The United Nations-based initiative is a partnership of governments, companies and international organisations accelerating the transition from cash to digital payments.
"Digital payments are an efficient and scalable way to improve the lives of the employees of our suppliers. They offer a faster, safer and more transparent way to receive their salary, increase financial inclusion and support women's economic independence," said Gustav Loven, social sustainability manager at H&M group.
About 65 per cent of the 1.6 million people employed along H&M group's supply chain are women, many of them with limited access to the financial services they need to create a better life for themselves and their families. Encouraging suppliers to pay wages through digital channels, such as bank accounts, cards or mobile money, will build on H&M group's sustainability commitment to work with its business partners to promote good working conditions, fair living wages and sustainable economic growth.
As the majority of the benefits will be realised by female workers, this move is a prime example of a corporation working to achieve the Sustainable Development Goals on Gender Equality (SDG 5) and Decent Work and Economic Growth (SDG 8).
"H&M group is taking a bold step in recognising how cash-heavy supply chains limit efforts to empower workers and prevent companies from increasing transparency. H&M group's leadership will help inspire other companies in the industry to make the shift to digital payments," said Dr Ruth Goodwin-Groen, managing director of the Better Than Cash Alliance.
Expanding digital payments to the world's cotton supply chain could potentially reach 250 million people, including smallholder farmers who currently have limited access to digital payment systems and financial services in general. Digitising payments, when designed responsibly and responsively to consumer needs, can enable H&M group to grow its supplier base and help create a sustainable, productive agricultural sector.
A research published by Better Than Cash Alliance shows that transitioning to digital payments can save factories approximately 750 hours of production a month, due to workers spending less time away from the production line and reduce costs by more than 85 per cent within 2 years of paying workers via a hybrid mobile money/bank account model. At the same time, moving toward a digital economy supports financial inclusion by drawing previously unbanked workers into the formal financial system and building financial skills. (KD)
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