Clothing manufacturer Levi Strauss & Co will provide financial incentives for suppliers in developing countries to improve their environmental, health, safety and labour standards.
Working in partnership with the World Bank Group’s International Finance Corporation (IFC), the jeans and casual wear firm will create a new supplier finance programme.
IFC’s Global Trade Supplier Finance programme will offer lower cost rates on working capital financing to suppliers which score higher on Levi’s 'terms of engagement' assessments, which measure labour, health and safety and environmental performance. The scheme uses tiered pricing of short-term financing for garment suppliers, providing lower costs for those borrowers scoring strong performance ratings under Levi’s environmental and social monitoring system.
Levi said vendors which score highly on its standards should be recognised 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,” said David Love, chief supply chain officer, at Levi. “We applaud the IFC for establishing this program and look forward to partnering to make it a success on the ground.”
IFC’s Global Trade Supplier Finance program is a $500 million (£316 million) multi-currency investment and advisory program that provides short-term finance to emerging-market suppliers and small and mid-sized exporters.
Supplier finance is a scalable way for suppliers in emerging markets to access affordable financing for their receivables over a period defined by the terms of credit.