The Problem With Palm Oil

When wealthy, western nations in Europe joined the United States to enact environmental laws that incentivized the use of vegetable oil in fuels, it was hard to see if there was a crisis on the horizon. These regulations mandated that fuel producers mix in soy, palm, and other vegetable oil with diesel fuels in the name of environmentalism and conservation.

A demand for palm oils soon took off. In response, plantations in nations such as Indonesia, Malaysia, and Brunei rose to meet that need. While  Palm oils can be harvested in other parts of the world, Indonesia and Malaysia produce 86 per cent of the world’s supply. Biodiesel production within the US grew as well- from 250 million gallons in 2006 to more than 1.5 billion gallons in 2016.

Palm oil is cheap to produce- as the plants produce a large amount of oil relative to their size. The oil also has other uses beyond biofuels and can be found in a variety of shampoo, candles, lipstick, bread and chocolate.

While developed nations were able to benefit from the use of alternative fuels, other countries have continued to deal with environmental impacts of the industry. Indonesia has lost over 38,000 square miles of forest in just 30 years, and has become the fifth largest emitter of greenhouse gasses in the process. Why is that? The forests of Borneo, an island that is home to parts of Malaysia, Indonesia, and the nation of Brunei,  spans large peatland swamps, and the destruction of those forests was roughly equivalent to the opening 70 new, large coal-fired power plants.

The demand for Palm Oil also changed the economic relationship between local farmers and their ownership of the land. The growth of massive plantations has also consolidated land from hundreds of local farmers. While the development land sharing process in Indonesia had been developed to allow local villagers to share in the profits of development, many were faced with intense lobbying, bribery and strong-arming, and missing payments.

Some land agreements missed the consent of local residents altogether. Gusti Gelambong, a resident of the Kalimantan region in Indonesia, explained to the New York Times that microfinance corporations gained control of the land by doctoring lists of signatures on contracts, even using the names of residents who had long passed away.

Because of the land-sharing development agreements, almost a third of Indonesians depend economically on palm oil as nearly half the industry consists of individual landowners. And that is where the conflict between what is economic benefits and environmental costs arises. While the EU parliament has called to phase out palm oil from transport fuel by 2030, countries like Indonesia, Malaysia, and Thailand, so heavily demand on the production of palm oil despite environmental concerns.

“If you pull out biofuel, the whole system will collapse,” said Dono Boestami, the director of Indonesia’s Palm Oil Development Fund.

However, if Indonesia’s production of Palm oil depends on the destruction of forestry that regulates the release of carbon from peatlands, whic collapse will matter more to the global economy: an environmental collapse or an nationally economic one?

Sources:

https://features.propublica.org/palm-oil/palm-oil-biofuels-ethanol-indonesia-peatland/

https://www.theguardian.com/global-development/2018/nov/02/displaced-villagers-myanmar-at-odds-with-uk-charity-over-land-conservation-tanintharyi

https://www.healthline.com/nutrition/palm-oil

Oil Palm, The Prodigal Plant, Is Coming Home To Africa. What Does That Mean For Forests?

https://features.propublica.org/palm-oil/palm-oil-biofuels-ethanol-indonesia-peatland/

https://af.reuters.com/article/commoditiesNews/idAFL8N1TG4J1

In 2017, Only 11,910 U.S. Students Chose to Study Abroad in China

Ashley Rivenbark, an American student who has studied in Hangzhou through the U.S. State Department’s Critical Language Scholarship, said living in China has changed her view of it.

China has its unique culture and increasing global power. The trade between China and U.S. has spurred the need of graduates who are fluent in both China and America – not only the two languages but also cultures and business development.

However, among 330,000 American students who chose to study in different countries, only 12,000 of them went to China last year. For most American students who choose to study abroad, France, UK, Germany, and some other European countries are ideal.

Reversely, in 2017, Chinese students accounted for more than one-third of total 1.1 million international students who studied abroad in the United States.

Since 2007, the number of Chinese students who have chosen to come to the U.S. has increased dramatically. On the other hand, the number of American students in China has remained virtually flat. According to the Financial Times, the number was 11,064 in 2007 and 11,910 in 2017.

