GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

APPENDIX

2

CONTENTSOVERVIEW
4567LETTER FROM OUR CEO
2017 HIGHLIGHTSGOALS + PROGRESSABOUT GAP INC.
ABOUT THIS REPORTSTRATEGY
9
10
11
12
13
14
15
16

SUSTAINABILITY STRATEGYVALUE CHAIN
MATERIALITY
CORE SUSTAINABILITY
FOCUS AREAS
MANAGEMENT APPROACHSUSTAINABLE DEVELOPMENTGOALSCODE OF BUSINESS CONDUCTGOVERNANCERISK MANAGEMENTSTAKEHOLDER ENGAGEMENT

SOCIALOPERATIONS
18
19
22
24

TALENT
DIVERSITY + INCLUSIONEMPLOYEE ENGAGEMENTTHIS WAY AHEAD: FIRST JOBS

SUPPLY CHAIN
26
29
35
36
37

SUPPLIER SUSTAINABILITYASSESSMENT + REMEDIATIONWORKPLACE COOPERATION PROGRAMWORKFORCE ENGAGEMENT PROGRAM
P.A.C.E.: EMPOWERING WOMENENVIRONMENT
SUPPLY CHAIN
40
46

WATER STEWARDSHIPCHEMICAL MANAGEMENTOPERATIONS
48
50

CLIMATE + ENERGYWASTEPRODUCT
52
55
57

PRODUCT SUSTAINABILITY
RAW MATERIALSCIRCULAR DESIGN:PRODUCT END OF LIFE

APPENDIX
59
61

GOALS + PROGRESS DETAILSASB REFERENCE TABLEGLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW
4LETTER FROM OUR CEO

52017 HIGHLIGHTS

6

GOALS + PROGRESS

7

ABOUT GAP INC.
ABOUT THIS REPORTOVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

APPENDIX

4

LETTER FROMOUR CEONOVEMBER 2018

AT GAP INC., WE ARE GUIDED BY THE
BELIEF THAT BUSINESS CAN ANDSHOULD BE A FORCE FOR GOOD.
Doing what’s right — supporting fairtreatment and dialogue between garment
workers and factory management, tacklingclimate change and fostering an inclusive
workplace where everyone is welcome — isa competitive advantage. Our businesssucceeds when everyone is given a chance
to thrive.
We hit some big milestones in 2017 as
we continue to work to be a responsible,
global leader in our industry. Our brands
are leading the way forward. Athleta, ourfastest growing brand, earned B Corp
Certification this year in recognition of its
exceptional commitment to protect theplanet, while empowering women andgirls to reach their limitless potential. Hill
City, our newest menswear lifestyle brand,also launched as a B Corp by integrating
sustainability throughout many of its
products. Three of our largest brands havepartnered with the Boys & Girls Club ofAmerica to scale our on-the-job training
program, This Way Ahead, because weunderstand the transformative powerof a first job and the value that comesfrom hiring a more diverse and engaged
workforce.
At the enterprise level, we made a newcommitment to conserve 10 billion litersof water by the end of 2020 throughimproved manufacturing practices. Thanks
to new ways we’re working with ourpartners and a revised goal, we’re also
setting our sights on ultimately reaching
many more than one million women
through our decade-long life-skills P.A.C.E.

program. Additionally, we’re requiring
100 percent of our apparel suppliers totransition from cash to digital payments
by 2020, because we recognize theimportance of financial inclusion for female
garment workers.
One company cannot solve the challenges
we face, so we’re evolving existing andbuilding new partnerships to help createa more resilient future. In 2017, weannounced an innovative public-private
partnership with the U.S. Agency forInternational Development (USAID) to help
promote solutions for women and water incommunities touched by our supply chain
in India. Earlier this year, we also joined
forces with the Ellen MacArthur Foundationand other leading apparel brands to help
create a more circular future for appareldesign and manufacturing.
The global apparel industry must do
more to protect the environment and theworkers who manufacture our products.
The challenges are complex, but we willcontinue to do our part. Moving forward,
we are shifting to an annual sustainability
reporting schedule in order to provide amore frequent assessment of how we’re
performing against our bold 2020 goals.
We started this work more than twenty
years ago, and we understand the urgencyof the task before us. We are committed tothis work for the health of our business, ourcustomers, our employees and the planet.

— ART PECK, CEO, GAP INC.

“Doing what’s right — supporting fair treatment
and dialogue between garment workers andfactory management, tackling climate change andfostering an inclusive workplace where everyone
is welcome — is a competitive advantage. Our
business succeeds when everyone is given achance to thrive."
GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

5

APPENDIX2017
HIGHLIGHTS
10

p.37

YEARS OFEMPOWERINGWOMEN, GIRLS +YOUTHESTABLISHED A
WOOD-DERIVED
FIBERS POLICY TO
PROTECT ANCIENT
AND ENDANGEREDFORESTS

p.56

#2

p.44

SOURCED THROUGH THE
BETTER COTTON INITIATIVE
THAN IN 2016

p.43

94%

RECEIVED THE 2017
EPA SMARTWAY
EXCELLENCE
AWARD FORLOGISTICSSUSTAINABILITY

to measure and improve environmental
impacts of apparel manufacturing

p.20

IN THE THOMSONREUTERS DIVERSITY +INCLUSION INDEXRANKING OF 6,000
GLOBAL COMPANIESTHE MAJORITY OF OURSTRATEGIC SUPPLIERS’ MILL
FACILITIES COMPLETED THE

SUSTAINABLE
APPARELCOALITIONHIGG INDEX

p.56

MORE
SUSTAINABLE
COTTON

THROUGH OUR P.A.C.E. AND
THIS WAY AHEAD PROGRAMSLAUNCHED THE
WOMEN+WATER
ALLIANCE, IN
PARTNERSHIP WITH
USAID TO IMPROVEWATER, SANITATION
AND HYGIENE
ACCESS

10X

COMMITTED TO SETA SCIENCE-BASEDTARGET TO REDUCE
GREENHOUSE GASEMISSIONS IN OUR
SUPPLY CHAIN

p.48

2X

p.35

FACILITY
ENROLLMENTIN OUR WORKPLACE
COOPERATION PROGRAM
to improve communication between
workers and management in our
suppliers' facilities

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

6

APPENDIXGOALS + PROGRESSHOLDING OURSELVES ACCOUNTABLE IS FUNDAMENTAL TO OUR APPROACH TOSUSTAINABILITY.
Below are key goals, our progress to date and where we are heading in the future.
All target years are fiscal year end. Data is through fiscal 2017 (Feb. 3, 2018) unlessotherwise noted. Additional detail is available in the Appendix (p.59).

SOCIALOPERATIONS
GOAL% ACHIEVED

2017 PROGRESS

Support $15 million in employeedriven community investment
per year99%$14.8 million in employeedriven community investment

10,000 youth participate inThis Way Ahead by 2020

39%

3,900 youth completed theprogram

13%

668 new store hires (0.66%
of total new hires) were from
This Way Ahead

5% of annual new store hires
are from This Way Ahead by2025

SUPPLY CHAINENVIRONMENTOPERATIONS
GOAL
50% reduction in GHG emissions
in our owned and operated
facilities globally by 2020, froma 2015 baseline% ACHIEVED

2017 PROGRESS

28%

14% reduction in emissions
from a 2015 baseline

80% of waste diverted
from landfill across our U.S.
facilities by 2020

47%

47% of waste is estimatedto be diverted from landfill
across our U.S. facilities

80% of Athleta store
waste diverted fromlandfill by 2020

70%

70% of packaging wastefrom Athleta stores isrecycled

2015

SUPPLY CHAIN
1 billion liters of water saved
in manufacturing in 2017240%

Gap Inc. suppliers saved 2.4
billion liters of water

10 billion liters of water saved
in manufacturing by 2020,
from a 2014 baseline33%

Gap Inc. suppliers havesaved over 3.3 billion liters ofwater since 2014

2014

Strategic facilities mustcomply with the ZDHCManufacturing Restricted
Substances List and verify
through wastewater testingWork toward zero dischargeof hazardous chemicals inour supply chain by 2020

1 million women participate
in P.A.C.E. by 2022

12%

122,500 women haveparticipated in P.A.C.E.

10,000 women empowered
through P.A.C.E. and Fair
Trade by 2020

25%

2,503 women have beenreached through P.A.C.E.
and Fair Trade in Athleta
sourcing facilities

100% of supplier facilities
producing branded apparel are
rated yellow or green by 2020

95%

95% of supplier facilities
were rated yellow or green

Eliminate the use of woodderived fibers sourced fromancient and endangered
forests by 2020100% of Tier 1 suppliers
transition to digital wage
payments by 2020

68%

68% of suppliers are using
checks or bank transfers

100% of cotton sourced
from more sustainablesources by 2021

200 supplier facilities
participate in our Workplace
Cooperation Program by 202035%

69 supplier facilities are
participating

80% of Athleta materials
made with sustainablefibers by 2020

44%

35% of Spring 2018 productwas made with sustainablefibers25% of Athleta productmade using techniquesthat save water by 2020

4%

1% of product was madeusing techniques that savewater

Gap brand goal

Athleta goal

ON TRACKPROGRESSING

New in 2017/2018

NEEDS ATTENTION

Modified timeline

PRODUCT
Reporting in progress

Reporting in progress

Achieved
GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

7

APPENDIXABOUTABOUT GAP INC.

ABOUT THIS REPORTFOUNDED IN SAN FRANCISCO IN
1969, GAP INC. IS A LEADING GLOBALRETAILER OFFERING CLOTHING,ACCESSORIES AND PERSONAL CARE
PRODUCTS FOR MEN, WOMEN AND
CHILDREN UNDER THE GAP, BANANAREPUBLIC, OLD NAVY, ATHLETA, HILLCITY AND INTERMIX BRANDS.

THIS REPORT COVERS GAP INC.’S
GLOBAL OPERATIONS FOR THE FISCALYEAR ENDING FEBRUARY 3, 2018.

We have approximately 135,000 part-timeand full-time employees. Our products
are available for purchase in more than
90 countries through 3,165 Companyoperated stores, 429 franchise stores ande-commerce sites (as of fiscal 2017).
Our Athleta and Hill City brands are
certified B-Corp brands, demonstrating
their commitment to using business as
a force for good by meeting rigorous
standards across social and environmental
performance, accountability andtransparency. We have amended Athleta's
legal charter to become a Delaware Public
Benefit Corporation to further uphold thebrand’s commitment to people and theplanet.
We purchase private label and nonprivate label merchandise from about 800
vendors. Our vendors have factories inabout 50 countries.
Annual Filings

Data within, unless otherwise noted, covers
fiscal 2017. Our last report covered fiscal
2015 and 2016 and is available with ourother past sustainability reports.
With this report, we return to annual
reporting, which represents an evolution
in our reporting approach. Here, we
focus more directly on content of interest
to key stakeholders, such as investors,
nongovernmental organizations (NGOs)
and others with disclosure requests.
This report focuses on developments
and actions for our key programs andprogress toward our corporate and brandgoals during fiscal 2017, preparations for
activities in 2018, and an analysis of trends
and business impacts where available. For
our many programs, we provide detailed
information on objectives, operations andour management approach online, which
can be accessed via links in each section.
We sought to prepare this report inaccordance with the Global Reporting
Initiative (GRI) Standards: Core option.
Gap Inc. is committed to the United Nations(UN) Global Compact Ten Principles andthis report serves as our Communication
on Progress (CoP). We have not obtained
external assurance for this report.
Please direct questions tosustainability@gap.com.
gapincsustainability.com
GLOBAL SUSTAINABILITY REPORT 2017

STRATEGY9

SUSTAINABILITY STRATEGY10

VALUE CHAIN

11

MATERIALITY

12

CORE SUSTAINABILITY FOCUS AREAS

13

MANAGEMENT APPROACH

14

SUSTAINABLE DEVELOPMENT GOALS

15

CODE OF BUSINESS CONDUCTGOVERNANCERISK MANAGEMENT

16

STAKEHOLDER ENGAGEMENTOVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

9APPENDIXSUSTAINABILITYSTRATEGYWE ARE REIMAGINING HOW BUSINESS CAN CHANGE
THE WORLD.
As one of the world's leading apparel retailers, werecognize that we contribute to and have the opportunity
to address systemic social and environmental challenges.
We continue to be committed to contributing to businessvalue; enabling safe, fair working conditions for the people
who make our products; minimizing our environmental
impact; and working with our industry to achieve progresson global goals. We do this by addressing impacts inour owned and operated facilities and collaborating
throughout our value chain and across government,
business and civil society. Recognizing the importance ofengaging customers and employees, we’ve also begun tocommunicate through our brands in our effort to build amore sustainable world.
We have aligned our sustainability strategy with theUnited Nations (UN) Global Sustainable Development
agenda. Guided by frameworks such as the UN Guiding
Principles on Business and Human Rights, the UN
Sustainable Development Goals (SDGs) and the Paris
Agreement on climate change, we have identified theissues that are most material to our business and where
we have the most influence. We apply our company’s
core strengths, reach and skills development to maximize
our impact throughout our value chain and acrossgovernment, business and civil society.

gap.com/gapforgood"Integrating sustainability into our businessbenefits us in many ways. From building a talentpipeline through our This Way Ahead program’s
proven return on investment to optimizing costs as
we address climate change and water risks within
our sourcing strategy, we’re seeing the benefit ofbuilding a more inclusive and resilient company."- TERI LIST-STOLL,CHIEF FINANCIAL OFFICER, GAP INC.
GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGY

VALUE
CHAIN
A GARMENT HAS A WHOLE LIFE —BOTH BEFORE IT REACHES OURSTORES AND AFTER IT LEAVESOUR HANDS AND IS WORN BY OURCUSTOMERS.
Each stage, from the first design
sketches to end of life, presents
opportunities and risks for ourbusiness and everyone who is
touched by our brands.

SOCIALENVIRONMENTPRODUCT

10APPENDIXTIER 3

TIER 2

RAW MATERIALS +PROCESSINGTEXTILEMANUFACTURING

Because most of a product’s environmental
impacts are determined at the concept
phase, our designers’ creative vision
ultimately impacts people and theenvironment. As our production and sourcing
teams bring this vision to life by placing
orders with independent suppliers, they
have significant influence over who makes
our clothes. This affords Gap Inc. the ability
to improve working conditions in facilities
and our address our larger environmental
footprint.

Our products use many types of fibers —natural cellulosic fibers, like cotton and linen,
synthetic fibers, like polyester and spandex,
and pulp-based man-made cellulosic fibers,
like rayon and modal. We work to minimize thesocial and environmental impacts unique toeach fiber. We place a special focus on cotton,
given its importance to many of our products
and water-intensive production process. We
are also taking steps to ensure that we source
more sustainable synthetic and man-madecellulosic fibers.

Fabric mills use large quantities of water,
and the chemicals used to dye and finish
fabrics may pose a risk to local waterways if
not treated properly. Our Mill Sustainability
Program establishes clear environmental
standards, and we are integrating thosestandards into our sourcing decisions. We
also aim to scale improvements across theindustry by working with our peers to identify
and share best practices for improving theuse of water, chemicals and energy.

OUR PROGRAMS• Water Stewardship (p.41)• Product Sustainability (p.52)

OUR PROGRAMS• Water Stewardship (p.41)• Chemical Management (p.46)• Product Sustainability (p.52)

DESIGN +DEVELOPMENTOUR PROGRAMS• Assessment + Remediation (p.29)• P.A.C.E.: Empowering Women (p.37)• Water Stewardship (p.41)• Chemical Management (p.46)

TIER 1PRODUCT +FINISHING

To improve working conditions, we work
closely with our key suppliers, collaborate
on industry solutions, form partnerships
with organizations, such as International
Labour Organization (ILO) Better Work,and run impactful programs, such as
P.A.C.E. (Personal Advancement & Career
Enhancement), which aims to provide life
skills that empower women in manufacturing
and community settings.

OUR PROGRAMS• Assessment + Remediation (p.29)• Capability Building (p.35)• P.A.C.E.: Empowering Women (p.37)• Water Stewardship (p.41)• Chemical Management (p.46)• Product Sustainability (p.52)

LOGISTICS +DISTRIBUTION

We ship products through a combination ofsea, air, truck and rail from supplier facilities
to our distribution centers and then on to
stores or directly to customers. We use theoptimal mix of shipping options based on
speed, cost and sustainability and havetaken steps to conserve energy and reduce
waste at our distribution centers, the largest
facilities we own and operate.

OUR PROGRAMS• Climate + Energy (p.48)• Waste (p.50)

RETAILSTORES

Our stores express who we are — from ourstyle to our commitment to operating ina way that cares for both people and theenvironment. They are where we sell our
products and communicate directly with our
employees and customers. As part of ourowned and operated footprint, they offer
an opportunity to reduce our environmental
footprint. We also run our This Way Ahead
program at our stores to help youth andyoung adults from low-income communities
gain important job skills.

