Product Sustainability Levis

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND VERHAERTINNOVATIONDAY – OCTOBER 12th, 2007 Both Blue and Green… www.mastersininnovation.com From Actionable Consumer Insights to the first Certified EKO Sustainable Textile Jeans Alberto De Conti - Director, Global Innovation Group - LEVI Strauss ADeConti@LEVI.com Eu.levi.com Commercially confidence – This presentation contains ideas and information which are proprietary of LEVI STRAUSS EUROPE, it is given in confidence. You are authorized to open and view the electronic copy of this document and to print a single copy. Otherwise, the material may not in whole or in part be copied, stored electronically or communicated to third parties without prior agreement of LEVI STRAUSS EUROPE. www.mastersininnovation.com CONFIDENTIAL 12.10.2007 Slide 1

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND Agenda www.mastersininnovation.com 1. Levi Strauss Europe 2. LS&CO. Corporate Citizenship 3. From Shaggy Organic to Supra Sustainable 4. From Supra Sustainable to Future Eco 5. Levi’s® eco: Beyond Organic 6. Getting the Message 7. What’s Next? CONFIDENTIAL 12.10.2007 Slide 2

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND Levi Strauss Europe www.mastersininnovation.com Headquartered in Brussels 4,500 employees across Europe Sales in 44 countries 3 manufacturing plants 400 Levi’s® stores 15,000 retailers FY2006 Net revenues: $898 million (of $4.2bn) CONFIDENTIAL 12.10.2007 Slide 3

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND LS&CO. Corporate Citizenship - Value Proposition GLOBAL POSITIONING GLOBAL CHARACTER . Paying close attention to the world around us; identifying and EMPATHY addressing the needs of our stakeholders Walking in Other People’s . Employing a diverse workforce and board, and fostering an inclusive “Profits Through Principles” Shoes and collaborative work environment Great brands and businesses are built by consistently providing . Giving back to communities where we operate, live and source www.mastersininnovation.com quality products and services, and by earning the trust of product consumers, investors, suppliers, employees and communities . Infusing all aspects of our business with the spirit of ORIGINALITY through responsible, progressive and accountable business practices. Moreover, as business leaders we have the innovation, including our corporate citizenship initiatives Being Authentic and obligation, both individually and collectively, to make our Innovative enterprise not only a source for economic wealth, but also a force for positive social change in the conduct of . Living our values despite economic and social pressures INTEGRITY business. This principle of responsible commercial success is . Being open, honest, responsible and accountable Doing the Right Thing embedded in our more than 150-year experience, and continues to anchor how we operate today. . Challenging hierarchy, accepted practices and conventional wisdom COURAGE GLOBAL BUILDING BLOCKS . Driving positive social change in communities Standing Up For What We . Truth telling and standing up for what is right Believe BUSINESS PRACTICES THAT SUPPLY CHAIN PRACTICES ENVIRONMENTAL SOCIETAL ENGAGEMENT HIV/AIDS INITIATIVES THAT REFLECT THE DIVERSITY THAT RESPECT THE INITIATIVES THAT CONTRIBUTES TO PROTECT EMPLOYEES, OF THE WORLD WE SERVE WORKERS WHO MAKE OUR THAT SUPPORT POSITIVE SOCIAL CHANGE WORKERS AND PRODUCTS SUSTAINABILITY CONSUMERS • A culture where all employees and • Progressive workplace policies • A diverse and inclusive • Manufacturing and raw material • A supply chain that supports our retail stores are motivated to and benefits that serve employees workforce and board suppliers who respect workers’ sustainable raw material use and benefit local communities through • A team environment that infected and affected by HIV/AIDS rights production processes • Employees, workers and donations of time, talent and resources • Go-to-market processes that • Retail stores and offices that respects and embraces different • Women and youth in communities consumers are activated to experiences, cultures, styles and facilitate compliance with our code support sustainable resource use where we have a business presence • Trade agreements that promote oppose HIV/AIDS stigma and viewpoints of conduct (i.e., Terms of have increased economic opportunities • Contracts with vendors owned discrimination Engagement) by suppliers environmental sustainability • The lives of workers for • Additional resources where the • Public policies and trade by women and underutilized manufacturing and raw material company has a business racial or ethnic populations agreements that uphold workers’ suppliers are improved through • Products and marketing that presence are focused on the rights supportive community resources poorly funded drivers of the reflect our diverse markets • NGOs, industry associations and • Public policies that support HIV/AIDS pandemic • Workers for manufacturing and others are engaged with us to further workplace diversity our corporate citizenship goals and raw material suppliers are CONFIDENTIAL strategies 12.10.2007 Slide 4 educated on HIV/AIDS prevention

