SUSTAINABILITY

END TERM JURY

SUMMARY OF GAP.INC SUSTAINABILITY REPORT

SUBMITTED BY:
ANUSHKA NARAYAN
B.FTECH
 ABOUT GAP INC.
Founded in San Francisco in 1969, Gap Inc. is a leading
global retailer offering clothing, accessories and
personal care products for men, women and children
under the Gap, Banana Republic, Old Navy, Athleta,
Intermix, Janie and Jack, and Hill City brands. They have
approximately 135,000 part-time and full-time
employees. Their products are available for purchase in
more than 90 countries through 3,194 Company-
operated stores, 472 franchise stores and e-commerce
sites (as of fiscal 2018).
Gap Inc., on February 28, 2019, announced plans to create two independent publicly traded
companies: Old Navy, a category leader in family apparel, and Gap Inc., which will consist of
the iconic Gap brand, Banana Republic, Athleta, Intermix, Janie and Jack, and Hill City b rands.
In early 2019, Gap Inc. purchased Janie and Jack, a leader in premium children’s fashion. Gap
Inc. expects to effect the separation through a spin-off in early 2020.

Athleta and Hill City brands are certified B-Corp brands, demonstrating their commitment to
using business as a force for good by meeting rigorous standards across social and
environmental performance, accountability and transparency. They have amended Athleta's
legal charter to become a Delaware Public Benefit Corporation to further uphold the brand’s
commitment to people and the planet. They purchase private label and non-private label
merchandise from about 700 vendors. Their vendors have factories in about 40 countries.
 ABOUT THIS REPORT
This report covers Gap Inc.’s global operations for the fiscal year ending February 2, 2019.
This report focuses on developments and actions for their key programs, progress towards
corporate and brand goals during fiscal 2018, preparations for activities in 2019, and an
analysis of trends and business impacts where available.

SUSTAINABILITY STRATEGY

As one of the world's leading apparel retailers, they recognize that they contribute to and
have the opportunity to address systemic social and environmental challenges. They continue
to be committed to contributing to business value; enabling safe, fair working conditions for
the people who make products; minimizing their environmental impact; and working with
their industry to achieve progress on global goals. GAP does this by addressing impacts in
their owned and operated facilities and collaborating throughout their value chain and across
government, business and civil society. Recognizing the importance of engaging customers
and employees, they are also communicating through their brands in their effort to build a
more sustainable world.

GAP has aligned their sustainability strategy with the United Nations (UN) Global Sustainable
Development agenda. Guided by frameworks such as the UN Guiding Principles on Business
and Human Rights, the UN Sustainable Development Goals (SDGs) and the Paris Agreement
on climate change, they have identified the issues that are most material to business and
where they have the most influence.
 Core Sustainability Focus Areas

SOCIAL
Advancing People + Communities:
They aim to create opportunities for the
exceptional people who support their
business — employees in their stores,
workers in supplier facilities and
communities near their operations.

ENVIRONMENT
Water Stewardship:

Water is essential for their business and the people and communities where they operate.
They look for ways to address water impacts throughout their value chain and in
communities.

PRODUCT SUSTAINABILITY
They are working with product designers and
developers to balance the needs of getting great
product into their customers’ hands more
consistently and faster than ever before, while
also reducing their impact on the environment.

IMPROVING SUPPLY CHAIN WORKING

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

OPERATIONAL ECO-EFFICIENCY
They are reducing their operational greenhouse gas (GHG) emissions and waste, and working
with their logistics and procurement partners to improve efficiency and environmental
performance.
 SOCIAL
THEIR APPROACH

Workplace culture and benefits are designed to meet the professional and personal needs of
their employees and their families. Over the years, they have built on their foundation of
putting people first. This includes improving wages and scheduling practices so that the
people who work in their stores experience greater stability and flexibility, as well as financial
incentives, work-life integration and benefits that help employees make the most of their
professional and personal lives. This supports employees and increases their engagement at
work, which contributes value to their business. In 2018, they invested in a few critical areas
to develop talent, understand employee engagement and enhance flexibility for their people.

