Supplier Partnerships 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 workers.
We strive to consistently innovate in our approach to working with factories, and take a holistic approach to improving labor standards and working conditions.
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 several, we have streamlined our approved list of facilities from more than 1,200 to approximately 750. With those suppliers, we develop shared sustainability goals and work with them to measure and improve performance.
Beginning in 2016, we disclosed the names and locations of factories that manufacture our branded products. This list is 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. In 2017, we implemented our Mill Sustainability Program to measure the social and environmental performance of our Tier 2 mill suppliers. We are using the Sustainable Apparel Coalition’s Higg Facility Environment Module 3.0, the Zero Discharge of Hazardous Chemicals Roadmap to Zero Program (ZDHC), and the Social and Labor Convergence Project’s Converged Assessment Framework in our effort to improve our mills’ sustainability performance. 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. 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.
Our Assessment & Remediation Program continues to evolve, through our partnership with ILO Better Work, and through our participation in the Social & Labor Convergence Project.
Social and Labor Convergence Project
As a signatory to this collaboration among apparel and footwear brands, retailers, industry groups and civil society organizations, we support a shared data-collection tool that assesses the social and labor performance of manufacturing facilities across the apparel and footwear supply chain and reduces the duplication of industry efforts. In 2019, we joined the SLCP Council and are active in workstreams to accelerate adoption of the tool.
In 2018, we participated in a pilot program to test the first version of this tool, and in 2019, expanded our implementation by inviting 65 mill facilities in China, Taiwan and India to complete the SLCP; 28 mill facilities did so. To support the wider adoption of the tool, we have applied lessons from the pilots to streamline communication and simplify materials that our staff use to train suppliers. As the program grows, we continue to seek new ways to demonstrate the benefits of this initiative to suppliers.
Gap Inc. is committed to supporting the expansion and sectoral adoption of the SLCP; we continue to allocate resources to institutionalize the program across our supply chain to promote supplier ownership of social performance.
ILO Better Work
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 Better Work program. As a founding member of this program, we view the ILO team as our key partner in every country where they operate, representing several of our key sourcing markets.
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 to address and remediate issues in Vietnam, Cambodia, Indonesia, Bangladesh, Jordan, Haiti and Nicaragua.
We also work closely with Better Work on the Better Work Academy, which we helped found to move beyond an “assessment-only” approach to facility monitoring. To date, the Academy has reached 300 facilities in 18 countries, with eight brands now participating, including Gap Inc. As a proud ambassador for the program, we have played an active role in supporting its expansion. One of the ways we do this is by onboarding other brands, sharing our insights, and providing training materials that brands can customize for their own programs. Based on feedback from participating brands, the Academy is helping to empower facilities to make improvements themselves, with brands serving as advisers and partners. Facilities report improved communication with workers, fewer worker complaints, and better production performance and output.
We believe it’s important to include leadership in capability-building programs, which enables facilities to take action to address worker feedback provided through new grievance mechanisms.
BW assessed 237 – or 70 percent – of the factories that make our branded clothing in BW markets in 2019, including 79 percent of factories in Cambodia, 60 percent in Vietnam, and 69 percent in Bangladesh.
Factory Assessment & Remediation in Better Work Markets (2019)
|FACTORIES AUDITED BY BETTER WORK||FACTORIES AUDITED BY GAP INC.|
|Country||# of factories||% of factories||# of factories||% of factories||Total|
Supervisory Skills Training
Together with Better Work, we launched the Supervisory Skills Training (SST) program to reach a key group of employees we have not yet engaged: mid-level managers. This program aims to help facility managers improve their communication with workers, who typically contact middle management first to discuss problems or make suggestions to improve facility working conditions.
SST is designed to give supervisors and middle managers a deeper understanding of important leadership and supervisory concepts. Participants are trained to avoid a passive or authoritarian style of leadership, and to strike a fair balance between the interests of the company and the interests of staff. As a result of this training, we expect the participating supervisors to change their management style from “timid” or “domineering” to “professional,” which will result in better production efficiencies due to higher worker motivation and retention.
