Contents

Strategy
About this Report__________________________________________ 01
About Gap Inc.__________________________________________________ 01

Letter from Our CEO_______________________________________ 02
Business Strategy_________________________________________ 05
Our Commitment to Sustainability___________________________________ 05
How We Support the Sustainable Development Goals_________________ 08
Advancing Progress Across Our Value Chain_________________________ 09
Assessing Materiality______________________________________________ 09
Our Management Approach_______________________________________ 12
Acting with Integrity_______________________________________________ 16
Sustainability Policies_____________________________________________ 18
Executive Q & A _________________________________________________ 20

Goals and Progress________________________________________ 23

PeopleAdvancing People and Communities________________________ 26
Context and Approach____________________________________________ 27
Employees and Workforce_________________________________________ 28
Our Employee Experience_________________________________________ 35
Youth Opportunity: This Way Ahead_________________________________ 40
Community Investment and Volunteering_____________________________ 43
Empowering Women: P.A.C.E._____________________________________ 45

Improving Factory Working Conditions______________________ 49
Context and Approach____________________________________________ 50
Our Policies and Commitment to Human Rights_______________________ 52
Collaborating on Supply Chain Sustainability__________________________ 63
Assessment and Remediation______________________________________ 68

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Environment
Water Stewardship________________________________________ 71
Context and Approach____________________________________________ 72
Women + Water_________________________________________________ 74
Improving Manufacturing in Mills and Laundries _______________________ 76
Chemicals_______________________________________________________ 79

Product Sustainability______________________________________ 80
Context and Approach____________________________________________ 81
Mapping the Product Life Cycle____________________________________ 82
Sustainably Sourcing Raw Materials_________________________________ 85
Addressing Water Use with Design Choices__________________________ 86
Integrating Sustainability Into Our Brand Decisions_____________________ 87

Operational Eco-Efficiency_________________________________ 89
Context and Approach____________________________________________ 90
Climate and Energy_______________________________________________ 90
Waste__________________________________________________________ 92

Appendix
GRI Content Index________________________________________________ 94
UN Global Compact: Communication on Progress___________________ 101
Public Reporting Working Group Statement_________________________ 104

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Reporting Fiscal Years
2014

2015

2016

2017

About Gap Inc.

About this Report

Gap Inc. is one of the world’s leading specialty retailers, based

This report covers Gap Inc.’s global operations for the two fiscal

in San Francisco, California. As of January 28, 2017, we had

years ending January 30, 2016 (fiscal 2015) and January 28,

approximately 135,000 employees and approximately 3,200

2017 (fiscal 2016). Our last report covered the fiscal years 2013

company-owned stores and 459 franchise store locations.

and 2014.

We offer apparel, accessories and personal care products formen, women and children under the Gap, Banana Republic,

Previous reports can be accessed online.

Old Navy, Athleta and Intermix brands. In December 2016, we

We sought to prepare the report in accordance with the coreacquired Weddington Way.

option of the Global Reporting Initiative’s (GRI) Standards.

Gap Inc. is an omni-channel retailer, with sales to customers

The Public Reporting Working Group has reviewed and provided

both in stores and online, through company-operated andfeedback on our sustainability report. The results of theirfranchise stores, websites and third-party arrangements. Gap

assessment can be found at the end of this report. We have

Inc. has company-operated stores in the United States, Canada,

not conducted external assurance for this report. Gap Inc. is

the United Kingdom, France, Ireland, Japan, Italy, China, Hongcommitted to the United Nations Global Compact (UNGC) Ten

Kong, Taiwan and Mexico. We also have franchise agreements

Principles and this report serves as our Communication onwith franchisees to operate Gap, Banana Republic and Old Navy

Progress (COP).

stores throughout Asia, Australia, Europe, Latin America, thePlease direct any questions to press@gap.com.

Middle East and Africa.
Most of the products sold under our brand names aredesigned by us and manufactured by independent sources.
We also sell products that are designed and manufactured
by branded third parties, especially at our Intermix brand. Wepurchase private-label and non-private-label merchandisefrom suppliers with approximately 800 facilities in about 30
countries. Approximately 25% and 23% of our fiscal 2016
purchases, by dollar value, were from facilities in Vietnam
and China, respectively.
More information is available online in our annual filings.

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Letter from Our CEO
Good business can change the world.
When Doris and Don Fisher opened the first Gap store in San Francisco in 1969, they
didn’t expect to transform retail. They just couldn’t find a pair of good jeans that fit.
From that single store to today’s global business, Gap Inc. is synonymous with equality,community and laid-back American style. Good business – the kind that puts people atits center – has the potential to change the world, no matter how small it starts.
At Gap Inc., we still sell good jeans, and we still believe in good business. We’re alsopart of a world that’s changed a lot since 1969. Today, customers expect more from a
product. They want to know the story behind it. Where did it come from? Who madeit? Was it created in a fair, safe and environmentally responsible way? What was theimpact on people and the planet?
We owe it to our customers to ask ourselves those same questions. Some of theanswers have brought us back to our core values, and some have compelled us tofind new solutions and build new partnerships. Gap Inc. is one of the world’s leading

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global apparel retailers. Our global scale affords us the opportunity and responsibility
to make business more sustainable, not just within our own company, but across theindustry as well. Addressing the apparel industry’s systemic challenges is a big job, so
we’re collaborating with suppliers, governments, NGOs, multilateral organizations andindustry leaders to find solutions that work. Our success depends on our people: theones who design, make and sell our products, and the ones who buy them.
To see this progress in action, you can visit Gap and buy a pair of Gap for Good denim,
made with 20% less water than conventional manufacturing methods, saving nearly
65 million liters of water per year, or about as much water as the city of San Francisco
consumes every day. By 2021, 100% of the cotton you buy from Gap will be moresustainably sourced.

Good business—the kind that puts
people at its center—has the potential
to change the world, no matter how
small it starts.
You can go to Athleta for clothing designed by and for women athletes, and activewear
made from organic cotton and recycled polyester. By 2020, 80% of Athleta’s materials
will be made with sustainable fibers.
You can go into one of our flagship Old Navy, Gap, or Banana Republic stores andthere’s a good chance you’ll meet a graduate of This Way Ahead, our job training andpaid internship program for 16-24 year olds from low income communities. By 2025,
5% of our entry-level sales associates will be hired through This Way Ahead – that’s
thousands of young people helping to shape the future of our company.
You can travel to one of the factories we partner with, and you’ll meet one of the
65,000 graduates of P.A.C.E., Gap Inc.’s life skills and education program. By 2020,
one million women from factories and communities around the world will havecompleted the program. That’s one million women with greater confidence, new skills
and a brighter future.
If you can’t travel to one of these factories, you can go to www.gapincsustainability.
com and see a published list of all our suppliers. You can also learn about ourpartnerships with organizations like ILO Better Work, Verité, and the Sustainable
Apparel Coalition. With them, we’re working to improve our supply chain and amplify
the voices of garment workers. Cooperative relationships between factory workers andmanagers are good for business, plain and simple.

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We’ve made good progress. I’m proud of this work. But there’s so much more weneed to do. And it’s not just about the clothes we make, it’s about our impact on
the world we live in. The human and environmental threat of climate change is morepresent than ever, and we need bold action from communities, companies andcustomers to move towards a low-carbon economy.
By 2020, we’re reducing absolute greenhouse gas emissions from our global owned
and operated facilities by 50%, and we’re diverting 80% of our waste from landfill for
our U.S. facilities. To make that happen, we’re monitoring our energy use, pursuing
new approaches to increase efficiency, and looking for ways to reduce waste and savemoney in the process.
We’re in a time of great transition, from a changing retail landscape to a changing
climate, but there’s one thing that hasn’t changed since 1969: good people makegood business. While much work lies ahead of us, our collective commitment toaction will not waver. Ultimately, our customers are the ones with the real power
to change the world, every time they purchase more sustainable, humane andresponsible products. Thanks to them, we’re facing the future with creativity, vision
and a clear sense of purpose.

Art Peck
CEO, Gap Inc.

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Business Strategy
As Doris and Don Fisher built Gap Inc., they imagined a company thatwould also create opportunities for the people and communities touchedby their business. In the decades since, we have been on a journey torealize this vision.
Our Commitment to Sustainability
We strive to ensure that the people who make our products work in safe, fairconditions. We are committed to minimizing our environmental footprint. And weare dedicated to supporting the communities where we operate. We do this bycollaborating throughout our value chain and across government, business and civilsociety to address systemic challenges. We also seek to engage our employees andcustomers across all our brands in our effort to build a more sustainable world.

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The Short Story

We are committed to augmenting business value, minimizing our environmental impact

Sustainability Strategy

and working with all sectors to achieve progress on global goals. That’s why we have•• Our sustainability strategy aligns with theglobal sustainable development agenda,
including the United Nations (UN) Guiding
Principles on Business and Human Rights,
the UN Sustainable Development Goals(SDGs) and the Paris Agreement on
climate change.
•• We are integrating sustainability more deeply
into our business to create greater impact
across our value chain.
•• We focus on issues where we have thegreatest opportunities for influence andimpact: advancing people and communities,
improving working conditions andwater stewardship.

aligned our sustainability strategy with the United Nations (UN) Global Sustainable
Development Agenda. Frameworks such as the UN Guiding Principles on Businessand Human Rights, the UN Sustainable Development Goals (SDGs) and the Paris
Agreement on climate change have established a foundation that informs how businesscan contribute value to the planet and society. Using the global agenda as our guide,
we have identified issues that are the most material to our business, and we apply ourcompany’s core strengths, reach and skills development to maximize our impact.
One of the key frameworks we use is the UN Guiding Principles on Business andHuman Rights, which defines the private sector's responsibility to protect, respect andremedy human rights. The principles outline the rights and needs of vulnerable people
and emphasize how women and men may face different risks. Our Human Rights
Policy is based on the Guiding Principles to honor and protect the human rights of ourapproximately 135,000 employees and the millions of people involved in our supply
chain. We want to ensure that all of our employees and the people in our partners’
facilities work in safe, fair conditions, and that they are treated with dignity and respect.

Using the global agenda
as our guide, we haveidentified issues that are
the most material to ourbusiness, and we apply
our company’s corestrengths, reach and skills
development to maximize
our impact.
Alongside hundreds of companies, we recognize the urgent need to address global
climate change caused by anthropogenic greenhouse gas emissions, as well as otherenvironmental impacts caused throughout our value chain. In addition to tracking
and reporting on goals aimed at ensuring a healthy planet, we have added our voice
to the We Mean Business coalition. As a company, we are committing to leadershipon climate action, which complements our ambitious work protecting and ensuring
access to the world's water resources.

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We are also proud to support the UN SDGs, which codify the global community’scommitment to ending poverty, protecting the planet and ensuring prosperity for all.
To meet these goals, everyone—from business to government to civil society—must
do their part.
In 2015, after the SDGs were adopted, we assessed Gap Inc.’s opportunities toadvance progress on the SDGs. This assessment revealed that our company’ssustainability efforts align most closely with eight of the goals. In particular, we havea leadership opportunity to support SDG 8, Decent Work and Economic Growth,through our Workplace Cooperation Program, and our youth-employment programThis Way Ahead. Some of our leading programs, such as our P.A.C.E. women's
empowerment program, support SDG 5, Gender Equality, as they’re focused onachieving gender equality and empowering all women and girls.
This assessment also highlighted how we are advancing SDG 12, Responsible
Consumption and Production, for the apparel retail industry. We do this through efforts
such as our Mill Sustainability Program (see page 77), our goals to eliminate hazardous
chemicals (page 80), significantly reduce our carbon emissions (page 91), waste (page92) and water consumption (page 71).

We are proud to support the UN SDGs, which codify the global community’scommitment to ending poverty, protecting the planet and ensuring prosperity
for all. To meet these goals, everyone—from business to government to civilsociety—must do their part.

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How We Support the Sustainable Development Goals
We aim to create opportunities for our employees, for women and girls around the world impacted by the apparel supply chain, andfor young adults seeking to begin their career, so they can reach their goals and fulfill their greatest potential.

1. End poverty in all its forms everywhere.

10. Reduce inequality within and among countries.

2. End hunger, achieve food security and improved
nutrition and promote sustainable agriculture.

11. Make cities inclusive, safe, resilientand sustainable.

3. Ensure healthy lives and promote well-being for
all at all ages.

12. Ensure sustainable consumption andproduction patterns.

4. Ensure inclusive and equitable quality
education and promote lifelong learning.

13. Take urgent action to combat climate change
and its impacts.

5. Achieve gender equality and empower all
women and girls.

14. Conserve and sustainably use the oceans,seas and marine resources.

6. Ensure access to water and sanitation for all.

15. Sustainably manage forests, combat
desertification, halt and reverse land degradation,
halt biodiversity loss.

7. Ensure access to affordable, reliable,
sustainable and modern energy for all.

16. Promote just, peaceful and inclusive societies.

8. Promote inclusive and sustainable economic
growth, employment and decent work for all.

17. Revitalize the global partnership forsustainable development.

9. Build resilient infrastructure, promotesustainable industrializationand foster innovation.

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Sustainability Investments in Our Value Chain

Programs in progress

Product Sustainability
Water Stewardship

Environmental Performance Management
Capability Building
Assessment and Remediation
Empowering Women: P.A.C.E.
Water Stewardship

Climate and Waste

Design and D evelopment

Manufacturing (Tier 2)Distribution

Raw Materials andProcessing (Tier 3)
Water Stewardship
Empowering Women: P.A.C.E.
Product Sustainability

End of Life

Product and Finishing (Tier 1)

StoresClimate and Waste
Climate and Waste
Water Stewardship
Youth Opportunity: This Way Ahead
Empowering Women: P.A.C.E.
Product Sustainability
Assessment and Remediation
Capability Building
Environmental Performance Management

Assessing Materiality
Our reporting is built on transparency, impact and accountability. We conducteda materiality analysis to ensure our strategy and reporting is focused on the mostimportant current and future economic, environmental and social impacts, as well as thepeople and communities we touch. We use our materiality assessment in four ways:
1. to identify the most material sustainability issues for Gap Inc. in terms ofbusiness value, risks and opportunities for long-term planning
2. to understand how sustainability and key business issues intersect
3. to inform future sustainability commitments and resource allocation
4. to support Gap Inc.’s engagement with external stakeholders

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9Some findings affirmed our current direction, particularly those related to the importanceof our employees and supply chain workers, as well as our role in water stewardship.
Other arising issues are driven by the trend toward increased transparency, which
is changing the business environment as consumers and stakeholders seek greater
openness about products and services. We are adapting to these important advancesand continuing to manage our most material topics.

Gap Inc. Material Issues
The garment industry is estimated to be the second highest polluting industry after oil.
It is also a massive global employer, with over 60 million jobs throughout the supply
chain, according to the International Labour Organization (ILO). Underscoring thesefacts, the World Economic Forum’s 2015 Global Risk Outlook names climate change,
water and unemployment/underemployment as high global risks to both governments
and businesses with “significant negative impacts within in the next 10 years.”
These issues, among the others listed below, must be addressed to ensure thesustainability, resilience and basic viability of Gap Inc.’s continued business.

Governance andOperating Context

Human Rights
and Social Impacts

Resource Use,
Scarcity and Impacts

Corporate GovernanceWorker Right and Well-Being

Water

Country/ Regional Legal

Income, Wages and Inequality

and Economic Conditions

Radical Transparency

Technology andProduct Innovation

Toxic Management

Human Capital

Energy andand Development

Climate Stewardship

Diversity and Inclusion

Waste and End of Life

Reputation andResiliency

Chemicals andConsumer Engagement

Sustainable Materials Sourcing

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10Core Sustainability
Focus Areas

Advancing People and Communities
We could not succeed as a company without the exceptional
people who support our business—from the employees

We recognize that we cannot lead on
every issue; given our business operations
and strengths, we prioritize our greatest
opportunities for leadership to maximize
impact. Gap Inc.’s sustainability materiality
assessment set our overarching sustainability
agenda and helped establish our fivecore focus areas: Advancing People andCommunities, Improving Factory Working
Conditions, Water Stewardship, ProductSustainability and Operational Eco-Efficiency.

in our retail stores, to the workers on the factory floors to
the communities near our operations. We aim to create
opportunities for our employees, for women and girls aroundthe world impacted by the apparel supply chain, and for young
adults seeking to begin their career, so they can reach theirgoals and fulfill their greatest potential.

Improving Factory Working Conditions
We partner with all our suppliers to provide safe, fair andhealthy working conditions for the individuals who create ourclothes. Together, we’re building the capacity of our suppliers tomanage and improve their practices, designing industry-leading
programs to improve worker and manager relations, assessing
and improving working conditions to meet legal and international
standards and increasing transparency about our efforts.

Water Stewardship
Water is essential for our business and for the people andcommunities where we operate. We look for ways to address
water impacts at all product life stages. Our programs aim to
reduce water use, eliminate discharge of hazardous chemicals
and work directly with women to improve access to clean,safe water.

Product Sustainability
Our integrated commitment to sustainability begins with ourdesign teams and the development of products that look good,
have lower impact on the environment and bring confidence
to our customers. Since the materials in our clothes greatly
contribute to each garment’s environmental impact, our design
and production decisions have significant power to make our
products more sustainable.

Operational Eco-Efficiency

LED

A dedication to reducing the impacts of our owned andoperated stores, distribution centers and offices means
reducing our operational greenhouse gas emissions and waste
production, and working with our logistics and procurement
partners to identify practices that are more efficient and havelower environmental impact.

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Our Management Approach
Given our size, we feel a great responsibility to the planet and to the people who
make our clothes. Our global scale also provides an opportunity to make a realdifference. Our aim is to reimagine the way business can change the world. We aredoing this by supporting long-term business performance while creating greater
equality and opportunity, developing social and environmental innovations that allow
people to fulfill their potential, and scaling these innovations by integrating them into
our business and products.
In addition to aligning our goals with the global sustainable development
agenda, we follow an intentional approach. For all of our social andenvironmental programs, we:

1
2
3
4

Integrate Sustainability into Our Business
By integrating sustainability into our business as a core driver, we create
wider accountability for sustainability goals. This allows us to leverage ourtalent across all of Gap Inc. to achieve our ambitious sustainability goals.

Set Ambitious Goals
By setting ambitious goals, we establish focus on key indicators across
our company so that we can measure our progress on delivering real
benefits to the people and communities we serve.

Deliver on Our Commitments
By delivering on our commitments, we contribute in a meaningful way
to the people and places we rely on for our business—which also
helps our company succeed.

Form Partnerships with Civil Society, Governments andOther Sectors to Increase Collective Impact
By partnering with organizations from the local to the global level, we
are able to can deliver impact on a bigger scale and create long-term,
sustainable progress.

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Partners and Stakeholders
Advancing progress on issues such as water access and climate change, women’s
empowerment and inclusive economies, and safe and fair working conditions demands
collaboration and jointly developed solutions. These issues are systemic, complex and
The Short Story

Stakeholders•• The scale of issues such as climate change
and worker safety demands that we joinwith others to forge solutions.

intertwined and cannot be solved by any one actor alone. By working together, we can
combine the right expertise and tools to develop holistic perspectives and help addressthese challenges.
Engaging stakeholders and establishing partnerships is a critical part of our sustainability
strategy. We work with diverse groups of experts and organizations to foster clearer•• A range of perspectives enables us toconceive initiatives that help bring about
long-term, sustainable change.

understanding of complex issues, as well as local conditions in the countries where we•• Our latest collaborations take an innovative
approach to challenges facing our industry
and the world.

unexplored issues and encourage us to expand our ambitions.

•• One example is our new five-year
partnership on Women + Water with theUnited States Agency for International
Development (USAID).

suppliers and factories, employees, unions, governments, multilateral institutions,do business. As conditions and challenges evolve in our industry, these dialogues give
us insights to improve our programs and refine our strategies. The dialogues also reveal

We have many key stakeholders: the people who make our clothes, our customers,
NGOs, industry associations, investors, communities and others. We also belong to anumber of organizations that enable us to more effectively collaborate with and learn
from stakeholders. Multi-stakeholder initiatives bring together organizations and people
from different sectors that play a key role in finding new approaches and creatingcollective action.
See a list of member and partner organizations and initiatives.