There are now 30 times as many Chinese students in the U.S. as U.S. students in China. This phenomenon has caused an information asymmetry, which means that there is not enough information exchanging between two countries.

The U.S. Foreign Policy recently surveyed 343 Americans who have studied in China through higher education programs. Most of them reported that they satisfied with their choice and explained why they think this is an ideal option for American students who want to study abroad in the future. Here are some statistics:

Are you the first person in your family to study abroad?

69.4 percent of students responded yes.

This shows that students who preferred to study in Beijing or Shanghai were not just the children of those who studied in Paris or London 30 years ago.

Most students didn’t have any previous relationship with local residents. 56 percent responded that they were positively searching for local friends on and off campus.

Do you think that living in China was worth the time, effort and expense required?

97.1 percent of students responded yes.

Students said that they didn’t realize the convenience and adaptability of China until they came here. Convenient transportations including G-series high-speed train and new subway system shocked them at the very beginning. Also, the cheap labor created the booming of food delivery service.

78.4 percent of students even responded that they felt “more positive” towards the country after studying in China.

Do you, or do you plan to, use the Chinese language in your future work?

82.9 percent of students responded yes.

The increasing communications and trades between U.S. and China have created plenty of job opportunities for graduates.

Although most American students didn’t think they can operate their own businesses in China, most believed that the language skill and, more importantly, a better understanding of Chinese culture definitely would help them to find a good job.

Conclusion

According to a 2017 Quartz report, eight in 10 of Chinese students who studied in the U.S. went back to China after graduation. They have become teachers, operated their own startups and even built advanced AI technologies in China.

This year, the Trump administration worried about Chinese student spies and considered to put restrictions on the majors that Chinese students can choose and even cancel the student Visa for Chinese students.

But for young Americans who have studied or want to explore in China, it is still a transformative period.

 

Sources:

http://www.studyinchina.com.my/web/page/study-in-china-for-american-students-in-china/

https://www.ft.com/content/6665e98c-ece6-11e8-8180-9cf212677a57

Millennials Make the Move to the Suburbs

It looks like millennials have abandoned their big-city dreams—more people aged 20-36 are living in the suburbs than in the city.

Millennials have the reputation of not being very responsible with their money—some say that they can’t afford to buy homes because they spend their paychecks on avocado toast. But living in the suburbs? Isn’t that the American dream?

Rent or own, 38% of millennials live in the suburbs compared to 37% that live in the city. Though this is only a difference of one percentage point, it marks a turning point for this generation. Moreover, for millennial homeowners, 41% decided to stick to the suburbs rather than anywhere else, compared to 36% in 2016.

For some, the suburbs represent settling down, starting a family, and overall stability. However, at face value, suburbs are an affordable living option for those who want an easy commute to the city for other reasons. If millennials really do value things like avocado toast, good Instagram posts, and trendy brunches, moving right outside of expensive big cities might just be the smart thing to do to keep up their habits.

One thing that could be holding millennials back from affording the city lifestyle they might crave is student debt.  83% of people 22-35 who have student debt and do not own homes claim the two are correlated.

Though millennials have been buying more homes lately, around 70% of those who have regret it. One reason is the hefty down payment—a survey found that a third of them dipped into their retirement savings. Other reasons include underestimating ongoing costs and buying a home even when timing wasn’t perfect.

Given the buyer’s remorse, it makes sense why millennials are gravitating to the suburbs. A report by Zillow shows that people can spend around 26.5% of their income to own property in a city, but only 20.2% to own a similar home in the suburbs.

The move to the suburbs could mean that millennials are changing their reputation. A 2016 survey by Ernst & Young LLP and Economic Innovation Group (EIG) showed that the age group was “deeply pessimistic.” Two years later, that picture has changed. They’re getting married sooner than they thought they would, they’re graduating college and entering the workforce with stable jobs, and they think the economy is doing well. Most millennials think that sticking with one company is the best way to advance in their careers instead of hopping from place to place.

Though there are countless theories about the reason behind it, this newfound attitude is likely the result of growing up. Millennials live and learn, too.

How much money would the world save by going vegan?

