Leadership Principles | Chip Bergh
At this critical moment in our society, we are fortunate to have the opportunity to hear from Chip Bergh: a leader who believes companies must approach the pressing and difficult issues that exist in our world today. An example of Beyond Yourself and Question the Status Quo, he has proven his commitment to taking on the issues of gun violence, voting rights, social injustice, and the environment.
When Chip took the helm at Levi’s in 2011, he pledged to refocus the brand to be more socially aware. We will have the opportunity to hear more about several of the sustainability initiatives implemented under his leadership — WellThread, WaterLess, and Levi’s SecondHand. Additionally, Chip is a firm believer in the opportunity for business to build back stronger, and we will discuss his vision for Levi’s in a post-pandemic world.
Transcript
good afternoon
and welcome to today’s speaker series
the dean speaker series co-sponsored by
the center for responsible businesses
peterson speaker series i am very
excited to introduce today’s guest
a leader who truly embodies our defining
leadership principles
chip berg president and ceo of levi
strauss and company
chip joined levi’s in 2011 and pledged
to make sustainability a primary
emphasis
for the company their stated mission
to not just make great clothes but to
make great clothes
in a sustainable way has been at the
forefront
of a number of significant
sustainability initiatives
implemented in this past decade in march
2019 under chip’s leadership levi’s
successfully launched an
ipo on the new york stock exchange after
the company reported 2018 results
of 13.9 percent year on year growth
in global revenue the advice products
are
sold today in more than 110 countries
through a combination of chain retailers
department stores
and online sites prior to joining levi’s
in september 2011 chip had a
28-year career at proctor and gamble
where he oversaw
all aspects of branding innovation and
key
investment decisions notably leading the
global expansion
of gillette fusion to more than 80 new
markets
in april 2019 ship was named one of the
top 20 world’s greatest leaders by
fortune magazine and he has been widely
recognized
for his values-driven leadership
today’s conversation will be led by four
high students who
in just a moment will introduce
themselves
robert strand our executive director of
the haas center
for responsible business will lead the
audience q a
on behalf of all of us here at berkeley
cost thank you chip
for taking time out of what i know is an
incredibly busy schedule
to share your insights with us today
i’d like to start the conversation with
a question that i’ve been posing myself
for the last several months so leading
in a crisis
is something that we teach in our
classes we never
imagined that this pandemic would give
us a
unique kind of real-time case study
to explore how to lead in a crisis
so i’m really curious as a business
leader
have you shifted the way you lead during
this crisis are there certain
key attributes or talents that you find
yourself leaning into
as you respond to this crazy uncertain
world
i’d love to hear your thoughts on that
well first of all ann thank you
so much for inviting me to be here as as
i said
um right before we went live my only
regret is that we can’t do it in person
um because i love these kind of
opportunities and i really do appreciate
and i’m looking forward to the
conversation over the next
hour um the short answer is yes
and i will get to kind of what i’ve
leaned into
uh predominantly through this
you know once in a lifetime kind of
experience that we’re all going through
but i would say that it’s it’s more than
one crisis that we’re living through
we’re living through multiple
crises all at the same time and
and navigating all of them uh and
there’s an
interconnectedness between these crises
so you’ve got obviously the health
crisis or the global pandemic that has
us all
zooming into this meeting right now you
have the economic fallout from that
crisis you know there are still
10 million americans less employed or
not
employed today that were employed before
the pandemic
and then you have the the racial and
social justice crises which have also
emerged and the health crisis has really
shined a spotlight on the structural
racism that exists in this country
and and the critical need for us to
address
some of these issues around equality and
um and all of this wrapped up um
you know in a way that has us
all experiencing life in a very very
different way
um you know we’re all zooming in from
different parts of the globe right now
instead of being together in a classroom
or an auditorium
and and being able to share you know
directly with one another and and the
stress that’s associated with that
especially you know
young parents who are trying to manage
two or three kids
zooming into school remotely i mean it’s
just
that’s another crisis on top of it and
the potential impact that this could
have
predominantly on women is a big concern
of mine
as well because a lot of this still
falls on the woman as the as the primary
driver of getting the kids to school and
um and so you have multiple crises
happening at the same time
from a business standpoint i would say
that um
our focus has been you know we had
tremendous
momentum and a lot of success leading up
to this
fiscal year as you said we took the
company public the the whole levi’s
story
over the last nine years has been a
turnaround story we
underperformed for more than a decade
and we’ve turned the company around
levi’s is back it’s a hot brand we’re
number one around the world
um we had a couple of years of
double-digit growth leading to the ipo
and even in our first quarter of this
past fiscal year which for us
is december january and february we
reported mid-single-digit
levels of growth and and that was with a
little bit of
covet impact in asia and then
the hammer fell and we your second
quarter our doors were closed for
10 of the 13 weeks of the quarter and
our revenues were down
67
and i can honestly say i’ve never had to
report revenue results
that bad and we lost over 200 million
dollars of profit
that quarter but when the pandemic
really hit us we made a commitment that
we were going to emerge from the
pandemic stronger
we might be a smaller company we will be
a smaller company
because of the impact that this is
having on our business but we will
emerge from it stronger
our brands will be stronger we will grow
