Prior to accepting any order for a Gap Inc. branded product, our suppliers are required to sign our Vendor Compliance Agreement (VCA), a legally binding document that is a condition of doing business with Gap Inc. We also have a vendor approval process that requires new suppliers for branded apparel product to undergo an assessment against our COVC prior to beginning production for Gap Inc. After the initial assessment of working conditions, the facility either earns approval or is placed in pending status while it addresses outstanding issues. The COVC that is used for the assessments contains provisions related to forced labor, child labor, foreign contract workers and identity document retention.
In signing Gap Inc.’s VCA, which incorporates our 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 employees 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.”
We recognize that policies and expectations alone are not a sufficient safeguard against forced labor within our supply chain. Our statements lay the foundation for our comprehensive approach to engaging and collaborating with our suppliers to monitor, remediate and continuously improve their performance with regard to responsible labor. Gap Inc.’s Supplier Sustainability team within our ESG department is responsible for the implementation of our supply chain policies and standards relevant to human trafficking and forced labor, which are reflected within our COVC. Our Supplier Sustainability team members – who are locally hired in the countries from which we source and who speak local languages – assess and validate that suppliers are meeting the expectations outlined in our COVC. We assess risks to especially vulnerable groups, including migrant labor and women in the workplace, and our COVC specifies our management approach towards ensuring free and voluntary labor for these groups. In 2020 and 2021, COVID-19 limited our ability to conduct on-site audits in some sourcing countries, so we made adjustments to our approach, including the use of virtual assessments. In addition, we conduct desktop reviews of key supplier and worker documents to assess forced labor risks. We also conduct virtual worker interviews for validation of our findings and for further due diligence. As conditions allow, we have started to resume on-site assessments and supplier trainings in all sourcing countries.
Our COVC also has stringent requirements around foreign contract workers, who are at risk of exploitation through indentured servitude. We monitor how foreign contract labor is used at facilities producing Gap Inc. branded apparel to help ensure that people are free to work as they choose. For more than a decade, we have had a “no fees” policy that applies to foreign contract workers, which requires that any fees and costs payable to host governments for the documentation of foreign contract workers be covered by the facility. Our policy must be upheld throughout the entire employment cycle of foreign contract workers. To protect the rights of contract workers, Gap Inc. also requires suppliers to hold direct employment contracts and agreements with all contract workers. These requirements span recruitment, employment, up to termination of employment, and provide the lens through which our assessors look at policies, practices and conditions in the facility to find indications of forced labor. More information on our policies and procedures regarding foreign contract workers is available online. The section of our COVC detailing our Foreign Contract Worker Requirements is also available online.
Our COVC further states that facilities 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.” Gap Inc. conducts both announced and unannounced audits in the facilities we monitor, and these are primarily conducted by Gap Inc. staff. Initial assessments for new facilities are generally coordinated with the requested vendor or facility.
Gap Inc. monitors for forced labor and human trafficking in all Tier 1 branded apparel supplier facilities from which we directly source. Facilities from Tier 1 suppliers include cut-and-sew production, sub-contractors, and supporting units such as dyeing, embroidery, and wash units. In 2017, we defined and communicated social criteria to Tier 2 fabric vendors, including production facilities and subcontractors. These social criteria include provisions involving forced and child labor. We have expanded an augmented version of our Assessment and Remediation program into our Tier 2 strategic textile mills, enabling us to directly evaluate working conditions at the mill level. We paused the expansion of this program in 2020 due to a reevaluation of our Tier 2 supplier base and because of COVID-19 restrictions. In 2021, we were able to resume and ended the year with 75% of Tier 1 and 40% of strategic Tier 2 strategic mills participating in SLCP and/or ILO Better Work. By 2023, 100% of our Tier 1 facilities will participate in industrywide efforts, including SLCP and/or ILO Better Work, and 100% of Tier 2 strategic mills will participate by 2025.
An increasing number of facilities producing our branded apparel participate in the Better Work program, a collaborative facility monitoring and capability building initiative led by the International Labour Organization (ILO). Facilities participating in Better Work are assessed by specialists employed by the ILO. These assessments are 100% unannounced and assessed against national labor laws and ILO Conventions, which includes instruments that directly cover forced labor.
Gap Inc.’s Supplier Sustainability team is trained to recognize situations where a facility may be using forced or involuntary labor, and our team is also trained to assess compliance with our company’s Foreign Contract Worker requirements. Our expectations for Foreign Contract Workers and recruitment are available online. We publicly report aggregate findings of assessment results at the facilities that make our branded apparel on our company website.
We consider the following within our Forced Labor standards: forced labor, free egress, restrictions to voluntarily ending employment and restrictions on worker movement. In the event our assessments reveal a facility in violation of these standards, our Supplier Sustainability team works with factory management, local stakeholders, and worker-representative organizations to create a corrective action plan, conducts follow-up visits to validate remediation is completed and educates workers on their right to free movement. Our policies and action plans for forced labor incidents are described further online.
We also monitor unauthorized subcontracting (UAS), which has high-risk for forced labor. We take extra precautions in countries with a high risk of UAS by offering specialized awareness training for suppliers and facility management, and by conducting site visits to ensure our product is being manufactured in the appropriate designated facility. When unauthorized subcontracting is detected, our Supplier Sustainability team will assess the unapproved facility for forced labor and other critical issues. We found two cases of UAS in 2021 and we have seen an overall decrease in the number of UAS cases since 2017. We believe this shows that the enforcement of our policies, which can involve financial chargebacks or business termination, are continuing to have a positive effect. More information on our policies and procedures is available online.
For our Licensing business that launched in 2021, we require all factories considered for producing licensed products to submit a recent third-party audit report from an approved auditing firm before they are approved to begin production. Our teams review these audits and will reject the factory for production if forced labor is found.