1 Levi Strauss & Co. Corporate Citizenship Value Proposition Coordination and Implementation Project Shirin Belur & Brooke Golden Wednesday, April 25,

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Levi Strauss & Co.Corporate Citizenship Value Proposition Coordination and Implementation Project

Shirin Belur & Brooke GoldenWednesday, April 25, 2007

Prepared for: Theresa Fay-Bustillos

Executive Director of Levi Strauss Foundation and Vice President, Worldwide Community Affairs, Levi Strauss & Co.

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Overview/Table of Contents

Topic Slide

Project Background 3-5

Methodology 6-8

Findings and Examples 9-19

Recommendations 27-32

Lessons Learned 34

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SUPPLY CHAIN PRACTICESTHAT RESPECT THE

WORKERS WHO MAKE OURPRODUCTS

BUSINESS PRACTICES THAT REFLECT THE DIVERSITYOF THE WORLD WE SERVE

ENVIRONMENTAL INITIATIVES

THAT SUPPORTSUSTAINABILITY

SOCIETAL ENGAGEMENT THAT CONTRIBUTES TO

POSITIVE SOCIAL CHANGE

HIV/AIDS INITIATIVES THATPROTECT EMPLOYEES,

WORKERS AND CONSUMERS

GLOBAL BUILDING BLOCKS

“Profits Through Principles”

Great brands and businesses are built by consistently providing quality products and services, and by earning the trust of consumers, investors, suppliers, employees and communities through responsible, progressive and accountable business practices. Moreover, as business leaders we have the obligation, both individually and collectively, to make our enterprise not only a source for economic wealth, but also a force for positive social change in the conduct of our business. This principle of responsible commercial success is embedded in our more than 150-year experience, and continues to anchor how we operate today.

EMPATHY Walking in Other People’s Shoes

ORIGINALITYBeing Authentic and Innovative

INTEGRITYDoing the Right Thing

COURAGEStanding Up For What We Believe

GLOBAL POSITIONING GLOBAL CHARACTER

LS&CO. Corporate Citizenship Value Proposition

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Project Scope

This project will focus on helping LS&Co. further integrate CCVP into strategies, plans and go to market processes by answering the following key questions:

• What tools are comparable companies using to ensure effective integration of corporate citizenship into staff functions, plans and strategies? How are these tools integrated into CSR reporting?

• What are the CSR mega trends facing the apparel industry today? Why are they important? How might the CCVP be best integrated to address and report on these issues?

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Definition of Integration

A company has fully integrated corporate citizenship when all functions and operations are engaged, when corporate citizenship spans all levels, and when all decision-making takes into account all stakeholders and issues. True success is reached when corporate citizenship is at the core of the business.

Every department, division, or component of an organization needs to share the same set of core values in a consistent manner among all employees. Corporate citizenship has its greatest power when employees, and all those working on behalf of the company, utilize these core values and corporate citizenship understanding in decision-making.

Building Momentum to Integrate Corporate CitizenshipTeleConvening Report: July 19, 2005.Boston College, Center for Corporate Citizenship

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Company Mission

Community Affairs

Global SupplyChain

Global Brand Leadership

Teams

Strategy &WW Marketing

Human Resources

IT Finance

Diversity Diversity Provide

Systems

Support

SupportAccountability

And Citizenship

Goal is to integrate CCVP into plans, strategies and go-to-market process

Put CSR on to the agenda of meetings at all levels

Supply Chain

EnvironmentalInitiatives

Societal Engagement

EnvironmentalInitiatives

HIV/AIDS

Supply Chain

Diversity

HIV/AIDS

Societal Engagement

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Methodology:

Identify comparable companies:

• Similar size to LS&C

• Interesting or innovative models

Benchmarking through interviews:

• Conducted 1 hour phone interviews

• Probe models and plans, best practices, KPI’s and evolution.

Research:

• Boston College Center for Corporate Citizenship

• Business for Social Responsibility

• CSR Reports

• Coursework and Readings

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CompanySize

(revenue in Mil) Sector Contact TitleAmerican Apparel $211 Apparel

Timberland $1,565 Apparel Alex Hausman CSR Reporting Manager

Agilent $4,685 IT Steve Beitler Manager Govt & Public Affairs

AMD $5,847 IT Allyson Peerman Global Community Affairs DirectorPhil Trowbridge Manager Corporate Responsibility

Starbucks $6,369 Food Cindy Hoots Sr. Specialist Corporate Soc. Responsibility

Adidas $8,247 Apparel Gregg Nebel Head of Social and Environmental Affairs (US)

Nike $13,739 Apparel Chuck Gatchell Reporting Manager

Dow $49,124 Sciences Scott Noesen Director of Sustainable Development

Methodology:

Benchmarking through Interviews

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Components of Integration

Corporate Buy-In

Forward Thinking

Defined Org Structure

Accountability

Tools for Coordination

Stakeholder Engagement

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Observed Model Org Structures

1. Pillar Model – Pillars represent company’s CSR focus areas: environmental stewardship, global human rights, social enterprise. Each of the pillars works directly with applicable operations units: marketing, supply chain, human resources, etc. (Timberland)

2. Dual Reporting – The CSR team has a dual reporting structure- each director reports to CSR VP as well as someone on the operations team. This provides a solid line to CSR, with a dotted line into the business. (Nike)

3. Internal CSR Consultants –CSR team works closely with various business units, acting as consultants who support CSR initiatives. CSR provides expertise for accountability, implementation and tracking (Starbucks, Adidas).