share through this
and we will change the shape of our p
l so that when our business does return
to pre-covet levels which it will
we will be more profitable as a company
so so
we’re really focused on that from a
business standpoint
but from a leadership standpoint i would
say the big pivot for me
has been to kind of um really amp up my
empathy muscles i like to think i’m a
pretty empathetic
guy to begin with i’m i’m very
approachable i’m
really reasonably down to earth um
you know i miss being in the office and
having hallway conversations or riding
up in the elevator with folks and just
having those spot
spontaneous moments but um
you know this crisis really has created
opportunities for me to listen more
and really empathize with the unique
situations that people find themselves
in and
and really trying to think through how
to solve some of these
issues for us as a company for us as an
organization but even more broadly the
impact that we can make
here in society so
after the george floyd murder um you
know i basically went into listening
mode with a number of our black leaders
and
um and it led to one of probably the
most
um yeah i would call one of the most
difficult
moments of my nine years in this company
and that is recognizing
and and declaring publicly that we’ve
not
made the progress we need to make in
building a diverse and inclusive
organization and when i listen to some
of the black leaders
tell me about their experience inside
the company
and some of the microaggressions that
they deal with almost on a daily basis i
mean set aside living in san francisco
which is hard enough
just looking at inside our own four
walls
and and some of the issues that we have
as a company
i feel like i failed in that area and i
think part of being a good leader
is to step up and to say there are
places
where i could have done better and this
is certainly one um you know when i
joined the company
diversity and inclusion was really low
on my list the house was on fire we
needed to fix the house and i thought
the two were separate
and i look back on it now and i realize
if we had addressed our diversity and
inclusion issues
really head-on hard in very early days
we’d be a better company today
we’re a pretty good company right now
but we’d be a better company because i
really do believe that diverse
organizations will out-compete
homogenous ones every single day you
know i talked about women at home
and and the challenge is that um you
know dual income
uh couples with kids what they’re
dealing with you know especially if
they’re living in san francisco in a
900 square foot apartment with two kids
zooming into school and trying to do
school remotely
it’s a challenge and then they’ve got a
boss who’s expecting them to be on
you know wall-to-wall video conferences
all
all day and and i’ve really had to step
in
and and demand of leaders
that they be empathetic to the unique
situations that each one of their
employees is facing
um we cannot project how we’re dealing
with
the pandemic on our own basis
and expect that all of our employees are
experiencing it the same way
everybody has unique and different
circumstances um
you know again i went into listening
mode with a lot of our
employees at all levels to understand
how is the
how is the pandemic impacting them and i
i literally have had employees tell me
that
they they’ve become depressed
that they’ve had to seek clinical help
for depression
i’ve had we’ve had an employee
leave the company she was a single mom
with three kids
two kids zooming to school and a toddler
and she said i
you know i’m failing as a mom i’m
failing at work
something’s got to give and that’s an
easy choice and so
that you know that that’s been the
challenge as a leader and we talk about
the importance of stakeholder management
one of the most important stakeholders
i believe i’ve got is our team
the people of this company they are what
has turned the company around that’s
that’s the team that has made this
company
what it is again and and and that
has has been really really hard too
um i guess the last thing i would say
and then we can move on
i feel like i’m rambling here a little
bit but there’s there’s a lot to unpack
in that question
um you know the hardest decision i had
to make during this pandemic was right
in that second quarter when we saw our
business
falling off of a cliff we’re about a six
billion
going into this year we our forecast or
our plan for the year was to be a little
bit more than six billion dollars in
sales
there’s a little bit of seasonality but
if you just straight line an average
quarter is about one
and a half billion dollars in sales that
second quarter we did
less than a half a billion dollars in
sales
we lost a billion dollars off of the top
line
in one quarter and we have no idea
how bad how long we still don’t really
know how long is this going to continue
so i we had a an organization
built to support a six billion dollar
business and it was pretty clear to me
that we were gonna wind up somewhere
pretty far south of five
and we had to adjust our cost structure
and that resulted in us announcing on
that same second quarter call
that we were laying off 700 people and
that was maybe one of the hardest
decisions
i’ve ever had to make in my career and
we’ve been through restructure once
before
shortly after i joined we needed to do
it then
this time was a lot different because
the business was healthy
and if it weren’t for this act of god
then the pandemic and the impact that
that had on our business
we would never have had to do this but
what made it really
really tough is i saw the list of people
who we were letting go
and a lot of them had been with the
company and had contributed to the
turnaround
and so these were really talented
contributors
that we had to let go because our back
was against the wall
and i i it was still the right thing to
do because i have to think about you
know we’ve been around for 168 years i
had to think about the next 168 years
so it was the right thing to do but man
was it hard
and so having that empathy muscle and
really being willing to listen
and and put yourself in another person’s
shoe
shoes to to understand what they’re
dealing with
at that moment um you know in the midst
of
all of these combined crises together
has been probably the most important
thing that i’ve i’ve had to really
exercise during this period of time
thank you so much for that chip that
that was really powerful