OUR PROGRAMS• This Way Ahead: First Jobs (p.24)• Climate + Energy (p.48)• Waste (p.50)• Product Sustainability (p.52)

CONSUMER USE +PRODUCT END OF LIFE

How our customers wear, care for and discard
their clothes accounts for a portion of our
products’ total environmental footprint. We
use product labeling, catalogs, social media
and blog posts to share our efforts to improvesustainability. This informs customers about
our work, inspires them to consider water
use in their daily lives and communicatesthe urgency of our environmental and social
initiatives. Recognizing that we have an
opportunity to improve circularity, we joined
the Ellen MacArthur Foundation in early 2018
to explore and contribute to industrywide
solutions to end of life impacts.

OUR PROGRAMS• Circular Design: Product End of Life
(p.57)GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

11

APPENDIX

MATERIALITYWE INTEGRATE SUSTAINABILITY DEEPLYINTO OUR BUSINESS TO CREATEGREATER IMPACT ACROSS OUR VALUECHAIN.
Within sustainability, materiality refers
to the areas of heightened concern
from internal and external stakeholders
compared to relevant environmental, socialand governance issues. Additionally, ourmaterial issues alongside our value chain
demonstrates focus areas where we candevelop programs more directly targetedto the areas of greatest impact.
We prioritize the opportunities andchallenges in sustainability that mattermost to our stakeholders and business.
We periodically refresh our materiality
assessment in order to:•

Identify the most material sustainability
issues for Gap Inc. in terms of businessvalue, risks and opportunities for longterm planning•

Understand how sustainability and key
business issues intersect•

Inform future sustainability
commitments and resource allocation•

Support Gap Inc.’s engagement withexternal stakeholders

MATERIAL ISSUESGOVERNANCE +OPERATING CONTEXTHUMAN RIGHTS +SOCIAL IMPACTRESOURCE USE,
SCARCITY + IMPACTS•

Corporate Governance•Worker Rights + Well-being

•

Water

•

Radical Transparency•

Income, Wages + Inequality•

Chemicals + Toxic Management•

Technology + Product Innovation•

Human Capital + Development•

Energy + Climate Stewardship•Resiliency•

Diversity + Inclusion•

Waste + End of Life•Country/Regional Legal +Economic Conditions•

Reputation + Consumer
Engagement•

Sustainable Materials Sourcing

Our material issues fall into three
categories — governance and operating
context, human rights and social impact,
and resource use, scarcity and impacts —with 15 sustainability-related aspects thatguide our strategy.

LEARN MORE: Materiality

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

12

APPENDIX

CORE SUSTAINABILITY
FOCUS AREAS
WE RECOGNIZE THAT WE CANNOT
LEAD ON EVERY ISSUE; GIVENOUR BUSINESS OPERATIONS AND
STRENGTHS, WE PRIORITIZE OUR
GREATEST OPPORTUNITIES FORLEADERSHIP TO MAXIMIZE IMPACT.
Gap Inc.’s sustainability materiality
assessment set our overarchingsustainability agenda and helped
establish our five core focus areas:

SOCIALENVIRONMENTPRODUCTADVANCING PEOPLE +COMMUNITIESWATERSTEWARDSHIPPRODUCTSUSTAINABILITY

We aim to create opportunities for the
exceptional people who support ourbusiness — employees in our stores,
workers in supplier facilities andcommunities near our operations.

Water is essential for our business andthe people and communities where we
operate. We look for ways to address
water impacts throughout our value
chain and in communities.

We are working with our productdesigners and developers to balance
the needs of getting great productinto our customers’ hands moreconsistently and faster than everbefore, while also reducing our impact
on the environment.

IMPROVING SUPPLY CHAIN
WORKING CONDITIONSOPERATIONAL
ECO-EFFICIENCY

By partnering with our suppliers, we
strive to provide safe, fair and healthy
working conditions for the individuals
who create our clothes.

We are reducing our operational
greenhouse gas (GHG) emissions
and waste, and working with our
logistics and procurement partners to
improve efficiency and environmental
performance.

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

13

APPENDIXMANAGEMENTAPPROACH
GIVEN OUR COMPANY'S SIZE, WE
FEEL A GREAT RESPONSIBILITY TO
THE PLANET AND TO THE PEOPLE
WHO MAKE OUR CLOTHES.
Our global scale also provides anopportunity to make a real difference.
We are doing this by supporting
long-term business performance
while creating greater equality andopportunity, developing social andenvironmental innovations that allow
people to fulfill their potential, andscaling these innovations by integratingthem into our business and products.
In addition to aligning our goals
with the UN Global Sustainable
Development agenda, we take an
intentional approach for all of oursocial and environmental programs.

1

2

3

4

INTEGRATE SUSTAINABILITY INTO OUR BUSINESSWe create broader accountability for our sustainability strategy by creating sharedgoals and targets across Gap Inc.

SET AMBITIOUS GOALS
We focus on key indicators across the company so that we can measure ourprogress on delivering real benefits to the people and communities we serve.

MAKE PROGRESS TOWARD OUR COMMITMENTS“We need tougher
expectations acrossthe industry. Byprioritizing ourresources andcollaborating moreclosely with our
suppliers, we’reraising the bar.”- DAVID HAYER, PRESIDENT, GAP
FOUNDATION, AND SENIOR VICEPRESIDENT, GLOBAL SUSTAINABILITY,GAP INC.

We contribute in a meaningful way to the people and places we rely on for ourbusiness — which also helps our company succeed.

FORM PARTNERSHIPS WITH CIVIL SOCIETY, GOVERNMENTS
AND OTHER SECTORS TO INCREASE COLLECTIVE IMPACT
By partnering with organizations from the local to the global level, we deliver
impact on a bigger scale and create long-term, sustainable progress.

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

14

APPENDIXSUSTAINABLE
DEVELOPMENT GOALSTHE SUSTAINABLE DEVELOPMENTGOALS (SDGs) DEVELOPED BY THE
UNITED NATIONS ARE A BLUEPRINTTO ACHIEVE A BETTER AND MORESUSTAINABLE FUTURE FOR ALL.

ENSURE INCLUSIVE AND
EQUITABLE QUALITYEDUCATION AND PROMOTELIFELONG LEARNINGPROMOTE INCLUSIVE AND
SUSTAINABLE ECONOMICGROWTH, EMPLOYMENT AND
DECENT WORK FOR ALL

To meet these goals, everyone — frombusiness to government to civil society —must do their part.

OUR WORK• Talent• P.A.C.E.: Empowering Women• This Way Ahead: First Jobs

OUR WORK• Talent• Diversity + Inclusion• This Way Ahead: First Jobs
• Supplier Sustainability

After the SDGs were adopted, we assessed
Gap Inc.’s opportunities to advance
progress on the individual targets. This
assessment revealed that our company’ssustainability efforts align most closely withsix of the goals.
While some of our programs may
contribute to other goals, we have mapped
Gap Inc. initiatives and goals against thesesix SDGs to demonstrate how we arecontributing to achieving global targets.

OUR GOAL
10,000 youth participate in This Way Ahead
by 2020OUR GOAL
100% of supplier facilities producing branded
apparel are rated yellow or green by 2020

ACHIEVE GENDER EQUALITYAND EMPOWER ALL WOMENAND GIRLS

ENSURE SUSTAINABLE
CONSUMPTION AND
PRODUCTION PATTERNSOUR WORK• Diversity + Inclusion• P.A.C.E.: Empowering Women• Women + Water

OUR WORK• Sustainability Reporting• Waste• Chemical Management• Product Sustainability

OUR GOAL
1 million women participate in P.A.C.E.
by 2022OUR GOAL
100% of cotton sourced for Gap brand from
more sustainable sources by 2021

ENSURE ACCESS TO WATER
AND SANITATION FOR ALL

TAKE URGENT ACTION TO
COMBAT CLIMATE CHANGE
AND ITS IMPACTS

OUR WORK• Women + Water• Mill Sustainability Program• Chemical Management

OUR WORK• Climate + Energy

OUR GOAL
10 billion liters of water saved in manufacturing
by 2020, compared to a 2014 baseline

OUR GOAL
50% reduction in GHG emissions in our owned
and operated facilities by 2020, compared toa 2015 baseline

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

15

APPENDIXCODE OF BUSINESS CONDUCT,GOVERNANCE + RISK MANAGEMENTCODE OF BUSINESS CONDUCTOUR GLOBAL CODE OF BUSINESSCONDUCT (COBC) SERVES AS OURETHICAL COMPASS, ARTICULATING OURCOMMITMENT TO HIGH STANDARDS.
We encourage our employees to use our
open-door process for discussing concernswith their supervisor, next-level manager
or human resources representative.
Employees may also contact our Global
Integrity team, which oversees our COBC
program. We also provide a confidential
COBC hotline, email box and web portal— all of which are available 24 hours aday, seven days a week to employees andanyone who conducts business with Gap
Inc. or is affected by our business. We haveinvestigative teams that log, process andaddress complaints received through any
channel, including our COBC hotlines.
Key aspects of how we implement our
COBC:•

All employees globally are required totake a COBC overview course within 30
days of their initial hire date.

•

We provide ongoing compliancetraining to various targeted employees
on topics of nondiscriminationand harassment, wage andhour compliance, workplaceaccommodations, anti-corruption,competition law compliance anddata privacy and security. Our Global
Integrity team also conducts generalin-person training sessions throughout
the year.

•

We provide a variety of online selfhelp tools for compliance educationand communication, including leader

tools (which guide leaders on how tohave effective conversations with theirteams), FAQs, policy links and contacts.
••

Our Global Integrity team conducts
annual interviews with employees invarious business units or offices andselected suppliers. These interviews
allow us to gauge how well our
employees understand our COBC,
remind employees and suppliers of their
responsibilities and our expectations of
how we engage with one another, andensure that employees know how toreport COBC violations.
Senior-level employees must certify
their COBC compliance annually andare briefed on relevant compliance andintegrity topics to raise awareness.

We are diligent about addressing
corruption risks, particularly in developing
countries with limited rule of law. We havea companywide program for monitoring,
enforcing and addressing any issues
related to our Anti-Corruption Policy,
which combines elements from our COBC
with anti-bribery requirements under theForeign Corrupt Practices Act (FCPA) andother similar laws around the world. The
policy and related training programs help
employees recognize and avoid corrupt
business practices in all aspects of Gap
Inc.’s business.

LEARN MORE:
Code of Business Conduct

LEARN MORE:
Policies

GOVERNANCERISK MANAGEMENTOUR ROBUST GOVERNANCESTRUCTURE ENSURES THAT OUR
GLOBAL SUSTAINABILITY PROGRAM
BOTH MEETS OUR COMPANY’S SOCIALAND ENVIRONMENTAL GOALS ANDSUPPORTS OUR BUSINESS.

GAP INC. HAS DEVELOPED SYSTEMSAND PROCEDURES FOCUSED ON
IDENTIFYING AND MANAGING RISKS,INCLUDING THOSE RELATED TOSUSTAINABILITY.

Gap Inc.’s Board of Directors, particularly
the Governance and Sustainability
Committee, oversees our Global
Sustainability program. The board
receives regular updates from SeniorVice President, Global Sustainability, andPresident, Gap Foundation, David Hayer.
He also meets quarterly with Gap Inc. CEO,Art Peck, and regularly with our Executive
Vice President of Global Supply Chain
and Product Operations. Hayer reports to
Executive Vice President and Chief People
Officer, Brent Hyder, who reports directly
to our CEO.
Our organizational structure allows
collaboration across key departments. Our
Global Sustainability team works closelywith our Brands’ Product and Marketing
teams, Supply Chain, Government Affairs,
Public Affairs, Legal and Gap Foundation
teams, among others.
Gap Inc.'s Environmental Council — whichis sponsored by the Senior Vice President,
Strategic Sourcing, and includes leadersand subject matter experts across ourbusiness — is integral to building thisalignment. The Council is responsible for
evaluating new initiatives and reviewing
progress on our existing environmental
goals and programs, particularly thoserelated to Gap Inc.'s overall climate-change
strategy and waste-reduction efforts.

Our Global Sustainability team works withbusiness partners and experts to assess
the importance of potential social andenvironmental risks and opportunities forour business and external stakeholders,
including suppliers and the people who
make our products. These include therisks that climate and environmental
impacts could pose to our business. The
team uses tools to help prioritize risks andopportunities, including a sustainability
materiality assessment, an assessment ofrepresentative products and a stakeholder
engagement process.
For these materiality and other risk
assessments, we consider such factors as
the magnitude, likelihood and time horizonof potential impacts on our business andstakeholders. We also develop countryspecific strategies that take local context
into consideration while developing ourprogram and addressing key issues.

LEARN MORE:
Our risk management process

LEARN MORE:
Governance

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

APPENDIX

16

STAKEHOLDERENGAGEMENTSTAKEHOLDER ENGAGEMENTADVANCING PROGRESS ON
SYSTEMIC ISSUES IN THE APPARELSECTOR — SUCH AS WATER ACCESSAND CLIMATE CHANGE, WOMEN’SEMPOWERMENT, AND SAFE AND FAIR
WORKING CONDITIONS — DEMANDSCOLLABORATION AND JOINTLY
DEVELOPED SOLUTIONS.
We engage stakeholders and establish
partnerships with diverse groups ofexperts and organizations to gain a clearer
understanding of complex issues andunderstand local conditions in the countries
where we do business. This dialogue helps
us improve our programs, refine strategies,
reveal unexplored issues and scale industry
solutions.
We have many key stakeholders: the people
who make our clothes, our customers,
suppliers and factories, employees, unions,
governments, multilateral institutions,NGOs, industry associations, investors,
communities and others. We also belong
to a number of organizations that enable
us to more effectively collaborate with andlearn from stakeholders. Multi-stakeholder
initiatives bring together organizations andpeople from different sectors that play a
key role in finding new approaches andcreating collective action.

“To create the change
we’re after, we can’t
do this work alone.
We partner withorganizations large
and small to makethis work happen. The
United Nations is oneof them. For years,
we’ve supported the
UN Global Compact
and its guiding
principles.”— ART PECK, CEO, GAP INC.

LEARN MORE: Our stakeholder
engagement approach

See a full list of our initiatives
and organizations we partner with

GLOBAL SUSTAINABILITY REPORT 2017

SOCIALOPERATIONSSUPPLY CHAIN

18

TALENT

26 SUPPLIER SUSTAINABILITY

19

DIVERSITY + INCLUSION

29

ASSESSMENT + REMEDIATION

22EMPLOYEE ENGAGEMENT

35

WORKPLACE COOPERATION PROGRAM

24

THIS WAY AHEAD:

36

WORKFORCE ENGAGEMENT PROGRAMFIRST JOBS

37 P.A.C.E.: EMPOWERING WOMENOVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

APPENDIX

18

TALENT
OUR BUSINESS SUCCESS DEPENDS ON OUR PEOPLE.
That’s why we are dedicated to cultivating a culturethat attracts and engages talented employees andgives them opportunities to achieve their work and life
goals. At Gap Inc., we provide programs and customized
experiences to help them achieve their full potential.
This belief guides our talent practices, from developing
a diverse pipeline of employees to giving individuals newchallenges to help them grow into new roles with greater
responsibility. We believe in our employees’ potential andprovide multiple career opportunities for those who wantto learn and grow with us.

OUR APPROACH
OUR WORKPLACE CULTURE AND
BENEFITS ARE DESIGNED TO MEET
THE PROFESSIONAL AND PERSONALNEEDS OF OUR EMPLOYEES AND THEIRFAMILIES.
For retail employees in particular, we
improved wages and scheduling practices
so that the people who work in our stores
experience greater stability and flexibility.

We offer financial incentives, work-life
integration and benefits aimed at
helping our employees make the mostof their professional and personal
lives. This supports employees andincreases their engagement atwork, which contributes value to ourbusiness.
LEARN MORE: How we help our
employees realize their potential

FIELD TO HQ
Fueling our entry-level headquarters roles
with incredible talent is important to our
success, and field employees are a key
source of talent for these roles.
Our diverse field employees work withcustomers every day and understand what
they need and want. Their connection tocustomers and understanding of how ourstores work is invaluable at headquarters.
We have always encouraged bringing store
employees to headquarters and in 2017,
we formalized a program where we actively
market opportunities to store employees,
support candidates through the recruiting
process and provide a custom onboarding
experience to ensure a successfultransition. By 2020, our goal is to fill 20
percent of entry-level headquarters roles
with field employees.

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

19

APPENDIX

DIVERSITY +INCLUSION
SINCE OUR FOUNDING, WE’VE EMBRACED CORE
COMPANY VALUES THAT INCLUDE CELEBRATINGINDIVIDUALITY, DIVERSITY AND TREATING ALL PEOPLE
EQUALLY — WITH RESPECT, DIGNITY AND FAIRNESS.
We see an opportunity to stand alongside other leaders
and work toward greater equality and a sense of
belonging for everyone. This helps our company attract
and retain the best employees, create great products forall of our customers, foster creativity and innovation, andcontribute to a more inclusive and just world.
Our empowerment, employee and workforce programs
support the rights and well-being of the people who
embody and drive our business, ensuring that they haveequal opportunity and support to develop personally andprofessionally.

