Reporting and materiality

Key Takeaways:

-        By providing an account of our business, our social and environmental impacts, our ongoing challenges, and where we are headed, we are in a stronger position to create positive change.

-        To help ensure that our reporting continuously improves and meets our stakeholders’ expectations, we regularly assess which issues are most important to our company, our stakeholders, and society at large. In 2012, we conducted a materiality assessment of our sustainability initiatives. The issues covered in this report were found to be “highly or moderately material” from a sustainability perspective.

 

Why we report

Our 2003 Social Responsibility Report was recognized in its time as a first in the apparel sector for its honesty and overall transparency. One of our goals with that initial report was to shift the debate on working conditions away from whether there were urgent labor rights issues in apparel factories, toward a constructive dialogue on how to fix them. It was not a risk-free decision at the time, but it proved to be a valuable one. Based on that experience, we have learned just how valuable reporting is – both as a process and in outcome.

Since that inaugural report, we have continued to build our reporting on the principles of transparency, accountability, and honesty. We believe the value of reporting can only be fully captured when it frankly discusses successes and failures, challenges and opportunities.

How we understand and use these reports can have widespread ramifications. First, it is important to see the report as the culmination of a process. It is not merely the assembly of information and ideas. It is the exploration of what the data tells us and how its use will inform work for the future. What needs to be adapted, changed, modified; what new challenges exist and how will they be addressed? Who else needs to be brought into the work and in what way? These are just some of the ongoing questions raised by a report such as this one.
– 2009-10 PUBLIC REPORTING WORKING GROUP Statement

Over the past decade, we have derived greater value from each subsequent report. By providing a public account of our business, operating context, and social and environmental impacts, we have become a better company. Reporting generates tangible value for our company by:

–        Building trust with stakeholders, which helps us collaborate to address issues.

–        Contributing to a broader culture of accountability and responsibility across Gap Inc.

–        Providing a platform for us to set public goals, enabling us to stay focused and enlist help in achieving them.

–        Giving us the opportunity to reflect on lessons learned and incorporate those learnings into our programs.

–        Keeping our executives and board members up-to-date on changes in the sustainability landscape, which informs our business strategy and enhances its implementation.

Several of our advances in reporting are the result of broader evolution in the reporting landscape. The innovative efforts of the Global Reporting Initiative (GRI) to create and disseminate a global framework for sustainability reports have helped shape our own efforts. We are pleased to include a GRI G4 Content Indices in this report, available here.

Concurrently, the work by the International Integrated Reporting Council (IIRC) to advance integrated reporting has also helped mature the reporting landscape. While we do not have immediate plans to release an integrated financial and sustainability report, we continue to monitor how this framework evolves. We are committed to using the reporting approach that brings the greatest value to our company and our stakeholders.

Scope

We publish a new Social and Environmental Responsibility Report every two years, while updating our data annually. In our view, biennial reporting is an appropriate timeframe given the systemic and global nature of the issues our company seeks to proactively address. It also allows us to devote the optimal allocation of resources to doing and communicating.

The scope of our 2011-12 report covers our efforts companywide and globally, across our Gap, Banana Republic, Old Navy, Piperlime, and Athleta brands. Our acquisition of Intermix on December 31, 2012, and the role this brand plays in our overall social and environmental responsibility efforts, will be included in our next report. Unless otherwise noted, data in this report relates to Gap Inc.’s fiscal years 2011 and 2012, which ran from January 30, 2011, to February 2, 2013.

Materiality

We regularly review the universe of issues we could report on in order to focus on those most important to our company, our stakeholders, and society at large. In 2012, we conducted a materiality assessment of our sustainability initiatives that found the issues we cover in this report to be “highly or moderately material” from a sustainability perspective.