uh response and now um we’re going to
turn to olivia
thank you so much sir for being here
with us tonight
albeit virtually um my name is olivia
wastines and i’m a first-year full-time
mba student at haas and
my question is a bit of a two-part
question
um i would love to know
a little bit more about the rationale
behind the decision
for levi’s to go public in 2019
after over a century of operating as a
private company
and and my follow-up to that is do you
have any concerns about how
earnings pressure and the short-termism
that comes along with it might impact
levi’s ability to
continue to make values like decisions
in the future
um okay great questions and i get asked
this a lot as you can imagine
um so the rationale on doing the ipo
was was fairly straightforward
um and i’ll take you through it we we
actually were public once before
small known fact for uh about a decade
or so
in the 70s and then the company did what
at the time was the largest
lbo in the history of wall street and
took the company
private again and then they did a second
lbo
in the mid 90s to buy out
half of the family and consolidate the
ownership
and um took on a ton of debt
right at a time when the economy was
going into the tank
and retailers were consolidating our
wholesale customers were consolidating
we lost
our largest wholesale customer and that
contributed to this 10-year
fall off of a cliff in 1996 the company
was 7 billion dollars in sales we went
from 7 billion
to 4 billion in about 5 years
and you all are business school students
you know that’s going the wrong
direction right
so and then we just kind of bumped along
for a number of years but
so the rationale was as follows um and
and to be clear
we it’s not like we really needed the
cash we had a really strong
balance sheet at that point in time this
was really about
um liquidity for our shareholders which
were all family members descendants of
levi strauss himself
but when we talk about the family and
our
family shareholders you know this is
it’s
it’s not like facebook where it’s mark
zuckerberg i mean there are
over 100 family members and when you add
up their trusts and everything else
almost 200 shareholders that hold stock
and levi’s before we went public
and you play that out another jeanration
or two jeanrations or three jeanrations
and we would get to such fragmented
ownership that would be
almost impossible to govern a company
like that and so that was
that was one consideration um
and and within that there were family
members who wanted liquidity
and um wanted to be able to
diversify their portfolio a lot of pride
in levi’s
but they wanted to be able to diversify
and as a privately held company with the
shareholder agreement in place
the only way that they could get
liquidity
is to sell their shares to another
family member and nobody wanted to be
that person and so you know obviously
the the best way to get liquidity is to
have a publicly traded vehicle
so so that became another supporting
reason to go public um the third reason
was
you know you want to go public when
you’ve got a good story to tell
and we had an amazing story to tell
because
here we’ve got you know this company
that at the time was 165 or 166 years
old
um we hit a real bad spot in the early
2000s
new ceo comes in builds a new management
team
turns the business around a couple of
years of double-digit growth
uh you know and and you know promising
kind of ongoing
mid-single-digit levels of growth with
profitable growth to go with that
great shareholder return results in the
past and a guy who said i’m willing to
stick around for a few more years
and you’re not going to get those kind
of
you know it’s like the moon and the
stars all need to line up at the same
time so when you put the
shareholder need for liquidity this kind
of
eventually it’s almost inevitable you’re
going to have to do something
from a governance standpoint anyway
business results and a management team
that
delivered those results saying we’re
willing to stick around for
a while longer and so that was the
rationale for why we went
and a lot of work went into it obviously
you know
needing to make sure that we still um
you know really take care of our our
family shareholders
we went dual class so the family
has 10 votes for every share of stock
that they own
public investors only get one vote so
the family still has
significant voting control over the
company
and that’s a really good thing when we
did the road show we told
investors think of the family as
long-term shareholders that’s what they
are
they’re most invested in making sure
that this contin
this this company continues to be
successful
and continues to operate the way we’ve
always operated
values led so which gets to the second
question
or second part of your question when we
did our road show so part of the whole
ipo
process is companies go out and they
meet with prospective investors
and you know kind of give their pitch
and then get into a q a and you get
it’s it’s uh eight or nine or ten days
of just
wall-to-wall meetings facing the firing
squad
and um just getting asked lots of hard
questions by investors
but we made it really really clear
during our ipo
that what got us to where we are is
being a values-led company
and by you know doubling down on the
things that make us
who we are we talked about our values we
talked about the investments that we’ve
made in sustainability
we talked about some of the innovation
that’s come out of sustainability
and and we basically i i even i talked
about the stand that we took on
ending gun violence in this country you
know a pretty polarizing
place to be and i said if if you don’t
have the appetite for that
we’re not your kind of stock don’t
invest in us and i do think
you know at the end of the day i’m not
worried
at least as long as i’m ceo i’m not
worried
about us ever compromising the long term
for the short term
we will continue to run this company as
a values-led company i actually believe
it’s good for business
i believe that over time and we’re
seeing this happen with the pandemic
consumers are getting more and more
concerned about sustainability
that over time these positions that
we’ve taken as a company history will
prove us to be on the right side
on every single one of these things as
has been the case for this company
for jeanrations and and that’s kind of
the the bar that i set when we
when we when we make the decisions that
we make is will history
prove us to be on the right side of the
issue over time
