C. OUR SUPPLY CHAIN
LS&Co. deals with a number of its suppliers directly for items including goods and services used in
providing products to customers. The suppliers and partners of LS&Co. are largely categorised as follows:
- Products manufacturing
- Marketing services
- Human Resource services
- Accounting and finance
- Professional services
- Warehouse and distribution
- IT and cloud services
- Retail and sales solutions
- Office and administration related services and supplies.
LS&Co. manages some of its supply chain, vendors and manufacturers of branded products under separate legal entities named Levi Strauss Global Trading Co Ltd which is registered in Hong Kong (Levi
Strauss Global Trading) and Levi’s Footwear & Accessories (Switzerland) SA which is registered in Switzerland (Levi’s Footwear and Accessories)
2. ACTIONS LS&CO. TAKES TO ASSESS AND ADDRESS THESE RISKS
- We are committed to a process of upholding practices against modern slavery or human trafficking in our supply chains or in any part of our business. We are committed to acting ethically and with integrity in all of our business relationships. Our commitment is also supported by policies and procedures which ensure responsibility and accountability for improving business practices and eliminating modern slavery in supply chains at all levels of our business.
- In 1991, we introduced our Terms of Engagement, a comprehensive code of conduct for our directsuppliers that manufactured finished branded goods for LS&CO. In 2022, this was replaced by anupdated document, the LS&Co. SCoC, which is applicable to every factory, subcontractor, licensee,agent, or affiliate that manufactures branded products for LS&Co. In 2022, we expanded the SCoC to apply to indirect procurement suppliers, including parties from whom LS&CO. procures goods andservices for its own use. The updated SCoC outlines our requirements for fair, safe and healthy working conditions and environmental responsibility throughout the tiers of our supply chain. These suppliers must operate in accordance with the SCoC, and in full compliance with all applicable laws and regulations, opting for whichever standard is higher should the requirements differ.
- Our branded products suppliers are required to sign a master supply agreement, which contains therequirement to comply with the SCoC. Our MSA requires any supplier engaged under its terms tocomply with all rules, regulations and policies of the greater LS&Co. network, including maintaininggeneral health and safety practices and procedures. LS&Co. also requires the supplier to ensure that all persons, whether employees, agents, subcontractors, or any other personnel acting for, or on behalf of the supplier, are properly licensed, certified, accredited and that its employees are suitably skilled, experienced, and qualified to perform the services. As our indirect suppliers contract with our business through a variety of routes and documents, new indirect procurement suppliers are requested to sign the SCoC at the point of onboarding to our ERP system, prior to being approved for transacting. We have also progressively sought to engage existing indirect procurement suppliers in signing up to the terms of the SCoC.
- LS&Co. assesses the risks related to the branded products supply chain and new indirect procurement suppliers as a fundamental element of our standard supplier and licensee engagement process. Ourcommitment to responsible business practices is embodied in our SCoC, which may be accessed through the following link: https://www.levistrauss.com/wp-content/uploads/2022/09/LSCo_Code-of-Conduct.pdf
- The SCoC guides our decisions and behavior as a company everywhere we do business. Since becoming the first multinational to establish such guidelines in 1991, LS&Co. has used them to help improve the lives of workers manufacturing our products, make responsible sourcing decisions and protect our commercial interests. The guidelines are a cornerstone of our business relationships with hundreds of contractors worldwide.