OUR APPROACH
IN 2017, WE EXPANDED OUR APPROACH
TO DEVELOPING A WORKPLACE THATSUPPORTS OUR CORE VALUES OFEQUALITY AND CREATING A SENSE OF
BELONGING.
Our Diversity and Inclusion strategy
focuses on three areas:
STORYTELLING
Telling stories about who we are and what
we stand for helps us create a company
culture that values equality, opportunityand connection for all people. To attract
and retain talent, we seek to be more vocal
about our public commitments, awards
and efforts.

EXPERIMENTATION
To drive innovation, we encourage trying
new and different approaches to discoverwhat works and what doesn’t to recruit
talent, develop leaders and create
programs that promote an inclusive work
culture.
PROGRAMS THAT MATTERTo set the foundation for our inclusivity
work, we invest in programs across Gap
Inc. that support mentorship, learning,
creating inclusive products and promoting
equal access for all.

LEARN MORE: Our commitment
to equality and opportunity

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

20

APPENDIX

DIVERSITY +INCLUSION
PUBLIC COMMITMENTS + AWARDSTRAINING + RESOURCES
UC BERKELEY’S HAAS CENTER FOR EQUITY, GENDER, AND LEADERSHIP
This center engages leaders from diverse political and corporate backgrounds,
conducts and disseminates cutting-edge research on diversity issues, producescase studies of companies that are leaders in equality and diversity and more. In
2017, Gap Foundation became the center’s first corporate foundation donor, andNancy Green, President and CEO of Athleta, serves on its board.

UN HUMAN RIGHTS LGBTI CORPORATE STANDARDS OF CONDUCT FOR
BUSINESSAs the first and only global apparel retail company to sign on to the standards, Gap
Inc. bolstered our efforts to support and lead on issues that impact our lesbian, gay,bisexual, transgender and intersex (LGBTI) community around the world.

CEO ACTION FOR DIVERSITY & INCLUSION
In August 2017, our CEO, Art Peck, alongside other CEOs, pledged his commitment
to advance diversity and inclusion in the workplace. The pledge aims to rally thebusiness community to work collectively toward that goal and outlines a specific
set of actions, such as unconscious-bias education. Companies are encouraged toshare practices for cultivating a trusting environment where all ideas are welcomeand employees feel comfortable and empowered to discuss diversity and inclusion.

THOMSON REUTERS DIVERSITY & INCLUSION INDEXIn October 2017, Gap Inc. ranked No. 2 out of 6,000 publicly traded companies on
this index.

HUMAN RIGHTS CAMPAIGN CORPORATE EQUALITY INDEX (CEI)
For the 13th year in a row, in 2018, Gap Inc. received a perfect score on the CEI,an annual benchmarking survey and report on corporate policies and practices
related to lesbian, gay, bisexual, transgender and queer (LGBTQ) workplace
equality.

INCLUSION TRAINING
We launched a series of unconsciousbias trainings to our Talent organizationin 2017 and will expand the trainings to all
employees in 2018. We also plan to create
curricula and accessible resources that
support equality and belonging. We want
our leaders and employees to consider how
unconscious bias and other issues come tolife in their everyday work.
BE ONE. GET ONE.
At Gap Inc., we value mentoring as adevelopmental process that helps build
incredible careers. Launched in 2018, our Be
One. Get One. program aligns with our corevalues and empowers employees to takeactive roles in both their own development
and the development of others. Mentorshipis a personal journey that works best whenpeople connect organically, instead of
relying on matching systems and formalized
reports.

SUPPLIER INCLUSIONPROGRAMWe are committed to increasing thediversity of suppliers we use, helping diverse
businesses become competitive industry
leaders and enhancing the economic
vibrancy of the communities we serve. The
launch of our supplier inclusion programin January 2018 provides a framework toincrease our work with companies that are
owned by or employ a large percentage ofminorities, veterans, women and people
with disabilities. Through this program, weare forming new partnerships to expand our
networks to connect with a more diverse setof companies in 2018 and beyond.
GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

21

APPENDIX

DIVERSITY +INCLUSION
WORKPLACE DATAWE BELIEVE DIVERSITY INCREASESCREATIVITY AND INNOVATION,PROMOTES HIGH-QUALITY DECISIONSAND ENHANCES ECONOMIC GROWTH.
We track and disclose data on
comparable workplace information to
enable us to monitor trends and theeffectiveness of our strategy.

ETHNIC DIVERSITYGENDER REPRESENTATIONUNITED STATES*GLOBAL		 201420152016 2017

WHITE
All		
Management		
New Hires		

50%
73%
46%

48%
72%
44%

51%
74%
49%

ASIAN
All		 6%
Management		
9%
New Hires		
6%

7%
9%
6%

7%
10%
6%

47%
71%
41%

7%
10%
6%

BLACK
All		 19%
Management		
6%
New Hires		
24%

19%
7%
24%

19%
6%
24%

20%
6%
25%

HISPANIC
All		 20%
Management		
10%
New Hires		
17%

20%
10%
18%

21%
10%
19%

22%
11%
21%

OTHER MINORITY
All		 4%
Management		
1%
New Hires		
5%

4%
1%
6%

5%
2%
6%

5%
2%
6%

ALL MINORITIESAll		 49%
Management		
26%
New Hires		
51%

50%
27%
54%

52%
28%
56%

54%
29%
58%

PROMOTION RATESUNITED STATES

		

2014

2015

2016

2017

		20142015 20162017

VP + ABOVE
Women		
Men		

46%
54%

49%
51%

51%
49%

50%
50%

VP + ABOVE
Women		8%Men		5%

10%
13%

3%
7%

4%
11%

SR. / DIRECTOR
Women		
59%
Men		
41%

59%
41%

61%
39%

61%
39%

SR. / DIRECTOR
Women		9%Men		11%

12%
10%

10%
12%

9%
6%

SR. / MANAGER
Women		
60%
Men		
40%

60%
40%

61%
39%

61%
39%

SR. / MANAGER
Women		13%Men		13%

16%
15%

16%
14%

13%
13%

STORE MANAGEMENT
Women		68% 69%
Men		
32%
31%

68%
32%

68%
32%

PROFESSIONAL
Women		7%Men		8%

6%
7%

7%
8%

8%
8%

NEW HIRES
Women		
Men		

72%
28%

73%
27%

74%
26%

74%
26%

OVERALL
Women		7%Men		8%

7%
8%

7%
8%

8%
8%

OVERALL
Women		
Men		

74%
26%

74%
26%

75%
25%

76%
24%

Promotions are defined as movement to a higher
grade level. Promotion rate is the number ofpromotions during the year, divided by the average
headcount for that year.

*U.S. full-time and part-time, non-seasonal
employees. Data on ethnic diversity is not available
outside the U.S.

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

22

APPENDIXEMPLOYEEENGAGEMENT
WE WANT TO EMPOWER GAP INC. EMPLOYEES TOSUPPORT THE POTENTIAL OF PEOPLE IN THEIRCOMMUNITIES THROUGH DONATIONS OF TIME,TALENT AND MONEY.
Our legacy of giving back began with our founders
and we continuously work to ensure that this spirit isingrained in our company culture. We have found thatencouraging employees to volunteer or donate delivers
a social impact and business benefits — it helps build
strong communities and helps our company attract andretain talented, engaged employees who are proud towork for Gap Inc. To encourage employees to give back,
we build in time for volunteering and provide grants tocommunity organizations, money for volunteer time andmatching donations. We measure the dollar value ofthese contributions annually, which we collectively call
“employee-driven community investment.”

GOALS + PERFORMANCEGOAL% ACHIEVED

2017 PROGRESS

Support $15 million in employeedriven community investment
per year99%$14.8 million in employeedriven community investment

25% of Gap Inc. employees
volunteer

92%

23% of employees
volunteered

430,000 volunteer hours logged
by Gap Inc. employees in 201799%

Gap Inc. employees logged
420,811 volunteer hours

New in 2017/2018

ON TRACKEMPLOYEE-DRIVENCOMMUNITY INVESTMENTPROGRESSING

NEEDS ATTENTION$1.7
MILLIONIN EMPLOYEEFINANCIAL DONATIONSLEARN MORE: How we invest
in others and ourselves$14.8
MILLION$10.2
MILLION$2.9
MILLIONIN VOLUNTEER HOURS
the financial equivalent of
420,811 volunteer hours

IN GAP INC. MATCHING
for financial donations +employee volunteer hours
GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

APPENDIX

23

EMPLOYEEENGAGEMENTOUR APPROACH

VOLUNTEERISM IMPACTS

IN 2017, THE GAP FOUNDATIONSHIFTED OUR STRATEGY TO
GIVE INDIVIDUAL TEAMS MOREOWNERSHIP OF THEIR EMPLOYEEENGAGEMENT GOALS.

LOWERTURNOVER

Each Gap Inc. team has at least one
representative on our Employee
Engagement Committee. These
representatives are responsible
for setting goals for volunteer
hours, employee participation andtotal employee-driven community
investment. We share monthly reports
with these representatives to help
keep teams accountable for theirgoals.

AMONG VOLUNTEERS

Turnover rates are lower among
employees who volunteer.

LONGERTENUREAMONG VOLUNTEERS

Employees who volunteer stay at thecompany longer than non-volunteers.

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT24

APPENDIX

THIS WAY AHEAD:
FIRST JOBS
THIS WAY AHEAD IS OPENING DOORS FOR THE NEXT
GENERATION WITH FIRST JOBS, MENTORING AND THE
CONFIDENCE TO MAKE DREAMS A REALITY.
The program brings talented employees into our stores
while providing opportunities for youth who are otherwise
disconnected from education or the job market.

GOALS + PERFORMANCEGOAL% ACHIEVED

2017 PROGRESS

10,000 youth participate inThis Way Ahead by 2020

39%

3,900 youth completed theprogram

5% of annual new store hires
are from This Way Ahead by
2025

13%

668 new store hires (0.66%
of total new hires) were from
This Way Ahead

Through structured training and paid work experience at
Old Navy, Gap or Banana Republic, This Way Ahead helps
youth between the ages of 16 and 24 land their first job.

ON TRACKPROGRESSING

NEEDS ATTENTION

Gap Inc. employees who volunteer to mentor
participants also gain skills as they guide This Way
Ahead hires, and stores build a valuable pipeline of future
employees and develop best practices for managing
talent that we can apply across the company.
LEARN MORE:
Our This Way Ahead program

2017
REACH:

12

CITIES

274

STORES

668

HIRES

1,148

PARTICIPANTS

3,900

PARTICIPANTSTOTAL AS OF FISCAL 2017

LEARN MORE: How wedoubled participation in 2017

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT25

APPENDIX

THIS WAY AHEAD:
FIRST JOBSOUR APPROACH

2017 PROGRESSPARTICIPANT IMPACTLEADER IMPACT

IN 2017, IN COLLABORATION WITH OUR
BRANDS AND NONPROFIT PARTNERS,WE EXPANDED TO TWO NEW CITIES —VANCOUVER AND MIAMI — AND STORESIN THE BROADER SAN FRANCISCO BAY
AREA.

Results from a recent survey of This Way
Ahead alumni who participated between
2007 and 2016 showed that 72 percent go
on to find stable employment, compared to55 percent of their peers. Alumni also reportthat This Way Ahead gave them the skills
and confidence they needed to join theworking world.

71%

95%

74%

IN AT LEAST ONE KEY COMPETENCY
such as leadership, management,
communications, and the ability to
manage teams or work with people
from diverse backgrounds

LIKE DECISION MAKING +TIME MANAGEMENT

81%

We’re laying the groundwork for asignificant expansion that will triple theprogram’s presence in 2018, growing This
Way Ahead from 15 cities to over 50 cities.
We also foresee long-term opportunities
to integrate the program into our brands’
marketing efforts, driving consumerawareness and program funding. In
2017, Old Navy introduced a customer
fundraising campaign that generated $1
million for Boys & Girls Clubs of America tohelp fund a national expansion of This Way
Ahead.

A 2017 analysis conducted at Old Navyfound a 130 percent return on investment,
taking into account the cost to train
and onboard new employees. Programmeasurement consistently shows that
This Way Ahead participants stay with thecompany twice as long as their peers andtend to have higher engagement scores.
This provides an incredible opportunity for
us to learn more about engaging employees,
ultimately increasing employee loyalty
and satisfaction and providing a positive
experience for our customers. Program
participants also diversify our store teams,
as 96 percent of This Way Ahead alumni
self-identify as people of color.

APPLYING LESSONS
We are applying talent management
practices from This Way Ahead to support
existing employees in other parts of thecompany. Working with experts from theconsulting firm FSG Inc., we applied their
methodology to our data. Our analysis
showed that 38 percent of our recent hires
have characteristics similar to those of This
Way Ahead participants, and many may befacing similar challenges as a result. Thus,
This Way Ahead’s proven strategies canhelp improve retention rates and increase
employee loyalty across the company.

RECEIVED AJOB OFFERIMPROVEDSOFT SKILLS70%

INCREASEDCONFIDENCE* +SELF-ESTEEM*particularly in their ability to get a jobin the future

REPORTEDGROWTH

INCREASEDPRIDEIN WORKING FOR GAP INC.

66%

ARE A LOT MORE
WILLING TO GO
BEYOND

WHAT IS NORMALLY EXPECTED TO
HELP THEIR TEAM SUCCEED

91%

WOULD
PARTICIPATEAGAIN
GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT26

APPENDIXSUPPLIERSUSTAINABILITYWE PARTNER WITH ALL OF OUR BRANDED-APPAREL
SUPPLIERS AND OTHER KEY STAKEHOLDERS TO
HELP PROVIDE SAFE, FAIR AND HEALTHY WORKING
CONDITIONS FOR THE WOMEN AND MEN WHO
CREATE OUR CLOTHES.
Using a holistic approach, we implement a variety of
programs that serve as the foundation for our suppliersustainability efforts while also building country-specificapproaches where appropriate. Given the need forindustrywide collaboration, in some cases we partnerwith other brands to improve results for garment workers.
Our goal is to design and implement industry-leading
programs that can help transform and future-proof theapparel manufacturing sector. In partnership with our
suppliers, NGOs, multilateral organizations and otherstakeholders, we’re continuing to build the capability of
our suppliers. Our efforts are multifaceted and focus
on a range of interventions — improving worker andmanagement relations, innovating how we assess andimprove working conditions and using technology todirectly engage with and respond to workers’ needs.

GOALS + PERFORMANCEGOAL% ACHIEVED

2017 PROGRESS

100% of supplier facilities
producing branded apparel are
rated yellow or green by 2020

95%

95% of supplier facilities
were rated yellow or green

100% of Tier 1 suppliers
transition to digital wage
payments by 2020

68%

68% of suppliers are
already using checks orbank transfers

200 supplier facilities
participate in our Workplace
Cooperation Program by 202035%

69 supplier facilities are
participating

100% of Gap Inc.'s supplierfacilities in Bangladesh
complete fire and building
safety remediation aspart of the Alliance for
Bangladesh Worker Safety
by 201884%

42 out of 50 facilities havereceived full remediationfrom the Alliance, with theremaining eight awaiting
final inspection

New in 2017/2018

ON TRACKPROGRESSING

NEEDS ATTENTIONLEARN MORE: How we're
improving working conditions

Supplier facility, India

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT27

APPENDIXSUPPLIERSUSTAINABILITYOUR APPROACHMILLS EXPANSION

THE FOUNDATION OF OUR APPROACH IS
GROUNDED IN FOUR FACILITY-FOCUSEDPROGRAMS:

1

ASSESSMENT +REMEDIATIONPROGRAM

Our approach to improving working conditions is based on transparency,
partnership and innovation. We believe that by working together, we can achieve
our commitments to improve workers’ well-being, protect human rights, reduce
environmental impacts and unleash improved business performance.
Learn more (p.29)

2

WORKPLACECOOPERATIONPROGRAMWe developed this program with International Labour Organization (ILO) Better
Work in 2015 to help improve communication between workers and management.
This intensive program is based on eight modules and seeks to drive continuous
improvement in the workplace by maturing industrial relations and establishing
functioning grievance mechanisms. Learn more (p.35)

3

WORKFORCEENGAGEMENTPROGRAMWe launched this program in collaboration with Verité in 2015 to measure andimprove the degree to which garment workers feel valued and engaged at work.
This program gives workers an opportunity to provide anonymous feedback on key
topics, such as supervisor relationships, grievance mechanisms, and training anddevelopment opportunities. Learn more (p.36)

4

P.A.C.E.
(PERSONALADVANCEMENT &CAREER
ENHANCEMENT)

Our P.A.C.E. (Personal Advancement & Career Enhancement) program gives
women in Gap Inc.'s supply chain and sourcing countries the foundational life skills,
technical training and support they need to advance in the workplace and in theirpersonal lives. Learn more (p.37)

Until recently, many of ourprograms have focused on our Tier
1 suppliers — the cut-and-sew,
embroidery and laundry facilities
from which we directly source.
Beginning in 2017, we began
measuring the social andenvironmental performance of ourTier 2 suppliers — the mills thatprovide our fabric — through ourredesigned Mill Sustainability
Program (p.43). We will leverageSocial & Labor Convergence
Project (SLCP) tools to improve ourmills’ sustainability performance.