and i’m convinced that of all the stands
and all the things that we
stand for that we’ve taken positions on
that we’ve invested in
history is going to prove us right and
and look at the business results they’ve
been pretty good
the last 10 years so and i think they’ll
continue to be good
setting aside the impact of the pandemic
so uh maybe the next question yeah
i’ll be asking the next question so i
chip my name is justin hogenauer and i’m
a third year junior at berkeley haas
and so i’m in the undergraduate business
program
often times as an undergraduate student
at haas and a cadet in berkeley’s air
force rotc program
i hear a lot about organizational
culture at haas our institutional
culture is really rooted in our defining
legal
principles and core values are clearly
apparent whether it might be office
hours with faculty member
or in the classroom with other students
and so to my question
how do you promote levi’s values which
you’ve spoken to
throughout the organization as a ceo and
how do you make these values relevant in
the long run
um and if you would talk to your
military experience as well i’d be happy
to hear that perspective
okay um so first of all as as i said
before we hopped on live
congratulations on uh your decision to
you know do a tour of duty to serve our
country
um i i did the same and i
also went through rotc i was in a
different
i was i was in the army uh army rotc
but um it in many ways it made me who i
am today it really shaped me as a leader
um i learned most of my leadership
lessons
in the military actually if you look me
up on linkedin i’ve got a posting the
ten lessons i learned in the military
which i wrote back in like
1990 or something and they’re still
relevant today um but
you know as a company we talk about our
four
values of empathy originality
integrity and courage as as
something that is really really near and
dear to us and that
um that these are these are
what we expect of each other um
it’s a standard that we hold ourselves
to and it ladders up to
what we try to do as a company which is
to make an outsized impact
on this world we talk about profits
through principles
um and we we do have this virtual spiral
that starts with our values
and our commitment to doing the right
thing and i like to talk about doing
the harder right over the easier wrong
and
and that that feeds into the successes
of our business
our ability to connect with consumers
and
and and that just drives that
virtual science spiral you know uh
all the way um you know how how do i
drive it
um is is really two things
one where and how i spend my time um
you know one of the things that i
learned shortly after i became
ceo is everybody knows what i’m doing
and uh
and where i spend my time you know what
meetings i
i call what agenda items i have
drive focus inside the company and it
and it sends a signal to what’s
important
um where and how we make investments
um uh sends a signal so
an example of that very early uh as the
new ceo
here we made a decision to
to invest in moving our innovation
center which was in chorleu turkey
which is halfway around the world it’s
literally a planes trains and
automobiles kind of trip
to get there you fly into istanbul and
then you get in a car and drive for two
and a half hours
and you know product development and
innovation
in the apparel industry it’s very
tactile and it’s iterative
and you know you need to you’re
constantly tweaking patterns and things
like that
and all of our designers and most of our
merchants
are sitting in san francisco yet our
innovation center is over
in turkey and so i made the decision to
invest
it was just a couple of million dollars
but it was for us at the time you know
we were highly levered we had
two billion dollars of debt on our
balance sheet was it was a big bet
but it was to send the signal about the
importance of innovation
and importantly innovation around
sustainability
and you know what i what i said at the
time was here we are we’re sitting in
san francisco
which at that point in time i used to
talk about it as the northern tip
of silicon valley now it’s the heart of
silicon valley
and and you know we have access to all
these
brilliant um creative people
in the valley but we can’t tap into it
because our innovation center is all the
way
in in turkey so we made the small
investment i think is less than five
million dollars
moved this innovation center here really
focused on
innovation and sustainability
so more sustainable chemistry
waterless innovations things that help
planet earth and
we started attracting attention from
other innovators in the valley
and we wound up doing a project with
google so we actually
we launched one of the very first
wearable pieces of apparel it was a
trucker jacket
where you could control your iphone with
the swipe of your sleeve
you know that wouldn’t have happened if
our innovation center was still over in
turkey so
um you know where and how i spend my
time
um what things we decide to
stand up for sends a very very strong
signal so two more examples
when our now exiting president was
the new president many of you will
remember
that within the first week he put this
immigration ban in place
and basically banned immigration from
seven muslim
countries we immediately took a position
on that
but that was wrong and um
you know we were joined by a bunch of
other companies the headline the next
day
was apple facebook google and levi’s
stand up against the immigration ban
those other three have like trillion
dollar market caps
we’ve got like seven billion dollars on
a good day
right now and you know but but we punch
way above our weight because we’ve got
this consistent track record
of not being afraid to speak up on
something
um you know another one is you know
after the george floyd
murder we obviously you know took a very
strong stand then but
uh when we when i had this conversation
which i met
referred to earlier internally we
realized
we needed to take some really aggressive
and publicly visible
action um so we stepped up we
published our diversity data totally
transparently
um which in the aggregate in the us
is okay but when you strip out our
retail business and our distribution
centers in corporate headquarters
our diversity numbers are terrible
and we owned it i owned it it’s a
problem we got to fix it and so
being transparent and communicating
not just the fact that we’ve got an
issue but then we had a multi-step
action plan that we put into place and
