Partnering with Factories
Partnering with Factories Improving working conditions to benefit people and our business
Addressing the systemic challenges of the apparel industry requires collaboration. We embrace this approach by working closely with our suppliers to build their capabilities, by joining industry-wide efforts to share best practices and improve efficiency and by partnering with local and international NGOs on innovative programs that benefit facility managers and workers.
We have thoroughly reassessed our approach to working with factories, laying the groundwork for further progress.
Empowering Our Strategic Suppliers
We partner with the facilities where our products are made to help them become preferred employers in the communities where they operate. This supports workers and can benefit business by driving higher retention and improved productivity. To achieve this, we take a multipronged approach to building our suppliers’ capability.
To cultivate long-term, close relationships that allow us to create greater change together, we are working with a smaller number of strategic suppliers. Over the past five years, we have streamlined our approved list of facilities from more than 1,200 to fewer than 900. With those suppliers, we develop shared sustainability goals and work with them to measure and improve performance.
In September 2016, we disclosed the names and locations of factories that manufacture our branded products. This list will be updated on a biannual basis and as needed. The factory list can be found here.
Our tier 1 suppliers are trained on our COVC on an ongoing basis. We also engage many suppliers more deeply through industry-leading programs such as P.A.C.E., our Workplace Cooperation Program and our Workforce Engagement Program.
To help our suppliers make strategic investments in their employees and business operations, we have increased their access to data and analysis from our Assessment and Remediation program. Over time, we will also disclose on each supplier’s involvement in various Gap Inc. programs and their areas of opportunity for improving performance. We believe that as suppliers take more ownership of their sustainability programs, they will realize the business benefits and will require fewer external assessments and incentives.
In 2015, Gap Inc. became a signatory to the Social and Labor Convergence Project, a collaboration among apparel and footwear brands, retailers, industry groups and civil society organizations.
Social and Labor Convergence Project
The proliferation of duplicative assessments and their associated protocols consume time and resources that suppliers could use to create real progress in their workers' lives. We believe streamlined approaches to measuring social and environmental performance can support systemic progress and make it easier for more businesses to improve their social and environmental performance.
That’s why, in 2015, Gap Inc. became a signatory to the Social and Labor Convergence Project, a collaboration among apparel and footwear brands, retailers, industry groups and civil society organizations . The project is building a shared data-collection tool that can assess the social and labor performance of a manufacturing facility. The initial tool was piloted in 2016, and it will be further tested in 2017. The project aims to have the tool and verification methodology ready for adoption in 2018. To help the project achieve its goals, Gap Inc. is chairing two key working groups: the Tool Development Working Group and the Verification Working Group.
As part of our efforts to go above and beyond assessment and remediation and work more collaboratively with our suppliers and other stakeholders, we have played a leading role in multi-stakeholder collaborations such as the ILO’s Better Work (BW) program. Better Work takes an advisory approach to monitoring facilities, with an emphasis on protecting worker rights and well-being by helping companies and governments uphold the ILO’s core labor standards and national labor laws. Better Work leads facility assessments and helps address and remediate issues in Vietnam, Cambodia, Indonesia, Bangladesh, Jordan, Haiti, Nicaragua and Lesotho.
We have partnered with Better Work since its founding, and today we collaborate in a variety of ways : We sit on the Better Work Advisory Board, we partner with them on advisory services in eight of our sourcing countries and we advocate for other buyers to adopt Better Work’s assessment reports instead of duplicating audits. Previously, we set goals to have 70% or more of facilities in ILO Better Work markets participate in the Better Work program. Our goal now is to enroll 100% of our eligible facilities in Better Work countries in the program by the end of 2018.
BW assessed 160 – or 45 percent – of the factories that make our branded clothing in BW markets in 2016, including 67 percent of factories in Cambodia, 45 percent in Vietnam, and 34 percent in Bangladesh.
Factory Assessment & Remediation in Better Work Markets (2016)
|FACTORIES AUDITED BY BETTER WORK||FACTORIES AUDITED BY GAP INC.|
|Country||# of factories||% of factories||# of factories||% of factories||Total|
Workplace Cooperation Program
In 2015, we partnered with Better Work to create a new capability-building program for the facilities we work with. This Workplace Cooperation Program gives workers and managers the skills they need to resolve workplace issues, engage in collaboration and drive continuous improvement in the workplace.
After helping fund the expansion of this program, we asked Better Work to train our Supplier Sustainability team on this curriculum, so we could deliver it to non-Better Work facilities. Through this program, we help train committees of workers and managers to develop sustainable solutions and share best practices for workplace challenges. The trainings cover communications and problem-solving, how to handle grievances, negotiation skills and more. Through this program, our Supplier Sustainability team also trains workers and managers on how to run effective, collaborative discussions to promote improved dialogue between workers and management.
