Levis moves to lift labour and environmental standards

Iconic jeans maker Levi Strauss & Co is working the International Finance Corporation (IFC) to provide financial incentives for its suppliers in developing countries to improve their environmental, health, safety and labour standards.

IFC is a member of the World Bank Group. The organisation’s Global Trade Supplier Finance (GTSF) program adopts tiered pricing of short-term financing for garment suppliers. Borrowers which score well under Levis’ environmental and social monitoring system are charged lower costs.

In other words, suppliers who treat their employees well and have good environmental and safety performance will receive lower cost rates on working capital financing.

IFC and Levi’s launched this initiative in partnership with GTNexus, a cloud-based business network and platform for global trade and supply chain management.

“Our experience shows that strong environment and social management correlates with stronger financial performance,” Alzbeta Klein, IFC Director of Manufacturing, Agribusiness and Services said in a joint statement from IFC and Levis.

The move comes at a time when global garment manufacturing is under close scrutiny over labour and environmental standards. This follows several incidents such as the collapse of a Bangladeshi garment manufacturing complex which killed 1,129 workers.

“Levi Strauss & Co. believes vendors that score highly on our strict standards should be recognized and rewarded in ways that allow them to reinvest in their business and improve their sustainability performance,” David Love, Levi Strauss & Co. Chief Supply Chain Officer said in the statement.

“We applaud the IFC for establishing this program and look forward to partnering to make it a success on the ground.”

Rachel Wilshaw, ethical trade manager for Oxfam, said the scheme was a good idea. However, she cautioned that it will have to be well monitored if it is to succeed.

“The devil will be in the process rather than in the incentive,” she told the Financial Times.

Meanwhile, here in Australia, eyebrows have been raised by the fact that jeans are now available for as little as $7.

News.com.au reports that the cheap products are the result of a price war among major retailers, Target, Kmart and Big W.

All three companies have their own publicly available Ethical Sourcing Codes, outlining minimum standards for suppliers, however organisations such as choice.com.au and Oxfam claim that such codes often do not go far enough in meeting acceptable standards.