2012 Lsco Climate Change

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2012CLIMATE CHANGESTRATEGY

SEPTEMBER 2012


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A MESSAGEFROM THE CEO

When acing the chal-lenges o our times, LeviStrauss & Co. has a his-tory o taking an industry-leading stance, romestablishing the frst codeo conduct or our sup-pliers to our leadershipin sustainable design.

We also ace signifcantbusiness risks, rang-ing rom disruptions to our operations, to the availabilityo water, and to potential impacts to cotton supply, ourcore raw material. This is why we measured our baselineglobal climate ootprint in 2007 and established a goal toreduce it by 11% by 2011. We beat that goal, achieving a13% reduction.

And when it comes to the next stage in our climate changestrategy, our ambitious approach is no exception to ourlegacy: our vision is to reduce carbon dioxide and othergreenhouse gases through maximizing energy efciencyand using 100% renewable energy frst in our operationsand then throughout the supply chain.

With this Climate Change Strategy, I am pleased to pres-ent a summary o our current climate change mitigationprogress and updated targets. Just as our groundbreakingTerms o Engagement changed the landscape or sup-pliers worldwide, our climate change strategy and e-orts are setting the stage to raise the bar or companiesworldwide. Thats why we have committed to take actionby measuring and reducing our climate impact, advocat-ing or government policy, and engaging our supply chain

and our consumers.

Today, Levi Strauss & Co. recognizes that human-pro-duced greenhouse gas emissions are a key contributor toclimate change perhaps one o the greatest challengeso our time. Climate change mitigation is vital to the long-terms success o our business, as well as the health and

well-being o the people who make and buy our products.Many o the countries where we operate are alreadybeginning to eel the eects o climate change, includingdrought, oods, and the spread o disease.

We recognize that to be pioneers, we must take a holisticapproach to ully address climate change: water and othermaterials are inextricably linked with energy and havebroader eects o their own. For more than two decades,Levi Strauss & Co. has been working to reduce our envi-

ronmental impacts. When we were concerned about waterdischarge polluting local waterways, we implemented theapparel industrys frst Global Euent Requirement orour actories and contract laundries. When we wanted tounderstand all o the environmental impacts rom op-erating our business, we completed a groundbreakingstudy o the entire liecycle o our top products. When wechallenged Levis designers to signifcantly cut the waterused in the fnishing process or our jeans, they createdour Water


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2012 CLIMATECHANGE STRATEGY

In 2011, we met our climate target, a reduction in globalcorporate greenhouse gas emissions o 11 percent rom2007 levels, by improving energy efciency and purchasingrenewable electricity.

Our holistic approach and eorts to address climate change

are guided by our values:

EA: We are concerned about the impacts o climatechange on our customers, employees, and other key stake-holders. We ocus on understanding the risks and implica-tions o climate change, and the potential eects on majorresources, our operations, and supply chain.

COAE: Our understanding o climate change neces-

sitates action. We are committed to reducing our climateimpact by maximizing energy efciency and using energyrom renewable sources. We set rigorous targets to guidechange within our operations. Since government leadershipis essential or widespread action on climate change, wealso play a strong role in climate and energy advocacy.

Copyright 2012 Levi Strauss & Co. All rights reserved. All inormation contained in this document is confdential andproprietary to Levi Strauss & Co. By reading this document, you are agreeing that you will not copy, disclose or use this

document or any o the ideas, concepts or inormation contained herein without Levis prior written permission.

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EXECUTIVESUMMARY


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IEI: We are ollowing through on our climate com-mitment by targeting every major source o our direct andindirect emissions in our manuacturing acilities, distri-bution centers, retail stores, and ofces. From changing uelsources to energy efciency retrofts, we employ a multitudeo projects to drive emissions reductions.

OIIALI: We look beyond the gates o our operations toaddress the ull climate ootprint o our products includingemissions in our supply chain. Ater learning that the largest

climate impact in the lietime o a pair o Levis jeans isrom consumer washing, we initiated an education programto empower consumers to reduce their own climate impactby changing their laundry habits. publicly owned watertreatment acilities. We also require that our suppliers regu-larly submit wastewater samples or laboratory analysis andreport on the results on a semiannual basis.