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND LS&CO. Corporate Citizenship www.mastersininnovation.com “Profits Through Principles” “…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…” We walk the talk CONFIDENTIAL 12.10.2007 Slide 5

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND A History of Profits Through Principles 1952 Levi Strauss Foundation formed to coordinate the company's charitable giving. www.mastersininnovation.com 1960 LS&CO. precedes U.S. government mandated racial integration policies and opens integrated plant (Virginia). 1982 The Levi Strauss Foundation begins matching employee contributions to an HIV/AIDS project in San Francisco. 1991 LS&CO. adopts first known set of comprehensive standards (Terms of Engagement), for all contractors (wages, hours, working conditions, the environment). 1992 LS&CO. becomes first Fortune 500 company to offer full medical benefits to unmarried partners of employees. 2005 LS&CO. unveils list of global suppliers. CONFIDENTIAL 12.10.2007 Slide 6

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND From Shaggy Organic to Supra Sustainable www.mastersininnovation.com Ethical consumption with zero trade-offs is now possible and cool CONFIDENTIAL 12.10.2007 Slide 7

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND From Shaggy Organic to Supra Sustainable • 2006 - 2007 sees huge momentum around this trend. Ecological and ethical issues are rising on the political agenda and consumers are www.mastersininnovation.com increasingly concerned about the impact this has on their own lives. • The trade-offs that existed pre-2006 (price, taste, style, etc.) are becoming less of an issue as new brands begin to change the paradigm. We are beginning to see the death of “alternative” lifestyles, with “ecological living” as the future. • The idea of transience and temporariness are also emerging in reaction to mass consumerism and materialism, in recognition that there is freedom in not ‘owning’. This idea epitomizes the transition from the “material” to “experience” economy. CONFIDENTIAL 12.10.2007 Slide 8

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND From Shaggy Organic to Supra Sustainable • 81% of the population has some level of consciousness … . 74% believe that every one of us should take action to www.mastersininnovation.com address global warming . 63% are very concerned by global warming and environmental issues • And over 50% are actually claiming to take action: . 44% are prepared to pay more for environmentally friendly products . 24% consider buying products only from companies that are socially responsible and environmentally friendly • In 2005, Britons spent £25 billion on products and services that were Sustainable, Ethical, Green, Organic or Responsible. CONFIDENTIAL 12.10.2007 Slide 9

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND From Supra Sustainable To Futureco www.mastersininnovation.com Sustainability is no longer about politics…it is a reality that is becoming ever more serious CONFIDENTIAL 12.10.2007 Slide 10

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND Futureco: Why is this relevant? • The impact it will have on brands is the need for us to be open, honest and transparent. Consumers are beginning to ask questions, moving beyond consumer-facing dimensions such as organic/ recycling to bigger issues www.mastersininnovation.com around production/business practices. • For the denim market in particular: Can the long-lasting nature of the material be further celebrated and magnified? Is recycling and re-spinning old denim a source of product creation? Can swapping and ‘dealing’ in unwanted denim be an alternative source of savings? • This also opens the door to being innovative and radical: can we re-invent our category? CONFIDENTIAL 12.10.2007 Slide 11

