A Global Engine

for Growth
L ev i St r auss & Co.

The textile, apparel, and footwear industry

serves as a global engine for growth, generating
jobs for more than 60 million people, including
many women in emerging markets.

An IFC Manufacturing Case Study

“If your business strategy doesn’t include
sustainability, then it’s incomplete.”
—Michael Kobori, Vice President, Sustainability, Levi Strauss & Co.
The Right Thing
to Do
Levi Strauss & Co.
T he textile, apparel, and footwear industry is a global
engine for growth, generating jobs for more than
60 million people, including many women in emerging
As one of the world’s largest brand-name apparel
companies, Levi Strauss & Co., known as LS&Co., has
markets. But the sector can exact a heavy toll on the a significant impact on environmental and labor
environment. Both cotton growing and dyeing use large conditions around the world. Besides its 14,000-plus
amounts of water, while the production of synthetic fibers employees worldwide, it contracts out production of
its jeans, casual wear, and accessories to independent
such as polyester generates high levels of greenhouse
manufacturers in some 30 countries employing 300,000
gases. Globally, the textile industry accounts for up to
workers. Net revenues were $5.6 billion in fiscal 2018.
8 percent of greenhouse gas emissions and is a major LS&Co. has been a leader in promoting sustainable
source of industrial water pollution from the treatment manufacturing to reduce its carbon footprint and
and dyeing of textiles. A number of factors contribute to improve the lives of textile workers. Since 1991, the
these trends. The apparel supply chain consists of millions company has required all third-party contractors and
licensees to comply with a code of conduct based on
of small, medium, and large manufacturers, many of which
specific ethical, environmental, labor, and health
operate in countries with weak labor, environmental, and
standards, in line with ILO Conventions and the UN
safety regulations for manufacturing. At the same time, Declaration of Human Rights. It has adopted new
global brands and their producers are under intense technologies and production methods that limit
pressure to hold down costs, innovate products, and pollution, energy and water use, partnering with
deliver on tighter deadlines as consumers buy more IFC to help meet its ambitious global sustainability
goals. LS&Co. is seeking to achieve a 90 percent
clothes and faster fashion cycles compress production
reduction in greenhouse gas emissions and
and delivery times. The industry increasingly is also asked
100 percent use of renewable energy in its
to focus on environmental and social sustainability. owned-and-operated facilities by 2025. It
Many brands have responded, recognizing it as the right has also pledged to cut greenhouse gas
thing to do and as a good business opportunity. They are emissions across its entire global
voluntarily setting their own goals and targets on energy, supply chain by 40 percent and has
committed to cutting water
water, labor, and climate, and are acting to reduce the
use by 50 percent in areas
environmental impact of textile manufacturing and
where water shortages
to improve the livelihoods of workers–strategies that are frequent.
ultimately can save money and boost productivity.
 Investment & Advisory Impact
Manufacturing is a route for creating job opportunities and IFC and LS&Co. built a foundation where the two have partnered extensively
building more sophisticated value chains that can have a to help the company’s suppliers pivot to more sustainable production. This
positive impact on economic growth. In particular, low- latest partnership involves LS&Co.’s strategic suppliers in South and East
income countries are able to use textile manufacturing Asia, South America, and the Middle East. IFC will follow its Partnership
to grow their economies and improve people’s lives. for Cleaner Textile approach to identify water and energy savings and
Increasingly, manufacturers are looking not only at renewable energy solutions for designated LS&Co. suppliers. Suppliers
minimizing costs but also at the environmental and social that choose to implement identified improvements must pay for any new
impact of production and what can be done to improve equipment and technology themselves. Factories that participate are
sustainability. In several emerging markets, IFC works with expected to achieve savings in water and energy use, lowered consumption
local, regional, and multinational companies to develop and of grid and diesel electricity, and reduced water pollution. Depending on
implement approaches for reducing energy and water use measures implemented, they can recoup their investment costs within one
and for increasing use of renewable energy, steps that also to six years based on savings alone, while also reducing greenhouse gas
can lower operating costs. emissions and water use. The program can also introduce suppliers to new
technologies, such as the use of LS&Co.’s Water<Less technology, which
LS&Co. began working with IFC in 2013 through the Better
utilizes dramatically smaller amounts of energy and water to finish products.
Work program, which is an IFC partnership with the
International Labour Organization that seeks to improve
working conditions in the garment industry. The next
year, LS&Co. became the first to join IFC’s Global Trade
Supplier Finance program, which encourages suppliers to
improve their environmental and social practices by offering Next Steps
lower interest rates on short-term financing. LS&Co. also
participated in IFC’s Bangladesh Partnership for Cleaner
IFC and LS&Co. have worked together to develop new approaches to
Textile program, known as PaCT, which helps factories
encourage and support sustainable production and they expect that the
identify and implement cleaner and more resource-
results of this new agreement will lead to more cooperation for reducing
efficient production options. This engagement formed the
greenhouse gas emissions and water use. The 42 suppliers included in this
basis of a 2017 IFC pilot program with six LS&Co. suppliers
program account for a significant part of LS&Co.’s supply chain. The lessons
in Bangladesh, India, Sri Lanka, and Vietnam. IFC experts
learned from this effort will be used to help other suppliers in LS&Co.’s supply
advised the suppliers on energy-saving, cleaner production
chain improve sustainability in their manufacturing processes. The two sides
methods and cost-saving investments to reduce water
will publish their results and case studies so the information can serve as a
and energy use. Changes made by the factories led to a 19
model and an inspiration to other brands and suppliers.
percent drop in energy and water consumption and a $1.2
million reduction in total annual operating costs for the six Many leaders in the textile industry, along with IFC and LS&Co., are
suppliers.. Six more suppliers were included the following committed to sustainable manufacturing, guided by agreements such as
year, and in 2019, cooperation was expanded to cover 42 the United Nations Fashion Industry Charter for Climate Action, which aims
additional Levi suppliers in 10 countries. Under the new to achieve net-zero greenhouse gas emissions in manufacturers’ global
expanded program, IFC will work with the factories to supply chains by 2050. The “Fashion Pact” announced by France’s President
identify and implement water and energy savings and scale Emmanuel Macron in 2019, is bringing together the fashion industry to adopt
up use of renewable energy, helping LS&Co. meet its 2025 science-based targets in three areas: global warming, restoring biodiversity
science-based targets. and preserving the oceans through largely ending single-use plastics.
Greening the Footprint
INTERVIEW WITH

