Hennes & Mauritz (H&M), the world's second-biggest fashion retailer, believes there is no conflict between its mission to sell more budget clothes and a drive to improve the environment and working conditions at its suppliers.

"We want to make sustainable fashion more democratic," Helena Helmersson, H&M's head of sustainability, told Reuters.

"We don't aim for sustainability to be a luxury thing."

The Swedish company is one of the biggest buyers of garments from Bangladesh, where the collapse of the Rana Plaza factory last April killed more than 1,100 people, drawing global attention to the poor conditions in which many in Asia work.

H&M customers, many of them idealistic youngsters, are becoming more critical of the use of cheap labour, with the company sinking last year to second-to-last place in a perceived sustainability ranking in its biggest market Germany.

"What hurts H&M is an assumption that they must be exploiting their workers because they produce cheap clothes," said Joachim Schoepfer, head of corporate reputation for the Serviceplan agency, which conducts an annual survey on companies' image in Germany.

Low-cost production in places like Bangladesh and China has helped H&M build a global empire with more than 3,000 stores in 53 countries, and it faces growing competition from even cheaper rivals such as Britain's Primark and US chain Forever 21.

"There is a misconception that lower prices in the stores mean bad working conditions or less pay," said Helmersson, a 40-year-old Swede who has worked at H&M for 17 years.

H&M has been lobbying Bangladesh and Cambodia to raise the minimum wage and in November laid out a plan to pay a fair "living wage" to some 850,000 textile workers by 2018, saying governments were acting too slowly.

Helmersson said working more sustainably should also help long-term profitability, by, for example, cutting water use to grow cotton, improving energy efficiency or using fewer chemicals.

H&M, which did not source from Rana Plaza but buys about 80 percent of its stock from Asian suppliers, was the first company to sign a Europe-led pact to improve safety at Bangladesh garment factories after the collapse.

Helmersson said it had also been active on such issues before the disaster.

"It is not a coincidence this was not our suppliers since we have been working with fire and building safety for so many years," said Helmersson, who was a fashion buyer for H&M in Bangladesh before taking on the sustainability role in 2011.

"'Made in Bangladesh' is something that I'm proud of," she said. "Our presence in Bangladesh is coming with so much positive impact if you think about the alternative jobs for women in Bangladesh."

H&M, which employs 100 auditors to check on its 850 suppliers, is considering producing more clothing in sub-Saharan Africa and has already placed orders in Ethiopia and Kenya.

"We want to expand. It is not about moving capacity from Bangladesh or China," Helmersson said.

ECO-FRIENDLY

Helmersson said H&M's commitment to sustainability was helped by its Scandinavian roots, where environmental consciousness runs deep, and the large stake owned in the company by the Persson family that founded it in 1947.

But it is also driven by its customers, with company surveys showing that 47 percent were interested in more environmentally friendly products in 2013, up from 27 percent in 2012.

In contrast to the poor showing in the German survey, which is a subjective ranking by customers, Interbrand promoted the company to 42nd in its top 50 global "green" brands in 2013, up from 46 and ahead of rival Inditex's Zara chain on 48.

In the coming months, H&M is launching a denim collection made with cloth recycled from used garments returned to its stores and also a new "Conscious" range using bamboo, recycled polyester and organic cotton.

Already the world's biggest user of organic cotton, H&M has pledged to use only cotton from sustainable sources by 2020 and to phase out the use of toxic chemicals that environmentalists say can pollute rivers near factories. - Reuters