siegel, 2001).
7(66)
2.4 Carroll’s pyramid of CSR
“CSR involves leading the business in a way that is economically profitable, legally persistent, ethical and socially helpful. Social responsibility means that profitability and perseverance in law enforcement are prerequisites of the discussion about company ethics” (Caroll 1983, p. 604). Carroll's model presents four categories that helps characterizing the nature of business's responsibilities.
Carroll’s Pyramid of CSR depicts the components of businesses’ responsibilities to society. The components were incorporated into four steps in the Pyramid of CSR in 1991 (Figure 1). Carroll's model is widely utilized by researchers and theorists (for example, Wartick & Cochran, 1985) and the pyramid was suggested to become the leading paradigm within the field (Wood & Jones, 1996). The model suggests a hierarchical sequence of the components where the economic domain is the top priority and the responsibilities in the philanthropy category are the least important (Carroll, 1991). The ranking of the categories was based on a survey where Aupperle (1984) investigated the weights and value of the four categories. The research was proven to be valid and useful (Edmondson & Carroll, 1999). Carroll (1993) declared the debility with the pyramid regarding the difficulty of capture the overlapping nature of the CSR domains. The dotted lines in the pyramid that separates the domains; economic, ethical, legal, and philanthropic do not capture the tension between economic and the philanthropic and ethical domains. However, Elkington (1994; 1997) along with Visser and Sunter (2002) argues that the social, environmental and economic aspects are excluded from the pyramid of CSR. The philanthropic part CSR forms a conceptual framework that includes the expectation that society “places on business at a given point of time” (Carroll, 2016).
8(66)
Figure 1: Carroll pyramid of Corporate Social Responsibility (Carroll 1991, p. 42)
2.4.1 Economical responsibility Companies have societal economic responsibilities that enable corporations to evolve without interference. The only way for companies to evolve is to become profitable and capture the stakeholder interest and thereby have enough investments and resources to proceed with their operations. The economic expectations are thereby a societal responsibility, and business profit is required for reinvestments and for business growth (Baden, 2016). Investors and owners are expected to be rewarded which makes the profit a key component in order to satisfy the actors. The business profits are crucial to the world’s economic system and societies. Businesses implement a variety of actions to become more profitable. The competition has increased along with the increased awareness of becoming sustainable due to globalization. Economic responsibility is essential in order to maintain a competitive advantage (Carroll, 2016). However, the economic values are based on economic aspects rather than sincere social and environmental values which have led to discussions regarding the economic values of the pyramid that emerged from Blowfield (2005) statement. Further, the economic aspect of CSR
9(66)
restricts the social and environmental aspects as it can be counterproductive, for instance where voluntary CSR actions are promoted as an option to effectual regulations (Blowfield 2005; Frynas 2005; Reich 2008).
2.4.2 Legal responsibility Companies are expected to operate under the society’s established ground rules involving laws and regulations which is the “codified ethics”, the regulations are confirmed by the lawmakers. While companies are obligated to encounter the legal requirements of a federal, local- and state level, they are beside presumed to perform as law-abiding citizens themselves. The companies are also required to follow the legal obligations regarding their goods and services along with the fulfillment of the societal stakeholders (Carroll, 2016). However, the legal responsibility will not be investigated in-depth since it is not relating to the purpose of this thesis.
2.4.3 Ethical responsibility Besides the legal responsibilities the society expects companies to operate with an ethical approach, which consists of the responsibilities that are expected beyond the law. Companies are expected to operate with an objective and fair approach, thus there is no guidance from laws and regulations. The aim is for the company to be responsible towards all stakeholders in order to protect their moral rights and take responsibility for all actions. Society’s legal expectations are based on the ethical whereas the ethical further completes the expectations, this makes the distinctions between the responsibilities complex. Companies are encountering expectations beyond their ethical responsibilities where new ethical norms or norms under involvement must be respected, where the same applies to moral norms. The company is as well expected to not compromise these norms to attain the business goals. Additionally, companies are expected to perform according to the ethical expectations of corporate citizens (Carroll, 2016).
2.4.4 Philanthropic responsibility The philanthropic of a company represents all shapes of a business giving, it comprises the voluntary and discretionary activities of a company. The philanthropic expectation from society has increased where companies are expected to engage in voluntary and discretionary actions, that are not required by the government. However, several companies have ethical motivations which means that they will encounter society's expectation of “giving back”. Although companies engage in these actions to promote their good citizenship and to enhance the reputation of the company. Companies and individuals have the same obligations in the eyes of the population and are expected to be equally good corporate citizens. To meet the philanthropic expectations companies are committing in a variety of actions to contribute to society, for
10(66)
instance; voluntary work, donations, and community development. Over the decades the philanthropy has been and still is the most important element of CSR (Carroll, 2016).
2.5 The CSR positioning grid
When building or developing a brand, the CSR brand positioning grid is useful as it facilitates the process by identifying the right balance. The framework is presented in relation to other brands based on the decision on how explicit or implicit CSR should be demonstrated (Figure 2). Moreover, companies can differentiate their products from competitors by implementing CSR positioning strategies. The value proposition and positioning of a brand should be explicit before the developing process of the brand, for instance; the best product, customer intimacy, lowest price, and sustainability should be identified. In this way, the level of CSR is identified in the business strategy. Regarding the value proposition, CSR is provided inside that based on different motives. The defensive motives are when stakeholders demand CSR and companies avert the uncertainty. On the other hand, the offensive motive strengthening the business strategy as CSR has its definition in the identity of the brand. In this way, companies can position themselves in the market by intensifying the brand (Brüggenwirth, 2006).
To discover the underlying factors of customer purchasing option of a product, the chain contains several factors including attributes which focuses on product features or physical factors, as well as capability or systems. Another factor is benefits or issues, mainly focuses on resolving product offers. Further, there are end values including individuals’ lifestyles and lastly inspiration and vision (Brüggenwirth, 2006). In brand positioning the main obstacle is to find the focal point, since the CSR positioning grid is essential when understanding a products opportunities or strengths. Considering each section in the model, the relevant opportunities should be investigated. Thereafter a selection of the brand positioning is made based on all preferences from each section, as part of the trade-off procedure. The end result is based on several basis, for instance allure for the target audience and peculiarity from rivalry as well as the legitimacy and reliability of the case. The outcome of a trade-off procedure could be for instance to encourage CSR or sustainability relating factors as a key component of brand positioning (Brüggenwirth, 2006).
11(66)
Added associations of beliefs
Inspiration/vision Emotional values / lifestyle
Corporate Identity based Market based Social (what do we offer) Responsibility (what’s in it for me)
Attributes Benefits
Intrinsic elements
Figure 2: The CSR brand position grid (Brüggenwirth 2006, p. 140)
2.6 Triple Bottom line
John Elkington was the first to coin triple bottom line as a phrase in 1994 with the argument that companies should prepare a foundation for three bottom lines which includes the planet, people, and profit. Simply, the triple bottom line focuses, except the traditional economic value, on the social and environmental value of corporations (Elkington, 2013). The bottom line, people, concerns how much the company gives back to societies whereas the bottom line, planet, involves the reduction of companies’ environmental footprint. Further, reporting of the triple bottom line is essential for companies to measure the environmental and social dimensions and evaluate the performance of the three dimensions. The measurement attempts to include the values, processes, and issues as a whole in order to generate a positive and balanced impact from their activities (Elkington, 1999). Thus, measuring the activities is complex due to the subjective view (Sridhar, 2012). According to Hart (1997) the social and political aspects was the basis for the sustainability crisis in the world, thus the corporations are the only ones with the resources and capability to obtain sustainability. Looking at the world's economy the corporations represents over half of the largest economies (Anderson & Cavangah, 1996). The importance of reporting ethical, social, and sustainability has increased in the new millennium. The demand for triple bottom line has increased due to the factors such as sustainable investment. The Dow Jones Sustainability index is one of the several different indexes that measure competing company’s sustainability (Henriques & Richardson, 2013).
12(66)
The Dow Jones Sustainability says that “it offers investors corporate sustainability assessments creating long-term shareholder value based on upon corporate sustainability criteria and weightings that assess opportunities and risks relating to sustainable factors” (Henriques & Richardson 2013, p. 19).
2.7 Stakeholder theory
The stakeholder theory is argued to create value and explains how to handle the business in an effective manner (Freeman, Wicks & Parmar 2004). Further, Freeman describes stakeholders as “any group or individual who can affect or is affected by the achievement of the organization’s objectives” (Freeman 1984, p. 46). Freeman’s (1984) work encourage companies to consider an extension of the traditional stakeholders (customers, shareholder, employees, and suppliers) (Jonker & Foster, 2002) and manage the responsibilities including the silent stakeholder’s interest (local communities and environments) (Simmons, 2004). However, in this thesis the stakeholders will be considered in accordance with Freeman’s extended definition, excluding the shareholders. The stakeholder theory assumes that values are an essential part of the business process, the theory involves managers to answer what their sense is regarding the value creation along with what makes the stakeholders unify (Freeman, Wicks & Parmar, 2004). However, Jones (1980) argues that it is more than just the end-result of the process, the CSR paradigm must therefore be implemented in the decision making in order to be evaluated and measured. Further, it requires managers to have distinct objectives on how to conduct the business activities, as well as creating the right kind of relationship with the stakeholders in order to achieve their purpose (Freeman, Wicks & Parmar, 2004). CSR is seen as strategic orientation, which is implemented by companies with capabilities such as capital and access to innovation, meanwhile maintaining regular activities. The non-financial reports are instrument for the companies that outline strategies in relation to the stakeholders (Dunfee, 1991; Hasnas, 1998)
According to Foster and Jonker (2005) the stakeholder theory provides updated ways about companies’ responsibilities. The stakeholders need to be considered in order to please the shareholders, which brought attention to aspects beyond optimized profit. Wood (1991) argues that the stakeholder approach is favored by multiple authors when examining CSR. Consumers are one type of stakeholder that puts pressure on companies and especially if they perceive that the company act in a responsive way. Information about companies’ operations has become even more accessible for consumers due to open sources that provide instant and free
13(66)
information (Lindgreen, Swan, & Johnson, 2009). If MNEs does not operate in accordance with the consumers ethical preferences, they have a wide selection of competing companies to turn to, which implies a risk for MNEs. Therefore, MNEs need to respond to the consumers’ pressure and respond with socially responsible CSR strategies and with a more responsible attitude towards CSR. MNEs tend to address the society's desired and preferred values in order to maintain and attract consumers in the different markets they operate in (Yang & Rivers, 2009). According to O’Shaughnessy, Gedajlovic and Reinmoeller (2007) CSR is driven by factors that is the result of managerial decisions that includes; strategies, company goals, and allocation of resources. Considering MNEs that operates in new markets, the CSR activities often improves the reputation and narrate the company’s image which is favorable for the operations in the new market.
CSR activities are also fueled by other stakeholders beyond the consumers (Udayasankar, 2008). Companies, including MNEs undertake actions to maximize profit while gaining stakeholder wealth. To achieve this companies need to involve opinions regarding ethical issues from other interest groups and consider actions to fulfill social responsibilities that goes beyond the company's economic- and legal obligations (Singh, Sanchez & Bosque 2007).
14(66)
2.8 Theoretical framework
FAST MNEs FASHION INDUSTRY
CSR Sweden Spainand
STRATEGY
Stakeholder Pyramid Triple CSR brand theory of CSR bottom line positioning grid
Figure 3: Illustration of Theoretical framework (Authors, 2020).
The theoretical framework concludes the literature review and aims to demonstrate and connect the concepts linked to the research question and the problem of this thesis (Figure 3). The CSR phenomenon is at the center of the research where MNEs operates in several cross-border activities and encounter diverse environments. In general, the manufacturing process takes place in developing countries to reduce costs. This has increased attention towards their ethical considerations, these doubts are as well common in the fast fashion industry where the production frequency is high. Therefore, it is interesting to investigate the two concepts in relation to CSR that is the foundation of this thesis. In general, MNEs possesses the resources to implement CSR strategies meanwhile maintaining their regular activities. CSR activities are implemented to accomplish long-term success, which is connected to pressure from various stakeholders and increased environmental awareness. The CSR positioning grid implies decisions regarding how implicit and explicit the CSR activities should be demonstrated, and the process identifies the right balance. The strategy is a tool to differentiate their product from competitors. Each of the theories describes how companies implement strategic CSR.
15(66)
3 Methodology This chapter presents the methodology of the thesis and reflects on research characteristics, grounded theory, coding, credibility, trustworthiness, and limitations. The purpose of this chapter is to provide how the study has been conducted in detail.