EA: ESAI E IOACEA IACS O CLIAE CAE

Levi Strauss & Co. (LS&Co.) recognizes that the emission ocarbon dioxide is a major contributor to global climate change.I let unchecked, carbon dioxide emissions will triggerlarge- scale economic, social and environmental conse-quences or our business and the communities in which weoperate. Within our operations globally, we are committedto reducing emissions o carbon dioxide and other green-house gases.

Why are we committed to ocusing on climate resilience andadaptation? First, many o our employees and consumershave already begun to eel the impact o climate change.

In September and October 2009, LS&Co. employees in thePhilippines were aected by a series o powerul typhoonsthat swept through the country. The frst storm resulted inthe heaviest rainall in 40 years and at one point, 80 percento Manila a city o almost 12 million people was sub-merged.

While, thankully, all LS&Co. employees were sae, manywere impacted by the ood waters. Through our Red TabFoundation, we provided support to employees or theirlonger term needs: essential home repairs, replacement ournishings and, in some cases, even relocation.

We also operate a distribution center in Canton, Mississippithat employs about 300 people and was aected by Hurri-cane Katrina. Though only minor damage was sustained inthe Jackson and Canton communities where many o those

employees live, we provided small cash grants or approxi-mately 40 percent o our Canton, Mississippi employees,many o whom took in amilies who lost their homes.

While typhoon in the Philippines and Hurricane Katrina maynot have been directly caused by climate change, we do knowthat climate change is increasing the incidence and severity ostorms, heat-waves, droughts, and other extreme weatherevents. The communities where we work and sell our prod-ucts will need to adapt to the changing weather patterns.

Second, we are deeply concerned about the threat climate

change is posing to the natural and agricultural resourcesthat provide the material bases or our products. For ourcompany, that resource is cotton. It makes up 95 percent othe material in our supply chain.

Cotton is produced in more than 100 countries around theworld, many o which are already starting to eel the impacto climate change and the need to implement adaptationstrategies. There are approximately 40 million cotton arm-ers in those countries acing arable land constraints andwater scarcity as climate change occurs.

Cotton, like other agricultural commodities, is at risk or

crop ailure and reduced yield as weather patterns changeand there are water shortages. Risks also stem romcountries deciding to switch rom cotton fber production toood crops as commodity crops compete with ood crops ordecreasing land and water resources.

All o this creates business risk and uncertainty aroundcotton availability, quality and pricing. We have thereore



OURAPPROACH


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recognized the need to be very ocused on the impacts oclimate change and how it may impact the global cottonsupply and the armers who produce it.

Lastly, much o our manuacturing supply chain is indeveloping countries. LS&Co. products are manuactured inmore than 30 countries around the world, many o which arealready or are expected to eel the eects o climate changemore prominently, including increased water shortage (e.g.,India and Nicaragua), disease (Cambodia), and ooding and

salt water intrusion (e.g., Bangladesh and Vietnam).

The Intergovernmental Panel on Climate Change listedBangladesh, the Mekong Delta in Vietnam, and the NileDelta in Egypt as the worlds three hot spots or potentialmigration because o their combination o sea-level rise andexisting population. All three are important sourcing regionsor LS&Co.

Extreme weather events pose increasing risks to productionand supply chain operations. The volatility o weather patternsalso present monumental challenges or planning inventory

and supply levels.We have to act on climate change, because it is vital to the

long term success of our business.

COAE: COIE O ECIO CLIAE IAC

MEASURING OUR IMPACT

We have been tracking our carbon emissions rom direct uecombustion (Scope 1) and indirect emissions rom electricityand steam purchases (Scope 2) or several years starting in2006 or the Americas and in 2007 or our global operations.LS&Co. was the frst apparel company to report global

greenhouse gas emissions to The Climate Registry and ouremissions inventories rom 2006 to 2011 are posted in theirpublic domain. The inventories ollow globally-recognizedguidelines outlined by the World Resources Institute andWorld Business Council or Sustainable Development protocoor Corporate Accounting and Reporting. We are committed tocontinue ollowing global standards and obtaining third-partyverifcation or our inventory.

The majority o our Scope 1 and Scope 2 emissions resultrom electricity purchases at all o our operated locations.We also have emissions rom steam purchases and direct

combustion o uels such as natural gas.