um and we’re already starting to fulfill
some of those some of those action steps
so
we’re very very committed to make
progress it’s a big priority of mine
it’s got to be driven from the top and
you know that sent a really strong
signal
so where and how i spend my time
where and how i invest and the things
that
i use the platform this is not about
chipberg this is about the platform
of the ceo of levi strauss and company
which is
a very powerful platform
how i use that platform and what i
choose to speak out on
um which obviously is a is a team sport
internally we can talk about that a
little bit but
um that that you know that is how you
build culture over time and it sends a
signal what’s important
and and that’s kind of how we’ve done it
over the last
couple of years yeah thank you for that
insightful
answer now pass it over to nicole the
next question
thanks justin and jeff thank you so much
for being here
my name is nicole austin thomas i’m a
second year mba student at haas
my question is a bit more zoomed in and
actually really dovetails nicely
into your definition of personal
platform like many others i’ll be
graduating into
an uncertain and politically charged
world
entering a large in-grain company and
as an individual contributor and i’d
love to hear more about your perspective
on how we can best chart a path to
effect change
awesome question and it’s one of the
things i that i love
about the haas school is
um the the graduates of that school
leave the school with this sense of
burning purpose
to make a difference in the world and um
and and i think it is a huge
differentiator for the school
and you know so kudos to everybody who
is involved in shaping that
and it’s it’s clear you know knowing
many haas
graduates and we’ve got a bunch who work
at the company
um that they’ve been shaped by
the the experience at haas so um you
know the first thing i would say and
this one sounds like it’s already water
under the bridge for you
but um is choose where you join
very very carefully um you know
what i i’ve been really really lucky if
you think about it
since the time i graduated from college
which was now
41 years ago
i’ve only worked at three places i’ve
worked in the us army which has been
around for about 250 years
procter gamble which has been around for
about 185 years
and levi strauss which has been around
for coming up on 169 years
and um you know i would say they’re not
really companies
they’re institutions and one of the
things that
i think differentiates those
institutions from others
is this deep sense of values and purpose
and in fact when i decided to leave p g
and come join levi’s one of the most
important things
on my list of consideration was
the values of the company because i knew
at png pg was invested in my success
individually um they they career pathed
me
you know and i wound up running png’s
second largest business
second most profitable business a huge
global brand
the gillette business after png spent 57
billion dollars buying it and um you
know one of the things i knew about that
company was
that it was always committed to doing
the right thing
that’s you know at the end of the day
that was the value system of that
company
and when i realized that that’s really
part of the the thread that runs through
levi strauss
and that the company really does
firmly believe that our business results
are
intricately uh married to
our values that you can’t have the
business results without the values
that this was a place for me and in fact
when i joined the company
i actually believed that one way to get
the company out of the hole that it was
in
was to double down on the values to
really start talking about our values
and to begin uh you know
through where i spent my time and where
i communicated and the platforms and the
investments that we made
to double down on our on our values
and so so the first piece of advice i
would give is
choose where you join very very
carefully
and you know make sure that wherever
you’re going
that the values of that firm that
company
that organization are very very closely
aligned to your own
and that you know that you feel
like you will be empowered to make a
difference
everybody’s i started at the bottom of
the ladder at png
in fact they don’t even have the title
that i had
when i joined the company anymore they
eliminated it
i started as a brand assistant they
don’t even have brand assistance anymore
you start as an
assistant brand manager today i had to
work for 18 months to get the
assistant brand manager and um
and and um but
i would also say
bring your true authentic self to work
every single day
do not compromise on that and if it
turns out that it’s not going to work
out at that place
then it wasn’t meant to be because you
don’t want to be somebody that you’re
not
right and so be your true authentic self
don’t be afraid to to to stand up for
what you think is right
internally don’t be afraid to walk away
from something that you think is wrong
don’t be afraid to have that
conversation with your manager
or your boss if something is done
you know in a way that you you find
challenging
and don’t be afraid to walk away if if
it doesn’t match with your personal
value system
um and it takes a ton of courage to do
that
and um but at the end of the day
i think nothing is worse than
compromising who you are
to fit in and that and that’s for me i
i say that knowing that i have people in
my company that had to do that
and that’s why i am so committed to
fixing it
because um you know life is too short
and and by being your true authentic
self you will be more successful
you will be happier um you will be more
fulfilled
and you will make a bigger difference so
don’t make that trade-off where you feel
like you have to compromise who you are
to be someone else to fit in to belong
and and you’re better off trying to
to address the issues and trying to get
it
righted and if and if you can’t then
walk away and find someplace where your
values
will be um you know will be a good match
with the values of the company
and it you know it’s easy for me to say
it i’m at the tail end of my career and
you know
i’m a ceo and that sounds really really
easy
it’s hard i know it’s hard but
which is worse being happier being
miserable
right and if you have to compromise who
you are
and give in on the things that are
important to you to
to find success at whatever company
you’re going to
but you’re not happy because you know
you’re making compromises it’s not worth
it