Engaging stakeholders andestablishing partnerships
is a critical part of oursustainability strategy.

Our latest collaborations take an innovative approach to our industry's challenges.
In 2016, we formed the five-year Women + Water Global Development Alliance with
the United States Agency for International Development (USAID). Through this alliance,
we will expand our P.A.C.E. programs to advance the health and well-being of women,
families and communities touched by the apparel industry—with an emphasis onaccess to sustainable water, sanitation and hygiene services, as well as the effective

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management of water resources. Alliance partners—including Water.org, CARE India,
Institute for Sustainable Communities and the International Center for Research on
Women (ICRW)—will apply a systemic, gender-sensitive and flexible approach tomaximize progress on our shared goals.
We are also collaborating on solutions that matter most to workers and our suppliers'
facilities. For example, with the ILO's Better Work program, we have developed Gap
Inc.’s Workplace Cooperation Program, which gives workers and management theskills they need to resolve workplace issues, engage in respectful collaboration anddrive continuous improvement in the workplace. Through other partnerships, wedeveloped our Workforce Engagement Program to measure and improve the degree towhich garment workers feel valued and engaged at work.
Looking forward, we will continue to engage our stakeholders and partners in taking aproactive, systemic approach that addresses root causes and accounts for more of thepeople and organizations who may be affected by an issue.

To create the change we’re after, we can’t do this work alone. We partnerwith organizations large and small to make this work happen. The United
Nations is one of them. For years, we’ve supported the UN Global Compact
and its guiding principles.
—Art Peck, CEO, Gap Inc.
Sustainability Governance
We implement a robust governance structure to ensure that our Global Sustainability
program both meets our company’s social and environmental goals and supports
our business. Gap Inc.’s Board of Directors, particularly the Board’s Governance andSustainability Committee, oversees our Global Sustainability program and receives
regular updates directly from David Hayer, Senior Vice President, Global Sustainability,
and President, Gap Foundation. Hayer also meets quarterly with Gap Inc. CEO Art
Peck, and he meets regularly with the Executive Vice President of Global Supply Chain.
Hayer reports to Brent Hyder, Executive Vice President, Global Talent and Sustainability,
who reports directly to our CEO.
Our organizational structure allows collaboration across key departments at Gap
Inc. Our Global Sustainability department works closely with our Supply Chain,
Government Affairs, Public Affairs, Legal and Gap Foundation teams, among others.
Gap Inc.'s Environmental Council—which is sponsored by Shawn Curran, Executive
Vice President, Global Supply Chain: Logistics and Product Operations, and includes
other functional leaders and subject matter experts across our business and brands—

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is integral in building this alignment. The Council is responsible for evaluating new
initiatives and reviewing progress on our existing environmental goals and programs,
particularly those that relate to Gap Inc.'s overall climate change strategy and wastereduction efforts.

Gap Inc. has developed
systems and procedures
focused on identifying
and managing risks—
including those related
to sustainability.

Managing and Prioritizing Risks
Gap Inc. has developed systems and procedures focused on identifying and managing
risks—including those related to sustainability.
At the enterprise level, our Internal Audit team conducts annual risk-assessment
interviews with more than 60 of the company’s top executives and Board members.
The team interviews a subset of these executives every quarter to track changes in thecompany’s risk profile. Our Internal Audit team uses these risk-assessment interviews,
as well as a consideration of external factors affecting our company and industry, todevelop heat maps that identify the most significant risks to the company. The teamprioritizes risks based on the likelihood and severity of their potential impact on meetingthe company’s strategic initiatives and maintaining business operations. We thenmonitor these areas for trends. Our executive leadership team and the Board review
and sign off on these enterprise risk assessments.
In addition, our Global Sustainability team works with business partners and experts
to assess the importance of potential social and environmental risks and opportunities
to our business and external stakeholders, including suppliers and the people
who make our products. These include the risks that climate and environmental
impacts could pose to our business. The team uses tools to help prioritize risks andopportunities, including a sustainability materiality assessment (described on page11), life cycle assessment of representative products (page 84) and a stakeholder
engagement process. For these materiality and other risk assessments, we consider
such factors as the magnitude, likelihood and time horizon of potential impacts on ourbusiness and stakeholders.

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Within our supply chain, tier 1 suppliers of branded products, and some tier 2
suppliers, use the Sustainable Apparel Coalition’s Higg Index to perform environmental
self-assessments. In 2016, our Internal Audit team conducted comprehensive risk
assessments of the management of social and environmental issues at both tier 1 andtier 2 suppliers. Their goal was to identify risks impacting our business and evaluate
the response in place to mitigate those risks. These results have been integrated into
our programs and are detailed throughout this report.
At the physical asset level, our Business Continuity Planning (BCP) team analyzes,
prioritizes and helps mitigate risks to our owned and operated facilities and stores
resulting from extreme weather, natural hazards and other external events. The BCP
team uses predictive and actual models from the US National Oceanic and Atmospheric
Administration (NOAA) and other national and international agencies, which are overlaid
against all of Gap Inc.’s facilities for tracking potential and actual impacts. The teamuses a risk-assessment tool to determine the event and company risk and the residual
risk remaining after preparedness plans are developed.

How we dobusiness is justas important as
what we do.
Acting with Integrity
How we do business is just as important as what we do. Our Global Code ofBusiness Conduct (COBC) serves as our ethical compass for the commitment to highstandards that we make to our stakeholders, customers and one another.
Our Global Integrity team manages our COBC program. The program is led by
Gap Inc. Global General Counsel and Chief Compliance Officer Julie Gruber, whoreports directly to Gap Inc.’s CEO. In addition to the Global Integrity team, we havea Global Integrity Committee, consisting of senior cross-functional leaders. This
committee meets quarterly to provide program guidance, offer insights into thebusiness that may impact the COBC and raise overall awareness of the COBC
within the company. The Global Integrity leader presents to the Audit and Finance

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Committee of the Board of Directors at least semi-annually to provide program
updates. The Board of Directors also receives training on compliance and integrityrelated topics.
When issues arise, our employees are encouraged to use our open-door process fordiscussing any concerns with 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 for use 24 hours a day, seven days a week, to employees and anyone who
conducts business with Gap Inc. or is affected by our business. We have investigative
teams that log, process and address complaints received through any channel,
including our COBC hotlines.

Key Aspects of How We Implement Our COBC:•• Within 30 days of their initial hire date, all employees globally are required totake a COBC overview course.
•• In addition, we provide ongoing compliance training to various targeted
employee audiences on topics of nondiscrimination and harassment,
wage and hour compliance, workplace accommodations, anti-corruption,competition law compliance and data privacy and security. Our Global Integrity
team also conducts general in-person training sessions through the year.
•• We provide a variety of online self-help tools for compliance education andcommunication, including leader tools (which guide leaders on how to haveeffective conversations with their teams), FAQs, policy links and contacts.
•• Each year, for various business units or offices, our Global Integrity teamconducts interviews with employees and selected suppliers. These interviews
allow us to gauge how well our employees understand our COBC, remind
our employees and suppliers of their responsibilities and our expectations as
to how we engage with each other, and ensure that employees know how toreport COBC violations.
•• Senior-level employees must certify their COBC compliance annually and arebriefed on relevant compliance or integrity topics to raise awareness.
We are diligent about addressing corruption risks, particularly in developing countries
with limited rule of law. We have a company-wide 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 the U.S. Foreign
Corrupt Practices Act (FCPA) and other similar laws around the world. The policy
and related training programs help employees recognize and avoid corrupt businesspractices in all aspects of Gap Inc.’s business.

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Sustainability Policies
In order to clearly demonstrate our commitments, we have developed several policies
that address specific social, governance and environmental concerns. Here is a briefsummary of our policies, which are updated and available online.

Animal Welfare Policy
Our Athleta, Banana Republic, Gap and Old Navy brands are deeply committed tothe ethical sourcing of our products, which includes the humane treatment of animals.
We expect all suppliers to make our products in an ethical and responsible way.

Anti-Corruption Policy
Our Anti-Corruption Policy, which is incorporated by reference into our COBC,
prohibits bribery by an employee or agent of Gap Inc. The policy combines elementsfrom our COBC with anti-bribery requirements under the U.S. Foreign Corrupt
Practices Act (FCPA) and other similar laws around the world.

California Transparency in Supply Chains Act
On January 1, 2012, California enacted this law, requiring companies of a certain size
to publicly disclose the steps they are taking to identify and eradicate forced laborin their supply chains. Gap Inc. supported this legislation, which we also view as animportant statutory policy lever to assist in the global fight against human trafficking.

Climate Policy
Gap Inc. is committed to reducing our impact on climate change. The consequences ofa changing climate are profound and wide-ranging, from biodiversity and water resource
impacts, to public health and agricultural impacts, to increased risk to our business inthe short and long term. Addressing climate change makes us more resilient and efficientwhile enhancing our connection with consumers, employees and other stakeholders.

Code of Business Conduct (COBC)
Our global COBC serves as our ethical compass for the commitment we make to ourstakeholders, customers and one another. It is our guide to working with integrity anddoing what is right in every situation, every day, no matter where we work.

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Code of Vendor Conduct (COVC)
Our COVC sets forth the basic requirements that all factories must meet in order to dobusiness with Gap Inc. This code is based on internationally accepted labor standards,
including the ILO’s Declaration on Fundamental Principles and Rights at Work (ILO core
conventions) and the Universal Declaration of Human Rights.

Conflict Minerals Policy
Gap Inc. is committed to ensuring compliance with section 1502 of the United States
Dodd Frank Act relating to trade in conflict minerals.

Human Rights Policy
Gap Inc. is committed to respecting internationally recognized human rights andeliminating human rights abuses. We support the principles contained within the
Universal Declaration of Human Rights, the UN Global Compact, the OECD Guidelines
for Multinational Enterprises and the ILO core conventions.
Our Human Rights Policy applies globally within our wholly owned operations andacross our branded apparel supply chain. It highlights our commitment to respectfundamental human rights throughout these operations, as well as our intent topromote human rights within our sphere of influence.

UK Modern Slavery Act
Gap Inc. is committed to supporting and improving labor rights and working conditions
globally across the retail and apparel industries. As a business, we have a moral
responsibility to protect and care for those whose work goes into creating our products
and bringing them to our customers. Our commitment in this regard applies equallyto all of our brands. Wherever we operate, and whomever we are operating with, we
strive to do so in compliance with our overall Human Rights Policy.

Wood-Derived Fabric Policy
Gap Inc. is committed to the ethical sourcing of our products and the use ofsustainable raw materials. Gap Inc. is against the use of ancient and endangered highcarbon-value forest areas to make cellulose-based textiles, including but not limited torayon, viscose, lyocell and modal.

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Executive Q & A
A Conversation with David Hayer, President, Gap Foundation,and Senior Vice President, Global Sustainability, Gap Inc.

Why is sustainability so

We were founded in 1969 by Don and Doris Fisher, a husband and wife team who

important to Gap Inc.?

believed in giving back to the community, the people who make our products andthe environment. To them, success has always been about so much more thanselling clothes.
Sustainability is becoming mainstream. Gap Inc. is in a unique position to influence theindustry, government and our customers by leading the way with best practices.

What is the biggest change inToday, we know more about what works and what doesn’t. We are doubling down on

our sustainability work sincemodels that truly show value, like the ILO’s Better Work program, which now covers

our last report was publisheda majority of the facilities we source from in Bangladesh. It’s less about testing an

covering 2013 through 2014?

approach, and more about building programs that scale.
Our global portfolio of brands positions us well to accelerate impact worldwide. Someof our brands, like Gap and Athleta, have set ambitious goals on sustainable cottonand synthetic fibers. As our understanding grows, we are infusing better environmental
practices into every part of the business.

What do you see as the biggest

There are five key levers that I feel need to be addressed to propel the apparelchallenges to our work?

industry forward: building effective partnerships, reducing fragmentation, converging
on what works, integrating accountability, and recruiting and developing top talent.
Each of these components is important to improve working conditions and reduce
environmental impacts.

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How do you define effective

As a company, we're estimated to represent a small but significant fraction of thepartnerships, and how do weapparel industry, which is humbling. We need help to continue to drive lasting

select our partners?

impact. We need external collaborations and multi-stakeholder initiatives—it’s NGOs,
manufacturers, government, labor groups and consumers. Today, we vet partners
based on shared vision and work style, supplemental capability and a true commitment
to long-term impact.

Why is streamlining sourcing

The high degree of fragmentation across the industry is a significant challenge torelationships and efforts an

improving sustainability. Over the past seven years, Gap Inc. has strategically reduced

important part of our strategy?

its number of sourcing facilities by over 25%. Prioritizing resources and ensuringthat brands and suppliers collaborate more closely on social and environmental
performance has been critical to our evolution. We need tougher expectations acrossthe industry. As we raise our standards and source solely from higher-performing
vendors, we necessarily reduce the amount of relationships we maintain.
When it comes to sustainability, we’re focused on efficacy and efficiency. We’repursuing the most innovative work with like-minded apparel companies, multilateral
institutions, governments, labor organizations, environmental groups and other key
stakeholders. That collaboration stands to change the way we assess our facilities andbuild capacity; it will help us save water and diminish chemical usage. Competition isa healthy part of any business, but this is one place where we need to converge within
the industry.

You mentioned integrating

Sustainability must continue to become a seamless part of how we run our company.

accountability as a key lever,The days of it being a small program off to the side of the core business are long

how is that going?

over. We are evolving the work to increasingly be a part of what we do regularly.
We’ve made progress, but fully integrating sustainability across our business will unlock
the biggest opportunities.
Tactically, it’s about education, empowerment and accountability. We want to enable
the people who are making real decisions, asking real questions and having realdebates about our products to understand how to push forward what is right forpeople, the planet and our company.
This work requires recruiting the best talent possible, from experienced and diverse
backgrounds. It requires the most qualified and creative professionals dedicated tocreating innovative supply chain solutions. We need to invest in them and support theirdevelopment. We’ve made good progress, but we still have room to grow.

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Where do you see the future of

We have a responsibility, to be accountable and maintain high levels of transparency.

reporting for Gap Inc.?

To do so, we will identify opportunities to publish our program impact in ways that are
more accessible and more frequent, including reporting on our sustainability metrics
and progress at least annually.

What keeps you fired up about
your work?

I can’t believe I get to wake up and do this job every day.
I’ve met hundreds of mothers in our cut-and-sew facilities across the globe; I’ve
met dozens of young men and women beginning their first jobs in our stores inurban centers across the US. We all want the same thing: to build a better future forourselves and our families. I’m fired up to help each one of them.
To me, leading sustainability at Gap Inc. is really about equality—equal treatment,
equal opportunity and the ability for everyone to enjoy a healthy environment.
We have a tremendous opportunity to connect the dots on our progress and ourchallenges. We must translate the activity we’re seeing across the industry into better
results. As we continue to weave sustainability into all we do, I’m confident that Gap
Inc., is taking the right steps toward the future we all want to see.

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Goals and Progress
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.

Existing Goals
Advancing People and Communities

Completion
Target*Details

Employees
Ensure female representation at allleadership levels is meaningfully above
external norms

Women make up 74% of our employees,
68% of our global store managers, 51% of
our leadership (VP and up) and serve equally

Ongoingas our brand leaders

Pilot and commit to expand programs thatprovide advance notice and stable, flexible
scheduling to store employees

We’ve eliminated on-call scheduling andprovide store employees with at last 10 to 14
days’ notice for their schedules, throughout

2017

our brands

Youth Opportunity: This Way Ahead
60% of This Way Ahead participants reportincreased on-the-job skills and confidence
as a result of their internships

97% of youth report increase in soft skills and
66% of youth report increase in confidence

2018

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

74% of interns received job offers

2020

their internships

Community Investment
All teams have a Community Leader (CL),and all CLs organize and lead at least 3
volunteer projects per year

62% of teams have a CL; 74% of CLs led atleast 3 volunteer projects

2018

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

70% of have established relationships

2018

maximize volunteering impact 2018
*By end of year

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Empowering Women: P.A.C.E.

Completion
Target*Details

Improve the lives of one million women andgirls in Gap Inc.’s supply chain and other

68,000 women have participatedmanufacturing and community settings

through 20162020

through the Gap Inc. P.A.C.E. program
Expanded program to bring new educational

Expand P.A.C.E. to a suite of learning

opportunities to girls ages 11 to 17. New

programs that provides multiple entry points

curriculum focuses on improving self-

for addressing the needs of adolescent girls

2020

confidence and helping girls develop future

and women leaders

goals and aspirations

Factory Working Conditions
100% of Gap Inc.’s suppliers producing branded

84% of facilities rated yellow or green

apparel are rated yellow or green by 2020

through 20162020

Partner with Verité and strategic suppliers
to measure workers’ sense of value and

Implemented Workforce Engagement

engagement at work, and launch projects

Program at 89 facilities representing

aimed at improving 20,000 workers’

220,000 workers with Verité and Good

engagement. Publicly report on findings and2018

World Solutions

impact, and share best practices with all Gap
Inc. suppliers

As part of the Social and Labor Convergence
100% of strategic suppliers of branded

Project, we are helping to create a sharedapparel self-report their sustainability

tool for footwear and apparel companies

performance in Gap Inc.’s global sustainability

to assess factories’ social and labor

data system

performance. This represents a more unified

2018

effort to self-report sustainability performance

Operational Eco-efficiency
50% absolute reduction of greenhousegas emissions in our owned and operated

7% reduction achieved through 20162020

facilities globally

80% waste diversion from landfill for our
U.S. facilities

Pilots underway; we are currently reassessing
our methodology to calculate waste production

2020

and diversion

Work towards zero discharge of hazardous

We have communicated our Manufacturingchemicals in our supply chain throughRestricted Substances List to suppliers,

membership in ZDHC 2020 Roadmap

facilities and mills that make our clothing

2020*By end of year

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New Goals
Completion
Target*Advancing People and Communities$15M per year in employee-driven community investment

Ongoing

5% of new store hires are from This Way Ahead

2025

10,000 teens and young adults participate in This Way Ahead

2020

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

2020

Water Stewardship
Save 1 billion liters of water in our manufacturing processes

2017

25% of product made using techniques that save water

2020

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

2020

100% of cotton purchased from more sustainable sources

2021

80% of materials made with sustainable fibers

2020*By end of year

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Advancing People and Communities
In this section•• Employees•• Youth Opportunity:
This Way Ahead•• Employee Impact:
Community Investment•• Empowering
Women: P.A.C.E.

We could not succeed as a company without exceptional people
who support our business—from the employees in our retail stores, to theworkers on the factory floors, to the communities that surround our operations.
We aim to create opportunities for our employees, for women and girls around theworld impacted by the apparel supply chain, and for young adults seeking to begin theircareer, so they can reach their goals and fulfill their greatest potential.

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Context and Approach
Seeking a better life for your family. Building the confidence to set bigger goals.
Finding time to mentor an intern. These acts inspire us every day—and they are carriedout by people touched by our business throughout the world, from a woman who sews
our clothes, to one of our 135,000 employees. These are the people who make ourcompany what it is today, and by helping them succeed, we all succeed.
As a company, we can make the biggest impact by focusing on areas that alignwith our business and affect the people we work with. Our mission is to promoteadvancement for people and communities. We set ambitious goals, and we integrate
our advancement programs into our core company operations to deliver social andbusiness returns. We focus on creating opportunities for our employees, young
people seeking their first jobs, the workers who make our clothes, and the womenand girls in the global communities where our company has influence and reach.
Our empowerment, employee and workforce programs support the rights and wellbeing of the people who embody and drive our business, ensuring they have equal
opportunity and support to develop personally and professionally. Within our global
workforce, our teams are dedicated to giving back, both through their time and theirsupport, and Gap Inc. is there to match them every step of the way. Working with andhiring great people, encouraging their development and supporting them for who they
are just makes sense.
One of the critical ingredients to the success of our advancement programs is our
focus on partnerships: We collaborate with local and international NGOs, local
community organizations and government agencies that expand our access to people,
resources and expertise. We know that collaboration allows us to engage with people
and contribute more to communities than we could alone.

