Business Studies Research Paper on The World’s Most Ethical Companies

The World’s Most Ethical Companies

Ethisphere’s most recent ranking of the World’s Most Ethical Companies had a list of 145 companies drawn from different countries around the world cutting across different industries. Of the 145 countries ranked among the most ethical, more than 40 had headquarters outside the US, with an additional 23 companies making it into the list for the seven years that the honors have been given (Ethisphere, 2014). In the apparel industry, only two companies made it to the list with the first being Gap Inc of U.S. and H&M of Sweden. This paper will look at Gap Inc, a leading apparel maker in the U.S., and the only one that has made it into the list.

Driven by the unavailability of a fitting pair of jeans and the growing popularity of jeans, Don and Doris Fisher founded Gap in 1969 with a store in San Francisco, California (Joslin, Lueck, Martino, Rhoads, Wachter, Chapman & Christian, n.d.).  The retail store became an instant success incorporating in 1971 and offering its first initial public offer in 1976. Even with a suit over the fall of the company’s stock prices from the initial $18 to $7.25, which was settled at thereabouts of $6 million, the company continued in its growth trend (Joslin, et al., n.d.). Gap’s expansion and growth included the addition of other labels apart from Levi Strauss in its offering. These included GapKids, the acquisition of Banana Republic and Athleta, apparel making companies, Old Navy and Piperlime, an exclusively online shoe store and the latest brand, Intermix (Gap, 2012).

The company’s success has however not been free of controversy regarding its business ethics. The media was awash in the past over Gap suppliers’ violation of child labor laws. The issue came into light in 2007 from the company’s India supplier, with a similar violation occurring some time back in 2000 from the company’s Cambodian supplier (Joslin, et al., n.d.). The two incidences however seem to have challenged the company to adopt more ethically sound business ethics, prompting the establishment of the company’s social responsibility website, whose statement of purpose reads, “At Gap Inc., social responsibility is fundamental to how we do business. It means everything from ensuring that workers are treated fairly to addressing our environmental impact” (Gap, 2012). Such a statement and the real work to defend such a statement are perhaps what catapulted Gap to the global most ethical companies.

Among the ethically responsible practices at Gap starts with the company Customers’ Bill of Rights that stipulates the rights of the customer as well as the responsibility of the employees to ensure that these rights guaranteed to the customers. According to the Bill of Rights, customers are not profiled in any of the company’s stores according to their gender, age, disability, ancestry, sex, race, color and sexual orientation, among other profiling criterion (Gap, 2014). Such a prohibition for profiling ensures that consumers can purchase goods from the company’s stores without the fear of being discriminated against because of any of the discriminatory criterion. This not only gives the consumers the confidence to shop from the store, it also sets precedence to the company’s commitment to the consumer satisfaction in a welcoming environment.

One of Gap’s selling points from its establishment has been provision of variety to consumers. The company’s ability to envisage changes in consumer preference and tastes and providing timely alternatives to the customers is part of the company’s social responsibility and business strategy. The company however not only ensures that consumers have a wide range of products finished according to their taste and fashion sense, but also that these products are safe for the customers. Gap’s Restricted Substance List, Product Safety Team and Product Integrity teams ensure the safety of the final products from the suppliers before they reach the consumers (Gap, 2012). While the two teams provide checkpoints within the production and development processes, the Restricted Substance List dictate chemicals that can and cannot be used on garments. Such teams and lists ensure that no harmful substances and chemicals end up to the consumers, thereby guaranteeing the safety of products bought from the company’s stores.

In recognition of the importance of the environment in which it operates, Gap is not only a member of global environmental protection groups within the apparel industry, but has also initiated programs and policies within the company that seek to address issue pertaining to sustainable business. Gap’s involvement in environmental protection groups includes membership and initiatives such as SustainAbility, Business for Social Responsibility, social Accountability International and Ethical Trading Initiative.  All these are initiatives within the apparel industry that collaborate in setting standards for fabric mills’ improvement of environmental and operational efficacies (Cohen, 2011).