and and it’s a big world out there and
and i think what’s again what’s so
inspiring about you know the students at
haas
is everyone’s committed to making a
difference in this world a lot of you
chose to go to haas because you know
it’s going to supercharge your
superpowers there use those superpowers
don’t let them go to waste
next question thank you so much
yeah sure uh sarah hilmer here i’m an
evening and weekend
mba student in my uh final year i was
going to ask you
all about when you decide to take a
stance on an issue but i’ve been so
inspired by what you’ve already shared
around
really leveraging your values and not
being afraid to really
um you know tell it to your shareholders
like it is so i’m gonna pivot my
question a bit and ask about
um who who is blocking you from making
the right decision are there any
blockers
uh you know how how are you working with
policymakers and employees
and what do you do if there’s a case
where maybe your values aren’t aligned
with
with their values yeah it’s a
it’s a really good question um i i am
uh really blessed uh with a great team
around me um you know especially when it
comes to policy matters
um uh communication matters
i’ve got really a super strong team and
we have we do have debates about things
you know whether we go public or not go
public on things and
and uh and and where and how do we take
a stand
um i’m also lucky i i think i’ve
probably earned this with nine years of
results but
i’ve got a great relationship with the
board um
i i feel like i have full support of the
board
um and i feel like i have you know very
strong shareholder support
especially from the family members um
i’ve
i’ve done wealth but for them and and uh
but you know i i think they also really
appreciate
how i continue to drive the company and
the company’s values
so you know i’ve got kind of the moon
and stars all lining up there
to help me um but you know at the
at the same time uh
you know if you stand for everything you
stand for nothing so we do have to pick
our spots right we can’t
weigh in on everything and there are
some things where
it’s worth weighing in on and there are
some where it’s clear that it’s not
and then there are some that are
tweeners and those become tough
conversations
but um we we do have a framework now
that you know i’ve worked with the board
of directors
so that i have a certain amount of
flexibility to weigh in on something
without needing to go
check with everybody okay so the
framework is pretty simple
it’s basically three big pillars civic
engagement
so under that right now we’ve got um
you know voting here in the united
states is a big one
and we played a really significant role
i’m not taking credit for the voter
turnout but
we had almost 2 000 companies sign up to
give
employees time off to vote on election
day and it represented more than 10
million employees so
voting falls into this pillar and ending
gun violence prevent or ending gun
violence in this country falls under
that power
the second big pillar is equality and
this is something this company has stood
for for
a really long time um and you know there
are several bullet points underneath
that
that includes programs for racial
justice
gender equality lgbtq equality
refugee programs
immigration rights falls under this too
so you know it’s kind of a big
human rights almost kind of uh pillar
but wrapped around this notion of
equality and that’s why
you know when i mentioned um when trump
put the immigration ban in place
i didn’t make a single phone call to the
board we just went
and said this is wrong we’re taking a
stand against this we signed an amicus
brief
i mean we we were all in on you know
taking a very strong position on this
because it’s a fundamental human right
and just
because somebody happens to be muslim
you can’t close your borders to then
we felt um and then the third big pillar
for us is
in the area of sustainability which is
um
you know so water chemicals
um uh uh now circular economy becoming a
bigger and bigger thing
uh and we can talk about that those are
all
pre-established predefined
if there’s an issue and it falls into
one of those buckets we can go
and and as i said there are some where
it’s a clear
let’s do this there are some where it’s
a clear let’s not do this
and there are those you know occasional
ones that become tweeners and we wind up
debating it and deciding what to do
but um that’s you know
pretty much how we do it we do like to
come back to our values and really check
against
you know what have we done historically
on this um
and and you know i do use this benchmark
of how will history judge us on this
were we on the right side of history
and and that’s actually one of the cool
things about i’m just looking at my
watch here
that’s one of the cool things about this
company is you know as i look back on
the company’s history
the company has always had this this
track record
of being on the right side of history um
one of the stories i love to tell is
back in the
19 early 1990s the boy scouts banned
gay troop leaders the company pulled all
funding
from the boy scouts and took a very
strong stand
you know because of our position on
lgbtq
equality and um
over the next week this was still
largely snail mail the company had
got over a hundred thousand letters in
email saying
i’m never buying levi’s again i’m
boycotting levi’s never buying levi’s
um 98 of the letters
were opposed to the stand that the
company took
now we look back at that and go like oh
my god was that a no-brainer or what
you know the boy scouts have dropped boy
from the name they’re struggling to stay
alive right now
and they’ve you know they they allowed
gay troop leaders quite some time ago
now so
history was clearly on our side there
you know we were on the right side of
history
and and that really is part of the bar
that i set for these
these different you know issues that we
decide to weigh in on
so i hope that answer your questions
yeah thank you so much
sure well i’m
uh robert strand and i have the the
privilege to be the executive director
of the center for responsible business
and chip on behalf of all of us it’s
just such a pleasure
and privilege to have you um and you
mentioned
uh levi’s being around an institution in
1853
i believe and and and we are so pleased
that levi’s has been a strong partner of
this fine institution
the university of california berkeley
1860
so we’ve got 151 years under our belt
and levi’s has been a partner
for a long time and of course the haas
