20 2021 ESG REPORT THE BIG PICTURE EMPOWERING WOMEN ENABLING OPPORTUNITY ENRICHING COMMUNITIES GOVERNANCE ASSESSMENT AND REMEDIATION When an issue is reported or found during 2021 Progress our assessments, our global field teams Between 2016 and 2020, we worked SOCIAL & LABOR We use our Assessment and develop a tailored remediation process that toward a goal of sourcing from facilities CONVERGENCE Remediation Program to considers local contextual factors such as rated yellow or green; today, only 1 percent PROGRAM (SLCP) evaluate our suppliers and workers’ education level, cultural norms, and of facilities we work with are rated red, incentivize improvements by ways of communication. For example, we may compared to 16 percent in 2016. In As a signatory to the SLCP, we support conduct interviews in workers’ communities 2021, we raised our ambition to drive ways to improve working conditions in directing more business toward to better understand their needs, enabling us performance improvement by setting global supply chains by encouraging the highest-performing facilities. to more effectively address violations within a goal to source at least 80 percent the wider adoption of the SLCP tool, our global supply chain. of business spend from green-rated which helps assess the social and Our approach begins with assessments factories by 2025; we are on track, with labor performance of manufacturing conducted by Gap Inc. (32 percent of Critical and severe violations have a greater 68 percent at the end of 2021. facilities while reducing the duplication assessments), ILO-IFC Better Work negative impact on a facility’s rating than of industry efforts. (26 percent), and the SLCP (43 percent). noncompliance violations. Our strict approval By the end of 2021, 84 percent of COVC process discourages red-rated facilities issues had been resolved. We resolve In 2021, we used the SLCP tool Through these assessments, we rate from entering our sourcing base. If a red these violations by integrating this work in Better Work assessments in each facility using a color-coded system: rating occurs, we provide corrective action into our sourcing decisions, which drives Indonesia, Bangladesh, and Vietnam. plans and a realistic time frame to resolve increased vendor ownership in resolving We aim to increase this across all > Green for high-performing facilities with any issues. Should a facility or vendor fail issues promptly. Our dedicated Supplier Better Work countries, supporting few violations, none of which were critical. to address persistent noncompliance, we Sustainability team trains global sourcing our goal to have all our Tier 1 facilities > Yellow for average performers. action a responsible exit plan and continue to employees on human rights policies and and Tier 2 strategic mills involved in > Red for those that need to address monitor the facility to address pending issues procedures, building awareness on COVC industrywide efforts by early 2023. one or more serious issues. during and following deactivation. requirements and ways to manage vendor performance. We also train and educate key vendors on how to implement measures that prevent COVC issues from arising. GOAL BY 2023/2025 PROGRESS IN 2021 100% 75% 40% By 2023, 100% of our Tier 1 facilities will of Tier 1 of Tier 2 participate in industrywide efforts, including factories are strategic SLCP and/or ILO-IFC Better Work, and 100% participating mills are of Tier 2 strategic mills will participate by 2025. participating Needs attention GOAL BY 2025 80% 68% of Gap Inc. sourcing will be allocated of our business spend is to green-rated factories allocated to green-rated On track factories