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Employees and Workforce
Since our founding, we’ve embraced core company values that include celebrating
individuality and diversity and treating all people equally—with respect, dignity
and fairness.
At Gap Inc., we have developed a workplace culture that promotes these fundamental
values. Our innovative initiatives champion diversity, inclusion and equality to attract
and retain talent, and to support positive change across business and society.
As one of the world’s leading apparel retailers, we see an opportunity to standalongside other leaders and work toward greater fairness for everyone. We feel it
is important to take public positions on issues that matter to our employees, ourcustomers and our business. In this way, we can champion the ideals of our founders
and contribute to broader cultural change.

We strive to create a workplace culture that embraces diversity and inclusion
and treats every individual with dignity and respect. By upholding thesevalues, we are able to attract and retain talented people, deliver the bestproducts and experiences to our customers, and support positive change
across business and society.
—Kisha Modica
Senior Director, Diversity and Inclusion
Diversity, Inclusion and Equality
At Gap Inc., a sense of belonging is always in style. Our goal is to attract, develop andretain the best talent from all walks of life — people who will disrupt the way we dobusiness, now and in the future. We believe embracing diversity promotes creativity
and innovation.
To us, celebrating individuality goes hand in hand with having deep respect for all.
Our business can thrive only if everyone has the chance to do the same. For ourbusiness to grow, our people also need to understand and embrace the wide varietyof cultures that we encounter across our brands and store locations.
Our commitment to equality and diversity is embedded in our Code of BusinessConduct (COBC), which includes a zero-tolerance policy for any form of discrimination,harassment or retaliation. This policy applies to our directors, employees, applicants,
customers and business partners, including independent contractors and suppliers.

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We believe in standing up for all forms of equality—inside and outside our company.
In recent years, this has included raising our voice in opposition to proposed legislation
impacting members of the lesbian, gay, bisexual, transgender and queer (LGBTQ)
communities, many of whom are current and future employees and customers.
Our Global Talent team works with our Diversity and Inclusion team to design, develop,
deliver and evaluate programs and activities related to talent and inclusion. We useinternal and external benchmarks, and leaders across the organization identify
and prioritize a set of critical issues (e.g., sustainable development or leadership
opportunities) based on agreed-upon criteria. Our Communications and our Public
and Government Affairs teams support communication of these priorities internallyand externally.

To us, celebrating
individuality goes
hand in handwith having deep
respect for all.
Creating a Community of Diversity and Inclusion
We believe diversity increases creativity and innovation, promotes high-quality decisions
and enhances economic growth. An inclusive culture helps employees feel comfortablebeing authentic at work. We have internal teams dedicated to embracing and driving
diversity and inclusion efforts:

Diversity and Inclusion Council
This advisory group—comprising corporate and field executives and leaders fromthroughout our organization—develops diversity and inclusion strategies and connects
these activities with business outcomes.

Enterprise Diversity and Inclusion Team
This team is responsible for the design and implementation of Gap Inc.'s Global
Diversity and Inclusion strategy.

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Diversity Ambassadors
These individuals across our organization champion diversity efforts, build awareness,increase knowledge and share their skills and resources within their respective teams.

Business Resource Groups
Gap Inc. employees from diverse backgrounds have taken the initiative to develop
Business Resource Groups, which provide opportunities for cross-cultural learning,
mentoring and relationship building. These groups organize development, networking
and volunteering events. They gather employee input and support on internal
initiatives, as well as offer consumer perspectives and product feedback that help
Gap Inc. in the marketplace. Additionally, they contribute their language skills andknowledge of various countries and cultures to support the global aspects of ourbusiness. Engaged employees gain networking experience and visibility, and theymeet leaders across the company.
We support our employees in developing these Business Resource Groups,
which may grow and change in the future. Our current Business Resource
Groups include:

AANG

African American Networking GroupASIA

Asians Supporting Inclusion and Awareness

GapWIL

Women in LeadershipGEAR

Gap Gay Employees, Allies and Resources

HOLA

Honoring Our Latino/Hispanic Ancestry

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In 2016, 52 percent of our full-time and part-time (non-seasonal) employees in the U.S. identified as ethnically diverse.

Gap Inc. Owned Facilities
US Ethnic Breakdown

2013

2014

2015

2016

All

53%

51%

50%

48%

Management

75%

74%

73%

72%

New Hires

51%

49%

46%

44%

All

6%

6%

7%

7%

Management

9%

9%

9%

10%

New Hires

6%

6%

6%

6%

All

19%

19%

19%

19%

Management

6%

6%

7%

6%

New Hires

23%

24%

24%

24%

All

18%

20%

20%

21%

Management

9%

10%

10%

10%

New Hires

16%

17%

18%

19%

All

4%

4%

4%

5%

Management

1%

1%

1%

2%

New Hires

5%

5%

6%

6%

All

47%

49%

50%

52%

Management

25%

26%

27%

28%

New Hires

49%

51%

54%

56%

White

Asian

Black

Hispanic

Other Minority

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

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ASCEND
Investing in the Next Generation of Leaders
We are devoted to developing an inclusive, diverse workforce and a pipeline of future
leaders. Our ASCEND program supports Gap Inc.’s ongoing vision and commitment todeveloping talent, driving engagement and advancing diversity. ASCEND is designed tohelp minority leaders realize their potential and achieve their career aspirations throughmentorship, building opportunity and individual capability building.
We also invest in the next generation through our support of and recruiting at minority
job fairs and through the Gap Foundation’s This Way Ahead youth internship and jobskills program.
Read more on page 40.

Standing with the LGBTQ Community
We believe part of our role as a business is to bring people together and work towarda brighter future where everyone has the opportunity to thrive as equals. Gap Inc.
and the UN Foundation built a partnership to raise awareness and funds in 2017 for
UN Free and Equal, a program of the Office of the UN High Commissioner for Human
Rights (OHCHR) to promote equal rights and fair treatment for lesbian, gay, bisexual,
transgender and intersex (LGBTI) people globally.
The partnership marked Pride Month and included two main components to engage
our customers:•• As part of Gap Inc.’s #WearYourPride campaign, 30% of net sales fromGap brand’s Pride T-shirts were donated to the UN Foundation to benefit
Free and Equal.
•• Gap Inc. brands also sold special, Pride-themed e-gift cards. We donated $2
from each card sold to support Free and Equal.
This campaign allowed us to publicly demonstrate our commitment to equality, while
giving our customers a way to support and celebrate Pride.

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Creating Opportunities for Women
Creating opportunities for women is deeply embedded in our culture. From store
managers to brand CEOs, women have long played an important role in running andgrowing each of our brands. Women make up over 70% of our employees, serve asa majority of our global store managers and serve equally as our brand leaders. We
strongly believe that our commitment to equality for women gives us a competitive
advantage, it helps us attract top talent, increase engagement and retention, andconnect with our customers, a majority of whom are women.
Our global Women and Opportunity initiative includes both internal and external
programs and activities that engage leaders and employees across our company.
Our broader women’s empowerment strategy includes ensuring alignment acrossall efforts impacting women and leveraging gender inclusion. This commitment toequality extends to all aspects of our business, from learning and development toleadership training.

Inspiring Future Women Leaders
Our GapWIL—Gap Women in Leadership—group partnered with Girls Inc., a nonprofit
whose mission is to inspire all girls to be strong, smart and bold, to launch a summer"menteeship" program at Gap Inc. During the three-week program, high school
juniors met with career coaches, visited stores and developed technical skills throughworkshops in retail and inventory management. They also sat down with Gap Inc.
leaders to learn about the business and our company's values.

In addition to these efforts, we have integrated our P.A.C.E. program into our corebusiness practices to help the women who make our clothes and their communities
gain the skills and confidence they need to advance in work and life. In September
2015, we announced a major expansion of P.A.C.E., with the goal of reaching 1 million
women throughout the world by 2020. (Read more about P.A.C.E. on page 45.)
In 2014, we signed the Women’s Empowerment Principles, developed by UN Womenand the UN Global Compact to give business practical guidance on areas such as
women’s professional development and the need to publicly report on progress about
gender equality.
One of the ways we support women’s equality is by providing equal pay for equal work.
We are proud that in 2015 we became the first Fortune 500 company to report publiclythat we pay female and male employees the same for the same work around theworld, verified by a third party. By sharing our progress, we aim to engender broader
change, with other companies following our lead.

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We were honored to receive the 2016 Catalyst Award
recognizing Gap Inc.’s culture of equality, inclusion
and opportunity.
2016 Catalyst Award Winner
We were honored to receive the 2016 Catalyst Award recognize Gap Inc.’s culture ofequality, inclusion and opportunity. Catalyst selected Gap Inc. because of our leadershipon equal pay for women, strong representation of women at all levels, and our dedication
to advancing women, including our employees, customers and the people touched byour business around the world.
The annual award from Catalyst recognizes organizations whose innovative approaches
result in proven, measurable results that advance the recruitment, development andadvancement of women in the workplace. For the first time since the inception of theCatalyst Award, Gap Inc. is the sole company to be honored by the organization in agiven year and has become the first company from the fashion industry to be recognized.
Initiatives that are considered for the Catalyst Awards are evaluated in a rigorous,
yearlong process against criteria such as strategy and rationale, senior leadership
activities, accountability and transparency, communication, employee engagement,
innovation and measurable results.

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Our Employee Experience
Our business success depends on our people. That’s why we are dedicated to
The Short Story

Careers andDevelopment•• We emphasize a growth mindset, which
we cultivate by promoting from within andeliminating traditional performance reviews.
•• Store employees can advance within
the field or into corporate positions; anumber of our executives started out asstore associates.

attracting talented employees and giving them opportunities and reasons to achieve
their work and life goals at Gap Inc. Our workplace culture and benefits are designed
to meet the professional and personal needs of our employees and their families. For
retail employees in particular, we improved wages and scheduling practices so thatthe people who work in our stores experience greater stability and flexibility.

Advancing Careers and Developing Talent
We strive to develop a diverse pipeline of talent and give our employees opportunities
to learn and develop, stay challenged, take on new roles and adopt greater responsibility.
We know our current and prospective employees expect a path to new opportunities
that rewards them for their performance and value contribution. Offering our employees•• Our Rotational Management Program
combines classroom learning with on-thejob training across multiple functions.

challenging work that tests and builds their capabilities not only sets them up for•• Instead of reviews, employees frequently
meet with managers to receive feedback
and guidance on opportunities to develop.

As a retailer that values hands-on experience in our stores, we give store employees

success, it makes our business stronger and more innovative.

opportunities to take on higher-level field and corporate positions. The best testaments
to the opportunities we provide are our employees who started out at stores and rosethrough the ranks to senior management positions; approximately 18% of Gap Inc.
executives at the vice president level and above started their careers working withproduct and customers in stores.

Global Share of Open Positions
Filled by Internal Hires

2013

2014

2015

2016

Vice President and Above

71%

57%

70%

71%

Director / Senior Director

67%

65%

65%

64%

Manager / Senior Manager

57%

60%

58%

59%

Store Management

53%

52%

53%

49%

Overall (including Store Associates)

15%

15%

14%

15%

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Many people stay at the company or return because of the opportunities and rangeof roles that our brands and business provide. It’s common for our employees to work
for multiple brands and functions during their careers. Employees at the manager
and higher levels average more than seven years with the company, and more than
16% of employees return for new challenges and opportunities. We recently launcheda revamped careers site and a new careers blog, as well as an alumni program toconnect past, current and future talent.
We also recognize the need to look outside our organization to make sure we find thebest people for each role. We aim to balance our internal promotions and external hires
to achieve the most productive mix of diverse talent, functional and subject matter
expertise and organizational fit.

Our Approach to Learning and Development
Our learning and development model is based on two core beliefs: Everyone has thecapacity to learn and grow, and the best opportunities for learning take place on the job.
In 2014, we did away with our traditional annual review process for employee
performance in favor of a new system called “GPS—Grow. Perform. Succeed.”With a focus on continuous learning, GPS uses frequent performance conversations
and coaching sessions to give employees regular feedback and guidance on theirwork and development opportunities.
Because we believe most growth happens on the job, we use a 70-20-10 model for
career development that emphasizes learning through real work experiences. 70%of an employee’s learning and development takes place on the job and is built into
their goals, 20% occurs through mentorships and collaboration and 10% comes fromcourses or formal training.

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We offer employees at all levels a variety of training opportunities, ranging from online
courses to in-person workshops and multiday programs. A few examples of programs
that improve our business by promoting employee learning and development include:

Retail Academy
This program combines classroom sessions, rotational training and business simulations
designed to develop the skills employees need to advance and navigate the increasingly
complex and technology-driven retail space. This includes a world-class Rotational
Management Program for high-potential entry-level talent being groomed to become
future leaders of the company.

Leadership Development
This six-month program provides tools and resources to new people managers andhelps them develop the long-term capabilities of others, create better ways to achievebusiness success and empower their teams.

Employee Profile

Andres Dorronsoro and the Rotational Management Program“RMP was an outstanding experience,” said Dorronsoro.
“The combination of classroom learning and on-the-job training
through multiple functions was the perfect way to learn what a
career in retail actually meant and how I could make an impact.”
Dorronsoro still remembers how the head of RMP, Leah Slater,
encouraged him to speak up and share ideas with anyone who
would listen to make our business better. “At 22, I was out in ourstores and shopping the competition, identifying problems andrecommending solutions. Her encouragement is what pushed
me to have this rigor in challenging the status quo.”
After working in our stores for many years and studying
business in college, Andres Dorronsoro knew he wanted to do

After RMP, Dorronsoro chose to focus on merchandising—asomething with the consumer experience, but he didn’t really

good decision seeing as he is now a senior vice president andknow what that meant. Following an internship at our corporate

general manager for Old Navy Merchandising. Today, he credits

office, someone suggested that he go through our Rotational

the people of RMP for putting him on the path to success: “It’sManagement Program (RMP) to learn about different roles in thethe people along the way that made RMP amazing,” he said.

company. He started the program in 2004.

“The mentors, the teachers and my fellow classmates are still apart of my life.”

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Benefits and Work-Life Integration
We offer financial incentives, work-life integration and benefits aimed at helping our
employees make the most of their professional and personal lives. This supports
employees and increases their engagement at work, which contributes value toour business. In 2017, we received recognition from the Business of Fashion’sBest Fashion Companies to Work For as a Top Performer in Rewards and Benefits,
highlighting our pay-for-performance philosophy.
A number of our departments offer flexible scheduling to shift the emphasis from where
and when work is conducted to the results delivered. This results-driven model lets
employees adjust their schedules and the way they work to suit their personal needs
and circumstances.
We also offer other programs designed to accommodate the different needs of ouremployees and their families. These programs include:
The Short Story

Benefits andWork-Life Integration•• We support our employees in a range ofways, from 401(k) matching to wellness
programs to family support.
•• Our rewards for strong performance andbenefits support employees in creating a
thriving future.
•• We have taken steps to raise our US
hourly minimum wage and improvescheduling practices, including eliminating
on-call scheduling and providing employeeswith at least 10 to 14 days’ notice for
their schedules.

•• Nationwide Family Support: US full- and part-time employees have online
access to child-, elder- and pet-care resources. Full-time US employees
also benefit from back-up childcare and priority access to nationwide
childcare centers.
•• Leave: US employees can take extended time off from work to manage thedemands of their family and personal lives.
•• Phase in/phase out: Eligible employees can temporarily reduce their work
hours before, during or after maternity or family leaves of absence.
We also provide a number of additional benefits that make up a significant portionof their overall compensation package and are intended to help our people and theirfamilies lead healthier, more productive lives:•• Health and wellness benefits: We offer full medical, dental and vision
coverage for full-time employees.
•• Financial benefits:–– GapShare 401(k) plan matches employees’ contributions dollar fordollar up to 4% of base pay, with 100% immediate vesting.
–– Employee Stock Purchase Plan (ESPP) allows full- and part-time
employees to purchase Gap Inc. stock at a 15% discount quarterly.
•• Work-life balance and lifestyle benefits:–– We provide generous paid time off (PTO) that increases with promotion
and seniority.
–– Our Employee Merchandise Discount Program gives full- and part-time
US employees up to 50% off at Gap, Banana Republic and
Old Navy, as well as 25% off at Athleta.

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–– We also offer tuition reimbursement, wellness programs andcommuter benefits.
•• Community investment benefits: The Gap Foundation matches or
supplements employees’ contributions of money or time to eligible nonprofits.

Wages and Scheduling: Promoting Stability and Flexibility
for Retail Employees
Our store and other hourly employees are especially sensitive to wages andscheduling—they greatly affect employees’ ability to make ends meet and fulfill
family obligations, undertake academic or other pursuits and plan their lives.
To promote stability and flexibility for retail employees, we have taken steps to raise
our US hourly minimum wage and improve scheduling practices, including eliminating
on-call scheduling and providing employees with at least 10 to 14 days’ notice for
their schedules.
We were one of the first US retailers to increase our US minimum hourly rate.
The increase took effect in two stages: In June 2014, we raised the minimum
hourly rate to $9, and in June 2015, we raised it again to $10.

Ensuring Worker Safety
When it comes to attracting and retaining employees, we are dedicated tofundamental worker safety. We strive to prevent and promptly address any
employee work-related injuries.
We have a centralized online reporting system that tracks all incidents and injuries.
We analyze the information at least quarterly to assess risks and develop preventive
measures. Our internal claims team and safety department analyze recurring injuries
or issues to determine if current policies or practices need to be amended or if moretraining is required to address risks. Our independent Internal Audit department audits
health and safety risks and processes. We incorporate results into the performance
evaluations and compensation of relevant personnel.
For data on workplace health and safety, please see our Data Tables.

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39Youth Opportunity: This Way Ahead
In 2007, we launched This Way Ahead, our life skills and paid store internship program,to help youth from low income communities between the ages of 16 and 24 land theirfirst job. Because our Old Navy, Gap and Banana Republic employees mentor the
program participants, This Way Ahead also builds our retail employees’ leadership andmanagement skills. We’ve also integrated the program into our recruitment strategy tohelp Gap Inc. stores build a valuable talent pipeline of future employees.

How This Way Ahead Works

Nonprofits recruit youth

This Way Ahead
provides training

Participants apply forinternships at stores

Mentorship bycurrent employees

Graduates eligible
for store jobs

Through This Way Ahead, we have re-envisioned our retail stores as a rich training
ground, where our employees can share what they have learned about career
The Short Story

planning and help participants explore careers that will ignite their passion. Each This

This Way Ahead

Way Ahead participant receives two months of in-person and online job training and•• This Way Ahead, our training and internshipprogram, helps teens and young adults
from underserved communities land theirfirst job. This Way Ahead is a collaborative
partnership between local nonprofits,
Gap Inc. and three of our brands(Old Navy, Gap and Banana Republic).
•• Program participants and employee
volunteers both receive real career andpersonal benefits.
•• Since 2007, more than 2,800 young people
across 15 cities in the US, UK and Canada
have participated in This Way Ahead.
•• As we expand to reach our goals, we arelooking at new ways to tailor the program
to different cities and markets.

coaching. During this time, they learn the skills they need to get and keep a job—fromdecision-making and goal-setting, to how to make presentations and resolve conflicts.
After the training program, youth are eligible to apply for paid internships at our stores.
Part of what makes our program successful is our emphasis on partnerships and thepower of human connections. We work closely with local nonprofit organizations that
help recruit and train participants, and we rely on store employee volunteers to leadworkshops and mentor participants.
This Way Ahead has had a significant impact to date, and we have set our sights highfor the future. Through early 2017, more than 2,800 young people have participated inThis Way Ahead across 15 cities in the US, UK and Canada. In 2015, we announced
a bold goal to hire 5% of our new entry-level store employees from This Way Ahead
by 2025. To reach that goal, we expect 10,000 youth to participate in This Way Ahead
by 2020. Already, we are on our way to achieving this goal: In 2016, we doubled thenumber of cities and tripled the number of interns who are part of This Way Ahead, andin 2017 we added two additional cities and doubled the number of interns again.