school of business
it’s in our name and the center for
responsible business where where i’m at
um you’ve been our longest partner and i
want to thank you very much for your
partnership
chip and anna walker our fine
crb senior advisory board member um and
of course you’re you’re talking with
many of our fine students here
at the center for responsible business
so i have the privilege then to draw
some
questions from the audience that have
come in and posed to you chip
are you ready let’s go all right uh
question coming in here uh what are some
ways that levi’s has taken care of its
workers
at the bottom of the supply chain
specifically in factories in asia has
coveted 19 push you to rethink the
global supply chain model
so um it’s it’s a really good question
um most of the factories that make our
product
are third-party factories we don’t own
them we do
we do still have two factories um
one in poland and one in south africa
the one
in south africa is there because of
import um duties making it impossible to
import
product in there and there just isn’t a
quality third-party
manufacturer there so we do have um
employees who work in apparel factories
in our two factories
but then most of our most of our supply
chain is with third-party manufacturers
and um you know we’ve been very very
focused
on the welfare i would call it
of the the apparel industry workers
and we have a program called worker
well-being
which was started just before i joined
the company we pi
we started piloting in five countries
and five different suppliers
uh developing programs with an unlikely
marriage of ngos on the ground
factory owners and us kind of mediating
but the whole focus was in trying to
understand what are the
burning needs or burning issues of the
mostly women mostly young women
who work in the apparel factories
cutting and sowing
our product and and what one of the
things we learned is that the issues
varied from one country to another in
in one country it might be women’s
health in another country it might be
child
care in another country it might be
financial literacy
and we tested this program to try to
demonstrate
that if factory owners invested in their
employees just like we
invest in our employees on a global
basis
that there’s a positive return on
investment there for them
and um so because the only way we’re
going to get third party factory owners
to invest in their um their
you know the the people making our
product
uh is to prove that there’s a business
case and so
fast forward now about 85 plus percent
of our factories
have this worker well-being program in
place we’ve worked with the harvard
school of public health to kind of
validate the business
uh case if you will and have convinced
all of our key strategic suppliers that
they should be investing
in their factory workers and um
and and you could you could say well how
does that how does the math
actually work on that because obviously
they got to invest real money in it
but if you think about it i don’t know
how many people have actually seen an
apparel factory but
in a big factory you might have
something the size of a football field
or more and it’s
basically an assembly line where the
product is getting passed from
station to station and every worker
has a specific function that they do
they might be installing the rivets
on the 501 they might be sewing the pant
legs together so each person has a very
specific job to do
and it is like a like an assembly line
well if if a woman has
child care issues and she can’t go to
work all of a sudden that station is
empty
and that’s a problem if you’re a factory
owner and 20 of your employees don’t
show up someday
and so just by getting greater
continuity
less turnover less absenteeism
these investments pay off and um
and pay out for the factory owners so so
we have invested there
covid has had an impact on the supply
chain
and one of the things that we did
through the levi strauss foundation
is we invested a million dollars
with our key strategic suppliers
to help in those communities that were
most impacted by
covet to help those employees out
in those communities most impacted by
coven and now we’re starting to see a
second wave
as everybody knows um and you know we’re
waiting to kind of understand the impact
of that so
there was kind of the health impact of
covid but the other thing that happened
you know i’ve talked about our stores
were closed for 10 or 13 weeks in the
second quarter
and our business is still down versus a
year ago the same thing’s happening
across the entire apparel industry
and people are like stopping orders we
were very very clear right from the very
beginning
if we placed an order with you and you
mr factory owner or ms
factory owner have started making that
product
we will pay you for that product okay if
it’s an order
where nowhere can started we want to
suspend that order
we’ll come back to it when business
resumes but we will pay you for
everything that you’ve committed to and
trying to keep our suppliers whole the
last thing that we’ve done is
uh we’ve worked with a couple of
international financing organizations so
the ifc
uh and others to
provide low-cost capital
to factory owners so that they can
invest in these kind of programs they
can invest in sustainability initiatives
to to be continuing down the path of
doing the right thing
and um you know and that’s one more way
to support these businesses
um and it’s not out of our pocket it’s
just by hooking them up with the right
kind of
vehicles so that they have access to
low-cost financing
that’s great chip thank you so much and
uh
with respect to sustainability we’re
getting a number of questions that are
coming in
along the lines of sustainability and we
have just a little over
five minutes uh left here so um
one of the questions that came in uh
considering the fact that both
fashion and retail accelerate climate
change
how have you found balance between
achieving high profit margins
while also maintaining advocacy towards
sustainability
yeah so um you know let’s let’s speak
straight um you know the apparel
industry is a bad guy when it comes to
planet earth right now not helped by the
fact that consumers have been bad guys
too
um you know we have lived in an age all
of us who were
on this call right now have lived in an
age of uh conspicuous consumption
um and i think the pandemic has shined a
spotlight on that people are starting to
realize i think the days of conspicuous
consumption are gone
