Sustainability and the C-Suite

I recently spoke at the Ceres Conference in Boston about the role of the C-suite in driving sustainability, a topic that’s important to me in my role as the CFO of Levi Strauss & Company (LS&Co.).

 You might not usually associate sustainability with a job like mine. After all, isn’t the CFO’s key priority ensuring the financial health of the company and creating value for stakeholders?

 Absolutely. And that is exactly why sustainability is a big focus for me, and for the entire leadership team at LS&Co. We recognize that sustainability is a true driver of value for our company. It comes from our company’s long history and the belief that how we make our products is as important as what we make – a philosophy we refer to as “profits through principles.” 

 Not too long ago, sustainability efforts at most companies didn’t capture a lot of attention in the C-suite. The people responsible for sustainability often were dispatched to the margins of the organization. It just was not considered core to the business or necessarily linked to the long-term strategy.

 It turns out that was a potentially costly oversight because sustainability is an asset that can have a direct impact on a company’s bottom line. Fortunately, many leaders now understand that, with the right sustainability programs, their companies can lower costs, help mitigate risks and attract more (and more loyal) customers.

 At LS&Co. we approach sustainability from both an environmental and social perspective. We take a long-term view and look at the financial sustainability of all of our initiatives. And we go far beyond the legal compliance and risk mitigation efforts that have characterized the apparel industry for decades. We still do risk mitigation -- but it is integrated with the longer-term strategy of the business. 

 A great example of going beyond risk mitigation is our Worker Well-being Initiative. It evolved from our Terms of Engagement, which LS&Co. established in 1991 as a comprehensive set of guidelines that all our vendors and suppliers had to meet before doing business with us. Worker Well-being goes beyond labor compliance to support financial empowerment, health and family well-being and equality and acceptance for the people who make LS&Co. products.

To accomplish this, we partner with local non-profits to support specific programs in the regions where our factory workers are located. We’ve found that investments in Worker Well-being programs generate compelling business and social returns – generating value for workers, vendors and LS&Co.

 For example, after implementing women’s health education programs in Egypt, a study showed that for every $1 invested in providing health education training to workers, $4 of return was realized in the form of reduced absenteeism and lower turnover rates among female workers.

 Another great example from the environmental side is our Water<Less® finishing process, which reduces our water use in the manufacturing process by as much as 96%. Of course, that’s great for the planet, especially because of the large volume of water involved in traditional garment manufacturing. But the process also reduces our costs by four cents per pair of jeans on average. Multiply that by our production volume and that represents a significant economic value. So far, LS&Co. has saved over 1 billion liters of water by utilizing Water<Less® finishing. Right now, 30 percent of our product volume is produced using Water<Less®, and we’re planning to up that to 80 percent by 2020.

 We also recently open sourced these techniques in an effort to encourage adoption by other apparel companies to drive water savings across the industry. Together, if adopted by the industry, we believe we can save more than 50 billion liters of water.

 To really drive sustainability, you need a long-term perspective. Our company has been here for the last 163 years, and we plan to be here for much, much longer.

 As we continue to create more value for our stakeholders from sustainability initiatives, I’m going to use my role as CFO to keep pushing the envelope. I hope others will join me in setting the right tone at the top by incorporating sustainability into their long-term strategies, measuring and reporting sustainability programs and importantly influencing capital allocation toward sustainable initiatives. We in the finance function can also help in developing and reviewing the business case for investing in and implementing sustainability initiatives.