By Roy Pankey

When I find myself the subject of dinnertime interrogation after refusing my aunt’s meatloaf, I have an artillery of arguments ready to deploy. I talk about how I am decreasing animal suffering, fighting climate change, and setting myself up to live longer than everyone else at the table.

I also talk about how I’m being economically conscious. In a study published in the Proceedings of the National Academy of Sciences, University of Oxford researcher Marco Springmann estimates (conservatively) that if the U.S. continues its current meat-consumption trend, by 2050 it could cost our country between $197 billion and $289 billion annually. The costs for the world are significantly higher.

Springmann laid out numerous dietary scenarios in the year 2050. He considered costs related to healthcare and climate change that will be incurred if we maintain our diet saturated with meat instead of adopting one that follows global dietary standards. (This would mean a great reduction in meat consumption for many parts of the country.) He also totaled cost savings for vegetarian and vegan world populations.

Costs considered include those related to healthcare (for treatment of diseases like diabetes and heart disease related to a diet heavy in meat), unpaid care (by family or friends for those affected by such diseases), and lost work days. Savings of minimizing greenhouse gas emissions related to the production of meat and other animal products were measured using the “social cost of carbon.”

Source: The Atlantic

Source: The Atlantic

The U.S. would save more than any other country by giving up meat. We would save $180 billion if we ate in accordance to recommended guidelines, and $250 billion if we gave up animal products altogether, due to our high healthcare costs per-capita. That’s more savings than would see China or all the countries in the European Union combined. And that’s not speaking at all of the minimum 320,000 yearly deaths associated with chronic diseases and obesity.

Source: The Atlantic

Overall, the study shows that the savings in healthcare-related costs are greater than the savings in environmental costs achieved when adopting a meatless diet. However, Springmann admits that the study’s numbers are “subject to significant uncertainties.” To realize these levels of savings, the world would need to decrease the amount of red meat it consumes by 56 percent and increase vegetable and fruit intake by about 25 percent. Globally, we’d also need to reduce our calorie intake by 15 percent in general.

Associating these well-known effects of a meat-free diet with a dollar amount is powerful. The numbers determined by the study can drive policy and attitude changes. Governments can now weigh the expenses related to consuming meat and other animal products against their economic needs. They can also use these numbers to drive debate about new taxes, existing subsidies, and changes to food advertising.

#ByeMeatloaf

Climate Change and the Language of Economic Growth

In October, the Intergovernmental Panel on Climate Change (I.P.C.C.) released a sobering report, stating that the threshold temperature (2 degrees Celsius) at which we must keep the planet’s climate below by 2040 might still be too high. Researchers originally believed that we had to keep temperatures below 2 degrees Celsius by 2040 to be somewhat safe. Now, they’re saying we must keep temperatures below 1.5 degrees Celsius by 2040, a conclusion that is harrowing in its implications if it wasn’t already.

What our species needs to do next is clear: we must move faster to a zero emissions society or face food shortages, more intense wildfires, and an exacerbated refugee crisis, just to name a few.

We’ve read the myriad of articles spelling out our impending doom, but what about the solutions? As journalists, editors, and media makers, what are we to make of all this? What can our role be, besides participating in the occasional march?

We can start by changing the ways we’ve defined progress, via the metric of GDP growth. As over 200 scientists stated in an open letter to the EU back in September, economic growth as we currently measure it is environmental unsustainable. We need to reduce our rates of production and consumption, which means we must have different measures for progress and wealth.

This might trigger anxiety for many, including myself, who’ve been raised under the belief that more growth means greater wellbeing. But it shouldn’t. A 2016 study by the Social Progress Initiative concluded that traditional measures such as GDP fail to capture the overall progress of societies.

For instance, countries like Saudi Arabia, Kuwait, and the United Arab Emirates have extremely high GDP per capita rates but lag heavily in social progress indicators like personal freedom and choice, access to advanced education, and tolerance and inclusion.

Contrarily, countries like Uruguay, Chile, and Estonia have much lower GDP per capita rates but rank much higher in social progress indicators like access to healthcare and opportunity.

