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1、Annual report 2020H&M GroupWe are a global family of brands with a shared passion to make great fashion and design available to all in a sustainable way.ContentsCEO letter 4H&M Group in brief 6Our brands 8H&M 9H&M HOME 10Weekday 10COS 11&Other Stories 11Monki 12ARKET 12Afound 13Treadler 13Sellpy 13C

2、ustomer experience 15Market overview 16Five year summary 18The H&M share 19Corporate governance report including the board of directors 21Auditors statement on the corporate governance report 34Administration report including sustainability report 36Financial reports 54Group income statement 54Conso

3、lidated statement of comprehensive income 54Group balance sheet 56Group changes in equity 58Group cash flow statement 59Parent company income statement 60Parent company statement of comprehensive income 60Parent company balance sheet 61Parent company changes in equity 62Parent company cash flow stat

4、ement 63Notes to the financial statement 64Signing of the annual report 84Auditors report 86Calendar and contact details 90H&M Hennes&Mauritz ABs annual accounts and consolidated accounts for the financial year 2019/2020 comprise pages 3684.With the collection H&M Conscious Exclusive we are constant

5、ly exploring new creative ways of recycling and reusing materials to create fashion.H&M Conscious Exclusive A/W20 took materials made from various kinds of waste and through innovations and new recycling methods transformed them into beautiful garments and accessories.4CEO letterThe H&M group stands

6、 strong after a very challenging year.We are continuing to manage the negative effects of the pandemic,while also strengthening our customer focus further and driving our transformation at full speed to create the best customer offering and sustainable,profitable growth for the H&M group.The year 20

7、20 was marked by the Covid-19 pandemic,which had a significant negative impact on the H&M groups results.However,we made a strong start to the year.Our positive trend from 2019 with more customers,more satisfied customers and increased full-price sales continued in the first quarter of 2020,when pro

8、fits more than doubled compared with the previous year.As a result of our transformation work and many years of investments focusing on the digital,this made a strong contribution to our ability to manage the challenges brought by the pandemic.The safety of our employees and customers has been our h

9、ighest priority throughout.Due to extraordinary social measures to reduce the spread of the virus,stores were temporarily closed in many markets.At the most,around 4,000 of our 5,000 stores were temporarily closed in the second quarter and in those markets where stores were still open,customer footf

10、all was significantly down.STRONG AND SWIFT ACTIONWe rapidly implemented a range of strong measures to mitigate the severe adverse effects.This crisis work encompassed all parts of the business.We adjusted our product purchasing and purchasing plans while maintaining our responsible purchasing pract

11、ices with our suppli-ers.With up to 80 percent of our stores closed,there was a great focus on adjusting store-related costs such as staffing,rents and marketing activities,as well as administrative expenses.I would like to thank all the H&M groups employees for such incred-ible commitment,determina

12、tion and team spirit.Everywhere colleagues came together to quickly find solutions to the problems that arose and to be able to meet customers despite all the restrictions and lockdowns.By accelerating the digital shift in the industry,the pandemic also hastened our need for a skills shift,with an i

13、ncreased need for online,tech and logistics skills while the opposite is the case for operations in the physical stores.This affected many of our employees and therefore meant difficult decisions had to be taken,but these were absolutely necessary in order for the business to adapt to the ever faste

14、r changes in the world around us.To offset the effects of the pandemic we also needed to shift our financial focus.The priority was first and foremost to secure the com-panys liquidity and continued financial flexibility.In view of the difficult situation we found ourselves in,I welcomed the decisio

15、n by the annual general meeting in spring 2020 to cancel the dividend in accordance with the boards proposal.It also became necessary to re-evaluate all approved and planned investments.These were scaled back,while at the same time invest-ments in digital and the supply chain made up a greater share

16、.With the majority of the stores closed,we strengthened our focus on the digital sales channels further and since we had expanded online sales globally,our customer offering remained available in many markets.Online demand for our collections was high and rapid online growth partly compensated for t

17、he drop in physical store sales.Due to the extent of the restrictions and the drastic worsening of the market situation,however,we made a loss in the second quarter despite swiftly implemented measures and substantial cost reductions.OUR RECOVERY AND THE SECOND WAVESales gradually started to come ba

18、ck as social restrictions were eased and our brands were able to welcome customers back into the stores again.Customers made it clear that they appreciate the H&M groups offering,and we saw just how well the physical and digital sales channels complement each other.Our recovery was faster than expec

19、ted and we returned to profit already in the third quarter.The improvement in profit was driven by increased full-price sales as well as cost reductions,and was also supported by our earlier investments to increase flexibility in the supply chain and redirect the product flow between sales channels.

20、The H&M groups online sales were up 50 percent in local currencies in the fourth quarter.Our recovery continued until the second wave of the pandemic brought a new slowdown as a result of new restrictions and lockdowns.Despite the Covid-19 situation,through our efforts and attractive customer offeri

21、ng we succeeded in growing our customer base in 2020 and kept inventory well under control.With strong,profitable online growth and good cost control we ended the year in profit and in a strong financial position.CHANGES ARE ACCELERATEDDuring the pandemic many of the changes in society that had alre

22、ady been driving the H&M groups transformation speeded up.Alongside accelerated digitalisation,awareness of the importance of sustainable development increased,the need for local relevance strengthened and in the wake of the pandemic demand for good value,sustainable prod-ucts is expected to increas

23、e.The H&M groups customer offering is well positioned for this and our transformation is continuing at full speed.Our main focus remains on developing the H&M groups strong,unique brands and providing customers with the best combination of fashion,quality,price and sustainability.We are continually

24、increasing the share of recycled and other more sustainably sourced materials in our collections,aiming to reach 100 percent by 2030 from the current level of 64 percent.New breakthroughs among our partners in recycling textiles made of material blends on an industrial scale,have contributed Helena

25、Helmersson,CEO of H&M Hennes&Mauritz AB since 30 January,2020.5to us setting a new waypoint:to increase the share of recycled materials to 30 percent by 2025,which is also part of our work to secure a sustainable supply of materials for the H&M group.Our brands are also offering customers an increas

26、ing number of services for a more sustainable lifestyle.By engaging our customers more in various ways,we are building long-term,value-creating relationships.H&Ms customer loyalty pro-gramme continues to attract customers in a growing number of markets and now has more than 114 million members who a

27、re able to benefit from more personalised offerings and digital services for inspiration and a smooth customer experience.Like we have seen also during the pandemic,customers value the physical store experience.The stores are also important for our profitable online trading.Alongside continued focus

28、 on digital growth,we are intensifying our work to ensure a relevant and profitable store portfolio that meets customers needs in interaction with our digital channels.SPEED AND FLEXIBILITY BECOME INCREASINGLY IMPORTANTSpeed and flexibility particularly in the supply chain will become even more impo

29、rtant going forward,to ensure the best customer offering and increase availability in all channels.Our tech drive involving AI,new logistics systems and high-tech logistics centres is an important part of our work to have the right product in the right place at the right time and at the right cost.C

30、ombined with more efficient processes,this increases our precision and thereby contributes to a more sustainable use of resources.NEW CLIMATE GOALSJust like digitalisation,the H&M groups sustainability work contributes to our transformation.Among other things,during the year we set new climate inter

31、im goals.You can read more about this in the H&M groups Sustainability Performance Report on our website.Our ambition is to lead the fashion industry towards a sustainable future and we are therefore pleased that the H&M group again was included in global organisation CDPs A List for environmental w

32、ork and transparency.The H&M groups transformation is also opening up new ways for us to benefit from our assets,relationships and economies of scale.Within the company and together with partners,we are identifying and developing new initiatives and business models that have the potential to add val

33、ue and more revenue streams to the company in the longer term.STRONG,LONG-TERM OWNERS AND SHARED VALUES2020 was an exceptionally tough year.It was also my first year as CEO of the H&M group after taking over on 30 January from Karl-Johan Persson,who became chairman of the board in May.I have worked

34、here for 24 years,alongside so many fantastic,dedicated colleagues around the world.Although the pandemic cannot be compared with anything we as a company have been through before and is far from over,I am convinced that we will come out of the crisis stronger.The H&M group has shown determination a

35、nd we have acted swiftly,while at the same time strengthening our customer focus further.We have the privilege of having strong,long-term and committed main owners the Persson family,founders of the H&M group.Throughout the incredible growth journey that the company has been on since it started in 1

36、947,we have been keen to maintain the unique corporate culture and entrepreneurial spirit on which our business is based.Our culture and shared values have meant incredibly much for our ability to recover during the pandemic and will continue to be just as important to us in the future.LOOKING AHEAD

37、The H&M group stands on firm foundations,allowing us both to make the most of opportunities that arise and to manage the ongoing Covid-19 situation.Our actions to mitigate its negative effects continue.Ongoing restrictions,with many stores temporarily closed,will have a substantial negative impact o

38、n the first quarter of 2021.At the end of January around 1,800 or 36 percent of our stores were closed.Although the challenges are again substantial,it is clear that when customers are able to shop they are showing that they appreciate our offering,both in stores and online.A gradual improvement in

39、the Covid-19 situation combined with our continued transformation means the H&M group is well positioned for a strong recovery during the year.Together with our ambitious sustainability agenda,our ongoing transformation will make us more resilient and adaptable in the future and will contribute to s

40、ustainable and profitable growth for the H&M group in the long term.Helena Helmersson,CEOH&M Hennes&Mauritz ABARKET.H&M.H&M GROUP IN BRIEF6Our brands and new business models The H&M group includes the brands H&M and H&M HOME,COS,Weekday,Monki,&Other Stories and ARKET,the marketplace Afound and the B

41、2B initiative Treadler.In addi-tion,the H&M group is the majority shareholder in Sellpy,a fast-growing e-commerce platform for second-hand items.Through strong,unique brands that offer the best combination of fashion,quality,price and sustainability we want to give our customers unbeatable value.The

42、 customer offering is continually improved to meet customers expec-tations.Supply chain investments in digitalisation and AI are part of the groups work to secure the best customer offering and increase availability in all channels.In parallel,new business models,initiatives and partnerships are dev

43、eloped to satisfy new customer needs,provide additional revenue streams and contribute to more sustainable use of resources.In 2020 the percentage of recycled or other sustainably sourced materials in the collections continued to increase.Our brands also offer a range of services based on circular b

44、usiness models such as resell,remake,repair and gar-ment rental,as well as the H&M groups garment collecting in stores globally for textiles recycling.Our innovation hub The Laboratory runs a range of projects focusing on digital services connected to sustainability.The group also includes investmen