“
Jeremy Levin, Senior Energy Specialist,
International Finance Corporation A company that produces T-shirts or denim
often needs extra help to identify or assess a
Why pay so much attention to environmentally sustainable practices
technology they are not familiar with or to
in the textile industry?
The textile, apparel, and footwear industry has a significant incorporate a new process into their plant.
environmental footprint globally in terms of energy use and greenhouse That’s where IFC...can provide unbiased
gas emissions associated with energy use, water consumption, discharge advice and help with adoption of
of water pollution, and chemical use. Improvements in this sector will energy and water solutions.”
help address global and local environmental issues.
and programs covering environment, infrastructure, water stewardship,
How did IFC and Levi Strauss & Co. start working together on this? trade, tariffs, and even special support for the textile sector through
Levi Strauss & Co. has always been a pioneer in these areas and IFC economic zones, for example.
is happy to work with such a partner to help them directly improve
sustainability metrics for their key suppliers, and to provide an example What is out there that can help textile factories produce clothing in a
for other industry players. LS&Co. was a partner in Better Work in more environmentally sustainable way?
2013 [the IFC-ILO program focused on improving social and labor There are many new technologies, new applications of existing
conditions]. It was a foundational partner for GTSF [IFC’s Global technologies, and transfer of existing technologies and processes into
Trade Supplier Finance program]. It was also a member of IFC’s PaCT new markets, all of which can provide cost-effective solutions for
[Partnership for Cleaner Textile] program for suppliers in Bangladesh. suppliers. For example, finishing blue jeans can be done with chemicals
It gained confidence in the IFC program due to the energy and water in a hazardous water- and energy-intensive process. Laser finishing and
savings we were able to achieve for their suppliers in a small pilot with LS&Co.’s Water<Less techniques can now produce the same level of
LS&Co. in 2017 and a larger one in 2018. This cooperation expanded finished products with dramatically less energy and water.
as Levi announced their ambitious science-based sustainability targets.
IFC is a critical partner to help LS&Co. meet these commitments. How easy is it to introduce new production processes to suppliers?
New technology can be a huge driver of clean production, but there’s a
Key to the program is that suppliers upgrade their facilities, but they learning curve. A range of supplier-level barriers needs to be addressed
have to pay for the changes themselves. Isn’t that a disincentive for the before widespread adoption and uptake, including things such as
suppliers to act? customer access to information, unfamiliarity, a high perceived risk
The fundamental driver is that these investments make economic sense. with new technology, and supplier prioritization of investments in other
We identify cost-effective water and energy savings and renewable areas. Training and workshops are part of the education process to help
energy solutions to these suppliers. Yes, the suppliers are the ones to demonstrate and replicate and scale beyond the initial suppliers.
pay for the new boilers, new washers, and water recycling equipment
needed to make the upgrades, but they will start saving energy, water, What other challenges have you run into on the ground?
and money right away. These are climate-friendly investments that make Customers can be initially skeptical and reluctant to change from
economic and environmental sense and, on a life-cycle cost basis, these technologies and processes that they are familiar with. This can be
are highly attractive investments that are paid off in one to six years overcome with case studies and demonstrations of the energy and water
with increased savings. savings, and once they are convinced, they will adopt on a large scale.
But it takes time and patience.
Is there a role here for governments in encouraging this to happen?
Governments are very important for creating the enabling environment
for these investments. This can include relevant government policies
Adding Value, Having Impact
INTERVIEW WITH
Michael Kobori, Vice President, Sustainability, Levi Strauss & Co.

