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H&M, Swedfund Team Up to Drive Sustainability in Ethiopian Textile Industry

H&M has teamed up with Swedfund, a Swedish company that offers expertise and financial support to emerging markets within Africa, Asia, Latin America and Eastern Europe, in a rare collaboration to try to develop a more ethical Ethiopian textile industry. The main goal of the coupled effort, to be launched this fall, is to promote both high social and environmental standards in an industry which is characteristically plagued with a poor ethical standing.

The possibility of a collaboration was brought to light following initial talks between the two companies, before culminating in a joint trip to examine factory conditions in Ethiopia in May.

As the main investor, Swedfund, which highlights its main goal as “poverty reduction through sustainable business,” will provide local market expertise and invest in the development of H&M’s textile suppliers. H&M, the world’s second-largest clothing retailer, will provide expertise on the workings of the textile industry, as well as purchase from suppliers through Swedfund’s investment.

“We see the cooperation as an opportunity to get involved in Ethiopia's growing textile industry at an early stage and to contribute to more jobs. We have for many years worked in existing manufacturing countries to improve working conditions and the environment. This experience is included with the establishment of cooperation with Ethiopian suppliers,” Karl-Johan Persson, CEO at H&M, said in a statement.

It’s hoped that this investment will help to strengthen the domestic textile industry in Ethiopia, which is key for job creation. Investment in the production side of the market will also help to ensure that the financial gains from the textile industry will remain with the country, rather than having the benefits sucked up elsewhere.

The partnership will not just create new jobs within the industry, but also aims to improve working standards in an industry that has been known for its poor treatment of workers. H&M and Swedfund have committed to setting standards for sustainable production, focusing on factors such as workers’ wages and water usage.

“Through this unique partnership with H&M, our goal is to contribute to developing the textile industry in Ethiopia, thus creating jobs with good working conditions that lift people out of poverty, especially women,” says Anna Ryott, CEO of Swedfund.

Founded in 1979, Swedfund has been a long-term investor in over 230 companies, allowing them to develop a strong level of expertise in the sustainable development of markets within developing countries. Combining this with H&M’s expertise in the textile industry, plus its list of suppliers, could prove to be a strong partnership in working towards a more ethical and sustainable textile industry within Ethiopia.

This is just one of several recent moves by H&M to try to improve the social and financial standing of workers within the textile industry. Earlier this year, the company announced its commitment to the global initiative, Business Call to Action (BCtA), pledging to invest in skills training for around 5,000 workers in Bangladesh by 2016. This followed its other pledges to improve working conditions in the garment industry in Bangladesh, committing to pay textile workers a ‘living wage’ by 2018, in addition to its support of the Accord on Fire and Building Safety.