It is in the context of a difficult environment, where the world and our industry are being significantly impacted by the COVID-19 pandemic, that I am writing this message. Although we have been facing unprecedented challenges over the past months as we navigate the fallout of the COVID-19 pandemic, it gives me great pride to witness how our unique business model of owning our supply chain is allowing us to adapt to this changing environment while maintaining our commitment to strong environmental, social and governance (ESG) practices as we continue to move our Company forward.
From the onset, as the situation of the COVID-19 pandemic unfolded, our first priority has been the health and welfare of our employees, customers, suppliers, and other partners. In this regard, we have taken several actions to safeguard our stakeholders while ensuring the continuity of our business. Starting in March, the Company temporarily suspended production at most of its facilities and for installations remaining open, we implemented appropriate measures to protect our employees, including additional sanitary precautions, the monitoring of employees’ health, social distancing and working from home arrangements for the vast majority of our office staff.
As we adapted our business to deal with this challenging environment, I’m especially proud that we were able to partially resume operations at a number of our Company-owned facilities to support efforts to help frontline workers by quickly adapting our operations to produce non-medical masks and isolation gowns while implementing stringent biosafety measures. It is with much gratitude that I extend my heartfelt thanks to the production employees who have been involved, as well as to our onsite medical staff and health and safety teams who are working hard to keep our people safe as they produce personal protective equipment.
2019 in review
In this unique landscape, I’m pleased to introduce our 16th consecutive annual Genuine Responsibility® ESG Report, which presents Gildan’s progress on our various ESG initiatives during 2019. Through our Genuine Responsibility® program, we continued to strengthen our practices in 2019 by further expanding our commitment to respecting human rights across our supply chain, advancing global programs and training on employee safety and on compliance with our Company policies and standards. This included the launch of our Social and Sustainable Compliance Guidebook trainings, in addition to completing the Fair Labor Association’s (FLA) Fair Living Wage evaluation at almost all of our textile and sewing facilities.
In 2019, I was pleased to see Gildan’s Social Compliance Program, which aims to protect workers’ rights and improve working conditions, be re-accredited by the FLA. Gildan originally became the world’s first vertically-integrated apparel manufacturer to receive this accreditation in 2007. The Company’s Genuine Responsibility® program has also been recognized by other well-established organizations in the past year, including the Dow Jones Sustainability Index for the seventh consecutive year. In January 2020, Gildan was included in the leadership band in CDP’s 2019 scores for corporate transparency and action on climate change with an A- score. The Company also received a Bronze Class Distinction in the 2020 SAM Sustainability Yearbook, marking our eighth consecutive inclusion in this publication.
Update on our 2020 environmental goals
Working towards our 2020 goals to reduce our overall environmental impacts, I am proud to report that we have achieved and surpassed two of our 2020 environmental goals ahead of schedule, specifically in the areas of water intensity and greenhouse gas (GHG) emissions. However, the areas of energy intensity and landfill waste have proven to be challenging, particularly in the context of a business that is continuously evolving with changing product mix and increased vertical integration related to our own yarn-spinning operations. Nonetheless, our business model fundamentally allows us to have strong control across our manufacturing supply chain and we remain fully committed to pursuing continuous improvements and integrating sustainable solutions throughout each level of our operations to achieve our goals.
Although we still have work to do to reach all of our 2020 goals, we have started establishing our next set of goals as we seek to continually improve on our various programs globally. As part of this work, the Company will continue to reinforce its social and human rights programs. In this regard, we will continue looking at how we can further strengthen our commitment to foster, cultivate and preserve a culture of diversity and inclusion across the organization. We strongly believe that supporting a diverse workplace is a business imperative that helps us attract and retain the brightest and most talented individuals who have and will contribute to Gildan’s future growth.
Finally, I would like to take this opportunity to thank all of the Gildan employees who have worked hard to contribute to our Company’s achievements this year. Through harnessing the power of our people in bringing to life our vision of Making Apparel Better®, I am confident in our ability to continue delivering value across our supply chain.
President and CEO
I am proud to present our 2019 Genuine Responsibility® ESG report, which includes the efforts and progress we made during 2019. This report has been prepared in accordance with the Global Reporting Initiative (GRI) Standards: Comprehensive Option.
