CA Transparency in Supply Chains Act

On January 1, 2012, California enacted a new law requiring companies of a certain size to publicly disclose the steps they are taking to identify and eradicate forced labor in their supply chains. Gap Inc. supported this legislation, and we see it as a policy lever that will assist in the global fight against human trafficking.

Under no circumstance is it acceptable for child, forced, or trafficked labor to be used in the production of any Gap Inc. product. We believe that no person should be subject to a situation where basic needs and fundamental rights are denied.

Our efforts to address human trafficking in the apparel industry are guided by our Human Rights Policy, which is founded on the principles outlined in the United Nations Universal Declaration of Human Rights (UDHR) and the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work (often referred to as the “ILO Core Conventions”). Our policy applies to both our wholly owned operations and our branded apparel supply chain.

Gap Inc. has a Code of Vendor Conduct COVC or “code”) that explicitly states that forced labor of any kind is strictly prohibited.  All Gap Inc. branded apparel vendors must abide by this code. Our COVC and the enforcement behind it is an important mechanism that brings our Human Rights Policy to life within our supply chain. We have a Supplier Sustainability team that monitors working conditions in these factories and works with management to help ensure that they abide by our code.

The United States’ Victims of Trafficking and Violence Protections Reauthorization Act (TVPRA) of 2000 defines human trafficking as:

“Any recruitment, harboring, transportation, provision, or obtaining of a person for labor services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery.”

We have additional requirements designed to protect foreign contract workers employed by vendors. We monitor how foreign contract labor is used at factories producing Gap Inc. branded apparel to help ensure that people are free to work as they choose.

On the ground, our Assessment & Remediation Specialists have a deep knowledge of the issue from interviewing workers, gaining their trust, and learning over time which agents and factories have good or bad reputations and practices.  The majority of them are locally-hired and speak the local languages in the regions where they work.  We publicly report on the findings of assessments at the factories that make our branded apparel on our company website.

Our efforts to address human trafficking are not limited to our factory assessment and remediation program.  For example, we are members of the multi-stakeholder network seeking to end forced child labor in Uzbekistan’s cotton sector. We have also supported handwork centers in Northern India where at-risk women can work safely, and a regional education initiative that helps raise awareness of how to avoid traffickers.

Human trafficking is an issue that crosses nearly all sectors, and is an exploitative practice that occurs outside the production of goods.  Confronting this complex problem requires collaboration across industries and must include partnerships among the public, private and nonprofit sectors.

Highlighted below are the five pillars of the California Transparency in Supply Chains Act, followed by the actions we are taking to address each one:

1. Company engages in verification of product supply chains to evaluate and address risks of human trafficking and slavery. The disclosure shall specify if the verification was not conducted by a third party.

We verify our product supply chains through both unannounced and announced visits to measure factories’ compliance with our Code of Vendor Conduct, which includes strict prohibition of “forced labor … or involuntary labor of any kind.” Most of Gap Inc.’s audits are conducted by our own internal team of Assessment & Remediation Specialists.  A number of factories producing our branded apparel participate in the Better Work program, a collaborative factory monitoring initiative led by the International Labour Organization (ILO).  Factories participating in Better Work are audited by specialists employed by the ILO.

2. Company conducts audits of suppliers to evaluate supplier compliance with company standards for trafficking and slavery in supply chains. The disclosure shall specify if the verification was not an independent, unannounced audit.

Gap Inc. conducts both announced and unannounced audits in the factories we monitor that are primarily conducted by Gap Inc. staff. Gap Inc.’s company standards on labor laws and human rights are outlined in our COVC and our Human Rights Policy. Our COVC, with which all facilities producing Gap Inc. branded product must comply, explicitly states that vendors must not use “forced labor … or involuntary labor of any kind.” Human trafficking and slavery fall under the category of “forced labor” and “involuntary labor.” Our COVC further states that factories must allow “Gap Inc. and/or any of its representatives or agents unrestricted access to its facilities and to all relevant records at all times, whether or not notice is provided in advance.”

3. Company requires direct suppliers to certify that materials incorporated into the product comply with the laws regarding slavery and human trafficking of the country or countries in which they are doing business.

Prior to accepting any order for Gap Inc. branded product, our suppliers are required to sign our Vendor Compliance Agreement and agree to be bound by our COVC. Gap Inc.’s COVC states that:

“Factories that produce goods for Gap Inc. shall operate in full compliance with the laws of their respective countries and with all other applicable laws, rules and regulations … including those relating to labor, worker health and safety, and the environment.”

In signing Gap Inc.’s Vendor Compliance Agreement, which also incorporates the COVC, Gap Inc. suppliers agree to comply with the following:

“All applicable laws, rules and regulations … these laws include, but are not limited to, laws relating to the

employment conditions of their respective employee such as: (1) wage and hour, labor, child labor, and forced labor requirements; (2) health and safety; (3) immigration; (4) discrimination; (5) labor or workers’ rights in general; and (6) environmental laws and regulations.”

4. Company maintains internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.

Failure of employees to abide by Gap Inc.’s Code of Business Conduct can result in corrective action up to and including termination of employment. Failure of vendors to abide by Gap Inc.’s COVC and/or Vendor Compliance Agreement can result in corrective action up to and including the “termination of all existing and future business.”

5. Company provides company employees and management, who have direct responsibility for supply chain management, training on human trafficking and slavery, particularly with respect to mitigating risks within the supply chains of products.

Gap Inc.’s Supplier Sustainability team works directly with factory management and workers in the factories we monitor. Gap Inc.’s COVC explicitly states that facilities producing Gap Inc. branded product must “not use involuntary labor of any kind,” of which human trafficking is one kind. Our COVC also has stringent requirements around “contract labor,” which can sometimes be exploited to create instances of indentured servitude for workers.  Our Assessment & Remediation Specialists are trained to identify these potentially abusive situations.