As Jason Hickel from the Guardian put it so eloquently, an alternative growth model would entail “easing the intensity of our economy, cutting the excesses of the very richest, sharing what we have instead of plundering the Earth more” and, of course, liberating ourselves from ramped consumerism (which makes us more miserable anyway). This does not entail a Ludditian regression into pre-industrial society. It means reevaluating the language we use to define growth.

Hence, there’s another way of looking at it. First off it, GDP growth doesn’t matter as much as we think it does. Media outlets and politicians alike love to use GDP as a buzzword for calculated progress and often employ absurdly hyperbolic language to suggest that something monumental is happening. Prime example: pundits praising the Trump economy’s “uuge” growth rates, how it’s just on fire (“on fire” for whom and for what is never addressed). Yet, economic pundits fail to mention how, for instance, this will directly address wealth inequality or the political disenfranchisement of communities of color and the poor.

Take another case: Nigeria. Traditionally, the rapid growth of Nigeria (now the largest economy in Africa) would elicit ecstatic responses. And indeed, some level of growth in Nigeria is positive. But what’s not in the equation is the fact that millions of Nigerians face hunger and hundreds millions more live below the poverty line. Meanwhile, the top five billionaires in Nigeria have a shared net-worth of about $30 Billion, about $5 Billion more than how much it would take to eradicate extreme poverty at the national level.

The point here is not to say we should stop talking about GDP growth. That’s impossible and undesirable. But we should place less emphasis on it politically. The actual mechanics of what this would mean on the ground via political policy is of course another matter.

As media disseminators, our primary job should be to allow for more open discussions on the alternative ways we can measure and subsequently construct a more environmentally sustainable vision for society. When have you seen a CNN panel discussion on the merits (or de-merits) of “de-growth” policies or the “steady-state economy”; or discussions on the differences between absolute and relative “decoupling”(the rate which economic output uses less energy and raw materials due to increased efficiency.)?

There’s no clear-cut rubric right now and the debate is mostly held in obscure environmental and social science circles. Instead, we should encourage these admittedly uncomfortable and controversial questions to be debated openly in mainstream outlets everywhere and the socio-economic urgency of mitigating climate change to be taken a tad bit more seriously.

 

China’s Online-shopping Festival

China announced a 6.5 percent economic growth rate in the September quarter of 2018, the lowest rate since 2016. However, the decreased economic growth rate didn’t cool down the consumption enthusiasm on e-commerce platforms. Instead, the Chinese e-commerce companies made e-commerce history in November.

China GDP Growth Rate

The most representative e-commerce company would be the giant—Alibaba. This year, Alibaba reported that customers spent $30.8 billion online in 24 hours, a significant increase from $25.3 billion in gross merchandise volume in 2017. The number is almost five times than the total online sales on 2017 Cyber Monday reached $6.59 billion, the largest online sales day in the U.S. history, according to Adobe’s analysis.

Singles Day (Nov.11) was originally created by Chinese university students to celebrate their single status. In 2019, Alibaba created its first shopping day on Singles Day with about $7.1 million in gross merchandise volume and turned it into a nationwide shopping festival. And now it’s the world’s largest online-shopping festival, according to Bloomberg.

Source: Statista

When the creative marketing strategy created by accident has become a profitable business model, Alibaba is not the only company who participates in the festival. While Alibaba calls its shopping festival as “Double 11”, JD.com, the most competitive rivalry of Alibaba, names its shopping festival as “11.11” and extends its sales time from Nov.1 – Nov.11. During the period, JD.com saw about $22.8 billion in transactions, a 25.7 percent increase compared to the gross merchandise volume of the same period in 2017. JD.com also has its own shoppers’ holiday in mid-June (6.18). This year, JD.com has sold $24.7 billion worth of goods on that day.

Plus, other popular local platforms performed well in this Singles Day, for example, Suning, VIP.com, Vmall.com and Kaola.com, all of which are popular e-commerce companies in China.

Based on the whopping numbers, China’s media show their confidence in Chinese customers’ purchasing power. According to people.cn, an authoritative media in China say that the development of shopping festivals over the ten years has shown the increase in China’s economic growth and witnessed the consumption power of domestic economic growth. In the past ten years, the items customer buy online have changed from everyday necessities to high-quality commodities, such as big-screen televisions, smartphones and imported products. Also, an increased number of rural residents are taking part in the shopping festival, for example, the number has reached 241 million in western rural areas, which can show huge potential possibilities for the e-commerce industry. China is welcoming “consumption upgrading”, China’s media say.

