Almost 150 years ago, a Bavarian-born immigrant by the name of Levi Strauss travelled from New York to San Francisco, intending to sell dry goods. Today Levi Strauss & Co is the world’s largest brand-name apparel manufacturer, with global sales of nearly 67 billion, operations in 50 countries and some 30,000 employees. In addition to branded jeans, casual sportswear is manufactured and marketed under brands names Levi’s, Dockers and Slates.
Still privately owned, shares are held by descendants of Levi Strauss and Bob Haas, his great great grandnephew, is chairman of the board and CEO. That family connection has helped maintain a long tradition of corporate philanthropy, one of the leaders in America. Where Levi’s differs from the norm of US big company practice is in its attention to socially responsible business practice and its willingness to engage with less popular social issues – such as HIV/AIDS and action on racism, long before the rest of the corporate sector risked getting involved.
This approach also led the company to be among the first to extend its practice of community affairs to operations around the world, not just in the home country, and to engage employees as a major plank of the programme. More recently, it was among the first to tackle social issues in supply chain management, leading the way with a code of practice, guidelines and monitoring.
In its philanthropic approach, Levi’s has bucked the trend towards focusing community activities on bottom-line objectives. But now, as competitive pressures on the brand mount, with a move into direct retail sales and plants cut-backs, the challenge is to find a way to preserve the primacy given to community benefit while also supporting the business which generates the profits to fund the programme.
Community programme
This profile focuses on Levi Strauss Europe, which is managed from Brussels and for operational reasons also includes Middle East and Africa. Here annual sales are nearly 62 billion and some 7,000 people employed, with major manufacturing sites in Scotland, Belgium and Spain, and lesser operations in France, Hungary, Poland, Turkey and South Africa. In addition, smaller marketing offices operate in most other countries in the region.
Within Europe, the programme’s annual budget is around 63.5 million, split between central community partnership grants and devolved funding to community involvement teams (CITs) at plant level. The chosen priority areas are as follows, the first three long-standing and the fourth newly added:
economic empowerment, focused on opportunities for people on low incomes; priorities include micro enterprise, job creation, targeted training and community leadership development;
AIDS prevention and care for those affected, through help to individuals, risk reduction education and services to populations particularly affected;
social justice – projects to break down the barriers such as racial and other discrimination that prevent many low income and disenfranchised people from realising their basic rights;
youth empowerment – projects to help alienated and disadvantaged youth reconnect with their communities and take full advantage of the opportunities available to them.
Examples of recent projects supported through community affairs grants are:
Turning Point – a 650,000 contribution towards the costs of producing an animated film for young people, Drugworld, about the dangers of drug misuse in relation to HIV/AIDS; in September, UCI Cinemas agreed to screen it in cinemas across the UK;
Autonomia Alapitvany – a three year project costing 6120,000 to address poverty and disadvantage among Roma and other minority groups in Hungary, based on a loan fund to help with their social and economic needs;
Gynaika – a 675,000 project in Belgium which, over three years, will train and employ 40 unemployed young people in an arts based communications programme that will encourage creativity among school students;
APEX Scotland – a contribution of 6164,000 to equip young people with the skills they need to influence decision-making and so increase their involvement in society and in its democratic development.
Employees
A particular feature of the Levi’s approach is the encouragement and support offered to employees who volunteer their time and raise funds for community projects of their choice. This long-standing programme, going back some 20 years in Europe, operates primarily at plant level. The CITs can apply for matched funding, worth four times the sums they raise, and the Local Employee Action Program (LEAP) allows regular volunteers to claim up to 6600 as an annual donation to the projects they themselves support with time.
The programme is managed by a team of three staff based in the European headquarters in Brussels and one in Budapest, headed by Alan Christie. This is part of a worldwide community affairs unit, reporting to the vice president based in San Francisco. At plant level, responsibility for local community relations and staff involvement is assigned to existing management team members, not to separate full or part-time community staff.
Business values
The stated mission of Levi Strauss & Co is “to sustain responsible commercial success as a global marketing company of branded apparel…. We will conduct our business ethically and demonstrate leadership in satisfying our responsibilities to our communities and to society.” This mission is supported by an aspirations statement, a statement of business vision, a code of ethics and a set of ethical principles.
The company also seeks to give effect to these principles through a set of Global Sourcing and Operating Guidelines. These were drawn up in 1991, a first for a major multinational. Essentially, these cover contractors – some 500 in more than 50 countries. They provide for terms of engagement on workplace issues substantially controllable by the company, such as ethical standards, environmental requirements, community involvement and child labour. Larger external issues beyond the control of individual business partners are considered when deciding where to do business through Country Assessment Guidelines.
As a result of the approach adopted to global sourcing, in Mexico for example, one contractor started an education programme to fund school attendance from low income families. In Bangladesh, when child labour was discovered, contractors agreed to continue paying the girls so their families would not suffer but sent them to school; Levi’s paid for the tuition.
Challenges
As a private company, Levi Strauss & Co does not disclose profits, but it is clear the business is not performing to shareholders satisfaction: major reductions in manufacturing capacity are being implemented. In November last year, the company announced the closure of 11 US facilities, representing a third of its North America manufacturing workforce. At the time the company offered a 6200 million employee benefits package and the Levi Strauss Foundation pledged 68 million in grants over three years to community-based non-profits to help ease the social and economic impact in areas affected.
Then in September this year, consultation began about the possible closure of four plants in Europe, three in Belgium and one in France, accounting for about one fifth of the workforce (with more in the USA and other parts of the world). If these go ahead, it is to be expected that the community programme will again play a part in supporting the communities affected.
However the challenge goes wider than alleviating some of the social consequences of individual closures. If the business does not thrive, the funds for the community programme inevitably come under threat. Currently, once the budget is set, the needs of the community come first in selecting suitable projects. Promotional considerations have not featured, nor has there been an attempt to brand projects with the Levi’s logo, as other companies have started doing. Is this sustainable?
The addition of youth empowerment as a fourth priority means there is now a category of project directly relevant to the core customer group. If market research shows social responsibility is a factor in purchasing decisions, the question of seeking publicity for community programmes will inevitably arise. It is then but a short step to start selecting projects that create the best promotional opportunities, rather than meet the greatest community need. With no end in sight to competitive pressures, keeping faith with the traditional values could prove a major challenge for Levi’s.
Benchmarking of Levi Strauss community programme against comparator companies:
Levi Strauss
Chairman and CEO: Robert Haas
President and chief operating officer: Peter Jacobi
Turnover: 66.9 billion
Pre-tax profits: not available
Year end: November 30, 1997
Employees: 30,000
Community contribution: 622 million
Percentage of profit: –
Per head of staff: 6735
Policy focus: economic development, HIV/AIDS, social justice and youth empowerment
Flagship projects:
1. AIDS prevention and care – projects to prevent the spread of HIV/AIDS and provide care for those affected.
2. Community-based economic development – projects to enhance economic opportunities for those from disadvantaged populations, through job creation, training and placement.
3. Social Justice – community-based programmes working with disenfranchised groups.
Employee involvement: through Community Involvement Teams, responsible for fund raising and employee volunteering, and Local Employee Action Program for volunteer grants.
Management: four community affairs managers for Europe, with team in San Francisco.
Contact: Alan Christie, community affairs director (Europe)
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