The SCoC includes the ban on the use of child labour, prison labor, indentured labor, bonded labor and trafficked labor. In addition, the SCoC has a specific section dedicated to foreign migrant workers and their rights. The foreign migrant workers’ requirements cover the areas of:
- recruitment
- employment contracts
- remuneration and benefits
- worker communication
- accommodations and food
- social activities and religious practices
repatriation
In November 2020, the Supplier Code of Conduct Implementation Guidebook was updated to include a broadened definition of forced labor and relevant policies. The following sections have been updated accordingly:
- New policies focused on advancing gender equity throughout various sections
- Foreign Migrant Workers
- Wages & Benefits
- Freedom of Association
In February 2023, the Supplier Code of Conduct Implementation Guidebook was again updated where we have expanded risk categories and emphasized the severity of risk concerning workers safety and security. The following sections have been updated:
- Child Labor
- Prison, Forced or Trafficked Labor
- Disciplinary Practices
- Working Hours
- Wages & Benefits
- Discrimination
- Foreign Migrant Workers
- Health & Safety
- We conduct regular assessments and follow up visits of our Tier–1 (product manufacturing sites) Tier-2 (fabric mills) suppliers based on the conditions outlined in the SCoC, which all our suppliers receive in the Supplier Code of Conduct Implementation Guidebook. These assessments involve on-site and off-site discussions with workers, management interviews, review of factory records (such as timecards and payroll) and health and environmental safety inspections. Each assessment identifies areas for improvement and a detailed corrective action plan, including actions, responsible parties and timelines. Regular follow-up visits are also conducted to ensure suppliers are completing their corrective action plans on a timely basis. We conduct unannounced assessments.
- Where a business partner fails to meet our standards or comply with any of the SCoC, they are given a reasonable period to correct the problem. If, on our next inspection, certain cases of non-compliance have not been resolved in a timely manner, LS&Co. has rights, where appropriate, to terminate the business relationship.
- LS&Co. is a signatory of the Social and Labor Convergence Program (SLCP), a non-profit multi-stakeholder initiative that offers the tools and system to assess working conditions in global supply chains. This multi-stakeholder initiative includes data sharing and replaces the need for repetitive social audits. This increases transparency in global supply chains, helps combat audit fatigue, enables theredeployment of resources into further improving working conditions and enhances industry-wide consistency and strengthens accountability. In addition, the assessment framework supports joint remediation and shared responsibilities among brands in the same supplier factories. In 2018, LS&Co. signed onto the industry Commitment to Responsible Recruitment developed in conjunction with the American Apparel and Footwear Association and the Fair Labour Association. It further amplified to our suppliers and other stakeholders, LS&Co.'s commitment to create conditions in our supply chain under which:
- no workers pay for their job;
- workers retain control of their travel documents and have full freedom of movement; and
- all workers are informed of the basic terms of their employment before leaving home.
- The above requirements had already been included in the SCoC.
- Since 2012, LS&Co. has been a signatory to the industry’s Uzbek Cotton Pledge, coordinated by the Cotton Campaign. In 2018, we also became a signatory to the newly introduced Turkmen Cotton Pledge. As an early signatory to both Pledges, we publicly stated our firm opposition to the use of forced labor in Uzbekistan's and Turkmenistan’s cotton production.
- We committed to not knowingly sourcing Uzbek and Turkmen cotton for the manufacturing of any of our products, until the governments of Uzbekistan and Turkmenistan end the practice of forced labor in their cotton sectors. These Pledges are in alignment with LS&Co.'s sourcing bans, which are already outlined in the SCoC.
- In 2011 LS&Co. launched the Worker Well-being (WWB) initiative. The initiative aims to improve the lives of the women and men who make our products with factory-based programs that address issues related to health, financial security and gender equality. We set a goal to reach 200,000 workers in our supply chain through our WWB programs by 2020. We surpassed that goal in May 2019, and by year’s end, we had reached 219,000 workers, in 113 factories, in 17 countries, and more than 65% of total product volume at that point of time was made in factories that have WWB initiatives.
- More than 90 percent of the WWB initiatives sites offer health interventions to their workers. Approximately 50 percent of these sites provide financial literacy workshops (some factories provide multiple programs for workers). Based on a survey carried out among participating sites in 2019, three quarters of participating factories report improvements in worker engagement, and over half report improved satisfaction and lower absenteeism. A majority of suppliers self-fund their own WWB programs. Based on a survey carried out among participating sites in 2019, only 40 percent rely on LS&Co. for support.