3.1 Research characteristics
The thesis research is designed with an exploratory purpose in order to identify patterns within MNEs strategic CSR focus and actions. The exploratory study is valuable to identify new insight on ‘what is happening’ (Saunders, Lewis & Thornhill 2003). The objective of conducting an exploratory research is to determine the nature of the problem and obtain a better understanding of the problem (Saunders, Lewis & Thornhill 2012). The thesis is designed with an inductive approach based on secondary data collected from annual and sustainability reports, where theories are developed from the empirical findings. This approach will lead to a deeper understanding based on the data collection where the identification of patterns will lead to the selection of theories (Saunders, Lewis & Thornhill 2012) which is in line with the objective of the thesis. However, the nature of the study is inductive where the purpose is to collect data, to obtain new insights of CSR actions and strategies of MNEs operating in the fast fashion industry. The Interpretative grounded theory is embedded in the inductive research approach and links the interstice between the theory and research. The concept of the theory is that the researchers is engaged and interprets the data proactively. The literature review is processed simultaneously together with the data collection where comparisons and observations are made (Glaser & Strauss, 1967).
3.2 Qualitative research
The thesis is based on a qualitative approach where the data collection is based on non-numeric data. The qualitative approach enables a wider understanding of reality and firmly information in comparison with reliable data from a quantitative approach (Bryman & Bell, 2017). The empirical data has been coded in order to categories the text and define a framework of thematic ideas, which is expressed as qualitative coding according to Gibbs (2007). Further, the coding is combining the data to the research of this thesis, the approach is data-driven coding where the text is processed without any previous formulation. A coding scheme has been created based on observations regarding recurring categories (Table 2).
16(66)
3.3 Selection of companies
The thesis selected groups are H&M group that originated from Sweden and Inditex that originated from Spain. These groups are MNEs that consists of a wide range of brands operating in the fast fashion industry. H&M group includes eight brands; H&M, Afound, H&M Home, Arket, COS, Weekday, & other stories, and Monki (H&M group, 2018). Inditex consists of eight brands including Zara, Oysho, Massimo Dutti, Pull & Bear, Zara Home, Uterqüe, and Bershka (Inditex, 2020). The selection of groups was made to explore the two different MNEs and their CSR strategies’ main focus and actions. For in-depth information regarding the companies see chapter 4.
3.4 Data collection
The initial data collection was conducted based on the research questions for the thesis. According to Bryman & Bell (2017) several large enterprises publish annual reports on their websites, therefore was the groups company name along with the word annual report were entered in the search monitor in order to locate the latest report (Table 1). Initially the coding was conducted early in the process in order to obtain a deeper understanding of the data and contribute to the literature review, this approach goes in line with Bryman & Bell (2017) recommendation. The common themes were noted after the second reading of the annual and sustainability report, thereafter in the third reading, keywords were noted. The keywords were then implemented in a coding-scheme that contributes to the interpretation of the method on the basis of data. Thereafter a critical inspection was implemented where common words was transcribed to conceptions and categories from existing literature. The keywords that could not be linked to literature was named with a general word which describes a common phenomenon. This was the foundation to locate connections to existing literature. Additional data was conducted from the companies’ websites in order to supplement the information.
Selection of secondary data Company References Sustainability report H&M Group H&M group, 2018 Annual report Inditex Inditex, 2018 Table 1: Summary of secondary data (Authors, 2020)
17(66)
3.5 Data analysis
Theoretical sampling Based on concept for representativeness and consistency
Data collection Open coding Axial coding Selective coding
-Gather secondary data -Conceptual labeling -Finding relationship -Selection of a -Visual material review -Categorizing between categories core category
Constant comparison Between incidents, data and theory for precision and consistency to avoid bias
Figure 4: Data analysis procedure of grounded theory method (Cho & Lee 2014, p. 9)
The analysis of data is including a four-step approach (Figure 4) where the first step is to keep in mind the importance of those involved in the encoded material, in this case the selected companies. The second step focuses on the linkage between the coding, and the third step includes that the analysis reflects the general significance of the results for the original research questions and the selected literature review. According to Bryman & Bell (2017) this is essential regardless of the data analysis method. Initially, open-coding was conducted in order to “break down” the data as well as create codes and concepts (DeCuir-Gunby, Marshall & McCulloch 2011). When the codes have been created, the process of analyzing the codes through the axial coding is essential and allows the researcher to identify patterns among the existing codes (DeCuir-Gunby, Marshall & McCulloch 2011) in order to develop categories (Flick, von Kardoff & Steinke 2004). The categories are developed by the surrounding network of relationships with the category located in the center. Further, selective coding was introduced as a process of selecting one or more core categories in order to connect the categories (Table 2) (Corbin & Strauss, 1990).
18(66)
Codes Category Theme Sustainability Circularity Equality Ambition Environmental footprint Strategy Health & Safety Sustainability Transparency Achivements Philanthropic Human welfare Ethical Commitments/focus Actions Environmental Table 2: Coding scheme (Authors, 2020)
3.6 Research quality
Researchers have argued whether validity and reliability are relevant in qualitative research (Bryman & Bell, 2017). Mason (1996) among other researchers suggests that the definitions should be adjusted in the qualitative method where the focus should be on questions that do not refer to measurements. Lincoln and Guba (1985) are two other critical researchers that are uncertain about the direct application of the approach, due to the researcher’s skeptical view of realism. Guba and Lincoln (1994) suggest two alternative criteria, trustworthiness and authenticity. Hence, the trustworthiness will be analyzed in this thesis.
3.6.1 Trustworthiness Within trustworthiness, there are four sub-criteria to consider; credibility, transferability, dependability, and confirmability. The credibility considers that the research is in accordance with the rules and that the results can be reconnected with the respondents in order to validate the researcher’s interpretation, mainly used in interviews (Bryman & Bell, 2017). In this case, this is not applicable due to the secondary data.
Transferability considers whether the result will have the same outcome in a different context, time or situation (Lincoln & Guba, 1985). The qualitative research mainly focuses on the profoundness of the research and the result tends to focus on the context and meaning of the aspects of the social reality. Further, Geertz (1973) suggests that a thick description is necessary to give an in-depth illustration to provide people with detailed information to decide whether
19(66)
or not the results is transmittable to different environments (Bochner, 2000). The transferability of this thesis is accomplished through transparency that is applicable in all chapters.
Lincoln and Guba (1985) describe the term dependability which means that the researchers adapt auditing, as a part of the examining approach, and by this approach ensuring the statements of the entire process. This validity technique is rarely used for the qualitative method due to that it generates large quantities of data, the same applies in this research. To increase the dependability in this research, the secondary data from the sustainability and annual reports has been processed three times before conducting a coding scheme. The secondary data has been presented in order to increase the dependability by display the origin of the materials in this case the annual and sustainability reports. The open sources make the process replicable.
Lastly, confirmability according to Lincoln and Guba (1985) expresses the importance of the researchers act in accordance with good faith due to the improbability of the researcher’s objectivity. To ensure high confirmability in the thesis, personal values have not influenced the execution and results of the thesis. In order to avoid research bias the data and interpretation will be analyzed three times to minimize that the findings will be affected by the personal presumptions (Table 3).
Step: 1. Initiated the search process for secondary data 2. Read through the selected secondary data (three times) 3. Gathered keywords in the reports and located codes, catagories and themes 4. Developed the coding scheme 5. Read through the secondary data again 6. Initiated the collection of empirical data in relation to the research question Table 3: Flow sketch of data collection (Authors, 2020).
3.6.2 Ethics The secondary data is collected through open sources and therefore the ethical considerations are not applicable. According to Bryman and Bell (2017) ethics is linked to the execution of interviews and how to manage the information in an ethical manner, therefore no ethical violations can occur in this thesis.
20(66)
3.6.3 Methodology critics The empirical data in a qualitative study is commonly collected through interviews. The empirical findings of this thesis will be based on secondary data from open sources as a consequence of the Covid-19 pandemic. The current pandemic has increased the pressure on companies where their current focus is to manage the situation. However, the secondary data is conducted from the companies’ website where the information and reports are produced to highlight the advantageous actions taken by the selected companies. However, the reports contain detailed information which has led to profound empirical findings. Therefore, the empirical data can be affected by the reports biased information.
3.7 Division of work
The authors have created all parts of the thesis together, this to include both authors perspectives and increase consensus on all parts of the thesis.
21(66)
4 Empirical findings This chapter provides information about the selected MNEs and the empirical findings from the secondary data will be presented case-by-case. The outline will be in accordance with the coding scheme presented in the methodology chapter.
4.1 Case 1 - H&M group
H&M was founded in Sweden with the concept of democratic fashion that involves fashion for a great price for each individual, not only for the privileged. Today H&M group objectives are to take the lead in developing more sustainable fashion and take social and environmental responsibility in order to encounter the challenges. The CEO of H&M group Karl-Johan Persson state “according to the UN, climate change and poverty are two of the most significant challenges of our time and will affect many generations to come” (H&M group 2018, p. 4). Therefore, sustainability is coordinated in the whole business strategy rather than take action subsequently.
Today H&M have multiple physical stores available in 74 markets and have online operations in 51 markets (H&M group, 2020). In the group there are eight subsidiaries with their own unique brand concept- Arket, Afound, COS, H&M, H&M home, Monki, Weekday, and & Other stories (H&M, 2018).
4.2 Case 2 - Inditex
Inditex was founded in Spain with its first brand Zara, today Inditex operates cross-borders and offers fashion products to affordable prices (Inditex, 2020). The chairman of Inditex explains that it is their technology and logistic innovations that differentiate the company from their competitors. All Inditex physical stores are located on the street with high visit frequency. The online traffic has increased due to their adaption to the digitalization, where around 3 billion in the year 2018 visited their online platforms (Inditex, 2018). The chairman of Inditex states “Quality, traceability and sustainability are our model's keywords. We have placed our supply chain workers in the centre to foster initiatives that promote social progress” (Inditex 2018, p. 6). In order to create social, economic, and environmental value, Inditex have used United Nations 2030 Agenda as a framework where the most essential Sustainable Development Goals (SDG) in Inditex value chain have been delivered (Inditex, 2018).
22(66)
In Inditex group there are eight subsidiaries with their own unique brand concept- Zara, Pull&Bear, Massimo Dutti, Beshka, Stradivarius, Oysho, Zara Home, and Uterqüe, the brands are available in 202 markets online and 96 markets with multiple physical stores (Inditex, 2020).
4.3 Strategy
4.3.1 Ambitions
4.3.1.1 H&M group H&M group’s vision is to take the lead towards a renewable and circular fashion industry, it is also important to act with fairness and be equal. This vision is important from a business perspective including the social and environmental aspects. Opportunities in the long-term perspective will enable H&M group to remain at the forefront of the industry, this will be possible due to the sustainability investments. The sustainability ambitions are evolving on the ground of stakeholder relationships and science-based industry experts where roadmaps and goals is included to drive positive change. This vision and strategic strategy are implemented in all H&M groups’ brands. The levels of natural resources and population growth are two driving forces in sustainability work. At H&M group there are three key ambitions; 100% Leading the change, 100% Circular and renewable, and 100% Fair and equal (H&M group, 2018).
The 100% leading the change involves the “commitment to catalyze change across the entire fashion industry and improve the way our products are designed and made” (H&M group 2018, p. 21).
To achieve the ambition “100% leading the change H&M group are focusing on scale innovation, drive transparency, and reward sustainable actions. Innovation fosters opportunities from digital systems to new energy-saving solutions. H&M group’s scale can contribute to the global fashion industries necessary transformation. The H&M group approaches innovation by promoting internal and external commitments through new ways of working and thinking. The first step is to consider the stakeholders’ interests while including the micro and macro trends. On the other hand, building trustworthiness and provide stakeholders with information to make sensible choices is possible through transparency. Transparency also drives enhanced performance and an increased impact across the value chain. However, in order to drive transparency and provide customers with information regarding how sustainable the garments are, a common measurement in the industry must be implemented. H&M group is members of
23(66)
an industry-wide alliance that are developing the Higg-Index, thus, there is a remaining challenge of bringing actors together due to the lack of alignment (H&M group, 2018).
The ambition is to become 100% Circular and renewable by 2040, the achieved result in each target is presented in table 4 where the progress is displayed.
KPI 2015 2016 2017 2018 Goal % of recycled or other sustanable sourced materials of total material 20% 26% 35% 57% 100% by 2030 use (commercial goods) % of recycled or other sustainably sourced cotton (certified organic, 34% 43% 59% 95% 100% by 2020 recycled or Better Cotton) Tonnes of garments collected through garment collection intiative 12,341t 15,888t 17,771t 20,649t 25,000t/year by 2020 % of stores with recycling systems for main types of store waste 61% 71% 64% 63% 100% % of facilitities in own operations with whater-efficient equipment 37% 51% 51% 64% 100% by 2020 % supplier factories in compliance with ZDHC wastewater standard 75% 82% 84% 87% 100% for conventional parameter % renewable electricity in own operations 78% 96% 95% 96% 100% % change in CO2 emmisions from own operations (scope 1+2) -56% -47% -21% -11% Climate positive by 2040 compared with previus year % change in electricity intensity (kwh/sqm per opening hours n/a n/a -2,70% -8,20% (')-25% by 2030 compared with 2017) Table 4: Circular & Renewable (H&M group 2018, p. 32).