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In the 11 years we have run This Way Ahead, we have measured
substantial social and business benefits:

Goals•• By 2025, 5% of our entry-level store
employees are hired through This Way Ahead.
•• By 2020, 10,000 teens and young adults
participate in This Way Ahead.
•• By 2018, 60% of This Way Ahead
participants report increased on-the-job
skills and confidence as a result of
their internships.
•• By 2018, 65% of This Way
Ahead interns are hired on as Gap Inc.
sales associates upon the completionof their internships.

of This Way Ahead participants improve their work-ready and
97% 97%soft skills, including job search and interviewing skills, as well as
communications, problem-solving, decision-making and relationshipbuilding skills.
of participants report an increase in their self-confidence
66% 66%and their ability to get a job in the future.
of This Way Ahead graduates receive job offers at our
77% 77%
stores after their internship.
of mentors say they’ve increased their ability to develop
89% 89%and coach their teams.

85% 85% of participants report improved communications skills.

Through This Way Ahead, we have re-envisioned our retail stores as a richtraining ground, where our employees can share what they have learned
about career planning and help participants explore careers that will ignite
their passion.

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We are continually refining This Way Ahead based on data we collect and feedback
we receive from nonprofit partners, participants and employee volunteers.
Given external trends, we have built a program that is responsive to the changing
landscape for young employees. As we expand the program to achieve our goals, weare testing different models tailored to different geographic markets, where the numberof stores and interns vary. We are also applying the lessons we have learned over theyears, including the value of investing in long-term partnerships with local nonprofits,
which customize the training programs for young people in their area, and the value of
testing new ideas through pilots.
After a decade of running This Way Ahead, in 2017 we are launching a longitudinal
study to assess the program’s long-term impact on participants. This study will help
us understand how This Way Ahead gives low-income young people the skills to
succeed in the working world, and how the program benefits our business by building
a robust pipeline of talented, engaged employees. We look forward to continuing toshare our insights with other organizations and companies that are investing in youthemployment programs.

Dashawn Hightower
This Way Ahead Graduate and Old Navy Employee
Before This Way Ahead, I thought a job was just about collecting
a paycheck. Now I know a job can change your life. I internedat the Harlem Old Navy store on 125th Street. After being lateand being written up a few times, my manager, Yeera, pulled
me to the side and said, “Dashawn, what is it you want to dowith this opportunity?”
I thought I had joined the program to become a sales associate
and get a check. She made me realize that this was only the
Dashawn Hightower, 2013 This Way Ahead Graduate, speaking to an audienceof 1200+ at the 2017 Old Navy Field Leadership Conference

beginning. If I worked hard enough, there was real opportunity togrow within the company. That’s what it took to turn me around.

Dashawn Hightower was a 2013 This Way Ahead graduate.

After three years with Old Navy, today, I’m a Training andToday, Hightower is an intern manager at his Old Navy store,

Business Operations Specialist at our flagship store on 34th

helping do for others what the program did for him.

Street in Manhattan. If you want to learn something new, I’m
the person you train with.

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Community Investment and Volunteering
Our work culture is imbued with a spirit of giving back: It’s what attracts many people
to work for Gap Inc. and it is a key part of what inspires our employees to stay.
That's why we created flexible programs that encourage our employees to give backin the way that makes the most sense for them, through money or volunteer time.
The Short Story

Community Investment•• To encourage employees to give back,
we provide time off for volunteering, grants
for community organizations, money forvolunteer time and matching donations.

We give our employees a chance to make a real difference in their communities
through our Community Leaders program, which consists of approximately 3,000
people across seven countries. Our Community Leaders, the heart and soul of ourvolunteer efforts, are encouraged to identify a local nonprofit organization that can use
the talents and skills of our employees. Leading by example, they inspire their teams
to volunteer—fueling a movement that rallies all of us to create positive change and•• We delivered over $30 million in
employee-driven community investment
in 2015 and 2016.

embody our philosophy to Be What’s Possible.

•• Employees volunteered over 900,000 hours
in 2015 and 2016.

Community Leaders identify local organizations we can partner with to create long-•• Nearly 3,000 of our employees in sevencountries participate in our Community
Leaders program.

our employee volunteers, and it fosters a deeper connection between our volunteers

We are dedicated to making a genuine impact through our efforts. To do this, ourterm positive impact. This model gives our partners the confidence to invest in training
and the local community. To further incentivize action, we have integrated volunteerism
into our core business through our employee-driven community investment goals.
Just as for any other business activity, each team is responsible for setting and

Goals•• Deliver at least $15 million per year in
employee-driven community investment.
•• Employees report at least 430,000
volunteer hours.
•• By 2018, 80% of teams have a Community
Leader, and 50% of teams organize
and lead at least three volunteer projects
per year.
•• By 2018, 70% of Community Leaders
form a long-term relationship with
one nonprofit partner to maximize
volunteering impact.

delivering on their goals. In addition to our Community Leaders program, we offer
benefits that encourage employees to give back in the way that is right for them:Field Team Grants
For every 25 hours a store team volunteers to support youth development or women’s
advancement, they can request a $250 grant for the community organization. We
incentivize efforts in youth development and women’s advancement because these are
two of Gap Inc.’s sustainability focus areas, where we can have the greatest impact.

Money for TimeWe donate $150 to the partner nonprofit for every 15 hours an employee volunteers
after one year of work.

Financial Donation Match
We match employees’ financial donations to eligible community organizations after
one year of work.

Take Five
Eligible employees can take up to five hours per month to volunteer.

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In 2015 and 2016, Gap Inc. and employees contributed over $30 million in employeedriven community investment, which represents the combined value of volunteer hours,
employee financial contributions and company matching dollars. This amount includes
more than 920,000 employee volunteer hours with organizations focused on a variety
of issues, from helping disadvantaged women thrive to enabling young people toachieve a better future.
For Gap Inc., these programs deliver both social and business benefits: Our
communities benefit from the long-term impact of our employee volunteer efforts, andour business is rewarded with more engaged employees who are passionate about
making a difference in the world. For example, we've found that volunteers have aturnover rate nearly a third lower than individuals who are not similarly engaged, they
stay with our company for nearly twice as long and they are more frequently promoted.

Gap Inc. employees
who volunteer are
more engaged at work,
stay with our company
nearly twice as long
and are more
frequently promoted.

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Empowering Women: P.A.C.E.
Women have played an essential role at Gap Inc. from the moment Doris Fisher
The Short Story

helped open our doors in 1969. Today, women comprise the majority of both our

P.A.C.E.

employees and workers within the apparel industry; investments in women are a•• P.A.C.E. unlocks opportunities forthe women and girls who work in the
global apparel value chain and live insurrounding communities.
•• 68,000 women in 12 countries
participated in the program by endof 2016.

business imperative. We also know that women are powerful catalysts for change,
and when women thrive, their communities thrive. Our business supports women’s
skills development and encourages them to use their voices and dream bigger sothey can help themselves, their families and communities thrive for generations.
Launched in 2007, our unique P.A.C.E. (Personal Advancement and Career
Enhancement) program is dedicated to supporting the women who work in the global•• Participant evaluations document
higher self-esteem and productivity.

apparel industry, and within our global supply chain. Although women represent the•• We are expanding P.A.C.E. througha partnership with USAID focused on
women and water.

management positions, and many lack access to the education and training they needmajority of the sector’s workforce, relatively few have the opportunity to advance toto support their personal and professional growth. We developed P.A.C.E. to give these
women the foundational life skills, technical training and support that will help themadvance in the workplace and in their personal lives.

Goals•• By 2020, improve the lives of 1
million women and girls in Gap Inc.’s
supply chain and other manufacturing
and community settings.
•• By 2020, expand P.A.C.E. to a suiteof learning programs that address
the needs of adolescent girls andwomen leaders.

We began offering P.A.C.E. in factories, and as we have developed our approach,we have expanded the program to unlock new possibilities for women and adolescent
girls in surrounding communities. To date, more than 68,000 women in 12 countries
have participated.
Beyond strong partnerships with our suppliers, a key element of our successful program
is collaboration with organizations that have a deep understanding of the needs of thewomen we aim to serve. The International Center for Research on Women (ICRW), a
global institute dedicated to empowering women, as well as Swasti Health Resource
Centre, worked closely with our teams to design P.A.C.E., and CARE International has
served as a key implementing partner for the program over the years.

In 2016, on International Day of the Girl, we announced the expansion of
the program to bring new educational opportunities to girls ages 11 to 17.
Our new curriculum focuses on improving self-confidence and helping girls
develop future goals and aspirations.
Guided by firsthand stories and metrics-driven results, we are scaling P.A.C.E. beyond
its initial scope. In September 2015, we announced our goal to expand the program
to reach 1 million women and girls by the end of 2020. Always keeping real impact inmind, we recognize that this rapid, ambitious expansion poses challenges. To address
this, we are working with our partners on innovative implementation approaches that

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10 Years of P.A.C.E.
Program expanded
to Cambodia.

P.A.C.E. launched in China,
Sri Lanka and Indonesia

Commitment to reach1 million women

2008

2012

2015

2007

2011

2013

2017

P.A.C.E. program
piloted in India

Transition from NGO
implementation to a vendor
trainer model allows us toscale up program

Community Program
launched in India, Bangladesh
and Cambodia

Government and NGO
engagements begin–
Girls program kicks off

will help us achieve the right mix of scale and impact. Today, P.A.C.E. programs for
women include up to 80 hours of classroom learning, interactive exercises and open
discussion covering areas such as communication; problem-solving and decisionmaking; time and stress management; water, sanitation and hygiene; as well as
additional modules when appropriate. We are currently evaluating how to maintain the
program's impact, while respecting that one of the biggest challenges women face isenough time to complete responsibilities at work and at home.
The P.A.C.E. for Girls Program is an innovative program that aims to build the skills andefficacy of young (11- to 13-year-old) and adolescent (14- to 17-year-old) girls to be
confident, resourceful and able to plan for their future. The program aims to enable girls
to negotiate the physical, mental and social transitions during adolescence that haveimportant implications for outcomes in adulthood. It also aims to strengthen parentchild communications.

Women who participate
in P.A.C.E. reportincreased knowledge,
skills and productivity,
as well as higher selfesteem and confidence.

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In addition to educating women and increasing their skills on these critical topics,
the most transformative lesson P.A.C.E. delivers is knowledge of how women can
advocate for themselves. We want to help women find and use their voices. As wecelebrate the 10-year anniversary of P.A.C.E. and work toward our goal of reaching
1 million women and girls, we have reflected on several key ingredients that makethis program a success: our strong partnerships both internally and externally, ourrelationship with our key facility partners and our focus on the women of today. We also
have reflected on how the lives of women have changed over the 10 years P.A.C.E.
has been functioning. To ensure the greatest value to the women within the program,
we are in the process of evaluating our current curriculum to ensure that it remains
relevant in our rapidly changing world.
We have found that P.A.C.E. programs are most effective in communities where
we have a strong presence. By focusing on our supply chain, we are better able tounderstand the specific needs and challenges in those areas, and by engaging with
our vendors, we can support their business and ours. To date, 42 suppliers in 10

At its core, P.A.C.E. is helping women use their voices, share their dreams
and own their futures. As a result, women are speaking up for themselves,
their families and their communities. It’s changing lives. This ripple effect isthe power of P.A.C.E.
- Kindley Walsh Lawlor, Vice President, P.A.C.E.
countries are planning on or are currently implementing P.A.C.E. These suppliers
report benefits in the form of improved workforce productivity and performance andgreater retention of workers. P.A.C.E. strengthens our relationship with our suppliersand enhances their performance, and it also deepens the sense of meaning andpurpose among our employees.
Evaluations of participants have documented our impact: Women who participate in
P.A.C.E. report increased knowledge, skills and productivity, as well as higher selfesteem and confidence. They describe becoming better at communicating, managing
their finances, taking care of their health and planning for the future. P.A.C.E. has also
helped enhance women’s relationships at work, at home and in their communities.

Gap Inc. and USAID Women + Water Global Development Alliance
In many garment-producing countries, some of women’s most significant challenges
relate to water. Women bear a disproportionate burden when it comes to household
responsibilities such as cooking and cleaning, which require water. According to
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each day—time that could be spent earning additional income, caring for their families
or getting an education. Moreover, women, along with their families, face serious healthrisks due to inadequate access to safe drinking water and sanitation facilities, and poor
understanding of healthy hygiene practices.
In an additional effort to address these water challenges and strengthen women’s lives,
we have integrated a water, sanitation and hygiene (WASH) curriculum into our P.A.C.E.
program. The P.A.C.E. WASH curriculum is part of our core P.A.C.E. curriculum andis key to our larger Women + Water strategy, which seeks to address water issues
through the lens of people and human rights (read more about this on page 75).
In 2017, we announced a partnership with the United States Agency for International
Development (USAID) that will expand this program even further. Gap Inc. and USAID’s
five-year Women + Water Global Development Alliance aims to advance the health andwell-being of women, families and communities touched by the apparel industry.
The alliance will focus on four key areas:
1. improving health and advancing development, including access to sustainable water,
sanitation, hygiene services and hard goods such as toilets and filters, and effectively
managing water resources
2. improving the quality of life and life skills of women touched by the apparel value chain
3. developing an effective model for a systemic partnership across the apparel industry
value chain to achieve development outcomes
4. disseminating lessons learned across and beyond the apparel industry sector
Alliance partners—including Water.org, CARE India, Institute for Sustainable
Communities and ICRW—will draw on their complementary strengths to improvehealth and well-being in countries of shared interest, starting in India. To maximize
the impact of these efforts, the Alliance is applying a three-part approach based on:

Gender sensitivity
While we will engage both men and women, we recognize the pivotal role thatwomen play in society and their uniqueneeds and opportunities.

Systems thinking
We understand that a variety of interdependent factors can determine the behaviors ofindividuals, and we recognize that changes at the individual, organizational, communityand systems levels are often needed to sustainably improve the lives of women, theirfamilies and their communities.

Flexibility
The program will allow us to learn while doing, and we will adjust as the program evolves.

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Improving Factory Working Conditions
In this section•• Our Policies andCommitment to
Human Rights•• Collaborating on Supply
Chain Sustainability•• Assessment
and Remediation

We partner with all of our suppliers to ensure safe, fair and healthy
working conditions for the individuals who create our clothes.
Together, we’re building the capacity of our suppliers to manage andimprove their practices, designing industry-leading programs to improve
worker and manager relations, assessing and improving working conditions
to meet legal and international standards and increasing transparency about
all of our efforts.

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Context and Approach
Consumer trends and expectations are placing greater demands on production
timelines and capabilities—which can ultimately affect the individuals working in thegarment industry.
To help manage these broad shifts in the industry, we continue to integrate policies andprograms into our core business and form partnerships across the apparel industry toensure that the people in our supply chain work in safe, fair conditions.
The Short Story

Factory Working
Conditions•• We work with governments, NGOs, tradeunions and others to forge innovative
solutions to systemic issues.
•• We have consolidated our supplier base by
25% so that we can work more closely withfewer suppliers.
•• We have built a holistic sustainability teamso that all of our field staff can support
progress with suppliers.

Since launching our Supplier Sustainability program in 1994, we have transformed ourapproach to improving facility working conditions by developing innovative programs
that go far beyond assessing and remediating issues in our approved facilities.
In recent years we have taken steps to:•• Revamp our policies and tools such as building out our Code of Vendor
Conduct (COVC) into a comprehensive manual to be more transparent toour suppliers, so that they understand and meet our expectations related toworking conditions and labor standards.
•• Consolidate our supplier base so that we are working more closely with fewer
suppliers. Today, we are working with 25% fewer suppliers than we were five
years ago.
•• Deepen our partnerships with suppliers and NGOs to create a more advisory

Goaland collaborative approach grounded in continuous improvement. With our

By the end of 2020, we have set a goal for all
strategic suppliers to elevate social and labor
performance ratings to earn a rating green or
yellow, thereby eliminating the most egregious
noncompliant issues from our supplier base.

providing training to improve suppliers’ social and environmental capabilities.

suppliers, we are designing new approaches to worker engagement and are
Examples include our Workforce Engagement Program with Verité and ourongoing work with the Arbitration Council Foundation in Cambodia.
•• Build a holistic sustainability team, moving from a model with separate
employee functions by program to require all of our field staff to help deliver
each of our Supplier Sustainability programs. This allows us to evaluate andimprove our suppliers' sustainability performance in an efficient manner andprovide them with support that is best suited to their needs.
•• Pioneer new programs in collaboration with a broad set of industry-wide
initiatives. This includes supporting the Social and Labor Convergence Projectby co-chairing two of its working groups and helping develop the Better Work
Academy in partnership with the ILO's Better Work program.

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50More than a million people work in the facilities that create our clothes, andwe want to ensure that they work in safe, fair conditions and are treated with
dignity and respect.
Our Supplier Sustainability efforts thus far have primarily focused on issues at cutand-sew facilities where we have direct relationships and greater influence to drive
improvements. We also monitor, assess, remediate and disclose their supporting
facilities, such as laundries, embroideries and screen printers. However, we are
evolving our strategy to address issues in other parts of our supply chain, including
areas where we have less direct influence but nonetheless see opportunities to improve
working conditions. For instance, we are working with our strategic mill suppliers toassess their working conditions and build their capacity to proactively mitigate risks,

Top Sourcing Countries
Our brands sell products that are manufactured
in about 30 countries. All the items we designand offer are produced in third-party facilities,
owned and operated by our suppliers. A
majority of our purchases come from the six
countries listed below.

and we are seeking to improve conditions in the cotton sector through our partnershipwith the Better Cotton Initiative
Our Global Supply Chain and Supplier Sustainability teams work in about 30 countries
and we often tailor our practices in these places based on a deep understanding of
the local context. In addition to our Assessment and Remediation program, which we
maintain for every supplier and facility wherever we source branded apparel, we haveCountry

Facilities(As of Jan 28, 2017)

China

234

Vietnam

129

India

120

created unique programs and specific policies to address local economic, political,
business and cultural context where needed. These assessments include social, politicaland environmental data, along with risk indices and expert analysis. They also draw on
the insights we have gathered through ongoing engagement with a variety of external
stakeholders and business partners.
When we assess a facility, they receive a rating that is calculated based on clear
criteria within five categories: Compliance with Laws, Environment, Labor Standards,

Cambodia59

Sri Lanka

53

Bangladesh

51

A list of all facilities we source fromis available here.

Occupational Health and Safety, and Management Systems. Violations are input into asystem that categorizes findings by their level of severity: “critical,” “severe,” “key” and“non-compliant.”
We use a color-coded system to rate 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 ormore serious issues are assigned a red rating. Critical, severe and key violations have agreater negative impact on a facilities’ rating than “non-compliance” violations, such as
first-aid kits not being fully stocked.
All of these efforts support our goal to achieve a sustainability rating of green or yellow
for all suppliers by the end of 2020.
Detailed data from our COVC assessments are available online.

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Our Policies and Commitment to
Human Rights
The Short Story

Human Rights•• Garment industry jobs help many peoplebuild a better life, but some regions sufferfrom a lack of infrastructure or rule of law.
•• We support the principles in the Universal
Declaration of Human Rights (UDHR), theUN Global Compact, the OECD Guidelines
for Multinational Enterprises and the ILO’s
core conventions, and we are signatories tothe UN Guiding Principles on Business andHuman Rights.
•• Our Human Rights Policy, Code of Vendor
Conduct (COVC) and other policies outline
our high expectations on social and humanrights issues in our industry.

We are proud to support the principles outlined in the Universal Declaration of Human
Rights (UDHR), the UN Global Compact, the OECD Guidelines for Multinational
Enterprises and the ILO’s core conventions. These principles form the foundation for
our Human Rights Policy, which defines our approach and activities to respect humanrights and prohibit human rights abuses.
Additionally, our COVC—which lays out our standards for labor, working conditions,management systems and environmental management—forms the core of ourcommitment to ensuring our vendors respect the human rightsof the people who make our branded apparel.
Read more about our COVC and our Assessment and Remediation
program on page 68.
Our Supplier Sustainability team is composed of individuals from the regions in which
they work. We believe that local staff are more effective at understanding workers’
needs, take greater responsibility for enforcing our standards—particularly on issues
that can be difficult to detect—and help us ensure compliance with our COVC.

