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IFC and Levi’s to Reward Garment Suppliers Upgrading Labor Standards

The World Bank Group’s International Finance Corporation (IFC) and Levi Strauss & Co. announced Tuesday a partnership to provide financial incentives for garment suppliers located in developing countries to upgrade their environmental, health, safety and labor standards.

IFC’s Global Trade Supplier Finance program applies tiered pricing of short-term financing for garment suppliers with lower costs for those borrowers who score strong performance ratings under Levi Strauss & Co.’s environmental and social monitoring system. Specifically, the program will reward vendors that score higher on Levi Strauss & Co.’s Terms of Engagement (TOE) assessments, which measure labor, health and safety, and environmental performance. The GTSF program will make lower cost rates on working capital financing available to these vendors. The higher the vendor’s TOE score, the more they will save.

Levi Strauss & Co. chief supply chain officer, David Love, said, “Levi Strauss & Co. believes vendors that score highly on our strict standards should be recognized and rewarded in ways that allow them to reinvest in their business and improve their sustainability performance. This innovative program provides financial incentives to our vendors who perform well on sustainability metrics. We applaud the IFC for establishing this program and look forward to partnering to make it a success on the ground.”

Alzbeta Klein, IFC director of manufacturing, agribusiness and services, said, “Our experience shows that strong environment and social management correlates with stronger financial performance. Levi Strauss & Co. is the first major international buyer to partner with a financial institution to offer its suppliers a direct financial incentive to improve compliance.”

IFC and Levi Strauss &Co. launched the initiative in partnership with GTNexus, a cloud-based business network and platform for global trade and supply chain management that enables participants to operate against a real-time set of information across multiple supply chain functions. The platform aims to optimize the flow of goods, funds and trade information.