- To deepen our impact, we recently refreshed the WWB strategy and our vision for 2025 and 2030. Learnmore about our revised WWB strategy and operational framework, accessed through the following link: Code-of-Conduct-English.pdf (levistrauss.com)
- We work with industry experts to pursue impactful systemic changes that address the power imbalances between largely female workers and predominantly male managers. Through our multi-year partnership with the Sustainability and Health Initiative for NetPositive Enterprise (SHINE) at Harvard’s T.H. Chan School of Public Health, we are discovering new areas for attention. This multi-year study, which has connected directly with more than 13,000 workers, most of whom are women making our products in Cambodia, China, Mexico, Poland and Sri Lanka, is showing us that factories that cultivate trust, respect and fairness lead to improvements in gender equality, well-being and productivity. We expanded and elevated our work designed to combat gender inequality in the supply chain, by using the data to build on the Gender Equity Report. To improve the assessment process, we instituted a requirement that all assessment teams include female members and, where possible, female leaders, and we continue to collaborate with partners on the ground such as Better Work in Cambodia, Swasti in India, and Better Work in Bangladesh and Change Associates to advance the effort.
- The Gender Equity Report assists LS&Co. and its apparel supply chain to acknowledge and focus on skill development, pregnancy and parenthood, menstruation, wages, work hours, harassment and gender-based violence. The Gender Equity Report also promotes 10 strategies to make the global apparel supply chain more fair, engaging and productive for all.
- Since October 2005, LS&Co. is committed to publishing the list of its worldwide finished goods suppliers.The most recent full copy of the factory and mill list is publicly available and can be accessed on the following link (Supplier Map - Landing - Levi Strauss & Co : Levi Strauss & Co). The list specifically details the countries the factories or mills are located, in addition to their factory name, address, city, state, the type of product that is being manufactured (i.e.. Apparel, footwear or accessories), the total number of employees and contract staff, any applicable LS&Co. initiatives implemented in the workplace and the parent company name of the factory or mill. This is a testament to LS&Co.'s level of accountability and transparency of its supply chain.
- To date, we actively support the International Labour Organisation’s Better Work Program (ILO Better Work), which is the leading global organisation focused on protecting human rights and improving working conditions in the apparel industry. ILO Better Work, makes targeted investments in our manufacturing suppliers’ workers, training apparel workers and factory management, on their rights and responsibilities in the workplace. A significant majority of LS&Co.'s production takes place in countries that participate in ILO Better Work. They currently include Bangladesh, Cambodia, Indonesia, Nicaragua, Vietnam and Egypt.
- LS&Co. maintains and enforces internal accountability procedures for employees and contractors regarding company standards on forced labour and human trafficking. While these accountability procedures have previously targeted the risks of forced labour and child labour, amongst others, these have been amended to include a broader reference to modern slavery and human trafficking. In the case of non-compliance, LS&Co. reserves the right to examine the specific situation and develop the best possible strategy for resolution.
- We employ full-time staff located globally to oversee compliance and advise on, and monitor branded products suppliers’ sustainability programs. To supplement our own monitoring efforts, we use third-party monitors to conduct regular assessments of every factory, key fabric mills and our product licensee suppliers. All third-party monitors understand the scope of our labour, environment, and health and safety standards and know the local languages, laws, culture and business context of each country in which they operate. All third-party monitors must be individually approved by LS&Co. to conduct SCoC assessments in factories. In accordance with our supplier arrangements, these monitors apply the standards of either the local law, or the SCoC , whichever are stricter.
- We seek to more deeply integrate the SCoC and our business. Integrating SCoC performance into our business has become a key factor in the effectiveness of our due diligence procedures. Weighted with other key factors, including delivery time, quality and price, SCoC performance ratings are used by our manufacturing operations team in considering which suppliers to use and how much production to give them. Poorly performing suppliers that are not completing their corrective action plans on time, will be given formal warnings that they are in danger of having their production ordersreduced, unless they improve their SCoC performance. In most cases, such notification motivates the supplier to quickly improve.
- If the supplier does not improve, we may reduce production orders. If SCoC performance still does not improve after the order reduction, we may exit the supplier and end our business with them. Such a situation rarely occurs, as most suppliers are interested in retaining our business, and will typically bring their performance to acceptable levels when future business is at stake.