SST is a three-day (24 hours total) training program that covers areas like being a professional supervisor, building good relationships, influencing, and managing workers.
In 2019, our team trained 1,298 supervisors—nearly triple the number trained in 2018. As of 2019, 111 facilities in seven countries were active in the program. In Better Work countries, where Better Work delivers the training, we also encourage our facilities to nominate their supervisors to participate in SST.
In 2019, we implemented a program-evaluation methodology that uses supervisor and worker surveys and production-efficiency data from facilities to measure several things: the extent to which participants reported trainings to be effective, the extent to which they learned new concepts, whether this learning led to any behavior change, whether workers acknowledged that change, and whether behavior changes impacted production efficiency.
We continue to scale our Workplace Cooperation Program, helping train committees of workers and managers to develop sustainable solutions and share best practices for workplace challenges.
Workplace Cooperation Program
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.
Our Workplace Cooperation Program (WCP) facilitates dialogue between workers and management to address workplace issues, from overtime and worker well-being, to washroom sanitation and better quality of food in the canteen. This training program works with elected bipartite committees comprising both workers and management representatives who collaborate to build good industrial relations. Inherent in this training program is a recognition that workers in many facilities do not feel comfortable voicing their grievances in the presence of upper-level management. Our approach, designed in partnership with ILO Better Work, seeks to address those relations by developing the skills of committee members and guiding effective meetings. We also provide guidance on how to best respect and abide by workers’ fundamental rights at work, as enshrined in the ILO’s Core Conventions.
In 2019, we focused on expanding and refining this program, as well as analyzing data that we collect quarterly. Since launching the program in 2016, we have reached 182 facilities—61 in 2019—in 11 countries. We continue to expand to our strategic vendors’ owned and sub-contracted facilities for even greater impact. Our goal is to reach 200 facilities by 2020.
|Year||Number of Factories|
Building on changes made in 2018, we have continued to offer an abbreviated training period of 12 to 16 months instead of two years. This gives facilities more flexibility in offering the training modules, as teams can opt to combine two half-day training modules into one all-day training, reducing the time for program completion.
We also continued to use the data assessments we launched in 2017 to examine how many grievances have been received and addressed, which channels were used, and how long it took to address the issues. Our analysis shows that once functioning bipartite committees are in place, workers feel more empowered to raise concerns, and that these concerns are more quickly addressed. In addition, our data show that once these committees have been trained, grievances rise for a period and then diminish in frequency, illustrating the comfort workers feel in voicing complaints and the subsequent actions taken to address their concerns.
We believe that improving worker and management relationships and addressing workers’ concerns can increase morale, which could improve our suppliers’ business performance. To understand whether the WCP is indeed impacting productivity, efficiency and quality among our suppliers, we have been collecting data for analysis. We created a quarterly data-collection tool and asked participating facilities to track and share data on business indicators, such as absenteeism, number of grievances and productivity.
In 2019, researchers from York University and Better Work conducted an evaluation of the program, revealing that the training has translated into workplace improvements in three areas: communication and cooperative work relationships, enhanced ability for workers and managers to address workplace concerns, and a better business case for workplace cooperation. Workers reported feeling more motivated, safer in their work environment and happier coming to work. They also reporting feeling that they were listened to and had a voice in decision making.
Workforce Engagement Program
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.
In 2015, we launched our Workforce Engagement Program with Verité, a leading NGO with deep expertise in improving working conditions in the garment sector. The goal of the program has been to measure and improve the degree to which garment workers feel valued and engaged at work, by giving workers an opportunity to provide anonymous feedback on key topics such as supervisor relationships, grievance mechanisms, and training and development opportunities.
By the end of 2019, we had reached 45 facilities by supporting mobile-engagement tools, applying lessons from our 2017 technology-enabled pilots. This builds on the 100 facilities that we had reached previously through earlier non-mobile-based iterations of the program.
