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Supplier Ownership

Levi Strauss & Co. (LS&CO.) and an ever-growing number of companies and key stakeholders believe that while factory monitoring has achieved significant results on a global scale with regard to improved working conditions in apparel factories, there are limits on what the monitoring approach can achieve. Interested companies and other stakeholders recognize that the monitoring approach is essentially a punitive one, has resulted in duplication of efforts on the part of many brands and is not a path to long-term change in factory working conditions.

To achieve a more sustainable impact, we believe we must encourage suppliers to take direct ownership of the policies and practices in the codes of conduct that they have agreed to uphold.

We want to see suppliers do more than respond to violations we find when we assess their factories. We want to undertake a deeper, "root cause" analysis to find out why their policies and practices do not meet our requirements.

We believe that once we and factory management understand the root causes, all parties can take steps to make the changes that will result in more lasting improvements. In our view, this requires establishing factory management systems — company policies, procedures, appropriate staffing, evaluation programs and mechanisms to identify problems and correct them — that will enable factories themselves to maintain and improve their performance on our Terms of Engagement.

We have taken a number of steps to establish "supplier ownership" as the next-generation program for our code of conduct.

• We developed an assessment tool that identifies the areas where factories may need to improve their code of conduct management systems.
• We created a detailed Supplier Ownership Guidebook that articulates the management systems approach and how it can be applied to our code of conduct.
• We established a two-day training program for factory executives and managers that is designed to be an introduction to management systems and how to apply them to our code of conduct.
• We initiated a pilot program to test the supplier ownership approach. We are testing our tools and gathering data from factories to assess the program’s effectiveness and developing procedures for extending the program to additional suppliers.

We will continue to work with our suppliers and other interested brands, retailers, and stakeholder groups to develop this supplier ownership approach. We aim to expand this approach to other factories and are hopeful that other brands will join us in this work.