We believe that improving dialogue and relations between workers and management can help prevent labor disputes, resolve problems, give greater voice to workers and improve productivity and competitiveness.
In 2015-2016, we implemented training activities with 31 facilities in nine countries, and we plan to expand into 69 facilities by 2017. In 2018, we will be adding a training focus on supervisory skills to help define worker rights, supervisor responsibilities and professionalism in the workplace. This program also teaches other valuable skills, including communication and effective listening.
Through the Workplace Cooperation Program, we help train committees of workers and managers to develop sustainable solutions and share best practices for workplace challenges.
Workforce Engagement Program
In addition to ensuring that the people who make our clothes work in safe, fair conditions, it is crucial that they feel valued and engaged at work. Research has shown that employee engagement enhances workers’ sense of well-being, and can also demonstrate positive business outcomes. According to Workplace Research Foundation, highly engaged employees are 38% more likely to have above-average productivity, and suppliers that invest in workers receive a three-to-one return on their investment .
Highly engaged employees are 38% more likely to have above-average productivity, and suppliers that invest in workers receive a three-to-one return on their investment.
After we receive the data collected by Verité or Good World Solutions, we help our suppliers analyze the workforce-related insights to create tailored recommendations they can use to make investments in their employees. This analysis also informs training programs for facility managers, as it serves as the basis for our Supplier Sustainability team to develop tools for facility managers to increase workers’ satisfaction, knowledge and overall well-being.
To achieve that end, in 2016 Gap Inc. created an Engagement and Well-Being Toolkit for suppliers, which is meant to provide them with resources that can help them improve various workplace-related issues. Examples of this include team-building activities, supervisory skills trainings and investments in well-being infrastructure, such as building daycare centers on site to help working mothers.
We have found that the program supports both social and business objectives: For workers, it enhances well-being by helping facility managers listen to and act on their concerns and ideas about improving the workplace. For management, giving workers better benefits and resources at work can help increase productivity, improve retention and lower absenteeism. The program also benefits our business by promoting an ethos of continuous improvement among our suppliers. And by delivering best practices and recommendations to our suppliers, the program is helping us meet our goal for all strategic suppliers to achieve a sustainability rating of green or yellow by 2020.
A recent independent study completed by Verité highlights some of the positive business benefits, making the case that when suppliers invest in their employees, their business can benefit as well. Simultaneously, when facility management chooses not to act upon the insights revealed in these assessments, or when coaching mechanisms are deployed to provide “positive answers", little improvement is observed by workers.
As we evolve the program, we will continue to find ways incentivize supplier ownership of this approach. We will continue to help facility managers understand that this is not a compliance-related exercise, but is rather a program that complements traditional assessments by focusing solely on the workforce as an asset. Further, we will seek to deepen our partnership with other companies operating similar programs, namely through the BSR Working Group on Worker Engagement, by sharing best practices and seeking to align worker well-being and engagement tools.
In addition to ensuring that the people who make our clothes work in safe, fair conditions, it is crucial that they feel valued and engaged at work.
All of our tier 1 suppliers will make the transition from a cash-based system to digital payments by 2020.
Moving to Digital Payments
In a move to improve the livelihoods of garment workers and help improve supply chain transparency and efficiency, in early 2018 we announced a goal for all of our tier 1 suppliers – approximately 800 factories in about 30 countries – to make the transition from a cash-based system to digital payments by 2020.
More than 60 percent of Gap Inc.’s supplier factories already provide digital payments methods, such as online transfers to bank accounts or mobile wallets. The new goal will help scale this progress across the company’s global supply chain and positively impact the lives of more than one million garment workers.
Electronic wage payment methods have the benefit of drawing previously unbanked workers into the formal financial system, allowing them greater control over their finances and a safer way to save, send money, and invest. At the factory level, suppliers benefit from cost savings, due to increased efficiency and speed. All parties also benefit from increased accountability, transparency, and security.
To help achieve this commitment, we joined the United Nations-based Better Than Cash Alliance, a partnership of governments, companies, and international organizations that accelerates the transition from cash to digital payments in order to reduce poverty and drive inclusive growth.
For over 10 years, Gap Inc. has promoted financial literacy and inclusion through our life-skills education and training program for female garment workers, P.A.C.E. (Personal Advancement & Career Enhancement). The program’s holistic curriculum also includes topics such as communication skills; time and stress management; problem solving and decision-making. P.A.C.E.’s evaluation results have demonstrated that the program directly improves the lives of women and their families by developing women’s knowledge, skills and confidence. The program also has a strong track record for reducing garment worker turnover and absenteeism, a key return on investment measure for suppliers that participate in P.A.C.E. across 16 countries.