45、t arm CO:LAB,which is focusing on entrepreneurs that are exploring the future of fashion.Through CO:LAB the H&M group has invested in businesses such as Renewcell,a Swedish textiles recycling company that has developed a unique method of recycling textiles on an industrial scale,creating natural bio

46、degradable fibres.Strong geographical diversification:74markets,of which 52 markets also offer online sales.An inspiring and smooth shopping experienceThe H&M groups brands reach customers around the world.Wher-ever,whenever and however our customers want to meet us in our stores,on our websites,in

47、digital marketplaces and on social media we want to offer a convenient and inspiring experience in which the channels interact and strengthen each other.We are continuing to focus on digital growth,optimisation of the store portfolio and integration of online and physical stores.Read more about our

48、digital services and initiatives for an even better customer experience on page 15.Reusable,plastic-free packagingWe are striving to reduce packaging throughout our supply chain,focus-ing on reducing plastics.For 2025 our goal is for all our packaging material to be recyclable,reusable or compostabl

49、e.In 2020 a new system of reusable bags made of certified paper was produced and this will gradually be rolled out to all the brands in the H&M group for online deliveries.Deliveries using climate-smart transport are also becoming available in more and more markets.Read more on pages 47 and 49 and a

50、t .LifecycleValueFirstHandSecondHandSecondLifeSecondChance28%online sales as a share of the groups net sales in 2020We want to create unbeatable value for our customersThe H&M group is a family of brands making it possible for customers around the world to express themselves through fashion and desi

51、gn,and to choose a more sustainable lifestyle.We create value for people and society in general by delivering our customer offering and developing with a focus on sustainable and profitable growth.By extending the life cycle of materials and products we increase value for customers and make a sustai

52、nable lifestyle accessible to more people.H&M GROUP IN BRIEF7114million members of H&Ms customer loyalty programme,which is attract-ing more and more customers.The programme is in 26 markets with further rollout planned.187billion Swedish kronor in net sales in 2020,despite significant impact of the

53、 Covid-19 pandemic.Our value chainThe H&M groups value chain includes every step from idea to customer the design and development of products and services,the choice and development of raw materials,suppliers of materials and products,transport,sales,and customer use such as garment care,reuse and r

54、ecycling.From a sustainability per-spective the value chain has both risks and business opportunities associated with the activities.Always acting ethically,responsibly and with integrity is essential for keeping the trust of our customers,other stakeholders and the world around us.We use our size,p

55、osition and experience to drive change,innovation and transparency along with our partners,with the aim of maximising positive impact in the value chain and minimising negative impact.Good,long-term relationships directly with carefully chosen suppliers promotes this by building trust and transparen

56、cy.Our product suppliers are listed on our website.At H&M,H&M HOME and ARKET information on the supplier and material is displayed at product level.We are also testing out showing the climate,environmental and social footprint of individual products using the Higg Index and we are exploring new tech

57、nology to improve traceability in the more complex parts of the chain.More information about sustainability in our value chain within the areas of the environment,social issues,human resources,respect for human rights and anti-corruption measures can be found on pages 4553 including our policies,goa

58、ls and performance indicators.30%recycled materials by 2025 is a new waypoint we have set as we move towards the H&M groups long-term goal of 100 percent recycled or other sustainably sourced materials by 2030 for commercial goods a share that increased to 64 percent in 2020 from 57 percent in 2019.

59、Biodiversity is part of our climate goalThe H&M group aims to be climate positive throughout the value chain by 2040 at the latest.Climate change and biodiversity loss are closely linked.We have therefore expanded our climate goal to include the ambition of achieving a net positive impact on biodive

60、rsity.Read more on pages 4749 and at .Our valuesShared values have guided us since the H&M groups founder,Erling Persson,opened the first Hennes store in 1947.Based on respect for the individual and belief in peoples ability to use their initiative,our values remain key to our success in a rapidly c

61、hanging world.We are one teamWe believe in peopleEntrepreneurial spiritConstant improvementCost-consciousStraightforward and open-mindedKeep it simpleReuseRecycle8VRA VARUMRKENOur brandsThe H&M groups brands each have their own unique identity.Together they offer customers a wealth of styles and tre

62、nds in fashion and design.9OUR BRANDSH&M is a fashion brand offering everyone a chance to explore their personal style.All seasons,all styles,all welcome!H&M always strives to offer the very best combination of fashion,quality,price and sustainability with collections for women,men,teenagers,childre

63、n and babies.Customers will find everything from unique designer collaborations and motivational sportswear to affordable wardrobe essentials,beauty products and dazzling accessories.Visit for more information or follow HM for daily inspiration and the latest Present in 74 markets,H&M offers collect

64、ions for women,men,teenagers,children and babies.H&M has a wide range of functional sportswear.H&M Beauty offers a wide range of beauty products for all styles,tastes and needs from make-up and hair styling to perfume and bodycare.H&Ms customer loyalty programme has more than 114 million members in

65、26 markets.10VRA VARUMRKENH&M HOME is a design-driven interior brand offering trend decorations,furniture and light-ing for every room and style.The assortment ranges from high-quality bedlinen and timeless dinnerware to diversified textiles,furniture and lamps;with contemporary style and attention

66、to quality and detail at its core.By merging modern design,inspiration and quality with affordable prices,H&M HOME enables interior lovers across the world to create modern and inspiring homes.H&M HOME was launched online in 2009.The assortment has been expanded throughout the years and rolled out t

67、o many markets.Today H&M HOME is avail-able in most H&M online markets,through standalone H&M HOME concept stores and at shop-in-shops in H&M HOME is one of the brands in the H&M group where customers can see detailed infor-mation online at product level both the materials used and the factory where

68、 it was made.Weekday is a Swedish fashion brand influ-enced by youth culture and street style.Founded in 2002,Weekday ships to cus-tomers in 30 online markets,as well as to around 70 more markets via global selling and is also available on external plat-forms.In 57 stores in 16 markets,Weekday offer

69、s customers a unique retail experi-ence and a curated mix of womens and mens assortments as well as a small selection of external brands.It has been part of the H&M group since 11OUR BRANDS&Other Stories offers a wide range of shoes,bags,accessories,beauty prod-ucts and ready-to-wear for women.In de

70、sign ateliers in Paris,Stockholm and Los Angeles,&Other Stories creates collections with great attention to de-tail and quality.Successfully launched in 2013,&Other Stories has 74 stores in 22 markets along with an online store in 33 markets,including in China where&Other Stories is present on Tmall

71、.In addition,the brand delivers to around a further 70 markets Inspired by the arts and contemporary culture,London-based fashion brand COS is known for collections that balance innovative design with enduring style,with every piece made to last beyond the season.COS creates modern,functional and co

72、nsidered design for women,men and children and has sup-ported the arts since the launch of the brand in 2007 through collaborations with established and emerging artists,galleries and creative studios.Offered online in 34 markets,COS also delivers to around a further 70 markets via global selling an

73、d is available on external platforms such as Tmall in China.COS has 291 stores in 44 markets.12OUR BRANDSARKET is a modern-day market offering essential products for men,women,children and the home.ARKETs mission is to demo-cratise quality through widely accessible,well-made,durable products,designe

74、d to be used and loved for a long time.The first store opened in London in 2017 and today ARKET has 21 stores in 7 markets in Europe,online in 31 markets and ships to around a further 70 markets via global selling while also being available on selected external platforms.ARKETs head office and desig

75、n studio is in SMonki is a storytelling brand that offers great fashion at a competitive price,aiming to be kind to the world and empowering the young women in it.Monkis signature collections can be described as Scandinavian cool meets Asian street style,complete with eve-rything from essentials to

76、stand-out pieces,all for individual styling.123 concept stores offer the Monki expe-rience in 20 markets.Online,Monki delivers to 31 European markets,and via global shipping to around 70 desti-nations worldwide.Monki fashion is also available on external platforms such as Tmall in China.Founded in 2

77、006,Monki is part of the H&M group since In 2020 Monki launched a collection in materials recycled by a new method that fully separates and recycles cotton and polyester blends on a larger scale.The technology,called Green Machine,is the result of collaboration between the Hong Kong Research Institu

78、te of Textiles and Apparel(HKRITA),one of Monkis suppliers and the H&M Foundation.13OUR BRANDSAfound offers great discounts,on everything,always.The online marketplace and Afounds physical stores offer the customer discounts on products from all the H&M groups brands together with a wide mix of othe

79、r well-known and popular external fashion,sports,interior and beauty brands.Through its business model,Afound also offers the customer a way to shop more sustainably by giving fashion new life.Afound was launched online in June 2018 together with its first store opening in Stock holm.Since then,Afou

80、nd has launched online in the Netherlands,Germany and Asellpy.seTreadler is a B2B initiative by the H&M group,enabling external companies to access the H&M groups global supply chain for quality textile products by offering ser-vices from product develop ment to buying,production and logistics.Clien

81、ts share the benefit of the H&M groups more than 70 years of experience,long-term supplier relationships and strategic sustain ability work with invest-ments in a more resilient supply chain.In this way more companies together can be part of accelerating change to a more sustainable textile Founded

82、in 2014,Sellpy has grown to become a broad digital platform for second-hand fashion and other products.With its vision of enabling everyone to consume and live in a more circular way,Sellpy has created a unique service that makes it easy for people to buy and sell second-hand items.Since 2019,the H&

83、M group has been the majority owner of Sellpy.Following its expansion to Germany in 2020,and the Netherlands and Austria in the beginning of 2021,Sellpy is currently available in four markets including Sweden.14OUR BRANDSThe H&M group continues to expand with a focus on increased omni-channel sales.