The disposal of natural resources has increased pressure on the industry to change from a linear business model into a circular. In the circular approach the objectives are for the resources to have a long-life cycle to reduce waste before being reconstructed into new products. The circularity is implemented in the whole value chain, which will have a net positive effect by 2040. The own operations will also be powered by renewable electricity to achieve a circular business model. The same applies for the packaging strategy where H&M group focuses on circular packing model in order to reduce the environmental impact. By 2025 the ambition is for all packaging to be recyclable, compostable or reusable. H&M group is focusing on five main steps in the value chain in order to become 100% circular. The five main steps are: design, material choice, production processes, product use and product reuse and recycling. Design is the first step in the value-chain where sustainability can be implemented. This step aims to expand the products lifecycle to enable recycling, reuse and secondhand. The circular design is also applied to the Non-Commercial Goods (packaging and stores) (H&M group, 2018).
The material choice focuses on providing sustainable or recycled materials. H&M group is using recycled materials though the ambition is to reach 100%. However, the sustainable production step includes reduction of chemicals and water in the production. The ambition is to a obtain a safe and toxic-free production process. H&M group states in the report “Our vision
24(66)
is to have a positive impact on water in our value chain by stewardship actions” (H&M group 2018, p. 45) which includes focus areas such as quantity, quality, circularity, collective actions, and communications. However, the step product use aims to provide long-lasting products where H&M group along with the customers are striving to keep the products in use for as long as possible. The initiation so far is H&M’s Take Care concept, where advices regarding how to take care of the garment and prolong their life is provided along with repair service. According to the manager of H&M take care group, many customers want to take care of their clothes, but do not know how (H&M group, 2018).
The last step is product reuse and recycling where used garment and textiles are collected from customers. H&M group have implemented “10% off your next purchase” vouchers for customers when recycling unwanted products at the stores. Another initiative made by H&M group is the investment in Sellpy, which is a secondhand website where then unsold products are given to charity. H&M group are striving to become climate positive and reduce their environmental footprint by 2040. This is an initiative based on the Paris Climate agreement where the planet needs to stay below the 2°C global warming limit. Yet, there is deficiency of solutions to achieve this goal though H&M group are working on solutions to “removing more emissions from the atmosphere than the value chain emits” (H&M group 2018, p. 53).
H&M group together with WWF Climate Savers and Scientific organizations have located priorities for actions which are:
• Priority 1 focuses on leadership in energy efficiency to enable us to use as little energy as possible. • Priority 2 tackles our 100% renewable energy goal, which will help us to ensure the energy sourced by H&M group and our supply chain is renewable. • Priority 3 targets climate resilience and carbon sinks to address unavoidable emissions and emissions beyond what our value chain is responsible for. These three priorities relate to both our own operations and those across our value chain (H&M group 2018, p. 53)
For more than ten years H&M group have constantly improved their water reduction work. In 2011 they initiated a partnership with WWF where they developed a five-step water stewardship strategy to be at the forefront of leading water steward (Figure 5). To find solutions
25(66)
regarding the water-related challenges, the two partners sought for actions in the industry along with the stakeholders, governments, and other partners (H&M group, 2018).
5-step water stewardship strategy
1. Water Awareness 4.Stakeholder engagement Building water awareness at our company, at our Increased focus on collective action with suppliers’ factories and amongst our customers to other companies, governments and NGOs in ensure high level understanding of the global water multi-stakeholder platforms to address water challenges and their dependence on freshwater. issues in specific focus regions.
2.Knowledge of impact 5.Influence governments Measuring water impact and risk within our stores, Increased focus on government influence by warehouses and suppliers’ factories. engaging with public policymakers to manage water basins in sustainable way. 3.Internal action Improving the use of water within our stores, warehouses and our suppliers’ factories.
Figure 5: Clear water strategy (H&M group 2018, p. 44)
4.3.1.2 Inditex In 2018 Inditex managed their digital transformation strategy and the ambitions for 2020 is to become fully digital and integrate their digital sales platform with the stores. They also aim to become fully sustainable in accordance with their eco-efficiency standards. The customers are the center of the business model and Inditex believes that this strategy will lead to informed customers that make better purchase decisions (Inditex, 2018).
Inditex have a clear ambition to achieve a circular business model and by then be able to recycle garments and waste. The keywords quality, traceability and sustainability are important parts of the product life cycle, starting from the selection of raw materials to the end of the cycle (Inditex, 2018).
Inditex have a continuous dialogue with stakeholders regarding the company’s sustainable business model and the key values; respect, human rights, and transparency to meet the stakeholders’ objectives. At the beginning of each policymaking Inditex identifies and reviews the stakeholders in order to establish goals and select channels of communication, where this sequence is repeated periodically to be updated. This is as well a part of Inditex development strategy, and it also involves making a contribution to communities. In order to locate challenges in the supply chain, Inditex applies elaborate programs that include social, environmental, and product health and safety. For instance, The List by Inditex that includes
26(66)
health and safety area, designed to sort and improve the chemical products used in the production process. Further, the partnership with stakeholders and other partners that extends from local to international authorities are important for Inditex regarding this matter. Examples of partners are United Nations Global Compact and the Zero Discharge of Hazardous Chemicals (ZDHC) initiative promoted by Greenpeace's Slowing the Flow of the Materials initiative, among others. The strategic partnership allows Inditex to make progress in accordance with the UN SDG (Inditex, 2018).
At Inditex the sustainability team works to improve the integration process between social, environmental, and health and safety aspects of the production across the supply chain. The priority is to ensure a sustainable work environment. An action taken to continuously improve the relationship with stakeholders, Inditex Social advisory board provides advice related to sustainability issues. The board consists of independent individuals and external institutions that communicates with the civil society’s key interlocutors (Inditex, 2018).
Inditex relationships with their stakeholders are based on transparency and open communication. Inditex commitment towards their employees includes labor- and human rights, and fair- and decent treatment. The company also protects the employee’s personal information and integrity. Regarding the employees as a stakeholder, Inditex priorities the people. Inditex wants to promote clear and transparent communication towards customers. Further the commitment is to provide products that are designed and manufactured in a responsible way, along with data protection and the customers’ privacy. The priority for Inditex customers is the excellence of their products and the customers themselves. The environment as a stakeholder is defined as organizations protecting the environment as well as the government (Inditex, 2018).
The environmental commitment is to respect the environment, sustainably manage the natural resources, and protect biodiversity. The key priority regarding the environment is the circularity and to use the resources in an efficient way. The community as a stakeholder is defined by Inditex as the government and public and non-governmental organizations. In addition, academic institutions, civil society and media are as well considered as community stakeholders. The commitment towards the community is to foster environmental and social development and engage in global prosperity. The priority is to engage in community prosperity as well as becoming tax transparent (Inditex, 2018).
27(66)
4.3.2 Achievements
4.3.2.1 H&M group The non-profit H&M Foundation have initiated the Global Change Award which is an initiative to generate new innovations that contribute to a circular fashion industry. This fosters new ways to produce, design, ship, and recycle garments either by using disruptive technology or creating new business models (H&M group, 2018).
H&M group sustainability report and the information about where and how the products have been made are two commitments towards transparency. H&M group decided to provide information about H&M product’s background including suppliers, factories, and materials. As a matter of fact, H&M group was one of the first in the industry to make this information public, which is one step in the right direction (H&M group, 2018).
H&M group have been included in the Dow Jones Sustainability World Index for multiple years and has reached the highest score in 2018 within the categories of Quality & Recall Management, Social Reporting, Environmental Reporting and the best industry score in Supply chain Management (H&M group 2018, p. 8).
In the fashion transparency Index, H&M scored at the top ten within H&M group brands. This indicates the H&M is continuously developing their information regarding the sustainability policies, practices and impacts. Meanwhile the H&M group scored 55% out of 58% in the Fashion Revolution’s Fashion Transparency Index. The Executive Board of SAC and H&M group aims to further develop the fashion industry’s transparency. The increased pressure and expectations from stakeholders and legislators have made transparent supply chains, disclosures on activities impact on the planet and people, more important than ever (H&M group, 2018).
H&M group have attained many great achievements in their three key ambitions, where in the key ambition 100% circular and renewable, the CO₂ emissions have been reduced by 11% between year 2017 to 2018. Further, they launched Afound with the aim to sell unsold products instead of wasting it. Another achievement is that 57% of the materials used to make all the products are coming from recycled or sustainable materials. The science-based targets initiative has approved H&M group’s GHG emission reduction goals 2030. In 2018, 95% of the cotton used was from sustainably or recycled sources (H&M group, 2018).
28(66)
Ellen MacArthur Foundation together with Stockholm Resilience Centre is examples of a research project that H&M group is engaged in, the collaboration aims to provide a sustainable fashion future by using a science-based approach. In the Zero Discharge of Hazardous Chemical program (ZDHC), H&M group have worked together with stakeholders and other brands to raise awareness within the industry and to develop an industry standard to obtain zero discharge. The aim is to protect human health and environmental toxicity that comes from production using synthetic fibres (H&M group, 2018).
H&M conscious collection is produced from at least 50%, but more often 100% recycled or sustainably produced material. Whereas the Exclusive Conscious collection is produced from new innovative materials every new season. The summer collection in 2019 was produced with materials from pineapple leaves, orange fiber, algiers and waste from citrus juice (H&M, 2019). H&M have also launched a pride collection where 10% of the sales were donated to the UN Free & Equal Campaign. In addition, H&M launched a bra collection where 100% of sales were donated to the American Cancer Society. Further, H&M group brand Monki is LGBTQ certified where the headquarter participated in workshops that provided education regarding norms and the impact the employees have on the working condition and health of LGBTQ people. Monki’s partnership with Mental Health Europe was initiated to promote positive health where they launched the campaign “All the feels”. However, Weekday have collaborated with UNHCR to encourage actions in support of refugees and forcibly displaced people where they donated 30% of the product sales price (H&M group, 2018).
The ambition to become 100% fair and equal is an ongoing process. The goals and key performance indicator (KPI) for the key milestones are presented in (Table 5).
KPI 2015 2016 2017 2018 Goal No. of supplier factories implementing improved Wage Management 69 140 (29%) 227 (40%) 500 (67%) 50% by 2018 Systems (% of production volume covered) No. Of supplier factories that have implemented democratically 132 290 (42%) 458 (52%) 594 (73%) 50% by 2018 elected worker representation (% of production volume covered) % of business partners regarding H&M group as a fair business 84% 83% 94% 93% 90 % by 2018 partner % of employees agreeing with the statements; "I I feel comfortable n/a n/a n/a 83%, 81% Year on year improvement being my self at work" and "I am treated with respect and dignity"
% of remediated issues (defined by the Bangladesh Accord) 61% 81% 90% 98% 100% Table 5: Key milestones of 100% Fair and Equal (H&M group 2018, p. 62)
29(66)
At H&M group, being fair and equal means respecting human rights, concerning all employees across the supply chain, which is defined as a safe and healthy work environment free from discrimination and to provide a fair salary. They also aim to promote diversity and growth in an inclusive way. These ambitions are the two focus areas within the key ambition “100% Fair and Equal”. According to Table 5 all key milestones have been achieved. However, the ambition is to enable all textile workers to have a fair living wage as the outcome of the strategy (H&M group, 2018).
H&M group’s human rights policies require sound due diligence and risk assessment processes in order to evaluate the risk for harm by the operations and supply chain. Actions taken to manage issues regarding child labor and rights, which are connected with the “fair living wage” strategy, enables the parents to provide a better life for their children. Further, H&M boycotts factories with child labor and they collaborate with the center for children’s rights to improve young workers’ life. Thus, child labor does occasionally occur, and one case was identified in China in 2018, where actions were taken in accordance with H&M Child Labor Policy that guides the group along with their suppliers to take actions with the children’s best interest in mind. Other human rights issues such as forced labor is as well identified with the due diligence process that identifies and addresses risks. H&M group are working hard to be able to provide a transparent, fair, equal, and trustworthy workplace. Where H&M group offers fair labor standards and high health and safety standards, this culture is reflected in the entire company and is what attracts talented employees (H&M group, 2018).
H&M group are working to obtain the ambitions of fair and equal work conditions, although it is tough to implement across the supply chain, particularly in developing countries, where there is lack of legislations. So far H&M have given people jobs that have helped them and the countries out of poverty and they are continuing towards a fairer industry, where H&M group in 1998 initiated a program to assess the work environments to frequently improve it. In 2013 the group updated the sustainable strategy with a more holistic approach with the focus on structural change at factories, in the industry and at the country level along with the focus on capacity building. The strategy includes silent issues regarding human rights on a local and global level where H&M group focuses on the issues that will result in fair jobs for all. To achieve a 100% fair and equal supply chain H&M group is addressing the challenges and work to engage local governments, establish collaborations in the industry and ensure that all workers are heard (H&M group, 2018).
