Gap Inc. Admits Problems, Vows to Improve Working Conditions at Garment Factories

As a result, the San Francisco-based company stopped doing business with 136 factories due to issues such as the use of child labor, inadequate safety and industrial hygiene measures, insufficient access to drinkable water, and verbal and physical abuse.

The report found that "few factories, if any, are in full compliance all of the time. If they were, we wouldn't need a code or the extensive resources we devote to monitoring. When we find problems, we work with management to try to resolve them as quickly as possible. We will stay with a manufacturer as long as we believe it is committed to making ongoing improvements."

The report noted that while any violation concerns the company, it pays particular attention "to violations of core areas… including serious issues such as forced or child labor. We also take note when violations occur frequently, such as in the area of health and safety, or if we see a pattern develop over time. In 2003, we terminated our business with 136 factories for serious or excessive breaches of our Code of Vendor Conduct."

Gap Inc. says the report, issued May 12, is the most comprehensive look ever provided by the company into its ongoing efforts to improve labor standards in the approximately 3,000 garment factories worldwide that produce merchandise for the company's Gap, Old Navy and Banana Republic brands. The report also provides an overview of the company's focus on supporting sustainable, industry-wide change beyond the garment factories that produce its merchandise.

Highlights of the report, which is available online at http:///www.gapinc.comwww.gapinc.com, include:

• A detailed review of the company's garment manufacturer and factory approval process and ongoing global monitoring program, which was launched in 1996. The company's 90-plus person compliance team conducted approximately 8,500 factory visits in 2003. The team rejected 16 percent of the 653 new garment facilities evaluated in 2003, and revoked prior approvals for 136 factories because of compliance violations.
• Aggregated data for 2003 from 11 geographic regions showing labor and health and safety issues among a base of approximately 3,000 garment factories in 50 countries that were approved to produce merchandise for the company.
• Sample factory rating data from a pilot program designed to quantitatively assess garment factory compliance with Gap Inc. labor and health and safety standards.
• Case studies highlighting independent factory monitoring; the complexities of ensuring a worker's right to freedom of association; and challenges and opportunities that exist in Cambodia's and China's garment industries.
• A discussion of the company's commitment to working collaboratively with multi-stakeholder initiatives such as the Ethical Trading Initiative, Social Accountability International and the Global Alliance; labor unions such as UNITE; and other groups such as socially responsible investment funds to create sustainable, industry-wide solutions and universal standards.

"We believe that garment and other manufacturing workers around the world deserve better than the reality that many unfortunately face," said Gap Inc. CEO and President Paul Pressler. "We recognize and embrace our duty to take a leadership role, and our first social responsibility report discusses in detail our comprehensive efforts and commitments. We are convinced that collaborative, multi-stakeholder engagement is the only way to create sustainable changes for garment workers worldwide. We are working diligently toward that goal."

In addition to a primary focus on improving garment factory conditions, the report also details other aspects of Gap Inc.'s social responsibility efforts. These include community giving and volunteerism, environmental practices, and corporate governance and ethical business practices, as well as policies and programs that support the company's more than 150,000 employees worldwide. Highlights include:

Community giving and volunteerism: Gap Inc. employees volunteered 22,000 hours in 2003 through company-sponsored programs to clean community parks, restore creek habitats, help kids with art projects, feed the homeless and provide other needed support. Through its Gap Foundation, the company also has donated $60 million to non-profit organizations worldwide over the past 5 years to help children, youth and families. In addition, the company also makes product donations to organizations in need. Product donations for 2003 totaled $12 million.

Supporting the environment: The company has been recognized for its environmentally sustainable building practices at headquarters facilities. In addition, the company continually looks for ways to improve energy conservation across its stores by improving designs, building standards and operations. As a result, stores built in 2003 are roughly 25 percent more energy efficient per square foot than those opened in 2000, and almost 29 percent more efficient than those built in 1990. The company is a member of the U.S. Environmental Protection Agency's Climate Leaders program.

"How we do business is as important as what we do," said Pressler. "We've accomplished a lot, as shown in our report, but there's always more we can learn and do. We'll continue working hard to ensure our actions consistently support our values."