84、In 2020 H&M opened online in Australia and was also launched on the ecommerce platform SSG.COM in South Korea.COS,Monki,Weekday,&Other Stories and ARKET all opened online in Bulgaria,Croatia,Cyprus,Estonia,Greece,Latvia,Lithuania,Luxembourg,Romania,Russia and Switzerland in 2020.COS also opened onli

85、ne in Japan and ARKET was launched on the ecommerce platform Tmall in China,while Afound opened online in Germany and Austria.COS opened its first store in New Zealand during the year,Monki opened in the Philippines,Weekday in Russia and Spain,while&Other Stories opened its first stores in Russia an

86、d Norway.In the 2020 financial year the H&M group opened 129 stores including franchises and closed 187 stores,making a net decrease of 58 stores compared with a net increase of 108 stores in 2019.For 2021 the plan is that 350 stores will close and just over 100 new stores will open,resulting in a n

87、et decrease of around 250 stores.As in 2020,the majority of the closures will be in established markets,while most of the openings will be in growth markets.The first H&M store in Panama is scheduled to open in the second half of 2021 via franchise.In 2021 COS plans to open its first stores in Greec

88、e,Estonia and the Philip-pines,&Other Stories in China,and ARKET in South Korea and China.The first H&M HOME stores in Russia and,via franchise,Kuwait are planned to open in 2021.The H&M group reachescustomers around the worldWe are constantly working to improve the experience for our customers wher

89、ever we meet them.The pandemic has accelerated the already rapid changes in customer behaviour and we are therefore continuing to focus on digital growth,further optimisation of the store portfolio and the integration of physical stores and online.BRAND NEW STORES(NET)DURING THE YEARNUMBER OF STORES

90、 30 NOV 2020NUMBER OF MARKETS WITH STORESNUMBER OF MARKETS WITH ONLINE-634,42974 5202914434*3571630*-71232031*61753423742233*121731*-1624*COS,Monki,Weekday,&Other Stories and ARKET offer global selling which enables customers in around 70 additional markets to shop online.The exact number of markets

91、 per brand that have this service varies.*Concept stores.H&M HOME is also included with 402 shop-in-shop in H&M stores.H&MCOSWeekdayMonkiH&M HOME&Other StoriesARKETAfound*Markets per brand15CUSTOMER EXPERIENCESCAN&BUYThe customer scans the QR code on a product in store to find and buy the item onlin

92、e in the size and colour they want.FIND IN STOREWith Find in store customers can use their mobiles to see in which stores they can find a specific item in the size they want.GARMENT COLLECTINGThe H&M group collects used clothes and home textiles,from any brand and in any condition,for reuse and recy

93、cling.Next day delivery and express delivery continue to be rolled out in more markets.Customers can receive digital receipts in the H&M app in most H&M markets.Recommended size helps customers find the right size online based on past purchases.Increased product transparency is important for custome

94、rs to be able to make sustainable choices.The H&M group is continuing to work with the Sustainable Apparel Coalition(SAC)on the development of the Higg Index a suite of tools that assess and measure sustainability performance at product,brand and factory level and enables comparability with industry

95、 average.RFID(Radio Frequency Identification)means items with a digital price tag can be located quickly,to get precise information on an items availability.Members of H&Ms customer loyalty programme can choose to pay now or later through the H&M app,whether shopping in store or online.IN-STORE MODE

96、In-store mode allows customers to see on their mobile which items are in the store they are currently in,as well as online.The brands of the H&M group are testing and offering innovative new services such as garment rental,second hand,made-to-measure jeans,repairs,alterations and climate-smart deliv

97、eries all to help customers live a more sustainable lifestyle.ONLINE RETURNS IN STOREOnline returns in store is a service which will continue to be rolled out to more markets.VISUAL SEARCHImage recognition helps customers find the right product by making relevant recommendations based on pictures th

98、at the customer has taken or been inspired by.CLICK&COLLECTWith Click&collect customers can pick up their online purchases in stores.#HMxME invites customers to share their fashion stories from Instagram while also providing an easy way to buy the items in the images.Initiatives for an even better c

99、ustomer experience Initiatives are under way throughout the supply chain to meet customers expectations of a smooth and inspiring experience wherever,whenever and however they choose to meet us in our stores,on our websites,in digital marketplaces and on social media.16MARKET OVERVIEWMarket overview

100、MARKET NET SALES 2020 (SEK M)NET SALES 2019 (SEK M)NEW STORES(NET)DURING THE YEAR NUMBER OF STORES 30 NOV 2020 Sweden*8,015 8,993-9 168 Norway*4,532 5,085-2 125 Denmark*4,626 5,157-7 105 UK*11,486 14,897-16 289 Switzerland*5,550 5,676-1 98 Germany*29,684 33,540-9 457 Netherlands*5,758 6,813-3 135 Be

101、lgium*3,331 4,214-5 93 Austria*4,368 5,302 87 Luxembourg*432 490-1 14 Finland*2,158 2,530-3 65 France*9,166 12,196-7 228 USA*20,802 29,976-11 582 Spain*5,535 7,930-1 166 Poland*5,095 6,336 2 192 Czech Republic*1,341 1,789 52 Portugal*890 1,309 29 Italy*6,079 8,401-7 174 Canada*4,181 5,094 1 96 Slove

102、nia*394 505 1 13 Ireland*1,061 1,181 24 Hungary*1,543 1,903 47 Slovakia*718 813 2 29 Greece*1,426 1,869 35 China*9,748 12,059-15 505 Hong Kong*933 1,448-2 24 Japan*4,333 4,987 10 115 Russia*6,226 6,852 8 155 South Korea*2,091 2,213 2 55 Turkey*1,925 2,797-7 59 Romania*2,116 2,642 57 MARKET NET SALES

103、 2020 (SEK M)NET SALES 2019 (SEK M)NEW STORES(NET)DURING THE YEAR NUMBER OF STORES 30 NOV 2020 Croatia*614 779 1 17 Singapore*466 822-1 13 Bulgaria*559 672 21 Latvia*321 365 9 Malaysia*890 1,360 3 50 Mexico*2,584 3,685 3 55 Chile 1,002 1,834 2 17 Lithuania*356 397 10 Serbia 373 459 1 15 Estonia*353

104、406 13 Australia*2,036 2,539 49 Philippines*742 1,273 1 41 Taiwan*666 650 1 13 Peru 579 970 2 15 Macau*86 125 2 India*1,568 2,007 2 49 South Africa 774 937 27 Puerto Rico*98 122 2 Cyprus*100 87 1 New Zealand 442 401 3 11 Kazakhstan 174 221 6 Colombia 499 528 2 9 Iceland 221 251 1 7 Vietnam 453 434 1

105、 9 Georgia 98 120 3 Ukraine 235 224 2 5 Uruguay 261 332 3 Bosnia-Herzegovina 32 32 1 Belarus 73 15 1 3 Franchise and other*4,833 5,711-3 269 Totalt187,031 232,755-58 5,018*Market with online sales.*United Arab Emirates*,Kuwait*,Qatar,Saudi Arabia*,Egypt*,Bahrain,Oman,Lebanon,Israel,Morocco,Jordan,Th

106、ailand*,Indonesia*and Tunisia.Five year summary1 DECEMBER 30 NOVEMBERFINANCIAL YEAR20202019201820172016Net sales,SEK m187,031 232,755 210,400 200,004 192,267 Change net sales from previous year in SEK,%-20+11+5+4+6 Change net sales previous year in local currencies,%-18+6+3+3+7 Operating profit,SEK

107、m3,099 17,346 15,493 20,569 23,823 Operating margin,%1.7 7.5 7.4 10.3 12.4 Depreciation and amortisation for the year,SEK m25,953 11,051 9,671 8,488 7,605 Profit after financial items,SEK m2,052 17,391 15,639 20,809 24,039 Profit after tax,SEK m1,243 13,443 12,652 16,184 18,636 Cash and cash equival

108、ents and short-term investments,SEK m16,540 12,312 11,590 9,718 9,446 Stock-in-trade,SEK m38,209 37,823 37,721 33,712 31,732 Equity,SEK m54,623 57,069 58,546 59,713 61,236 Number of shares,thousands*1,655,072 1,655,072 1,655,072 1,655,072 1,655,072 Earnings per share,SEK*0.75 8.12 7.64 9.78 11.26 Sh

109、areholders equity per share,SEK*33.00 34.48 35.37 36.08 37.00 Cash flow from operating activities per share,SEK*15.65 17.51 12.86 13.04 14.36 Dividend per share,SEK*0.009.75 9.75 9.75 Return on equity,%2.2 23.3 21.4 26.8 31.2 Return on capital employed,%3.2 23.0 21.2 31.0 39.2 Share of risk-bearing

110、capital,%33.6 51.0 53.5 61.0 67.1 Equity/assets ratio,%31.3 47.4 49.3 56.0 62.1 Total number of stores5,018 5,076 4,968 4,739 4,351 Average number of employees110,325 126,376 123,283 120,191 114,586 20162019 are excluding IFRS 16.*Before and after dilution.*See sections on dividend in the administra

111、tion report on page 44 and in note 31.For definition of key figures see page 81.18FIvE yEaR SummaRyThe H&M shareKEY RATIOS PER SHARE2020 2019 2018 2017 2016 Shareholders equity per share,SEK33.00 34.48 35.37 36.08 37.00 Earnings per share,SEK0.75 8.12 7.64 9.78 11.26 Change from previous year,%-91+6

112、-22-13-11 Dividend per share,SEK*0.009.75 9.75 9.75 Share price on 30 November,SEK181.60 184.84 167.64 197.10 267.90 P/E ratio242 23 22 20 24*See sections on dividend in the administration report on page 44 and in note 31.DISTRIBUTION OF SHARES,30 NOVEMBER 2020SHAREHOLDINGNO.OF SHAREHOLDERS%NO.OF SH

113、ARES%AVERAGE SHARES PER SHAREHOLDER 1500204,341 82.523,802,808 1.4 116 5011,00020,489 8.3 16,129,990 1.0 787 1,0015,00018,031 7.3 39,888,732 2.4 2,212 5,00110,0002,326 0.9 17,057,177 1.0 7,333 10,00115,000659 0.3 8,232,674 0.5 12,493 15,00120,000412 0.2 7,325,724 0.4 17,781 20,0011,184 0.5 1,542,634

114、,895 93.3 1,302,901 Total247,442 100.01,655,072,000 100.0 6,689 MAJOR SHAREHOLDERS,30 NOVEMBER 2020NO.OF SHARES%OF VOTING RIGHTS%OF TOTAL SHARES The Stefan Persson family and related companies818,771,755 75.4 49.5 The Lottie Tham family and related companies88,680,400 2.6 5.4 State Street Bank and T

115、rust CO,W970,830,426 2.1 4.3 Swedbank Robur Fonder32,108,051 0.9 1.9 Nordea Funds28,091,3330.81.7 amF Frskring och Fonder27,302,626 0.8 1.6 Fjrde aP-fonden22,263,966 0.7 1.4 Inter Long Term Capital Sa21,073,068 0.6 1.3 BNy mELLON Sa Na FORmER BNy,W8Imy19,438,210 0.6 1.2 BNy mELLON Na FORmER mELLON,W