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NATURAL GAS

HYDROFLUORO CARBONS

HEATING OIL

LIQUID PETROLEUM GASOLINE

DIESEL

HOT WATER

EMERGENCY GENERATORS

MANUFACTURING RETAIL OFFICE


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2011 TARGETS AND ACHIEVEMENTS

In 2009, we publicly announced a target to reduce Scope 1and 2 greenhouse gas emissions 11 percent by the end o2011 as compared to a 2007 baseline. We are proud to an-nounce that we achieved that goal by implementing energyefciency and conservation programs at our stores, ofces,manuacturing plants, and distribution centers, and byprocuring electricity generated rom 100 percent renewableenergy sources (RES-E) in Europe and Green-e renewableenergy certifcates (RECs) in the United States. Throughthese initiatives, we were able to obtain 11 percent of our

energy from renewable sources and reduce our total

emissions by 13 percent from 2007 levels.



2007 2008 2009 2010 2011

Our 2011 target was to

emit 76,000 metric tons oCO2-e: an 11% decrease

rom 2007 levels.


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LS&CO. GREENHOUSE GAS EMISSIONSAND RENEWABLE ENERG SUMMAR

In meeting our 2011 target, we ound that greenhouse gasemissions rom our distribution centers, ofces, and retailacilities are predictable, although growth in our retailoperations can oset gains made through energy efciency.We also learned that the manuacturing plants we operatecan have highly variable energy use since emissions romthese locations are mostly driven by production quantitiesand intensity. When we open or close manuacturing acili-ties, it makes a substantial impact on our global emissions.

With these fndings, we set targets or specifc areas o ourbusiness that better align with their operating characteris-tics and growth orecasts.

NEW VISION AND TARGETS

Ater meeting our 2011 targets, we reviewed our progress,made key updates to our vision, and set new targets tourther drive reductions in our emissions. We believe thatsubstantial reductions in our greenhouse gas emissions arenecessary given the urgency o climate risk and magnitudeo potential impact.

In our new vision, we are committed to reducing carbondioxide and other greenhouse gases through maximizingenergy efciency and using 100 percent renewable energy frst in our operations and then throughout the supply chain.

We prioritize energy efciency, because it is the most costeective way to reduce our emissions. By selecting energyefciency projects that have avorable fnancial returns, we

can also improve the cost-eectiveness o our businessoperations. Once we maximize energy efciency, our sec-ondary target is to procure all remaining energy needs romrenewable sources. We have set targets or greenhousegas reduction rom both energy efciency improvementsand renewable energy, and also added a specifc target orrenewable procurement.

NEW GLOBAL GREENHOUSE GAS REDUCTION TARGETS

- 25 percent reduction in emissions by 2020 or ofces,retail, and distribution centers (compared to our global2007 baseline)

- 5 percent annual reduction target in greenhouse gasemissions per product shipped rom our owned andoperated manuacturing

New Global Renewable Energy Target: Obtain 20 percentenergy purchases rom renewable sources by 2020

By setting these aggressive long term targets, we arecommitting to tapping every major source o our corporate

emissions or substantial reductions. This involves engage-ment at every level o the company, rom the ront-lineemployees who operate our stores and make our products,to our fnancial managers and building operators. We arecommitted to transorming our operations and movingtowards long-term change in how we do business.




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CLIMATE AND ENERG ADVOCAC

We believe government leadership is essential or wide-spread action to address climate change and create anenvironment that enables companies like ours to invest inrenewable energy and achieve the greatest savings romenergy efciency.

We can do more, aster and cheaper with government policythat incentivizes utilities to work with us to capture efcien-

cies and invest in renewable energy. Reduced business costsrom these investments can be reinvested in the company togrow our business and create jobs. Put simply, we can runour business better with the certainty o a price on carbonand government policies and incentives to help us to maxi-mize energy efciency and draw our energy rom renewablesources.

Examples o policy advocacy include:

BICEP (Business for Innovative Climate and EnergyPolicy) To bring our voice or energy and climate actionto Washington, LS&Co. was one o the ounding members

o Business or Innovative Climate and Energy Policy(BICEP). BICEPs members more than 20 major UnitedStates brands and retailers believe that climate changewill impact all sectors o the economy and that variousbusiness perspectives are needed to provide a ull spec-trum o viewpoints or solving the climate and energychallenges acing the United States. BICEPs goal is towork directly with key allies in the business communityand with members o the United States Congress to passmeaningul energy and climate change legislation thatis consistent with BICEPs core principles. As a BICEPmember, we have been advocating on Capitol Hill and withthe Obama Administration or comprehensive domesticclimate and energy legislation. In December 2010, RichardKauman, LS&Co.s then-chairman o the board, pre-sented testimony beore the House Select Committee onEnergy Independence and Global Warming.