We have learned from our experiences engaging workers and have adjusted our approach to better fit the needs of individuals, their workplaces and our business. We have tested a variety of approaches, including worker discussion groups, pen-and-paper surveys and various mobile technologies. We now focus on a vendor-led model that uses scalable mobile technology, allowing workers’ voices to be heard directly by those who are able to respond. To sustainably expand the program, we are sharing best practices across vendors, from Vietnam to China to Indonesia to Guatemala.
Gap Inc. hosts WEP workshops in each region to bring together our vendors and WEP service providers. During these workshops, our Supplier Sustainability team shares the importance of worker engagement and how it can help our vendors’ business. Research on worker engagement supports supplier adoption: Improved engagement has been correlated with business outcomes like reduced absenteeism and turnover. Additionally, vendors can learn from their workforce to make improvements that are good for business, whether that’s identifying a problem before it escalates or becomes a large risk, or hearing workers’ ideas about opportunities to improve efficiency, safety and more.
We recognize that there are many ways to measure worker engagement. To increase brand collaboration and avoid the proliferation of tools with a similar purpose, we adopted Nike’s survey tool in 2019, and plan to share best practices and resources to enhance industry knowledge going forward.
All of our tier 1 suppliers will make the transition from a cash-based system to digital payments by 2020.
Digital Wage 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 to make the transition from a cash-based system to digital payments by 2020. As of the end of 2019, 92% of our suppliers were using digital wage payments, and we had rolled out programs in 23 countries. (We define digital wage payments as mobile wallets, bank accounts, debit cards and other methods that are digitally accessible.)
To support our commitment, we joined the UN’s Better Than Cash Alliance (BTCA), which works with the private sector, governments and international organizations to accelerate the transition to digital payments, which can help reduce poverty, build financial inclusion and support inclusive growth. It also advances supply-chain efficiency and transparency.
In addition to costing more time and money for facilities, cash payments present a variety of security risks to workers and contribute to financial exclusion. Globally, more than 30% of working-age adults lack access to formal financial services, with rates of financial exclusion are higher among women.
By committing to work with our suppliers to use digital wage-payment methods, we hope to increase the number of people in our supply chain—particularly women—who have access to formal financial products and services, including bank and savings accounts, credit and insurance. This gives workers greater control over their finances and offers them a safer way to save, spend and invest their money. Our suppliers benefit from cost savings via a faster, more efficient payment system. Digital wages also help increase accountability and transparency across the garment sector. Since financial inclusion requires both access to financial services and knowledge about how to use those products and services, we are evaluating how we can tie our digital wage-payment work to financial-literacy training programs, which our P.A.C.E. program provides.
We are pleased to see that our efforts have created a positive impact for workers and supply-chain facilities alike: In India, where 100% of the facilities with which we work now provide digital wage payments, time spent on payroll is down by 10% for finance teams and 25% for HR teams. Digital wage systems have also supported more transparency in worker payments, including overtime, which has helped workers get paid what they earned. As a result, worker attrition and turnover has dropped by 15% to 20%.
While we are seeing good progress in most of our sourcing countries, we are encountering different barriers to progress in countries such as Cambodia, Haiti and Jordan. In Haiti, for instance, there’s a lack of banking infrastructure for workers to access accounts. Other countries face high transaction costs that create barriers for garment workers, or lack banking infrastructure in rural areas where workers may want to send money to support their families.
We recognize that we cannot solve challenges across the banking ecosystem alone, and as we work toward our goal, we are partnering with a broad set of stakeholders to develop working groups in countries that presently lack the infrastructure or capital investment required to make digital wages a scalable, cost-effective model for garment workers. In addition to our collaboration with the BTCA, we have partnered with the Bill & Melinda Gates Foundation and BSR in Bangladesh, in tandem with other international buyers, to identify solutions that can help us address some of the key systemic barriers to digitization in the years ahead.