P.A.C.E. - Empowering Women

Launched in 2007, their innovative Personal Advancement & Career Enhancement (P.A.C.E.)
program was initially created to support women in the global apparel industry. Although
women represent the majority of the sector’s workforce, relatively few have the opportunity
to advance to management positions, and many lack access to the education and skills
training they need to support their personal and professional growth. They developed P.A.C.E.
to give these women the foundational life skills, technical training and support that will help
them advance in the workplace and in their personal lives, as documented in the program’s
evaluation results. They began delivering P.A.C.E. in their vendors’ facilities in 2007, and
expanded the program to community settings in 2013 to unlock new possibilities for women
and adolescent girls.

Being involved in a transformational journey

themselves, P.A.C.E. trained women had an
aspiration for their daughters to participate in
a similar program. In 2016, Gap Inc. expanded
the P.A.C.E. programming to include
adolescent girls in two age groups (11-13 and
14-17) as a result of the vision that P.A.C.E.
graduates had seen for their own daughters to
possess better life skills, to be bolder, braver
and able to negotiate their problems more
effectively.

They seek to bring P.A.C.E. to as many women

and girls as possible. By 2022, over one million
women will have participated in this life-
changing program, and they anticipate that many more will be served in the next after that.
In 2017, they implemented a new strategy that will help us grow P.A.C.E. by forming new
partnerships, improving the efficiency and effectiveness of their program management and
through the development of a new learning management program.
As of early 2020, over 500,000 women in 17 countries have participated. These gai ns came as
the result of momentum with existing partners and the addition of new partners with the
potential to greatly expand the program.
 Employee Engagement
Community Leaders program

They give their employees a chance to make a real difference in their communities through
their Community Leaders program, which consists of nearly 3,000 people across seven
countries. Their Community Leaders, the heart and soul of their volunteer efforts, are
encouraged to identify a local non-profit organization that can use the talents and skills of
their employees. Their aim is to partner with these organizations to create long-term positive
impact. This model gives their partners the confidence to invest in training their employee
volunteers, and it fosters a deeper connection between their volunteers and the local
community. Just as for any other business activity, each team is responsible for setting and
delivering on their goals.
In 2018, Gap Inc. and employees contributed $15.6 million in employee-driven community
investment, which represents the combined value of volunteer hours, employee financial
contributions and company matching dollars. This amount includes 431,534 employee
volunteer hours with organizations focused on a variety of issues, from helping disadvantaged
women thrive to enabling young people to achieve a better future.

For Gap Inc., these programs deliver both social and business benefits: Their communities
benefit from the long-term impact of their employee volunteer efforts, and their business is
rewarded with more engaged employees who are passionate about making a difference in
the world. For example, they've found that volunteers have a turnover rate nearly a third
lower than individuals who are not similarly engaged, they stay with their company for nearly
twice as long and they are more frequently promoted.
 Improving Supply Chain Working Conditions
A commitment to safety, fairness, dignity and respect

THEIR APPROACH

Consumer trends and expectations are placing greater demands on production timelines and
capabilities—which can ultimately affect the individuals working in the garment industry.

Gap Inc. has worked to develop and implement a robust program for assessing and
remediating issues in sourcing facilities, and in recent years has developed a suite of capability
building programs. Having in-country field teams enables us to closely monitor facilities
according to their Code of Vendor Conduct, allowing us to have thorough, on-the-ground
insight into how their suppliers perform and what salient issues workers in their supply chain
face. Given the need for industry wide collaboration, in some cases they partner with other
brands to improve results for garment workers.

Their goal is to design and implement industry-leading programs that can help drive
innovation that transforms the apparel manufacturing sector. In partnership with their
suppliers, NGOs, multilateral organizations and other stakeholders, they’re establishing
initiatives that are multifaceted and focus on a range of interventions: improving worker and
management relations, innovating how they assess and improve working conditions, and
using technology to directly engage with and respond to workers’ needs.

