Michael Kobori, Levi Strauss VP of sustainability

Michael Kobori, Levi Strauss' VP of sustainability

"We're best when we're leading and pioneering," is Michael Kobori's take on denim giant Levi Strauss & Co's responsibility in ensuring it has an ethical supply chain. But it is competition, believes the company's VP of sustainability, more so than collaboration, that really raises the bar when it comes to sustainability.

Levi Strauss & Co can lay claim to having developed the first blue jeans around 142 years ago. But it has also pioneered in other ways, including being the first multinational apparel company to establish a comprehensive supplier workplace code of conduct, the first in the sector to establish global guidelines for water quality standards for suppliers, and the first to provide financial incentives for garment suppliers in developing countries.

"We're companies right, we compete. Collaboration is great, but we're best when we're competing, not only on the business, but on sustainability," explains Michael Kobori, VP of sustainability at Levi Strauss.

But Levi Strauss does collaborate too, and is party to a number of initiatives across all aspects of the supply chain, from the cotton field to the manufacturing of jeans.

On sustainability, the 162-year old company, with sales in over 110 countries, has participated in a number of industry schemes. One of these is the Better Cotton Initiative, which works with cotton farmers to promote fair working conditions - and Levi Strauss aims to source nearly 75% of its cotton as Better Cotton by 2020, up from 6% today.

It is also a member of the Sustainable Apparel Coalition (SAC), a group that aims to reduce the environmental and social impacts of apparel and footwear products globally, and developer of the Higg Index sustainability measurement tool.

Competition is key
When it comes to raising the bar on sustainability in the apparel industry, however, Kobori believes competition has a key role to play.

"By raising the standards, it will spur others to reach that higher bar. That is one of the things we've tried to do over the last 20 years when we set up our initial code of conduct and terms of engagement. Now, of course, everybody has one."

Kobori points to the group's waste water quality standards, its restricted substances list, and its Worker Well-Being programme that requires key vendors to implement programmes that enhance workers lives outside factory walls. "Financial literacy, reproductive health training for women, access to healthcare, access to educational opportunities. These are the kinds of programmes that have enriched workers lives but also have a payback to the factory," Kobori explains.

He backs this up, saying Levi Strauss has documented a "four-to-one" return on investment for its vendors that support such programmes.

"Many brands do similar things, but when the foundation grant runs out the programme stops and the benefit is lost. So what we have been doing with our key vendors is a requirement that they fund themselves so it is sustainable in the long run, the benefit to the worker continues, and the benefit to the vendor continues. That's the difference with this approach; really reaching the next bar if you want to become a supplier of Levi Strauss & Company."

Vendor financing
In addition to this, in December last year, the jeans giant started providing low-cost loans to help its garment suppliers in developing countries to upgrade environmental, health, safety and labour standards - with better terms available to those who perform well on sustainability metrics.

Launched with the World Bank Group's International Finance Corporation (IFC), both companies say the $500m multi-currency investment and advisory programme is the "first of its kind", and to date, Kobori says they have eight vendors now signed up from Bangladesh and Pakistan.

"There are many more vendors interested in the programme which is terrific," he enthuses. "I'm really excited about that and the IFC has recently also extended the programme to Puma, so they are now participating which is great."

Kobori adds: "This is one of the few direct financial incentives our vendors have. We reward them with more volume. But this is one of the few [programmes] where the vendors actually get a financial incentive for improving their sustainability performance and it's terrific the IFC has believed in us."

Kobori has confidence the programme will make a difference in convincing suppliers to change their behaviour when it comes to sustainability and compliance.

"Suppliers are already coming to us saying 'I want to get to the next highest level of scores and have even more trade'. So it is having the desired impact, which is great. Obviously the proof will be in the pudding at the end of the year if the suppliers have actually improved their performance."

Kobori says there is no limit on the number of suppliers allowed to participate in the programme, but he admits the financing rate available to vendors in some countries means it's not enough of an incentive. The response, he says, has been more positive in South Asia, the Middle East, and in the Americas, but less so in East Asia where there is access to more competitive financing.