In our sustainability reporting, we define materiality by the degree to which an issue is significant to society and our interested stakeholders, and the degree to which it is relevant to Gap Inc.’s scope of operations and ethical commitments. As part of our assessment, we analyzed indicators from key frameworks, indexes, and surveys including those from the Global Reporting Initiative (GRI), the Dow Jones Sustainability Index, Corporate Responsibility Officer, Ethical Trading Initiative, Social Accountability International, As You Sow, and Free2Work.

We then rated each issue according to its aggregate score along each of the following dimensions:

-        Significance to society:

·         Awareness of issue

·         Significance to key stakeholders

·         Evidence and impact of issue

·         Industry and peer response

-        Relevance to Gap Inc.:

·         Potential short- and long-term business impacts

·         Ethical relevance and policy commitments

·         Peer-based and social norms

·         Stakeholder activity and reputational risk

SR_CO6

Our assessment revealed that while we had been appropriately focusing our previous reporting on material issues, we were not sufficiently emphasizing our goals or our strategies to achieve them. In this report, we aim to address this by more clearly discussing our strategies, and by ensuring that our goals are easier to find on our website.

This assessment reconfirmed the enormous value that stakeholders contribute to our efforts. By keeping in close, direct contact with stakeholders from across the social and environmental responsibility spectrum, we are better able to proactively address the issues that most urgently demand our attention. While conducting a materiality assessment is a valuable exercise, there are no greater assets in identifying “what matters” than having an internal team with deep social and environmental expertise, and the external relationships and partnerships we build with experts around the world.

Stakeholder review of our reporting

We could not have produced this report without the help of our stakeholders. The Public Reporting Working Group (PRWG) was instrumental in providing feedback on content, insights into our overall message, and perspective on our data and progress, including areas where we need to do more. This group – comprised of experts on social and environmental issues from a number of non-governmental organizations and socially responsible investment firms – has been collaborating with us for more than ten years in our work to achieve greater transparency and sustainability.

The members of the Public Reporting Working Group are:

- Adam Kanzer – Managing Director and General Counsel – Domini Social Investments

- Mike Lombardo – Senior Sustainability Analyst and Manager, Calvert Social Index – Calvert Investments

- Ruth Rosenbaum – Executive Director – Center for Reflection, Education, and Action

- David Schilling – Director of Human Rights and Resources Programs – Interfaith Center on Corporate Responsibility

Included with the release of every Gap Inc. Social and Environmental Responsibility Report is a statement drafted by the PRWG that offers its assessment of our report in the context of our social and environmental responsibility efforts. The PRWG does not assure data or audit results. To read its statement on this report, please click here.

Experts at Ceres also reviewed and gave input on our report. In the years since we first partnered with Ceres in 2007, the organization has provided valuable guidance and held us accountable on evolving our environmental initiatives. We are grateful for their help in offering critical feedback on this report. The Ceres staff members who reviewed this report are:

- Andrea Moffat – Vice President, Corporate Program - Ceres

-  Kristen Lang – Senior Manager, Corporate Program - Ceres

Additional reporting

In addition to our public report, we provide regular, separate reports on our social and environmental progress to the Carbon Disclosure Project, the Clinton Global Initiative, the Ethical Trading Initiative, Social Accountability International, and the United Nations Global Compact (UNGC). Providing these issue-specific reports to key stakeholders helps focus and advance our work with them to continually improve our social and environmental responsibility efforts.

Please click here to download a copy of our Carbon Disclosure Project report.

Supplier Reporting

In early 2013, we began the process of more explicitly encouraging our branded apparel suppliers to issue public sustainability reports. Just as we provide transparency in our own Social and Environmental Responsibility Report, we believe that it is good practice for our apparel suppliers to provide reporting for their interested stakeholders. To that end, we sent a letter to all suppliers making Gap Inc. branded apparel encouraging them to issue public sustainability reports. We provided information on how to report, where to find additional resources, and whom to contact at Gap Inc. should a supplier want to learn more about reporting processes. We also informed our suppliers that public sustainability reporting earns best practice credit on our Code of Vendor Conduct ratings.