116、916,611,760 0.5 1.0 2019Jan 1,2021201720152013Jan 1,20110100200300400SOURCE CISION/MILLISTREAMDevelopment of the H&M share price in SEK over the past 10 years.For more information see the investor relations section at .19ThE h&m ShaRECorporate governance report 2020H&M Hennes&Mauritz ABH&M Hennes&Ma

117、uritz AB is a Swedish public limited company.H&Ms class B share is listed on Nasdaq Stockholm.H&M applies the Swedish Corporate Governance Code(the Code)and has prepared this corporate governance report in accordance with the Annual Accounts Act and the Code.H&M has applied the Code since 2005.This

118、report,which covers the 2019/2020 financial year,was prepared by the companys board of directors and has been reviewed by the companys auditors.h&m is governed by both external regulations and internal control documents.Examples of external regulations that apply to corporate governance at H&M:The S

119、wedish Companies act accounting legislation including the Swedish Bookkeeping act and Annual Accounts Act maR the Eu market abuse Regulation(596/2014/Eu)Nasdaq Stockholm Rules for Issuers The General Data Protection Regulation(GDPR)Swedish Corporate Governance Code(the Code),which is available atcor

120、porategovernanceboard.se.The Code is based on the principle of“comply or explain”,which means that companies applying the Code may deviate from individual rules provided they give an explanation of the deviation,describe the chosen alternative and provide the reasons for the deviation.Examples of in

121、ternal control documents:Articles of association The boards rule of procedure including instructions for the CEO and auditing committee The h&m Way Code of Ethics Code of Conduct:Sustainability Commitment Insider Policy Financial Policy Communications Policy Human Rights Policy Tax Policy Whistleblo

122、wing Policy Other policies,guidelines and manualsh&ms corporate governance is value driven,since it is based both on external regulations as well as on our values which,in brief,canbe described as a sound,simple,straightforward,cost-conscious,entrepre-neurial corporate culture that focuses on teamwo

123、rk,our beliefinpeople and constant improvement.Sustainability work is well integrated into every part of the business and forms a natural part of ouremployees everyday life.Today,h&m is present in just over 70 retail markets and about 20 production markets.as a global company,it is of the utmost imp

124、ortance that we always act ethically,transparently and responsibly atevery stage from doing business with our suppliers to meeting with customers.Through good purchasing routines and close cooperation with our suppliers,our products should always be produced with the greatest possible consideration

125、for people and the environment.Our risk man-agement and internal control work ensure that we work purposefully inevery part of the organisation.The board of directors and auditing committee receive regular feedback from the organisation concerning how the internal control work is being conducted.Eve

126、ry year a thorough review is carried out of the companys risks,both operational and finan-cial,with well-defined action plans to minimise risk.The risk analysis also shows which risks are more long-term in nature,providing input to long-term commercial decisions.Responsibility for management and con

127、trol is shared between the shareholders,board,auditing committee and CEO.The boards rule of procedure states how the work is to be distributed between the board,the auditing committee and the CEO,with the board having the ultimate responsibility for the companys organisation and administration and t

128、he CEO being accountable for ongoing management of the business,with regular feedback to the board.The board of directors has eight members elected by the annual gen-eral meeting(aGm)four women and four men.The board also has two employee representatives and two deputies for these.In total,the board

129、 has 12 members eight women and four men.The composition of the board exhibits breadth and diversity,with the board members different areas of expertise complementing each other well.Their experience in areas such as retailing,entrepreneurship,fash-ion,digitalisation,aI,advanced analytics and automa

130、tion,sustainability and communication forms a good basis for deep and nurturing discus-sions with the CEO and management.Sound corporate governance ensures that companies are managed as sustainably,responsibly and efficiently as possible in the interests of the shareholders.It is a matter of complyi

131、ng with external regulations and doing the right thing.At H&M,our values and global policies and guidelines are important tools in our approach to the world around us.Our Code of Ethics,which is signed by all our employees who have business relationships and by all business partners,clearly states o

132、ur approach to doing business.Acting consistently and with a strong ethical compass is highly important,because we operate in many different markets that have different challenges and where the laws,environmental requirements and social conditions may differ.21CORPORaTE GOvERNaNCE REPORT 2020During

133、the year the board held 11 board meetings,including a statutory meeting in conjunction with the aGm.as in previous years,there was a very high level of attendance by board members.The CEO,CFO and chief accountant also attend all the meetings.Generally,one or two func-tions/departments are invited to

134、 each meeting to give a status presenta-tion concerning what their particular function is working on;for example,every six months the head of sustainability provides an update on the companys sustainability work,making reference to key indicators and targets.These presentations act as a complement t

135、o the CEOs status reports and provide opportunity for more in-depth discussions concern-ing specific areas of the operations.at each board meeting the chairman of the auditing committee also gives an account of the matters addressed by the auditing committee at its most recent meeting within areas s

136、uch as accounting,auditing,tax,internal control and risk,as well as various new regulations and legislation.The company has chosen to have the corporate governance report as a separate document to the annual report,in accord-ance with chapter 6 section 8 of the Swedish annual accounts act.The inform

137、ation that must be provided under chapter 6 section 6 items 36 of the Annual Accounts Act is included intheadministration report on page 40 of h&ms annual report for 2020 and is therefore not included in this corporate govern-ance report.In accordance with chapter 6 section 9 of the annualaccounts a

138、ct,the companys auditors have issued a statement on the corporate governance report that can be foundon page 34.During the period from 1 December 2019 to the aGm on 7 may 2020 the company deviated from the Code on the following point:2.4 The fact that Stefan Persson,chairman of the board until 7 may

139、 2020,also chaired the nomination com-mittee.until the aGm on 7 may 2020 the nomination committee was unanimous that,as the chairman of the board and the largest shareholder in h&m,Stefan Persson was the natural choice to chair the companys nomination committee.Read more about h&ms corporate governa

140、nce at you will find,among other things:Previous corporate governance reports Articles of association Information on the nomination committee,board of directors,CEO,auditors,auditing committee,guidelines andpolicies,executive management team etc.Information and material from previous aGms Risks and

141、uncertaintiesCORPORATE GOVERNANCE IN SWEDENFor listed companies in Sweden it is important to be aware of,among other things,the following areas within corporate governance.The nomination committee plays a key role and in contrast to the Anglo-American system,its members are appointed by the companys

142、 largest shareholders.It is the nomination committees task to propose the size of the board of directors and who is to be elected to the board at the general meeting of shareholders.Board members are elected by all those who vote at the general meeting,but in practice it is difficult to present alte

143、rnative proposals to the nomination committees proposed board members while the general meeting is in progress.In practice,therefore,the nomination committee has a decisive influence over who is elected to the board.The nomination committee also provides the general meeting with a proposal for board

144、 fees and a proposed auditor.Principles for how members of the nomination committee are appointed are decided by the general meeting.The law states that board members are appointed to represent the interests of all shareholders.Even if a large shareholder group has pro-posed a new member via the nom

145、ination committee,therefore,it does not mean that the member represents the interests of only that group ofshareholders.For around 50 years Swedish enterprise has generally taken a positive view of board members elected by the general meeting owning shares inthe company concerned.This is seen as a g

146、uarantee that the interests of the board are aligned with the interests of all shareholders in positive development of the share price and that there is consensus regarding the companys risks and opportunities.Neither the Swedish Corporate Governance Code nor the Swedish Companies Act impose any res

147、trictions on the age of board members,how long members may sit on the board,or any time limit for when an independent board member ceases to be independent of the company or its principal owners.It is traditional for the companys chief auditor to attend the general meeting of shareholders,which is n

148、ot the rule in all countries.This is because the auditors are also deemed to be the general meetings con-trol body for the board.as a result,shareholders can put questions to the auditors at a general meeting irrespective of the size of their shareholding.The option of having different classes of sh

149、ares,usually known as“class a”and“class B”shares,often with differing voting rights,has long existed in Sweden and is widely used.It is common for class a shares to carry 10 times the number of votes but otherwise have the same nominal value and the same dividend rights as other shares.By law the em

150、ployees have the right to appoint employee repre sen-tatives to the board.all are invited to the same meetings and receive the same information,and the employee-elected members have the same voting rights as members elected by the general meeting.Board fees arepaid only to members elected by the gen

151、eral meeting.22CORPORaTE GOvERNaNCE REPORT 20201.SHAREHOLDERS AND ANNUAL GENERAL MEETINGIt is H&Ms shareholders who have the final decision on the companys governance by voting at the general meeting to adopt the articles of association,which decide what the business will focus on,and to appoint the

152、 board of directors and its chairman,whose task it is to administer the companys affairs on behalf of the shareholders.The shareholders at the general meeting also elect auditors,decide on the principles for the nomination committee and select the members of this committee.The general meeting is thu

153、s the companys highest decision-making body and is the forum in which shareholders exercise their right to decide on the companys affairs.h&ms ordinary general meeting(annual general meeting)is held once a year,in late april or early may.The date and venue are announced in conjunction with h&ms nine

154、-month report as well as at .The notice of the meeting is published in full usually five weeks before the meeting as a press release and in Post-och Inrikes Tidningar and at .Publication of the notice is announced by an advertisement placed in Dagens Nyheter and Svenska Dagbladet.Shareholders regist

155、ered directly in the register of shareholders who have given notice of their attendance on time are en titled to participate in the meeting and vote for the total number of shares that they hold.Shareholders who cannot be present in person may be represented by proxy.Shareholders wishing to have a p

156、articular matter considered by the meeting may submit a written request to the board at least seven weeks before the meeting.h&ms email address is also given for those share-holders who wish to submit their questions to h&m in advance.all the material belonging to the meeting,including the minutes o

157、f the meeting,is available on the website in both Swedish and English.Extraordinary gen-eral meetings can also be held when there is a particular need to do so.Shareholders decision-making powersAmong other things,the general meeting makes decisions concerning:The election of board members and the c

158、hairman of the board Board fees including the compensation paid to members for work on the auditing committee Discharge of the members of the board and the CEO from liability Amendments to the articles of association The election of the auditor The adoption of the income statement and balance sheet

159、The distribution of the earnings for the past financial year The election of members of the nomination committee and establishment of principles for the nomination committee Guidelines for remuneration to senior executivesArticles of association according to the h&m articles of association,h&ms boar

160、d of directors isto consist of at least three and no more than twelve members elected by the general meeting and no more than the same number of deputies.The annual general meeting decides the exact number of board mem-bers,and which individuals are to be elected to the board.Board mem-bers are elec

161、ted for the period until the close of the next annual general meeting.The general meeting also decides on amendments to the articles of association.Annual general meeting 2020h&ms annual general meeting 2020 was held on 7 may as a hybrid meeting in view of the infection risk from Covid-19.By far the

