Supply Chain Working Conditions

Improving Supply Chain Working Conditions A commitment to safety, fairness, dignity and respect

We partner with all of our suppliers to ensure safe, fair and healthy working conditions for the individuals who create our clothes . Together, we’re building the capacity of our suppliers to manage and improve their practices, designing industry-leading programs to improve worker and manager relations, assessing and improving working conditions to meet legal and international standards and increasing transparency about all of our efforts.

More than a million people work in the facilities that create our clothes, and we want to ensure that they work in safe, fair conditions and are treated with dignity and respect.

Our Approach

Consumer trends and expectations are placing greater demands on production timelines and capabilities—which can ultimately affect the individuals working in the garment industry.

To help manage these broad shifts in the industry, we continue to integrate policies and programs into our core business and form partnerships across the apparel industry to ensure that the people in our supply chain work in safe, fair conditions. 

Since launching our Supplier Sustainability program in 1994, we have transformed our approach to improving facility working conditions by developing innovative programs that go far beyond assessing and remediating issues in our approved facilities.

Our approach to improving working conditions is based on transparency, partnership and innovation. We believe that by working together, we can achieve our commitments to improve workers’ well-being, protect human rights, reduce environmental impacts and unleash improved business performance.

At a glance working conditions

We continue to integrate policies and programs into our core business and form partnerships across the apparel industry to ensure that the people in our supply chain work in safe, fair conditions. 

In recent years we have taken steps to: 

  • Revamp our policies and tools such as building out our Code of Vendor Conduct (COVC) into a comprehensive manual to be more transparent to our suppliers, so that they understand and meet our expectations related to working conditions and labor standards. 
  • Consolidate our supplier base so that we are working more closely with fewer suppliers. Today, we are working with 25% fewer suppliers than we were five years ago. 
  • Deepen our partnerships with suppliers and NGOs to create a more advisory and collaborative approach grounded in continuous improvement. With our suppliers, we are designing new approaches to worker engagement and are providing training to improve suppliers’ social and environmental capabilities. Examples include our Workforce Engagement Program with Verité and our ongoing work with the Arbitration Council Foundation in Cambodia. 
  • Build a holistic sustainability team, moving from a model with separate employee functions by program to require all of our field staff to help deliver each of our Supplier Sustainability programs. This allows us to evaluate and improve our suppliers' sustainability performance in an efficient manner and provide them with support that is best suited to their needs. 
  • Pioneer new programs in collaboration with a broad set of industry-wide initiatives. This includes supporting the Social and Labor Convergence Project by co-chairing two of its working groups and helping develop the Better Work Academy in partnership with the ILO's Better Work program.
  • Create better data. Data is essential to realizing our vision to create long-term, sustainable improvements in working conditions. We created a Data & Insights team to help us gauge our progress, reveal trends, point to new questions and highlight opportunities to advance our efforts in the future. 

Our Supplier Sustainability efforts thus far have primarily focused on issues at cut-and-sew facilities where we have direct relationships and greater influence to drive improvements. We also monitor, assess, remediate and disclose their supporting facilities, such as laundries, embroideries and screen printers. However, we are evolving our strategy to address issues in other parts of our supply chain, including areas where we have less direct influence but nonetheless see opportunities to improve working conditions . For instance, we are working with our strategic mill suppliers to assess their working conditions and build their capacity to proactively mitigate risks, and we are seeking to improve conditions in the cotton sector through our partnership with the Better Cotton Initiative.

Achieving this requires innovation and closer partnership with suppliers and their facilities that manufacture our branded product. At the same time, more assistance, better tools and added capability building services are provided to suppliers to help them improve their sustainability performance. One of our responsibilities in a partnership model is to clearly establish and communicate all of our expectations to our supply chain partners. To that end, we have evolved our Code of Vendor Conduct  (COVC) to provide our supply chain partners with more clarity on our standards, goals and expectations. 

Our COVC Supplier Manual – which is a comprehensive manual that provides guidance and insight into how facilities can meet the standards outlined in our COVC – is reviewed on an annual basis to reflect best practices. It is incorporated into our Vendor Compliance Agreement, which is signed by all our manufacturers. We request supplier and worker feedback and partnership along the way, and expect continuous improvement from ourselves, and our supplier partners. While assessing facilities’ performance against our COVC is a significant aspect of our work, we are also a consultative resource and strive to help our suppliers prevent and solve problems as well as innovate to identify new solutions.