Oxfam America Partnership for Resilience and Environ-mental Preparedness (PREP) - Recognizing that businesshas a critical role to play in building climate preparednessLS&Co. joined the Partnership or Resilience and Envi-ronmental Preparedness (PREP) as a ounding member.PREP is coordinated by Oxam America, the internationalrelie and development organization, and builds on theirclimate adaptation advocacy by engaging the businesscommunity to take action and promote public policies thatacilitate adaptation eorts to prepare or and respond

to the consequences o a changing climate. As a PREPmember, we have participated in Congressional briefngsto share our story on the potential climate adaptationneeds and business impact in our supply chain. We alsomet with Congressional and Administration sta on theneed or public and private investments that promote cli-mate adaptation and resilience in vulnerable communities

California Low Carbon Fuel Standard Our climate andenergy policy advocacy is at the global, country and locallevel where we do business. In December 2011, togetherwith other prominent Caliornia-headquartered compa-

nies and business associations, we added our name to amedia ad to be placed in the Sacramento Bee supportingCaliornias low carbon uel standard (LCFS), requiring oilcompanies to reduce carbon pollution rom their gasolineand diesel uel. Caliornia business support or the LCFSenabled the state government to strengthen the standardwith a clear business, as well as environmental, rationale.



ut simply, we can run our business better

with the certainty o a price on carbon and

government policies and incentives to help

us to maximize energy efciency and draw

our energy rom renewable sources.
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No on 23 Campaign We were proud to be one o the frstCaliornia-headquartered multinational companies to

join the campaign against the Caliornia ballot initiative(Proposition 23) to overturn Caliornias Global WarmingSolutions Act o 2006 (AB 32), which set the Caliornias2020 greenhouse gas (GHG) emissions reduction targetinto law. We produced a blog post arguing or the deeat oProposition 23 that was posted on our public acing corpo-rate website and was widely circulated by the campaign.

PARTNERSHIPS AND MEMBERSHIPS

We also believe that coordination with non-proft organiza-tions and industry groups is critical to our success in com-prehensively addressing climate change within and outsideo our business. We work with:

Carbon Disclosure Project A non-proft that works toreduce greenhouse gas emissions and improve availabilityo climate change and water inormation or business,investment, and policy decision-making. We voluntarilyreported our annual greenhouse gas emissions, risks

rom climate change, and management practices or thepast our years.

Climate Counts i2 As a member o Climate CountsIndustry Innovators (i2) program we work with the othermembers to share best practices to improve our climatechange mitigation eorts.

The Climate Registry - A non-proft collaboration amongNorth American jurisdictions that sets consistent andtransparent standards to calculate, veriy and publiclyreport greenhouse gas emissions in a single registry.We have reported our greenhouse gas emissions toThe Climate Registry or the past six years.

Sustainable Apparel Coalition An industry group thatseeks to fnd common approaches to measure and evalu-ate the sustainability perormance or ootwear and apparelproducts. We are an active member in developing indicesad tools to measure the environmental perormance o

our products, including measurements o greenhouse gasintensity.

IEI: OLLOWI O OO CLIAE COIE

We take our commitment to address all major sources oScope 1 and 2 greenhouse gas emissions seriously. The tar-gets that we set or major areas o our operations undergoannual review by LS&Co. executives. In addition, we areincluding consideration or projects that reduce greenhousegas emissions as part o our fnancial planning process.

Our strategy encompasses all o the acilities we operate,including ofces, retail, distribution centers, and manuac-turing acilities. We have identifed the business owners andoutlined specifc tactics to enable each area o our operationto achieve success.



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Ofces: We target energy efciency improvementswhen we start new leases, by looking at opportunities

or lighting, heating, ventilation and air conditioning retroftswhen we move into a new space or when a lease is renewed.

Our San Francisco headquarters recently underwent a largerenovation, with the goal o attaining LEED (Leadership inEnergy and Environmental Design) certifcation. LEED is aninternationally recognized green building certifcation systemdeveloped by the United States Green Building Council.