Supplier Sustainability Program

Since launching their Supplier Sustainability program in 1994, they have transformed their
approach to improving facility working conditions by developing innovative, holistic programs
that go far beyond assessing and remediating issues in their approved facilities.
Supplier Sustainability efforts historically
have focused on issues at cut-and-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, in recent years we have
evolved 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 to assess their working conditions and build their capacity to
proactively mitigate risks, and we are seeking to improve conditions in the cotton sector
through our partnership with the Better Cotton Initiative.
Achieving their goals requires innovation and closer partnership with suppliers and their
facilities that manufacture our branded product. At the same time, more assistance, be tter
tools and added capability building services are provided to suppliers to help them improve
their sustainability performance. One of their responsibilities in a partnership model is to
clearly establish and communicate all of our expectations to their supply chain partners. To
that end, we have evolved their Code of Vendor Conduct (COVC) to provide supply chain
partners with more clarity on their standards, goals and expectations.
 ENVIRONMENT
Water Stewardship
Treating water as a human right

Few resources are as essential to people’s health and well-being as water. Their water
stewardship strategy is built on the principle that clean, safe water is both an environmental
goal and a basic human right. They have a responsibility and an opportunity to address water
issues because it is a critical natural resource for their business — used to cultivate raw
materials like cotton, consumed in the mills and laundries that manufacture their products,
and used by consumers when they wash their clothes.
To help build the resilience of their company, their supply chain and the people who make
their clothes, they strategically address water use and contamination in product design and
manufacturing. Alongside their strategic implementation partners, they also lead a suite of
programs to provide education, access to services and financing to women and communities
to address water, sanitation and hygiene (WASH) needs. Through water-risk assessments,
they have identified India as a critical location for WASH services, making it a strategic location
for many of their programs. Within Gap Inc. partner facilities, their Code of Vendor Conduct
requires that key WASH needs of garment workers are met. In addition, their P.A.C.E. program
aimed at workers within their supply chain as well as global communities, provides additional
capability to bring WASH education to women globally.

Their Women + Water strategy is focused on the intersection between their industry's
significant use of water and the basic right people have to clean safe water and is targeted in
three key areas:
1. Partnering with fabric mills and laundries to reduce manufacturing impacts (read more
in their section on reducing impacts at mills)

2. Building awareness and educating the women who make their clothes about safe
water-handling practices, and by increasing their access to safe water (read more
below)
 3. Adopting more water-efficient product design and sourcing practices (read more in
their section on product sustainability)

In 2018, they set an ambitious goal to conserve 10 billion liters of water by the end of 2020
through sustainable manufacturing practices.

This volume is equivalent to providing daily drinking water for 5 billion people. Their primary
strategy to achieve this goal is to engage with the mills and laundries in their supply chain and
use water-saving methods in the production of their clothing. They achieved 5.7 billion liters
of water savings by the end of 2018, from a 2014 baseline.

In addition, they are a signatory to the CEO Water Mandate, which enables collaboration with
other companies, governments, civil society and others to address challenges related to water
scarcity, quality and governance, and access to water and sanitation. They also partner on
several initiatives with Water Aid, an NGO that supports people with access to clean water
and sanitation, and they are part of WASH4Work, a diverse public-private partnership
mobilizing business to improve access to WASH in the workplace and communities across
supply chains.
In 2018, They helped to create “Businesses for Water Security in the Noyyal Bhavani River
Basin,” focused on improving the long-term sustainability of India’s Cauvery River Basin, a
critical watershed in one of their key sourcing regions. The project looks beyond individual
facility or single-company initiatives to holistically address risks in the river basin where their,
and other brands’, value chains operate. It aims to help address the root cause s of water risks
that threaten businesses, communities and ecosystems.

Through this project, they will be working with regional and local stakeholders to address
water risks and ensure water security in this basin by prioritizing solutions that consider both
the river basin and apparel facility conditions.
 PRODUCT SUSTAINABILITY

They have developed a number of systems and tools to educate their brand designers,
merchants, product development and sourcing teams about how to design using more
sustainable fibers, fabrics and manufacturing techniques that save water — and how to
procure more responsible materials. For example, their Sustainability and corporate Learning
and Development teams collaborated to deliver and scale several tools, including a training
curriculum and guidance on sustainable fibers, sustainable wet processing, recycled materials
and sustainability marketing claims.
They also worked with Textile Exchange, the Sustainable Apparel Coalition and Anthesis to
create a Preferred Fibers Toolkit so that designers and developers are better able to select
the best fibers based on sustainability factors such as water, chemicals, energy and emissions,
land use and biodiversity, social conditions, animal welfare, potential for circularity and
improved conditions for women. The toolkit also allows product design teams to eval uate
fibers based on commercial factors such as quality, cost, availability and traceability.

