From the July-August 2009 issue of Treasury & Risk magazine

Perils of Climate Change

Two years ago, executives at Levi Strauss & Co. analyzed the effects of climate change on their business and realized the consequences could be dire. Declining water supplies and increasing temperatures in India, Pakistan and other countries that produce cotton--the company's core ingredient--could spell disaster for the San Francisco-based clothing manufacturer. "We needed to be sensitive to risks that would influence the price, yield and quality of that vital material," says Anna Walker, senior manager of worldwide government affairs and public policy at Levi Strauss. What was needed, Walker and her colleagues figured, was a way to improve the efficiency of agricultural water use.

So the company launched an ambitious effort to teach farmers in those areas more water-efficient techniques, teaming up with a nonprofit group, Better Cotton Initiative, that works on such efforts. Products made from this cotton haven't hit the market yet, but the company is hoping to have 5% of its clothing made using these methods by 2015. Eventually, it wants all its merchandise to be sourced in this way.

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