30(66)
Production office teams are located in the majority of the countries H&M have production to make sure that all workers are heard, they have worker representatives, trade union and worker committees to address work-related issues. The industry collaborations are essential for further improvements in the industry. H&M have established trade unions and agreements to improve relations in the supply chain (H&M group, 2018).
The workers’ safety and health are also a priority where factories must take preventative measures if hazards do occur. Awareness must be raised for the workers along with worker representation that will race awareness on safety issues. The workers’ health will be improved by providing social security including, for example; health care, sick pay, and coverage if work- related injuries occur. Modern slavery is one example along with workers excluded from the social security scheme, which excludes workers from these rights. H&M group is tackling this issue by working with suppliers that obey the labor and social security laws. Further, H&M groups global operations connect the group with people across the globe as well as make them representatives for a large number of people. This gives them the opportunity to drive the ambition for diversity and inclusion (H&M group, 2018).
4.3.2.2 Inditex Inditex business model to become fully sustainable (Figure 6) includes a five-step approach. The model derives from their stores where the upgrade is driven by eco-efficiency measurements where the objective is to reduce the usage of water and electricity. The measurements are developed by the Inditex environmental pledge where the criteria are to save 40% water and 20% electricity compared with conventional stores. The target of 100% eco- efficient stores by 2020 was achieved in China 2018 (Inditex, 2018).
The circular economy program, Closing the Loop, was established with the purpose to implement the recycling of textiles by recover and reuse garment. This is done in order to reuse the fabric and prolong the cycle. Steps taken so far are recycling containers that are deployed in Spain together with Caritas. Pick-up service is also provided in Spain and China as part of the initiative. During the period 2016 to 2018, approximately 34 tons of garments were collected in the containers. The closing the loop program collaborates with twelve non-profit organizations to “reunite, reuse and recycle” garment (Inditex, 2018).
31(66)
The initiatives are in line with the developed program constructed by the social sustainability of Inditex activities with the aim to promote human rights along the supply chain with the help of traceability and monitoring systems as part of the Workers at the Centre strategy 2019 - 2022. Inditex achievement in 2018 was when the agreement of the Transition Accord in Bangladesh was signed, however, the company is still striving to improve the safety of further factories in the supply chain. This is an ongoing collaboration with international organizations, suppliers and governments among others. Inditex received a gold medal in the Sustainability Yearbook, awarded by RobecoSAM. In addition, Inditex was awarded for the third year in a row by Dow Jones Sustainability Index for being the most sustainable company in the retailing industry. Inditex Management Systems and Environmental policy were ranked top scores. Another achievement by Inditex was the signing of the New Plastics Global Commitment promoted by Ellen MacArthur Foundation, aiming to further develop sustainable activities (Inditex, 2018).
Figure 6: Sustainable business model (Inditex 2018, p. 35)
Dow Jones Sustainability Index have awarded Inditex, for the fourth year in a row, as the leading company within the area of corporate citizenship and philanthropic in the fast fashion industry. Further, Inditex believes that voluntary actions contribute to the development of society related to their activities. Therefore, Inditex have implemented the Corporate Community Investment (CCI) Program that is done through fundamental training such as emergency relief, education, and social welfare projects. This initiative would not have been possible individually, therefore Inditex decided to collaborate with more than 400 community organizations in order to tackle the social development challenges. The collaboration has so far resulted in 620 community projects that have helped approximately 2.4 million people (Inditex, 2018).
32(66)
4.4 Actions
4.4.1 H&M group H&M group is collaborating with other actors in the industry to foster policy change and innovation meanwhile executing climate reduction goals on a global level. Actions taken to commit to these objectives are the following. In order to reduce GHG emission by 40% in the company’s operations, H&M group have aligned its science-based targets with the Paris agreement. Further actions taken are H&M endorsement of the Task force on Climate Related Disclosure (TCDF), where the company is analyzing their climate risks in accordance with TCDF guidelines to comply with the recommendations. The Fashion Industry Charter on Climate Actions emerges from UNFCCC which is a “collaboration set to decarbonization pathway for the fashion industry, complementing and supporting other fashion sector initiatives, and aimed at increasing climate action” (H&M group 2018, p. 54). H&M group are a signatory of the initiative to take action in the industry collaboration. H&M group together with other actors informed the European Parliament and the Council through meetings and correspondence regarding The Clean Energy for All European Package and the importance of actions, essentially focusing on renewable energy and energy efficiency (H&M group, 2018).
4.4.2 Inditex The material analysis is an important factor for Inditex when having dialogues with the stakeholders, to identify and manage issues and take sustainability actions. For the past eight years the material analysis has been executed together with both internal and external stakeholders. The identification of the material topics is in accordance with the Global Reporting initiative standards, which states materiality that determine which material principle that must be included in the sustainable report (Inditex, 2018).
Inditex prioritizes actions when it comes to making progress on issues related to social, economic and environmental value so that stakeholders are satisfied. Further, Inditex have committed to the United Nation 2030 agenda for sustainable development, as part of the company's’ strategy. The agenda involves 17 SDG including 169 targets for companies to work towards in order to develop profitability that goes in line with social and environmental sustainability (Inditex, 2018).
Inditex commitment to contribute to the SDG is that the brick-and-mortar and online stores have an ongoing dialogue with their customers in order to meet their needs and provide information to help them foster more responsible consumption and make smarter purchases
33(66)
decisions since the customers are at the center of their business. Technology is the key tool for an integrated sustainable experience that is implemented across the value chain. In this way Inditex will create special and long-term relationships with their customers. Further, Inditex is reactive when it comes to customer needs and requests where they are quick to respond and launch new collections in line with the customers’ requests due to their flexible production (Inditex, 2018).
Inditex further describes that the people at Inditex are the key to the company's success. Therefore, Inditex priorities the employees a healthy and safe work environment, which keeps the highest standards. Equality and training are two other factors that are prioritized. Further, Inditex have implemented a Code of Conduct to maintain a socially responsible supply chain. All employees in the factories are receiving a fair living wage. To promote fair living wages in the industry Inditex collaborates with stakeholders and participate in campaigns. Further the code of conduct is implemented to promote non-discrimination, gender equality and decent employment. Their relationships are aligned with international standards which establishes lawful and respectful standards in order to prevent corruption. Inditex Compliance model was introduced to establish an ethical corporate culture among all stakeholders (Inditex, 2018).
Inditex have implemented a diversity and inclusion policy where potential is valued regardless of characteristics such as sexual orientation and religion. Inditex Zero-tolerance policy that defines the zero-tolerance of discrimination. Therefore, has Inditex collaboration with European Network Against Racism to work against racism in Europe. Inditex have taken initiative towards gender equality where the target is to become certified by the Gender Equality European and International Standard, by which Belgium was the first to be awarded the certification. Inditex is also taking action to reduce the gender wage gap in collaboration with 11 other companies “ClosinGap”. Further, Inditex wants to include disabled people by adjusting the stores facilities to disabled customers and employees. The project For&From aims to integrate the work environment to people with disabilities (Inditex, 2018).
Traceability, sustainability, health, and safety requirements are ensured by the innovation and management throughout the supply chain. Actions taken to achieve excellence of the products is the commitment to ZDHC and Inditex research to improve the materials and substances used in the manufacturing process. Traceability will allow Inditex to ensure high safety and health standards on the products. In order to contribute to circularity and use the resources in an efficient way, Inditex uses innovative technology to reduce emissions and reduce waste from
34(66)
production, whereas 88% of Inditex waste was reused and recycled in 2018. As previously mentioned, the Closing the Loop Program was implemented in order to contribute to circularity. Regarding Inditex contribution to the community welfare, SDG is the core of the company’s strategy, such as voluntary work that is aligned with Inditex activities (Inditex, 2018).
Inditex commitment to promote human rights contains a strategy with three pillars. The first pillar is Inditex’s own policy that was approved in 2016, which means proactive work to reduce negative impacts on human rights from Inditex own actions as well as the company’s third parties. Examples are that child labor is rejected, unfair- and unequal working conditions along with discrimination have been rejected to promote diversity. The second pillar, due diligence, locates impacts regarding human rights in Inditex value chain. The process is updated regularly to identify the best methods both internal and external in order to create a global model. Inditex social sustainability team located in markets where the company operates in has been trained in human rights in collaboration with Shift, where the objectives are to develop the sustainable supply chain management strategy. The potential impacts on human rights are also identified and prioritized. However, the third pillar is grievance mechanisms where the strategy locates solutions regarding consequences on human rights meanwhile boosting the due diligence process and the stakeholder relationships (Inditex, 2018).
Inditex have implemented the biodiversity strategy, which arises from the standards of the United Nations Convention on Biological Diversity. The aim is to protect the biodiversity in all of Inditex activities meanwhile guaranteeing that the decision making is relying on the ethical and environmental standards. In addition, Inditex implies two other sustainability strategies, water and energy (Inditex, 2018).
As previously mentioned, the Join Life label plays an important role at Inditex where Zara, Massimo Dutti and Oysho have increased the record of having collections with the Join Life label. This has resulted in that Pull & Bear, Bershka, Stradivarius, Zara Home, and Uterqüe integrated the Join Life products, resulting in 85% more sold Join Life items than in the year 2017. In order for Inditex brands to be awarded Join Life labeling standard, the company must comply with requirements, such as the suppliers must have high social audits rating. The manufactured products that have gone through “wet processing” in the factory must be highly rated in the environmental assessments. Lastly, a product’s environmental attribute must follow one of the three requirements. In order to be awarded “Care for Fiber” the products must be
35(66)
manufactured with raw materials such as organic cotton, Lyocell or recycled fibers. The “Care for Water” certifies that the products have been manufactured with a water reduction technology during at least one stage of the production. Garments manufactured with renewable energy is awarded the “Care for Planet” label (Inditex, 2018).
In the development and design process of a collection at Inditex, decisions regarding which materials and fabrics to use for the collection are of importance. Inditex have therefore decided to follow the principle of Environmental Sustainability Policy and the Strategic Environmental Plan for 2016-2020. This is in line with their promotion to use more sustainable fibres resulting in reduction of the environmental impact meanwhile efficient use of resources (Inditex, 2018).
Awarded by the independent organization Textile Exchange, this is what Inditex have executed in the year 2018:
• Second largest consumers in the world of the sustainable Lyocell fibre. • Fourth company in the world for organic cotton consumption by volume. • Fourth in the world for the consumption of other cellulosic fibres of sustainable origin. • Eighth in terms of highest volume of recycled cotton consumed (Inditex 2018, p. 153).
In 2018 Inditex signed the Fashion Industry Charter for Climate action to reduce 30% GHG emission by year 2030. This is sponsored by the United Nations Climate Change office. However, Inditex is collaborating with organizations to contribute to the circularity of products life cycle. The group have partnered with the Universitat Politècnica de Catalunya, to researched on the microplastics from washed clothes effect on the marine ecosystems. The outcome will minimize the environmental impact of product use. On the other hand, Inditex is working with the Applied Physics Department of the University of Vigo in order to find a chemical treatment that will be the solution to recycling selected fabric components. The aim of this collaboration is to reduce unusable waste. The third collaboration is together with Fundación URV where the focus is on product reuse, where the technology will lead to that the reused product will be reclassified as raw material after the components has been separated (Inditex, 2018).
Inditex priority in the next following years will be to focus on their contact with the employees in order to obtain knowledge of their personal needs as well as their communities which will be a part of the Workers at the center project, along with collaborations with relevant stakeholders.
36(66)
This will enable Inditex to take the lead towards sustainability and more responsible business model. Inditex three-dimensional structure; workplace, wellbeing, and industry which will enable the group to continue to focus on the sustainability of the factories in their supply chain. This will be reflected in the wellbeing of the workers and eventually the whole industry (Inditex, 2018).
37(66)
5 Analysis This chapter provides the empirical findings along with the literature review for the purpose of providing a discussion in relation to the research question. The analysis is in accordance with the theoretical framework to analyze the selected MNEs strategy in relation to literature review.