Our Global Supply Chain and Supplier Sustainability teams work in about 30 countries and we often tailor our practices in these places based on a deep understanding of the local context. In addition to our Assessment and Remediation program (described below), which we maintain for every supplier and facility wherever we source our branded clothes, we have created unique programs and specific policies to address local economic, political, business and cultural context where needed. These assessments include social, political and environmental data, along with risk indices and expert analysis. They also draw on the insights we have gathered through ongoing engagement with a variety of external stakeholders and business partners.

Improving working conditions video
Improving factory working conditions

Assessment and Remediation

The success of each assessment depends largely on the willingness of the facility management to provide access to a facility’s grounds, records and workers. We believe that transparency is crucial for the long-term health of our business relationships and ask that all our vendors and facilities embrace this as a core aspect of our partnership. Our focus is on assessing sustainability performance and helping to identify areas for improvement, which can only be done if we understand the true working conditions and environmental impacts in the facility. 

We recognize that every country and every facility is different and so our assessment team is trained to assess facilities according to the local environment. Facility management is expected to provide their full support and access for the assessors to carry out all assessment activities. Facilities shall allow Gap Inc. representatives or agents unrestricted access to its facilities for observation, workers for interview and relevant records for review, whether or not notice is provided in advance. Any form of restriction during our assessments will be considered a critical COVC violation and will negatively impact facility’s rating, and may lead up to termination of our business relationship.

 

Our Supplier Sustainability Assessment Manual, which is based on industry best practices, outlines the protocols our team uses to assess and remediate issues related to labor or working conditions. Each fiscal year, our team conducts a full assessment for all active manufacturers of our branded product  to understand working and labor conditions, facilitate greater partnership with our suppliers and improve sustainability performance. Each assessment includes interviews with managers, confidential interviews with workers, visual observations and reviews of documents and records.

We conduct announced, unannounced and semi-announced assessments. Depending on a multitude of factors, including transparency, commitment to continuous improvement and a proven ability to effectively and sustainability remediate issues, notification of assessments will vary. Roughly 50% of our assessments are unannounced. 

Our assessments can be classified as one of the following types, and are further detailed below:

Initial Assessment: The first full assessment carried out for a facility that has been offered for assessment and approval. 

Full Assessment: Assessments that cover all sections of Gap Inc. COVC. At least one Full Assessment is conducted for all active, approved facilities each fiscal year (February 1st to January 31st), unless otherwise specified for certain categories. 

Follow-up Assessment: Assessments carried out to assess the progress made by facilities on the issues identified during the Initial Assessment or Full Assessment. New issues may also be found during follow-up assessments and those are also recorded and reported. 

 

A key tenet of our approach to partnering with facilities is that we work to fix what we find. 

When we assess a facility, they receive a rating that is calculated based on clear criteria within five categories: Compliance with Laws, Environment, Labor Standards, and Occupational Health and Safety, though we also review Management Systems. We employ a facility rating system that offers gradients of non-compliance that correspond to different severity levels. Violations are input into a system that categorizes findings by their level of severity: “critical,” “severe,” “key” and “noncompliant.”

We use a color-coded system to rate facilities’ performance based on assessments.  High-performing facilities with no critical or few violations receive a green rating. Average performers are rated yellow, while facilities that need improvement on one or more serious issues are assigned a red rating. Critical, severe and key violations have a greater negative impact on a facilities’ rating than “non-compliance” violations, such as first-aid kits not being fully stocked.

 

Results

Issue Clarification and Performance Measurement

A key tenet of our approach to partnering with facilities is that we work to fix what we find. Together with facility management, we agree on specific, time-bound corrective action plans to address findings, and we provide additional resources to fix the issues that pose higher risks to workers’ rights and well-being, as well as to our business. Based on the severity of issue, we outline a timeline within which we expect the facility to fully remediate. To ensure sustainable resolutions of issues, facilities are encouraged to conduct root cause analysis of issues and to present corrective actions that address the root causes. Some issues may require multiple progressive corrective actions for resolution. In such case, each corrective action shall have a target completion date. We also collaborate with local stakeholders who have direct access and influence to improve conditions. 

The Corrective Action Plan submitted by each facility must include the following information:

1. A plan to address findings which are noted in the Assessment Report from Gap Inc.

2.Specific Corrective Actions to eliminate the cause of finding. This could include developing or updating written policies or procedures, capability building and any other relevant actions.

3.If Root Cause Analysis has been conducted, Corrective Actions should target the root cause(s) identified.

4.Information on who is accountable for each Corrective Action implementation at the facility.

5.A deadline for completing each Corrective Action.