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT28

APPENDIXSUPPLIERSUSTAINABILITY
PARTNERSHIPSIN ADDITION TO OUR FOUR PROGRAMS,WE MANAGE OR PARTICIPATE IN
A BROAD SET OF INITIATIVES THATADDRESS COUNTRY-SPECIFIC LABORISSUES, PARTNERING WITH OTHERAPPAREL AND FOOTWEAR COMPANIES,
EXPERT ORGANIZATIONS, NGOS,
GOVERNMENTS AND MULTILATERALORGANIZATIONS.
SOCIAL & LABOR CONVERGENCE
PROJECT (SLCP)As a signatory to this collaboration
among apparel and footwear brands,
retailers, industry groups and civil society
organizations, we support a new shareddata-collection tool that can assess
the social and labor performance of
manufacturing facilities across the appareland footwear supply chain. In 2017 and2018, Gap Inc. chaired both the SLCP
Tool Development Working Group and the
Verification Working Group in which wehelped facilitate the creation of the first
SLCP tool and verification process. We also
enrolled some of our facilities in the pilot
and supported the broader pilot coveringover 150 facilities in more than 10 countries.
The final version has been developed andwill launch in China and Sri Lanka in late
2018, with 17 of our approved facilities
and mills encouraged to participate. We
aim to support the expansion and sectoral
adoption of the SLCP and are investing
significant resources to institutionalize
it across our supply chain to promote
supplier ownership of social performance.

INTERNATIONAL LABOURORGANIZATION (ILO) BETTER WORKAs a founding partner of this program, weview the ILO team as our key implementing
partner in every country where they
operate, representing several of our key
sourcing markets.
BETTER THAN CASH ALLIANCE
In 2018, we joined this alliance — apartnership of companies, governments
and international organizations — toaccelerate the transition from cash-based
wage payments to digital wage paymentsin the apparel supply chain.
Digital Wage Payments

p.32

THE ARBITRATION COUNCIL
FOUNDATION + ILO BETTERFACTORIES CAMBODIA
We partnered with The Arbitration
Council and ILO Better Factories
Cambodia to deliver a workshop on
freedom of association, workplacecooperation and dispute resolution for
our Cambodian suppliers and the unions
represented at their facilities. We’recommitted to holding this type of forum in
additional sourcing markets in 2018 andbeyond.
Freedom of Association

p.34

ALLIANCE FOR BANGLADESH
WORKER SAFETY (ALLIANCE)
Gap Inc. is a founding member of the
Alliance. We maintain our commitment
to ensuring that the facilities we workwith, as well as the national garment
industry, continually improve working
conditions. We have formed an expert
team focused on improving fire andbuilding safety at the facilities producing
our branded apparel in Bangladesh. We
also provide training to help drive worker
and management behavior changes toimprove fire safety practices. As of fiscal
2017, all major remediation requiring
significant investments to improve worker
safety was completed in the facilities fromwhich we source. The remaining issues,
while important, are relatively minor. In
the facilities that have already completed
remediation, we are transitioning oversightof the fire and building safety programs tosmaller safety monitoring organizations
that will work closely with local partners
in Bangladesh to carry on this importantwork. The Alliance provides detailed
information on its progress and impact.

AMSTERDAM COALITION
We are working with several of the world’s
largest apparel companies and theOrganisation for Economic Co-operation
and Development (OECD) to address
working conditions and employment
practices in South India’s apparel supply
chain. We seek to partner with the Indian
government and fabric mills and apparelfacilities in South India to systematicallyaddress key labor issues that requirecomprehensive, multistakeholderinterventions.
MAXIMIZING WORKER ENGAGEMENTWORKING GROUP
In partnership with BSR and otherindustry-leading apparel and footwear
companies, we seek to align arounda common mission and set of guiding
principles for our companies’ distinct
worker engagement and worker wellbeing programs. We aim to help scale
and institutionalize worker engagement
best practices in partnership with othercompanies across the apparel andfootwear supply chain.

Fire, Building + Electrical Safety p.33

REMEDIATION IN
BANGLADESH FACILITIES

50
8AS OF FISCAL 201742

FACILITIESRECEIVED FULL REMEDIATION
from the Alliance

8

FACILITIES42

PENDING FULL REMEDIATION
They have completed the civil
work required and are awaiting
the final Alliance inspection
process.

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

APPENDIX

29

SUPPLIERSUSTAINABILITYASSESSMENT + REMEDIATIONPROGRAMWE MONITOR OUR SUPPLIERS’
FACILITIES’ ADHERENCE TO OUR
CODE OF VENDOR CONDUCT (COVC)
BEFORE INITIAL APPROVAL AND THENANNUALLY, ALONGSIDE OUR EFFORTS
TO BUILD INNOVATIVE PROGRAMS THATCREATE SUPPORTIVE, EMPOWERINGWORKPLACES.

LEARN MORE:
Assessment + Remediation Program
Including:• Assessment practices, resolution
data and our management
approach• Detailed management approachto human rights issues andpolicies• How we partner with facilities

PROGRAM OVERVIEW
We use a color-coded system torate facilities’ performance based on
assessments. High-performing facilities
with no critical or few violations receive
a green rating. Average performers are
rated yellow, while facilities that need
improvement on one or more serious issues
are assigned a red rating. Critical, severe
and key violations have a greater negative
impact on a facilities’ rating than “noncompliance” violations, such as first-aid kits
not being fully stocked.

toward our goal and identify facilities
that are lagging so that we can focus ourresources on improvement. Since we trackdata by country and category (such as
knits, wovens, accessories, etc.), we arealso able to collaborate with category
leaders on the Global Supply Chain team.
Through training and education, we also
work closely with key vendors to build theircapacity for continuous improvement andhelp them implement proactive measuresthat will prevent COVC issues from arisingin the first place.

In 2017, Gap Inc. set a goal to not workwith any red-rated facilities by 2020. We
made significant strides toward this goal in2017 by integrating this work more deeply
into our sourcing decisions, concentrating
our business with preferred vendors andincreasing our investment to help facilities
close out COVC violations in a sustainable,
responsible way. In addition to a dedicatedSupplier Sustainability team that engages
directly with facilities on these issues andtargets, we train global sourcing employees
on human rights policies and procedures,
building companywide awareness of aholistic approach to collaboration andmanagement.

In 2017, we raised the bar for our facility
approval process and no longer allow
red-rated facilities (based on their preproduction assessment) to be approved
by Gap Inc. for production. In the past, weapproved red-rated facilities if they agreed
to address the issue in question within acertain timeframe.

We have created internal systems todevelop a close partnership between our
Supplier Sustainability, Global Supply
Chain and Data Insights teams. Our
Supplier Sustainability and Data Insights
teams meet monthly to evaluate progress

We also changed our approach toassessing red-rated facilities. Rather
than wait one year after our initialassessment to reassess red-rated
facilities, we work with them to develop
a time-bound corrective action plan andevaluate them again at the end of theagreed-upon timeframe to determine
whether they have successfully achieved
the required remediation. This approachallows us to work more closely with facility
management to ensure that they aremaking the necessary investments andadjustments to their practices.

Fair Trade facility, Sri Lanka

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT30

APPENDIXSUPPLIERSUSTAINABILITY
SUPPLIER PERFORMANCEANALYSIS
We analyze our suppliers’ performanceagainst our COVC and use theconsolidated, country-level results totrack and analyze progress or areas ofconcern for these issues. Our analysis
showed that we closed a higher
percentage of issues in 2017 than in
2016: In 2017, we closed 91 percent ofissues that had remained open for 12months, compared to 82 percent in2016. As we identify emerging areas ofconcern, we partner with our suppliers
to implement changes to our systems
or develop new programs to addresssalient issues.

FACILITY TRENDPERFORMANCE 2017
871

306

861

851

341

326

Q1

813

450

472

83

75

41

Q2

Q3

Q4

YELLOW-RATED FACILITIESRED-RATED FACILITIES

2/1/2016

3 MONTHS
5/1/2016

6 MONTHS
8/1/2016

1 YEAR
2/1/2017

2 YEARS2/1/2018

Open
IssuesOpen
IssuesResolved

Open
IssuesResolved

Open
IssuesResolved

Open
IssuesResolved

452
158
873
12
791
365
100
278
0
629
296

312
88
481
2
703
208
100
233
0
423
232

31%
44%
45%
83%
11%
43%
0%
16%
100%
33%
22%

113
36
224
2
565
178
59
199
0
243
170

75%
77%
74%
83%
29%
51%
41%
28%
100%
61%
43%

44
29
98
2
181
82
34
103
0
94
50

90%
82%
89%
83%
77%
78%
66%
63%
100%
85%
83%

17
5
59
1
88
57
30
74
0
44
23

96%
97%
93%
92%
89%
84%
70%
73%
100%
93%
92%

3,954

2,782

30%

1,789

55%

717

82%

398

90%

RESOLUTION OF FACILITY CODE OF VENDOR CONDUCT ISSUESOPEN AS OF 2/1/2017
2/1/2017

3 MONTHS
5/1/2017

6 MONTHS
8/1/2017

1 YEAR
2/1/2018

Open
IssuesOpen
IssuesResolved

Open
IssuesResolved

Open
IssuesResolved

BANGLADESHCAMBODIACHINA		GUATEMALA
INDIA		INDONESIAPAKISTANSRI LANKA
UNITED STATESVIETNAM		OTHER		

583
271
1,102
12
733
443
11
285
1
832
332

369
118
553
2
541
358
11
230
1
459
247

37%
56%
50%
83%
26%
19%
0%
19%
0%
45%
26%

196
54
213
1
342
269
11
140
0
250
136

66%
80%
81%
92%
53%
39%
0%
51%
100%
70%
56%

52
40
44
1
62
75
1
65
0
48
44

91%
85%
96%
92%
92%
83%
91%
77%
100%
94%
87%

TOTAL		

4,605

2,889

37%

1,612

65%

432

91%

300

437

GREEN-RATED FACILITIESBANGLADESHCAMBODIACHINA		GUATEMALA
INDIA		INDONESIAPAKISTANSRI LANKA
UNITED STATESVIETNAM		OTHER		TOTAL		

425

140

RESOLUTION OF FACILITY CODE OF VENDOR CONDUCT ISSUESOPEN AS OF 2/1/2016

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

31

APPENDIXSUPPLIERSUSTAINABILITY
INTERNATIONAL LABOURORGANIZATION (ILO) BETTER
WORK
As part of our efforts to go above andbeyond assessment and remediation
and work more collaboratively with our
suppliers and other stakeholders, wehave played a leading role in multistakeholder collaborations such as
the ILO Better Work program. Better
Work takes an advisory approach tomonitoring facilities, with an emphasis
on protecting worker rights andwell-being by helping companies
and governments uphold the ILO’s
core labor standards and national
labor laws. Better Work leads facility
assessments and helps address
and remediate issues in Vietnam,
Cambodia, Indonesia, Bangladesh,
Jordan, Haiti and Nicaragua.

ASSESSMENTS IN ILO BETTER WORK MARKETSFACILITIES ASSESSEDBY ILO BETTER WORK

FACILITIES ASSESSEDBY GAP INC.

MILL SUSTAINABILITYPROGRAMTOTALBANGLADESHCAMBODIAHAITIINDONESIAJORDANNICARAGUAVIETNAM

32
43
5
43
3
5
79

62%
80%
100%
54%
30%
63%
54%

20
11
0
37
7
3
66

38%
20%
0%
46%
70%
38%
46%

52
54
5
80
10
8
145

TOTAL

210

59%

144

41%

354

2018 marks the launch of our Mill
Sustainability Program, which
integrates key industry programs
and puts supplier ownership at its
center.
Our first step on this journey was
to comprehensively map the mills
from which we source fabric andgroup them into three categories:
preferred mills, which represent
the majority of our businessvolume, non-preferred mills, andniche and new mills. While wehave yet to finish identifying all of
the niche mills, we made progressin 2017, mapping 179 facilities
that represent 80 percent of ourbusiness volume.
In March 2017, we communicatedto our entire mill base our
expectations of their social andenvironmental performance,
which are conditions of doing
business with us. We are now inthe midst of gradually rolling out
the comprehensive mill program
to the identified mills.

Mill Sustainability Program p.43
Vietnam

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

APPENDIX32

SUPPLIERSUSTAINABILITY
DIGITAL WAGE PAYMENTS
IN 2018, WE SET A NEW GOAL FOR
ALL OF OUR TIER 1 SUPPLIERS TO
TRANSITION FROM A CASH-BASEDWAGE-PAYMENT SYSTEM TO A DIGITAL
WAGE-PAYMENT SYSTEM BY 2020.
To support our commitment, we joined
the UN’s Better Than Cash Alliance(BTCA). BTCA works with the private
sector, governments and internationalorganizations to accelerate the transition
to digital payments, which can help reducepoverty and support inclusive growth.
Countries from which we source are atdifferent levels of digitization. For example,
we began working with our suppliers inIndia nearly a decade ago to transition
away from cash-based wage payments,
while in Cambodia and Bangladesh,the majority of our facilities continue to
use cash. Approximately 30 percent of
our suppliers use cash payments, which
can present a variety of security risks
to workers and contribute to financial
exclusion.

Globally, more than 30 percent of workingage adults lack access to formal financial
services. Rates of financial exclusion are
higher among women, who compriseabout 80 percent of the garment-industry
workforce. By committing to work with
our suppliers to use electronic wagepayment methods, we hope to increase
the number of people in our supply chain— particularly women — who have accessto formal financial products and services,
including bank and savings accounts,
credit and insurance. This will give workers
greater control over their finances andoffer them a safer way to save, send
and invest their money. Our suppliers will
benefit from cost savings via a faster, more
efficient payment system. Digital wages
will also help increase accountability andtransparency across the garment sector.
We are also evaluating how we can tie ourdigital wage-payment work to financial
literacy training programs, which our
P.A.C.E. program (p.37) provides. We
recognize that providing financial access toindividuals in developing countries is only
one piece of the puzzle — another crucial
piece is helping to ensure that workers caneffectively use those resources.

68%
OF OUR TIER 1 SUPPLIERS
PAY WAGES DIGITALLY

Vietnam

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT33

APPENDIXSUPPLIERSUSTAINABILITY
KEY ISSUESWE ARE PROUD TO SUPPORT THE
PRINCIPLES OUTLINED IN THE
UNIVERSAL DECLARATION OF HUMAN
RIGHTS (UDHR), THE UN GLOBALCOMPACT, THE ORGANISATION FORECONOMIC CO-OPERATION AND
DEVELOPMENT (OECD) GUIDELINES FOR
MULTINATIONAL ENTERPRISES AND THE
ILO’S CORE CONVENTIONS.
These principles form the foundation of our
Human Rights Policy, which defines ourapproach and activities to respect humanrights and prohibit human rights abuses.
In addition to the programmatic updates
in this report, detailed information on
our human rights policies, management
approach and resolution actions for key
issues is available at the links below.

LEARN MORE:
Respecting Human Rights
•
•
•
•
•
•
•
•
•
•
•
•

Child Labor and Young Workers
Discrimination
Wages and Benefits
Fire, Building and Electrical
SafetyGrievance Mechanisms
Short-Term Contracts
Human Trafficking and Forced
Labor
Working Hours
Humane Treatment
Freedom of Association
Foreign Contract Workers andRecruitment
Unauthorized Subcontracting

FIRE, BUILDING + ELECTRICAL SAFETYPROGRAMIn 2017, we expanded our approach tofire, building and electrical safety (FB&ES)
beyond Bangladesh, where we continue
to collaborate with the Alliance for
Bangladesh Worker Safety. We recognizethat some of our key sourcing countries —Cambodia, Indonesia and Pakistan — mayalso have FB&ES risks and we want to do
our part to reduce those risks and ensure
safety for workers in those countries. As
part of a pilot, we partnered with an expert
third party to assess facilities on fire andelectrical safety — 20 in Cambodia, three inIndonesia and three in Pakistan. We are now
working with these facilities on remediation
against their improvement plans.
Our assessment also provided analysis on
the unique challenges that contribute to
FB&ES risk in each country. For instance,
Cambodia lags far behind in fire-safety
regulations and most buildings do not haveadequate fire protection. In Indonesia, wefound that up to 70 percent of fires in thecapital city of Jakarta are caused by shortcircuits. It also revealed that fires spreadquickly when access to water is scarceand fire trucks face heavy traffic and poorroad conditions. In Karachi, Pakistan, theassessment revealed a number of issues,
including code violations, lack of awarenessabout safety measures, and a shortage offirefighting infrastructure and resources.

