Back when protesters were targeting the company, the Gap realized that it needed to overhaul the way it interacted with its critics. So the company launched a strategy of stakeholder engagement.
The pictures that came out of the southern African mountain kingdom of Lesotho in August 2009 were truly disturbing. A reporter from the London Sunday Times had found that a contractor to leading apparel brands, including Gap Inc., had allegedly dumped toxic materials into local landfills.1 Poor local children, some as young as five, had reportedly found razors and harmful chemicals while scavenging through burning refuse piles. “We itch all day and some of the sacks used to dispose the chemicals have powder that makes our hands and arms burn,” said one girl. Some children suffered from breathing problems, rashes and watery eyes. A subsequent CBS broadcast added a further, vivid twist: The contractor’s discharge of garment dyes and other contaminants into the nearby Caledon River had turned the water indigo blue, making it hazardous for local inhabitants. To make matters worse, some workers at the factory claimed management treated them badly. All in all, it was a brand manager’s nightmare.
A similar crisis 10 years before had led to global protests that went on for months, at considerable cost to the San Francisco-based company, employee morale and even the child workers themselves. However, this time the Gap responded swiftly and proactively to take steps to address the problems, and the Lesotho story soon died down. What had changed? In the intervening decade, the Gap had cultivated close relationships with labor groups, human rights organizations, governments and other stakeholders through sustained and action-oriented engagement — a long, hard process that had transformed a brand associated with sweatshops and child labor into a company recognized for corporate social responsibility,2 the kind of organization that people were willing to give the benefit of the doubt.
The Leading Question
How does stakeholder engagement work in practice?
- li>Stakeholder engagement is not easy; the process is often expensive and slow.
- Identifying and prioritizing stakeholders can enable a company to focus on developing relationships with a few key stakeholder organizations.
- Over time, Gap’s stakeholder engagement strategy has improved perceptions of the company.
Gap’s stakeholder engagement strategy transformed the way Gap approached inevitable ethical trading problems. However, the change did not happen overnight. Instead, management learned a number of key lessons over time.