162、 majority of the shareholders who had registered for the meeting attended remotely and were allowed to choose between postal voting and voting digitally.aphysical venue was also provided in Kista for those who preferred to attend in person,but very few chose to do so.a digital tool also allowed thos

163、e attending the meeting remotely to ask the company questions.H&Ms corporate governance structureh&ms corporate governance structure encompasses shareholders,the board of directors,the auditing committee,the CEO,the nomination committee,auditors,the executive management team,business areas organised

164、 by brand,employees and employee organisations(see the illustration below).The illustration summarises the companys corporate governance structure.h&ms shareholders ultimately decide the com-panys direction,since the shareholders at the general meeting appoint the board of directors and the chairman

165、 of the board.Proposals for the composition of the board,board fees and the election of auditors are prepared in advance within the nomination committee.The board in turn appoints a CEO to take care of day-to-day administration.The CEO appoints members of the executive management team within h&ms ma

166、trix organisation.The board includes two employee representatives and two deputies for these,who are appointed by their respective employee organisations.The board appoints an auditing committee from among its members,which deals with accounting and auditing matters on an ongoing basis and which is

167、the main channel of commu-nication between the board and the auditors.Each year the auditors report to the board and the annual general meeting on their scrutiny.REPORTS TO/PROvIDES INFORmaTION aPPOINTS/ELECTS/PROPOSES1.ShaREhOLDERSat the GENERaL mEETING4.BOaRD OF DIRECTORS7.CEOmaTRIX ORGaNISaTION s

168、ee page 293.auDITORS2.NOmINaTION COmmITTEE6.EmPLOyEE ORGaNISaTIONS8.BRaNDS:h&m,COS,Weekday,monki,h&m hOmE,&Other Stories,ARKET,Afound9.EXECuTIvE maNaGEmENT5.auDITINGCOmmITTEE23CORPORaTE GOvERNaNCE REPORT 2020The company appeared on video from a separate venue at h&ms head office.a total of 1,083 sha

169、reholders were represented at the meeting,representing 86.7 percent of the votes and 72.7 percent of the capital.The main resolutions passed were the following:The lawyer Sven unger was elected as chairman of the meeting.Balance sheets and income statements for the parent company and for the group w

170、ere adopted.No dividend was to be paid to the shareholders and the funds at the disposal of the annual general meeting were to be carried forward.The board members and the CEO were discharged from liability for the 2018/2019 financial year.The number of board members elected by the meeting to serve

171、until the close of the next aGm was set at eight,with no deputies.The following ordinary board members were re-elected:Stina Bergfors,Anders Dahlvig,Danica Kragic Jensfelt,Lena Patriksson Keller,Christian Sievert,Erica Wiking hger and Niklas Zennstrm.Elected as a new member:Karl-Johan Persson.Karl-J

172、ohan Persson was elected as the new chairman of the board.The aGm approved the proposal from the nomination committee thatboard fees be paid as follows,unchanged from the previous year:chairman of the board SEK 1,700,000;board members elected by the aGm SEK 650,000;members of the auditing committee

173、an additional SEK175,000;and the chairman of the auditing committee an additional SEK225,000.The aGm resolved to appoint Ernst&young aB as auditors until theclose of the 2021 aGm.auditors fees to be paid based on approved invoices.The proposed principles for the nomination committee were approved an

174、d members of the nomination committee were elected.The proposed guidelines for remuneration to senior executives wereapproved.votes and capital represented at h&ms annual general meeting:YEAR%OF VOTES%OF CAPITAL201683.365.5201783.766.6201882.363.6201984.668.4202086.772.7Number of shareholders and ow

175、nership structureat the end of the financial year h&m had 247,442 shareholders.The total number of shares in h&m is 1,655,072,000,of which 194,400,000 are class a shares(ten votes per share)and 1,460,672,000 are class B shares(one vote per share).h&ms largest shareholder is Stefan Persson and family

176、,who via Rams-bury Invest aB hold all the class a shares,which represent 57.1 percent of the votes,as well as 587,971,466 class B shares,representing 17.3 percent of the votes.In addition,the family privately own 36,400,289 class B shares.This means that as at 30 November 2020,Stefan Persson and fam

177、ily pri-vately and via Ramsbury Invest aB represent 75.4 percent of the votes and 49.5 percent of the total number of shares.Ramsbury Invest aB is thus the parent company of h&m hennes&mauritz aB.Ramsbury Invest aB is owned by Stefan Persson and family,and primarily by Stefan Persson.Karl-Johan Pers

178、son is also a shareholder in Ramsbury Invest aB.Each class A share represents 10 votes per share and each class B share represents one vote per share.a class a share therefore has greater voting power at the companys general meetings.all the shares have the same dividend entitlement and right to sha

179、re in the companys assets.Since the company was first listed on the stock exchange in 1974 all the class a shares in h&m have belonged to the founding Persson family,asis usual when family-owned businesses are floated on the stock exchange since it allows the founding family to have a controlling in

180、ter-est.The division into class a and class B shares is set out in h&ms arti-cles of association and is thus transparent to those considering buying shares in h&m.Annual general meeting 2021h&ms annual general meeting 2021 will be held on Thursday,6 may 2021.To register to attend the 2021 aGm,see th

181、e notice of the meeting at COMMITTEEThe nomination committee prepares information that will be used as a basis for decisions at the general meeting concerning the election of the board of directors,chairman of the board,auditors and chairman of the annual general meeting,the fees to the board and au

182、ditors,as well as principles for the nomination committee.The nomination committees proposal for the composition of the board exhibits diversity and breadth as regards expertise,experience,background and gender balance.It also takes into consideration H&Ms stage of development and future focus.Befor

183、e each general meeting the nomination committees report is available to read as a separate document at composition of the nomination committee is based on the principles for the nomination committee adopted at the 2020 annual general meet-ing.The nomination committee below is based on the principle

184、that the nomination committee is to consist of the chairman of the board plus four others nominated by the four largest shareholders in terms of voting rights,as recorded in the register of shareholders.Changes in the register of shareholders showed during the autumn 2020 that Nordea Funds was no lo

185、nger among the four largest shareholders,which meant that Nordeas representative Erik Durhan,who had been elected to the committee at the aGm on 7 may 2020,left h&ms nomination committee in autumn 2020.Inaccordance with the principles for the nomination committee,anew member was appointed:anders Osc

186、arsson of amF and amF fonder,which is now one of the four largest shareholders in h&m according to the register of shareholders.In autumn 2020 the nomination committee thus consisted of:Karl-Johan Persson,chairman of the board Stefan Persson,Ramsbury Invest aB Lottie Tham Jan andersson,Swedbank Robu

187、r fonder anders Oscarsson,amF and amF fonderThe nomination committee meets the requirements of the Code regard-ing the independence of members.Stefan Persson is the nomination committees chairman.until the 2020 aGm,this deviated from section 2.4 of the Swedish Corporate Governance Code since Stefan

188、Persson was also chairman of the board.Since Stefan Persson did not stand for re-elec-tion as chairman of the board at the 2020 aGm and Karl-Johan Persson was elected as the new chairman of the board,there is no longer this deviation from the Code.The 2020 aGm resolved that unless the mem-bers of th

189、e nomination committee agree otherwise,the chairman of the nomination committee shall be the member representing the largest shareholder.The nomination committee has found no reason to decide otherwise.The nomination committee was unanimous that in view of h&ms ownership structure,Stefan Persson in

190、his capacity as principal shareholder is the natural choice to chair h&ms nomination committee.24CORPORaTE GOvERNaNCE REPORT 2020who are independent of the company and its management must also beindependent of the companys major shareholders.The chairman of h&ms auditing committee,like all the other

191、 members ofthe committee,is independent of the company and its management.Two of the three members are also independent of the companys major shareholders.There is nothing in the Code stating that the chairman of the committee must be independent of major shareholders.Work of the nomination committe

192、e in preparation for the 2021 AGMBetween the 2020 aGm and the end of the financial year the nomination committee held two meetings at which minutes were taken and has also been in contact at other times.In autumn 2020 the nomination commit-tee began its work,starting with information from the chairm

193、an of the board concerning how well the work of the board had functioned during the year.The board functioned well over the course of the year and the information from the chairman of the board,along with interviews con-ducted with the aGm-elected board members,provides a basis for the nomination co

194、mmittees work on its proposal to the 2021 annual general meeting regarding the composition of the board.a new accounting firm is to be appointed at the 2021 aGm.The chairman of the auditing com-mittee gave an account to the nomination committee of how the selec-tion process for a new accounting firm

195、 has taken place and which accounting firm the board recommends.The nomination committee thus discusses the size of the board,its composition in terms of expertise and experience,among other things,the election of a chairman of the board and of a chairman for the aGm,fees for board members,principle

196、s for the nomination committee and the election of auditors.No fees were paid to the nomination committees chairman or to any other member of the nomination committee.The nom-ination committees work in preparation for the next aGm is not yet com-plete and more information will be presented before an

197、d at the 2021 aGm.3.AUDITORSThe auditors,who are independent and appointed by the shareholders at the AGM,scrutinise H&Ms annual report,consolidated financial state-ments,accounts,sustainability report and corporate governance report,and examine whether these have been prepared in accordance with cu

198、r-rent laws and recommendations.The auditors also scrutinise the man-agement of H&M by the board and CEO,and review compliance with the guidelines on remuneration to senior executives adopted by the AGM.at the 2020 aGm the accounting firm Ernst&young aB was elected as auditor of h&m for a one-year p

199、eriod of office,i.e.until the close of the 2021 aGm.authorised public accountant andreas Troberg from Ernst&young holds the main responsibility for the audit.as previously,the 2020 aGm resolved that the auditors fees should be paid based on invoices submitted and approved.The fees invoiced by the au

200、ditors over the past two financial years are reported in note 10 of the annual report for 2020.Ernst&young aB(Ey)is a member of a global network used for audit-ingassignments for most of the groups companies and meets h&ms requirements with respect to competence and geographical coverage.The auditor

201、s independent status is guaranteed partly by legislation and professional ethics rules,partly by the accounting firms internal guide-lines and partly by the fact that non-auditing assignments must be approved in advance by the auditing committee.andreas Troberg conducts audit-ing assignments for hex

202、agon and Sectra,among others.The auditors attend all meetings of the auditing committee and,as inprevious years,the board meeting held in January 2020 was also attended by sa Lundvall from Ey,who previously held the main respon-sibility forthe audit,and andreas Troberg,in order to notify the board o