5.1 Carroll’s pyramid of CSR
5.1.1 H&M group H&M group’s strategy to become 100% circular includes five core steps that will involve sustainability actions starting from the design and continues through the whole value chain including material choice, production processes, product- use and reuse, and recycling. The objective is to expand the product life cycle by recycling, secondhand and reuse. To protect human health and environmental toxicity from production that use synthetic fibres, H&M group signed the ZDHC program to develop an industry-standard with zero discharge. One initiative is H&M group's investment in Sellpy secondhand website, however, the unsold products are given to charity (H&M group, 2018). These actions are in line with the ethical responsibility in the CSR pyramid, along with the philanthropic responsibility. The findings indicate that the strategy of Sellpy is in line with the hierarchy of the domains, where the economic responsibility is the priority and the last priority is philanthropic which the unsold products that cannot contribute to profit, are given to charity instead. Considering the ethical responsibilities H&M group strives to protect the human rights and environmental toxicity, this could be interpreted as actions to avoid harm which is expected by the society.
H&M group together with the nonprofit organization WWF Climate Savers have located actions that are H&M groups priorities. This entails energy efficiency, actions to use 100% renewable energy and address carbon sinks and make climate resilience. These priorities are implemented in H&M group value chain as a response to SDG Clean Water and Sanitation that stated the importance of actions against water pollution. Besides, H&M group together with WWF have developed a five-step water stewardship strategy, where they sought for actions in the industry. These findings of H&M group indicate that the company takes ethical responsibility in accordance with Carroll CSR Pyramid as they take actions to protect the planet where they try to reduce their operations’ environmental impacts. However, the priorities are also in line with Freeman (1984) that encourages companies to consider the silent stakeholder interest. Meanwhile, H&M group manage and take actions regarding the traditional stakeholders’ interest. Non-financial reports are instruments for the companies that outline
38(66)
strategies concerning the stakeholders (Dunfee,1991; Hasnas, 1998) which is the strategy of H&M group’s sustainability reports.
Another action towards leading the change is the non-profit H&M foundation that initiated the Global Change Award intending to generate new innovations that will contribute to a circular fashion industry (H&M group, 2018). The philanthropic responsibility from Carroll's pyramid of CSR refers to supporting the community. Carroll (2016) suggest that philanthropic part of CSR is the society's expectation on the business at a given point of time. To meet the philanthropic expectations companies is committing in a variety of actions to contribute to the society, by voluntary work, donations or community development. The philanthropy is the most important element of CSR. Philanthropic expectation has increased from the society though the actions are not required by the government.
H&M group strives to become 100% fair and equal where each individual should be treated equally, regardless of sexual orientation or gender, among other characteristics. They also aim to provide the workers with a safe and healthy work environment across the supply chain. The strategy of becoming 100% fair and equal also involves the ability to provide a fair living wage (H&M group, 2018). The ethical responsibility to provide a living wage is to do what is ethically right and respond to society expectation through working towards equality. Hence, H&M group fair living wage strategy could be interpreted as philanthropic responsibility, since they are committing to actions to contribute to society as part of the community development. However, the authors consider this ambition to be ethical since it is the right action to take in order for the workers to provide their basic needs. However, H&M group strives to counteract and locate child labor and modern slavery, with the help of the due diligence and risk assessment process. H&M group updated sustainable strategy with a holistic approach with the focus on structural change at the factories indicates that they want to continue to improve work-related issues. The strategy includes silent issues regarding human rights on a local and global level where H&M group focuses on the issues that will result in fair jobs for all. The strategy also involves engaging local governments and initiate industry-wide collaboration to tackle issues. The workers’ health will be improved by providing social security. Their ambitions to drive diversity and inclusion further is possible due to H&M group global operation which connects them with people across the globe. The ethical responsibility since they are taking actions expected beyond the law, there is no guidance regarding what actions are expected from the
39(66)
company. Ethical responsibility involves taking responsibility of all actions, thus, it is important to consider that companies do not compromise these norms to attain the business goal (Carroll, 2016).
The economic values in the CSR pyramid is based on economic aspects rather than sincere social and environmental values. When companies strive to maximize profit these values can be pushed to the sidelines. In order to reduce the production costs H&M group have suppliers located in developing countries which often have poor working conditions even though the empirical findings indicate that they are constantly working to improve the workers environment by providing health and safety conditions. This goes in line with Carroll (1993) explanation of the tension between the philanthropic and economic domains. Blowfield (2005), Frynas (2005) and Reich (2008) explains that the economic aspect of CSR restricts the social and environmental aspects and it can be counterproductive.
All the actions and strategies taken by H&M group is in line with Caroll definition of CSR “CSR involves leading the business in a way that is economically profitable, legally persistent, ethical and socially helpful. Social responsibility means that profitability and perseverance in law enforcement are prerequisites of the discussion about company ethics” (Caroll 1983, p. 604). The strategic CSR and actions suggest a hierarchical sequence which is a part of the CSR pyramid, and this is represented in the findings of H&M group.
5.1.2 Inditex Dow Jones Sustainability Index awarded Inditex, as the leading company within the area of corporate citizenship and philanthropic in the fast fashion industry for the fourth year in a row (Inditex, 2018). This indicates that Inditex is taking actions in accordance with the philanthropic responsibility, and the award is a clear evidence that Inditex takes voluntary and discretionary actions by contributing to communities with their resources to improve quality of life. Another finding is Inditex voluntary actions as they believe will contribute to the development of society. Inditex Corporate Community Investment (CCI) Program was initiated to provide fundamental training such as education, social welfare projects and emergency relief in order to tackle social development challenges. The increased philanthropic expectation from the society has led to Inditex actions by engaging in voluntary actions. These actions are essential for MNEs as they encounter competition on a global level, and risk to lose their customers if not engaging in CSR activities. The findings demonstrate that Inditex priorities these actions in
40(66)
a responsible way to take the lead in the fast fashion industry by improving the social and environmental aspects.
Inditex have implemented a Code of Conduct in order to maintain a socially responsible supply chain. According to Inditex the employees are the key to the company's success, and therefore the priority is to provide a safe and healthy work environment, where all employees have a fair living wage. Inditex promotes fair living wages in the industry by collaborating with the stakeholders and participate in campaigns (Inditex, 2018). This indicates that Inditex is implementing the ethical and philanthropic responsibility from the CSR pyramid. The ethical responsibility involves obligations to do what is right and fair, whereas the philanthropic responsibilities involves being a good corporate citizen, contribute resources to the community and improve quality of life (Carroll, 1991). The findings indicate that there is an obscure line between the two domains, and what the contribution of providing fair wages across the supply chain belongs to. These actions are beyond their legal responsibilities in several markets. Since ethical preferences differ between individuals, the Code of Conduct is a tool for implementing guidelines in the organization, especially in MNEs due to their cross-border activities.
Inditex actions regarding ethical responsibilities are clearly stated with the Workers at the Centre strategy, where Inditex aims to promote human rights across the supply chain by traceability and monitoring systems. In order to promote safety standards Inditex signed the Transition Accord in Bangladesh in the year 2018. Thus, they want to improve the safety standards of further factories in the supply chain (Inditex, 2018). This is a clear action of their ethical responsibility to avoid harm and do what is ethically right. The diverse environment affects the MNEs CSR activities and the MNEs actions are influenced by the institutional environment where laws and regulations are key components (Meyer and Rowan, 1977). This finding of the Transition Accord in Bangladesh is not in line with Meyer and Rowan (1977) statement since Inditex have taken actions beyond the institutional environment where laws and regulations regarding the workers’ safety were excluded. Instead of exploiting this, Inditex took action to improve the work environment.
The ethical responsibility is reflected in Inditex promoting equality, where they initiated the diversity and inclusion policy along with the Zero-Tolerance policy that defines the zero- tolerance of discrimination. Inditex also takes actions to raise awareness of women that are victims of violence along with actions taken to reduce the gender wage gap and actions to include disabled people in the work environment. This shows that Inditex takes actions to avoid
41(66)
harm and do what is right and fair. For companies to take their ethical responsibility they are expected to not compromise the ethical norms in order to obtain the business goals. However, no ethical scandals have been highlighted in the annual report. In order to reduce production costs, the manufacturing process occurs in developing countries that lack laws and regulations which can lead to human rights issues. This can lead to difficulties in locating human rights issues when manufacturing takes place in several countries.
Inditex Green to Pack initiative involves the reduction of transportation to Europe from the distribution centers along with the packaging of the products that are first and foremost made of recycled materials. The new Plastics Global Commitment promoted by Ellen MacArthur Foundation was signed in order to further develop sustainable activities (Inditex, 2018). This could be interpreted as an ethical responsibility where Inditex strives to do what is right and strives to minimize their impact on the planet.
Technology is the key tool for an integrated sustainable experience that is implemented across the value chain. In this way Inditex will create special and long-term relationships with their customers. Inditex are reactive when it comes to customer needs and request where they are quick to respond and launch new collections in line with the customers’ requests due to their flexible production. This indicates what the fast fashion industry term refers to, which is Inditex strategy to obtain economic responsibility meanwhile efficiently attracting customers. Through responding to stakeholders’ ethical preferences, Inditex boost their profit by engaging in CSR activities which leads to a competitive advantage. This is highlighted in Inditex ambition to improve the integration process between social environmental, health and safety aspects of the production across the supply chain, which will ensure a sustainable work environment.
5.2 The CSR positioning grid
5.2.1 H&M group H&M group strives to produce products made from 100% recycled or sustainable material, so far H&M conscious collection is produced with at least 50 to 100% recycled or sustainable material (H&M, 2019). However, the conscious exclusive collection is an innovative project where each collection is made from new innovative fabrics. In year the 2018, 95% of the products made of cotton was from sustainably or recycled sources (H&M group, 2018). The findings indicate that H&M launching of the conscious collection is a strategy to attract stakeholders that value sustainability, even though H&M group is striving to become circular the ambition is not fully achieved. The collections’ attributes and benefits make H&M appear
42(66)
as more environmentally responsible. Besides, H&M have launched a Pride collection and donated 10% of the sales to the UN Free & Equal Campaign along with their donation from the bra collection to the American Cancer Society. The CSR positioning of Monki is highlighting the LGBTQ which is a step towards a more inclusive industry and take actions to provide information regarding LGBTQ issues and their partnership with Mental Health Europe where they promoted positive health. However, Weekday have collaborated with UNHCR in order to encourage actions to assist forcibly displaced people and refugees where donations were given. The CSR actions are a response to the stakeholder preference regarding human rights to equality and this is an action in line with H&M groups’ ambition to become 100% fair and equal.
5.2.2 Inditex The Join Life label is another initiative to promote more sustainably produced garments, which is implemented in all Inditex brands. In order to be awarded with the Join Life labelling standard, the manufactured garment must comply with requirements such as suppliers must have high social audits rating (Inditex, 2018). Inditex have implemented CSR strategies in all brands to differentiate the CSR positioning of the products with the Join Life label as sustainably produced. This can be interpreted as a strategy to highlight the sustainably produced garments to attract customers that values responsible produced products. The Join Life label is a way for Inditex to raise awareness and promote their environmental responsibility before they have achieved their ambitions of circularity throughout the whole production.
5.3 Triple Bottom line
5.3.1 H&M group H&M group decided to provide information about the H&M product’s background including suppliers, factories, and materials. This is a one step in the right direction, thus, to provide customers with information about how sustainable the garment is, a common measurement in the industry must be implemented (H&M group, 2018). H&M group still face challenges regarding the usage of a common measurement that are used in the whole industry in order to provide the customers with information regarding the products environmental impact. Currently H&M group is included in the Dow Jones Sustainability World Index which measures competing company’s sustainability. The triple bottom line focus on the companies social, environmental and economic value where reporting of the triple bottom line is essential for companies to measure the environmental and social dimensions and therefore be able to evaluate the performance of the three dimensions. A common measurement should be implemented in order for the fast fashion industry to have a common measurement. The
43(66)
findings indicate that H&M group have implemented the triple bottom line since they take actions to take responsibility and improve the impact from their operations on the planet and people.
Based on the empirical data H&M group focus on a long-term strategy in order to take the lead towards a renewable and circular fashion industry, thus it will require sustainable investments. The strategy of becoming 100% leading the change includes scale innovation, drive transparency and reward sustainable actions. Where the innovation derives from digital systems to develop new solutions to save energy and resources. Other actions taken to reduce the environmental impact is their reduction of CO₂ and GHG emission. Thus, this is an ongoing process for the H&M group. Another action taken by H&M group was the endorsement of the task force on TCDF where they are analyzing their climate risks in accordance to TCDF guidelines. H&M group aims to lead the change in the fashion industry where their global presence gives them influence in a wider scope (H&M group, 2018). H&M group have a large market share where they have the ability to attract competent workers and thereby develop innovative solutions to become more sustainable. The findings of their actions to reduce the environmental impact can be connected to triple bottom line where they are focusing on the bottom line, planet. For instance, the reduction of CO₂, GHG emission and their analyzes of their climate risks indicates that they are measuring their environmental dimensions and evaluate the performance.