We believe that local staff
are more effective atunderstanding workers’
needs, take greater
responsibility for enforcing
our standards—particularly on
issues that can be difficult to
detect—and help us ensurecompliance with our COVC.

We use an integrated scorecard within our sourcing department to measure our
suppliers’ performance. We believe that further integrating sustainability into oursourcing practices will play a key role in improving social and labor performanceand limiting any contribution our purchasing practices may have on issues such as
excessive overtime.

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In addition to our policies, we recognize that transparency has become a coreexpectation of global companies. Twice a year, we publish our approved list of facilities(see the list here), which includes cut-and-sew facilities, embroideries and laundries.
Our Supplier Sustainability team monitors each of the facilities disclosed on our list,
and publishes detailed data on our assessments, findings and resolution process here.
The sections that follow describe our policies and approaches to ensuring respect forhuman rights.

Freedom of Association
Our COVC explicitly supports freedom of association and the rights of workers to
lawfully and peacefully associate, organize and bargain collectively. Many garment
workers have limited experience working at facilities or exercising these rights, and theyoften have few other options for earning a steady income to support themselves andtheir families. These rights can help workers find a common voice and provide themwith a framework for engaging with management on fair wages, sufficient benefits
and the right to do their work in fair and decent conditions. The limited rule of law inmany developing countries provides fewer protections for workers’ rights, which is why
freedom of association can be such an important enabler in certain countries. We use awide range of approaches in seeking to ensure that the rights of freedom of association
are respected, from supporting open dialogue between facility workers and managers,
to partnering with workers’ rights groups and trade unions when appropriate.

Human Trafficking and Forced Labor
The ILO estimates that more than 20 million people globally are forced to work against
their will. This issue has received heightened attention over the past several years dueto the innovative and diligent work of NGOs, governments, multilateral organizations,media and companies.
Our COVC and Vendor Compliance Agreements explicitly prohibit the use of forcedlabor in any stage of our products’ production, and we actively work to combat thisviolation of fundamental human rights. While assessing facilities, our field teams
interview both workers and managers and review records to help ensure that workers:•• have voluntarily agreed to all employment terms•• are free to end their employment if and when they choose•• can freely enter and exit their work spaces and living quarters
We believe legislation is an important lever in the global fight against human trafficking;we welcomed the 2012 California Transparency in Supply Chains Act, which
requires companies of a certain size to publicly communicate their efforts to identify
and eliminate forced labor in their supply chains. We combine this disclosure with
our response to the UK Modern Slavery Act of 2015, which also requires eligible

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businesses over a certain size to disclose annually the actions they have taken to
ensure there is no modern slavery in their business or supply chains.
Our response statement can be found here.
We also collaborate with stakeholder networks in key sourcing countries to monitor
and address forced labor risks. We were pleased that in 2016, KnowTheChain ranked
Gap Inc. second in its benchmark of 20 apparel and footwear companies based on
our efforts to eradicate forced labor from our global supply chain. While we recognizethat there is still much more to do, we are proud to help lead the industry in ensuring all
workers’ rights and freedoms are respected.

While we recognize that there is still much more to do, we are proud to help
lead the industry in ensuring all workers’ rights and freedoms are respected.
Foreign Contract Workers and Recruitment
Gap Inc. maintains that facilities that recruit or employ foreign contract workers (FCWs) shallensure that these workers are treated fairly and on an equal basis with its local workers.
Migrant workers shall not be subject to any form of forced, compulsory, bonded orindentured labor. All work must be voluntary, and workers must be free to terminate
their employment at any time, without penalty. Migrant workers (or their family
members) shall not be threatened with denunciation to authorities to coerce theminto taking up employment or preventing them from voluntarily terminating theiremployment, at any time, without penalty.

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Within our COVC, we have incorporated an extensive list of procedures and standards
in relation to the treatment and employment of foreign contract workers. Our COVC
states that facilities shall not discriminate, intimidate, control passports or misuse
contracts or recruiting fees and paperwork as they relate to migrant and foreign
workers. We also amended our requirements on employment of foreign contract
workers to ensure due diligence of recruitment agencies before contracts are madewith them, and we regularly assess their existing recruitment agencies on their legal
and ethical recruitment practices. Our Supplier Sustainability team tracks theseprocedures to ensure that these workers are treated fairly and on an equal basis withlocal workers.
As described in our COVC, facilities are expected to use recruitment agencies only
under the following conditions:•• The agency is licensed by the home country government, and, whereapplicable, the host country government.
•• A written contract exists between the facility and the recruitment agency
that clearly defines all hiring practices.
•• The recruitment agency discloses all the information regarding the use ofany sub-contractors, sub-agents or any individual for recruiting workers forthe facility.
•• The facility (including its employees and representatives) does not accept any
reimbursements, kickbacks or other amounts from the recruitment agency orother person involved in the recruiting process.
The Supplier Sustainability team audits to determine whether our policies andstandards are followed. Gap Inc.’s Foreign Contract Workers policy states: “The facility
shall pay all fees and costs payable to the host government for the documentation of
FCW’s employment in the host country, including any levies, fees for work permit, fees
for renewing work documents. The facility shall not at any point deduct from wages,
charge workers or otherwise accept reimbursements to recoup these fees. The facilityor the recruitment agency shall not collect from FCWs a deposit or bond or withholdpart of FCWs’ earnings at any point of their employment.”
The FCW policy also prohibits recruitment agencies from charging FCWs any illegal
fees and/or fees payable to the host government, such as levy, legal work document
fees, and fees for renewing work documents.
In cases where it has been found that recruitment fees have been paid by workers,
we require and verify that the affected workers are reimbursed.

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Of all facilities active as of the end of fiscal year 2016, only a few employed foreign
contract workers, including in Jordan, where we partnered with Better Work and theWorld Bank to help provide employment opportunities in the garment sector to
Syrian refugees.

Short-Term Contracts
According to our COVC, each facility shall not modify or terminate workers’ contracts(including the signing of a series of short-term contracts in immediate succession), work
schedules or location for the sole purpose of avoiding wage requirements, including
overtime or other benefits. Temporary, short-term or fixed-term contracts for workers
should not be used for permanent jobs, and workers shall be shifted to permanent
status in accordance with local laws if they have exceeded the specified period.

Unauthorized Subcontracting
Subcontracting is common in the apparel industry, and it can pose risks because
suppliers may outsource production to facilities that have not been approved bybuyers and that do not uphold requirements for safe, fair labor practices and working
conditions. Our Global Supply Chain and Supplier Sustainability teams collaborate toaddress unauthorized subcontracting (UAS).
We take extra precautions in countries with a high risk of UAS by offering specialized
training for suppliers and facility management, and by conducting site visits to ensure
our product is being manufactured in the appropriate designated facility. Our Supplier
Sustainability, Quality Assurance and Merchandising teams seek to detect UAS. If acase is found, we may impose financial chargebacks, or, in severe or repeat cases,
we will terminate our business with a supplier. In the event that chargebacks are
imposed, those funds are reallocated either philanthropically or programmaticallytoward projects that are focused on improving working conditions within our supply
chain or across the industry. High-Risk Incidents are immediately escalated and thefollowing steps are taken:•• requires the unauthorized facility to immediately stop production of any
Gap Inc. branded apparel•• ensures all goods (finished or unfinished) are returned to a facility approved by
Gap Inc., segregated and held until the issue is resolved•• leads an investigation to look for and address any critical issues in theunauthorized facility•• requires the approved facility to register for management systems training
as a prevention measure, ensuring facilities invest in systems to prevent
future violation

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Discrimination
We are committed to ensuring that the people who make our clothes are not subject
to any form of discrimination. Our COVC prohibits any form of discrimination duringhiring, compensation, access to training, promotion, termination or retirement basedon race, color, gender, nationality, religion, age, maternity status, marital status,
indigenous status, ethnicity, social origin, disability, sexual orientation, HIV/AIDS status
or membership in worker organizations, including unions or political affiliation.

We conduct
assessments of all
branded apparel
suppliers on a regularbasis to check for any
signs of discrimination.

We conduct assessments of all branded apparel suppliers on a regular basis to checkfor any signs of discrimination in hiring or promotion decisions, contract terms, labor
practices, payroll records or tests or medical exams workers may be asked to take.
We know that enforcing our discrimination standards requires significant time andattention, especially because the majority of garment workers are women, while thevast majority of supervisors and managers are men.
Our team also identifies common risks and best practices for pregnant or nursing
women, including rearranging working hours, adjusting overtime hours and offering
greater flexibility for break times.

Child Labor
Gap Inc. does not tolerate the use of child labor under any circumstances.
We do recognize that it is a deeply complex issue that is inextricable from the broader
issues of poverty and economic development. Our Human Rights Policy and our
COVC explicitly prohibit the use of child labor. We require our supplier facilities toestablish robust age-verification processes to prevent employment of children or
underage workers. We also work to ensure that facilities respect local laws andinternational standards related to employing younger workers who are not children.

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During facility visits, our Supplier Sustainability team interviews workers and managers
about recruitment and hiring, labor practices and working conditions for young workers.
They check for lawful, unaltered documents to verify workers’ ages, since workers can
go to great lengths to obtain counterfeit documents. Our teams also monitor whether
facilities are upholding labor laws and standards for legal young workers.
In the rare event that we encounter child labor at an approved facility, we take
immediate action to resolve the issue, including:•• removing young workers from the facility•• making sure workers have access to education or appropriate training,receive an ongoing wage and are guaranteed a job if they choose to work at
the facility when they are older•• requiring the offending supplier to pay for all remediation costs

Wages
We require suppliers to pay the legal minimum or industry wage, whichever ishigher. When violations are found, the facility must remedy the situation. If wage
violations are found and the supplier fails to properly remediate, we will implement
consequences up to and including termination of our relationship with that supplier.
We have conducted wage studies in our supply chain multiple times in order to assess
wages paid against various local and international frameworks. In data collected froma selection of our suppliers, we found wages met minimum wage requirements and inmany cases exceeded local norms. To ensure the accuracy of this baseline study, we
engaged an independent third party to verify the process and findings.
We also collaborate on advocacy work to push for appropriate wage-setting
mechanisms in certain countries. Most recently, in response to the unrest in December
2016 in Bangladesh, we sent a letter to the prime minister of Bangladesh, seeking toencourage the government to institute a regular wage review mechanism. We believethat annual wage review mechanisms are an important legislative protocol, as they will
help ensure that minimum wage levels are adjusted on a regular basis to account for
inflation and cost of living adjustments.

Working Hours
Excessive working hours is one of the most common and persistent issues at thefacilities making our branded apparel. Several factors can contribute to this: Facility
managers may request overtime to meet tight deadlines or boost sales, workers may
choose to work more hours to increase their pay and buyers’ purchasing practices
such as rush orders can lead to more overtime. Recognizing our role in this, weparticipated in a program to improve our understanding of how our purchasing choices
can lead to better outcomes. As part of Better Buying’s beta test, we enlisted suppliers

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from South Korea, Sri Lanka and Hong Kong to evaluate our purchasing practices andprovide feedback on their impacts. Using the results of that project, we will seek toincorporate insights into our core business operations, such as improved forecasting
and giving appropriate lead times.
The issue of capacity adds another layer of complexity to purchasing practices.
Apparel facilities typically work with five to 10 apparel brands at any given time. Despite
their efforts, facilities often miscalculate their capacity or buyers change orders at
the last minute, which means facilities may face too much or too little production
which directly affects working hours. To address this challenge, we have createda team devoted solely to capacity planning. This allows us to build more balanced
purchase orders and ultimately help our suppliers improve how they manage their own
operations such that we can address the issue of working hours.
We impose several requirements that address working hours:•• Workers must be allowed to refuse overtime without any threat or penalty
of punishment.
•• Workers must not be required to work more than six days in a row.
•• Facilities must take corrective actions to limit excessive overtime, which can
include analyzing the root causes of issues, adjusting production schedules
and improving management systems.
Based on each country’s laws, we set the total number of allowable working hours
per week, including overtime. Our facility ratings system identifies and implements
consequences for serious overtime violations.

Humane Treatment
The demands of garment manufacturing—including production targets and otherrequirements—can place significant stress on workers and supervisors, which may
contribute to mistreatment in the workplace. We also recognize that supervisors may
not have enough training or experience to constructively communicate with workers,
or understand appropriate behavior in the work environment.
Read more about the Workplace Cooperation Program on 64.
We monitor for signs of verbal, psychological or physical mistreatment, including
coercion and threats to workers. Facilities are required to provide workers withgrievance channels and training on how to use these mechanisms, and we expect
facilities to have a disciplinary process and take action to address issues. We alsocollaborate with select facilities through our Workplace Cooperation Program toproactively improve worker-manager dialogue and relationships.

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Sexual Harassment in India
Women constitute 60–80% of India's apparel workforce. Recent

build an environment where they clearly define and implement thereports have highlighted that these women face widespread andnational policy on Prevention of Sexual Harassment (as required

underreported sexual harassment, and this coverage has helped

legally), and create an Internal Complaints Committee (also legallycreate awareness within local communities and among various

required). We also want to help them raise awareness among

stakeholders. Protection against sexual harassment and the rightboth male and female employees about the issue and about their

to work with dignity are universally recognized human rights byrights and responsibilities under the Sexual Harassment at theinternational conventions.

Workplace (Prevention, Prohibition and Redressal) Act of 2013.

During regular facility assessments, we have found that there isa systemic failure to address this issue, despite stringent local

We believe that implementing these mechanisms will help prevent
sexual harassment in the workplace.

laws. There is also an opportunity for both local employers andWe have conducted sensitization programs with all of ouremployees to have a better understanding of this issue and the

suppliers in India and have provided them with guidance on

legal requirements.

legal requirements. We also have defined time-bound goals and

To address this, our team is working with our suppliers in India,

identified implementing organizations for this work.

covering around 100,000 workers. We aim to help our vendors

Grievance Mechanisms
We require facilities to provide a confidential and anonymous channel for workers
to express grievances without fear of retaliation. The grievance process must allow
for a timely response, with documentation, and an action plan to address the issue.
Our field team trains factory workers and managers on establishing and using
grievance mechanisms. If our team identifies any issues, we require facilities toimplement corrective action plans and evaluate their performance.
In 2015, we provided all of our suppliers with information on how to effectively operate
and manage grievance mechanisms. Key elements include:•• information on how effective grievance mechanisms can play an important rolein identifying, preventing and remediating issues of concern on the facility floor•• how facility-level grievance mechanisms can help support workers’ ability toraise concerns and seek remedy in the workplace•• how mechanisms can enable facility management to understand and address
issues before they escalate into bigger issues

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We also train facility managers and workers on effectively using and managing
grievance mechanisms through our Workplace Cooperation Program (described on
page 64). Going forward, we will be focusing on improving facilities’ capabilities toimplement properly functioning grievance mechanisms and ensuring workers are able
to use them to advocate for their rights and well-being.

Fire and Building Safety
Levels of fire and building safety vary greatly across the global apparel industry,and depend on a number of factors, including local laws and regulations, building
maintenance, the technical capabilities of local experts and the expectations andactions of suppliers and brands.
To address this, our Supplier Sustainability team works to improve fire and building
safety by checking that all facilities:•• maintain sufficient fire alarms, clearly marked exits and emergency lighting•• conduct evacuation drills•• keep all doors, aisles, exits and stairwells clear, accessible and unlocked
during working hours•• maintain and charge fire extinguishers that are visible and accessible toworkers in all areas of the facility
We also continue to evaluate how our involvement in the Alliance for Bangladesh
Worker Safety can inform our approach to addressing fire and building safety acrossall of our suppliers’ facilities. For example, we began conducting comprehensive fire,building and electrical safety inspections in our approved facilities in Pakistan to identify
risks that may require immediate attention in that country.

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Bangladesh
Alliance for Bangladesh Worker Safety
Gap Inc. is a founding member of the Alliance for Bangladesh

as well as the national garment industry, continually improve

Worker Safety. Now in its fifth year, the Alliance continues its

working conditions. We have formed an expert team focused onefforts to help ensure safer factories in Bangladesh. It has

improving fire and building safety at the facilities producing ourreleased regular progress reports, including its third Annual

branded apparel in Bangladesh. We also provide training to help

Report in 2016, as well as impact assessments and monthly

drive worker and management behavior changes to improve firestatements on completion of Corrective Action Plans andsafety practices.

suspended operations. All reports may be found on the
Alliance website.

Looking forward, we will continue to operate our program within
Bangladesh, and strengthen our work with stakeholders to

In addition to our participation in the Alliance, we maintainachieve our collective vision of a multi-stakeholder, industry-wide

our commitment to ensuring that the facilities we work with,solution for improving the country’s working conditions.

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Collaborating on Supply Chain Sustainability
Addressing the systemic challenges of the apparel industry requires collaboration.
We embrace this approach by working closely with our suppliers to build theircapabilities, by joining industry-wide efforts to share best practices and improve
efficiency and by partnering with local and international NGOs on innovative programs
that benefit facility managers and workers.

Empowering our Strategic Suppliers
The Short Story

Collaboration

We partner with the facilities where our products are made to help them become
preferred employers in the communities where they operate. This supports workers
and can benefit business by driving higher retention and improved productivity.

•• We work closely with our strategic suppliers
to help build their capability to managesocial and environmental issues.

To achieve this, we take a multipronged approach to building our suppliers’ capability.

•• In partnership with organizations such as
Better Work and Verité, we are pioneering
programs that improve worker-manager
relationships and enhance worker
engagement and well-being.

together, we are working with a smaller number of strategic suppliers. Over the past•• Together with the Social and Labor
Convergence Project, we are helping createa shared tool for footwear and apparelcompanies to assess facilities’ social andlabor performance.

Our tier 1 suppliers are trained on our COVC on an ongoing basis. We also engage•• 164 of our facilities—20% of our strategic
suppliers—are enrolled in Better Work’s
program to reduce the duplication of audits
by brands.
•• We have trained 31 facilities in nine countries
through our Workplace Cooperation Program
to improve dialogue and relations between
workers and management.

To cultivate long-term, close relationships that allow us to create greater change
five years, we have streamlined our approved list of facilities from more than 1,200 to
fewer than 900. With those suppliers, we develop shared sustainability goals and workwith them to measure and improve performance.

many suppliers more deeply through industry-leading programs such as P.A.C.E.
(described on page 45), our Workplace Cooperation Program (page 64) and ourWorkforce Engagement Program (page 66).
To help our suppliers make strategic investments in their employees and business
operations, we have increased their access to data and analysis from our Assessment
and Remediation program (described on page 68). Over time, we will also disclose oneach supplier’s involvement in various Gap Inc. programs and their areas of opportunity
for improving performance.
We believe that as suppliers take more ownership of their sustainability programs,
they will realize the business benefits and will require fewer external assessments
and incentives.

Social and Labor Convergence Project
The proliferation of duplicative assessments and their associated protocols consume
time and resources that suppliers could use to create real progress in their workers'
lives. We believe streamlined approaches to measuring social and environmental
performance can support systemic progress and make it easier for more businesses toimprove their social and environmental performance.

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That’s why, in 2015, Gap Inc. became a signatory to the Social and Labor
Convergence Project, a collaboration among apparel and footwear brands, retailers,industry groups and civil society organizations. The project is building a shared datacollection tool that can assess the social and labor performance of a manufacturing
facility. The initial tool was piloted in 2016, and it will be further tested in 2017.
The project aims to have the tool and verification methodology ready for adoption
in 2018. To help the project achieve its goals, Gap Inc. is chairing two key working
groups: the Tool Development Working Group and the Verification Working Group.

In 2015, Gap Inc. became a signatory to the Social and Labor Convergence
Project, a collaboration among apparel and footwear brands, retailers,industry groups and civil society organizations.
ILO Better Work, Capability building and the
Workplace Cooperation Program
As part of our efforts to go above and beyond assessment and remediation and work
more collaboratively with our suppliers and other stakeholders, we have played aleading role in multi-stakeholder collaborations such as the ILO’s Better Work program.
Better Work takes an advisory approach to monitoring facilities, with an emphasis
on protecting worker rights and well-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, Nicaragua and Lesotho.

