Gap Inc. Social Responsibility

Ours is a fast-moving industry. Success depends on our ability to anticipate and respond quickly to market changes. As we navigate shifts in our business, we strive to work with our factories to minimize the negative impact on them and their employees.

That impact is getting worse due to the economic downturn, says Lynda Yanz, executive director of Maquila Solidarity Network, a Canadian-based labor and women’s rights organization. In addition to factories shutting down, she notes, orders are being scaled back. “Workers are more at risk,” she says, “so brands need to deal responsibly with sourcing pressures and engage with their vendors to ensure that workers and communities aren’t paying the price for the brunt of the economic crisis.”

Some of our most important efforts are preemptive, as we seek to build stable, long-term supplier relationships. In determining country and supplier sources, we consider a number of factors: quality, price, on-time delivery, and commitment to social compliance, rule of law and innovation. Striving for long-term relationships helps build trust and cooperation between suppliers and Gap Inc.

Still, we can’t entirely avoid changes in our industry, especially given the current economic climate. When production shifts occur that are likely to result in significant layoffs or closures, we seek to work with factories to minimize the impact and ensure that all legal labor requirements are met. We require that all regulations are followed and implemented by factory management.

This may seem like a given, but the unfortunate reality is that many factories throughout the industry are closing without meeting their obligations to workers. Government ministries often find it challenging, if not impossible, to enforce their own laws. Workers show up to find doors closed and nowhere to turn for their severance pay, back-wages and other benefits. Because the majority of garment workers are women, and many of them are single mothers, Yanz notes that the impact on families can be great.

“There’s a lot of instability right now,” she says, adding that reduced orders create stress due to cuts in pay and uncertainty. Workers who are logging just one or two days a week can suddenly be pressured to work overtime as a result of a rush order. According to Yanz, factory closings affect the broader community, as jobs in the informal sector serving factory workers — vendors selling lunches, fruit, juice and trinkets — also disappear.

Factory workers, Yanz says, “find themselves with no job, no health coverage or day care, and no assistance for a job search. And informal sector workers who have been dependent on the maquila also lose out. The challenge for all is how can they find enough to survive, to keep food on the table for their families. School and doctors are now luxuries.”

These are difficult challenges to face. But at Gap Inc., we believe that we significantly reduce the risk of this outcome by maintaining responsible sourcing practices, getting involved when we’re aware of high-risk closures, and reaching out to factories to facilitate resolution.

We’re also working with our suppliers and others to address this issue at the industry level. Gap Inc. is one of three core brands that worked with non-governmental organizations and trade unions to develop the Multi-Fiber Arrangement (MFA) Forum Responsible Transitions Guidelines. These guidelines incorporate recommendations from multiple sources into a single document for the industry. We’re actively engaged with the MFA Forum and others to determine how these guidelines can best be applied and what other collective actions can be taken to address the impact of the global recession. “Gap Inc. has taken the guidelines very seriously,” says Yanz.

Ultimately, she would like to see companies go even further. She calls for more accountability, saying that brands should go beyond legal requirements to assess the impacts of their sourcing decisions, make those decisions more transparent, consult with workers about possible alternatives, and help with new placements or retraining.

“This issue is fundamental at the moment,” she says. “There can be creative solutions to ensure that workers aren’t simply left without health benefits or income.”

We have explored these ideas in specific cases, and have talked openly with our stakeholders about the challenges of implementing all of them on a widespread scale. It’s often the collective decisions of many companies, sourcing agents, or even of a factory’s parent company that eventually result in layoffs and closures. We’ve also learned that reduced orders tell only part of the story about why factories in our industry are closing. A lack of access to credit is driving the closure of factories that otherwise have a healthy business.

The diverse causes of layoffs and closures reinforce our belief that it’s more important than ever to find collaborative solutions. We believe that our efforts to improve working conditions more broadly can help by bringing greater stability to the industry. We have supported a number of other projects to help factories create and maintain competitiveness and reduce turnover, including:

- International Labor Organization (ILO) and International Finance Corporation (IFC) Better Factories Cambodia and Better Work Vietnam program -  read more.

- Continuous Improvement in the Central American Workplace (CIMCAW) training and capacity building in Latin America

- Human Resource Restructuring Program with the IFC’s South Asia Enterprise Development Facility in Bangladesh

- Lobbying for trade legislation to help countries in the African Growth Opportunity Act (AGOA) group to import fabric from China

- Ongoing work with non-governmental organizations (NGOs) and trade unions around the world to address local issues

Dashboard