people are starting to realize the
impact of our conspicuous consumption
the impact that it’s having on planet
earth you know the pictures
of the pollution over beijing and the
blue sky over
beijing side by side you know
pre-lockdown post lockdown
but pictures of uh delhi in india
the famous gate in delhi pre-pandemic
post lockdown pre-pandemic you can
barely see the car in front of you the
smog is so bad
post-pandemic you see blue sky and you
can see
a couple of hundred yards people are
realizing the damage that we as humans
are having on planet earth
and so um i do think sustainability is
going to go from being a backseat issue
for a lot of people to really front and
center
for young people for gen z it’s right at
the top of the list and in fact one of
the programs that we just launched
a couple of weeks ago taps into this
insight
of uh consumers wanting to participate
in a circular economy
we have arguably the number one brand in
thrift stores
right we’re the we’re the number one
brand in flea markets people go to flea
markets and thrift stores
looking for vintage levi’s and
you know there’s no data to back that up
so you’re just gonna have to take me in
my word
but i i feel pretty confident saying
there’s no
brand that is bigger in thrift than
levi’s
and um and so
we decided we’re going to participate in
this upcycling this recycling
so we just launched a website called uh
levi secondhand.com and
uh the way it works is if you’ve got an
old pair of levi if you put on covet 15
i’ve got a solution for you take your
old levi’s to a levi’s store
and we will give you somewhere in the
range of five to 25 dollars depending on
what those levi’s
are and we will take them from you
will give you a gift certificate or a
store coupon for
somewhere between five and twenty five
dollars depending on what you bring in
you can go buy yourself a new pair we
take the old pair
we’re working with the third party we
they clean it they repair it if it needs
repair then we post it on this website
and we sell it and it’s a great
value and um and
and it’s good for planet earth it’s good
for the consumer it’s a
great value as i said it also drives
traffic to our stores
and so it’s a win-win-win-win all the
way around no matter how you look at it
and so this is a big opportunity um so
i kind of got a little bit off track
there but but you know at the end of the
day
we’re very very committed on making a
difference
in the apparel supply chain whether it’s
more sustainable chemistry we’ve we’ve
introduced we’ve got this proprietary
technology
that’s got lots of ip around it where
we’re finishing our jeans which used to
require
thousands of chemicals we finish them on
a laser
and and it requires less than 10
chemicals
and we recycle the water so clear that
i’ve
drank the recycled water so it it’s
you know we continue to innovate in this
area and we’re leading
and in areas where it’s not like a
competitive advantage
we open source it so our screen
chemistry
program we open source it our waterless
program
we open source it will give it to
anybody
our worker well-being program that i
talked about we open source it
so um you know it’s not something we’re
going to build a competitive advantage
around it’s just
doing the right thing and the more
people that do it the better off we’re
all going to be
i love that chip and i think it really
speaks to one might ask
you know how do you innovate a pair of
jeans there was the rivet so many years
ago that was an innovation and what
you’re speaking to here chip are so many
innovations that
many of us on the consumer side of
things aren’t even aware of
but as well as you’re innovating new
business models these new business
models for circularity and that’s what
we need when we want to reimagine
capitalism we need to reimagine how we
do business
at the very core so let me give you one
more plug i know we’re almost out of
time but
one other program that we’re that we
launched this season right now you can
find it in stores
so cotton is a bad guy too okay cotton
you know
we’re basically a cotton made product um
and now a lot of our product has stretch
in it but we use a lot of cotton
cotton uses a lot of water and it takes
a lot of land
um we’ve worked with a supplier we’ve
got a proprietary position in this
that um takes hemp
which if anybody has felt a hemp fabric
before
it feels like burlap it’s a very
vibrancy
fiber we’ve worked with the supplier who
has developed
a technique or a technology to soften
hemp so that it’s as soft as cotton
and when we blend it with real cotton
hemp
doesn’t require nearly as much hemp as a
weed it is weed
um and and and it requires a lot less
land
it requires a lot less water and we’re
now selling
an entire line of products with this
cottonized temp in it
it’s a win-win the consumer can’t even
tell the difference versus something
that’s 100
cotton and over time as the scales it’ll
be cheaper than cotton
and uh and it and it’s good for planet
earth and i’m convinced
it’s good for the consumer it’s it’s
good although it’s a win-win-win-win-win
all the way around
well that’s a a great uh example there
chip and
and just a further example of the
leadership role that levi’s is playing
and and also i i’d like to i’ll be i’m
bringing this to a close here now but
before
i do i want to commend you and thank you
very much
chip for the leadership role that you’re
taking in policy advocacy
on issues that matter and when we talk
about addressing those structural
inequities
racial injustices threats to our
democratic
institution way of life we need
policy champions and chip you’re
leveraging your platform
and levi’s the platform of levi’s and on
behalf of all of us thank you so very
much
so this brings us to a close here on
behalf of dean harrison
and the berkeley haas center for
responsible business i’d like to thank
our student leaders
nicole justin sarah and olivia for your
compelling questions
and your engagement today and a sincere
uc berkeley thanks
to you chip for taking the time to join
us today
for this joint rudolph peterson and
berkeley haas dean’s
speaker series your personal commitment
to levi strauss values driven leadership
is a wonderful example of our berkeley
haas defining leadership principles
how they can be brought to life in
redefining business for a sustainable
and equitable future and with that our
event has come to an
end so thank you all so very much for
joining us and we hope that you have a
safe
and happy holiday season ahead goodbye
