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Gap Inc. Ranks Overseas Factories on Treatment of Workers

Coalition of Social Investors Helps Create Groundbreaking Report

San Francisco, CA — For the first time, a clothing retailer has publicly rated the way its overseas factories treat their employees. Gap Inc.’s new Social Responsibility Report is the result of two years of dialogue between the company and a coalition of socially responsible investors.

Gap’s Social Responsibility Report presents a rating system for evaluating supply factory compliance with the company’s code of conduct. The report uses a quantitative ranking system to examine whether suppliers use physical punishment or coercion, protect their workers’ right to freedom of association, pay at least the minimum wage, or require excessive overtime.

In addition to a scored ranking system, Gap’s Social Responsibility Report provides regional compliance indicators relative to all major elements of the company’s code of conduct for suppliers.The report also reveals the number of supplier facilities audited by region and discusses central issues related to non-compliance.

“Today, there is no generally accepted reporting format for supply chain compliance. The Gap report is an important step in the direction of a model format that other companies can adapt and improve upon,” said David Schilling, Director of Global Corporate Accountability for the Interfaith Center on Corporate Responsibility (ICCR).

ICCR is a member of the shareholder group, along with Domini Social Investments, the As You Sow Foundation, the Calvert Group, and the Center for Reflection, Education and Action (CREA).

This report presents the first attempt by a clothing retailer to publicly rank the relative level of compliance by factories with its code of conduct. “Nearly a decade after major retailers began to develop codes of conduct for their supply chains to deter sweatshop conditions, it is virtually impossible to determine levels of compliance with these codes,” said Adam Kanzer, Director of Shareholder Advocacy for Domini Social Investments, the manager of the Domini Social Equity Fund (NASDQ: DSEFX). “To restore and maintain the confidence of consumers and investors, it is essential that retailers issue public reports detailing code compliance.”

“While companies say that they have been steadily improving the quality of their vendor standards enforcement, they have generally not been willing to share meaningful data to verify their assertions,” said Alya Kayal, Senior International/Human Rights Analyst for Calvert.

“Establishing a meaningful public benchmark that helps stakeholders and the general public understand and measure the company’s progress is a valuable step forward on public disclosure,” she added.

“In our view, corporate social compliance systems should exist to bring working conditions in line with internationally accepted human rights standards,” said Ruth Rosenbaum, Executive Director of CREA. “These systems are critically important to helping workers protect their rights. We commend Gap for recognizing that its code of conduct sits within this broader context of international human rights norms. It is an important recognition of public accountability.”

“Companies need to be held accountable for enforcement of their codes of conduct,” said Conrad MacKerron, Director of the Corporate Social Responsibility Program of As You Sow. “Otherwise they run the risk of misleading investors by suggesting that adoption of a code implies adequate monitoring and enforcement.”

Members of the group plan to expand existing dialogues with other retailers to encourage them to match Gap’s public report. Gap’s report is available online at www.gapinc.com.

About the Participants

About the As You Sow Foundation

As You Sow is a non‑profit social change organization dedicated to promoting corporate accountability, social justice, and environmental protection. As You Sow helped manage the dialogue with Gap, Inc. on behalf of Domini Social Investments. For more information, visit www.asyousow.org.

About CREA

The Center for Reflection, Education and Action (CREA) is a faith-based social economic research, education, and action center located in Hartford, Connecticut. Additional information about CREA and its work on purchasing power, corporate responsibility, and economic justice can be found at www.crea-inc.org.

About Domini Social Investments

Domini Social Investments manages more than $1.8 billion in assets for individual and institutional mutual fund investors seeking to create positive change in society by integrating social and environmental criteria into their investment decisions. Additional information on Domini Social Investments is available on the firm’s website, www.domini.com.

About the Interfaith Center on Corporate Responsibility (ICCR)

ICCR's membership is an association of 275 faith- based institutional investors, including national denominations, religious communities, pension funds, endowments, hospital corporations, economic development funds and publishing companies. ICCR and its members press companies to be socially and environmentally responsible. Each year ICCR- member religious institutional investors sponsor over 100 shareholder resolutions on major social and environmental issues. The combined portfolio value of ICCR's member organizations is estimated to be $110 billion. For more information, visit www.iccr.org.