As we reviewed and made each decision during design andconstruction everything rom building insulation to theheating and air conditioning system to lighting fxtures andbeyond we looked or ways to drive more energy efciencyand sustainability. The result: in 2011, electricity use peremployee was down 37 percent and natural gas use peremployee was down 70 percent. The building earned LEEDGold or its holistic sustainable design elements.

etail Stores: Retail stores are increasing as acomponent o our greenhouse gas ootprint, grow-

ing rom 9 percent o our emissions in 2007 to 22 percent

in 2011. Since our global retail presence will continue toexpand, our stores will continue to be an important ocus oour greenhouse gas reduction eorts.

We implemented LEED best practices and successullyachieved LEED certifcation or Commercial Interiors (CI)or three Levis stores in Paris, France; Liege, Belgium;and Birmingham, England. Our three LEED certifedLevis stores have a number o eatures that reduce energyby at least 37 percent compared to our average Europeanretail stores, including:

energy-efcient ambient and spot lighting

integration o daylight into the store

automatic sliding doors with synchronized air curtains

energy efcient heating, ventilation and air conditioningsystems.

All three stores also procure electricity produced rom100 percent renewable sources.

We are now making many o the energy efciency eaturesrom our LEED stores standard in new store design.For example, we continue to expand the number o ourstores that use LED (light-emitting diode) rather than halo-gen lighting both in Europe and in the United States.

istribution Centers: The 12 distribution centers

that we operate makeup the largest portion o ourScope 1 and 2 emissions. We have ocused heavily

on energy improvements in our distribution centers whichresulted in $1.3 million in avoided costs and a 27 percentdecrease in greenhouse gas emissions rom 2007 to 2011.

One o our largest distribution centers, in Henderson, Ne-vada, started tracking its perormance through the EnergyStar Portolio Manager, a benchmarking tool operated bythe United States Environmental Protection Agency and De-partment o Energy. The acility frst scored 37 out o 100 in2010, signiying poor energy perormance in comparison to

peer acilities. Since then, the Henderson employees starteda Green Team and completed several energy efciency ret-rofts, including deploying an energy management systemupgrade to better control the buildings air conditioningand heating, adding motion sensors, replacing roo tileswith white suraces to reduce cooling needs, and installingvariable requency controls to reduce operating times ormechanical equipment. Their eorts have resulted in a 26%reduction in the acilities energy use, bringing its EnergyStar score up to 53. The team continues to ocus on raisingthe score with a goal o 75, signiying superior energy per-ormance.

All o our distribution centers set annual energy efciencytargets and have onsite sta to assess energy reductionprojects. Our three largest acilities are all planning majorrenovations to consolidate mechanical equipment, upgradelighting, and improve climate controls.



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anuacturing: We directly operate our manu-acturing plants, which are located in Vietnam,South Arica, Poland, and Turkey. In 2010 and2011, our Turkey and Poland plants received ISO

14001 and OHSAS 18001 certifcation, respectively. To reachthese standards we ocused on improving our monitoringsystems, including energy management systems. Thesecertifcations recognize excellence in environment, healthand saety (EHS) management and are valid or three years.

They also trigger ongoing reviews and continuous improve-ment o EHS in the workplace.

We commissioned extensive energy audits at our Turkey,Poland, and South Arica plants and completed severalenergy efciency retrofts. Our Turkey plant installed severalheat recovery systems that use waste heat or some o theplants heating needs, yielding considerable energy savings.We are expanding the use o heat recovery technology inour other manuacturing plants to reduce energy used orgarment fnishing. Each o our plants sets annual energyefciency targets and plans long-term energy efciencyprojects to improve environmental perormance.

enewable Energy: In combination with reduc-ing the energy use in our acilities, we also targetenergy procurement rom renewable sources

to reduce greenhouse gas emissions. In Europe, over thepast two years, 23 o our retail stores, nine Levi Strauss &Co. ofces and a distribution center in the United Kingdomstarted purchasing electricity generated rom 100 percentrenewable energy sources. This renewable energy procure-ment, together with previous years eorts helped us reducegreenhouse gas emissions by 3,039 metric tons in 2011.

In the United States, we purchased renewable energy orour San Francisco headquarters and several other acilities.Our Green-e certifed Renewable Energy Credit purchasesamounted to 12,151 metric tons o greenhouse gas emis-sions in 2011. We are exploring additional opportunitiesor renewable energy procurement and renewable energyproduction in all areas o our global portolio.

OIIALI: EASI A ECILIECCLE CLIAE IAC

At LS&Co., we place a high importance on mitigating theull environmental impact o our products. This includes as-suming the responsibility to understand and develop strate-gies to reduce the carbon impact o our core products, evenwhen that impact lies outside o our direct operations.