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We have partnered with Better Work since its founding, and today we collaborate in avariety of ways: We sit on the Better Work Advisory Board, we partner with them onadvisory services in eight of our sourcing countries and we advocate for other buyers
to adopt Better Work’s assessment reports instead of duplicating audits. Previously, we
set goals to have 70% or more of facilities in ILO Better Work markets participate in the
Better Work program. Our goal now is to enroll 100% of our eligible facilities in Better
Work countries in the program by the end of 2018.
In 2015, we partnered with Better Work to create a new capability-building program
for the facilities we work with. This Workplace Cooperation Program gives workers andmanagers the skills they need to resolve workplace issues, engage in collaborationand drive continuous improvement in the workplace. Upon helping fund the expansionof this program, we then asked Better Work to train our Supplier Sustainability teamon this curriculum, so we could deliver it to non-Better Work facilities. Through thisprogram, we help train committees of workers and managers to develop sustainable
solutions and share best practices for workplace challenges. The trainings covercommunications and problem-solving, how to handle grievances, negotiation skills
and more. Through this program, our Supplier Sustainability team also trains workers
and managers on how to run effective, collaborative discussions to promote improved
dialogue between workers and management.
We believe that improving dialogue and relations between workers and management
can help prevent labor disputes, resolve problems, give greater voice to workers andimprove productivity and competitiveness.

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In 2015-2016, we implemented training activities with 31 facilities in nine countries,
and we plan to expand into 69 facilities by 2017. In 2018, we will be adding a training
focus on supervisory skills to help define worker rights, supervisor responsibilities andprofessionalism in the workplace. This program also teaches other valuable skills,
including communication and effective listening.

Facilities Assessment and Remediation in Better Work Markets (2016)
Facilities Assessment by Better Work or Gap Inc. during fiscal year
Country

Facilities Assessed by Better Work

Facilities Assessed by Gap Inc.

Total

Bangladesh

18

34%

35

66%

53

Cambodia

40

67%

20

33%

60

Haiti

7

88%

1

13%

8

Indonesia

30

32%

65

68%

95

Jordan

3

75%

1

25%

4

Lesotho

2

100%

0

0%

2

Nicaragua

1

25%

3

75%

4

Vietnam

59

45%

71

55%

130

Total

160

45%

196

55%

356

*Not all assessed facilities are approved, or facilities may be newly approved or deactivated during year

Workforce Engagement Program
In addition to ensuring that the people who make our clothes work in safe, fairconditions, it is crucial that they feel valued and engaged at work. Research has

Goal
By 2018, partner with Verité and ourstrategic suppliers to measure workers’
engagement, and launch projects aimed at
improving 20,000 workers’ sense of value
and engagement at work. Publicly reporton findings and impact, and share bestpractices with all Gap Inc. suppliers.

shown that employee engagement enhances workers’ sense of well-being, and canalso demonstrate positive business outcomes. According to Workplace Research
Foundation, highly engaged employees are 38% more likely to have above-average
productivity, and suppliers that invest in workers receive a three-to-one return on
their investment.
In 2015, we launched our Workforce Engagement Program with Verité, a leading NGOwith deep expertise in improving working conditions in the garment sector. The goalof the program is to measure and improve the degree to which garment workers feelvalued and engaged at work, by giving workers an opportunity to provide anonymous
feedback on key topics such as supervisor relationships, grievance mechanisms, andtraining and development opportunities.

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This information is collected through surveys, focus groups and one-on-one
interviews, which provide a cross-section of both quantitative and qualitative datafor our field team to derive insights from. Upon two years of implementation with
Verité, we began testing the delivery of this program through interactive voice
response (IVR) technology, smart phone applications (WeChat) and tablets. To do so,
we partnered with Good World Solutions, launching the technology-based survey inthree of our key sourcing countries.
Upon receipt of the data collected by Verité or Good World Solutions, we thenhelp our suppliers analyze the workforce-related insights to create tailored
recommendations they can use to make investments in their employees. This
analysis also informs training programs for facility managers, as it serves as the basis
for our Supplier Sustainability team to develop tools for facility managers to increase
workers’ satisfaction, knowledge and overall well-being. To achieve that end, in 2016
Gap Inc. created an Engagement and Well-Being Toolkit for suppliers, meant toprovide them with resources that can help them improve various workplace-related
issues. Examples of this include team-building activities, supervisory skills trainings
and investments in well-being infrastructure, such as building daycare centers on site
to help working mothers.
To date, we have worked with Verité to complete surveys in 81 facilities in
Bangladesh, China, Guatemala, India and Vietnam, and with Good World Solutions
we have delivered the tech-friendly survey to eight facilities in China (IVR and
WeChat), Sri Lanka (tablet) and Vietnam (IVR)—reaching a workforce of over 220,000
workers since 2015.

The goal of the Workforce Engagement Program is to measure and improvethe degree to which garment workers feel valued and engaged at work, by
giving workers an opportunity to provide anonymous feedback on key topics
such as supervisor relationships, grievance mechanisms and training anddevelopment opportunities.
We have found that the program supports both social and business objectives: For
workers, it enhances well-being by helping facility managers listen to and act on theirconcerns and ideas about improving the workplace. For management, giving workers
better benefits and resources at work can help increase productivity, improve retention
and lower absenteeism. The program also benefits our business by promoting an ethosof continuous improvement among our suppliers. And by delivering best practices
and recommendations to our suppliers, the program is helping us meet our goal for all
strategic suppliers to achieve a sustainability rating of green or yellow by 2020.

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A recent independent study completed by Verité highlights some of the positive
business benefits, making the case that when suppliers invest in their employees, theirbusiness can benefit as well. Simultaneously, when facility management chooses not to
act upon the insights revealed in these assessments, or when coaching mechanisms
are deployed to provide “positive answers,” little improvement is observed by workers.
As we evolve the program, we will continue to find ways to incentivize supplierownership of this approach. We will continue to help facility managers understand that
this is not a compliance-related exercise, but is rather a program that complements
traditional assessments by focusing solely on the workforce as an asset. Further, we
will seek to deepen our partnership with other companies operating similar programs,
namely through the BSR Working Group on Worker Engagement, by sharing bestpractices and seeking to align worker well-being and engagement tools.

Assessment and Remediation
Since beginning our Supplier Sustainability program in 1994, we have refined ourapproach and introduced a range of innovative measures to more accurately assess
facility performance, focus our time on the most critical issues, better understand theexperience of the people who make our clothes and make sure their voices are heard.
The Short Story

Assessment andRemediation•• We aim to create industry-leading standards
that go above and beyond local laws.
•• We partner with our suppliers to set anddeliver business and sustainability goals.
•• We updated our Code of Vendor
Conduct (COVC) and created new tools
to improve sustainability performance todrive positive change.

We view our suppliers as critical partners in meeting our business and sustainability
goals, and we work with them to set shared goals and monitor and improve
performance. Together, we share accountability for sustained improvement of working
conditions, which will help us reach our goal of ensuring all our supplying facilities meet
performance standards.
Today, our COVC, composed of industry-leading standards and legal requirements, isa living document that defines our standards for working conditions at the facilities thatmake our products. It is incorporated into our Vendor Compliance Agreement, which issigned by all our branded-product manufacturers.
Our Supplier Sustainability Assessment Manual, which is based on industry bestpractices, outlines the protocols our team uses to assess and remediate issues related
to labor or working conditions. Each fiscal year, our team conducts a full assessment

Goal
Achieve a sustainability rating of green or
yellow for all suppliers by the end of 2020.

for all active manufacturers of our branded product to understand working and labor
conditions, facilitate greater partnership with our suppliers and improve sustainability
performance. Each assessment includes interviews with managers, confidential
interviews with workers, visual observations and reviews of documents and records.
When we assess a facility, they receive a rating that is calculated based on clear
criteria within five categories: Compliance with Laws, Environment, Labor Standards,
Occupational Health and Safety, and Management Systems. Violations are input intoa system that categorizes findings by their level of severity: “critical,” “severe,” “key”
and “noncompliant.”

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We use a color-coded system to rate 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 ormore serious issues are assigned a red rating. Critical, severe and key violations have agreater negative impact on a facilities’ rating than “non-compliance” violations, such as
first-aid kits not being fully stocked.

A key tenet of
our approach topartnering withfacilities is that
we work to fix
what we find.
A key tenet of our approach to partnering with facilities is that we work to fix what wefind. Together with facility management, we agree on specific, time-bound corrective
action plans to address findings, and we provide additional resources to fix the issues
that pose higher risks to workers’ rights and well-being, as well as to our business.
Based on the severity of issue, we outline a timeline within which we expect thefactory to fully remediate. We also collaborate with local stakeholders who have directaccess and influence to improve conditions. We monitor progress through follow-up
assessments. Should there be outstanding or overdue issues, our Supplier Sustainability
and Global Supply Chain teams escalate further intervention. However, if key or criticalissues remain unresolved, we may halt future order placement or discontinue thesupplier relationship.
In 2015, we introduced revisions to our COVC requirements, through the creationof Gap Inc.’s COVC Manual and a revised Assessment Manual for our Supplier
Sustainability team. We have trained all our tier 1 suppliers on our COVC Manual,
which is the primary training resource that helps our suppliers understand how tomeet our sustainability requirements and proactively address issues related to labor
standards, working conditions, the environment and more.

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To help our suppliers take greater ownership of improving working conditions, we
added the Management Systems category in 2015. This category measures thedegree to which facility managers establish goals, implement plans, train employees,
conduct their own assessments and adjust their programs to ensure continuous
improvement. Also in 2015, we launched a new data system that includes a portal forour suppliers to easily access information related to their sustainability performanceand find tools that can help them manage their risks and opportunities.
In 2017, we will be expanding our minimum requirements for suppliers, with additional
guidance on fire, electrical and structural safety based on our learnings in Bangladesh
and best practices in the industry.
Detailed data from our COVC assessments are available online.

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Water StewardshipIn this section•• Women + Water•• Improving Manufacturing in Millsand Laundries•• Chemicals

Water is essential for our business as well as the people and communities
where we operate. At each stage of our products' creation, we look for ways
to reduce water impacts. Through our programs, we reduce water use,
eliminate discharge of hazardous chemicals and work directly with women to
improve their access to clean, safe water.

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Context and Approach
Few resources are as essential to people’s health and well-being as water; we believe
clean, safe water is both an environmental issue and a basic human right. Water is also
critical to our business—it is 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.
In recent years, decreasing availability of safe, clean water has become a significant
global challenge. Since 2015, the World Economic Forum has ranked the water crisis
as one of the top five global risks in terms of impact.1 It affects many people: One-thirdof the world’s population lives in countries with poor water quality or where there is notenough water. That ratio is expected to reach two-thirds by 2025.
By 2030, it is estimated that demand for clean water will exceed supply by 40%.
Climate change is exacerbating the water crisis, contributing to more frequent andsevere droughts, storms and floods, which affect livelihoods and increase the risk ofwaterborne diseases. The issue of water is so important that the UN identified theneed to ensure the availability and sustainable management of water and sanitation as
Sustainable Development Goal (SDG) 6, Clean Water and Sanitation, which is one of
the 17 SDGs.
As a business that relies on water to create our products in communities where people
need access to water for their daily lives, water stewardship is a core pillar of theGap Inc. sustainability strategy. To help build the resilience of our company, our supply
chain and the people who make our clothes, we strategically address water use, watercontamination and education about water and sanitation.
Our Women + Water strategy is aimed at reducing impacts in three primary ways:•• Building awareness and educating the women who make our clothes about
safe water-handling practices, and by increasing their access to safe water•• Partnering with fabric mills and laundries to reduce manufacturing impacts•• Adopting more water-efficient product design and sourcing practices
Apparel production requires water throughout its life cycle, and the manufacturing
process has significant water impacts. Cotton, an important raw material for Gap Inc.,is one of the most water-intensive crops: About 1,500 gallons of water are needed to
produce the 1.5 pounds of cotton within a single pair of jeans. Additionally, harmful
chemicals used in dyeing and laundering can pollute as much as 200 tons of water per
ton of fabric. In a climate-challenged world where both too much and too little water1

http://reports.weforum.org/global-risks-2017/the-matrix-of-top-5-risks-from-2007-to-2017/

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can have a serious impact, cotton sourcing has become a risk, with repercussions
throughout our supply chain.
Beyond our supply chain, we are saving water through design choices and byeducating customers about water stewardship. We proudly communicate our efforts in
our product labeling, catalogs and online. Through this engagement, we hope to keep
customers informed about our progress and inspire them to consider water in their
daily lives and communicate the urgency of the work we’re doing.
For more on our efforts to reduce impact, specifically water-saving initiatives within
product design, see page 87.

Women and the Impact of Water
Of crucial importance is how water affects the people who make our clothes—roughly
80% of whom are women. These women need water to care for themselves, theirfamilies and their communities. Unfortunately, access to clean, safe water is a major
challenge in many of our key sourcing countries, according to basin-level water risk
mapping through WRI’s Aqueduct tool, and issues such as population growth andclimate change exacerbate the crisis. In water-stressed areas, poor and marginalized
communities are affected the most. In India, groundwater pollution from agricultural andindustrial activities and poor sanitation represent a root cause of water-quality issues
that increase health and mortality risks. In China, 80% of water from underground wells
is unfit for drinking or bathing because of contamination from industry and farming.

Country

China

India

Mills

•

•

•

Processing

Bangladesh

Cambodia

Indonesia

•

•

•

•

•

•

•

•

•

Cut/Sew
Facilities

•

•

•

•

•

P.A.C.E.
Program

•

•

•

•

•

Water
Risk*

Medium/High

Extremely
High

High

Low/
MediumHigh

Denim
Laundries
Wet*Source: Conservation International research for Gap Inc.

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Women + Water
Our water strategy is focused on the intersection between our industry’s significant
use of water and the basic right people have to clean, safe water. In many parts of
the world, women are largely responsible for household duties such as cooking andcleaning; they shoulder a disproportionate burden when it comes to water stress.
If women had better access to water, they could spend that time caring for theirfamilies, getting an education or earning additional income. Women and children also
face serious health risks due to inadequate access to safe water and sanitation, which
is sometimes worsened by a limited understanding of healthy hygiene practices.
We recognize that water resource management is multifaceted, requiring diverse
solutions. To make holistic change at the individual, organizational, community andsystems levels, we need to coordinate efforts across business, government and civilsociety. In addition to focusing on education and awareness, we also partner withorganizations to improve secure access to clean, safe water.
Our supply chain connects us to many of these women and their communities, giving
us an opportunity to help improve their access to water and help them manage water
issues. We support women and communities in two main ways: through our P.A.C.E.
program, which includes curriculum about health and safe water-handling practices,and through partnerships with experts to address other systemic challenges, such asaccess to clean, safe water.

Our water strategy is focused on the intersection between our industry’s
significant use of water and the basic right people have to clean, safe water.

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P.A.C.E. and the USAID Women + Water Global Development Alliance
In 2014, we introduced water, sanitation and hygiene (WASH) curriculum to our P.A.C.E.
program, which supports the women who make our clothes in gaining the skills andconfidence to advance in work and life (read more about P.A.C.E. on page 45). With our
expansion of P.A.C.E., and the goal to reach 1 million women and girls by the end of
2020, we are eager to reach even more women with effective strategies for managing
water issues.

With our expansion of
P.A.C.E., and the goal toreach 1 million women andgirls by the end of 2020,
we are eager to reach evenmore women with effective
strategies for managing
water issues.
In 2017, we announced a significant new partnership: a five-year collaboration with the
US Agency for International Development (USAID) to improve access to clean water andsanitation services for the women touched by the apparel industry. We are expanding
our P.A.C.E. program in India to teach safe water-handling practices, alongside ourlongstanding partners CARE and the International Center for Research on Women(ICRW). We will also support access to clean water and sanitation with our partner
Water.org, and we will work to manage local water resources sustainably, in partnershipwith the Institute for Sustainable Communities.
Read more about our USAID partnership on page 47.
Our partnership with USAID is designed to support women and communities as theylearn about WASH practices, while also developing leadership skills. This supports
women as they take initiative to incorporate improved water infrastructure in theircommunities. Our partnerships take this program beyond education to provide theessential hard goods, such as toilets and filters, needed in the home and to provide
neighborhoods with clean water access.

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Improving Manufacturing in Millsand Laundries
The Short Story

Mills and Laundries

The processes behind making a piece of clothing affect both the environment andpeople in the surrounding communities. Traditional fabric mills use a great deal of waterand chemicals during the dyeing and finishing process, and wastewater must be treated•• Launched in 2013, our Mill Sustainability
Program expands our environmental efforts
well beyond our own operations.

to ensure that both ecosystems and nearby communities are protected. Laundries,•• This program has reduced water andelectricity use, as well as wastewater
discharge.

Gap Inc. is working with fabric mills and laundries to improve practices, and we are•• We have strengthened our Mill Sustainability
Program and our Water Quality Program to
reduce water impacts and fight pollution.
•• We also partner with several industry
initiatives, including NRDC's Clean by
Design, Race to the Top and the Partnershipfor Cleaner Textile program.

especially for denim, also require a great deal of water and pose pollution risks.

pursuing partnerships across our supply chain to reduce water and chemicals use. We
aim to save 1 billion liters of water in our manufacturing processes by the end of 2017.
We encourage and support our suppliers in conducting environmental footprint
assessments, including water use, using the Sustainable Apparel Coalition's (SAC)
Higg Index. Though our sustainability programs have traditionally focused on our tier
1 cut-and-sew facilities, we recognize the need to measure and address the impactof the apparel supply chain more broadly. For this reason, we have expanded ourprogram beyond direct suppliers to reach deeper in our supply chain. Through our Mill
Sustainability Program, we have used the Higg Index to engage strategic mills in China,

Goals•• Together with our suppliers, reducewater use in manufacturing by 1 billion
liters by 2017.
•• Work toward zero discharge of hazardous
chemicals by 2020.

India, Pakistan, Vietnam, Korea and Taiwan to conduct environmental assessments,
including water consumption and wastewater treatment and disposal. We are also
actively monitoring and helping improve wastewater quality at denim laundries throughour strengthened Water Quality Program (WQP).
In 2015 and 2016, we began working closely with our suppliers to share importantbenchmarking data so our suppliers can see how their environmental performancecompares to competitors and peers. With a dashboard, we provide details—by country
and factory—water consumption, greenhouse gas (GHG) emissions and energy use—and suggestions to help our suppliers identify opportunities for improvement.

Gap Inc. suppliers
have saved 668
million liters ofwater since 2014.

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Mill Sustainability Program
Launched in 2013, our Mill Sustainability Program aims to improve the practices offabric mills, while delivering benefits to the people who live in surrounding communities.
Our 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
the use of water, chemicals and energy.
We started our program by working with strategic mills in China, India, Pakistan andTaiwan to conduct environmental assessments, covering issues such as their energyuse, water consumption, wastewater treatment and disposal and handling of waste
and hazardous substances. Between 2015 and 2016, we expanded our program toreach more mills, and we updated our mill policy to strengthen expectations. We haveinvited 112 of our strategic mills—representing more than 70% of our fabric spend—toparticipate in the Higg index.
Going forward, we will continue to work with our supply chain business partners toengage with more tier 2 suppliers. We plan to establish an onboarding process for new
mill suppliers, with clear communication of our performance expectations. Additionally,
we communicated Minimum Expectations of Social and Labor and Environmental
Issues to our entire mill base in March 2017. By further integrating this program andperformance metrics across our business—and sharing innovative techniques and bestpractices with our vendor partners and mills—we will broaden our impact.

