Levi’s sees jump in supplier violations, points to wage payment challenges - The Entrepreneurial Way with A.I.


Friday, October 14, 2022

Levi’s sees jump in supplier violations, points to wage payment challenges


Dive Brief:

  • Violations among Levi Strauss' Tier 1 and Tier 2 suppliers jumped in 2021 across all categories, according to the retailer's annual sustainability report.
  • The increase occurred in part because apparel and footwear suppliers struggled to make timely wage payments as the COVID-19 pandemic dried up their cash flows, Levi's said in the September report. In some cases, suppliers hadn't met new requirements established by the company in 2020.
  • "Delays in remittance of social security benefits, severance payments to workers, delays in permits renewal and other issues associated with the pandemic were reported during the assessments," Levi's said, adding that it worked with suppliers to meet their legal obligations to pay their workers.

Combined Tier 1 and 2 supplier violations surge for Levi Strauss in 2021

Supplier violations by category: Zero tolerance (must remediate immediately), immediate action (must remediate fully within two months) and continuous improvement (should be addressed).

Dive Insight:

After violations skyrocketed in 2021, Levi's said in the report that it’s leaning on corrective action plans to help suppliers comply with the company's code of conduct going forward.

The retailer said it is providing suppliers with the training, resources and capacity building necessary to tackle systemic issues. A special focus was placed on licensees, who were hit harder by the pandemic than direct suppliers, according to Levi's.

"We are also adjusting our scoring methodology and rating system to more closely align them with industry practices and to fast-track remediation and closure of [corrective action plans]," Levi's said.

The company said it terminated two supplier relationships for noncompliance after zero-tolerance violations, with another undergoing verification as of September. The remainder have been remediated.

Zero-tolerance violations are considered serious breaches of the supplier code of conduct which require immediate remediation. They can include sexual harassment, forced labor and child labor. Levi's said it identified one incident of sexual harassment in 2021, which the company said has been remediated, and found no instances of forced labor or child labor in its assessments last year.

Health and safety problems remained the most common issue for Levi’s at both Tier 1 and Tier 2 facilities in 2021 even with the overall surge in violations, making up 53% of issues found. In 2020, 54% of issues were tied to health and safety.

The retailer said in the report that health and safety assessment findings are often tied to "paperwork management non-conformances,” rather than issues threatening worker safety. It added that it regularly reminds suppliers about the importance of ongoing safety training.

"Because our health and safety requirements are so extensive, it is not uncommon for assessments to uncover a violation, sometimes due to workplace conditions or procedures, and sometimes due to worker noncompliance, such as removal of gloves or a mask," Levi's said.

Working hours and wages and benefits tied for a distant second in issues found at 12% each. That's not a problem unique to Levi's supply chain — Amazon recently reported that among its suppliers and potential partners, more than 40% of those audited last year had wage and benefits issues. At Victoria's Secret and Co.'s suppliers, the majority of what it considered to be "elevated violations" in 2021 concerned wages and benefits, per its most recent ESG report.

via https://www.aiupnow.com

Max Garland, Khareem Sudlow