Best of the best: leading the responsibility race

It should come as no surprise that Gap, which includes such brands as Banana Republic, Old Navy and Piperlime, won the first Corporate Secretary Magazine Award for ‘Most innovative CSR policy disclosure’. Over the years, this specialty retailer of clothing, accessories and personal care products has won recognition and awards for its social responsibility reporting, sustainability practices and business ethics. But it takes far more than beautifully written CSR reports or social responsibility pages on the corporate website to earn this level of acclaim. It takes an unwavering corporate commitment to instill and monitor socially responsible practices among employees and business partners, and to initiate remedial action if necessary.

‘We believe we should go beyond the basics of ethical business practices and embrace our responsibility to people and to the planet,’ says the company on its website. ‘Social responsibility is fundamental to who we are and how we operate as a company.’

‘Gap’s social responsibility approach focuses on three main areas that are most integral to our business: the ethical sourcing of our products, giving back to the communities impacted by our operations and lessening our impact on the environment,’ explains Geoffrey Geist, manager of strategy and communications, global responsibility. He previously served as the company’s vendor compliance officer for North America. ‘I’ve primarily focused on ethical sourcing, working with the vendors and factories that produce our goods in order to improve conditions for workers over the long term,’ explains Geist.

Taking responsibility for others
According to Geist, the cornerstone of Gap’s social responsibility program is the company’s commitment to the ethical production of its garments. However, the fact that Gap doesn’t own the factories which make its garments creates challenges. In 1996 Gap became one of the first companies in their industry to establish a code of vendor conduct. Based on internationally accepted labor standards, the six-page code details Gap’s expectations for the factories it does business with as well as for the company’s subsidiaries, divisions, affiliates and agents.

Not only does Gap’s code of vendor conduct address such key areas as compliance with local laws and the implementation of sound environmental practices and policies, it also lays out very detailed requirements for labor and for safe and healthy working conditions. Besides agreeing to abide by the code, factories that work with Gap must develop ‘monitoring systems’ to assess and ensure their compliance. Gap also conducts its own monitoring through an internal global team. Factories found to violate the code may face termination or be required to take corrective action. While any violation of the code creates concern, the company pays special attention to serious situations such as forced or child labor or to frequent violations in the area of health and safety.

Kellie McElhaney, co-faculty director, center for responsible business, adjunct assistant professor and John C Whitehead distinguished faculty fellow in corporate responsibility, Haas School of Business at Berkeley, says Gap is quick to act and comes clean if they discover a situation that violates their code of conduct. ‘This is a company that takes their commitment to social responsibility very seriously, tells the truth and tells it fast, which is a strategy that we don’t see much of any more,’ says McElhaney.

‘Gap has a very in-depth corporate responsibility strategy. It’s very much focused on their scariest question which is the factory conditions in which their clothes are made,’ continues McElhaney. ‘I think that’s the strength of their strategy.’

It’s not just about the good things
‘A lot of companies deal with different things in the area of corporate social responsibility,’ adds McElhaney. ‘What I think is different about Gap is that they focus on where they’re most vulnerable.’

The company has an internal team of more than 80 people around the world who are dedicated to working with the factories that make their products. Geist, a company employee for more than 10 years, says the most significant change he has observed has been the ‘evolution from a compliance/regulatory-oriented group to one that combines compliance with an increased focus on capacity building and management training. … It has been an important shift to empower factory owners themselves to take ownership of the improvements in working conditions. While we maintain a comprehensive code of vendor conduct with each of the factories we contract with, our role has increasingly been as a consultant, providing guidance to factories on how to address the root causes of issues in their facilities before they become compliance violations.’

Geist says that one challenge faced by Gap and others in their industry is ‘creating a culture of compliance’ that instills a sense of ownership in factory management. ‘I’ve seen firsthand that factories that improve working conditions and treat their workers with dignity and respect frequently have less employee turnover, which leads to longer-tenured workers who produce higher quality work more consistently,’ comments Geist. ‘Improved working conditions have an impact on the bottom line.’

Geist anticipates Gap will continue to work toward building the internal capacity of vendors and factories. ‘Our experience is that when we help to improve things like management systems within factories we help to effect positive, long-term change for factory workers.’

Another way Gap effects positive change is by investing in the communities where they do business. In India, for example, the company recently launched a program called Personal Advancement and Career Enhancement (PACE). ‘This program seeks to improve the lives of female garment workers through education and life skills training,’ explains Geist.

‘Over the past decade, I’ve seen the evolution of Gap’s social responsibility program and believe that we are helping to lead the industry toward increased awareness of supply chain issues and, ultimately, better working conditions for garment workers around the world,’ he concludes.

In taking home the award for best CSR disclosure, which was supported by Jenner & Block, Gap beat out some very strong competition in the form of American Electric Power, Ford Motor Company, Johnson & Johnson and Motorola.