GRIEVANCE MECHANISMS
We take a multifaceted approach tohelp ensure that workers are able toeffectively raise grievances:••

Our Workforce Engagement
Program (p.36) — based on
worker surveys, interviews andmessaging applications — offers
one approach in which individuals
can confidentially report workplace
related grievances to facility
management. We are currently
working in China and Vietnam
to provide resources through asmartphone app and developing ascaling strategy to bring it to othersourcing markets.
Our Workplace Cooperation
Program (pg.35) provides training
for workers and management on
how to develop and implement
grievance mechanisms. Our goal is

to deliver this program to 200 facilities
by 2020.
•

Our Assessment and Remediation
program (p.29) evaluates the efficacy
and use of grievance mechanisms.
Our Supplier Sustainability team also
provides contact information to workers
in the facilities from which we source, sothey are able to reach out to us directly
if there are issues that require ourattention.

We believe that context-specificapproaches to grievance mechanisms will
increase the likelihood that workers will use
them. We are in the midst of evaluating
additional service providers that can help
implement technology-based solutions inother sourcing markets.
LEARN MORE:
Grievance Mechanisms

In addition to assessing the facilities, ourpartner trained facility managers and Gap
Inc. sourcing staff on how to address thebiggest issues.
LEARN MORE:
Fire, Building and Electrical Safety
GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT34

APPENDIXSUPPLIERSUSTAINABILITY
KEY ISSUES CONTINUEDFREEDOM OF ASSOCIATIONOur Code of Vendor Conduct (COVC) andHuman Rights Policy explicitly support
freedom of association and the rights ofworkers to lawfully and peacefully associate,
organize and bargain collectively.
We use a wide range of approaches inseeking to ensure that freedom of associationrights are respected, from supporting open
dialogue between facility workers andmanagers to partnering with workers’ rights
groups and trade unions when appropriate.
In January 2018, we partnered with The
Arbitration Council and ILO Better
Factories Cambodia to lead a workshop on
freedom of association for our Cambodian
suppliers and the unions represented intheir facilities. The purpose was to improve
employee and employer relationships
through a mutual understanding of freedomof association, workplace cooperation anddispute-resolution mechanisms.
In the workshop, we provided guidance on
how facilities should respect and address
freedom of association and disputeprevention and resolution regulations,
including those enshrined in ILO Conventions
No. 87 and No. 98 and Cambodian laborlaw. We also discussed the rights, roles andresponsibilities of employers and employees,
and provided practical information on how
to improve workplace cooperation, prevent
disputes and effectively use resolution
mechanisms. The workshop also included
an overview of Gap Inc.’s Workplace
Cooperation Program (p.35), which aims to
improve worker-management dialogue atfacilities.

Through the workshop, we reached facility
managers, union leaders and workers. To
complement this training, we also required
all of our Cambodian suppliers to enroll in
ILO Better Factories Cambodia’s advisory
services by the end of 2018. This will help
ensure that the voice of workers will beheard and issues will be resolved fairly
through the establishment of workplacecommittees. More broadly, in recent years
we have seen fewer instances of freedomof association issues in our sourcing
facilities, such as blocking attempts toorganize. We continue to work with our
suppliers and stakeholders on improving
understanding and access for workers
and management. We are in the midst ofplanning additional trainings in other key
sourcing markets.
LEARN MORE:
Freedom of Association
WORKING HOURS
One of the compliance issues we frequently
encounter relates to worker overtime,
which increased across most of oursourcing countries in 2017. Overtime is acomplex challenge to address because
many workers seek premium overtime
pay, while facilities seek to optimize theirproduction capacity across multiple buyers.
In addition, buyers themselves, including
Gap Inc., often require changes to ordersthat either increase or reduce the size ofan order. Despite these challenges, wewill continue to address the role that ourbuying practices have on overtime.
LEARN MORE:
Working Hours

GENDER BASED DISCRIMINATION AND
HARASSMENT
Women constitute between 60 and 80
percent of India's apparel workforce. During
regular assessments of the facilities wework with in India, we have found serious
violations pertaining to gender-based
discrimination and harassment, which are
known to be systemic issues in India. We
recognize this as an urgent issue that all
relevant stakeholders must invest more timeand resource into addressing.
To do our part, Gap Inc.’s Supplier
Sustainability team is working with
our suppliers in India — covering over
100,000 workers — to help them build anenvironment where they clearly define
and implement policies on Prevention of
Sexual Harassment (POSH) and create an
Internal Complaints Committee, both ofwhich are required under Indian law, though
inadequately enforced. We aim to help our
suppliers raise awareness among both maleand female employees about this issue,
and about their rights and responsibilities
under the Sexual Harassment of Women at
the Workplace (Prevention, Prohibition andRedressal) Act of 2013.
As a first step, we conducted sensitization
programs with all of our suppliers in India,
and have provided them with guidance on
the relevant legal requirements. We also
have defined time-bound goals, such ascommitments from our vendors to train 100
percent of their employees on this issue,and have identified expert organizations
for them to partner with in implementing
this work. As a result, regular training
and awareness also provided to all theiremployees to enhance understanding of theissues, the various forms it can take, its root

causes and their roles and responsibilities.
Regular trainings are provided to Internal
Complaints Committees to strengthen theirunderstanding and capabilities to address
sexual harassment cases. To review
progress, Gap Inc. assessments include
components on POSH and determine
areas for improvement, if needed, within a
remediation plan.
Given the urgency and importance of thisissue, we are now developing regional
strategies to address this issue in other key
sourcing countries, and will be launchingsimilar trainings in Bangladesh, Cambodia,
Indonesia and Vietnam in 2018.
LEARN MORE: Discrimination
CHILD AND FORCED LABOR
We continue to maintain a strong focus onprotecting human rights, including issues
such as forced and child labor. Under nocircumstance is it acceptable for child,forced or trafficked labor to be employedwithin our operations or used in the
production of any Gap Inc. product. Recent
legislation has supported global awarenessand we annually report our actions touncover and protect against these issues
within our U.K. Modern Slavery Act 2015
and California Transparency in Supply
Chain Act disclosures. While we have notdiscovered instances of forced or childlabor in our supply chain in recent years,
we remain vigilant about these issues anddetail our comprehensive management
approaches for both issues.
LEARN MORE:
Child Labor and Young Workers

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT35

APPENDIXSUPPLIERSUSTAINABILITY
WORKPLACE COOPERATIONPROGRAMOUR WORKPLACE COOPERATIONPROGRAM AIMS TO FACILITATEDIALOGUE BETWEEN WORKERS AND
MANAGEMENT.
It does so by addressing a broad set ofissues, from washroom sanitation andbetter quality of food in the canteen, toovertime and worker well-being. This
training program works with democraticallyelected bipartite committees — committees
comprising an equal number of workers
and management, which are legallyrequired in most countries from which wesource — so they can better collaborate
to address workplace issues. 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 partnershipwith International Labour Organization(ILO) Better Work, seeks to address
those relations in a way that benefits all
stakeholders.
In 2017, we focused on expanding thisprogram to improve social dialogue infacilities. We began using new dataassessments to better understand thebenefits of the program and areas for
improvement, launched a new training
module and set a goal to reach 200
facilities by 2020.

QUALITATIVE SURVEYS
In 2017, we sent a qualitative survey to
69 facilities to better understand theexperience of workers and managers in the
program, including how they perceive theeffectiveness of the bipartite committee
in making decisions, whether they feel
comfortable sharing issues and complaints,
and how they describe the quality of
the relationship between workers andmanagers. We conduct these surveys
quarterly so that we can respond toopportunities and challenges more rapidly.
Through these surveys, we learned thatworkers who have undergone training
feel more comfortable sharing issues.
They describe the quality of workermanagement relationships as positiveand believe that the committees areresolving workplace grievances and issues
more effectively than before the program
was introduced. However, the surveys
also revealed that the program is not
yet reaching its full potential. We need to
identify ways to engage more workers,
beyond those who have undergone
training, to participate in the bipartite
committee.
A challenge we have identified in working
with bipartite committees is how toshare updates and information fromcommittee meetings with the rest of the
facility’s workforce. To address this, weare partnering with Spread the Word,a consultancy focused on workplacecommunication, that will help us teachworkers and managers who receive ourtraining how to share that knowledge more
broadly in the facility.

ANALYZING BUSINESS IMPACT
Since part of our aim with this programis to improve business performance, wehave begun collecting data to analyze
whether the Workplace Cooperation
Program is improving productivity,
efficiency and quality. We createda quarterly data-collection tool andare asking participating facilities
to track and share their data on
different business indicators, such as
absenteeism, number of grievances,productivity and more. We are working
with ILO Better Work to conduct an
independent impact assessment of the
program, examining whether there is acorrelation between the program andbusiness benefits.
SUPERVISORY SKILLS TRAINING
In partnership with ILO Better Work, we
also began implementing a new training
module in 2018 to reach a key group of
employees we have not yet engaged
in the program: mid-level managers.
Through our supervisory skills training,
we aim to help middle managers
improve their communication withworkers, who typically contact middle
management first to discuss problems
or make suggestions to improve facility
working conditions. We plan to launch
this training module in 2018.

2017 REACH:

9COUNTRIES69

FACILITIES

12K+

WORKERS +TRAINED

125K+

WORKERSREPRESENTED+24%

More committee
members report feelingcomfortable sharing
issues during committee
meetings.

+26%

More committee
members say they
are satisfied with how
the committee makes
decisions.

+31%

More workers areaware of the workermanagement committee
at their facility.

POINTS

POINTS

POINTSGLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

APPENDIX36

SUPPLIERSUSTAINABILITYWORKFORCE ENGAGEMENTPROGRAMIN 2015, GAP INC. LAUNCHED ITSWORKFORCE ENGAGEMENT PROGRAM
TO IMPLEMENT A WORKER-CENTEREDAPPROACH TO IMPROVE SUSTAINABLE
SUPPLIER PERFORMANCE AND
MEASURE IMPACT.
By measuring how valued andengaged workers feel at work andthe contributing factors, the programsought to set priorities and goals forfacility improvement. Gap Inc. engaged
Verité to develop and help implement

this program. In August 2018, Verité
released a white paper highlighting the
program’s return on investment, lessons
learned and case studies to drive broader
industry awareness of supply chain worker
engagement.

engagement improved. This, in turn, drove
positive business results.

Using data from facilities that werere-assessed during the 2015-2017
implementation of our Workforce
Engagement Program, Verité found thatin facilities where significant management
improvements were made — including
supervisor training, communication andworker feedback, and training and careerdevelopment — workers’ sense of value andWe are currently working with otherbrands and BSR in the Maximizing Worker
Engagement Working Group to develop
an enabling environment for a supplierowned model of worker engagement thatcan be adopted and promoted acrossthe industry. The working group’s goal
is to bring together like-minded brands
across the apparel and footwear sector

In one case highlighted in the report, theteam noted a 5 percent decrease in worker
turnover from 2015 to 2016.

to adopt guiding principles to establish asystem that puts workers at the center ofengagement and well-being.
Achieving the scale of our objectives
requires that we find ways to drive greater
adoption of the program. We are exploring
new technology solutions (including
MicroBenefits) to help us lower the cost ofsuch initiatives for greater adoption among
our vendors. We are also sharing bestpractices across vendors, from Vietnam
to China to Indonesia, to develop the
program’s sustainability.

Supplier facility, Vietnam

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT37

APPENDIX

P.A.C.E. :EMPOWERING WOMENOUR P.A.C.E. (PERSONAL ADVANCEMENT & CAREER
ENHANCEMENT) PROGRAM GIVES WOMEN IN GAP
INC.’S SUPPLY CHAIN AND SOURCING COUNTRIESTHE FOUNDATIONAL LIFE SKILLS, TECHNICALTRAINING AND SUPPORT THEY NEED TO ADVANCE
IN THE WORKPLACE AND IN THEIR PERSONAL LIVES.
We launched P.A.C.E. in vendor facilities in 2007 andhave expanded the program to community settings to
unlock new possibilities for women and adolescent girls.

GOALS + PERFORMANCEGOAL% ACHIEVED

2017 PROGRESS

1 million women participate
in P.A.C.E. by 2022

12%

122,500 women haveparticipated in P.A.C.E.

10,000 women empowered
through P.A.C.E. and Fair
Trade by 2020

25%

2,503 women have beenreached through P.A.C.E.
and Fair Trade

Modified timeline

Athleta goal

ON TRACKPROGRESSING

NEEDS ATTENTIONLEARN MORE:
Our P.A.C.E. program

2017 ACTIVE COMMUNITY PARTNERSPARTNER

COUNTRY

Apparel Training & Design Centre

India

CARE

Bangladesh, Ethiopia, Haiti, Indonesia,

P.A.C.E. IS ACTIVE IN

13

+172%

PARTICIPATIONCOUNTRIESFROM 2016 TO 2017

43K

122K+

IN 2017

SINCE THE PROGRAMLAUNCHED IN 2007

Sri Lanka, Vietnam
China Women's University

China

Fujian Hwa Nan Women's College

China

Gram Tarang Employability Training Services

India

Maria Elena Cuadra (MEC)

Nicaragua

Project Concern International (PCI)

GuatemalaFoundation SAE-A

Haiti

Self-Employed Women's Association (SEWA)

India

Want Want Group

China

Win-Win Strategies

El Salvador, Guatemala, Nicaragua

WOMEN
PARTICIPATEDWOMENPARTICIPATEDGLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT38

APPENDIX

P.A.C.E. :EMPOWERING WOMEN
2017 PROGRESS
IN 2017, WE IMPLEMENTED A NEW
STRATEGY THAT WILL HELP USGROW P.A.C.E. BY FORMING NEW
PARTNERSHIPS, IMPROVING THE
EFFICIENCY AND EFFECTIVENESSOF OUR PROGRAM MANAGEMENT
AND DEVELOPING A NEW LEARNINGMANAGEMENT PROGRAM.
We seek to bring P.A.C.E. to as many
women and girls as possible. By 2022,
we aim to reach 1 million women with thislife-changing program and anticipate
that we will serve many more in the years
after that. This is a shift from the goal
we announced in 2015 to reach 1 million

women by 2020. Based on learnings fromour scaling efforts and our commitment
to prioritize the program’s impact overmeeting a deadline, this was the rightchange for Gap Inc. and P.A.C.E.
To reach our goal, we are looking forlong-term partners who share our visionof women’s empowerment and can help
us sustainably scale P.A.C.E. In 2017,
we formed partnerships with groups
including India’s Self-Employed Women’s
Association — one of the country’s largest
organizations focused on women engaged
in entrepreneurial activities — which willbring P.A.C.E. to 200,000 women, and
MEC Nicaragua, a women’s advocacy andrights organization.

Over the years, P.A.C.E. has evolved fromteams focused on local management toa global program that can share lessons
across geographies. This helps us tailor
content to fit local priorities while building
resources for a global scale. We aredeveloping a new community of practicethat will make it easier for P.A.C.E. teams
as well as our implementing partners
globally to share tools, knowledge andresources, such as master trainers.
Lastly, we created a new approach tolearning management so that our partners
and strategic vendors can more easily
implement P.A.C.E. in workplace settings
and train their own trainers to deliver the
program. For instance, we have licensed
P.A.C.E. to two strategic vendors that canlead the program in any of their facilities,
even those that do not produce products
for Gap Inc. This increases our efficiency inimplementing P.A.C.E., gives more womenin facility environments access to P.A.C.E.,
and deepens our relationship with strategic
vendors, which supports our businessgoals.
In addition to our P.A.C.E. expansion
strategy, we piloted a girls curriculum incommunity settings in China, Haiti, India
and Sri Lanka. We also invested in a newdata platform to help our partners andvendors track the progress of P.A.C.E.
implementation and began developing
indicators to measure P.A.C.E.’s impact
in community settings. We will use theseevaluations for program improvements.

P.A.C.E. in the classroom, India

GLOBAL SUSTAINABILITY REPORT 2017

ENVIRONMENT
SUPPLY CHAIN
40

WATER STEWARDSHIP

46

CHEMICAL MANAGEMENTOPERATIONS
48

CLIMATE + ENERGY

50

WASTE

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT40

APPENDIXWATERSTEWARDSHIPWATER IS ESSENTIAL TO HUMAN HEALTH AND WELLBEING, AND IT’S ALSO ESSENTIAL TO OUR BUSINESS.
Our water stewardship strategy is built on the principlethat clean, safe water is both an environmental goal anda basic human right. We have a responsibility and an
opportunity to address water issues because it is a criticalnatural resource for our business — used to cultivate raw
materials like cotton, consumed in the mills and laundries
that manufacture our products, and used by consumers
when they wash their clothes.