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND Levi’s® eco: Actionable Consumer Insights • Consumers are seeking to minimize their personal impact on the environment without sacrificing style & quality. www.mastersininnovation.com • Consumers are looking for initiatives that meet the needs of the present without compromising the ability of future generations to meet their needs. • Consumers are looking for products with the long term in mind. • Consumers are willing to make a small contribution to a better world when choosing a product. CONFIDENTIAL 12.10.2007 Slide 12

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND Levi’s® eco: Beyond Organic May 2006: • Levi Strauss Europe’s Supply Chain and Levi’s ® Product teams begin discussions around a product that goes beyond organic www.mastersininnovation.com cotton (as already achieved in the LEVI’S® ENGINEERED JEANS® range in Spring 06) • The project was aimed at environmentally-conscious consumers that demand style and quality while reducing impact on the environment • We wanted to focus on an end-to-end manufacturing process from incorporating a sustainable and holistic perspective CONFIDENTIAL 12.10.2007 Slide 13

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND Levi’s® eco: Beyond Organic End-to-End Holistic Process Find Develop “Factory www.mastersininnovation.com 100% Certified Alternative HQ Support Delivery Non-Chemical Within Organic Cotton Certified Processes To Market Finishes a Factory” Components Location of Raw Material Suppliers and Company-Operated Plant and its proximity to market reduces transportation impact on the environment CONFIDENTIAL 12.10.2007 Slide 14

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND Levi’s® eco: The Product • 100% certified Organic Cotton • Coconut shell waistband button • Non-galvanised metal buttons www.mastersininnovation.com • Metal rivets replaced by reinforced stitching • 100% certified Organic pocket bags and 100% linen cloth label • Innovative organic finishes: potato starch, mimosa flowers and Marseille soap CONFIDENTIAL 12.10.2007 Slide 15

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND Levi’s® eco: A factory Within a factory • Company-operated plant in Kiskunhalas, Hungary • Production processes for Levi’s® eco jeans completely www.mastersininnovation.com separated from other production: Machinery cleaned Components, fabric, finished jeans kept separate Tracking of every component at every stage Specialized training required CONFIDENTIAL 12.10.2007 Slide 16

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND Levi’s® eco: EKO Sustainable Textile • Achieving Independent Certification by Control Union: www.mastersininnovation.com Control Union Certifications est. 1956 (oldest, most established certification body & most widely known in denim industry) EKO Sustainable Textile certification guarantees EU regulations for organic production met and Control Union’s standards for textile processing Standards are aligned with LS&CO. values • Key focus of Control Union audit: Fabric, finishes, components for Levi’s® eco jeans Manufacturing site and processes Processes at European HQ to support production, including quality control and tracking processes CONFIDENTIAL 12.10.2007 Slide 17

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND Eco-Tech • Consumers becoming more aware of health and environmental issues. • Gone are the times when technology was generally perceived as www.mastersininnovation.com harmful and polluting. • Technology is nowadays a source of both constructive environmental solutions, distinctive and contemporary aesthetics. CONFIDENTIAL 12.10.2007 Slide 27

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND Like a Virgin • In an increasingly artificial, superficial, media-driven world where the only constant is change, we are losing touch with deeper www.mastersininnovation.com values and with what is real. • The look and feel of raw, untouched, virgin and pure materials are a return to primary human values: it is about purity commanding new looks. CONFIDENTIAL 12.10.2007 Slide 28

© LEVI STRAUSS EUROPE PRODUCT SUSTAINABILITY AND BEYOND www.mastersininnovation.com Verhaert New Products & Services nv Hogenakkerhoekstraat 21 9150 Kruibeke Belgium Tel +32 (0)3 250 19 00 Fax +32 (0)3 254 10 08 www.verhaert.com info@verhaert.com www.mastersininnovation.com CONFIDENTIAL 12.10.2007 Slide 30

Product Sustainability Levis

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2 Favorites, 1 Group & 1 Event