Responsible pressure
As a global company with sales of $1.05bn in its most recent quarter, Levi Strauss is only too aware of the increasing pressure on brands and retailers to be more responsible for their entire supply chains, end-to-end. And indeed, Kobori acknowledges the need for more transparency and responsibility.

"The consumer expectation of a global brand like ours, or any global brand, is that we do have a responsibility all the way to the raw material stage and that we provide the consumer with transparency back to that stage."

Levi Strauss has published a list of its suppliers, but Kobori admits it hasn't yet traced that chain back to the cotton fields, something he explains is "an enormous task".

Nonetheless, he adds: "We do have visibility through the Better Cotton programme. We are working with cotton farmers and trying to get their cotton back into our supply chain, we're extending our Code of Conduct and our water quality standards to our fabric mills. So that's another move to take the standards we've applied to our first-tier suppliers to the second tier suppliers back up the supply chain. That movement is absolutely there.

"We're doing the same with our chemical management programmes, so these are all moving what we say 'upstream' because that is what we believe is the expectation of our consumers, the expectation of our key stakeholders and society at large."

Tackling water use
Through the Better Cotton initiative, Levi Strauss has been working to train farmers to grow cotton using less water. But while significantly reducing the company's water footprint is currently one of its "biggest commitments", longer-term, Kobori says the vision is to use more recycled denim in the process.

The company is focused on reducing the 68bn pounds of clothing that end up in landfills each year — nearly 95% of which it says could be recycled. As a result, the jeans giant last year launched its 'clothing take-back' programme in select stores in the US and Europe. Through the initiative, wearable items are resold and the remaining pieces are recycled into items such as cleaning cloths or building insulation.

"The programme is being expanded and by this year all of our retail stores in the US will have take-back. One of the things we're working on is how do we recycle the denim into new Levi's. One challenge of doing that is, the maximum that you can recycle is about 20% of the denim into new fabric because any more than that and the cotton fibres are short. They get shorter and weaker, so if you blend more than 20% it won't pass our products' strength test, and strength and durability is very important to us. That's one of the great things we love about our product, it will last a long time, it's not fast fashion, it's not disposable."

This durability in denim brings Kobori onto his favourite subject, and the sustainability achievement he says he is most proud of: the Water<Less programme. The process aims to reduce the water used in garment finishing by up to 96%.

The company's recently published Product Lifecycle Assessment (LCA) revealed it has saved 1bn litres of water its garment finishing process over the last four years. By 2020, the group aims to make 80% of its products using Water<Less techniques, up from nearly 25% today.

"The programme illustrates what is possible and how sustainability not only makes sense for the environment but sense for the business. It all has resonated with the consumer and associated our brand with water [saving]."

Breaking down water use in the life of a pair of jeans, Kobori explains how around 68% happens during the cotton growing stage, 23% during consumer use, and 7% occurs during fabric production and the finishing process.

This is something the company is working hard to reduce, but is also an area where consumers can play a part. "If you only wash [jeans] once in the ten times [you wear them] you can basically save 80% of water use in the consumer phase. So that's something we're really promoting and trying to engage the consumer with more. It's a fun conversation that isn't really so heavy about sustainability.

"It helps differentiate us from the competition and that really for us is what sustainability means in terms of that consumer connection. It isn't something consumers want to pay more for, they expect it from us and if we can surprise and delight them with it, it is a differentiator."

So, how much further along the sustainability journey will Levi Strauss travel? Is there room for more? Kobori believes so.

"What is it they say? Onwards and upwards. How do we take our existing programmes and expand them to all of our products, to all of our suppliers? How do we continue to innovate? We set up our terms of engagement, but how do we go to the next step which is worker well-being? How do we go from water quality and basic water conservation to partnering with others in the industry?

"We're best when we're leading and pioneering. We believe in innovation and we believe in that pioneering spirit and we've got to keep raising the bar on ourselves but also for the rest of the industry."