GOALS + PERFORMANCEGOAL% ACHIEVED

2017 PROGRESS

1 billion liters of water saved
in manufacturing in 2017240%

Gap Inc. suppliers saved 2.4
billion liters of water

10 billion liters of water saved
in manufacturing by 2020,
from a 2014 baseline33%

Gap Inc. suppliers havesaved over 3.3 billion liters ofwater since 2014

New in 2017/2018

Achieved

2014

ON TRACKPROGRESSING

NEEDS ATTENTION

To help build the resilience of our company, our supply
chain and the people who make our clothes, we
strategically address water use in product design andmanufacturing, water contamination, and education
about water and sanitation.
LEARN MORE: How we create
solutions for women + water

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT41

APPENDIXWATERSTEWARDSHIPOUR APPROACH
OUR WOMEN + WATER STRATEGYIS FOCUSED ON THE INTERSECTION
BETWEEN OUR INDUSTRY’SSIGNIFICANT USE OF WATER AND THE
BASIC RIGHT PEOPLE HAVE TO CLEAN,
SAFE WATER.

1

MANUFACTURING
We partner with fabric mills andlaundries to reduce manufacturing
impacts.

Mill Sustainability Program p.43

The program is focused on three key areas:water stewardship in manufacturing;access to water, sanitation and hygiene(WASH) for women; and designing morewater efficient products.

2

WOMEN
We build awareness and educate
the women who make our clothes
about safe water-handling practices
and increase their access to safe
water.
Women+Water Alliance

3

p.44

PRODUCTWe adopt more water-efficient
product design and sourcing
practices.

Product Sustainability

p.52

2.4B

LITERS
OF WATER
SAVED
AT DENIM
LAUNDRIES +MILLS IN 2017

34K

PEOPLETRAINED

ON WATER,SANITATION +HYGIENE
PRACTICES

76.6M

LITERS
OF WATER
SAVED

WITH WASHWELL
SINCE 2016

In 2017, we worked withthree denim laundries
and 24 mills, reducing
the amount of waterused in manufacturing
by 2.4 billion liters,
exceeding our 1 billion
liter goal.

In partnership with
WaterAid, we trained
34,000 people onwater, sanitationand hygiene (WASH)
practices.

Our program to reduce
the water used infinishing denim saves
at least 20 percent
of water used in thelaundry stage of
production. Since theprogram began in
2016, Washwell has
saved more than 76.6
million liters of water.

20%
LESS WATER USEDTO FINISH DENIM
WITH WASHWELL

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT42

APPENDIXWATERSTEWARDSHIP
2017 PROGRESSAFTER EXCEEDING OUR 2017
GOAL TO REDUCE WATER IN
MANUFACTURING BY 1 BILLION
LITERS — WE SAVED 2.4 BILLION
LITERS — WE SET AN AMBITIOUS
NEW GOAL IN 2018 TO CONSERVE
10 BILLION LITERS OF WATER
BY THE END OF 2020 THROUGHSUSTAINABLE MANUFACTURING
PRACTICES.
These potential water savings areequivalent to the daily drinking-waterneeds for 5 billion people. Our primarystrategy to achieve this goal is toenhance our engagement with themills and laundries in our supply chain
and use water-saving methods in the
production of our clothing.

PARTNERSHIPSSUSTAINABLE APPAREL COALITION (SAC)
We are a founding member of the SAC and use the Higg Index to evaluate suppliers’ environmental performanceand engage them to meet our goals. Beginning in 2017, we expanded our use of the Higg Facility Environmental
Module (FEM) 3.0 to collect data from mills’ self-assessments, which are verified by a third party.
ZERO DISCHARGE OF HAZARDOUS CHEMICALS (ZDHC) ROADMAP TO ZERO
We joined this commitment in 2014 to work toward zero discharge of hazardous chemicals in our supply chain.
We integrate ZDHC tools and resources, such as the Manufacturing Restricted Substances List (MRSL) and
Wastewater Guidelines, into our Water Quality Program and our Mill Sustainability Program. We are also amember of the ZDHC leader program. Beginning in 2018, our strategic mills and laundries will be required to test
their wastewater discharge twice a year and publish the results through the ZDHC Gateway. Learn more (p.46)
CLEAN BY DESIGN
We are collaborating to expand this Natural Resources Defense Council (NRDC) program, which helps mills in
China improve their operational efficiency to reduce water, energy and chemicals use. We worked with eightmills through 2017 for a total of 11 mills to date. The NRDC's results show an annual savings of 7 million tons ofwater and nearly $13 million in operating costs across all mill participants. Each mill used 11 percent less water, 7
percent less coal and saved, on average, $230,000 in annual operating costs. Additionally, we have developed
our own program for six mills in China — the China Mill Efficiency Program — and saved 1.4 billion liters of water.
RACE TO THE TOP
In Vietnam, our largest sourcing country, we partner with Race to the Top to work with other global appareland footwear brands, government, local industry and civil society on programs that support sustainability,
cost savings and opportunities for innovation in our sector. The first mills to participate in the Mill Optimization
program reported water, energy and fiscal savings.

CEO WATER MANDATE
We are a signatory to the CEO Water
Mandate, which enables collaboration
with other companies, governments,
civil society and others to address
challenges related to water scarcity,
quality and governance, and access towater and sanitation.

PARTNERSHIP FOR CLEANER TEXTILE (PaCT)In Bangladesh, we work with PaCT to improve the environmental performance of the country’s textile wetprocessing sector, which uses up to three times more water than the global average. In 2017, we worked withthree denim laundries (out of nine total participating laundries), helping us save 115 million liters of water.
USAID + GAP INC. WOMEN+WATER ALLIANCE
In 2017, we launched this Global Development Alliance (GDA) with the United States Agency for International
Development (USAID) to improve and sustain the health and well-being of women and communities touched by
the apparel industry. Learn more (p.44)

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT43

APPENDIXWATERSTEWARDSHIPMILL SUSTAINABILITYPROGRAMIN 2017, WE TRANSITIONED OUR MILLSUSTAINABILITY PROGRAM, WHICH
BEGAN IN 2013, FROM A PILOT TO A
STRATEGIC PHASE WITH THE PURPOSE
OF DRIVING TRANSPARENCY, REDUCINGCOMPLIANCE RISKS AND CONTRIBUTINGTO OUR SUSTAINABILITY GOALS.
By 2020, we expect all Gap Inc.-approved
mill facilities to participate in and reportusing the Sustainable Apparel Coalition(SAC) Higg FEM 3.0, Zero Discharge ofHazardous Chemicals (ZDHC) MRSL and
Wastewater Guidelines, and Social &Labor Convergence Project (SLCP) social
and labor assessment. To meet thesegoals, we are collaborating closely with
our Tier 2 mill suppliers and local NGO
partners. We have also further integrated
these programs into our business throughinternal partnerships with our Global
Supply Chain team.
The program is centered around five key
objectives:•

Establish a clear sustainability
roadmap for mill engagement that ismeasurable, innovative and integrated
into business decision making•

Assess internal and external needs tobuild capacity for this program•

Develop and conduct training andeducation with our mill partners•

Continuously monitor mills’ social andenvironmental performance•

Create a mill scorecard to integrate
the program’s impact into our overallbusiness portfolio

Before engaging our mill suppliers, we firstwanted to identify them at the facility level— a challenge in the highly-fragmented
apparel supply chain. In 2017, we begancomprehensively mapping mills in three
categories: preferred mills, which represent
the majority of our business volume, nonpreferred mills, and niche and new mills.
While we have yet to finish identifying allof the niche mill facilities from which wesource fabric, we made progress in 2017,
mapping 179 facilities that represent 80
percent of our business volume. We havelearned that our engagement with millvendors is more effective when we’re able
to build relationships with the vendors
supplying fabrics for our products and work
collaboratively to reduce the environmental
impacts of manufacturing.
In 2018, we will begin our phased
implementation of the program, with goalsfor:•All preferred and Tier 2 mill facilities
to complete a self-assessment andreceive third-party verification for the
Higg FEM 3.0•

All mills to review and understandthe ZDHC MRSL and Wastewater
Guidelines•

Select mills to pilot the SLCP
assessment

By deepening engagement with suppliers
through these programs, we aim to spur
innovation so that our suppliers contribute
ideas and pilot new technologies to reduce
environmental impacts.
LEARN MORE:
Our Mill Sustainability Program

Mill facility wastewater treatment, Vietnam

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT44

APPENDIXWATERSTEWARDSHIPUSAID + GAP INC.
WOMEN+WATER ALLIANCE

and sustainably manage quality water
resources and sanitation services.

IN 2017, WE LAUNCHED THE
WOMEN+WATER ALLIANCE, A GLOBALDEVELOPMENT ALLIANCE (GDA) WITH
USAID (UNITED STATES AGENCY FOR
INTERNATIONAL DEVELOPMENT), TO
IMPROVE AND SUSTAIN THE HEALTH
AND WELL-BEING OF WOMEN AND
COMMUNITIES TOUCHED BY THE
APPAREL INDUSTRY.

This pioneering public-private
partnership aligns closely to our businessand sustainability goals related tosustainable water stewardship andempowering women through our P.A.C.E.
program. Through rigorous monitoringand evaluation, we will deepen our
understanding of the WASH needs ofwomen and girls in the communities where
we operate and improve our ability todeliver programs that support their wellbeing. We will also learn and share bestpractices for WASH and water stewardshipto catalyze progress across the apparelindustry and beyond.

Over the course of this five-year program,
Gap Inc. will serve as the co-funder andprimary program manager. The program
will operate in two river basins in India
with four implementing partners — CARE,
ICRW, Water.org and ISC — toward
two goals: encourage communities toadopt key water, sanitation and hygiene(WASH) practices, and build access to

LEARN MORE: The USAID +Gap Inc. Women+Water Alliance

India

WOMEN

WATER

THE GLOBAL APPARELWORKFORCE IS

THE APPAREL INDUSTRYIS RESPONSIBLE FOR

80%

20% OF

FEMALEFRESHWATERPOLLUTION

INDIA

45M

PEOPLE

WORK IN INDIA'STEXTILE INDUSTRY54%

OF PEOPLE IN
INDIA FACE HIGH
WATER STRESSGLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT45

APPENDIXWATERWOMEN+ WATER ALLIANCE
2017 PROGRESSIn 2017, the first year of the program’s
implementation, the Women+Water Alliancefocused on program development andstakeholder engagement to ensure thesuccess of program activities. This included
establishing operating guidelines andpolicies, conducting a needs assessment
and delivering program recommendations,and developing a monitoring and evaluation
framework. Stakeholder engagement andpartner development included hosting a
Women+Water launch in India, updating
program designs and identifying project
locations. The Alliance provides quarterly
programmatic and financial updates to
USAID.
This partnership speaks to the opportunity
for the public and private sectors to eachbring their unique skills, reach and accessto collaborate on a shared vision. For
this partnership, Gap Inc. offers a uniquevalue proposition through our experiencedelivering P.A.C.E. and our access to women,
particularly in India, a top apparel sourcing
country. USAID offers essential technicalexpertise and funding. Other partners alsooffer complementary resources, expertiseand programmatic abilities.
As part of this, we worked with partners on
an assessment in India to understand the
WASH challenges and opportunities thatwomen and girls face. We also created alist of potential project locations in India.
In 2018, we will begin training in Madhya
Pradesh, India, based on Gap Inc. millsupplier presence, water availability andthe local need for better WASH practices incommunities.

Our partnership with USAID is unique
because it is one of the first times a
private company has taken the leadon program management (serving as
the prime partner), implementation,and monitoring and evaluation for adevelopment project. Because of this, anumber of our business teams have been
involved in implementing the GDA. On the
programmatic side, the Women + Water
group works closely with our Sustainable
Innovation and P.A.C.E. teams, which will
help the Alliance reach 200,000 womenby 2022. This will contribute to our larger
P.A.C.E. goal to change the lives of 1 million
women by 2022. We have also worked
with our Internal Audit, Finance, Legaland Communications teams to establish
the necessary systems and processes toimplement this work. Some of these may
prove to be useful in future programs
and partnerships, such as an evaluation
tool that we created to understand andmitigate the risks of potential implementing
partners.

WOMEN+WATER ALLIANCE
PARTNERSHIPS

CARE
Implements P.A.C.E. to reach
200,000 women by 2022

WATER.ORG
Is expanding the WaterCredit
microfinance model to help
communities access sustainable
WASH products and services

INSTITUTE FOR SUSTAINABLE
COMMUNITIES (ISC)
Assesses best practices on water
stewardship and management, andbuilds tools and guidelines for theapparel sector and communities toaddress water priorities

INSTITUTE FOR DEVELOPMENTIMPACT (I4DI)
Conducts independent, thirdparty baseline, midterm and final
evaluations of the program

INTERNATIONAL CENTER FOR
RESEARCH ON WOMEN (ICRW)Assesses how well P.A.C.E. fosters
behavior change on water, sanitationand hygiene (WASH) practices inhouseholds and communities

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT46

APPENDIXCHEMICALMANAGEMENTTHE GLOBAL APPAREL INDUSTRY ACCOUNTS FORHIGH AMOUNTS OF MANUFACTURING CHEMICAL USE,
AND THE DISCHARGE OF THESE CHEMICALS CANTHREATEN LOCAL WATER SOURCES AND AFFECTPEOPLE LIVING IN SURROUNDING COMMUNITIES.
We aim to eliminate the discharge of hazardous chemicals
within our supply chain to reduce our environmental
impact and improve access to clean, safe water in thecommunities where our suppliers and mills operate.

GOALS + PERFORMANCEGOAL% ACHIEVED

2017 PROGRESS
Strategic facilities mustcomply with the ZDHCManufacturing Restricted
Substances List and verify
through wastewater testingWork toward zero dischargeof hazardous chemicals inour supply chain by 2020

ON TRACKPROGRESSING

NEEDS ATTENTIONLEARN MORE: How we're
reducing the impact of chemicals

Mill wastewater testing, Vietnam

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT47

APPENDIXCHEMICALMANAGEMENTOUR APPROACH
OUR APPROACH TO CHEMICALMANAGEMENT INCLUDES THREE KEYCOMPONENTS:•

WORK WITH SUPPLIERS: We
communicate chemical safety
requirements to our suppliers throughour Code of Vendor Conduct (COVC)
and require them to acknowledge andcomply with these requirements.

•

COMPLIANCE AND MONITORING:
We use third-party testing of products
and components of products to ensurecompliance with global chemical
regulations and Gap Inc. chemical
restrictions.

•

INDUSTRY PARTNERSHIPS: We
partner with industry groups, including
Zero Discharge of Hazardous
Chemicals (ZDHC), the Appareland Footwear International RSL
Management (AFIRM) Group, andthe Sustainable Apparel Coalition(SAC), to implement a consistent setof tools and processes to support
best practices, monitor supplierperformance and encourage use ofsafer chemicals. In addition to helping
us achieve our water and sustainability
commitments, these partnerships help
advance the industry as a whole.

Gap Inc. chemical restrictions are
informed by global regulations as well as
hazard- and risk-based considerations.
They include our Restricted Substances
List (RSL) and Manufacturing Restricted
Substances List (MRSL). Since 2008,
Gap Inc. suppliers have been expected tocomply with our RSL. Since 2015, we haveasked all our suppliers to comply with the
ZDHC MRSL and we are aligned with the
AFIRM Group RSL.

2017 PROGRESSIn 2017, we laid the groundwork for deeper
collaboration on chemical managementwith our strategic suppliers and mills.
We also continued to focus on effective
engagement in industry partnerships,
including ZDHC, the AFIRM Group and the
SAC.
As a ZDHC signatory brand, we areintegrating ZDHC tools and resources
into Gap Inc. policies and systems. In
2017, we piloted the ZDHC Wastewater
Guidelines with key suppliers. In 2018, weare adopting the guidelines into existing
supply-chain programs, including ourWater Quality Program (WQP), whichreaches all denim laundries, and our Mill
Sustainability Program. Our strategic
mills and laundries will now be required
to test their wastewater twice a year to
ZDHC standards and publish the results
through the ZDHC Gateway — a platformthat allows brands to monitor supplierperformance and provides suppliers
information on better alternatives torestricted substances.
We asked all Tier 1 cut-and-sew suppliers
and strategic Tier 2 fabric suppliers to
respond to the SAC’s recently updated
Higg Index Facilities Environmental Module(FEM) 3.0 to assess chemical managementin our supply chain. We will use this data to
inform the evolution of Gap Inc.’s chemical
management strategy.