In 2007, we wanted to better understand the major environ-mental impacts o our products using the most credible andscientifcally robust methods available. We commissioned aliecycle assessment or two o our core products a Levis

501 Medium Stonewash jean and a Dockers OriginalKhaki. We studied the environmental impacts related to theentire liecycle o these products by tracing all o the input


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materials, such as cotton, and continuing through the supplychain, transport, consumer use, recycling and, fnally, disposal.

This groundbreaking study revealed some surprising results:the greatest impact on climate change was outside o ourdirect control, resulting rom consumer use. Over the lieo a pair o jeans, the carbon impact rom consumers whowash and dry their jeans once a week over the course o twoyears is more than the carbon impact o producing the jean.Furthermore, consumers who wash their jeans less, wash

in cold water, or air dry their jeans can signifcantly reducethe total environmental impact o our products.

Following our 2007 LCA study, we continued researching ourproducts liecycle climate impact. In 2009 we completed aliecycle based impact assessment method we call E-val-uate. Using our E-valuate method we assessed the envi-ronmental impact, including the global warming potential,or11 Levis products.We continue to expand our use oE-valuate to track our eorts in reducing environmental andclimate impact and inorm our designers during the productdesign and development phases.

In 2010, we were one o 60 companies selected to road-test

two new protocols to measure greenhouse gas emissions one designed to measure the impact o a product andthe other to measure the impact o our entire supply chain(Scope 3 emissions). These new protocols, developed bythe World Resources Institute (WRI) and World BusinessCouncil or Sustainable Development, are intended to helpcompanies ocus on the areas with the greatest opportuni-ties or greenhouse gas reduction. As in our 2007 liecycleassessment, we ound some o the largest impacts to beduring consumer use as well as upstream production.

These fndings have guided our environmental ocus

towards building consumer awareness and implementinginitiatives in all high-impact phases o the product liecycle.

CONSUMER ENGAGEMENT

In 2009, we initiated a global dialogue with consumers Care or Our Planet about how caring or their clothesaects the environment. Through this initiative we:

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Started a Care Tag or Our Planet campaign, changingthe product care tags in our clothing to include instruc-tions about ways consumers can reduce the environmen-tal impact o their clothes ater leaving the store. The tagsencourage consumers to wash less, wash in cold water,line dry when possible, and donate clothing to charitywhen no longer needed.

Launched a contest Care to Air to fnd a better wayto air dry jeans, as well as every other article o clothing

that typically ends up in the dryer. With $10,000 in prizes,we received nearly 140 designs rom around the world,with submissions that included artistic designs and dryingracks optimized or urban dwellers.

Established a partnership with Goodwill in the UnitedStates to encourage consumers to increase the lie cycleo a pair o jeans by donating them.

We also wanted to enable consumers to make smart pur-chasing decisions, so in 2011, we launched our version oan environmental nutrition label or our products, based

on our liecycle research. We participated in an experimentin France to fnd the most eective ways to provide environ-mental impact data including carbon dioxide emissions to consumers on the products they purchase.

The National Experiment, led by the French Ministry oEcology, Sustainable Development, Transport and Housing,included eight jean styles on our French Levis website andalso at our LEED certifed store in Paris. The pilot ran romJuly 1, 2011 to June 30, 2012, and the 168 participatingcompanies will submit evaluations o the pilot or consolida-tion into a recommendation to the French Parliament early2013 on next steps or environmental labeling o consumerproducts.

TRANSPORTATION

When we studied the carbon ootprint o transporting ourfnished goods rom actories to our distribution centers, wewere surprised to learn that the amount o greenhouse gas

emissions varies substantially with the mode o transport.We also came to the conclusion that with some innovativeeorts, we can both reduce emissions and also reducecosts rom transportation while still meeting our deliverytimerames. For example, we can reduce our emissions byswitching rom air to ocean transport and truck to eitherwater or rail transport.

Realizing that we can only improve what we measure, in 2010we tracked the amount o goods transported by air, truck,ocean, and rail to estimate our carbon ootprint. In 2011, westarted a quarterly carbon dashboard or all transport rommanuacturing acilities to distribution centers globally. Wealso assess environmental sustainability criteria in our car-rier selection, including corporate policies, annual carbonreporting, vessel design, and the extent to which they sharebest practices in the industry. By doing so we are inuenc-ing the transportation industry to do more and encouragingtransparency in their sustainability practices.