However, the opposite points came out that the numbers “ suggest China’s economy is cooling down”, according to Business Insider. Although the gross merchandise volume has been increasing over the past ten years, the GMV annual growth rate is not the case. This year, the GMV annual growth rate of Alibaba has dropped from 39% to 27%. Also, the upstart e-commerce company Pinduoduo, featuring to sell unknown-brand, cheap, low-quality products but low-price products, has won many shoppers in China this year. The phenomenon was heatedly discussed that Chinese people are facing “consumption degrading”.

The 2018 shopping festival in China has come to a close. What is the status quo behind the hilarious shopping carnival? Maybe the consumers can tell.  

HQ2… and 3?

For over a year, cities all over the United States, as well as in Canada and Mexico, have been in a battle to get Amazon’s attention. Two-hundred and thirty-eight entries from states, cities and towns were submitted since the announcement of the search for Amazon’s HQ2, all offering the online retail giant millions of dollars in tax incentives. Local officials all over North America had immense excitement about the possibility of bringing many new, high paying jobs to their city. In the end, Amazon chose to split its second headquarters between two areas that already have the greatest number of Amazon employees other than Seattle and the Bay Area – Long Island City, NY (just outside of Manhattan) and Arlington, VA (just outside of Washington D.C.) The decision is controversial, and has local taxpayers wondering whether or not the benefits outweigh the downsides of the company’s presence.

Amazon has committed to generating 25,000 new jobs in each city, with an average salary of more than $150,000 for those jobs. They have also committed to building community infrastructure and to donate space for a new public school and ““for a tech startup incubator and for use by artists and industrial businesses.” There are many potential benefits on the local economy and individuals as a result of so many new jobs and an investment in the community. Additionally, college students in the surrounding areas are enthusiastic about the number of diverse, high-paying future job opportunities.

But many concerns are also being raised, particularly surrounding the headquarters in Long Island City, in the Queens neighborhood outside of Manhattan. Alexandria Ocasio-Cortez, the representative-elect of New York’s Fourteenth Congressional District said on Twitter, “The idea that [Amazon] will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here.” Others have also openly criticized the use of government money for a private corporate government, when that money could be used for so many other things.

There are additional concerns over housing prices rising outside of Long Island City and Arlington. According to senior economist at First American, Odeta Kush, home prices in Seattle have jumped 35 percent since Amazon opened its doors. In the last five years, that jump was 73 percent for homes and 31 percent for rent prices, according to Zillow data.

In places like New York City and Washington D.C., where home and rent prices are already some of the highest in the U.S. these statistics are extremely concerning to many residents. However, some analysts believe price trends will not mirror Seattle’s because of the already established housing markets in the two cities.

As plans for the split HQ2 are being finalized, everyone seems to have an opinion on the decision – including SNL writers.

The recent announcement is another example of how a company that started out as an online bookstore, has become such a powerful force in our society. Amazon has an economic impact that cannot be ignored, and has even manage to seep into popular culture,

Will Insurance Companies Catch Fire, Too?

Widespread fires burn through thousands of California homes year-over-year. This doesn’t only affect the homeowners and their families but also lays immense pressure on firefighters in these dry areas. Also, insurance companies struggle as they insure these households and properties that are prone to blow up in flames.

In light of the recent fires burning through Northern and Southern California, I am discussing the economic impact that this disaster-prone state has on insurance companies. As one of the driest states in the United States of America, it seems like insurance companies struggle as California officials don’t do much to mitigate these risks. There is not much of a boundary for homeowners to build on land that is so dry that the probability of a wildfire is high. It feels like these fires that happen on a yearly basis are not enough for someone to take a step in the direction for safer housing, which would result in insurance companies saving money, as well. While public resources are spent defending or salvaging what is left of those homes which shouldn’t have been built in the first place, insurance companies must defend themselves or they are at risk for driving themselves out of business.