203、f the scope,focus,significant considerations and conclusions of the audit of the 2018/2019 financial year.In addition to this involvement,the audi-Work of the nomination committee in preparation for the 2020 AGM including description of diversity policy for the board of directorsafter more than 20 y

204、ears as chairman of the board of h&m,at the end of January 2020 Stefan Persson gave notice that he would not be standing for re-election as chairman of the board at the spring aGm and the nomi-nation committee therefore unanimously resolved to propose Karl-Johan Persson,former CEO of h&m for more th

205、an 10 years,as the new chair-man of the board.In addition,the nomination committee proposed to the 2020 aGm that all the current board members except Stefan Persson be re-elected.The nomination committees proposal to the 2020 aGm for the composition of the board was therefore as follows:re-election

206、of Stina Bergfors,Anders Dahlvig,Danica Kragic Jensfelt,Lena Patriksson Keller,Christian Sievert,Erica Wiking hger and Niklas Zennstrm,and election of Karl-Johan Persson as a new member.as a basis for its work analysing the composition of the board,the nomination committee studied the report by the

207、chairman of the board on the work of the board of directors and also conducted interviews in autumn 2019 with board members elected by the annual general meet-ing.Over the years the nomination committee has also met previously with CEO Karl-Johan Persson,and did so again before submitting its propos

208、al for the composition of the board to the 2020 aGm.The nomination committee judged that the proposed composition ofthe board complied well with section 4.1 of the Swedish Corporate Governance Code,which the nomination committee has applied as its diversity policy.The policy aims to ensure that the

209、proposed board exhibits diversity and breadth of qualifications,experience and back-ground,as well as gender balance.The nomination committee aims for gender balance and h&ms board has had a good gender balance for many years.The board members proposed,and subsequently elected,consisted of four wome

210、n and four men.The board thus achieves the ambition communicated by the Swedish Corporate Governance Board,which wants owners to speed up developments towards a share of around 40 percent for the less well represented gender on the boards ofmajor listed companies by 2020.To achieve continued gender

211、balance,h&ms nomination committee discusses this each year and identifies future board candidates with relevant backgrounds and experience on a continuous basis.It was felt that the proposed composition of the board more than satisfies the requirements made of expertise and experience,taking into ac

212、count thecompanys operations and future development.The proposed com-position was also considered to meet the applicable requirements well as regards the independence of board members,their stock market experience and their expertise in accounting and auditing.The Swedish Corporate Governance Code s

213、ets no time period after which a board member is considered to be no longer independent.In its proposal to the aGm the nomination committee carefully reviews each board members expertise,experience,contribution to the work of the board over the past year,potential conflicts of interest etc.To decide

214、 whether a member is independent,an overall assessment is to be made of all circumstances that might cause the members independence of the company and its management to be questioned.In rule 4.4 the Code states at least seven different circumstances that are to be considered here.at least two of the

215、 board members who are independent of the company and itsmanagement must also be independent of the com-panys major shareholders.To decide whether a member is independent,the extent of the board members direct and indirect relationships with the major shareholder is to be included in the assessment.

216、a board member who is employed by or is a board member in a company that is a major shareholder is not to be considered independent.as regards the composition of the auditing committee,section 7.2 of the Code states that the majority of the committees members are to be independent of the company and

217、 its management.at least one of the board members 25CORPORaTE GOvERNaNCE REPORT 2020on financial reporting,investments and financing.The order of proce-dure,which also includes the procedure for the auditing committee,is updated as needed but is established at least once a year.Composition of H&Ms b

218、oard and independence of its members The board members are elected by the shareholders at the annual gen-eral meeting for the period up until the next aGm.Since the 2020 aGm the board has consisted of eight ordinary mem-bers elected by the aGm,with no deputies,as well as two employee rep-resentative

219、s and two deputies for these positions.The board is made up of eight women and four men.Only the employee representatives and their deputies are employed by the company.Since the 2020 aGm the board has comprised the following members elected by the general meeting:Karl-Johan Persson(chairman),Stina

220、Bergfors,anders Dahlvig,Danica Kragic Jensfelt,Lena Patriksson Keller,Christian Sievert,Erica Wiking hger and Niklas Zennstrm.Ingrid Godin and alexandra Rosen-qvist are the regular employee representatives,with helena Isberg and margareta Welinder as their deputies.For more facts about h&ms board me

221、mbers,see pages 3233.The members are required to devote the time and attention that their position on the board of h&m demands.New board members receive intro-ductory training that includes meetings with the heads of various functions.tor meets regularly with the chairman of the board,the auditing c

222、ommit-tees chairman and other members,the executive management and other keyindividuals.The auditor also takes part in the aGm,reporting the conclusions drawn from the audit.alongside its mandate as elected auditor,Ey has also carried out related tasks such as verification of the sustainability repo

223、rt.In addition,Ey has assisted with other consulting services,primarily tax advice.Ey has internal processes to ensure its independence before these tasks are begun.The auditing committee also has a process for approving non-auditing services in advance,before such assignments are begun.The auditing

224、 committee evaluates the auditor annually to gain assurance that the auditors objectivity and independence cannot be questioned.4.BOARD OF DIRECTORSThe task of the board of directors is to manage H&Ms affairs in the inter-ests of the company and all its shareholders.This means that the board has ove

225、rall responsibility for H&Ms administration,taking a long-term sustainable approach with a focus on the customer offering and growth.In addition to laws and recommendations,h&ms board work is regulated by the boards order of procedure which contains rules on the distribu-tion of work between the boa

226、rd,its committees and the CEO as well as COMPOSITION OF THE BOARD AND ATTENDANCE IN 2020NAMEYEAR ELECTEDINDEPENDENT 1)INDEPENDENT 2)FEES(SEK)3)BOARDMEETINGS 4)AUDITINGCOMMITTEESHARE-HOLDINGSHARES HELD BY RELATED PARTIESStefan Persson5)chairman1979No No1,700,0007/7194,400,000 6)587,971,466 7)Karl-Joh

227、an Persson5)chairman2020yesNo4/412,136,289Shareholder in Ramsbury Invest aBStina Bergfors2016yesyes650,00011/111,0008,000 and 6,000 8)Anders Dahlvig2010yesyes825,00011/115/517,510Danica Kragic Jensfelt2019yesyes11/112,500120Lena Patriksson Keller 2014yesyes650,00011/111,200 and 9,450 9)Christian Sie

228、vert2010yesNo10)875,00011/115/581,00019,000 and 2,400 11)Erica Wiking hger 2016yesyes825,00011/115/5750 12)Niklas Zennstrm 2014yesyes650,00011/1172,700Ingrid Godin employee rep.201211/1160alexandra Rosenqvist employee rep.201511/11helena Isberg deputy employee rep.201911/11margareta Welinder deputy

229、employee rep.200711/111)Independent of the company and company management in accordance with the Swedish Corporate Governance Code.2)Independent of major shareholders in the company in accordance with the Swedish Corporate Governance Code.3)Fees as resolved at the 2019 annual general meeting.This me

230、ans that the fees related to the period until the next aGm,i.e.for the period 7 may 2019 to 7 may 2020.The amounts were paid out after the 2020 aGm.4)attendance via technology is equated with attendance inperson.5)Stefan Persson did not stand for re-election as chairman of the board at the 2020 aGm.

231、In accordance with the nomination committees unanimous proposal,at this aGm Karl-Johan Persson was elected as a new board member and as the new chairman of the board.6)Class a shares owned through Ramsbury Invest aB.7)Class B shares owned through Ramsbury Invest aB as at 30 November 2020.8)8,000 sha

232、res held through Stina Bergforss company SCEBE holding aB and 6,000 shares held by spouse.9)1,200 shares owned through Lena Patriksson Kellers private company verdani holding aB.9,450 shares held by spouse and children.10)Christian Sievert is not considered independent of Ramsbury Invest aB since Ra

233、msbury InvestaB is a major shareholder in a company of which Christian Sievert is CEO.11)Shares held by related parties:19,000 shares held through Christian Sieverts company Whitechris Industri aB and 2,400 shares held by spouse and children.Supplementary disclosure:in addition to Christian Sieverts

234、 shareholding shown above,Christian Sievert holds9,000 h&m shares via a pension plan.12)750 shares owned through Erica Wiking hgers company Erica Wiking hger advokataktiebolag.There are no outstanding share-or share price-related incentive programmes for the board of directors.26CORPORaTE GOvERNaNCE

235、 REPORT 2020paid.During the year the board also took several financing decisions,such as taking out new credit facilities with terms ranging from one to five years.The purpose of this was to further secure h&ms liquidity buffer and financial flexibility.a decision was also taken to expand h&ms sourc

236、es of financing by establishing a European commercial paper pro-gramme and a medium-term note(EmTN)programme;the latter to allow bonds to be issued in various currencies,but mainly inEuR and SEK.The pandemic also meant that the investment plan for 2020 was revised during the year.Since the pandemic

237、has hastened the digital shift within the industry,the companys transformation work was accelerated with more digital initiatives,increased store consolidation and increasingly integrated channels.The Covid-19 situation has also highlighted the importance of sustainability.In parallel with managing

238、the Covid-19 situation the com-pany therefore continued to work according to its business plan,which aims to deliver long-term sustainable and profitable growth.Read more under the heading Direction in the administration report contained in the 2020 annual report.at its November 2020 meeting,which i

239、s always an extended meeting and this time was a full-day conference held entirely digitally,the board examined this business plan carefully with those responsible inh&ms executive management team.among other things,discussions covered h&ms goals and business plan for each brand as well as the group

240、s supply chain,omni-sales and store portfolio,transformation,leadership,culture etc.Sustainability is integrated into all these components.Examples of functions/brands that presented their work to the board during the year include Business Tech,Expansion,Sustainability,Strategy&Transforma-tion,Suppl

241、y Chain,various parts of the h&mbrand and Portfolio Brands.h&ms integrated sustainability work is very important and is discussed regularly by the board.Every six months,the head of sustainability pro-vides an update on the groups sustainability work with reference to key indicators and targets,such

242、 as compliance with the Sustainability Commit-ment,sustainable materials,climate impact,anti-corruption,etc.At each board meeting the chairman of the auditing committee reports to the board on what the auditing committee discussed at its latest meeting.This primarily concerns areas such as accountin

243、g,IFRS 16 effects,auditing,tax,customs duties,internal control,risk and various new regulations,legislation and directives such as the GDPR,Task Force on Climate-related Financial Disclosures(TCFD)etc.During the year the board was kept updated on the privacy breach in Nuremberg,Germany,and informati