4. Decentralized Model – CSR Manager identifies implementation leaders in each business unit (AMD) and coordinates communication.

Structure Corporate Buy-In Accountability Stakeholder Engagement Forward Thinking

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Leader - Nike


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Corporate Buy-In

Best Practices

Top Down/Bottom Up Approach to CSR – In order to get company-wide buy in, CSR message must come from the CEO. There must also be a process for employees to raise CSR issues and concerns

Put it in Writing – To demonstrate long term commitment to CSR, incorporate it into the company mission or guiding principles

Engage Key People - To get support of middle managers (implementers), important to start by engaging executives and influencers who will spread the word

Educate: Persuade skeptics and others by sharing business case for CSR


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Leader – Starbucks


CSR is one of their guiding principles – this helps integrate CSR into the company culture.

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Leader – Starbucks

Corporate Buy In

• Top Down - Howard Shultz continually delivers a strong social and environmental message internally and externally.

• Education - Starbucks Environmental director brought in Natural Step and offered workshops on business case for CSR (for directors and above). He talked about reducing operating costs (waste management), increasing customer loyalty, and benefits to “license to operate”.


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Accountability

Best Practices

Collaborative Goal Setting - Goals and metrics are developed and owned by each business unit, with guidance from the CSR team if needed. Ownership creates accountability.

Print goals in CSR report – Officially committing and communicating goals helps keep team accountable

Incorporate CSR into the Performance Review Process – Formalize accountability by evaluating CSR goals in the same way that other goals are evaluated

Use IT tools – Web based applications or intranet can simplify process and help push accountability to business units


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Stakeholder Engagement

Best Practices

Hold a stakeholder forum - stakeholders go to headquarters and discuss issues, ideas, strategies, etc.

Create External Advisory Council - External stakeholder group of activists, academics, etc. Who give guidance on sustainability issues

Poll stakeholders before and after CSR Report is published – Stakeholders provide feedback, act as barometer on what is missing and where to focus


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Leader – Nike

Stakeholders are lead identifiers of how they are doing and where they are going.

Nike holds an annual stakeholder forum where 50+ stakeholders visit headquarters and spend two days focused on discussing issues, ideas and strategies related to emerging and existing CSR issues.

Also, CR reports open the window for hearing stakeholder feedback. They inevitably comment on the information that is released.


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Preparing for the future: Best PracticesBeing proactive to identifying and responding to societal concerns

Emerging Issues Council – a group of executive leaders meets to discuss issues and determine relevancy and risk to the company. (Nike)

Receive feedback – set up a mechanism for employees, consumers, and other stakeholders to respond to your business, business practices and share ideas on future improvements.

Research – Be involved in the community, monitor blogs, attend University Conferences, engage NGO collaboration


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Leader – AMD

Preparing for the Future

AMD hosted its first Global Vision Conference in October 2005 for nearly 200 senior-level executives and technology thought leaders. Executives from multiple industry sectors including end user, OEM, software, hardware, and channels, convened to discuss technology trends and their impact on social behavior, business strategies, and other key issues facing business leaders over the next 10 years. The conference was designed to inspire attendees to think about their businesses in new and exciting ways, to pursue new technologies, new partnerships, and new paths to help achieve a new global vision using technology to make the world a better place.


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Our Recommendations Short - Term:Recommendations Implementation

Establish Organizational Structure • Create CSR Manager role

• Identify implementation leaders in each business unit

• Assemble Executive Committee

State Company CSR Vision • Integrate CCVP goals into corporate mission statement– Start with Guidelines for Socially Responsible Investing. Personalize to LS&C.

• Develop short and longer term goals for success– Set timing against specific goals

Get Buy In At All Levels • Communication should come from CEO

• Identify execs and influencers and educate them with business case

• Ensure brand is engaged and goals are a part of business development planning process

Set CSR Goals • CSR manager can work with business units to set goals, put goals in writing

• Build upon existing test models and set new test models

Build Brand Story • Make a case for, integrate and publicize CSR into product story, product development, general marketing

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Our recommendation: Hybrid (stepped)

Step 1: Hire one CSR Manager and identify implementation leaders in each business unit

Step 2: Hire 2-3 more managers. They can either be assigned to specific business units or assigned to specific building blocks

Step 3: Ultimate goal is to have a CSR team that works closely with the business units either reporting directly to them or acting as consultants.