As California residents sift through the ash and hope to rebuild, funds may be insufficient, as insurance companies don’t need to cover one homeowner’s lost property, but the entire community (if not more). According to a Forbes article discussing insurance and loss of use for the recent victims of the Woolsey and Camp Fire in Los Angeles and Ventura County, “What is often overlooked is loss-of-use coverage. How long will it take to repair or rebuild?” (Gorman). Loss of use, or living expenses during the duration of the recovery process, usually covers living expenses and rental value. Although, not all insurance plans have this, and when a fire causes destruction, Californians may be surprised when their insurance companies don’t fully cover these temporary living costs. Homeowners in these high-risk areas must understand that in cases of natural disasters, they may be left with a much lighter wallet than expected.

According to a Los Angeles Times article discussing fleeing insurers, insurance companies in high-risk areas for natural disasters are no longer agreeing to insure homes. For example, a couple living in Lake County in Northern California is denied insurance. In the area which the couple resides, “50% of the land has been burned by fires in the past several years” (Newberry). With an already expensive premium of $2,100, their rate had skyrocketed to $5,800 in only two years (Newberry). The increase in California wildfires leads to more fleeing insurers. What insurers have continued to do in California is to inflate the price of insurance in high-risk areas to veer builders away from this land, and make home buyers think twice before buying a property with a likelihood to catch fire.

The Los Angeles Times article also provides statistics on the California Department of Insurance: This department acknowledges that the trend of inflating insurance prices is a rational and fair response on the part of the insurance companies. In 2017 alone, they “received nearly $12 billion in claims from wildfires that destroyed more than 32,000 homes. It makes sense that companies will write fewer – if any – policies in areas where they predict losses will outweigh what they can recoup through premiums.

What’s next? Legislators must take action to protect home buyers and homeowners who have made efforts to reduce wildfire risk.

Uber’s Re-Entry into Germany

It is no secret that Uber is more popular in American cities than European cities. However, the company is making attempts to change this. Uber has recently returned to Germany. Previously, Uber had been forced out of Germany due to not following German regulations. This time, the company is trying to make amends. 

Germany requires all drivers to pass health and driving tests, and to receive a business licenses that includes a bookkeeping exam. Additionally drivers must return to a home base between trips, which result in limitations in the number of rides that can be made. Car-pooling services are not allowed. When Uber first arrived in Germany, the company didn’t inform local officials that it was coming and so as soon as the app went live, anybody was able to transform his or her car into a taxi, even if they didn’t have a license. Uber has been trying to make amends since this faulty communication. The CEO, Dara Khosrowshahi, has been to Germany twice in the past year in order to apologize for the company’s past behavior. Uber has also vowed to follow all of Germany’s regulations, as well as incorporating electric cars into Uber’s fleet out of respect for the German government’s fight against air pollution. Uber plans to re-establish its service into Germany by the end of 2018.

Uber will first return to Düsseldorf. The company has chosen this town because customers have logged into the app more than 150,000 times since January and this was a period of time when there weren’t even any cars on the road.

Re-entry will not be especially easy for Uber. The company faces more competition than it did when it started in Germany three years ago. There is now a service owned by BMW called DriveNow that lets people rent a car with an app for short trips around cities. Moia is testing a ride-sharing bus service in Hamburg. MyTaxi is a taxi-dispatch app that is widely used in Germany. Lastly, Taxify also provides rides in European cities. 

In addition to other competing apps, Uber is also facing major backlash from German taxi drivers. Last month dozens of taxi drivers protested outside of Uber’s office. They blasted their horns and stopped traffic. The Düsseldorf police said there have been reports of six incidents between taxis and Uber drivers. These reports include incidents of taxi drivers verbally abusing and harassing Uber drivers. 

If Uber were able to successfully expand into Germany, this would result in great things for the company. Germany is the world’s fourth-largest economy and the largest in Europe. It has multiple densely populated cities and has a wealthy, tech savvy population. Currently, in London, the company is involved in a lawsuit that would require a minimum wage and to provide holiday time to drivers. In Spain, taxi drivers have persuaded politicians to limit the number of Ubers on the road. In Italy, the company has been kept out due to regulations. It seems as though Germany may be Uber’s greatest hope in expanding into European markets. 

