By Rose Ors
In collaboration with Amelia Miazad, Founding Director & Senior Research Fellow, Business in Society Institute, Berkeley Law
Few brands are as iconic as Levi’s®. In the fashion industry, few companies have been more proactive than Levi Strauss & Co. in fostering practices that serve both the bottom line and the public good.
I spoke to Seth Jaffe, Levi’s executive vice president, and general counsel, about Levi’s sustainability goals and initiatives, their impact on various stakeholders, and the role that the company’s board of directors, CEO and legal department play supporting them.
Rose Ors: Levi’s states: “Sustainability is literally woven into everything we do. It is how we do business and how we show up in the world.” What are some of the key ways this pledge translates into action?
Seth Jaffe: Our business practices are informed by a philosophy that we call “profits through principles.” Bob Haas coined the term when he was the company’s chairman and CEO to describe how we operate. It includes doing business in an ethical way, ensuring that the people who make our clothes are treated fairly, and sourcing and using raw materials in a responsible way. For example, we pledged that by 2020 we will source 100% of the cotton we use from sustainable sources. This is a significant commitment because more than 90% of our products are cotton-based. By the end of 2018, we were two-thirds of the way to meeting this pledge and we’re on track to get all the way there in 2020.
Rose Ors: In 2011, Levi launched the “Worker Well-being” initiative. What is the goal of the initiative?
Seth Jaffe: I am very excited about Worker Well-being. It is the outgrowth of the code of conduct for our suppliers that we launched in 1991 – the first of its kind in our industry. Called the Levi Strauss & Co. Terms of Engagement (Code) it sought to improve the conditions of the workers employed by our global suppliers, including the elimination of harassment and child and forced labor. In 2011, the 20th anniversary of the Code, we decided that we wanted to go even further. So, we started trying to actively improve workers’ lives beyond the factory walls. We launched Worker Well-being, an initiative aimed at building a more sustainable supply chain by ensuring that workers have access to programs focused on financial, educational, and health literacy.
Rose Ors: What has been the business impact on the suppliers and the personal impact on the workers?
Seth Jaffe: The impact on both the suppliers and the workers has been very positive. So positive that Worker Well-being has expanded to 17 countries and has impacted more than 200,000 workers. The 200,000 number was our 2020 goal, but we met it a year ahead of schedule.
On the supplier’s side, the initiative has resulted in business benefits at all levels of the supply chain, including a 4:1 return on investment from some of the programs. On the worker’s side, it has positively impacted many lives. Let me give you a personal story. On a trip to Sri Lanka to do community service and to see how our programs are working in the field, we were invited to visit the home of one of our suppliers’ employees. During our visit, the employee, a woman with a baby and a toddler at home, told me how the health literacy training had improved her diet while she was pregnant, and how it had also helped her enrich her new baby’s diet. She also shared how the financial literacy program had helped her save the money to buy the home in which we were sitting. It was so moving to see first-hand the profound impacts these programs can make on a single-family.
We are hoping to increase the impact of the initiative with our 2020 target to produce 80% of our products in Worker Well-being factories. We then have a 2025 target to include all our strategic suppliers in the initiative, reaching an additional 100,000 workers. And, going further, we hope this approach will be adopted by other companies in our industry and in other sectors as well.
Rose Ors: How are you measuring the impact of the Worker Well-being initiative?
Seth Jaffe: To measure the business and personal impact of our Worker Well-being initiative, we have partnered with the Sustainability and Health Initiative for NetPositive Enterprise (SHINE) at Harvard’s T.H. Chan School of Public Health. In addition to the rigor and terrific ideas that come from SHINE, an exciting part of this collaboration is that we will use blockchain technology to directly and anonymously survey factory workers on their well-being, which will help us adapt and improve the program as we go.
Rose Ors: What does success look like?
Seth Jaffe: What we hope to find is that the Worker Well-being programs give workers a greater sense of personal security, pride, and connectedness. That would be a success in itself. At the same time, we hope that these benefits will, in turn, increase employee engagement and productivity in the workplace. This is the win-win we want to achieve.