244、on on this was provided in conjunction with the nine-month report.The overall risk assessment,including the very largest risks in both the short and the long term,is then also discussed at subsequent board meetings.The chairman of the auditing committee provided the board with ongoing updates on the

245、 process of appointing a new account-ing firm and at the November meeting the board decided which firm would be presented to the nomination committee,which proposes a new accounting firm for the 2021 aGm to decide on.at four of the years meetings the board goes through quarterly reports before they

246、are pub-lished and at the January meeting the board discusses the annual report,with the auditor also reporting on the years audit.As every year,during 2020 the board took various decisions such as decisions on investment plans,on the dividend to be proposed to the aGm,on the proposed guidelines for

247、 remuneration of senior executives and decisions concerning the financial reports.At the board meeting held in January 2020 the board of directors decided that h&ms growth target to increase sales in local currencies by 1015 percent per year with continued high profitability remains a long-term targ

248、et.Since h&m does not have a separate review function(internal audit function)for work on internal control,but has instead established its own model for managing the companys risk and internal control(see pages 3031),once a year the board assesses the need for a separate internal The composition of

249、h&ms board during the year met the independence requirements set out in sections 4.4 and 4.5 of the Code.This means that the majority of the board members elected by the general meeting are independent of the company and company management.The majority of the board members are also independent of th

250、e companys major shareholders.The Swedish Corporate Governance Code sets no limit on how long an individual can remain a board member.Number of board meetingsDuring the financial year h&m normally holds six regular board meetings,one of which is the statutory board meeting.Extraordinary board meet-i

251、ngs are held when the need arises.The CEO attends all board meetings,except on the occasion of the board meeting when the CEOs terms of employment are being discussed.The CEO reports to the board on the operational work within the group and ensures that the board is given relevant and objective info

252、rmation on which to base its decisions.The CFO and chief accountant also attend the board meetings in order to provide financial information.The board is assisted by a secre-tary who is not a member of the board.During the year 11 board meetings were held.This is significantly more than usual,but at

253、 the same time perfectly natural since 2020 was an unusual year with a change of CEO and the Covid-19 pandemic,which gave rise to more board meetings.as in previous years,attendance lev-els at the board meetings were very high.For details of meeting attend-ance by each member see the table on page 2

254、6.Work of the board in 2020h&ms board meetings are generally structured as shown below.This is supplemented by one or more business presentations,e.g.by heads of functions,brand managers or country managers.The following areas are usually reviewed at each board meeting:minutes of the previous meetin

255、g CEOs status report and report by CFO Strategic matters Feedback from latest auditing committee meeting Financial reporting,such as interim report and annual report Any other businessOn 30 January 2020 the board of directors decided to appoint Helena helmersson as the new CEO of h&m.The background

256、to the decision is that after more than 20 years as chairman of the board,Stefan Persson had decided not to stand for re-election at the spring aGm on 7 may 2020.In the light of Stefan Perssons decision,Karl-Johan Persson decided to leave his role as CEO.at the aGm on 7 may Karl-Johan Persson was el

257、ected as the new chairman of the board.Before the pandemic struck,the company had been performing strongly as a result of many years of long-term investments to create the best customer offering and meet the digital shift in the industry.The effects of the pandemic,with up to around 80 percent of th

258、e groups stores closed during the spring,naturally impacted the work of the board during the year with more board meetings than normal and regular updates on the situation.CEO helena helmersson provided the board with information,including concerning the rapid and decisive actions taken to manage th

259、e Covid-19 situation with the safety of employees and customers being the highest priority.all parts of the business were scrutinised,including product purchasing,investments,rents,staffing,financing etc.,in order to manage the pandemics negativeeffects on the business.In view of the drastic changes

260、 in market conditions as a result of the pandemic and the uncertainty this brought,in march the board of directors decided to withdraw its earlier dividend proposal of SEK 9.75 per share and instead propose to the 2020 aGm that no dividend be 27CORPORaTE GOvERNaNCE REPORT 2020During the year the aud

261、iting committee addressed the following matters,among others:The companys financial reporting,including interim reports,the corporate governance report and annual report.Compliance with the groups internal control and risk management processes and review of the overall risk analysis for the group bo

262、th financial risk and operational risk with well-defined action plans to minimise risk.In addition,the following functions/departments provided information on their work:Security,Expansion/Construction,accounting/Tax,Logistics,IT(later merged into Business Tech)and Data Privacy.The transfer pricing

263、model,tax matters and matters relating to cus-toms.a status update regarding tax matters is given at each meeting,which is partly related to the OECDs BEPS project that deals with,among other things,how and where profits in multinational companies are to be taxed.Follow-up of the new IFRS rules was

264、also reviewed in respect of IFRS 16 Leases.Planning and procurement process for new accounting firm.Follow-up in the area of privacy(including GDPR).Follow-up of human rights policy.Ey informed the committee of the audit plan,the scope of the audit and the results of scrutiny carried out.In addition

265、,Ey provided information on current regulatory developments in the areas of accounting and auditing.Review of the auditors independence and impartiality.The auditing committee finds that it is clear which assignments Ey takes on in addi-tion to auditing and sees no reason to question the accounting

266、firms impartiality.a process has been established for non-auditing services to be approved in advance.h&m also uses consulting services from other accounting firms and tax advisors.6.EMPLOYEE ORGANISATIONSunder Swedish law,the employees have the right to appoint employee representatives with deputie

267、s to the companys board.These are appointed via employee organisations(trade unions).The trade unions appoint two board members and two deputies to the board of h&m.7.CEOThe CEO is appointed by the board of directors and is responsible for the daily management of the company as directed by the board

268、.This means that,among other things,the CEO must focus in particular on recruitment of senior executives,buying and logistics matters,the cus-tomer offering,pricing strategy,sales and profitability,sustainability matters,marketing,expansion,development of the store network and ofonline sales,and dig

269、ital development.The CEO reports to the board on the groups development and makes the necessary preparations fortaking decisions on investments,expansion,etc.The role of CEO includes contact with the financial market,the media and the authorities.helena helmersson,born in 1973,has been CEO since 30

270、January 2020.In 1997 helena helmersson joined h&m as a controller in the buy-ing department,after which she worked in various roles in buying and production.helena helmersson was head of sustainability for five years and subsequently head of production based in hong Kong.For just over a year prior t

271、o becoming CEO she worked as COO(chief operating officer)with responsibility for expansion,logistics,production,IT and advanced Data analytics/aI,as well as Insights and analytics.helena helmersson holds 870 shares in h&m.She also holds 300,000 call options issued by Ramsbury Invest aB,each option p

272、roviding the right to buy one class B share in h&m during the 12 months following a three-year period from the agreement date of 7 October 2020.For the part of the financial year running from 1 December 2019 to 30January 2020 Karl-Johan Persson was CEO.his shareholdings are audit function.This year

273、the board again reached the conclusion that the present model for monitoring internal control is satisfactory.ahead of the annual general meeting the board had assessed how well the guidelines for remuneration of senior executives that were adopted at the 2019 aGm were being applied.The results of t

274、his assess-ment were published on the website in good time before the 2020 aGm.h&m has no remuneration committee,since the board of directors deems it more appropriate for the entire board to carry out the tasks of aremuneration committee as is entirely in accordance with requirement 9.2 of the Code

275、.It is the board that prepares the proposed guidelines for remuneration to senior executives that are presented at the aGms,and itis the board that decides on the CEOs salary in accordance with the guidelines adopted at the last aGm.The board continually assesses the CEOs work and once a year discus

276、ses this matter separately in conjunc-tion with setting the CEOs remuneration for the coming year.No mem-ber of executive management is present when this is discussed.The board continually evaluates its work,and during the year the newly appointed chairman of the board carried out a more in-depth ev

277、aluation to obtain his own idea of the work of the board and its members wishes.The evaluation covers working methods and the working climate,as well as the main focus of the boards work.It also focuses on access to and the need for specialist expertise within the board.The evaluation is used as a t

278、ool for developing the boards work and also forms a basis for the work of the nomination committee.5.AUDITING COMMITTEEThe auditing committee monitors the companys financial reporting,which among other things involves monitoring the effectiveness of the companys internal control and risk management.

279、Its work includes han-dling auditing topics and financial reports published by the company.The auditors attend the meetings of the auditing committee to report on their scrutiny of the groups annual report and financial statements,including the consolidated financial statements.The auditing committe

280、e also reviews and monitors the impartiality andindependence of the auditor,and regulates which assignments the accounting firm may conduct for h&m in addition to the audit.The audit-ing committee annually receives a written assurance of independence from the auditor stating which services the accou

281、nting firm has provided to h&m during the financial year in addition to the audit.The auditing committee also assists the nomination committee with any proposals tothe aGm concerning the election of auditors.The auditing committee is made up of three board members,two ofwhom have expertise in accoun

282、ting or auditing while the third has expertise in commercial law.all the members are independent of the company and its management.The majority of the members are also independent of the companys major shareholders.The auditing com-mittee is appointed annually by the board of directors at the statut

283、ory board meeting held in conjunction with the aGm.Since the statutory meeting held in conjunction with the 2020 aGm,the auditing committee has consisted of chairman Christian Sievert and members Anders Dahlvig and Erica Wiking hger.The committee held five meetings at which minutes were taken during

284、 the 2019/2020 financial year.Ey attended the minuted auditing committee meetings to provide debriefs on the auditing work.The meetings were also attended by,among others,the CFO Jyrki Tervonen up to and including meeting 2 of 5 and adam Karlsson from and including meeting 2 of 5 and chief accountan

285、t anders Jonasson.The committees meetings are minuted and the min-utes are then distributed to all board members.During the year members of the auditing committee also took part in several meetings with the various accounting firms that were candidates to become h&ms new auditor;these meetings took

286、place ahead of and during the procurement process.28CORPORaTE GOvERNaNCE REPORT 2020The H&M groups matrix organisationauDITING COmmITTEECFOBOaRD OF DIRECTORSCEOBuSINESS aREaSGROuP FuNCTIONSBuSINESS TEChCOmmuNICaTIONSEXPaNSIONhumaN RESOuRCESSuPPLy ChaIN(includes Production and Logistics)SuSTaINaBILIT

287、yOThER GROuP FuNCTIONSFINaNCE&aCCOuNTINGCONTROLLINGLEGALSECuRITyOThER GROuP FuNCTIONSBuSINESS uNITSSALES REGIONSh&m BrandPortfolio BrandsBusiness ventures29CORPORaTE GOvERNaNCE REPORT 2020above all the Code of Ethics;an ethical policy that permeates the entire company,since it describes the way in w

