Levi Strauss & Co. (LS&Co.) and HSBC have teamed to help make the former’s suppliers more sustainable.
The program, launched in February 2021 to assist with financial difficulties exacerbated by the pandemic, gives suppliers access to lower-cost financing to support ongoing operations and to make sustainable improvements through HSBC’s Sustainable Supply Chain Finance Program (SSCF). All the denim giant’s suppliers must follow its Code of Conduct for fair, safe and healthy working conditions and environmental responsibility and the SSCF can help in augmenting those benchmarks.
“We’re excited to partner with HSBC and incentivize forward-looking suppliers to invest in sustainable solutions,” said Jeffrey Hogue, LS&Co.’s chief sustainability officer. “Working with a global, commercial bank to make sustainability-linked supply chain financing solutions available helps LS&Co. meet our environmental and social ambitions, support suppliers in their own journeys and, ideally, help drive a more sustainable apparel industry.”
The participating suppliers also can benefit from interest rates linked to their performance against the standards in the Code of Conduct. They are eligible to receive higher scores as they invest in sustainability, resulting in access to lower interest rates through SSCF and encouraging innovation across the LS&Co.’s three pillars of sustainability: climate, consumption and community. In 2021, 16 of the 21 LS&Co. suppliers participating in the HSBC program received lower interest rates based on their effective sustainability performance.
From partnership launch through the end of LS&CO.’s fiscal year in November 2021, 21 suppliers received a total of $142.4 million in payments–out of an available $150 million–and have made payments 71 days, on average, earlier than through the company’s usual schedule.
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“HSBC is excited to partner with Levi’s because we consider them to be a pioneer of sustainable supply chain finance within the apparel industry” said Kelly Fisher, U.S. head of corporate sustainability, HSBC. “As a leading trade and sustainable finance bank, we know that utilizing finance as a driver is imperative to realizing the progress the world needs now to achieve a net-zero future.”
HSBC launched a similar supply chain finance partnership with Tommy Hilfiger and Calvin Klein parent PVH Corp. in June that gives PVH’s suppliers accessible funding to reach their science-based environmental and social targets.
In addition to HSBC, LS&Co. works with International Finance Corporation (IFC) and its Global Trade Supplier Finance (GTSF) program, which similarly offers low-cost capital and early payments. It has also been working with IFC on the Partnership for Cleaner Textiles (PaCT), where suppliers get expert guidance and additional support on initiatives that make their operations more sustainable.
Earlier this month LS&Co. released a new annual sustainability report outlining its goal of reaching net-zero greenhouse gas emissions no later than 2050.