5.3.2 Inditex Inditex have implemented a three pillars strategy to promote human rights, which contains Inditex own policy to proactively work to reduce negative impacts on human rights caused by Inditex own actions as well as third parties’ actions (child labor reject, unfair and unequal work conditions). Inditex also implemented due diligence to locate impacts on human rights in Inditex value chain. Regular updates in the process enable the company to identify the best methods both internally and externally to create a global model. Social sustainability teams are located in markets where the company operates, and the teams have been trained in human rights where the objectives is to develop the sustainable supply chain management strategy. The third pillar is grievance mechanisms where the strategy locates solutions regarding consequences on human rights meanwhile boosting the due diligence process and the stakeholder relationship. The findings illustrate that Inditex focus on people, which is beyond
44(66)
the traditional economic value, identified in the triple bottom line. The triple bottom line “people” measures the company's action to contribute to society's welfare.
The biodiversity strategy was initiated with the ambition to protect the biodiversity of all activities meanwhile guaranteeing that the decision making is relying on the ethical and environmental standards (Inditex, 2018). The biodiversity strategy is one part of their contribution of environmental value where the reporting of triple bottom line is essential for companies to measure the environmental and social dimensions and evaluate the performance of the three dimensions (Elkington, 2013). However, Sridhar (2012) argues for the completion of measuring the activities, since the activities are subjective. It is possible to measure company’s environmental footprint, meanwhile it is complex to apply a measurement to measure the value of the company’s activities to contribute to societies.
5.4 Stakeholder theory
5.4.1 H&M group H&M groups sustainability ambitions is evolving on the ground of stakeholder relationships. In order to drive the positive change, road maps and goals are implemented in the business model. H&M group argues that the levels of natural resources and populations growth is two driving forces in the sustainability work where H&M group have decided to change from a linear to circular business model. However, another ambition for H&M group is to reduce their environmental footprint and want to take actions to keep the planets global warming limit underneath 2°C which is in line with the Paris Climate agreement (H&M group, 2018). This indicates that H&M group have implemented a long-term strategy in order to please the silent stakeholder and to be at the forefront of the stakeholder expectations.
H&M group is focusing on global issues regarding the action to keep the planet’s global warming limit along with tackling other environmental issues, which indicates that they take actions to address the society's desired and preferred values in order to maintain and attract customers on a global level. CSR activities improve the company’s reputation which is favorable in new markets, H&M groups strategy involves global benefits which will enable H&M group to depict the company’s image. H&M groups CSR actions that tackle global issues solves the concerns regarding whether to prioritize local versus global CSR issues that MNEs face due to their cross-border activities. By focusing on the global issues H&M group is balancing the requirements and manage expectations in a more advantageous way rather than
45(66)
prioritizing single local issues that are valued on a local level. Prioritizing local issues can lead to an imbalance of the CSR activities and dissatisfaction among stakeholders. At the same time, MNEs can encounter obstacles across the supply chain due to the geographic distance along with the absence of extended international regulations. One example is the discovery of child labor in China, which increased attention to H&M groups’ operation of ethical responsibilities.
In order to lead the change in the global fashion industry H&M group take into consideration the stakeholders’ interest meanwhile including micro and macro trends. Increasing pressure from stakeholders and the global market where companies meet a higher level of competition has increased the importance of including stakeholders’ interests and requests. The findings indicate that H&M group have implemented responsible CSR strategies in order to meet the stakeholders’ preferences which are in line with Yang and Rivers (2009) statement regarding the stakeholder theory. As the pyramid of CSR argues that the company needs to evolve themselves in order to become profitable and capture the stakeholder interest in order to survive (Baden, 2016). The economic expectation is a societal responsibility since the business profits are crucial to the world’s economic system and societies. Transparency in relation to the stakeholders is crucial for building trustworthiness along with providing the stakeholders with sensible information. The annual sustainability report is one commitment to provide the stakeholders with information. Another initiative was the published information regarding the product’s background.
5.4.2 Inditex At Inditex the customers are in the center of the business model, where they consider that informed customers will make better purchase decisions. The continuous dialogue with the stakeholders is preformed to meet their objectives of the sustainability models key values; respect, human rights and transparency. Inditex have different priorities and commitments regarding the different stakeholders. Regarding the employees, Inditex is committed to improve labor and human rights and promote fair and decent treatment where the focus is on the people. Their commitment towards the customers is clear and transparent communication, by providing products that are designed and manufactured in a responsible way “excellence of Inditex products”. This is committed through the ZDHC along with their research to improve the materials and substance used in the manufacturing process (Inditex, 2018). These findings illustrate that Inditex prioritizes the stakeholders’ interest and is in line with Foster and Jonker (2005) definition that the stakeholders need to be considered in order to please the shareholders,
46(66)
which brought attention to aspects beyond optimized profit. Further, the researchers explained that the stakeholder theory provided an updated view of companies’ responsibilities, which Inditex CSR strategies implies. Inditex engages in several CSR activities where Dunfee (1991) and Hasnas (1998) argues that CSR is seen as a strategic orientation which is implemented by companies with capabilities such as capital and access to innovation meanwhile maintaining regular activities where Inditex CSR engagement is a proof of their economic responsibility.
The environmental commitment is to respect the environment, sustainably manage the natural resources, and protect biodiversity, where the stakeholder is defined as organizations protecting the environment and governments. The key priority regarding the environment is the circularity and to use the resources in an efficient way. Inditex defines the community as the government and public and non-governmental organizations, where the commitment is to foster environmental and social development and engage in global prosperity. The priority is to engage in community prosperity as well as becoming tax transparent (Inditex, 2018). This illustrates that Inditex have embraced the extension of the traditional stakeholders and included the silent stakeholder interest that Freeman (1984) encourage. The material analysis is executed together with internal and external stakeholders where issues are managed and identified by Inditex dialogue with the stakeholders. This will enable sustainable actions, where Inditex is following the global initiative standards when identifying the material sources. Inditex sustainable actions entail responsibility on a global level, whereas their social responsibility is focusing on local issues across the supply chain. This is in accordance with Yang and Rivers (2009) statement that MNEs tend to address the society's desired and preferred values in order to maintain and attract consumers in the different markets they operate in.
Inditex have a clear ambition to become circular in their business model, this will be possible through recycling garments and waste. The keywords quality, traceability, and sustainability are important parts of the product life cycle, starting from the selection of raw materials to the end of the cycle. This is ensured by the innovation throughout the supply chain that will allow Inditex to ensure high safety and health standards of the products. The objective to reduce water and electricity usage is part of Inditex eco-efficiency strategy, where the aim is to have 100% eco-efficient stores by 2020. However, in China the goal is achieved (Inditex, 2018). These findings indicate that Inditex have taken actions and have the ambition to address global problems to contribute to sustainable development (Kolk & Tulder, 2010). Their eco-efficiency strategy involves local actions where water reduction is applied to each market where the
47(66)
manufacturing process occurs. Regarding the eco-efficient stores, local actions are taken to reduce electricity usage in all Inditex stores. These local actions are in the overall context concentrated, hence, it will contribute to the improvement of global issues and sustainable development.
Another initiative is the reuse and recovery of garments with the purpose of recycling textiles as a part of Inditex circular economy program, “Closing the Loop”. The actions will involve reusing the fabric and prolonging the product life cycle (Inditex, 2018). In order for Inditex to fulfill these actions they need to engage the stakeholders as their actions are a part of “Closing the Loop”. Without the consumers’ commitment to recycle and reuse the products, the loop will not be accomplished. The consumers need to be aware of the importance of their actions along with the possibilities to reuse and recycle their products. However, actions taken so far are the recycling containers and pick-up service in Spain, whereas in China they provide pick-up services. This is Inditex achievement to raise awareness and to recycle products in order to be circular. These actions could be interpreted as one step in the right direction, however, this has to be implemented on a larger scale in order to fully produce sustainable products. From the year 2016 to 2018, Inditex collected approximately 34 tons of garments in the containers. However, this requires resources and infrastructure to be able to reproduce and recycle materials. Hence, the garment collection is beneficial for the company as it decreases the costs instead of purchasing new raw materials. It is difficult to state which of these solutions that are most cost-efficient, however, it is the most sustainable alternative that will contribute to circularity.
In the initiation phase of each policymaking, Inditex identify and review the stakeholders to establish goals and select channels of communications, which is part of Inditex development strategy. This will enable Inditex to contribute to communities. Inditex elaborated programs locate challenges regarding social, environmental and product health and safety in the supply chain. The List that includes health and safety areas designed to sort and improve the chemical products used in the production process is one example of an Inditex strategy. Inditex have strategic a partnership that allows Inditex to make progress in accordance with the SDG. The partnerships include both local- and international authorities along with stakeholders. Inditex Social advisory board consists of independent individuals and external institutions that provide advice related to sustainability issues in order to constantly improve the stakeholder relationship and communicates with the civil society’s key interlocutors (Inditex, 2018). This can be
48(66)
interpreted as Inditex response to the consumers’ pressure where they included socially responsible CSR strategies and a more responsible attitude towards CSR as Yang and Rivers (2009) suggested. However, Inditex have as well involved opinions regarding ethical issues from other interest groups to fulfill social responsibilities that goes beyond Inditex company’s economic and legal obligations (Singh, Sanchez & Bosque 2007). With the Social advisory board, Inditex obtains advice regarding sustainable issues which are not influenced by the economic factors, since the employees at Inditex might consider the economic aspects of their sustainability solutions. The independent individuals and external institutions of the Social advisory board might be impartial when considering the sustainability issues, where they perceive the issues with a different approach.
Inditex progress on issues related to social, economic and environmental values are important actions in order to satisfy the stakeholders, where the company have committed to the UN 2030 agenda for SDG, which is a part of their strategy.
5.5 Reflection of analysis
The establishment of Afound occurred after the scandal where H&M group “burned clothes” in 2018, caught the authors attention to reflect on the conjunction. The incident was not discussed in the sustainability report, whereas the child-labor scandal was mentioned. This indicates that they are transparent towards the stakeholders regarding issues and events in their supply chain that occurred without their consciousness. However, the action to burn clothes was a conscious choice where the authors presume that H&M group endangered losing their customers since they did not operate in accordance with the customers ethical preferences. Therefore, was the establishment of Afound an initiative to respond with a more responsible attitude towards CSR.
Another finding that caught the authors attention was the reflection of the hierarchical sequence in the CSR pyramid where both MNEs prioritize the economic responsibility since they need to make profit and are stakeholder oriented. Hence, the findings confirm Carroll (1993) declaration of the pyramids debility of capture the overlapping nature of the CSR domains along with that the CSR pyramid does not capture the tension between economic, philanthropic and ethical domains. Profit is crucial for the business survival along with the world’s economic system and societies, whereas it is important to not comprise the ethical norms to attain the business goal (Carroll, 2016). MNEs in the fast fashion industry outsource the production in
49(66)
order to boost profit, which affects the social and environmental aspects. However, MNEs engage in CSR activities to improve social and environmental issues, meanwhile it is questionable whether the positive outweighs the negative aspects. Besides, there is a tension between the ethical and legal responsibility for MNEs due to their cross-border operations where they encounter different regulations. Due to the different institutional environment the legal requirements and ethical expectations varies where MNEs encounter challenges regarding how to priorities global and local issues while balancing requirements and expectations.
50(66)
6 Conclusion
RQ: What are the main differences and similarities of MNEs, which originated from Sweden and Spain that operates in the fast fashion industry, regarding their strategic CSR focus and actions?
There are multiple similarities and differences between the MNEs identified in the empirical findings. Firstly, the SDG is commonly used by both H&M group and Inditex where the company’s CSR strategies are formed based on UN sustainable development goals with the ambition to transition to a sustainable future.
Inditex provide their customers with information to foster responsible consumption, which is applied in the brick-and-mortar and through their online stores to maintain ongoing communication with their customers to meet their needs. Regarding transparency, Inditex provides information concerning their products’ origin along with the suppliers’ conditions upon request. H&M on the other hand provides information online that enables their customers to trace the products’ origin, however, this is working progress since this information is not accessible for H&M groups remaining brands. Both MNEs are addressing the importance of transparency in order to inform the customers and enable them to make sustainable choices, hence, H&M group information is more accessible. However, both MNEs sustainability and annual reports provide transparent information towards stakeholders.
Inditex target is to have responsible production where innovation and traceability are important commitments which are applied through policies and standards. For instance, the environmental strategy for water, energy and biodiversity along with their Code of Conduct and Inditex product health and safety standards. However, H&M group’s water stewardship strategy focus on reducing water impacts throughout their value chain along with providing a safe and healthy work environment.
Inditex ambition is to implement the principles of sustainability which is applied throughout the supply chain. It is also important for Inditex to know that their suppliers and manufactures follow the sustainability standards. Their strategies and innovations are applied to the supply chain, which enables Inditex to have a more holistic impact on the social and environmental conditions during the production process while improving product quality and safety. To reduce the environmental impact, Inditex re-designed their stores where the goal for the stores is to be eco-efficient by 2020. Another environmental commitment is the reduction of GHG and CO₂
51(66)
emission. The same applies for H&M group, where there is a clear goal for both MNEs to reduce the environmental impact of their operations. However, Inditex ambition is to save energy across the supply chain whereas H&M group ambition to become eco-efficient applies to their value chain. The MNEs ambition to lead the change and improve the industry is especially important due to global issues, for instance decreased level of resources and climate change.
