H&M joins the ‘cashless club’
H&M made a powerful statement about gender on Women’s Day by announcing its new unisex denim clothing range. But the company also made another announcement which, while perhaps not eye-catching to its fashionista fans, might be more important down the line. As of yesterday, H&M is joining the United Nation’s Better Than Cash Alliance.
H&M will join a list of distinguished partners, like the Gates Foundation, MasterCard, and Coca-Cola, in seeking to eliminate cash payments for supply chain workers. This initiative seeks to use modern innovations in electronic payment technology to “boost financial inclusion and curb poverty” according to online magazine Triple Pundit.
The reason cash is falling out of favour is partly down to a lack of transparency and inefficiency. When cash is sent overseas, there is scant opportunity to guarantee that it goes where it’s meant to go – that means workers’ pockets, but it also means the taxman. There is also, of course, the possibility that money can get lost legitimately. On top of these concerns is a safety issues: in poorer parts of the world, payday at the local factory might be a great invitation to criminals; and even if they don’t attack the facility itself, local ne’er-do-wells can figure out who’s pockets will be bulging on payday, putting workers at direct risk outside of the workplace.
All of these factors apply to more than just businesses, of course. At the heart of the ecommerce trend, there is a worldwide move towards cashless payments that we previously wrote about here. H&M’s adoption of this technology is yet another example of the intersection between fashion and ecommerce. This a subject close to Dominion’s heart – so close that we will soon be speaking at an event dedicated to its exploration, which you can find more about here.
In contrast to the concerns raised by cash payments, digital payments have some clear advantages, including that they can “reduce a factory’s costs, save time and also improve workers’ access to financial services.”
H&M is the first big fashion brand to sign up to the Alliance, and is likely to reap a certain amount of positive press from ethically minded Millennial consumers. According to the company, its supply chain includes 1.6 million people – and if producers of raw materials like cotton are included, that number grows to some 250 million. If the Alliance is correct about the benefits of cashless payments, then H&M has just improved a lot of lives.
H&M may have just initiated the next big fashion trend: using digital payments to streamline company efficiency whilst simultaneously improving workers’ lives.
Dominion holds H&M in its Global Trends Luxury Fund.
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