The apparel sector is a thirsty industry, with significant water impacts—from water
consumption during production, to the use of harmful chemicals in dyeing andlaundering, to industrial water pollution. We have created internal programs working with
our strategic suppliers to reduce our company’s impact, and we participate in leadingindustry initiatives to reduce the impacts of the sector more broadly.
–Sally Gilligan
Senior Vice President, Strategy and Product Operations, Global Supply Chain

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Mill and Laundry Partnerships
In addition to our Mill Sustainability Program, we are working to improve water impacts
by partnering with several industry collaborations.
The Natural Resources Defense Council's (NRDC) Clean by Design program works
with global apparel companies to help textile mills reduce their use of water, energy andchemicals. Since 2009, we have worked with Clean by Design to help mills conserve
resources, save money and improve their performance. During the reporting period,
we focused on helping three mills in Suzhou, China, improve their overall environmental
performance by reducing their use of water, energy and chemicals. This project, which
ended in 2017, resulted in a savings of 620 million liters of water per year.
In Vietnam, we work with Race to the Top, an initiative that includes global appareland footwear brands, government, local industry and civil society. Race to the Top
aims to scale up sustainable practices across the country’s garment-manufacturingsector by focusing on four pillars: proving the benefits of a sustainable apparel sector,
demonstrating the business case for manufacturers and mills to invest in sustainability,
creating a supportive regulatory environment, and creating cost efficiencies andopportunities for innovation in sustainability across Vietnam.
In Bangladesh, we are part of the Partnership for Cleaner Textile (PaCT), a program
focused on improving the environmental performance of the country’s textile wetprocessing sector. In Bangladesh, wet-processing facilities can use three times morewater than the global average. This not only wastes water, it consumes more energy
and costs more. Through PaCT, we are working with three denim laundries, where
we have the potential to save nearly 85 million liters of water. With four other laundries
nominated by other brands, there’s potential to save up to 114 million liters.

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In 2015, we built a training program focused on resource efficiency with three mills
in water-stressed regions in northern India. Building on this pilot, our India Water
Partnership with 10 mills provides technical expertise on water and energy efficiency,
as well as chemicals management.

Chemicals
Chemicals are used throughout the production cycle of most garments, from fabricdyeing to creating unique finishes. According to some estimates, the global apparelindustry accounts for 25% of manufacturing chemical usage. The discharge of thesechemicals threatens local water sources; contamination could affect people living insurrounding communities.
Because we know certain chemicals can be harmful to consumers, in 2008, wedeveloped a Restricted Substance List (RSL) that dictates which chemicals must not
be used to produce our clothing. We base this list on both existing and developing
legislation as well as toxicity risk assessments. As part of our ongoing monitoringprocess, we have an independent, accredited, third-party lab test for restrictedchemicals in our finished products. If products do not meet applicable legal chemical
requirements and regulations, they will not be sold or must be remade to meet ourcompliance standards. If a supplier’s product is shown to have elevated levels of thesechemicals, we provide test results and guidance to help the supplier remediate its
usage of these chemicals and educate the supplier on our chemical policy.
Looking beyond our initial chemicals management program, we are partnering toaddress the impact of chemicals used in our supply chain through the Zero Dischargeof Hazardous Chemicals (ZDHC) program. In 2014, ZDHC established a strengthened
industry-wide standard for restricted substances with an expanded Material Restricted
Substance List (MRSL) that aims to reduce worker exposure to chemicals and reduce
chemical impacts on wastewater. We have communicated this list to the suppliers,
facilities and mills that make our clothing, and we have set an ambitious goal: to work
toward zero discharge of hazardous chemicals in our supply chain by 2020.

Three denim laundries that we source from in Bangladesh
are participating in the Partnership for Cleaner Textile
program, alongside other mills, which has identified nearly
114 million liters of water savings.

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Product Sustainability
In this section•• The Product
Life Cycle•• Sustainably Sourcing
Raw Materials•• Addressing Water
Use with Design
Choices•• Integrating
Sustainability into
Our Brand Decisions

Our integrated commitment to sustainability begins with our design teams
and the development of products that look good, have lower impact on theenvironment and bring confidence to our customers. Since the materials
in our clothes greatly contribute to each garment’s environmental impact,
our design and production decisions have significant power to make our
products more sustainable.

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Context and Approach
We are committed to integrating environmental sustainability more deeply into every
aspect of our business, from the materials we source, to the suppliers we work with
and, ultimately, the clothes we sell.
We are committed to pursuing technology and product innovation, allowing us tocontinually deliver great products that look good, delight our customers wear after
wear and reduce our impact on people and the planet. In recent years, we’ve begun
a new journey to build on our capabilities and empower our employees to makesustainability part of their jobs. Our brands are tasked with developing strategies
to improve their sustainability performance, and in 2017, both our Athleta and Gap
The Short Story

Product Sustainability•• We are committed to designing great
clothes that look good, delight ourcustomers and reduce our impact on
people and the planet.
•• By sourcing more sustainable raw
materials, we are protecting natural
resources and reducing water, energy
and chemicals use.
•• We use life cycle analyses to find ways
to reduce impacts in manufacturing,packaging and distribution, consumer
use and end of product life.

brands released public goals to improve the materials they source.
Given the size and complexity of the apparel supply chain, we work hard to identify andmeasure our greatest environmental impacts so that we can invest resources in areasthat will have the greatest impact.
We have identified several critical ways to improve product sustainability:•• We partner with our most progressive and strategic suppliers to identify andscale best practices across our supply chain.
•• We’ve identified ways to more sustainably source key raw materials.
•• Through our life cycle analyses, we are examining ways to reduce impacts
in other stages of our products’ life, including manufacturing, packaging anddistribution and in our retail operations.
•• Our brands work to develop solutions that are meaningful to their customers
and that can be scaled up across our business.
We are embarking on a long-term vision that builds on our strengths, addresses
our weaknesses, and ensures that our efforts are sustainable and scalable. We
also recognize that we cannot get there alone and we will continue to leverage ourrelationships with peers, partners and stakeholder groups, such as the Sustainable
Apparel Coalition, Textile Exchange and the Better Cotton Initiative. Our partners eachbring something unique to the table in terms of access, expertise, common frameworkor principles, funding and more. With these partnerships, we’re able to scale up
work through our global supply chain and support our brands in setting their own
sustainability goals.

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Mapping The Product Life Cycle
To understand environmental impacts for the entire process—from design, tosourcing, to manufacturing, all the way to a customer’s closet—we perform life cycle
assessments (LCA). We use these to evaluate indicators such as product carbon
emissions, chemicals and water usage from cradle to grave. Our LCAs helped us
understand where we can engage our supply chain, internal teams and customers to
help reduce the environmental impacts of our products at all stages.
Given that denim plays such an important role in each of our brands’ assortments, wemeasured the environmental impact of a pair of both men’s and women’s jeans, as wellas one of our T-shirts. Our findings revealed that, in terms of water, raw materials havethe greatest impact, primarily due to the water required in cotton cultivation. Consumer
use contributed the second-highest water impact due to laundering garments.
Consumer use also contributed the most significant carbon emissions due to the highlevel of energy required to dry jeans and other clothes.
Using these results, we increased our efforts in areas where we have direct influence:
raw materials selection, fabric development, garment production and finishing. We alsoaffirmed that durable and well-loved garments, worn time after time, will have lower lifecycle impacts, which has strengthened our commitment to classic, well-made designs
that our customers love and keep for years.

In 2016, Athleta's use of recycled raw materials diverted
the equivalent of 7 million plastic bottles from landfills.

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To understand our impacts and where we have the greatest leverage to address
issues, we use a tiered approach to mapping our supply chain.
The nature of our relationships with our product suppliers means we have the mostvisibility and control over our tier 1 suppliers. Our tier 1 suppliers encompass cut-andsew facilities—where garments are embroidered, cut, assembled and finished—andlaundries, where finishes are applied and garments are washed before being packaged
and sent to our distribution centers. All of our tier 1 facilities are asked to respondto the Sustainable Apparel Coalition’s Higg index, a self-reporting tool that evaluatesenvironmental performance and helps identify opportunities for improvement. Since
2016, we have published a complete list of our active facilities, which is available
online here.
Our tier 2 suppliers include textile mills, where fabric is woven or knit and dyed to theperfect color or pattern. We have mapped the facilities of our strategic tier 2 suppliers
and are systematically mapping out all facilities for our tier 2 mills. Additionally, we
communicated Minimum Expectations of Social and Labor and Environmental Issues
to our entire mill base in March 2017, establishing standards for both social andenvironmental monitoring and performance (for more on our engagement with mills
around water consumption and quality, see the section beginning on page XX.) So
far, we have engaged 30% of our strategic mill facilities in water and energy-efficiency
programs in China, India, Vietnam and Bangladesh, and we are planning toengage more.
Our supply chain begins with what’s sourced from suppliers within tier 3, which
includes raw material cultivation and extraction, the first stages of production and the
preparation of those materials into fibers ready to become cloth.

In 2016, Gap Inc.
sourced more than
11.5 million pounds ofBetter Cotton Initiative
cotton—enoughto make 7.4 million
pairs of jeans.

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Key Stages in the Apparel Life Cycle
Resource Extraction and Refining
This stage includes the sourcing of raw materials, including
cotton, polyester and man-made cellulosic fibers such as
viscose/rayon and modal. It can also include materials for trim,such as zippers and embellishments, and turning them into aform (such as spun thread) that is ready to be manufactured into
our products. Impacts can be reduced in this phase throughstrategic sourcing of more sustainable materials.

Manufacturing
Manufacturing covers all processes involved in creating our
products, such as yarn spinning, knitting/weaving, dyeing,embroidering, cut-and-sew processes, laundering and finishing.
In manufacturing, it’s possible to reduce the use of water, energy
and chemicals, especially with closed-loop or zero-discharge
manufacturing that reuses chemicals or water without releasing
them to the environment.

Packaging and Distribution
This includes all steps involved with labeling, packaging fortransport and storage, and freight to our distribution centersand eventually to customers or stores.

Consumer Use
Consumer use of products—mostly from garment care including
washing, drying and dry-cleaning—contributes to a product’s
water and carbon footprint when in the customer’s possession.
Use may also include multiple “lives” if the garment is resold asa second-hand product, which reduces the product’s life cycle
impacts compared to a new item.

End of Life
Finally, we consider the environmental impacts of when an item
is eventually discarded, usually into a landfill. This phase offers
opportunities for recycling, upcycling or helping create a circular
product life cycle.

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Sustainably Sourcing Raw Materials
We use many types of fibers in Gap Inc. products: natural fibers include plant-based
items such as cotton and linen, and animal-based materials such as wool, leather andcashmere; synthetic fibers include polyester and spandex; and man-made cellulosics
include pulp-based materials such as rayon and modal. Each type of fiber has a socialand environmental impact, and we are empowering our designers with the knowledge
needed to make informed choices within the design process.
Recently, we published a policy, in line with Canopy Style, on sustainable procurementof wood-derived fabrics, such as rayon, viscose, modal, lyocell and Tencel, to eliminate
the sourcing of woodpulp from ancient and endangered forests.
It can be challenging to trace tier 3 suppliers because most fibers are bought andsold as commodities, and we do not have direct financial relationships with theoriginal suppliers. For some of these commodities, we have joined multi-stakeholder
partnerships, or certified initiatives such as organic, recycled, Fair Trade and others, that
help verify the origin of the fibers or ensure that these fibers are sustainably sourced.

CottonCotton is essential to our business. As one of the leading apparel brands in the world,
we use a significant amount of the global cotton supply. Cotton cultivation requires
large amounts of land, human labor, machinery, pest- and weed control measures, and
it is also water-intensive. Cotton is also an important crop for the economy, supporting
the livelihoods of 250 million people, many of whom are women.
Given its importance in many of our products, we have announced ambitious goals
to source more sustainable cotton. Our commitment to sustainable cotton includes
sourcing recycled, organic, American-grown and cotton from the Better Cotton
Initiative (BCI).
These options enable us to purchase cotton that is grown in ways that reduce waterand pesticide usage, improve soil quality and work to make cotton production betterfor the workers and farmers involved. For example, BCI provides training to millions offarmers around the world to “produce cotton in a way that cares for the environment,
minimizing the negative effects of fertilizers and pesticides, and caring for water, soil
health and natural habitats.” BCI farmers also commit to decent work principles—conditions that support workers’ safety and well-being.
This approach works: In a benchmark of BCI farmers in 2013, between 14% and
23% less water was used in cultivation than on farms that did not use BCI principles.
In 2016, we sourced 11.5 million pounds of BCI cotton—enough to make 7.4 million
pairs of jeans.

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Synthetic
We also use synthetic materials in our products, including polyester, spandex and nylon,
which provide essential performance properties. However, synthetics are often derived
from nonrenewable, petroleum-based 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 we’re sourcing more sustainable synthetic fibers.
As a brand that uses large amounts of synthetics in its active wear, Athleta is taking aleading stance on addressing this issue with its goal of having 80% of materials madewith sustainable fibers by 2020. Athleta incorporates recycled polyester and nylon into
sourcing, which helps offset the impacts and waste streams of virgin materials andpreserves our nonrenewable resources. In 2016, Athleta diverted the equivalent of 7
million plastic water bottles from landfills by sourcing recycled polyester.

Addressing Water Use with Design Choices
The Short Story

Since up to 80% of a product’s environmental impact is tied to decisions made in

Water Usedesign and development, we know that reducing water impacts begins with innovative•• 80% of a product's environmental impact
is determined at the concept phase.
•• We find ways to reduce water andchemicals use when designing andselecting materials for our products.

product design. Our designers have embraced the opportunity to save water while
creating the style and quality our customers love. We are working with our designers toevaluate a variety of factors that can reduce water impacts throughout a product's life
cycle. These factors include: the type of raw materials and how much are used, how
our products are manufactured and how long our clothes are designed to last.
In addition to improving the raw materials used in our products, we are working to
reduce water used to finish garments such as denim, while staying true to the lookand feel of the clothes that our customers love. For instance, Gap has pioneered asmart denim wash technique called Washwell that incorporates water-savings as well
as plant-based fabric softeners that are certified by the US Department of Agriculture
as BioPreferred.® Not only did Washwell save more than 17.9 million liters of water in
2016, this process has helped to eliminate hazardous chemicals and protect the healthof workers and waterways.

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We are continuing to educate our brand designers, merchants,
product development and sourcing teams about how to designusing more sustainable fibers, fabrics and manufacturing
techniques that save water—and how to procure more
responsible materials.
Integrating Sustainability into Our
Brand Decisions
One of the most effective ways we’ve found to design and create more sustainableproducts is to build awareness and education around sustainability, so as to improve
the impacts of our products on people and the planet. We continue to educate ourbrand designers, merchants, product development and sourcing teams about how todesign using more sustainable fibers, fabrics and manufacturing techniques that savewater—and how to procure more responsible materials.
In partnership with sourcing product development teams, we’ve designed training
on raw materials and wet-processing impacts and alternatives. We trained productdevelopment teams from Athleta and Gap and our sourcing teams to make informed
design decisions when creating more sustainable products. We are also engaging new
employees as they enter the company and start their careers. Product sustainability
curriculum is included in our existing Rotational Management Program training, and we
updated our new employee orientation to include key highlights and resources.

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We also publish a monthly Product Sustainability Report. This internal newsletter
provides updates on current events, industry innovations as well as company andcompetitor initiatives. Informing our teams provides insight into the business value
and empowers them to integrate this information into their day-to-day work.

Brand Goals
From its start, Athleta has been grounded in the values of taking care of ourselves
and our environment. In 2015, the brand strengthened this commitment by integrating
sustainability more deeply into the way it does business. Athleta took its efforts tothe next level by building a passionate, knowledgeable, cross-functional team andmaking training courses and tools available to them. This included the development of
ambitious sustainability targets and customer messaging.

From its start, Athleta has been grounded in the values oftaking care of ourselves and our environment.
Athleta has prioritized the conversion of raw materials to sustainable alternatives
and has set a goal to use sustainable fibers, including recycled polyester andLenzing Tencel, in 80% of materials by 2020. Athleta is also offering certified
Fair Trade products that provide additional worker funds to the factory certified
in Sri Lanka. These funds are used to address work needs such as health care,childcare, transportation and community investment, based on nominations by aworker committee.
Gap brand has established the ambitious goal to get 100% of its cotton from moresustainable sources by 2021, including BCI, organic, recycled and American-grown.
Gap sourced 3.8 million pounds of BCI cotton in its Spring 2017 collection alone. The
brand is launching the Gap for Good platform, which serves to engage customers
through product tagging, in-store and online tagging and marketing material. We arealso working to educate our store employees on our sustainability efforts so they are
empowered to talk about this work with our customers.
We’ve also begun to examine our packaging, understanding that we need to work
holistically to ensure our products, and the items we use to protect and ship them,
have a smaller impact on the environment.
Looking forward, there are still many areas where we see impacts that must be
addressed, including sustainable chemistry and end-of-life solutions. We see
opportunity for industry-wide collaboration to find innovative solutions to many
outstanding issues. While we have much exciting work ahead of us in 2017 andbeyond, we are pleased that our brands are championing sustainability by setting
ambitious goals, integrating sustainability into their processes, designing withsustainability in mind and communicating directly to customers.

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Operational Eco-Efficiency
In this section•• Climate and Energy•• WasteA dedication to reducing the impacts of our owned and operated stores,
distribution centers and offices means reducing our operational greenhousegas (GHG) emissions and waste production, and working with our logistics
and procurement partners to identify practices that are more efficient andhave lower environmental impact.

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Context and Approach
A healthy environment is critical to healthy populations and our success as a business.
Alongside our supply chain work, we recognize we have the greatest power to reduce
our impact within our own operations. Our transportation team also works to achieve
emission reductions while streamlining our logistics. We view climate change as bothan environmental and a human rights issue. These efforts reduce environmental impact
and are cost-effective.

Climate and Energy
The Short Story

Operational
Eco-Efficiency•• We take steps every day to reduce theclimate and waste impacts of our stores,
offices and distribution networks.
•• We have installed LED lighting at 1,000
stores and we are pursuing new approaches
to further increase our energy efficiency.
•• We are partnering with industry leaders tofind ways to reduce major waste streams
across the retail industry.

We focus primarily on energy and waste when it comes to the environmental impacts of ourown operations. Taking action in one area, like waste, can also reduce GHG emissions.
We believe it is vitally important that we address the urgent challenge of climatechange—and that integrating climate change into our business strategy contributes to
a competitive advantage in several ways, as it:•• reduces our operating costs by increasing energy efficiency andreducing consumption•• positions us well to adapt to a fast-changing regulatory environment affecting
energy use, product marketing and labeling, and store construction•• helps us improve our reputation and build support from a range ofstakeholders, including customers, employees, investors and

Goals•• Reduce absolute scope 1 and 2 greenhousegas emissions in our owned and operated
facilities globally by 50% by 2020.
•• Divert 80% of waste from our U.S. facilities
by 2020.

environmental organizations
Climate change affects us all, and we feel an urgency to act both individually andalongside others. Since 2007, we have been actively engaged with Ceres, a leading
nonprofit organization dedicated to mobilizing the business community to build asustainable economy. As a member of Ceres’ Business for Innovative Climate andEnergy Policy (BICEP) coalition, we advocate for progressive policy action on climate
and energy issues, and publicly affirmed our commitment to the Paris Agreement on
climate change.
Our climate goal—to achieve a 50% absolute reduction in the GHG emissions of ourowned and operated facilities globally between 2015 and the end of 2020—builds on
our previous goal to reduce our absolute U.S. GHG emissions 20% by 2015, basedon a 2008 baseline. We exceeded that goal by achieving a 37% reduction by the endof fiscal 2015. As a result of our ambitious target, we were pleased to receive the U.S.
Environmental Protection Agency (EPA) Climate Leadership Award for "Excellence in
GHG Management – Goal Setting" in 2016, the second time we’ve received this award.

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Retail stores
Retail stores are the focus of Gap Inc.’s energy program since they generate
approximately 85% of our direct (scope 1 and 2) GHG emissions. We are taking
steps to adapt to climate change and regulatory changes by piloting and expanding
energy-management solutions for our retail operations, updating HVAC systems andexploring renewable energy options. To work toward our 2020 emissions-reduction
goal, we used the EPA EnergyStar platform to analyze differences in store performanceand prioritize regions, brands and initiatives with the greatest opportunities for energy
improvements. We piloted a new energy-efficiency program at 100 stores across North
America to provide real-time monitoring and management of our energy use. We haveinstalled LED lighting—which use 80% less energy than conventional lights—at over
1,000 of our stores. Not only do these lights reduce our energy use, they last five to 10
times longer and they pay for themselves in just two to three years. In addition to thiswork, renewable energy will likely be important for us to reach our goal, and we are
exploring options that achieve significant reductions while balancing business needs.