Inditex strategy is to close their garment production cycle and so far, they have deployed collection containers in order to reuse and recycle. However, H&M group have encouraged their customers to re-wear, reuse and recycle unwanted products where some brands reward their customers with 10% off at their next purchase if recycling products at the stores. Another initiative to promote reuse and re-wear is H&M group’s investment in Sellpy, the launching of Afound and H&M Take Care concept. Both MNEs strategies are developed to obtain circularity, which starts at the product design and the cycle is completed with product reuse and recycling. However, H&M group have taken more actions towards their ambition to circularity, where they raise awareness and engage customers to achieve their sustainable ambition. However, the outcome of the 10% off concept is questionable since it encourages customers to further consumption, thus, it can be an incentive to engage the customers to recycle their unwanted products.
To promote good health and well-being Inditex employees’ health and safety are the top priority where their human right strategy involves a due diligence process. Inditex have developed programs to ensure the health and safety in factories, and one significant action to ensure the health and safety of the workers was the signing of the Bangladesh Transition Accord. Further, The List by Inditex is implemented in order to provide product excellence to improve the chemical products used in the production process. Inditex contribution to improve water quality is a part of their commitment to achieve ZDHC by 2020. Inditex encourages sustainable environmental behavior to promote efficient use of resources and waste reduction, and in year 2018 Inditex implemented Join Life label to increase the use of sustainable raw materials in all brands. However, H&M group is also committed to achieve ZDHC in order to select the best available chemical for their production. One difference between the MNEs is the Join life label implemented by Inditex in all their brands, whereas H&M group have specific sustainable collections, thus, all H&M group use 95% recycled or sustainably sourced cotton. Considering the MNEs brands, H&M group have different CSR positioning strategies whereas Inditex have the same CSR activities in all their brands.
52(66)
Inditex is constantly improving employment quality and they are committed to guaranteeing a stable and safe work environment, where employees have equal opportunities. Inditex have the ambition to reinforce gender equality as an important part of their corporate culture. The workers at the centre program was one action to promote decent work and sustainable economic growth for the suppliers’ employees. Inditex Code of Conduct demonstrates that all factory workers must earn a living wage. However, this is one of the main issues in the fashion industry, hence, Inditex is committed to promote living wages through collaborations with various stakeholders as well as to prove their political commitment. H&M group are also focusing on ensuring the workers’ health and safety in the work environment, where risks and impacts on human rights in their value chain is located through their due diligence. However, one significant difference is H&M group’s target of 50% fair living wages 2018. The focus of improving the workers’ health and safety is an essential part of both MNEs strategies, where Inditex have engaged in far more activities to contribute to human welfare.
To make progress on sustainable development across the supply chain, all related stakeholders must be involved and Inditex has built strategic alliances with for instance, suppliers, trade unions, and governments. H&M group are also involving the stakeholders in their strategies and considers their interests while including micro and macro trends. However, Inditex annual report is more stakeholder-oriented in all CSR strategies where they provide more explicit information regarding their ongoing dialogue and involvement with the stakeholders. The customers are the only stakeholder that generates revenue and therefore the most important to satisfy. Both MNEs are quick to respond to global trends within the fashion industry which is essential in order to fulfill their economic responsibility.
6.1 Theoretical implications
CSR is a well-discussed phenomenon that has received increased attention where corporations have to consider transparency and their social and environmental impact. Previous research in the area focus on the CSR concept, however, it does not examine the concept in relation to MNEs cross-border operations where they face challenges when developing CSR activities. MNEs have to consider social issues on a local- and global level, which made it possible to identify a research gap. The problem motivated the authors to further investigate strategic CSR in the fast fashion industry due to the industry's frequent production that has an impact on environmental and social aspects. The focus on MNEs originated from Sweden and Spain was
53(66)
motivated by the curiosity to examine the similarities and differences between the selected MNEs CSR strategies.
Further, the thesis contributes to the understanding of the relation between strategic CSR in the context of MNEs originated from Sweden and Spain, operating in the fast fashion industry. The theoretical framework was revised (Figure 7) since the findings indicates that the CSR strategies are influenced by local and global issues where the selected MNEs focus on environmental issues on a global level and social issues where actions are taken on a local level where the issues differ due to the markets regulations and infrastructure. However, the MNEs successful CSR strategies might impact the global and local environment.
FAST MNEs FASHION INDUSTRY
CSR
Global Local Sweden Spainand
STRATEGY
Stakeholder Pyramid Triple CSR brand theory of CSR bottom line positioning grid
Figure 7: Revised theoretical framework (Authors, 2020).
54(66)
6.2 Managerial implications
CSR is defined as companies’ actions and strategies towards social and environmental responsibilities that goes beyond legal compliance and the company’s own interest (McWillams & Siegel, 2001). All activities in the supply chain affect the MNEs brand reputation and CSR is essential in all the activities, including third parties (Li et al., 2014). The implementation of sustainable strategies is essential for the fashion industry where a re-design of the supply chain is conducted in order to balance the economic, environmental, and social performance (Clarke & Clegg, 2000). MNE encounter challenges due to global and local issues and how to priorities their actions while balancing the requirements and manage expectations (Surroca, Tribo & Zahra, 2013)
MNEs engagement in CSR is essential for the bottom line and to maintain competitiveness. CSR activities can also improve the MNEs reputation and narrate the image in new markets they operate in. The thesis contributes to the understanding of the importance of implementing CSR and how to balance and prioritize social and environmental responsibilities. The authors recommend MNEs operating in the fast fashion industry to take responsibility for social and environmental impacts across the supply chain due to the urge for actions to protect our planet.
The absence of mandatory CSR in Sweden and Spain indicates that the engagement in CSR activities is based on ethics, hence, the ethical preferences are individually affected and MNEs encounter difficulties regarding shattered ethical preferences. The authors are therefore recommending managers to implement a Code of Conduct in order to unify the employees and establish guidelines based on how the company should address social, ethical and, environmental aspects. A Code of Conduct is also a tool to permeate the guidelines across the supply chain. Further, the authors recommend MNEs to develop due diligence to identify impacts on human rights across the value chain.
Further recommendations are to engage the stakeholders and maintain an ongoing dialogue as the customers are the only stakeholder that contributes to revenue. The stakeholders are also essential to lead the change and contribute to a more sustainable future. The MNEs should also consider the silent stakeholders, the environment and communities, since companies will not be able to survive if the society around them fails. It is therefore crucial to transition from a linear business model to a circular.
55(66)
6.3 Social and environmental implications
This thesis can contribute to an understanding of the importance of CSR activities, along with the benefits by implementing a strategy based on UN Sustainable Development Goals (SDG). The importance of taking actions to protect the environment and promote prosperity is more urgent than ever. MNEs that responds to stakeholders’ ethical preferences and engage in CSR will most likely maintain and attract customers in markets they operate in. Further, the thesis contributes to understanding strategic CSR actions and how to address local- and global issues, where the thesis also highlights which issues to focus on and how to address ethical preferences.
It is important for companies to focus on the environmental and social values beyond profit where it is essential for MNEs to evaluate their environmental and social impact. The thesis highlights the importance of promoting responsibility. However, a common measurement in the fast fashion industry must be implemented in order for the customers to compare products and make conscious decisions.
6.4 Limitations and future research
The thesis has some limitations in regard to how the research was conducted. The research was carried out through examining MNEs that operates in the fast fashion industry that originated from Sweden and Spain. The empirical data was collected through secondary data due to the current Covid-19 pandemic, thereby is the sampling size of this thesis limited to two MNEs that includes multiple brands. This might affect the generalization of the conclusion, which may not be applicable to MNEs in the whole industry. Further, the selected MNE originated from Sweden and the second MNE originated from Spain might not provide a general representation of differences and similarities in the selected countries regarding strategic CSR actions and focus.
However, a suggestion of future research within strategic CSR is to examine the cultural impact of different countries and how it influences their implementation and engagement in strategic CSR. Another suggestion for future research is to explore the different actions between markets with mandatory- versus voluntary CSR. Further suggestion would be to investigate how small and medium-sized enterprises engage in CSR activities with less resources and how they prioritize their actions.
56(66)
References
Literature Bryman, A. & Bell, E. (2017). Företagsekonomiska forskningsmetoder (2: ): Liber.
Carroll, B. A. (1993). Business and society: ethics and stakeholder management. Cincinnati: South-Western College Publishing.
Choi, T. M. (Ed.) (2013). Fast fashion systems: theories and applications. CRC Press.
Elkington, J. (1997). Cannibals with Forks: the triple bottom line of 21st century business. London: John Wiley and Sons.
Flick, U., von Kardoff, E. & Steinke, I. (Eds.) (2004). A companion to qualitative research. Sage.
Freeman, R. E. (1984). Strategic management: a stakeholder approach. Boston: Pitman.
Geertz, C. (1973). The interpretation of cultures: selected essays. New York: Basic Books.
Glaser, B. & Strauss, A. (1967). The discovery of grounded theory: strategies for qualitative research. Hawthorne, NY: Aldine de Gruyter.
Henriques, A. & Richardson, J. (Eds.) (2013). The triple bottom line: does it all add up. Routledge.
Idowu, S. & Louche, C. (Eds) (2011). Theory and Practice of Corporate Social Responsibility. Berlin: Springer.
Lewis, S. (1999). Measuring corporate reputation. Mori: London, UK.
Lincoln, Y. & Guba, E. (1985). Naturalistic inquiry. Beverly Hills, CA: Sage.
Mason, J. (1996). Qualitative Researching. London: Sage.
Saunders, M., Lewis, P. & Thornhill, A. (2012). Research methods for business students. Pearson Education Limited.
57(66)
Scientific articles Anderson, S. & Cavanagh, J. (1996). The top 200: the rise of corporate global power. Washington, DC, Institute of Policy Studies.
Aruthaud-Day, M. (2005). Transnational corporate social responsibility: a tri-dimensional approach to international CSR research. Business Ethics Quarterly, 15(1), pp. 1-22.
Aupperle, K. E. (1984). An empirical measure of corporate social orientation. Research in corporate social performance and policy, 6, pp. 27-54.
Baden, D. (2016). A reconstruction of Carroll’s pyramid of corporate social responsibility for the 21st century. International journal of corporate social responsibility, 1(1), pp. 8.
Barnes, L. & Lea-Greenwood, G. (2006). Fast fashioning the supply chain: shaping the research agenda. Journal of Fashion Marketing and Management: An International Journal, 10(3), pp. 259-271.
Bhate, S. (2003). One world, one environment, one vision: are we closer to achieving this? An exploratory study of consumer environmental behavior across three countries. Journal of Consumer Behavior, 2(2), pp. 169-84.
Blowfield, M. (2005). Corporate social responsibility: reinventing the meaning of development?. International Affairs, 81(3), pp. 515–524.
Bochner, A. P. (2000). Criteria against ourselves. Qualitative inquiry, 6(2), pp. 266-272.
Brüggenwirth, B. (2006). The CSR brand positioning grid. In: Jonker J., de Witte M. (eds) Management models for corporate social responsibility. Springer, Berlin, Heidelberg, pp. 140-146.
Caniato, F. (2012). Environmental sustainability in fashion supply chains: an exploratory case-based research. International Journal of Production Economics, 135(2), pp. 659–670.
Carroll, A. B. (1979). A three-dimensional model of corporate performance. Academy of management review, 4(4), pp. 497-505.
Carroll, A. B. (1983). Corporate social responsibility: will industry respond to cutbacks in social program funding?. Vital Speeches of the Day, 49, pp. 604-608.
58(66)
Carroll, A. B. (1991). The Pyramid of corporate social responsibility: toward the moral management of organizational stakeholders. Business Horizons, 34(4), pp. 39-48.
Carroll, A. B. (1999). Corporate social responsibility: evolution of a definitional construct. Business & society, 38(3), pp. 268-295.
Carroll, A. B. (2016). Carroll’s pyramid of CSR: taking another look. International journal of corporate social responsibility, 1(1), pp. 3.
Cho, J. Y. & Lee, E. H. (2014). Reducing confusion about grounded theory and qualitative content analysis: similarities and differences. The qualitative report, 19(32), pp. 1.
Choi, T. M., Hui, C. L., Liu, N., Ng, S. F., & Yu, Y. (2014). Fast fashion sales forecasting with limited data and time. Decision Support Systems, 59, 84-92.
Christopher, M., Lowson, R. & Peck, H. (2004). Creating agile supply chains in the fashion industry. International Journal of Retail & Distribution Management.
