Improving Workers' Well-Being

A New Approach to Supply Chain Engagement

Levi Strauss & Co. (LS&Co.) knows that to be a successful global company it has to set high workplace standards for itself, as well as its supply chain. In 1991, it became the first multinational apparel company to establish a comprehensive workplace code of conduct for its manufacturing suppliers. Also known as its Terms of Engagement (TOE), the compliance-focused, “do no harm” code established labor, health, safety, and environmental requirements for its suppliers based upon internationally recognized standards, such as the United Nations Universal Declaration of Human Rights (UNDHR) and the International Labor Organization (ILO) core conventions.

Once considered pioneering, such codes — requiring that supply chain workers be treated with dignity, respect and fairness within safe and clean factories — are now widespread in global companies within and outside of the apparel industry. Expectations for companies and their suppliers have been raised, and compliance, monitoring, and reporting are now the norm for most global supply chains.

Over the years LS&Co. coupled its efforts to identify problems and monitor compliance improvements with the direct engagement of factory management to increase the ownership of improved performance. The company collaborated with other brands and retailers, as well as international worker rights stakeholders, to improve compliance, training and remediation and also shifted its own purchasing practices to consider the effect on workers. The impact and pace of these efforts — as well as the limited evidence of tangible improvements to the lives of workers on the ground — made it clear, however, that there is still much work to be done.

Upon the twentieth anniversary of its TOE, LS&Co. considered whether its current efforts were having the desired impact. The simple answer was, no. Although the TOE has made signifi cant strides in several areas of worker rights, through expert assessments of the industry’s monitoring and compliance approach and LS&Co.’s own review, three things became starkly evident:

1. You must expect more to get more. The “do no harm” approach does not incentivize suppliers to exceed the minimum compliance expectations.
2. The monitoring approach has limitations. With many companies working with similar suppliers, compliance monitoring can have the unintended consequence of duplication and resource inefficiency — resulting in far too much time and money dedicated to policing, rather than improving, operations and employment conditions.
3. You can’t go it alone. In order to see and scale change on the ground, collaboration is critical. There must be a commitment to working with suppliers and workers themselves, as well as other stakeholders, including companies, trade unions, nongovernmental organizations (NGOs), and governments, to achieve meaningful impact.

LS&Co. recognized that it was time to raise the bar for itself and for its supply chain. There was a clear need to expand its approach beyond “do no harm” to focus on developing programs aimed at improving the lives of its suppliers’ workers, their families, and the communities in which they live. This initiative will be an integrated part of LS&Co.’s business strategy, with the expectation that raising supplier performance will have a positive impact on the success of the company by strengthening LS&Co.’s supply chain partnerships. Improvements in supply chain efficiency, productivity, reliability, and overall resiliency will contribute to the success of the company in the long term.