Reporting: How Gap Inc. Does It
Gap Inc., founded in 1969, is one of the world’s largest specialty retailers, with 134,000 employees and 3,200 company-owned stores across Canada, China, France, Ireland, Italy, Japan, the United Kingdom and the United States. Gap Inc also has 200 franchise stores from Australia to Moscow and a global online store. Gap main brands are Banana Republic, Old Navy, Piperlime, and Athleta. One million workers produce Gap Inc.'s products in more than 1,300 factories across nearly 50 countries.
Reporting Period: February 2009 to January 2010
- GRI (including pilot Apparel and Footwear Sector Supplement) and UNGC cross reference table
- CDP submission on website
Assurance: Not assured
Material issues: No materiality assessment
- Public Advisory Working Group for reporting and their public statement
- FAQ's on the report website – addressing the sticky issues
- Data Dashboard collating all performance data
- Interactive Progress Map with case studies of sustainability activities from around the world
- 100% percent of branded denim is made in compliance with Gap's Water Quality Program.
- P.A.C.E. (Personal Advancement and Career Enhancement) community Program to train female garment workers.
- Gap applies its Code of Vendor Conduct in its extended supply chain.
- Designed and launched a line of T-shirts made in Haiti, with 10 percent of profits donated to Mercy Corps, and contributed $360,000, following the Haiti earthquake.
- GAP GEAR video supporting the LGBT community with 31,000 YouTube views
- In 2010, Gap’s “Recycle Your Blues” campaign collected more than 360,000 units of denim, which was used to create fiber insulation for nearly 700 homes.
- Gap Environmental Council of executives and managers to create positive environmental change for the company.
- Gap installed a one-megawatt solar array at Fresno California distribution center, which generates approximately 1.9 million kwH annually.
What's material for Gap?
As with all textile and apparel manufacturers and retailers, there is a host of material issues which should inform sustainability strategy and reporting. Labor conditions and human rights, economic impacts in emerging markets, environmental life-cycle impacts of products, sourcing of raw materials, chemicals and dyes used in production, transportation and logistics, retail practices, eco-design, packaging, green building etc. are all areas which are on Gap's sector-specific radar.
Gap has selected four generic focus areas – supply chain, environment, employees and community investment – as the key pillars of its approach to social responsibility. While Gap engages with many industry initiatives such as the Ethical Trading Initiative, Social Accountability International, Business for Social Responsibility and SustainAbility, participates in the ILO/IFC Better Work program, is a founding member of the Sustainable Apparel Coalition and also maintains a five-member Public Reporting Working Group (since 2002) to review the way the company reports, a clear process of materiality and prioritization of the issues that Gap considers most material in this reporting period is not available. However, many of the issues are addressed in the four main sections of the report.
There is no easy supply chain solution!
Gap reports: "Poor factory working conditions are unacceptable, yet the complex reality behind them defies easy solutions." There is no doubt that Gap takes this responsibility seriously and takes care to consider the levels of influence that Gap exerts in different parts of the supply chain. For example, Gap has significant influence over its own purchasing practices (which can often impact suppliers and lead to supply pressures which can affect workers) but less influence over sites in locations where there are inadequate or outdated labor laws. In this complexity, Gap maintains a 70 –strong staff to work in supply chain auditing, monitoring and factory improvement practices. In 2010, Gap conducted more than 2,500 audits in over 1,200 facilities that make Gap products. 233 new factories were evaluated in 2010 and 78% were approved. However, of the total facilities in the Gap supply chain, less than 15 % achieve an excellent rating and close to 20% achieve a Red Status meaning "action required".
Focus on the products not the efforts
Despite Gap's target to do less "policing" and more work on changing systems and addressing root causes, efforts to encourage suppliers to adopt SAI’s SA8000 certification, work on improving "factory-level human resource management systems to empower factories to proactively improve their work environments" (10% of factories -133 sites- embedded such systems in 2010), this massively complex puzzle still delivers no guarantees of acceptable practices in half of Gap's supply chain. Is Gap better than other apparel retailers? It's difficult to say – certainly Gap's intentions are positive and efforts are tireless and, in some cases, pioneering. Gap's transparency in listing the Code of Vendor Conduct violations in factories around the world is commendable. However, the report does not entirely address the real changes that Gap has been able to effect in its supply chain which has been so carefully managed over so many years. It is of interest to know that a strict Code of Vendor Conduct exists. It is of much greater interest to understand how this has impacted the sustainability quality of Gap brands over the past 10 years.
"A supply chain is not merely a mechanical process"
In my view, a more meaningful measure for Gap would be the number of garments that are delivered from sub-standard factories, not how many factories are sub-standard. If the Pareto rule holds true, and 20% of factories produce 80% of Gap products, and those are the 20% of factories that are achieving excellent or good ratings, then the picture looks somewhat different. This approach would take into account the implications of sourcing allocations on Gap's overall human rights footprint in their supply chain. Gap's reporting should focus on the sustainability of Gap brands as a result of efforts to clean up the supply chain, not only on the efforts themselves. Gap's 2011 goals are about improving the Vendor Development Progam and Social Responsibility Rating tools. They should also be about increasing the percentage of products from highly rated factories.