“
When did LS&Co. get involved in promoting sustainability and why? The next step is to stay at it and seek bigger
You could say that the trousers that Levi Strauss and Jacob Davis
impact for ourselves and industry.”
first created in 1873 were a sustainability innovation; they were more
durable than what miners had so they didn’t have to keep buying new
pairs. More recently, in 1991, we were the first multinational company
Then you have fast fashion. Ultimately, do prices have to rise?
to establish a comprehensive code of conduct for our suppliers, which
included global labor, environment, and health and safety standards. No. The sustainable garment should by definition be less costly because
We promote and innovate on sustainability because it is the right it requires fewer inputs. However, we know that our current economic
thing to do for our planet, the communities in which we operate, and system sometimes distorts that fact.
our business, and because it helps us uphold our company’s guiding
philosophy of Profits Through Principles. What kind of impact will this next phase of work with the IFC have?
Our goal in establishing an aggressive target for greenhouse gas
You’ve been working with IFC for some time. Why IFC? emissions was not only to challenge ourselves, but to inspire the industry
IFC has been a great partner. We began in 2014 with the Global Trade to do better. We hope we can use this program to drive collaboration
Supplier Finance program, which helps incentivize suppliers to do and improve performance on sustainability on a much larger scale.
better on sustainability by offering lower interest rates on short-term
trade finance. In 2017, we piloted the Partnership for Cleaner Textiles Promoting sustainability is good PR, but is it also good business?
program, known as PaCT, with six suppliers in four countries, and saw It’s never been a public relations play for us. Any company with a global
how they used IFC funding and guidance to reduce emissions while supply chain needs to be concerned about sustainability, not just because
saving on costs. And in June, we signed a $2.3 million Cooperative consumers care about it, but because it impacts our business. Climate
Agreement with IFC to begin expanding the PaCT program to 42 of and water affect everything from how cotton is grown and crop yields,
our largest vendors. to our ability to operate and deliver products, to what consumers wear.
I firmly believe sustainability provides business benefits in terms of
You want them to reduce global supply chain emissions by 40 percent risk management, productivity and cost, and opportunities for growth
by 2025. through innovation and building brand equity.
Yes, that is the Scope 3/supply chain commitment that we made towards
our Science Based Targets on greenhouse gas emissions. The IFC’s PaCT What’s next for LS&Co. after this project?
program is key to achieving this. We’re talking to IFC about how to make the PaCT program available
to other companies and suppliers. Other companies see it makes
What do you see as the main challenges in achieving your goals? suppliers more efficient and resilient, with payback in one or two years
We think of it more as an opportunity to share our sustainability work at most, and they’re eager to participate. I’d expect it to be available
with consumers, wholesale customers, and investors. If we can do that, to others in the industry within the next year.
it’ll increase awareness and demand to do more.

How do you actually strengthen awareness?

We need to be more clear and explicit in our product and marketing,
and speak about sustainability more accurately with stakeholders.
With millennials and Generation Z, you have a significantly heightened
interest in sustainability and the future of our planet.
 “IFC is highly engaged in the textile and apparel
sector and we are actively seeking investment
opportunities to support clients looking at new
technologies and business model innovations that
also address the sustainability issues.”
—Sabine Schlorke, Global Manufacturing Manager, International Finance Corporation
Contacts
Sabine Schlorke
Manager, Global
Based in Washington, D.C.
[email protected]

Olaf Schmidt
Manager, Sub-Saharan Africa
Based in Johannesburg, South Africa
[email protected]

Web: www.ifc.org/manufacturing
LinkedIn: www.linkedin/showcase/ifc-manufacturing
Twitter: #IFCmanufacturing

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