Further, they have incorporated sustainability workshops and educational trainings into their
companywide learning and development program, and they created a monthly newsletter on
product sustainability that they use to proactively engage product development employees.

Sustainability Commitments
Athleta
Athleta has a strong commitment to environmentally conscious products and sustainable
practices. The brand believes in protecting the Earth as a natural playground, positively
contributing to the direction of the apparel industry, offering customers responsible options
and driving demand for sustainable goods, and supporting the potential of women and girls.

In 2017, Athleta demonstrated its growing commitment to sustainability by announcing new

goals:
  Protect resources: By 2020, 80 percent of Athleta materials will be made with
sustainable fibers. The brand has been working to increase its use of recycled
synthetics, organic cotton, and more efficient fabric dyeing and finishing techniques.
Life-cycle assessments show that these materials conserve water resources, use less
energy, emit less greenhouse gases and use less hazardous chemicals than the ir
conventional counterparts.

 Conserve water: By 2020, 25 percent of Athleta’s line will be made using

manufacturing techniques that save water. The brand is investigating new
technologies and expanding programs that use less water.

 Divert waste: By 2020, 80 percent of Athleta’s store waste will be diverted from
landfill.
 Empower women: By 2020, Athleta will impact 10,000 women and their communities
through programs like P.A.C.E. and Fair Trade. Athleta certified the first of its facilities
as Fair Trade in 2016 and debuted its first Fair Trade products in 2017.

Banana Republic
Banana Republic is continuing to integrate sustainability into design and manufacturing
decisions to reduce the environmental impacts of each garment. The brand has also
established sustainability goals and key metrics:

 Make 50 percent of products using water-saving techniques and cleaner chemistry

practices in the supply chain by 2025

 Make more eco-friendly denim by 2023

 Source 100 percent of cotton from more sustainable sources by 2023

 Make 50 percent of products with sustainable fibers by 2023

Old Navy
Old Navy’s targets are focused in two areas of critical importance to the brand and Gap Inc.
Old Navy will help scale and drive impactful improvement in water-savings efforts and
sustainable cotton sourcing, while helping to educate the brand’s customers on the
importance of more sustainable apparel production.

 Source 100 percent of cotton from more sustainable sources by 2022

 Make 100 percent of denim products using water-saving techniques by 2022.

Circular Design: Product End of Life

In order to create truly sustainable fashion, they recognize that they must address the full life
cycle of their garments, from raw materials to end of life — and back again.
The environmental impact of a product at
the end of its life is large — the majority
of textiles ultimately end up in landfill or
incinerated. They understand that they
must close the loop and create a system
that uses recycled inputs and reduces
waste. To do so, they are building
programs to address product end of life
and create circular design systems that
reduce waste and increase recycling,
upcycling and reuse.
They are collaborating with leaders in the circular economy, including as a core partner in the
Ellen MacArthur Foundation’s Make Fashion Circular initiative. Through Make Fashion
Circular, They have made a three-year commitment to focus on safe and reusable inputs,
sustainable-fiber models and recycling old clothing. Through their involvement, they
launched a textile-collection effort in New York City in early 2019 that encourages customers
to bring their spent garments to select Banana Republic, Gap brand and Athleta stores for
recycling. Their aim is to develop safe and reusable inputs that feed into sustainable -fiber
models in order to turn old clothes into new. In addition to these partnerships, they continued
their engagement with Global Fashion Agenda (GFA) and Fashion Positive, to explore
circularity opportunities.

As part of their 2020 Circular Fashion Commitment with GFA, They have set three
commitments to achieve by 2020:
 They will train their cross-functional product teams for each of their brands on circular
design techniques and best practices.

 They will help increase the volume of used garments collected globally through
participation in pre-competitive, industry-led collection pilots.

 They will identify the most promising recycling technologies for post-consumer
materials across multiple product categories, and they will start scaling them up in
their supply chain.
 OPERATIONAL ECO EFFICIENCY
Improving the Energy Efficiency of Retail Stores and Distribution Networks

Retail stores are the focus of Gap Inc.’s operational energy program since they generate
approximately 85% of their direct (scope 1 and 2) GHG emissions. They are taking steps to
adapt to climate change and regulatory changes by piloting and expanding energy-
management solutions for their retail operations, updating HVAC systems and exploring
renewable energy options.