A fashionable, sustainable, and values-driven IPO

Denim has long been referred to as the fabric of American lives, and Levi Strauss & Company’s plan to become publicly traded once again in early 2019 merely reinforces that point.

Although the brand Levi Strauss & Co. was hugely popular throughout the mid to late 20th century, the denim maker’s clothing started to decline in popularity in the late 1990s, causing the company to go private. Today, however, Levi’s has experienced a full comeback, with the iconic label clearly pronounced on the jeans and jean jackets of many Americans as well as consumers across the globe.

Thanks to the return of Levi’s products to mainstream fashion, the company is well-situated financially to return to public markets. In its most recent quarter, revenue grew 11%, with the entire brand delivering 12% growth over the quarter. Furthermore, the company’s women’s business grew for the 13th straight quarter. The most recent earnings report also boasted strength in the direct-to-consumer area, thanks in part to the fact that the chain opened 65 new stores over the course of the last year.

 

Levi Strauss & Co.’s 2017 annual report also demonstrated its strong financial position. In addition to strong net revenue, gross margin, earnings before income taxes, and free cash flow, the company reported having its lowest net debt since 2000. Source: 2017 Annual Report

But what propelled Levi Strauss to go from America’s forgotten brand to being set to issue an IPO in 2019 that will purportedly raise between $600 and $800 million, and value the company at $5 billion? First, denim’s fashionableness seems to be back, with jean jackets and bell bottom jeans being worn by many once again. In fact, the denim market is expected to reach $79 million by 2023, thanks in part to the growth and transformation of the Asian retail clothing industry. For Levi’s in particular, however, the money that the company invested in a research and development center in the early 2010s, called Eureka Innovation Lab, seems to be paying off. Levi’s recently unveiled new technology that allows it to automate new parts of the denim-making process, ranging from design to manufacturing, which not only saves time and effort, but also creates less waste and thus is more sustainable.

Levi’s now uses lasers to distress its jeans, not people. Source: Wall Street Journal

Levi’s also diversified its products by expanding its women’s wear recently, causing sales for women’s clothing to rise from $800 million a year in 2015 to over $1 billion in 2018. On top of all of those factors, it certainly helps that celebrities have come to love Levi’s, with the Kardashian family all wearing different pairs of Levi’s in their 2017 Christmas card.

 

The company continues to diversify its products, focusing less on men’s wear and pants. Source: Quartzy

But beyond those factors, something that has undoubtedly attracted consumers to Levi Strauss & Co. products over those of their competitors has been the company’s values. Self-described as “values-driven,” the CEO of Levi’s, Chip Bergh, has been an outspoken supporter of various highly politicized and relevant issues. In November 2016, he wrote an open letter asking gun owners not to bring their weapons into Levi’s stores after a customer was accidentally shot. Bergh has since defended the company’s gun policy and asked other business leaders to stand up against gun violence, while also taking a variety of steps including establishing the Safer Tomorrow Fund earlier this year which directs money to support nonprofits working to end gun violence. The company has also partnered with like-minded clothing maker Patagonia to create MakeTimeToVote.org, an initiative that gave employees time off to vote in the recent midterm elections also encouraged other large corporations to follow in suit. Furthermore, in late summer of 2018, the company announced its 2025 Climate Action Strategy, an aggressive and detailed plan that includes achieving 100% renewable electricity and a 90% reduction in greenhouse gas emissions at all of its factories in less than a decade.

At a time when consumers care not just about how their clothes look but also about how they were made, where the materials were sourced from, and what the seller believes in, Levi’s has managed to cultivate an ethically-minded fashion brand supported by aggressive values-driven initiatives. At the same time, the company has found increased cultural relevance, and has willingly taken the plunge into the world of automation in order to improve its processes and create better products. While other companies fear mechanization or stagnate as they try to figure out how meaningfully decrease environmental impact, Levi’s has forged a unique path for itself by embracing the current challenges posed to businesses in the modern economy. Given their carefully-devised and multi-faceted approach, it seems highly likely that Levi’s will easily raise its projected $600 million—and perhaps even more—when the time comes in 2019.