Rose Ors: In 2018, Levi’s announced that by 2025 it will reduce its carbon emissions by 90% in its owned-and-operated facilities and by 40% across its global supply chain. It also will draw 100% of its own energy in its owned-and-operated facilities from renewable sources. How has the company operationalized these goals?
Seth Jaffe: Achieving the goals in our owned-and-operated facilities, while not easy, is largely under our control. In all our facilities—primarily offices, retail stores, and warehouses—we have focused heavily on energy efficiency and reduction efforts. We will continue to make energy efficiency upgrades until we get to our 90% emissions reduction goal. We will also invest in onsite renewable energy to get to 100% renewable electricity by 2025.
Meeting our goal of reducing carbon emissions in other parts of our global supply chain is more of a challenge because we need the buy-in from our suppliers. On that front, our sustainability team developed an innovative finance and advisory supplier program in partnership with the International Finance Corporation (IFC), the financing arm of the World Bank. Starting in 2017, we piloted the program with six suppliers in Bangladesh, India, Sri Lanka, and Vietnam, and in a little more than a year, the suppliers had reduced their local greenhouse gas emissions by an average of around 20%. Equally exciting is that they hit this target and collectively lowered their operating costs by more than $1 million. We have now started to scale the program to include 10 countries and 42 top suppliers, and we’re connecting other companies with the IFC as well, so they can get involved.
Rose Ors: What role does Levi’s Board of Directors play in tracking the success of Levi’s sustainability goals?
Seth Jaffe: Our board frequently talks about sustainability and they get updates on all of our targets and initiatives when they meet. As overseers of risk and stewards of long-term enterprise value, the board’s oversight role on our environmental and social impact is critical. That is why our board’s Nominating, Governance, and Corporate Citizenship Committee includes, among its other responsibilities, the oversight and review of corporate social responsibility and sustainability matters.
We provide the board and the Committee with regular updates from the Levi Strauss Foundation, community affairs, marketing, and the sustainability team. The board is always highly engaged during our presentations. For example, on the issue of gun violence, the board was presented with a proposal to fund several community organizations and youth organizations advocating for better, safer gun laws. The board not only approved the funding but suggested we support these organizations for a longer period of time and that we invest four times the amount of money we had proposed.
Rose Ors: Levi’s CEO, Chip Bergh, has been very vocal about gun violence and the role of the business community to address it. How important is his stewardship in these kinds of issues?
Seth Jaffe: It is absolutely vital. While we have other spokespeople—our chief marketing officer, our head of sustainability, our communications teams, our CFO, and me—Chip’s voice has the greatest impact and influence, in and beyond our industry. I think the bigger challenge is figuring out when we should join the public conversation. There are so many important issues, and we want to be thoughtful about when to weigh in. That said, Levi Strauss & Co. has a history of speaking out on issues affecting our people and the people touched by our business. Issues on which we have lent our voice and our support include anti-discrimination, LGBTQ rights, AIDS and HIV, immigrants and refugees, voting, sustainability, and social justice. The opportunity to participate in these dialogues is a huge part of why I came back to the company in 2011.
Rose Ors: What sustainability issues do you think will pose the greatest challenges for the fashion industry in the next five years?
Seth Jaffe: There are many challenges, but let me point to three. Climate change is the first urgent environmental issue we face as an industry, and as a planet. For our part, we fully support the Paris Climate Treaty to limit rising global temperatures and hope to go even beyond its goals. A second urgent issue is the use of harmful chemicals in garment manufacturing. That is why we have committed to a zero discharge of hazardous chemicals by the end of next year and have made our Screened Chemistry program open-source, so anyone can use it. The third issue has to do with the people part of our industry. Like many, our industry makes important contributions to critical economic growth. But parts of the industry also bring the challenges of global manufacturing, including the need for improvements in wages and working conditions. That is why we launched our Worker Well-being initiative and made its guidelines and tools available to others.
Rose Ors: What role does corporate counsel play in addressing those challenges?
Seth Jaffe: The dual nature role of the legal department is like yin and yang. On one hand, we serve as trusted business partners to the company and help drive business growth. But at the same time, we serve as guardians of corporate integrity, with responsibility for ensuring that the company acts with the highest standards of ethics. Like yin and yang, the two roles actually complement and support each other.