In order to achieve our supply chain and sustainability goals, we work in close partnership with our suppliers, many of whom have been with us for more than a decade. While they are required to abide by our Code of Conduct we in turn look to support them when and how we can. That has included standing up financing mechanisms that can provide the capital needed for our suppliers to finance ongoing operations and new investments that can improve sustainability performance.
That’s why we have partnered with HSBC. Together, we’re supporting suppliers’ business and sustainability ambitions with access to lower-cost financing through the bank’s Sustainable Supply Chain Finance Program (SSCF). This means we’re helping suppliers to not just recover from the financial impacts of the pandemic, but to look ahead and take steps toward building a sustainable future. With HSBC’s expertise and financing, we can collectively deliver meaningful funding for our suppliers.
“We’re excited to partner with HSBC and incentivize forward-looking suppliers to invest in sustainable solutions,” said Jeffrey Hogue, LS&Co. 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.”
We launched the SSCF with suppliers in February 2021 to address the unusual financial implications found within the apparel industry due to the pandemic. From launch through the end of our fiscal year (November 2021), 21 suppliers received a total of $142.4M in payments – out of an available $150M – through the program, and have made payments 71 days, on average, earlier than through our customary schedule.
In addition, suppliers can benefit from interest rates linked to their performance against our environmental and social standards as outlined in our Code of Conduct. Suppliers are eligible to receive higher scores as they invest in sustainability solutions, resulting in access to lower interest rates through SSCF and incentivizing innovation across the three pillars of sustainability: climate, consumption and community. In 2021, 16 of the 21 LS&Co. suppliers participating in the HSBC program benefitted from lower interest rates based on their strong sustainability performance.
“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.”
This announcement complements our relationship with International Finance Corporation (IFC) and their Global Trade Supplier Finance (GTSF) program, which similarly offers low-cost capital and early payments. Since 2017, we’ve also been working with IFC on the Partnership for Cleaner Textiles (PaCT), where suppliers get expert advice and additional support on initiatives that make their operations more sustainable. Through continued collaboration with financing partners like HSBC and IFC, and their innovative programs, we’re making strides toward redefining the apparel industry and its impact on the world around us.