Gap’s commitment to green business practices is also visible through it policy and restrictions to its suppliers on the use of environmentally friendly practices. The company had in 2009 made it mandatory for the compliance, by its denim suppliers, to its wastewater guidelines. These guidelines enumerate improvement of water conservation and energy, output and reduction of waste at the completion of the production process (Cohen, 2011). This is largely monitored by Gap Inc’s Environmental Council, a consortium of the company’s top executives who meet quarterly on identification and prioritization of the brands’ environmental initiatives’ support and influence senior executives of both the company and suppliers in making decisions and executions on environmental priorities (Gap, 2012).

The requirement that suppliers do not use any child labor is evidence of Gap’s commitment to both its direct and indirect employees. One ethical treatment of employees therefore is the company’s recruitment from a diverse base. Just as the company does not profile its customers, it also does not profile its employee base giving a wide range of employment opportunities to diverse populations across the world (Gap, 2012). The diversity in the company is further improved through the company’s recognition of talent in responsibility, integrity and innovation, regardless of the employee’s location in the company’s global operations.

Even more encouraging for Gap is the provision of career development for employees. The company’s 70-20-10 model of career development exposes employee to learning on-the-job at 70 percent. The employees then get 20 percent of their career development through mentorship and collaboration, and the remaining through formal training and courses (Gap, 2012). Such training ensure that employees are inculcated into the company’s organizational culture, and therefore work better for the customers satisfaction, while themselves achieve job satisfaction.

Gap’s policy on customers is impressive, giving priority to them through the Customers’ Bill of Rights. It serves as a clear message not only to customers, but also to employees on what the company believes in. it however puts at jeopardy the employees’ safety, when it requires politeness even in cases when customers have committed a crime such as shoplifting. The risk remains high for employees especially in violent crimes that may culminate to injury or loss of life. Although the respect for the customers’ rights is necessary, it should not supersede the safety of the employees during such adverse circumstances.

The company runs one of the most comprehensive environmentally sound programs. The collaborations, initiatives and funds that the company engages in the protection of the environment go a long way in reducing wastages and therefore the protection of the environment. While the requirement of compliance by its suppliers for the observation sound environmental practices, may be considered arm-twisting, it goes a long way in inculcating sound practices across the company’s supplier fraternity, and the overall company global foot print.

Recent protests have highlighted the need for a change in the company’s policy towards its employees, whether direct or indirect. Following the death of 1,127 garment factory workers in Bangladesh it is important that Gap review its policy for the improvement of the safety of its workers, even those who work for its suppliers, by undertaking legal liability for such workers (Greenhouse, 2013). Additionally, for the protection of employees, the career training and development course should also include safety measure in case of an emergency in the factories. This will ensure that employees can protect themselves and help others in the event of such incidences, and therefore prevent loss of life. If the company cannot do this, it should ensure that its suppliers use safety standards within their processing factories, just as it ensures that the production process is environment friendly.

References

Cohen, E. (2011). Reporting: How Gap Inc. Does It. Sustainable Business Forum. Retrieved from http://sustainablebusinessforum.com/carissa/54942/reporting-how-gap-inc-does-it

Ethisphere. (2014). World’s Most Ethical Companies-Honorees. Ethisphere. Retrieved from http://ethisphere.com/worlds-most-ethical/wme-honorees/

Gap (2012). Gap Inc. 2011/2012 Social and Environmental Responsibility Report. Gap.

Greenhouse, D. (2013, May 22). U.S. Retailers See Big Risk in Safety Plan for Factories in Bangladesh. The New York Times. Retrieved from http://www.nytimes.com/2013/05/23/business/legal-experts-debate-us-retailers-risks-of-signing-bangladesh-accord.html?_r=0

Joslin, R. et al. (n.d.). Gap, Inc.: Has the Retailer Lost its Style? Arizona State University.