Iconic denim apparel marketer - Levi Strauss & Co has partnered with IFC, a member of the World Bank Group to provide financial incentives for garment suppliers in developing countries.
This new supplier finance program, which was announced at the ILO/IFC Better Work Buyers’ Forum in New York City, will help garment factories upgrade environmental, health and safety and labour standards.
IFC’s Global Trade Supplier Finance (GTSF) program has performance ratings attached to its short-term and low cost loans, for those borrowers which score strong performance ratings under Levi Strauss’s environmental and social monitoring system.
“Specifically, this pioneering program will reward vendors that score higher on Levis Strauss ‘Terms of Engagement’ (ToE) assessments, which measure labour, health and safety, and environmental performance,” a press release from IFC informs.
The GTSF program will offer these vendors lower cost rates on working capital financing and higher the vendor’s TOE score, the more they will save.
David Love, Levi Strauss & Co. Chief Supply Chain Officer said, “Levi Strauss 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,” he adds by saying.
“Our experience shows that strong environment and social management correlates with stronger financial performance. Levis is the first major buyer to partner with a financial institution to offer its suppliers a direct financial incentive to improve compliance,” Alzbeta Klein, IFC Director reveals.
IFC provides financing to ready-made garment suppliers through its GTSF program, which provides working capital to suppliers backed by receivables from international buyers.
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.
Established in 2010, GTSF is a $500 million multicurrency investment and advisory program that provides short-term finance to emerging-market suppliers and small and midsized exporters.
IFC invests in this sector because it is a provider of formal jobs for low-skilled workers that can make an important contribution to poverty reduction in developing countries. IFC’s support to the industry includes its engagement through the Better Work joint-venture program with the ILO.
IFC and Levi Strauss launched this initiative in partnership with GT Nexus, a cloud-based business network and platform for global trade and supply chain management, whose platform optimizes flow of goods, funds and trade information. (AR)