We were selected as a2016 SmartWay High
Performer for our efforts
to use cleaner modesof transportation andencouraging the use of
fuel-saving strategies.
Distribution
In 2011, we joined a voluntary government and industry collaboration known as the
SmartWay Shipper Program, which brings together carriers, freight shippers andlogistics companies to improve fuel efficiency. In addition to being a certified EPA
SmartWay shipping partner, we became a Canadian SmartWay partner in 2013. We
were also selected as a 2016 SmartWay High Performer. We have committed toincreasing the amount of freight we ship by SmartWay carriers by 5% each year. We
also have committed to using cleaner modes of transportation and encouraging theuse of fuel-saving strategies and technologies. Moving forward, we are working tointegrate more of our business operations into the SmartWay program and improve ourdata collection to better measure results.

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Supply Chain
Gap Inc. Global Greenhouse

Metric Tonnes CO2e

Gas Emissions
Type / Location

2014

2015

2016

499,859

481,122447,687

Reduction rate

N/A

Baseline-6.95%

Scope 1 GHG emissions

31,27528,46523,811

Headquarters

1,780

1,466

1,559

Distribution Centers

6,118

6,885

5,556

Retail Stores

23,37820,144

16,696

Scope 2 GHG emissions

468,584

452,628

423,878

Headquarters

23,116

18,916

15,894

Distribution Centers

41,17841,054

39,598Retail Stores

404,290392,658

368,386

Total GHG Emissions(Scope 1 and 2)

We recognize that our supply chain represents an even larger carbon footprint thanour direct operations. To address this, we are working closely with our productsuppliers to measure the environmental footprint of our supply chain. Gap Inc. was
one of the first members of the Sustainable Apparel Coalition to execute a largescale rollout of the environmental performance management tool, the Higg Index, toour entire cut-and-sew and fabric mill suppliers. Our goal is to reduce the emissions
intensity of Gap Inc.’s products and manufacturing processes and, therefore, reduceclimate risk from potential sourcing impacts.

Waste
Our biggest waste streams from our owned-and-operated facilities are polyethylenebags and plastic hangers. As many of our facilities are within larger mall complexes,
we are looking for solutions that address the diverse needs of our stores anddistribution centers. By addressing these two significant areas of waste, we’ll be able
to achieve our goal of diverting 80% of waste from U.S. facilities by 2020.

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We are engaged with our brands, suppliers and the greater apparel industry to achieve
our goal. For example, we are working with the Retail Industry Leaders Association(RILA), which has convened retailers and major landlords to explore ways to collectand recycle these major waste streams. In 2014, we diverted 29% of our waste fromour U.S. stores. We are currently reassessing our methodology to calculate waste
production and diversion and look forward to reporting our progress in the future.
We are particularly focused on:•• Packaging sustainably: Boxes, hangers and plastic wrapping are used totransport and to protect our clothes as they move from distribution centersto stores. We are looking at ways to reduce packaging weight or change
the packaging materials to decrease the overall waste volume or allow for
greater recycling.
•• Recycling in malls: Reusing or recycling packaging pose challenges because
we don’t own the buildings where our stores are located. To address this, we
are working with our stores’ landlords on recycling options and also looking at
recycling stations where bags can be baled, picked up and recycled.
•• Creating opportunities via partnerships: Our teams are partnering withRILA to discuss ways the industry can reduce the impacts of polybags. We
are also part of the Landlord Tenant Energy Partnership, which is exploring
how to incentivize energy efficiency and finance clean energy projects inshared spaces.

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GRI Content Index
We sought to prepare the report in accordance with the core option of the Global Reporting Initiative’s (GRI) Standards.
(GS Report and GS Website refer to Gap Inc.'s Global Sustainability Report, 2015–2016 and Global Sustainability website;
Annual Report refers to Gap Inc.'s Annual Report for the fiscal year ended January 31, 2016)

GRI
Indicator

Disclosure
SourceDescription

Section(s)Page(s)General Standard Disclosure
1. Organization Profile
102-1

Name of the organization

GS Report

About Gap Inc.

1

102-2

Description of the organization’s

GS Report

About Gap Inc.

1

GS Report

About Gap Inc.

1

GS Report

About Gap Inc.

1

activities; primary brands, products,
and services, including an
explanation of any products
or services that are banned incertain markets
102-3

Location of organization’s
headquarters

102-4

Location of operations: Number ofcountries where the organization
operates, and the names ofcountries where it has significant
operations and/ or that are relevantto the topics covered in the report

102-5

Nature of ownership and legal form

102-6

Markets served, including

Annual Report

GS Report

Part I, Item 1. Business (page 1)

About Gap Inc.

1geographic breakdown, sectors
served, and types of customers/
beneficiaries
102-7

Scale of the reporting organization

Annual Report

Part I, Item 1. Business (page3), and Item 7. Management’s
Discussion and Analysis ofFinancial Condition and Results ofOperations (page 19)

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102-8

Total number of employees by

GS Report,

About Gap Inc.;

employment contract and gender;

GS Website

Measuring Our Progress/

1

Employees

Total number of employees by
employment contract (permanentand temporary) by region;
Total number of employees by
employment type (full-time andpart-time) by gender;
Whether a significant portion of
the organization’s activities are
performed by workers who are
not employees;
Any significant variations in thenumbers reported above (such as
seasonal variations)
102-9

Describe the organization´s

GS Report

supply chain
102-10

Advancing Progress Across8

Our Value Chain

Significant changes to theAnnual Report

Part I, Item 1. Business. (page 2)

GS Report

Managing and Prioritizing Risks

14-15

GS Report

Sustainability Policies

17-18

GS Report

Partners and Stakeholders

12

GS Report

Letter From Our CEO

2-3

GS Report

Assessing Materiality

9-10

organization’s size, structure,
ownership, or supply chain
102-11

Whether and how the organization
applies the Precautionary Principle
or approach102-12

List externally-developed economic,
environmental, and social charters,
principles, or other initiatives towhich the organization subscribes
or endorses

102-13

Memberships in industry orother associations, and national
or international advocacy
organizations

2. Strategy
102-14

Statement from the most seniordecision-maker of the organization

102-15

Description of key impacts, risks,and opportunities

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3. Ethics & Integrity
102-16

Describe the organization´s

GS Report

values, principles, standards

Acting with Integrity,

15-18

Sustainability Policies

and norms of behavior

4. Governance102-18Governance structure of the

GS Report

Sustainability Governance

13-14

GS Report

Partners and Stakeholders

12

Basis for identifying and selecting

2013-2014

Gap Inc. 2013-2014 Sustainability

stakeholders with whom to engage

GS Report

Report (pages 14, 15, 16)

Approach to stakeholder

2013-2014

Gap Inc. 2013-2014 Sustainability

engagement, including frequency

GS Report

Report (pages 14, 15, 16)

GS Report

Gap Inc. Material Issues; topics

organization, including committeesof the highest governance bodyand committees responsible fordecision-making on economic,
environmental and social impacts.

5. Stakeholder Engagement102-40

List of stakeholder groups engaged
by the organization

102-42102-43of engagement by type and by
stakeholder group102-44

Key topics and concerns that havebeen raised through stakeholder

9

addressed throughout the report

engagement; how the organization
has responded to those key topics
and concerns, including through its
reporting; the stakeholder groups
that raised each of the key topics
and concerns

6. Reporting Practice102-45

List all entities included in the

Annual Reportorganization´s consolidated financial

Part I, Item 1. Business(pages 1 - 2)statement; report whether any entity
is not covered in the report

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102-46

Process for defining report

2013-2014

Gap Inc. 2013-2014 Sustainability

content and the topic Boundaries;

GS Report

Report (pages 14, 15, 16)

GS Report

Gap Inc. Material Issues

explain how the organization
has implemented the Reporting
Principles for defining report content
102-47

List the material topics

9

identified in the process fordefining report content
102-48The effect of any restatements

There are no restatements from theof information given in previous

previous report data.

reports, and the reasons for such
restatements
102-49Significant changes from

The material topics and Boundaries

previous reporting periods inremained the samethe list of material topics andtopic Boundaries
102-50

Reporting period for the

GS Report

About This Report

1

GS Report

About This Report

1

GS Report

About This Report

1

GS Report

About This Report1

information provided
102-51

Date of the most recent
previous report102-52

Reporting cycle(annual, biennial, etc.)

102-53

Contact point for questions
regarding the report or its contents

102-54

Report the “in accordance” option

GS Report

About This Report

1102-55The GRI content index

GS Report

GRI Content Index & UNGC

97

Communication on ProgressSpecific Standard Disclosure
Economic
Aspect: Economic Performance
201-1

Direct economic value generated

Annual Reportand distributed

Part II. Item 6. Selected
Financial Data

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201-2Financial implications and other

GS Report,

Business Strategy; Sustainability

4-13, 17,risks and opportunities due to

GS Website

Policies; Climate and Energy; Doing

88-89

climate change

Our Part on Climate, Collaborating
for Change

Aspect: Market Presence
201-1

Ratios of standard entry level

GS Report,

Creating Opportunities for Women,

wage by gender compared to

GS Website

Wages and Scheduling: Promoting

local minimum wage at significant

Stability and Flexibility for Retaillocations of operation

Employees; Wages

31, 37, 56

Working for Greater Equality
and Opportunity

Aspect: Indirect Economic Impacts
203-2

Significant indirect economic

GS Report

Youth Opportunity: This Way

38-68

impacts, including the extent

Ahead; Community Investment andof impacts

Volunteering; Empowering Women:
P.A.C.E.; Improving Factory
Working Conditions

Environmental
Aspect: Energy
302-1

Energy consumption within

GS Website

the organization
302-3

Measuring Our Progress/
Environment

Energy intensity

GS Website

Measuring Our Progress/
Environment

302-4

Reduction of energy consumption

GS Website

Measuring Our Progress/
Environment

Aspect: Water
303-2

Water sources significantly affected

GS Website

by withdrawal of water

Measuring Our Progress/
Environment

Aspect: Emissions
305-1

Direct (Scope 1) GHG emissions

GS Report,
GS Website

Climate and Energy

90

Measuring Our Progress/
Environment

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305-2

Energy indirect (Scope 2)

GS Report,

GHG emissions

GS Website

Climate and Energy

90

Measuring Our Progress/
Environment

305-3

Other indirect (Scope 3)

GS Website

GHG emissions
305-4

Measuring Our Progress/
Environment

GHG emissions intensity

GS Website

Measuring Our Progress/
Environment

305-5

Reduction of GHG emissions

GS Report,
GS Website

Climate and Energy

90

Measuring Our Progress/
Environment

Aspect: Supplier Environmental Assessment
308-1

New suppliers that were screened

GS Report,

using environmental criteria

GS Website

Assessment and Remediation

66-68

Measuring Our Progress/
Working Conditions

308-2

Negative environmental impacts in

GS Report,

the supply chain and actions taken

GS Website

Assessment and Remediation

66-68

Measuring Our Progress/
Working Conditions

SocialAspect: Employment
401-2

Benefits provided to full-time

GS Report,

employees that are not provided to

GS Website

temporary or part-time employees

Benefits and Work-Life Integration

36

Measuring Our
Progress/Employees

Aspect: Occupational Health & Safety
403-2

Types of injury and rates of injury,

GS Report,

occupational diseases, lost days

GS Website

and absenteeism, andEnsuring Worker Safety37

Measuring Our
Progress/Employees

work-related fatalities

Aspect: Training & Education
404-3

Percentage of employees receiving

GS Report

Our Employee Experience33-34

regular performance and careerdevelopment reviews

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Aspect: Diversity & Equal Opportunity
405-1

Diversity of governance bodies

GS Report,

and employees

GS Website

Employees and Workforce29

http://www.gapincsustainability.
com/strategy/our-sustainabilitystrategy/ensuring-stronggovernance
Measuring Our
Progress/Employees

Aspect: Non-discrimination
406-1

Total number of incidents of

GS Report,

discrimination and corrective

GS Website

actions taken

Discrimination

55

Measuring Our Progress/
Working Conditions

Aspect: Freedom of Association and Collective Bargaining
407-1

Operations and suppliers in

Freedom of Association

which workers’ rights to exercise

51

Measuring Our Progress/

freedom of association or collective

Working Conditions

bargaining may be violated or atsignificant risk

Aspect: Child Labor
408-1

Operations and suppliers at

GS Report,

Our Policies and Commitment tosignificant risk for incidents of

GS Website

Human Rights: Child Labor

child labor

55-56

Measuring Our Progress/
Working Conditions

Aspect: Forced or Compulsory Labor
409-1

Operations and suppliers at

GS Report,

Our Policies and Commitment tosignificant risk for incidents of

GS Website

Human Rights: Human Trafficking

forced or compulsory labor

51-52

and Forced Labor
Measuring Our Progress/
Working Conditions

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Aspect: Human Rights Assessment
412-3

Significant investment agreements

GS Report,

Our Policies and Commitment toand contracts that include human

GS Website

Human Rights

rights clauses or that underwent

47-60

Measuring Our Progress/

human rights screening

Working Conditions

Aspect: Local Communities
413-1

Percentage of operations with

GS Report

implemented local community

Community Investment

41-42

and Volunteering

engagement, impact assessments,
and/or development programs

Aspect: Supplier Social Assessment
414-1

New suppliers that were screened

GS Website

using labor practices criteria

Assessment and Remediation;

66-68

Measuring Our Progress/
Working Conditions

414-2

Negative social impacts in the

GS Report,

Assessment and Remediation;

supply chain and actions taken

GS Website

Measuring Our Progress/

66-68

Working Conditions

United Nations Global Compact: Communication on Progress
Principle

Principle Description

Location

1

Businesses should support and respect

Policies

the protection of internationally proclaimed

California Transparency in Supply Chains Act

human rights

Code of Vendor Conduct
Human Rights Policy
UK Modern Slavery Act
Implementation
Assessing Materiality
Advancing People and Communities
Improving Factory Working Conditions

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2

Businesses should make sure they are not

Policies

complicit in human rights abuses

Human Rights Policy
Code of Vendor Conduct
Conflict Minerals Policy
Implementation
Advancing People and Communities
Improving Factory Working Conditions

3

Businesses should uphold the freedom of

Policies

association and the effective recognition of

Code of Vendor Conduct

the right to collective bargaining
Implementation
Freedom of Association
4

Businesses should uphold the elimination of all

Policies

forms of forced and compulsory labor

Human Rights Policy
Code of Vendor Conduct
California Transparency in Supply Chains Act
UK Modern Slavery Act
Implementation
Forced Labor
Human Trafficking and Forced Labor

5

Businesses should uphold the effective

Policies

abolition of child labor

Human Rights Policy
Code of Vendor Conduct
Implementation
Child Labor and Young Workers
Child Labor

6

Businesses should uphold the elimination

Policiesof discrimination in respect of employment

Human Rights Policy

and occupation

Code of Vendor Conduct
Implementation
Discrimination
Advancing People and Communities
Improving Factory Working Conditions

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7

Businesses should support a precautionary

Policies

approach to environmental challenges

Climate Policy
Wood-Derived Fabric Policy
Implementation
Letter From Our CEO
Assessing Materiality
Water Stewardship
Product Sustainability
Operational Eco-Efficiency

8

Businesses should undertake initiatives to

Policies

promote greater environmental responsibility

Animal Welfare Policy
Climate Policy
Wood-Derived Fabric Policy
Implementation
Water Stewardship
Product Sustainability
Operational Eco-Efficiency

9

Businesses should encourage the

Policies

development and diffusion of

Climate Policy

environmentally friendly technologies
Implementation
Product Sustainability
10

Businesses should work against corruption in all

Policies

its forms, including extortion and bribery

Code of Business Conduct
Code of Vendor Conduct
Human Rights Policy
Implementation
Acting with Integrity

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Public Reporting Working Group Statement
Any report is a snapshot of that company at a particular moment in time that describes
where a particular company is. Much can be written to describe where a company is
at a particular moment, using data, measurements, photos, etc. However what is really
important is how the company, or any organization reporting, looks at where they areat that moment in time, how they got there and where they need to go as they plan
their work for the future.
Gap’s 2017 report provides a comprehensive picture of where the company is at thepresent moment. It supports and fills out that picture with data, descriptive writing andphotos to give a broader picture of the goals of the reporting company and progress inachieving these goals. Good reports include challenges, such as negative findings infactory audits, and how they are being addressed. It is about process and content, notjust one or the other.
The 2017 Gap report is such a report. For the PRWG, some members of which haveworked with Gap since their first report published in 2004, this report continues to
describe the process and content of the on-going work at Gap that we have seen.
In the diverse areas of the environment, ecology, worker rights and improving theworkplace, product development, etc. as well as reporting against industry accepted
standards such as the GRI Reporting Guidelines, Gap continues to describe its work
and its in-going challenges in detail.
The 2015 Gap CEO letter published on the Gap sustainability website describes thework most accurately when he writes “Every Gap product is part of a bigger story”. He
goes on: “What that story is, however, can be tough to know at first glance. Was a shirt
or jacket sewn by someone who works in safe and fair conditions? Was care taken to
mitigate any potential environmental harm caused by the manufacturing process? Were
the people whose lives were touched by the creation of a piece of clothing affected in apositive way?” Of course there are additional questions to ask…but it is the openness
to asking, and answering the questions that is important.
In working on this report, Gap shared its decisions: to move towards more frequent
reporting of data related various aspects of the work and urge Gap to make available
updated key performance data annually through its website. We realize the tremendous
amount of work that goes into reporting well and commend Gap for accepting thiswork as part of the on-going process for positive change.
Gap’s continued support for the P.A.C.E. program (Personal Advancement and Career
Enhancement) as reflected in the expansion of the program to 16 countries with morethan 65,000 women participants needs to be highlighted as a sustainability programthat moves beyond mere data and numbers to the actual lives of women and theirGap Inc.
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families. The Gap goal of 1,000,000 participants in P.A.C.E. by 2020 reflects the broader
reality of true sustainability. The reporting by ICRW, (International Center for Research on
Women) documents and verifies the effects of the program, one that other companies
would do well to support.
We look forward to seeing the outcomes from the various collaborative projects in which
Gap is engaged. Learnings from each project as well as what is transferable to othergeographic locations will strengthen the work.
Other strong points in the report include the provision of county specific data, as wellas the reference to the Sustainable Development Goals (SDGs). Gap’s Restricted
Substances List (RSL), following AFIRM Group’s RSL would be stronger with a link fromthe report to the RSL list online.
The next report would be strengthened by the expansion of information and data
regarding findings related to various types of unethical recruiting practices, where
they are found, how they are addressed and what measures are taken to change therecruitment paradigm from ‘worker-paid fees’ to ‘employer-paid fees’. In particular, we
would recommend that Gap disclose the dollar amount that has been reimbursed toworkers, and set goals – and discuss challenges – for ensuring that workers are directly
employed by Gap suppliers. When migrant workers are employed by their recruitment
firm, it makes them particularly vulnerable to exploitation.
We also commend Gap for its work to ensure the sustainability of its raw materials and,in particular, its cotton purchases. We would encourage Gap to provide greater specificity
around its sustainable cotton sourcing goals, supported by data to allow investors toassess progress. We would also welcome a discussion of how Gap is addressing thehuman rights of workers at these Tier 3 suppliers.
Gap did the right thing by voluntarily raising the minimum wage for its workers. We
encourage Gap to go a step further by publicly supporting an increase in the federal
minimum wage, with future adjustments indexed to inflation.
We strongly urge Gap to create links to its webpages as progress is made on any andall of the issues described in the report. In that way, the on-going reality of the many
aspects of the work will be easier for readers to comprehend.
We commend Gap for its work and progress and look forward to the next Gap report.

Mr. Adam Kanzer, Managing Director of Corporate Engagement, Domini Impact Investments, LLC
Mr. Mike Lombardo, Vice President, Research, Calvert Research and Management
Dr. Ruth Rosenbaum, Executive Director, Center for Reflection, Education and Action (CREA)
Rev. David Schilling, Senior Program Director, Interfaith Center on Corporate Responsibility

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