Clarke, T. & Clegg, S. (2000). Management paradigms for the new millennium. International Journal of Management Reviews, 2(1), pp. 45–64.
Corbin, J. & Strauss, A. (1990). Grounded theory research: procedures, canons, and evaluative criteria. Qualitative Sociology, 13(1), pp. 3-21.
Cruz, L. & Boehe, D. M. (2010). How do leading retail MNCs leverage CSR globally?. Insights from Brazil. Journal of Business Ethics, 91(2), pp. 243–263.
Davis, K. (1960). Can business afford to ignore social responsibilities?. California management review 11(3), pp. 70-76.
Davidson, A. (2013). Economic recovery: made in Bangladesh?. The New York Times Magazine.
Davis, K. (1967). Understanding the social responsibility puzzle. Business horizons, 10(4), pp. 45-50.
59(66)
DeCuir-Gunby, J. T., Marshall, P. L. & McCulloch, A. W. (2011). Developing and using a codebook for the analysis of interview data: an example from a professional development research project. Field methods, 23(2), pp. 136-155.
Dunfee, T. W. (1991). Business ethics and extant social contracts. Business Ethics Quarterly, 1(1), pp. 23–51.
Edmondson, V. C. & Carroll, A. B. (1999). Giving back: an examination of the philanthropic motivations, orientations and activities of large black-owned businesses. Journal of Business Ethics, 19, pp. 171–9.
Elkington, J. (1994). Towards the sustainable corporation: win-win- win strategies for sustainable development. California Management Review, 36(2), pp. 90-100.
Elkington, J. (1999). The link between accountability and sustainability – theory put into practice. In Conference on the Practice of Social Reporting for Business, ISEA (Vol, 19).
Elkington, J. (2013). Enter the triple bottom line. In The triple bottom line. pp. 23-38. Routledge.
Farcane, N. & Bureana, E. (2015). History of "corporate social responsibility" concept. Annales Universitatis Apulensis: Series Oeconomica, 17(2), pp. 31.
Foster, D. & Jonker, J. (2005). Stakeholder relationships: the dialogue of engagement. Corporate Governance 5(5), pp. 51–57.
Frankental, P. (2001). Corporate social responsibility- a PR invention?. Corporate Communications: An International Journal, 6(1), pp. 18-23.
Freeman, R. E., Wicks, A. C. & Parmar, B. (2004). Stakeholder theory and “the corporate objective revisited”. Organization science, 15(3), pp. 364-369.
Friedman, M. (1970). The social responsibility of business is to increase its profits. The New York Times Magazine, 33, pp. 122-126.
Frynas, J. G. (2005). The false developmental promise of corporate social responsibility: evidence from multinational oil companies. International Affairs, 81(3), pp. 581–598.
60(66)
Gibbs, G. (2007). The nature of qualitative analysis. Analyzing qualitative data. pp. 1-9.
Goodpaster, K. E. (2003). Some challenges of social screening. Journal of Business Ethics, 43(3), pp. 239-46.
Guay, T., Doh, J.P. & Sinclair, G. (2004). Non-governmental organizations shareholder activism and socially responsible investments: ethical, strategic and governance implications. Journal of Business Ethics, 52(1), pp. 125-39.
Guba, E. G. & Lincoln, Y. S. (1994). Competing paradigms in qualitative research. Handbook of qualitative research, 2(163-194), pp. 105.
Hart, S. J. (1997). Beyond greening: strategies for a sustainable world. Harvard Business Review. 75(1), pp. 66-77.
Hasnas, J. (1998). The normative theories of business ethics: a guide for the perplexed. Business Ethics Quarterly, 8(1), pp. 19-42.
Husted, B. W. & Allen, D. B. (2006). Corporate social responsibility in the multinational enterprise: strategic and institutional approaches. Journal of international business studies, 37(6), pp. 838-849.
Hsieh, M.H. (2002). Identifying brand image dimensionality and measuring the degree of brand globalization: a cross-national study. Journal of International Marketing, 10(2), pp. 46- 67.
Jamali, D. (2010). The CSR of MNC subsidiaries in developing countries: global, local, substantive or diluted?. Journal of Business Ethics, 93(2), pp. 181–200.
Jhunjhunwala, S. (2014). Intertwining CSR with strategy: the way ahead. Corporate Governance, 14(2), pp. 211-219.
Jones, T. M. (1980). Corporate social responsibility revisited redefined. California Management Review, 22(3), pp. 59–67.
61(66)
Jonker, J. & Foster, D. (2002). Stakeholder excellence: framing the evolution and complexity of a stakeholder perspective of the firm. Corporate Social Responsibility and Environmental Management, 9, pp. 187–195.
Joshi, M. R. & Yadav, R. (2013). Corporate social responsibility: is it a positioning strategy?. International Journal of Research in Management & Social Science, 1(1), pp. 74- 81.
Joy, A., Sherry Jr, J. F., Venkatesh, A., Wang, J. & Chan, R. (2012). Fast fashion, sustainability, and the ethical appeal of luxury brands. Fashion Theory, 16(3), pp. 273-295.
Kolk, A. & Van Tulder, R. (2010). International business, corporate social responsibility and sustainable development. International business review, 19(2), pp. 119-125.
Lam, M. L. L. (2009). Beyond credibility of doing business in China: strategies for improving corporate citizenship of foreign multinational enterprises in China. Journal of Business Ethics, 87(1), pp. 137-146.
Leonidou, C. N. & Skarmeas, D. (2017). Gray shades of green: causes and consequences of green skepticism. Journal of Business Ethics, 144(2), pp. 401–415.
Li, Y., Zhao, X., Shi, D. & Li, X. (2014). Governance of sustainable supply chains in the fast fashion industry. European Management Journal, 32(5), pp. 823-836.
Lindgreen, A., Swan, V. & Johnson, W. J. (2009). Corporate social responsibility: an empirical investigation of U.S. organizations. Journal of Business Ethics, 85, pp. 303–323.
MacCarthy, B. L. & Jayarathne, P. G. S. A. (2010). Fast fashion: achieving global quick response (GQR) in the internationally dispersed clothing industry. In Innovative quick response programs in logistics and supply chain management (pp. 37-60). Springer, Berlin, Heidelberg.
Markusen, J. R. (1995). The boundaries of multinational enterprises and the theory of international trade. Journal of Economic perspectives, 9(2), pp. 169-189.
McAlister, D.T. & Ferrell, L. (2002). The role of strategic philanthropy in marketing strategy. European Journal of Marketing.
62(66)
McWilliams, A. & Siegel, D. (2001). Profit maximizing corporate social responsibility. Academy of Management Review, 26(4), pp. 504-505.
Meyer, J. W. & Rowan, B. (1977). Institutionalized organizations: formal structure as myth and ceremony. American Journal of Sociology, 83, pp. 340–63.
Morsing, M. (2006). Strategic CSR communication: telling others how good you are. In Jonker, J. & de White, M. (Eds.) Management Models for Corporate Social Responsibility. Springer, Heidelberg, pp. 238-46.
Muller, A. (2006). Global versus local CSR strategies. European Management Journal, 24(2- 3), pp. 189-198.
Napier, E. & Sanguineti, F. (2018). Fashion merchandisers’ slash and burn dilemma: a consequence of over production and excessive waste?. Rutgers Business Review, 3(2).
O’Shaughnessy, K. C., Gedajlovic, E. & Reinmoeller, P. (2007). The influence of firm, industry and network on the corporate social performance of Japanese firms. Asia Pacific Journal of Management, 24, pp. 283–303.
Polonsky, M. J. & Scott, D. (2005). A quantitative examination of the Freeman stakeholder strategy matrix. European Journal of Marketing, 39(9/10), pp. 1199-215.
Polonsky, M. & Jevons, C. (2009). Global branding and strategic CSR: an overview of three types of complexity. International Marketing Review, 26 (3), pp. 327-347.
Reich, R. (2008). Supercapitalism. The transformation of business, democracy and everyday life. Society and Business Review.
Rodriguez, P., Siegel, D. S., Hillman, A. & Eden, L. (2006). Three lenses on the multinational enterprise: politics, corruption, and corporate social responsibility. Journal of International Business Studies, 37(6), pp. 733–746.
Sandin, G., Roos, S., Spak, B., Zamani, B. & Peters, G. (2019). Environmental assessment of Swedish clothing consumption-six garments, sustainable futures. Mistra Future Fashion report.
63(66)
Saunders, M., Lewis, P. & Thornhill, A. (2003). Research methods for business students. Essex: Prentice Hall: Financial Times.
Schlegelmilch, B. B. & Pollach, I. (2005). The perils and opportunities of communicating corporate ethics. Journal of Marketing Management, 21(3/4), pp. 267-90.
Simmons, J. (2004). Managing in the post-managerialist era: towards socially responsible corporate governance. Management Decision, 32(3/4), pp. 601–611.
Singh, J., Sanchez, S. M. M. & Bosque, I. R. (2007). Understanding corporate social responsibility and product perceptions in consumer markets: a cross-cultural evaluation. Journal of Business Ethics, 80, pp. 597–611.
Smith, N. C. (2003). Corporate social responsibility: whether or how?. California Management Review, 45(4), pp. 52–76.
Sridhar, K. (2012). Corporate conceptions of triple bottom line reporting: an empirical analysis into the signs and symbols driving this fashionable framework. Social Responsibility Journal.
Surroca, J., Tribo, J. A. & Zahra, S. A. (2013). Stakeholder pressure on MNEs and the transfer of socially irresponsible practices to subsidiaries. Academy of Management Journal, 56, pp. 549–72.
TerraChoice. (2010). The sins of greenwashing: Home and family edition 2010: a report on environmental claims made in the North American consumer market.
Udayasankar, K. (2008). Corporate social responsibility and firm size. Journal of Business Ethics, 83, pp. 167–175
Visser, W. & Sunter, C. (2002). Beyond reasonable greed: why sustainable business is a much better idea. Cape Town: Tafelberg Human & Rousse.
Wartick, S. & Cochran, P. (1985). The evolution of the corporate social performance model. The Academy of Management Review, 10(4), pp. 758-769.
64(66)
Werther, W. B. & Chandler, D. (2005). Strategic corporate social responsibility as a global brand insurance. Business Horizons, 48, pp. 317-324.
Williams, C. A. & Aguilera, R. V. (2008). Corporate social responsibility in comparative perspective. In Crane, A., McWilliams, A., Matten, D., Moon, J. & Siegel, D. (Eds.), Oxford Handbook of Corporate Social Responsibility. Oxford: Oxford University Press, pp. 452–72.
Wood, D. (1991). Corporate social performance revisited. The Academy of Management Review 16(4), pp. 691– 717.
Wood, D. & Jones, R. (1996). Research in corporate social performance: what have we learned. In Dwight, B. & Dennis, Y. (Eds.), Corporate philanthropy at the crossroads. Bloomington: Indiana University Press.
Yang, X. & Rivers, C. (2009). Antecedents of CSR practices in MNCs’ subsidiaries: a stakeholder and institutional perspective. Journal of Business Ethics, 86, pp. 155–169.
Zyglidopoulos, S. C. (2002). The social and environmental responsibilities of multinationals: evidence from the Brent Spar case. Journal of Business Ethics, 36(1-2), pp. 141-51.
Online European Communities. (2001). Green paper: promoting a european framework for corporate social responsibility. https://ec.europa.eu/commission/presscorner/detail/en/DOC_01_9 [2020-04-04]
H&M. (2019). H&M Conscious exclusive 2019 mixing the beauty of nature with sustainability innovation at a star-studded event in Los Angeles. https://about.hm.com/news/general-news-2019/conscious-exclusive-2019.html [2020-05-07]
H&M group. (2018). H&M group Sustainability report. https://hmgroup.com/content/dam/hmgroup/groupsite/documents/masterlanguage/CSR/report s/2018_Sustainability_report/HM_Group_SustainabilityReport_2018_%20FullReport.pdf [2020-04-24]
65(66)
H&M group. (2020). Market overview. https://hmgroup.com/about-us/markets-and- expansion/market-overview.html [2020-04-24]
Inditex. (2018). Annual report 2018. https://static.inditex.com/annual_report_2018/pdfs/en/Inditex%20Annual%20Report%202018 .pdf [2020-04-27]
Inditex. (2020). Who we are. https://www.inditex.com/en/about-us/who-we-are [2020-04-27]
Naturvårdsverket. (2010). Miljömålen - Svensk konsumtion och miljöpåverkan. http://www.naturvardsverket.se/Documents/publikationer/978-91-620-1280-9.pdf [2020-05- 20]
Ourgoodbrands. (2020). The real impact of the fast fashion industry in the world. https://ourgoodbrands.com/real-impact-fast-fashion-industry-world/ [2020-05-20]
66(66)