In a move to improve the livelihoods of garment workers and help improve supply chain transparency and efficiency, Gap Inc. today announced a bold new goal for all of its 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.
“At Gap Inc., we believe that good business practices can help change the world and fuel growth. By having our suppliers pay garment workers digitally, we aim to accelerate the transition towards a more transparent workplace for the women and men who make our clothes. It’s a win-win for garment workers and factories alike,” said David Hayer, Senior Vice President of Global Sustainability at Gap Inc. and President of Gap Foundation.
Women make up about 80 percent of the world’s garment industry workforce but often live in a cash-only environment and lack access to formal financial services. Electronic wage payment methods have the benefit of drawing previously unbanked workers into the formal financial system, allowing women 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 bold new commitment, Gap Inc. also announced today that it has 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.
“We’re pleased to join the Better Than Cash Alliance to help drive this important progress forward. We encourage others across the apparel industry to join us in this effort,” Hayer added.
“The scale, innovation and leadership of the private sector is critical to creating economies where all people benefit from digital financial services”, said Dr. Ruth Goodwin-Groen, Managing Director of the Better Than Cash Alliance. “Gap Inc. is one of the global brands leading the way when it comes to digitizing workers’ payments in the garment sector. Its commitment today will continue the movement across the retail sector to improve lives, increase transparency and drive business benefits through digital payments, and contributing to the Sustainable Development Goals.”
For over 10 years, Gap Inc. has promoted financial literacy and inclusion through its 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.
The company’s focus on promoting an inclusive digital payment ecosystem is the latest move by Gap Inc. to partner with suppliers to improve the livelihoods of the garment workers who make its clothing. The company’s Supplier Sustainability team continues to move beyond an “assess and remediate” model to a more innovative approach – with more cooperative, productive, and positive working environments as the end goal. This includes: developing and delivering trainings around topics like communication in the workplace, problem solving, grievance handling and effective negotiations for workers and managers; measuring and improving workers’ sense of value and sense of engagement at work by helping factories make well-being investments in their workforce; consolidating and publishing its tier 1 supplier base to focus on partners that share the company’s values and sustainability goals; and updating its Code of Vendor Conduct to better align with environmental and human rights policies.