We know we have to make progress on our climate goals. And we know that to do so, especially in our supply chain, we have to act in concert with our suppliers. That means working with them to set clear and ambitious targets while also going the extra mile to support their efforts to become more water and energy efficient and increasing the amount of renewable energy they use.
That’s why we are evolving our partnership with the International Finance Corporation (IFC) and helping suppliers that have already begun implementing low-carbon investment plans gain access to lower-cost financing to support their efforts. To put it simply: we want to back suppliers who are moving in the right direction, because their success is our success. With the IFC, we have a partner that can help make that happen. Then, collectively, we can reduce water and energy use and deliver meaningful climate action.
“We’re excited to expand our partnership with IFC and bring added incentives to forward-looking suppliers,” said Jeffrey Hogue, LS&Co. Chief Sustainability Officer. “Working with a highly respected organization to make sustainability-linked supply chain financing solutions available will help us meet our own sustainability goals and, ideally, help drive a more sustainable apparel industry.”
This announcement builds on an already productive relationship with IFC. Since 2017, we’ve been working with the organization on the Partnership for Cleaner Textiles (PaCT), where suppliers get expert advice and additional support on initiatives that make their operations more sustainable. After early pilot programs showed demonstrable savings and efficiency improvements, we expanded availability to around 40 LS&Co. suppliers across countries, including Bangladesh, Egypt, India, Pakistan, Sri Lanka, Mexico, Turkey and Vietnam.
We have also long worked with IFC’s Global Trade Supplier Finance (GTSF) program, which offers low-cost capital and early payments on completed orders to suppliers that meet our environmental and social standards. This program has been critical during the time of COVID-19, given the challenges suppliers and their employees have faced — and still face — while navigating through the pandemic. Over the past 18 months, we’ve seen more suppliers utilizing the program and we have worked with the IFC to increase the amount of financing available to meet the growing need. (We also now provide additional assistance to suppliers in locations not served by the IFC program.)
This new initiative effectively blends the two programs, integrating PaCT into the GTSF framework so suppliers implementing the former can gain more liquidity, at lower rates, through the latter. It both recognizes suppliers that have shown a consistent commitment to making the necessary sustainability improvements and incentivizes them to keep working towards a shared set of sustainability goals. This is all built on the foundational belief that more sustainable businesses are stronger and more resilient, and that the apparel industry urgently needs to accelerate its progress towards a more sustainable future.
“Such partnerships are essential when it comes to tackling some of the most difficult business challenges of our time,” said Tomasz Telma, IFC senior director for Global Industry Manufacturing, Agribusiness and Services. “This includes addressing climate change risks impacting a company’s business operations and meeting ambitious sustainability targets. We are excited about this next phase of our work with Levi Strauss & Co.”