288、hich the employees should act within the company and in business relations with suppliers.For a number of years the group has had a document called“The h&m Way”,which briefly describes and brings together what the company stands for and provides a basis for how employees are to act in relation to ea

289、ch other and the outside world.It also refers to the groups main policies.h&ms internal control structure is based on:The division of work between the board of directors,the auditing committee and the CEO,which is clearly described in the boards for-mal order of procedure.The executive management te

290、am and the auditing committee report regularly to the board based on estab-lishedroutines.The companys organisation and way of carrying on business,in which roles and the division of responsibility are clearly defined.values and guidelines,as well as policies and manuals;of these,the Code of Ethics,

291、the financial policy,the insider policy,the communica-tions policy and the store instructions are examples of important overall policies.awareness among the employees of the importance of maintaining effective control over financial reporting.Control activities,checks and balances,analysis,reporting

292、.h&m has a matrix organisation(see page 29),which means that those responsible for the joint group functions are responsible for the efficiency of work within their function at each brand(the horizontal arrows in the matrix organisation).Each brand has its own organisation and managing director,and

293、all the brands have their own local sales organisations.Internal control is evaluated annually by the relevant group function,which checks that its function in each country is working according to the prescribed policies and guidelines.The stores are in turn checked by internal store auditors.all th

294、e companies within h&m have the same structure and account-ing system with the same chart of accounts.This simplifies the creation of appropriate routines and control systems,which in turn facilitates internal control and comparisons between the various companies.There are detailed instructions for

295、the store staff that control daily work in the stores.many other guidelines and manuals are also available within the group.In most cases these are drawn up in the central departments at the head office in Stockholm and then communicated to the respective departments in the country offices.Each cent

296、ral department regularly reviews its guidelines and manuals to see which need updating and whether new guidelines need to be developed.RISK ASSESSMENTh&m carries out regular risk analysis for both operational and financial risks.at the end of each financial year the analysis is updated in respect of

297、 the main operational risks in the short and long term and also the risks within financial reporting.This is carried out in two group-wide documents,based on the probability and impact of each risk.In 2019 a climate risk analysis was conducted according to the guidelines issued by the Task Force on

298、Climate-related Financial Disclosures(TCFD).No updated anal-ysis was carried out in 2020,but the results of the TCFD analysis per-formed in 2019 remain fully relevant.As in previous years,at the end of 2020 each central function re-viewed its main risks,assessed these and identified the systems,meth

299、-ods and controls that are in place to minimise any impact of the risks.This information was compiled at group level,after which the functions together prepared the general risk analysis mentioned above with a view to getting an overall picture of the groups main risks and thereby shed-ding light on

300、 the mitigation plans that are in place to manage these risks.The risk analysis of operational risks and for the risks within financial stated in the table showing composition of the board and attendance onpage 26.8,9.ORGANISATION AND MANAGEMENT h&m has a multi-brand matrix organisation with well-de

301、fined brands:h&m,COS,&Other Stories,monki,Weekday,h&m hOmE*,aRKET and afound.Each brand has its own organisation and managing director,and all the brands have their own local sales organisations.Centrally,there are also a number of group functions that support each brand in order tocapitalise on the

302、 benefits within these shared areas,so that each brand and country works purposefully according to central policies and guidelines.The CEO is responsible for day-to-day management of the group and appoints the members of the executive management team,which is made up of the CEO plus 14 others.The ex

303、ecutive management team is made up of six women and nine men,and comprises the CEO,the CFO,the two people with responsibility for the h&m brand,the person with responsibility for Portfolio Brands(which include COS,&Other Stories,monki,Weekday and aRKET),the person with respon-sibility for Business v

304、entures(which include afound and Treadler),the two people with responsibility for Business Tech,and the heads of the following group functions:Expansion,Strategy&Transformation,human Resources,Sustainability,Supply Chain,Communications and The Labo-ratory.Those responsible for other group functions

305、are appointed by the CFO.The matrix organisation provides a good combination of central andlocal perspectives on leadership and entrepreneurship.The regional and local sales organisations are responsible for daily retail operations in their region and country,giving them a collective responsibility

306、for all the regional and local support functions whose work is based on instructions from the central group functions.*h&m hOmE is included in the h&m brands organisation.Internal controlThe board of directors is responsible for the companys internal control,the overall aim of which is to safeguard

307、the companys assets and thereby its shareholders investment.Internal control and risk management are part of the boards and the managements control and follow-up respon-sibilities,the purpose of which is to ensure that the business is managed in the most appropriate and effective manner possible,to

308、ensure reliable financial reporting and to ensure compliance with applicable laws and regulations.This description of h&ms internal control and risk manage-ment for financial reporting has been prepared in accordance with chapter 6 section 6 of the Swedish annual accounts act and section 7.4 of the

309、Swedish Corporate Governance Code.h&m uses the COSO framework as a basis for internal control over financial reporting.The COSO framework,which is issued by the Com-mittee of Sponsoring Organizations of the Treadway Commission,is made up of the following five components:control environment,risk asse

310、ssment,control activities,information and communication,and monitoring.CONTROL ENVIRONMENTThe control environment forms the basis of internal control,because it includes the culture that the board and management communicate and by which they work.The control environment is made up primarily of ethic

311、al values and integrity,expertise,management philosophy,organisa-tional structure,responsibility and authority,policies and guidelines,as well as routines.Of particular importance is that management documents such as internal policies,guidelines and manuals exist in significant areas and that these

312、provide the employees with solid guidance.Within h&m there exists 30CORPORaTE GOvERNaNCE REPORT 2020tive feedback to the central function regarding where there is room for improvement at central level.an important part of the internal control work is the feedback to the country management(country ma

313、nager andcountry controller)which the central function provides based on theresults of the evaluation in each country.This is done with a view to transparency and to ensuring that the countries adopt best practice.Within the production organisation there is a firm and regular control and monitoring

314、process for the internal routines that are brought together in the Routine handbook for Production.These routines are about how h&m ensures that the company does business in an ethical and transpar-ent way.most of these routines are monitored on a monthly basis at regional level and every other mont

315、h at global level.Internal store auditors perform annual checks at the stores aimed at determining the strengths and weaknesses of the stores and how any shortcomings can be corrected.Follow-up and feedback with respect to any non-compliances found during the assessment of internal control constitut

316、e a central part of internal control work.The board of directors and the auditing committee continuously evaluate the information provided by the executive management team,including information on internal control.The auditing committees task of monitoring the efficiency of internal control by the m

317、anagement team is of particular interest to the board.This work includes checking that steps are taken with respect to any shortcomings detected and sugges-tions made during the assessment by the central departments and inter-nal store auditors,as well as by external auditors.The work on internal co

318、ntrol maintains awareness of the importance of effective internal con-trol within the group and ensures that continuous improvement is made.INTERNAL AUDITIn accordance with section 7.4 of the Swedish Corporate Governance Code,during the year the board assessed the need for a specific internal audit

319、department.The board concluded that h&ms present model of monitoring internal control is the most appropriate for the company.Inthe boards opinion this model,which the central departments such asaccounting,Expansion/Construction,Shop Fitting,Business Tech,Communications,Security,Logistics,Supply Cha

320、in etc.apply in the sub-sidiaries,as well asthe work carried out by internal store auditors,are well in line with the work performed in other companies by an internal audit department.Itwas therefore deemed that there was no need for an internal audit department.The issue of a specific internal audi

321、t department will be reviewed again in 2021.Stockholm,February 2021The Board of DirectorsMore information on H&Ms corporate governance work can be found in the section on corporate governance at .The next two pages contain information about the board members.reporting were then dealt with in the aud

322、iting committee and thereafter discussed by the board.For a description of h&ms operational risks,see the administration report on pages 3839.For risks within financial reporting,see the administration report on page 39 and note 2,Financial risks,on pages 6566 of the annual report for 2020.To limit

323、the risks there are appropriate policies and guidelines as well as processes and controls within the business.CONTROL ACTIVITIESThere are a number of control activities built into every process to ensure that the business is run effectively and that financial reporting provides atrue picture at each

324、 reporting date.The control activities,which aim to prevent,find and correct inaccuracies and non-compliance,are at all levels and in all parts of the organisation.Within h&m the control activities include effective control and analysis of sales statistics,account recon-ciliation,monthly accounts an

325、d financial reports.During the year ongoing internal control of the Business Tech depart-ment is also carried out,to ensure that the work and processes are being performed in accordance with guidelines set.This also includes systems relating to financial reporting.These financial systems are also re

326、viewed by an external party in cooperation with those responsible for systems and system areas within h&m.INFORMATION AND COMMUNICATIONPolicies and guidelines are of particular importance for accurate accounting,reporting and provision of information,and also define the control activities to be carr

327、ied out.h&ms policies and guidelines are updated on an ongoing basis.This takes place primarily within each central function and is communicated to the sales countries by email and via the intranet,as well as at meetings.h&m has a communications policy providing guidelines for communi-cation with ex

328、ternal parties.The purpose of the policy is to ensure that all disclosure obligations are met and that the information provided is accurate and complete.Financial communication is provided via:Annual report Interim reports,the full-year report and quarterly sales reports Press releases on events and

329、 circumstances that may impact the share price h&ms website MONITORINGIn 2020 the group functions/central departments assessed internal control within their respective functions in the sales countries based partly on general issues and partly on department-specific issues,usingthe COSO model.The Cov

330、id-19 pandemic had a certain impact oninternal control during the year.Some functions were hard pressed dealing with the consequences of the pandemic,and therefore tem-porarily reduced their internal control.all the functions that usually travelto countries to carry out internal control instead impl

331、emented control activities remotely.The work resulted in a plan of action for each central department working on internal control,defining the areas that ought to be improved in order to further strengthen internal control not only in respect of each country,but also for the central function.The fun

332、ctions also followed up on the assessments made in the previous year.The way in which h&m assesses internal control is considered to be firmly established within the organisation.It is an aid and an instrument that the central functions can use to ensure that their respective departments in the sale

333、s countries are working in a uniform and desirable way.The assessment of internal control also allows each sales country to provide valuable and construc-31CORPORaTE GOvERNaNCE REPORT 2020The board of directorsPrimary occupationChairman of the board of h&m.Other significant board assignmentsmember of the boards of Ramsbury Invest aB,the GoodCause Founda-tion and the h&m Foundation.EducationBA in b