The Gap Inc. assessor will follow up with the facility on the Corrective Action Plan according to the timeline set by the facility. The facility is responsible for sending to the Gap Inc. Supplier Sustainability Specialist evidence of corrective actions taken as per the timelines for each issue reported in the assessment report. The assessor will review the evidence submitted and update the facility whether the issue can be resolved by offsite review of evidences, or if an on-site verification is required.

We monitor progress through follow-up assessments. Should there be outstanding or overdue issues, our Supplier Sustainability and Global Supply Chain teams escalate further intervention. However, if critical or severe issues remain unresolved, we may halt future order placement or discontinue the supplier relationship.

We closed 88 percent of critical open issues and 84 percent of non-critical open issues at red-rated factories in 2016.

For all rating levels, 72 and 56 percent of issues open at the beginning of fiscal 2015 and 2016 were resolved within six months, respectively. 87 and 82 percent of issues were corrected within one year.

Resolution of Factory Code of Vendor Conduct Issues Open as of 2/1/2017

 

  2/1/2017 5/1/2017
(3 MONTHS)
8/1/2017
(6 MONTHS)
2/1/2018
(1 YEAR)
Sourcing Country # of open 
issues
# of open
issues
% resolved # of open
issues
% resolved # of open
issues
% resolved
Bangladesh 583 369 37% 196 66% 52 91%
Cambodia 271 118 56% 54 80% 40 85%
China 1,102 553 50% 213 81% 44 96%
Guatemala 12 2 83% 1 92% 1 92%
India 733 541 26% 342 53% 62 92%
Indonesia 443 358 19% 269 39% 75 83%
Pakistan 11 11 0% 11 0% 1 91%
Sri Lanka 285 230 19% 140 51% 65 77%
United States 1 1 0% 0 100% 0 100%
Vietnam 832 459 45% 250 70% 48 94%
Other 332 247 26% 136 59% 44 87%
Total 4,605 2,889 29% 2033 65% 432 91%

 

In 2015, we introduced revisions to our COVC requirements, through the creation of Gap Inc.’s COVC Manual and a revised Assessment Manual for our Supplier Sustainability team. We have trained all of our tier 1 suppliers on our COVC Manual, which is the primary training resource that helps our suppliers understand how to meet our sustainability requirements and proactively address issues related to labor standards, working conditions, the environment and more.

To help our suppliers take greater ownership of improving working conditions, we added the Management Systems category in 2015. This category measures the degree to which facility managers establish goals, implement plans, train employees, conduct their own assessments and adjust their programs to ensure continuous improvement. Also in 2015, we launched a new data system that includes a portal for our suppliers to easily access information related to their sustainability performance and find tools that can help them manage their risks and opportunities.

In 2017, we will be expanding our minimum requirements for suppliers, with additional guidance on fire, electrical and structural safety based on our learnings in Bangladesh and best practices in the industry.

Detailed data from our COVC assessments are available here

 

Improving factory working conditions

Initial Assessment

When there is a request to work with a new supplier, Supplier Sustainability Specialists conduct an initial on-site assessment of the requested facility. Upon review of the facility assessment report, Global Sustainability will notify the vendor and Gap Inc. supply chain representative of one of the following decisions:

→ Corrective Action Needed
→ Approved
→ Rejected

If Global Sustainability informs a vendor that corrective action is needed before a facility can be approved, the facility may be given the opportunity to take appropriate steps to gain approval. Global Sustainability must determine that all corrective actions have been satisfactorily taken, or identified non-compliance issues have been satisfactorily resolved before a facility can be approved for production.

An approved facility will be authorized to begin production only after a written approval letter is issued by the Global Sustainability department upon successful completion of the approval process which may include other processes such as technical approval or Gap Inc. Water Quality Program (WQP) approval. Rejected facilities are not authorized to produce for Gap Inc., and the rejected facility cannot re-apply with an approval request within 12 months from the date of rejection.

On-Site Assessment

During each assessment, information is gathered from management interviews, confidential worker interviews, visual observation, and documents/records reviews based on a minimum sampling. The size of Gap Inc.’s assessment team will depend on several factors.

A full assessment can require 1-4 person days, depending on the number of workers employed by the facility. For smaller factories, our assessors may conduct confidential interviews with 5-15 individual workers, while also interviewing groups and management. For a larger facility, we may conduct as many as 30-50 individual worker interviews, both onsite and offsite. Workers are selected for interviews based on facility demographics, such as gender, to ensure inclusive representation. During the assessment, the team will assess facility expectations, working conditions and examine worker files for compliance, completeness and accuracy, as well as time and wage records.