INDUSTRY INITIATIVES
SAC HIGG FEM (FACILITIESENVIRONMENTAL MODULE)• Covers many sustainability topics
including chemicals, water and energy• Baseline Gap Inc. supply chain on
chemicals management

ZDHC MRSL(MANUFACTURING
RESTRICTEDSUBSTANCES LIST)• Restricts hazardous
chemical use from all
wet-processing facilities

AFIRM RSL (RESTRICTEDSUBSTANCES LIST)• Restricts chemicals infinished product• RSL Testing Program
monitors chemical
regulatory compliance

WASTEWATER GUIDELINES• Gap Inc. Water Quality
Program (WQP) for laundries• ZDHC testing program tomonitor MRSL compliancethrough wastewater andsludge testing (ZDHC
Wastewater Guidelines)

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT48

APPENDIX

CLIMATE +ENERGY
CLIMATE CHANGE IS A GLOBAL CHALLENGE THAT
TRANSCENDS BOUNDARIES, AFFECTING PEOPLE
AND COMMUNITIES EVERYWHERE.
We view this challenge as an environmental issue, ahuman rights issue and a business issue. We also feelan ethical responsibility to address climate change byaligning our goals and strategies with the best scienceand industry practices.

GOALS + PERFORMANCE
GOAL
50% reduction in GHG emissions
in our owned and operated
facilities globally by 2020, froma 2015 baseline% ACHIEVED

2017 PROGRESS

28%

14% reduction in emissions
from a 2015 baseline

2015

ON TRACKPROGRESSING

NEEDS ATTENTIONLEARN MORE:
How we're doing our part on climate

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT49

APPENDIX

CLIMATE +ENERGYOUR APPROACH
AFTER SETTING OUR 2020 GOAL AND
DEVELOPING OUR CLIMATE STRATEGY
IN 2016, WE FOCUSED OUR EFFORTS IN
2017 ON DEFINING A CONCRETE PLAN
TO MEET THAT GOAL.
One of our core focus areas is optimizing
energy efficiency in our retail stores, which
represent more than 85 percent of ouroperational emissions.
As we have continued to improve theenergy efficiency of our stores, we havecome to understand that we cannot
achieve our 2020 goal through these
efforts alone. Because our stores areoften housed in buildings and malls owned
by landlords, we have limited ability to
implement efficiency improvements andbuilding upgrades. For this reason, weare exploring ways to purchase cleaner
energy through various renewable energy
initiatives that will help us meet our goal.
In 2017, we worked closely with internalteams — including Strategic Sourcing,
Legal, Accounting and Finance — toeducate decision makers about large-scale
renewable energy and explore different
solutions that will work best for Gap
Inc. Ultimately, we believe our proposed
investments in renewable energy will not
only help us meet our goal and address theenergy impacts of our more than 3,000
sites, but also benefit our business by
reducing operating costs. Moreover, it will
help drive demand for renewable energy
and spur the growth of the low-carbon
economy.

As a first step, we have identified an
opportunity to install a three-megawatt
on-site solar array at our distribution
center in Fresno, California, that will reduce
the site’s emissions by the equivalentof removing 254 passenger cars fromthe road annually. This facility will begin
generating power in 2019. In addition toadding solar energy to our distribution
centers, we are exploring multiple off-site
renewable energy opportunities to offset
the impact of our stores.

2017 PROGRESSIn 2017, we continued our efforts to reduce
our climate impacts in three ways:•

Improving energy efficiency at ourstores, offices and distribution networks•

Expanding our investments inrenewables•

Evaluating the opportunity to set ascience-based target beyond 2020

In addition, we are members of Businessfor Innovative Climate and Energy Policy(BICEP), an advocacy coalition within
Ceres comprising businesses committed
to working with policymakers to passmeaningful energy and climate legislation.
BICEP-sponsored legislation aims toenable a rapid transition to a low-carbon,
21st-century economy that will create newjobs and stimulate economic growth whilestabilizing our planet’s fragile climate.
Gap Inc. recently signed on to two lettersfrom BICEP members in support of two
important pieces of legislation in our home
state of California: Senate Bill 32, which
extends California's climate pollution
reduction target to 80 percent below 1990

levels by 2050, and Senate Bill 350, which
provides a roadmap to move us forward
by implementing 50-50-50 benchmarksby 2030 (raising the renewable portfolio
standard to 50 percent, reducing
petroleum use by 50 percent andincreasing energy efficiency in buildings
by 50 percent). Through our engagementwith Ceres and other multistakeholder
organizations, we believe that we have arole to play in both decreasing our own
environmental impact as it relates toclimate change and advocating for policies,
legislation and global agreements thatwill help us all transition to a low-carbon
economy.

SCIENCE-BASED TARGETIn 2017, Gap Inc. signed on to the Science
Based Targets initiative (SBTi) to alignour climate goals with the scientificconsensus and core commitment of theParis Agreement to limit global warming
to less than 2 degrees Celcius. The
initiative — a partnership between CDP,
World Resources Institute (WRI), World
Wildlife Fund (WWF), and the UN Global
Compact (UNGC) — includes more than
400 companies. By setting and meetingthese goals, we will do our part to help theworld avoid the most dangerous impacts ofclimate change.

We also joined the SBTi Apparel andFootwear Sector Guidance Working
Group to help define how our industry
should determine Scope 3 emissions andset science-based goals. Together withother global apparel companies, we areresearching and aligning on best practices
and approaches to calculating Scope 3
emissions. Using this methodology, we plan
to submit Gap Inc.’s science-based target
for Scope 3 emissions and finalize a target
in 2019.

CDP CLIMATE CHANGE
See our CDP Climate
Change response for detailed
information on our strategy andperformance, which incorporates
recommendations from theTask Force on Climate-related
Financial Disclosures (TCFD).

We established our 2020 Scope 1 and 2
GHG emissions-reduction goal using ascience-based methodology. To meet thestandards of the SBTi protocol, we arealso establishing a Scope 3 goal to reduce
upstream and downstream emissions,
including in transportation and our supply
chain.

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT50

APPENDIXWASTEWE HAVE A RESPONSIBILITY TO HELP PREVENTGLOBAL WASTE IN OUR OPERATIONS, WHICH CAN
NEGATIVELY IMPACT THE ENVIRONMENT AND ADD
UNNECESSARY COST TO OUR BUSINESS.
In North America, 90 percent of our waste comes fromour retail locations, and we are exploring ways to reduceand divert our packaging waste. By innovating to optimize
packaging and reduce volume, lower business costs andsupport industrywide change, we aim to divert more than
30 million pounds of material from landfill every year.

GOALS + PERFORMANCEGOAL% ACHIEVED

2017 PROGRESS

80% of waste diverted
from landfill across our
U.S. facilities by 2020

47%

47% of waste is diverted
from landfill across our U.S.
facilities

80% of Athleta store
waste diverted fromlandfill by 2020

70%

70% of packaging wastefrom Athleta stores isrecycled

Athleta goal

ON TRACKPROGRESSING

NEEDS ATTENTIONLEARN MORE:
How we're diverting waste

OUR APPROACH
IN 2017, WE SHIFTED OUR APPROACH TO
OUR WASTE-DIVERSION GOAL.
Since landlords control waste management
at 75 percent of our North American
stores, we have historically focused on
engaging our largest landlords to identify
opportunities to improve recycling.
However, recognizing that an industry
solution will take more time, we shifted
our priority in 2017 to explore steps we
can take as a company to innovate our
packaging design and recycling systems toachieve our 2020 goal.
We will continue to engage our landlords
and other retail tenants to develop a
long-term solution. In the short term, we
are working across our business to create

new packaging solutions that reduce
waste and improve the reuse and recyclingof materials. We are also incorporating
questions about waste and recycling into
our regular store audits. Additionally, we areengaging our brands to improve recycling
rates at our stores and working with ourTransportation/Logistics team on how to
use our transport system to ensure that werecycle as much material as possible.
Waste in the retail sector requires bothcompany-specific and industry-level
solutions. Therefore, we engage external
stakeholders to improve recycling capability
and access; work with the retail industry
and suppliers to create new solutions for
packaging and store displays; and engage
our brands, sourcing and transportation
teams to create and implement programs
that help us meet our waste-reduction goal.

GLOBAL SUSTAINABILITY REPORT 2017

PRODUCT52

PRODUCT SUSTAINABILITY

55

RAW MATERIALS

57

CIRCULAR DESIGN: PRODUCT END OF LIFE

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

APPENDIX52

PRODUCTSUSTAINABILITYWE AIM TO DESIGN GREAT PRODUCTS WITHSUSTAINABILITY IN MIND AND COLLABORATEACROSS OUR BUSINESS TO DEVELOP STRATEGIESTO IMPROVE THE SUSTAINABILITY PERFORMANCEOF OUR BRANDS AND PRODUCTS.
Our brands approach sustainability by starting with thematerials they source, the products they design andthe suppliers they work with. They are also beginning tocommunicate directly with customers about our efforts
to produce responsibly.
LEARN MORE:
Our work on product sustainability

76.6M

228

WITH WASHWELL
SINCE 2016

FOR WASHWELL
IN SPRING 2018

LITERS
OF WATER
SAVED

DENIM
STYLESQUALIFIED850+

EMPLOYEESTRAINEDON PRODUCTSUSTAINABILITY
IN 2017

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT53

APPENDIXPRODUCTSUSTAINABILITY
2017 PROGRESS
IN 2017, WE ENHANCED OUR SYSTEMSAND TOOLS TO MORE DEEPLYENGAGE OUR BRANDS AND INTERNAL
BUSINESS PARTNERS.
For example, our Sustainability andcorporate Learning and Development
teams collaborated to deliver and scale
several new tools, including a training
curriculum and guidance on sustainablefibers, sustainable wet processing,recycled materials and sustainability
marketing claims.
PREFERRED FIBER + MATERIALSTOOLKITWe also worked with Textile Exchange,
the Sustainable Apparel Coalition (SAC)and MADE-BY to create a PreferredFiber & Materials Toolkit that rolled out in2018. With this, designers and developers
are better able to select the best fibers
based on sustainability factors, such as
water, chemicals, energy and emissions,land use and biodiversity, social
conditions, animal welfare, potential for
circularity and improved conditions for
women. The toolkit also allows productdesign and development teams toevaluate fibers based on commercial
factors, such as quality, cost, availability
and traceability.

TRAINING
We developed and incorporated
sustainability workshops and a training
curriculum into our companywide
learning and development program. In
2017, we held 10 workshops engaging
approximately 850 product designand development employees. We
also created a monthly newsletter on
product sustainability that reaches
350 product development employees.
CUSTOMER COMMUNICATION
We have begun to communicate
our product sustainability efforts tocustomers through store displays,
product descriptions, product labeling,social media and other publications.
We also engage in educational
campaigns and media around events,
such as World Water Day, andthrough our strategy to source moresustainable cotton, including the Better
Cotton Initiative (BCI). We see theopportunity to increase our consumer
communication in 2018 and beyond.
BRAND GOALS
Two of our brands, Gap and Athleta,
have deepened their commitment
to product sustainability by forming
executive sustainability steeringcommittees, choosing their own
priorities and goals, and leading
strategy workshops on sustainability
with cross-functional teams. To ensureaccountability, both brands havedeveloped a sustainability scorecard
to share updates. Banana Republic
and Old Navy are developing longterm sustainability objectives in 2018
to inform their priorities, goals andcustomer-facing strategies.

GAP BRANDGAP FOR GOOD
In 2017, Gap brand launched its
consumer-facing Gap for Good platform,
highlighting more sustainable fashion.
This builds on Gap’s Earth Day 2017
commitment to source 100 percent of its
cotton from more sustainable resourcesby 2021. Over the past year, the brandhas increased consumer communication
about its sustainability commitments andshowcased its efforts in a Gap for Good
pop-up store in New York City in Fall 2017.
Gap also trained store employees to speak
to the core programs behind Gap for Good.

In 2016, Gap brand pioneered a smart
denim wash program called Washwell thatconserves water in the laundry stage of
production. In 2017, we refined the process,streamlined the program to encourage
wider adoption across brands, andexpanded it to include woven bottoms. In
2018 we are scaling the program to otherbrands in our portfolio.
In 2017, 16 vendors participated in
Washwell, up from four vendors in 2016.
We saved 76.6 million liters of water
through Washwell in 2017, up from 17.9
million liters in 2016.

Gap for Good pop-up store, NYC

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT54

APPENDIXPRODUCTSUSTAINABILITY
ATHLETA
Athleta has a strong commitment toenvironmentally conscious products andsustainable practices. The brand believes
in protecting the Earth as a natural
playground, positively contributing to thedirection of the apparel industry, offering
customers responsible options, driving
demand for sustainable goods, andsupporting the potential of women andgirls.

2020 GOALS
In honor of these values, Athleta
announced four brand-specificcommitments on Earth Day 2017:••

Athleta recycled polyester top

PROTECT RESOURCES: By 2020,
80 percent of Athleta materials will
be made with sustainable fibers.
Over the past two years, the brandhas been working to use morerecycled synthetics, organic cottonand more efficient fabric dyeing
and finishing techniques. Thesematerials, as demonstrated by lifecycle assessments, conserve water,
use less energy, and emit less GHGs
and hazardous chemicals than theirconventional counterparts.
CONSERVE WATER: By 2020,
25 percent of Athleta’s productwill be made using manufacturing
techniques that save water.
The brand is investigating newtechnologies and expanding
existing programs that use lesswater.

•

DIVERT WASTE: By 2020, 80
percent of Athleta’s store waste will
be diverted from landfill.

•

EMPOWER WOMEN: By 2020,
Athleta will impact 10,000 womenand their communities throughprograms like P.A.C.E. and Fair
Trade. Athleta certified the first of
its facilities as Fair Trade in 2016
and debuted its first Fair Trade
Certified products in 2017.

B CORP
In 2017, Athleta began the process to seek
B Corp Certification which it received in
2018. B Corp Certification, awarded by
the nonprofit B Lab, requires a company
to meet rigorous standards of social andenvironmental performance, accountability
and transparency. With this accreditation,
Gap Inc. has become one of the largest
publicly traded retail companies with a
Certified B Corp subsidiary apparel brand.
We plan to learn from Athleta as a casestudy for Gap Inc., providing a benchmark
and roadmap of potential opportunities for
greater social and environmental impact
across the enterprise. The effort to attaincertification required coordination between
Athleta and Gap Inc., executive sponsorshipand building connections among many
teams, including Sustainability, Operations,
Talent, Real Estate, Legal and our Board of
Directors.
We included employees at Gap Inc.
and Athleta headquarters and all of
Athleta’s nearly 150 retail stores in theannouncement, teaching them about

the certification through signage, teammeetings and store ‘chat-ins’. In 2018,
we are creating a B Corp GovernanceCommittee to build momentum toward
Athleta’s goals and improve our score in
the coming years, as well as continue toeducate and engage our employees.
We will also share the news via ourcustomer channels, including social media,
retail websites, stores and catalogs.
Athleta is using this platform to start
conversations and embark on a journeyof making business a force for good — amission that the brand intends to promotethroughout the industry.

CUSTOMER ENGAGEMENT
Athleta started using simple, clear symbols
in catalogs to indicate which products
are Fair Trade and which are sourced
from facilities that participate in our
P.A.C.E. program. The brand also shares
its sustainability efforts on athleta.com,
including its five core values and progress
toward its 2020 sustainability goals.

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT55

APPENDIXRAW
MATERIALSWE BELIEVE GREAT PRODUCTS ARE CREATED WITHSUSTAINABILITY AT THEIR CORE — WHICH MEANSUSING MORE SUSTAINABLE RAW MATERIALS TO
MAKE OUR CLOTHES.
We give our brands license to improve the sustainabilityof their products by selecting the best raw materials
that meet the performance of their products, while also
meeting our standards for social and environmental
sustainability. We are constantly refining and innovating
our strategy to source and use more sustainable raw
materials.
LEARN MORE: How we source
more sustainable raw materials

GOALS + PERFORMANCEGOAL% ACHIEVED

2017 PROGRESS

Eliminate the use of woodderived fibers sourced fromancient and endangered
forests by 2020

Reporting in progress

100% of cotton sourced
from more sustainablesources by 2021

Reporting in progress

80% of Athleta materials
made with sustainablefibers by 2020

44%

35% of Spring 2018 productwas made with sustainablefibers25% of Athleta productmade using techniquesthat save water by 2020

4%

1% of product was madeusing techniques that savewater

New in 2017/2018
Gap brand goal

ON TRACKPROGRESSING

NEEDS ATTENTION

Athleta goal

Cotton gin workers, India (CREDIT: Better Cotton Initiative)

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT56

APPENDIXRAW
MATERIALS
2017 PROGRESS
IN 2017, WE REFINED OUR RAW
MATERIALS STRATEGY TO FOCUS ON
THE FOUR FIBERS THAT ACCOUNTFOR APPROXIMATELY 97 PERCENTOF OUR FIBER CONSUMPTION:
COTTON, POLYESTER, NYLON, AND
MAN-MADE CELLULOSICS, SUCH AS
RAYON AND MODAL.
Historically, fiber traceability has beena challenge as fabric sourcing is done
separately from supplier selection.
In 2017, we improved our ability to
track our fiber consumption to help
meet our goals. With these updates,
and in partnership with our Sourcing
Strategy team, we’ve improved our
fabric management systems to provide
detailed data on our fiber consumption
and volumes.