Our Recommendations Short - Term:

Establish Organizational Structure

LS&C should decide if it wants to start with a centralized, decentralized or hybrid model.

• How much support will the business units need?

• Can you find implementation leaders in each business unit to spearhead the programs?

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Our Recommendations Medium - Term:Recommendations Implementation

Build in Accountability • Incorporate CSR into brand planning process.• Incorporate CSR into job descriptions and performance reviews of key

implementers.

Engage Stakeholders • Assemble an external council of stakeholders (meet twice/year), hold a broader stakeholder forum (once/year), get feedback on CSR report (once/year)

Develop Global IT Systems • Use for tracking and communications

Issue a CSR Report • Set owner of report and content for each department

• Communicate goals, accomplishments

• Establish metrics and timeline for reporting

Prepare for the Future • Assemble an “Emerging Issues” team or incorporate this into a few positions, identify CSR issues that will be potentially be tackled in the future

• Recruit employees interested in CSR at all levels of the business:

– Include CSR ideals in recruiting materials

– Incorporate CSR probe questions in interview process

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Our Recommendations Medium - Term:

Build in Accountability:

Incorporate CSR Roles & Responsibilities into planning process

Make CSR a “stretch” not an “added task.”

Challenge: Avoid bureaucracy and layers when possible

Our recommendation: Incremental Progress, leverage what you have.

Step 1: Meet with Brand managers during planning process, hear initiatives, consider where they can stretch or repackage what they are already doing. (consultancy model)

Step 2: Incorporate CSR into performance reviews for key implementers.

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Our Recommendations Medium - Term:

Prepare a CSR Report:

Supports accountability

Provides a timeline and reason for communication

Outlet for stakeholder engagement and feedback

Supports branding initiatives and corporate image

Shows LS&C is leader in their field

Our recommendation: Prepare a CSR Report

Step 1: In first report discuss initiatives you are already doing. Set timing for report and for long term initiatives.

Step 2: Give departments the opportunity to choose what to discuss on current efforts. Set metric for where you are going as a company (if not quantified, outline vision).

Step 3: Go to Press. Integrate into retail. Establish formal review process for progress to cover in subsequent reports.

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Comments on CSR Reporting:

Adidas: “Report “keeps your feet to the fire” and requires you to report on progress of deliverables or explain why not delivering.” Serves a broad and global audience. Also, relieves the obligation for staff to report/ present on the issues.

AMD: Report becomes a driver for collecting information, it requires that these groups give you specific information, also helps open the conversation with new or different people. In whatever format it takes (frequency, format) it’s more about the exercise of pulling the info having a deadline, etc.

Nike: It makes sense (for Levis) to have a report in retail stores and online. Reporting leads to more transparency, it shows leadership, and is consistent with the strengthens of the brand.

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Our Recommendations Long - Term

Recommendations Implementation

Build in Accountability • Expand CSR responsibilities into job descriptions and performance reviews

Build CSR Team • Consider having one manager for each building block or one manager for each business unit

Plan Industry Wide Conference

• Collaborate with industry partners to tackle CSR issues, establish LS& Co. as leader in CSR

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Maturity of Model Low High

Staff Involvement Discussion Structured

Stakeholder Engagement Limited Formalized

Accountability Little Broad sweeping

Collaborative Goal Setting Simple Intensive

Owners None/ Few All

Reporting Reactive Proactive

Company Goals Mentioned Stated part of mission and goals

Evolution formalization integration forward focus

Companies: Dow, Adidas AMD, Agilent Starbucks, Timberland, Nike

Grassroots Silo IntegrativeModel Evolution:Doing less harm Doing more good

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Lessons Learned

• CSR Strategies are useless without an effective plan for integration and implementation.

• Integration strategies must fit with the culture of company. Identify past successes and implement similarly.

• Integration can happen in stages.

Value of Project

• Learned real tactics for implementing CSR strategies within a large corporation

• Learned best practices through benchmarking and interviews

• Gained first hand peek behind the CSR curtain at a diverse set of companies.

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Thank You

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Sources:

Boston College Center for Corporate Citizenship

• “10 half truths to Integrating Corporate Citizenship”

• “Corporate Citizenship Infrastructure: People, Roles, and Structure”

• “Building Momentum to Integrate Corporate Citizenship”

• “Integration: Integral Link for Corporate Citizenship”

Business for Social Responsibility

• “CSR Governance Structures”

• “Designing a CSR Structure”

Coursework and Readings

• Prof. McElhaney Lecture: CSR Frameworks, Systems, Metrics

• Current and historical CSR Reports of each company

Documents

1 Levi Strauss & Co. Corporate Citizenship Value Proposition Coordination and Implementation Project Shirin Belur & Brooke Golden Wednesday, April 25,