H&M has decided to stop operating in Myanmar following an increase in allegations of labor abuses at garment factories in the country.
The world's second largest fashion retailer told CNN on Thursday that it had been "monitoring the latest developments in Myanmar very closely and we see increased challenges to conduct our operations according to our standards and requirements."
"After careful consideration we have now taken the decision to gradually phase out our operations in Myanmar," said a company spokesperson.
The decision by the Swedish clothing retailer could affect tens of thousands of workers in Myanmar, which was rocked by a military coup in February 2021.
As of March, H&M sourced from 41 factories with nearly 42,000 workers in the country, according to company figures. The chain says it doesn't directly own any factories, instead outsourcing production to independent suppliers.
Its withdrawal comes after new allegations published by the Business and Human Rights Resource Centre (BHRRC), a workers' advocacy group.
The organization has been tracking cases of alleged labor and human rights abuses against garment workers in the country for years. It said Wednesday it had documented 212 alleged cases affecting at least 108,000 workers between February 2021 to February 2023.
Since the military seized power two years ago, Myanmar's garment sector "has seen substantial job losses and underemployment, alongside a proliferation of labor rights abuse against its largely female workforce," says the BHRRC.
According to the group, the workers affected "are employed at 124 factories producing for at least 47 named global fashion brands and retailers," including Zara owner Inditex, Marks & Spencer, Primark and H&M.
The companies have all issued statements on Myanmar recently, saying they are working to leave the country out of concern for workers on the ground.
The BHRRC said it had found that wage reduction and wage theft were big issues and were linked to more than half of the reported cases. Forced and "often unpaid" overtime were tied to 42% of cases, it said.
Additionally, "gender-based violence and harassment, including verbal, psychological and physical abuses, and pregnancy discrimination, is widespread," the nonprofit said in its report.
"[Our] tracker recorded multiple instances of women being threatened and unfairly dismissed for not meeting production targets," it said.
According to the BHRRC, the number of allegations has nearly tripled over the course of a year.
"Things are getting worse for garment workers — and quickly," the organization said.
H&M told CNN that "all the cases raised in the report by BHRRC are being followed-up and, where needed, remediated through our local team on the ground and in close cooperation with relevant stakeholders."
Shares of the company ticked down 1.1% in Stockholm on Thursday following news of its decision to stop operations.
Businesses leaving
The retailer joins other global businesses cutting ties with Myanmar, including Nestlé, TotalEnergies and Chevron.
Within the garment industry, Inditex, Marks & Spencer and Primark had already made the decision to stop their operations in Myanmar, according to BHRRC.
Their announcements came after a separate assessment from another nonprofit group, the Ethical Trading Initiative.
Last September, it released a scathing report that also found "evidence of pervasive forced labor," as well as "high rates of forced and excessive overtime combined with financial penalties for refusing work, high rates of harassment and abuse and workers paying for recruitment and jobs."
Those findings forced some retailers to immediately announce their departures.
In September, Primark said the report "makes for very difficult reading and shows there has been a significant deterioration in the situation in Myanmar."
"This poses significant challenges to our ability to ensure the standards we require to protect the safety and rights of the people who make our clothes and products," said the British fast fashion chain.
"In light of this, we believe our only option is to begin working towards a responsible exit from the country."
A month later, Marks & Spencer also said the assessment had shown it was "impossible" for its standards to be upheld.
"We do not tolerate any human rights abuses within any part of our supply chain and are now working towards a responsible exit from Myanmar," it said in a statement at the time.
Inditex confirmed to Reuters last month that it would stop sourcing from the country. The company did not immediately respond to a request for comment from CNN.