2017 SUSTAINABLE FIBER
SOURCING
FIBER TYPE

% OF FIBER TYPE

Natural Fibers
Organic cotton
BCI cotton		
Recycled wool

0.1% of cotton
20.8% of cotton
3.9% of wool

Synthetics
Recycled nylon
Recycled polyester

1.1% of nylon
1.7% of polyester

Man-Made Cellulosics
Lenzing modal
2.5% of rayon
TENCEL		
3.9% of rayon

COTTONAs we continue to evolve our sourcing
practices, we are also deepening ourunderstanding of the regions from which
we source, with a focus on risks in watersensitive areas and other impacts arisingfrom climate change. We have built acomprehensive evaluation of cottonsourcing risks — the crop is especiallyvulnerable to water-related impacts
as it is primarily grown in high waterstress locations, such as India, China andPakistan. We joined the Better Cotton
Initiative (BCI) in 2016 as part of ourongoing efforts to build resiliency byintegrating more sustainable materials into
our product design and sourcing practices,and Gap brand aims to use 100 percent
more sustainable cotton by 2021. To us, thisincludes Better Cotton, organic, recycled
and American-grown cotton. Across all ofour brands, Gap Inc. sourced 116 million
tons of BCI cotton in 2017.

SYNTHETICSWe also use synthetic materials in our
products, including polyester, spandex andnylon, which provide essential performance
properties. However, synthetics are often
derived from nonrenewable, petroleumbased sources. They also have fewer
end-of-life solutions than natural fibers
because they may never biodegrade. To
address these challenges, we’re taking
steps to ensure that we’re sourcing moresustainable synthetic fibers. In 2017,
we began exploring more sustainable
polyester options, including recycled
polyester. After working with externalgroups, including the Textile Exchange
Recycled Polyester Working Group andBiosynthetics Working Group in 2016, wehave been gathering data for a life-cycle
assessment and formed an internal
working group to define the challenges andopportunities of recycled polyester andsupplier mapping.

MAN-MADE CELLULOSICS
In 2017, we created a companywide policy
to eliminate our use of wood-derived fibers
from ancient and endangered forests by
2020. This commitment helps protect
critical forests and supports our otherefforts to tackle climate change, as forest
ecosystems are vital natural resources that
promote biodiversity, protect watersheds
and help mitigate the release of carbon
dioxide to the atmosphere. Our new
policy aims to ensure that our suppliers
do not use ancient, endangered, highconservation or high-carbon value forest
areas to make cellulose-based textiles,
including rayon, modal, viscose and lyocell.
We developed our policy in partnershipwith Canopy’s sustainable fashion andforestry initiative, CanopyStyle.
To achieve our commitment, our Global
Sustainability and Global Supply Chain
teams are partnering with mills to identify
our raw-material suppliers in order toeliminate sourcing of wood-derived fibers
from ancient and endangered forests.
We are working with those suppliers
to go through CanopyStyle’s audit andremediation plan, and to develop trials
using innovative fabrics. In partnership with
our major suppliers, we are also exploring
ways to integrate recycled cellulosics into
our raw-materials pool.

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT57

APPENDIXCIRCULAR DESIGN:PRODUCT END OF LIFE
IN ORDER TO CREATE TRULY SUSTAINABLE FASHION,WE RECOGNIZE THAT WE MUST ADDRESS THE FULL LIFECYCLE OF OUR GARMENTS, FROM RAW MATERIALS TOEND OF LIFE — AND BACK AGAIN.
The environmental impact of a product at the end of its life islarge — the majority of textiles ultimately end up in landfill orare incinerated. We understand that we must close the loop
and create a system that uses recycled inputs and reduces
waste. To do so, we are building programs to address
product end of life and create circular design systems that
reduce waste and increase recycling, upcycling and reuse.
LEARN MORE:
How we map the product life cycle

INDUSTRY COLLABORATIONTHERE ARE OPPORTUNITIES FOR
INDUSTRYWIDE COLLABORATION TO
FIND INNOVATIVE SOLUTIONS TO MANYOUTSTANDING ISSUES.
We are partnering with leaders in thecircular economy, including the Ellen
MacArthur Foundation, Global Fashion
Agenda (GFA) and Fashion Positive, toexplore circularity opportunities. In 2017,
we attended the Ellen MacArthur Circular
Fibres Initiative workshop and contributed
to its report, addressing circularity andsolutions for product life extension and endof life solutions. This will set the foundationfor our strategy, alongside an industry
partnership that is seeking large-scaleinnovation.

As part of our 2020 Circular Fashion
Commitment with GFA, we have set threecommitments to achieve by 2020:•

We will train our cross-functional
product teams for each of our brands
on circular design techniques and bestpractices.

•

We will help to increase the volumeof used garments collected globally
through participation in precompetitive, industry-led collection
pilots.

•

We will identify the most promising
recycling technologies for postconsumer materials across multiple
product categories and start scaling
them in our supply chain.

Lenzing modal, Athleta

GLOBAL SUSTAINABILITY REPORT 2017

APPENDIX59

GOALS + PROGRESS DETAIL

61

SASB REFERENCE TABLEOVERVIEW

STRATEGYSOCIALENVIRONMENTPRODUCT

APPENDIX:GOALS + PROGRESS DETAILCATEGORYAPPENDIX

59

Holding ourselves accountable is fundamental to our approach to sustainability.
Below are key goals, our progress to date and where we are heading in the future.

TARGETYEAR

STATUSDETAILS

Pilot and commit to expand programs that provide advance notice andstable, flexible scheduling to store employees

2017

CompleteWe've taken steps to reduce on-demand scheduling and to provide schedules
sooner throughout our brands.

Ensure female representation at all leadership levels is meaningfully above
external norms

Ongoing

Tracking

Women make up 76% of our employees, 68% of our global store managers, 50%
of our leadership (VP and up) and serve equally as our brand leaders.

60% of This Way Ahead participants report increased on-the-job skills andconfidence as a result of their internships

2018Complete

97% of youth report increase in job skills and 66% of youth report increase inconfidence.

65% of This Way Ahead interns receive offers to continue as Gap Inc. sales
associates upon the completion of their internships

2020

Complete

77% of interns received job offers in the most recent year. As we evolve theprogram, our goals have shifted.

10,000 youth participate in This Way Ahead

2020

New - 2017

3,900 youth completed the program as of fiscal 2017. Expansion to over 30 cities
has broadened our reach, allowing us to scale.

5% of annual new store hires are from This Way Ahead

2025

New - 2017668 new store hires (0.66% of total new hires) were from This Way Ahead in 2017.

All teams have a Community Leader (CL) and all CLs organize and lead atleast three volunteer projects per year

2018

Complete

62% of teams have a CL; 74% of CLs led at least three volunteer projects.

All Community Leaders form a long-term relationship with one nonprofit
partner to maximize volunteering impact

2018

Complete

81% of CLs have established relationships.

Support $15 million in employee-driven community investment per year

Ongoing

Tracking$14.8 million in employee driven community investment in 2017, made up of
employee volunteer hours, financial donations, volunteer hours and Gap Inc.
matching of time and money.

Expand P.A.C.E. to a suite of learning programs that provides multiple entry
points for addressing the needs of adolescent girls and women leaders

2020

Complete

We expanded the program to bring new educational opportunities to girls ages 11
to 17 in community settings.

Improve the lives of 1 million women and girls in Gap Inc.’s supply chain andother manufacturing and community settings through P.A.C.E.

2022

Adjusted

122,500 women have participated through 2017. Our timeline shifted due toscaling strategy.

10,000 women empowered through P.A.C.E. and Fair Trade

2020

Tracking

2,503 women have been reached through P.A.C.E. and Fair Trade in Athleta
supplier facilities.

GOAL

SOCIAL
Employees

This Way Ahead

Community
Investment

P.A.C.E.

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTAPPENDIXPRODUCT60

APPENDIX:GOALS + PROGRESS DETAILTARGETYEAR

STATUSDETAILS

Partner with Verité and strategic suppliers to measure workers’ sense of value
and engagement at work, and launch projects aimed at improving 20,000
workers’ engagement. Publicly report on findings and impact, and share bestpractices with all Gap Inc. suppliers

2018

Complete

We implemented our Workforce Engagement Program at 89 facilities
representing 220,000 workers with Verité and Good World Solutions.

100% of strategic suppliers of branded apparel self-report their sustainability
performance in Gap Inc.’s global sustainability data system

2018

Complete

As part of the Social and Labor Convergence Project (SLCP), we are helping tocreate a shared tool for footwear and apparel companies to assess facilities’social and labor performance. This represents a more unified effort to selfreport sustainability performance.

100% of supplier facilities producing branded apparel are rated yellow or green

2020

Tracking

95% of supplier facilities were rated yellow or green.

100% of Tier 1 suppliers transition to digital wage payments

2020

New - 2018

68% of suppliers are already using checks or bank transfers.

200 supplier facilities participate in our Workplace Cooperation Program

2020

New

69 supplier facilities are participating.

50% absolute reduction in Scope 1 and 2 GHG emissions in our owned andoperated facilities globally, from a 2015 baseline

2020

Tracking

We achieved a 14% reduction in emissions from a 2015 baseline.

80% of waste diverted from landfill across our U.S. facilities

2020

Tracking

Pilots are underway; we are currently reassessing our approach to reducing
waste production and improving diversion.

80% of Athleta waste diverted from landfill

2020

Tracking

Athleta is currently recycling 70% of packaging waste from its stores.

1 billion liters of water saved in manufacturing

2017

Complete

Gap Inc. suppliers saved 2.4 billion liters of water in 2017.

10 billion liters of water saved in manufacturing, from a 2014 baseline

2020

New - 2018

Gap Inc. suppliers have saved over 3.3 billion liters of water since 2014.

Work toward zero discharge of hazardous chemicals in our supply chain
through membership in the ZDHC 2020 Roadmap

2020

Tracking

Strategic facilities must comply with the ZDHC Manufacturing Restricted
Substances List and verify through wastewater testing.

Eliminate the use of wood-derived fibers from ancient and endangered forests

2020

New - 2017

Our teams are partnering with mills to identify our raw-material suppliers inorder to go through CanopyStyle’s audit and remediation plan, and to develop
trials using innovative fabrics.

100% of cotton sourced from more sustainable sources

2021

New - 2017

Sourcing of more sustainable cotton increased over 10 times in 2017; we willreport on percentage progress toward our goal in 2018.

80% of Athleta materials made with sustainable fibers

2020

New - 201735% of Spring 2018 product was made with sustainable fibers.

25% of Athleta product made using techniques that save water2020

Tracking

1% of product was made using techniques that save water in 2017.

CATEGORY

GOAL

Supply Chain

ENVIRONMENTPRODUCTGLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTAPPENDIX:SASB REFERENCE TABLETOPIC

ACTIVITY METRICCATEGORY

UNIT OFMEASURE

Number of (1) Tier 1 suppliers and (2)suppliers beyond Tier 1

Quantitative

NumberPRODUCT

APPENDIX

61

The Sustainability Accounting Standards Board (SASB) is an independent, private sector standardssetting organization dedicated to enhancing the efficiency of the capital markets by fostering high-quality
disclosure of material sustainability information that meets investor needs. This table references the Standard
for the Apparel, Accessories & Footwear industry as defined by SASB’s Sustainable Industry Classification
System (SICS) with the location of that information in Gap Inc.’s 2017 Global Sustainability Report (GSR) andgapincsustainability.com.
CODE

DATA

REFERENCE

ACCG-AA000.A

As of Feb. 3. 2018, (FY’17), we sourced from 855 Tier 1
branded apparel supplier facilities, defined as directrelationship cut and sew facilities and their associatedembroidery, laundry and screen printing facilities.

Social: Supply Chain
GSR: Supplier Sustainability (p.26)
GSR: Mills + Laundries (p.43)

We have identified 179 Tier 2 mill suppliers which
represent about 80% of business volume.
Managementof Chemicals in
Product

Environmental
Impacts in the
Supply Chain

Description of processes to maintaincompliance with restricted substances
regulations

Discussion
and Analysis

Discussion of processes to assess andmanage risks and/or hazards associatedwith chemicals in products

Discussion
and Analysis

Percentage of (1) Tier 1 supplier facilitiesand (2) supplier facilities beyond Tier 1 incompliance with wastewater discharge
permits and/or contractual agreements

Quantitative

N/A

Environment: Reducing Chemicals

CG-AA250a.1

GSR: Chemical Management (p.46)
N/A

Environment: Reducing Chemicals

CG-AA250a.2

GSR: Chemical Management (p.46)
Percentage (%)

CG-AA430a.1

100% of Tier 1 supplier denim laundries havewastewater meeting or exceeding legal requirements,
in accordance with our Water Quality Program.

Environment: Mills + Laundries
GSR: Water Stewardship (p.43)

Supplier Facilities beyond Tier 1• N/A
By 2020, we expect strategic Gap Inc.-approved
mill facilities to participate in and report for the
Sustainable Apparel Coalition (SAC) Higg FEM 3.0 and
Zero Discharge of Hazardous Chemicals (ZDHC) MRSL
and Wastewater Guidelines.

Labor Conditionsin the Supply
Chain

Percentage of (1) Tier 1 supplier facilitiesand (2) supplier facilities beyond Tier 1that have completed the Sustainable
Apparel Coalition’s Higg Index Facility
Module (Higg FEM) assessment oran equivalent environmental dataassessment

Quantitative

Percentage of (1) Tier 1 supplier facilitiesand (2) supplier facilities beyond Tier 1that have been audited to a labor codeof conduct, (3) percentage of total audits
conducted by a third-party auditor

Quantitative

Percentage (%)

Percentage (%)

CG-AA430a.2

CG-AA430b.1

100% of Tier 1 suppliers were requested to complete
the SAC’s Higg Index Facility Module.
• 94% of active Tier 1 branded apparel suppliers
completed the 2017 data request
Suppliers beyond Tier 1 requested to complete the Higg
Index Facility Module• 108 invited Tier 2 mill facilities completed the 2017
data request

Measuring Our Progress:
Environmental

90.4% of Tier 1 branded apparel suppliers were audited
to our Code of Vendor Conduct during the fiscal year.
• 22% of audits conducted by third-party assessor,
primarily through ILO Better Work

Measuring Our Progress: Working
Conditions

GSR: Water Stewardship (p.43)

Social: Working Conditions

GLOBAL SUSTAINABILITY REPORT 2017

OVERVIEW

STRATEGYSOCIALENVIRONMENTAPPENDIXPRODUCT62

APPENDIX:SASB REFERENCE TABLETOPIC

ACTIVITY METRICCATEGORY

UNIT OFMEASURE

CODE

Labor Conditionsin the Supply
Chain (continued)

DATA

REFERENCE•

Gap Inc. Code of Vendor Conduct(COVC)

Facilities with a consistently low non-conformance
rate may be assessed on a biannual basis; allfacilities are audited prior to initial production.

Gap Inc. Supplier Factory List
Suppliers beyond Tier 1 audited to Code of Vendor
Conduct• N/A
In March 2017, as part of our Mill Sustainability
Program, we communicated to our entire mill baseour expectations of their social and environmental
performance, which are requirements of doing
business with us.
Priority non-conformance rate andassociated corrective action rate forsuppliers’ labor code of conduct audits

Quantitative

Rate

CG-AA430b.2

As of fiscal year 2017, 5% of facilities received red
ratings during assessments against our Code ofVendor Conduct.
For issues open as of 2/1/2017, 91% of corrective actionplans were resolved by 2/3/2018.

Raw Material
Sourcing

Environment: Mills + Laundries
GSR: Assessment + Remediation(p.29)

Measuring Our Progress: Working
Conditions
GSR: Assessment + Remediation(p.29)

Discussion of greatest (1) labor and (2)environmental, health, and safety risks inthe supply chain

Discussion
and Analysis

N/A

CG-AA430b.3

Social: Working Conditions
GSR: Supplier Sustainability (p.33)
Environment: Supply Chain
GSR: Water Stewardship (p.40)
GSR: Chemical Management (p.46)

Discussion of environmental and social
risks associated with sourcing priority
raw materials

Discussion
and Analysis

N/A

CG-AA440a.1

Environment: Raw Materials

Percentage of raw materials third-party
certified to an environmental and/or social sustainability standard, bystandard

Quantitative

GSR: Raw Materials (p.55)
Percentage (%)
by weight

CG-AA440a.2

FIBER TYPE

% OF FIBER TYPE

Environment: Raw Materials

Natural Fibers
Organic cotton
BCI cotton		
Recycled wool

0.1% of cotton
20.8% of cotton
3.9% of wool

GSR: Raw Materials (p.55)

Synthetics
Recycled nylon
Recycled polyester

1.1% of nylon
1.7% of polyester

Man-Made Cellulosics
Lenzing modal
2.5% of rayon
TENCEL		
3.9% of rayon
GLOBAL SUSTAINABILITY REPORT 2017