NEW YORK — Gap Inc. plans to disclose today that it dropped 136 of its factory suppliers last year because they had committed violations of its code of vendor conduct.
The $15.9 billion retailer said it will divulge this information on its social responsibility practices in a report issued to shareholders at its annual meeting in San Francisco. The first report of its kind from Gap is part of its campaign to address allegations the company buys from sweatshops.
The 42-page document provides a detailed account of the retailer’s sourcing practices, specifically addressing how it ensures its supply chain of 3,000 factories in more than 50 countries complies with its published code of vendor conduct. Gap provided WWD with an advance copy of the report.
“We have taken some lumps on this issue over the years,” Anne Gust, Gap’s executive vice president and chief administrative and compliance officer, said in a phone interview.
She said Gap plans to release new editions of the report each year.
Gap’s well-known name and network of more than 4,000 stores around the world have made it a prime target for activists targeting abusive labor practices in foreign factories. In particular, the UNITE union had held a series of demonstrations targeting Gap stores in the past several years.
However, last month UNITE and Gap reached a truce, with both parties lending support to the establishment of a new, unionized El Salvador factory called Just Garments that is intended to serve as a model of responsible apparel production.
Bruce Raynor, president of UNITE, said Tuesday he believed Gap was serious about trying to improve working conditions at factories where it buys apparel.
“There is a real effort on their part,” he said. “We have our disagreements, but I essentially believe there are some positive moves they’re making. We’re looking forward to having them use the power of their sourcing to help achieve some better conditions.”
According to the report, Gap’s worldwide team of 93 compliance officers last year evaluated 653 factories that were seeking to do business with the chain. Of those, 75 percent were ultimately accepted into Gap’s sourcing network. During follow-up visits to current Gap suppliers, company executives found code-of-conduct violations that led to 136 factories being kicked off the Gap approved-supplier list.
Gap’s code of conduct includes both broad human rights standards, such as forbidding the use of child or forced labor, as well as safety and hours rules, such as ensuring corridors remain clear and not allowing workers to toil more than 60 hours a week.
The report said “few factories, if any, are in full compliance all of the time.” It said the firm’s compliance officers strive to fix problems in noncompliant factories, rather than just dropping vendors at the first sign of a violation, with the goal of improving the conditions of factories and the well-being of workers.
“There are very few issues we face that you can say, it’s yes or no, black or white,” Gust said.
She said enforcing the code of conduct often comes down to trying to assess the intention of factory managers, as well as observing their actions.
“People can be out of compliance for innocent reasons and then there are those who really just want to game the system,” she said.
Citing an example of a violation that would lead to a swift break in relations, she said, “There are some factories in China where you find double sets of books,” with one showing the amount of hours employees are actually working and another showing the number of hours for which they are being paid.
In such a case, she said, the only conclusion is, “This is someone who has been lying to you and then you have to move on.”
Gap developed its first code of vendor conduct in 1996, the year before Gust was promoted to her current post. Since then, she said, she has seen improvement in the conditions at factories where Gap produces merchandise. The biggest changes, she said, have come from factory owners who’ve found that there are ancillary benefits to complying.
On a recent trip to India, she said, one factory owner told her that at first, he’d regarded the code as an annoyance. Now, she said, he found that improving conditions — and adding benefits like on-site child care and health care, as well as free meals — has reduced employee turnover and improved productivity.
“He was doing it because we were asking him to,” she said. “He now does it because he sees a lot of benefits to it.”