"Environmental responsibility means far more than being 'green'"
Gap's approach to environmental stewardship – the ECO approach - is well structured, focusing on improving Energy and water conservation, Cotton and sustainable design, Output and waste reduction after completion. In 2009, Gap made it compulsory for suppliers to comply with Gap's waste water guidelines for supply of denim products. Gap collaborates within the industry to set standards for fabric mills for improving operational and environmental efficiencies.
In 2009, Phase One (U.S. non-manufacturing facilities) of Gap's environmental assessment was completed showing, among other things, that 71% of Gap's electricity usage is in retail stores, representing a significant opportunity. Gap's energy figures are presented in detail, including even the Gap's corporate jet which is responsible for 10,000 tons MMBtu energy consumption or 0.02% of total energy used by the Company in the U.S.
Gap measures carbon emissions including, for the first time in 2010, Scope 3 business travel. Overall, Gap shows a 14% reduction in absolute greenhouse gas emissions between 2008 and 2010, on track to achieve a 20 percent absolute reduction in U.S. operations by 2015. Gap's energy disclosures are for U.S. operations only, representing 75% of Gap's sales. While Gap's is clearly on a structured path to increase the scope of monitoring and reporting, it would be nice to see Gap's next report covering all global environmental impacts.
"A job makes a living. A career can make a life."
Gap's employee management processes are well described in the report and cover energizing and innovative ways to engage employees in sustainability. For example, three times a year, Gap offer a friends and family shopping event called “Give & Get” in which 5% of sales are donated to employee-selected non-profits. Since 2008, Give & Get has raised more than $15 million for our non-profit partners. In 2010, The Fisher Award, a global recognition program, was introduced to honor the legacy and values of Gap's co-founders. Employees nominate teammates or themselves and winners receive global recognition and a non-profit grant. Other practices include a wide range of employee benefits, emergency relief for employee hardship, training and development, career planning, diversity and inclusion, employee recognition, employee engagement etc. – all of which appears to show that Gap truly is a great place to work. But then, 67% of Gap's management in the U.S. is female, so perhaps that explains a thing or two!
“Be What’s Possible”
Gap maintains a range of community investment programs to develop capacity in two clear areas of focus: underserved youth in the developed world and women in the developing world. Gap's P.A.C.E. (Personal Advancement & Career Enhancement) program is aimed at training female garment workers in technical and social skills so they can advance in work and life. The program currently operates in India and Cambodia and more than 5,000 women have participated. In one factory, women who completed P.A.C.E. were promoted at 4.7 times the rate of other female workers at the same factory. The long-term vision is to extend this program to all Gap's 34 plants and 60,000 workers.
Online is the way to go!
The way to read this report is on Gap's report website which is nicely navigable and enables good access to relevant information. The report builder enables downloading of sections, or the entire 159 page report, as webpages grouped together with no index or graphics. The key sections of the report follow a similar format – overview, goals, data – and contain nice insights, case studies, personal stories of Gap employees and interviews with employee award winners. Michele Sizemore, Vice President of Global Sourcing for Gap, for example, "jokes that she never imagined staying at a job for 18 years, but adds that her role’s direct impact on people is a big reason she is still at Gap". The website makes it come alive with images, videos and testimonials, and also an interactive World Map, plotting points around the globe where Gap "makes a difference", linking to case studies.
Sharing the struggles
The tone of the Gap report is candid and open, honestly articulating the struggles of a company with such a sprawling reach in monitoring and controlling the really tough issues such as human trafficking, child labor, freedom of association and the problem of child-picking of Uzbek cotton. Gap provides useful contextual background for many of the issues the Company faces – for example, the practice of multiple tiers of subcontracting for special handwork required on Gap garments, which makes monitoring the supply chain even more difficult than auditing facilities. Gap also gives two short case studies of human rights violations in Indonesia and El Salvador, showing how Gap responded fast, investigated, worked collaboratively with the site-owners and other local stakeholders to rectify issues.
Tell it like it is
This candid story-telling tone adds an authenticity to Gap's reporting. "We know we're not perfect, but at least we try to be as transparent as we can be about how we make our product and treat our people", says Bobbi Silten, Global Responsibility SVP at Gap.
Constructive dialog among stakeholders is the key, Gap says, but "sometimes, it is a significant achievement just to get people together in the same room." This is the reality, and I have always admired Gap for telling it like it is. The Gap report is immensely readable because it creates stories and anecdotes out of almost all performance updates, complete with contextual information, personal insights and experiences of key people.
Notwithstanding, transparency alone is not enough and sustainability can only be advanced by changing current reality. Gap could make a stronger impact with its reporting by tightening up the focus on how reality has changed and what has improved as a result of their genuinely impressive and wide-ranging leading-edge actions. One good example is the impact evaluation of the This Way Ahead program for empowering youth, which provides an assessment of the program impacts on youth, Gap employees and non-profit partners. It would be nice to see similar socio-economic assessments for areas of business impact as well as community investment impact.
Further options for Gap's reporting in the future include a more rigorous application of the GRI reporting framework and third party verification to add an additional layer of credibility. Similarly, as Gap is a global company, its core performance reporting should step up to define global impacts, beyond the borders of the U.S. And while the many stories in the Gap report are illustrative and truly inspiring, it may just be that they don't tell the whole story.
elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of : CSR for HR: A necessary partnership for advancing responsible business practices (read more on www.csrforhr.com) Founding partner at BeyondBusiness Ltd (www.b-yond.biz/en) consulting to companies on CSR strategy, processes and sustainability communications.
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