To work toward their 2020 emissions-reduction goal, they used the EPA Energy Star platform
to analyze differences in store performance and prioritize regions, brands and initiatives with
the greatest opportunities for energy improvements. They piloted a new energy-efficiency
program at 100 stores across North America to provide real -time monitoring and
management of their energy use. They have installed LED lighting—which use 80% less energy
than conventional lights—at over 1,000 of their stores. Not only do these lights reduce their
energy use, they last five to 10 times longer and they pay for themselves in just two to three
years.

In addition to their efforts to reduce the energy impacts of their retail stores, they look for
ways to improve the efficiency of their distribution networks. In 2011, they joined a voluntary
government and industry collaboration known as the Smart Way Shipper Program, which
brings together carriers, freight shippers and logistics companies to improve fuel efficiency.
To support that, they also have committed to using cleaner modes of transportation and
encouraging the use of fuel-saving strategies and technologies. Moving forward, they are
working to integrate more of their business operations into the Smart Way program and
improve their data collection to better measure results.

Investing in Renewable Energy

In August 2019, they announced a 90 Megawatt (MW) virtual power purchase agreement
(VPPA) for the Aurora Wind Project with Enel Green Power North America, marking one of
the largest offsite renewable energy contracts by an apparel retailer. The 12-year agreement
is their latest renewable energy deal and will enable us to reach their 2020 goal to reduce
absolute Scope 1 and 2 greenhouse gas (GHG) emissions for its owned and operated facilities
by 50 percent compared to 2015. They also announced a goal to reach 100 percent renewable
energy across its global owned and operated facilities by 2030.

Earlier in 2019, together with four other companies — Bloomberg, Cox Enterprises, Salesforce
and Workday — They formed a first-of-its-kind Virtual Power Purchasing Agreement (VPPA)
partnership that is enabling us to procure a total of 42.5 megawatts of a 100-megawatt solar
project in North Carolina. Historically, it has been difficult for individual companies with
smaller energy needs to procure solar from large projects due to high transaction costs and
complicated contract processes. By joining forces, however, they have expanded their buying
power, and they will be able to share best practices with other companies that wish to
replicate this innovative model. Each company will receive approximately the same amount
of energy from the project. Gap Inc. has contracted for 7.5 megawatts of solar energy, which
will offset 100 percent of the energy load for their Athleta brand’s headquarters and stores.
The project is targeted to begin generating electricity in 2020.

In June 2018, they finalized an agreement to develop a 3-megawatt solar array at their Fresno,
California, distribution center. The project, which will result in the equivalent of removing 254
passenger cars from the road annually, will offset more than half of the energy load at their
Fresno facility and is projected to reduce energy expenses. They expect the array to begin
generating power by the end of 2019. They are continuing to explore the possibility of
combined renewable energy and storage opportunities in their distribution center network.

Developing a Science-Based Target

In 2017, Gap Inc. signed on to the Science-Based Target initiative (SBTi) to align their climate
goals with the scientific consensus and core commitment of the Paris Agreement to li mit
global warming below 2°C. The initiative, a partnership between CDP, WRI, WWF, and the UN
Global Compact, includes more than 400 companies. By setting and meeting these goals, they
are doing their part to help the world avoid the most dangerous impacts of climate change.

They collect environmental data from their finished product (Tier 1) and textile manufacturing
(Tier 2) suppliers using the Sustainable Apparel Coalition’s Higg index, a self-reporting tool
that evaluates environmental performance and helps identify opportunities for
improvement.
In 2020, they announced Gap Inc.’s science-based target for reducing emissions:

Gap Inc commits to reduce absolute scope 1 and 2 GHG emissions 90% and scope 3 GHG
emissions from purchased goods and services 30% by 2030 from a 2017 base year. Gap Inc.
also commits to increase annual sourcing of renewable electricity from 0% in 2017 to 100%
by 2030 for its owned and operated facilities globally.
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 https://www.gapinc.com/content/gapinc/html/sustainability.html