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SUPPL CHAIN INITIATIVES

Recognizing that our supply chain represents a big portiono our product climate impact, we are also ocused on work-ing with our suppliers on greenhouse gas reduction eorts.In 2011 we started collecting annual water and energyconsumption data rom 63 o our high volume and strategicsuppliers. The goal o this initiative is to identiy best sus-tainability practices and share them with our partners.

Each supplier received a personalized one-page summarydocument o their 2010 water and energy perormance,based on a comparison o regional and global averageconsumption per manuactured unit. Suppliers received twopercentile rankings: one or energy use per unit and one orwater use per unit. Our regional teams worked closely witheach supplier to review their perormance scores, answerquestions, and gather insights.

Many o our suppliers have reduced energy use by up to 30%The actions our suppliers are taking to improve their energyefciency ratings include installing:

Energy efcient lighting in ofces and on the manuactur-ing oor

Switches or motion sensors or lighting in areas withlow use

Heat recovery systems to capture and reuse waste heat

in manuacturing

Direct drive sewing machines that improve efciency

Variable speed drives or air compressors

Solar panels

We will continue to provide annual perormance reportsor our direct suppliers and engage in deeper dialogues onstrategies and projects to reduce their energy and waterootprints.

Another way we work with our suppliers on reducing their

climate impact is through our partnerships.

National Resource Defense Council (NRDC)s Responsible

Sourcing Initiative:

The Responsible Sourcing Initiative works with Chinesemills to identiy practical, low-cost opportunities to increaseoperational efciencies, while reducing materials, wateruse, energy use, waste, and emissions.

In 2011, we engaged our mills in the initiative: two romNorth China, one in Central China, and one in South China,covering Jiangsu, Hebei, Shandong and Guangdong provinces

The abric mills frst were introduced to the ResponsibleSourcing Initiative and the 10 Best Practices for ResponsibleSourcing from Textile Mills. They then went through trainingon technical guidance to implement the best practices.All our mills were visited by NRDC and submitted actionplans outlining the steps they could take to implementthe practices.


WATER,20TH

PERCENTILE

ENERGY,90TH

PERCENTILE
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Cleaner roduction Initiative:

The World Banks International Finance Corporation (IFC)and several partners started a cleaner-production initiativetargeted at increasing the efciency o textile acilities inBangladesh. The initiative has already helped textile ac-tories reduce water consumption by several million liters.These acilities are also realizing substantial reductions inenergy used to heat water or washing, dyeing, and fnishing.

We are exploring how to extend the best practices and poli-cies rom the projects in China and Bangladesh to suppliersglobally.

Better Cotton:

More than 95 percent o all Levis products are made withcotton grown in the United States, China, India, Pakistan,Turkey or one o the many other countries where cotton isarmed. Many cotton armers especially small-holderarmers that lack access to education apply too much water,pesticides and chemical ertilizer to their crops. As climatechange continues, millions o armers will ace increasing

land constraints and water scarcity, urther exacerbatingthe need to inuence how cotton is grown and harvestedand standardize more sustainable arming practices.

While LS&Co. is a big consumer o cotton, we use less thanone percent o the worlds annual cotton crop. By creatingalliances with other major cotton consumers, we leveragethe power o our brands to achieve aster and switer change.We joined orces with other brands and retailers, nonprofts,and armers organizations to advance the Better CottonInitiative.

The Better Cotton Initiative aims to make all cotton grownaround the world more sustainable by reducing water andchemical use (including pesticides and ertilizers), protectingthe health o the soil and promoting important labor stan-dards including bans on child labor. By reducing water useand improving soil health, we are helping to improve theresilience o cotton grown or our products as the impacts oclimate change spread. In 2011, we started incorporatingBetter Cotton in over two million pairs o Levis and Denizen

jeans around the globe and we plan to increase that amountevery year.



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lobal climate change is one o the toughest environmental issues we ace, with

widespread potential impacts that aect us, our employees, our partners, and

our customers. We take this issue seriously and have started several initiatives

to reduce our impact, rom every major component o operations, to our supply

chain and conversations with consumers. But we also recognize that we need to

do better, do more, and do it aster. We are committed to continue championing

policies and ideas that move the needle towards aggressive carbon emissionsreductions and climate resilience. We invite you to join us on this path, to chal-

lenge convention, and to fnd the road to a more sustainable uture.

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