Denim doesn't have to be the bad guy – how Levi Strauss is driving sustainable change
The denim and jeans sector is having to work tirelessly to change perceptions over its sustainability, or lack of it. But change is nigh, promises Michael Kobori, vice president of social and environmental sustainability at Levi Strauss & Co
Levi Strauss is one of the world's oldest jeans makers, having produced its first blue jean in 1873. The company is also one of the biggest players in the sector, booking revenues of US$5.58bn and net income of US$283.1m in its last financial year. In March the owner of the Levi's, Dockers, Signature by Levi Strauss & Co, and Denizen brands raised more than US$623m when it floated on the New York Stock Exchange.
With its large global footprint – Levi Strauss (LS&Co) sources products that include jeans, casual and dress pants, tops, shorts, skirts, jackets, footwear and related accessories for men, women and children from factories on nearly every continent – the company is very aware of the environmental impact of denim production, Kobori explains.
An average of 7,000 litres of water are required to make each pair of jeans. Growing cotton also uses pesticides that threaten biodiversity and weaken the natural eco-systems. And then there are the chemicals used in production: from the spinning process to the dye bath, which contains dye fixatives, oxidising agents, reducing agents, and enzymes to bind the synthetic dye to the cotton. In the desizing process, these are all washed out into the wastewater stream. Bleaches and lightening agents are used for fades and finishes.
Sustainability initiatives already rolled out by the jeans giant include plans to eliminate thousands of chemical formulations from its supply chain by replacing the hand-finishing process with ozone and laser equipment. The so-called Project FLX (or Future-Led Execution), should also slash finishing time and speed-to-market.
Doubling-down on sustainability
However, LS&Co is now engaging in one of its most ambitious plans to date, with a target to cut carbon emissions across its supply chain by 40% by 2025. This goal applies to the manufacturers making its products and its fabric mills, while its owned and operated facilities such as stores, offices and distribution centres are tasked with a reduction of 90% in carbon emissions and a 100% renewable energy rate.
"At this point, that is the most aggressive target in the industry, we believe, in terms of both the magnitude and the timeframe," says Kobori.
To achieve this, the company is teaming up with the International Finance Corporation (IFC), part of the World Bank Group, to expand its Partnership for Cleaner Textiles (PaCT) programme, which tackles high water, energy, and chemical use in the textile wet processing sector.
The initiative, piloted at six LS&Co supplier factories in Vietnam, Bangladesh, Sri Lanka and India has helped “to save 20% on their water and energy consumption on average," explains Kobori. "Together the six vendors combined saved over US$1m, and that is only in a nine-month period. So we know the programme works."
“The next goal is to get from 20% to 40% savings by 2025, which Kobori acknowledges is “an uphill climb,” and one that will mean a move away from a low-to-no-cost investment to a much more significant one.”
The next goal is to get from 20% to 40% savings by 2025, which Kobori acknowledges is "an uphill climb," and one that will mean a move away from a low-to-no-cost investment to a much more significant one.
"Previously it was simple things the vendors could do, like changes to their heating, ventilation and air conditioning systems, to simply reduce the amounts they were using. It did not go into larger investments like highly water-efficient washing machines. So the first way the vendors are going to get more savings is the use of bigger investments in equipment."
The second is by developing renewable energy on site – either via solar or wind renewable energy technologies, or by teaming up with other supplier factories in the area to implement a power purchasing agreement.
Also, extending the PaCT programme from the manufacturing factories to the fabric mills will make a major difference. "The mills are three times as energy intensive as factories and use all kinds of equipment, so there is much more opportunity there," Kobori explains.
Getting supplier buy-in
But with many of LS&Co supplier factories in developing countries, are they expected to foot the cost?
"That's the beauty of the programme: the IFC will help the vendors with the financing for these larger investments that they make," assures Kobori. "They do get savings from this project," he adds, pointing to just one reason encouraging suppliers to get on board.
What has also helped with supplier buy-in is their increasingly close relationship with LS&Co. In the last five years, the jeans-maker has "dramatically reduced" the size of its vendor base, leaving it with fewer, larger and more capable vendors.
“Normally with suppliers, if they don't perform to standards, we [brands] tell them they'll get fewer orders – they're penalised”
The company has also been working with the IFC on a separate Global Trade Supplier Finance (GTSF) programme, which recognises the need for short-term finance. With manufacturers having to advance money to their raw material suppliers for the fabric, yet not being compensated by brands until the product is delivered, there is a time-lag that doesn't account for the supplier needing to cover its cash flow needs.
"Under this programme, the IFC provides the trade financing. And because it's the IFC and because it's Levi Strauss, they are able to offer a lower interest rate than the vendors might ordinarily get."
An added benefit is that the better a vendor's sustainability performance, the lower the interest rate on its short-term trade plan.
"Normally with suppliers, if they don't perform to standards, we [brands] tell them they'll get fewer orders – they're penalised. There isn't necessarily the reciprocal going on where we say if you do well on sustainability, we will give you more business. Sometimes, with a financial incentive, they do better knowing they can get more money."
Sharing best practice
Levi Strauss is keen to talk about the steps it is taking to be more sustainable in a bid to drive industry-wide change.
"For all the sustainable innovations we have – like the Water<Less finishing techniques, the jeans production process, our programme on worker wellbeing – we open-source all of our lessons and information. That's our policy. We want to share these breakthrough innovations with everyone so that the industry gets better and we help to change the unsustainable system that exists out there," says Kobori.
"We're trying to get this PaCT programme to scale because we all use the same suppliers. My hope and dream is that these programmes will be adopted by all the leading brands because that's what we need to change the industry.”
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