As you read this report, you will find comprehensive information and a range of content dedicated to detailing the efforts we made, challenges we faced, and progress we achieved towards fulfilling our ESG pillars last year. In 2019, we continued to pursue progress towards our 2020 environmental goals and achieved great reductions in the areas of GHG emissions and water intensity. Essentially, we reduced our GHG emissions by 13.0% from our 2015 baseline year which was attributable to the implementation of new energy initiatives, the use of higher quality biomass feedstock, and changes in emissions factors. In terms of water intensity, we saw an 11.2% reduction compared to 2015, which can be attributed to the full implementation of condensate and heat recovery systems in our manufacturing operations, as well as the continuous improvements of our water management processes and product development. Both mark an early achievement of the 10% reduction goal we set for ourselves for 2020.
We also accomplished a landfill waste reduction of 6.2% from 2018 thanks to improvements made in our waste management system at our facilities, and we were likewise able to reduce our energy intensity by 3.1% compared to last year. However, we still have progress to make around these latter two targets in order to achieve our 10% reduction 2020 goal – specifically with regards to our energy intensity, which has seen an overall increase of 0.5% from our baseline year of 2015 due to the integration of new yarn-spinning operations and product mix offerings. Although our energy scenario analysis shows that without the integration of yarn-spinning operations and additional product mix, we would have been able to achieve our energy intensity goal in 2018, we remain wholly committed to continuing our efforts to reduce our impacts where possible and continue to work hard to decrease our energy intensity as we pursue sustainable solutions and the integration of innovational technologies.
Over the last decade, we have maintained a sharp focus on areas most material to our stakeholders, which includes special attention to human and labour rights, health and safety, traceability, and reducing our environmental impact. Our three Genuine Responsibility ® pillars of Caring for People, Conserving the Environment, and, Creating Stronger Communities aim to address these concerns while guiding our efforts to operate responsibly and create value across our supply chain.
Caring for people
As one of the largest employers in many of the regions where we operate, we take the responsibility to safeguard the health and safety of our people very seriously. In this area, we embrace a collaborative strategy, with 96% of our workers represented by employees on Health and Safety Committees. Year after year, we strive to invest in our people in areas which range from health and safety to personal and professional development. In 2019, we provided almost 2.5 million hours of training to our employees and invested $13.9 million in supplemental benefits, including free onsite medical health care at all our non-U.S. locations, vaccination and medicine programs, parental leave, financial assistance, subsidized meals, and free transportation.
As part of our overall commitment to diversity and inclusion, we have also continued to strengthen our women empowerment program in 2019 with the objective of advancing women in the workplace through focus on both personal and professional leadership skills. This develops our future talent and enhances diversity in management roles. We also believe more broadly that empowering women creates social and economic growth, promotes sustainability, and reinforces the principles of justice and fairness across society.
Conserving the environment
We undertook and made further progress across a range of energy initiatives this past year, including making progress on integrating more energy efficient technologies at our facilities, completing the installation of our Biotop filtering system at all of our textile and hosiery facilities in Honduras, and continuing to replace bunker fuel with biomass for energy production. We also launched our updated Global Environment & Energy Policy, which will help strengthen our environmental performance as one of our key priorities. In 2019, renewable energy represented 44% of the Company’s total energy use, and it will continue to remain a large focus of ours in the coming years.
Creating stronger communities
Gildan strives to go beyond the direct employment impacts we deliver; we believe that we have a responsibility to be an active participant in the communities where we operate, and this starts with buying locally wherever possible – a directive which is mutually beneficial – reducing lead times and costs for the Company while fostering economic growth among the local supplier networks in the regions where we operate. We also continued to implement various community projects and enhance meaningful partnerships with organizations to respond to regional needs while giving back to the communities where we operate. For example, last year, we were able to expand our partnership with World Vision in Honduras, helping us grow our network of Gildan-sponsored schools from 21 to 371. With the help of our regional partnerships and our dedicated employees, we were able to donate close to $1.5 million towards creating sustainable local impacts during 2019.
Responsible production and sourcing
Our Social Compliance program for labour practices and working conditions is designed to proactively ensure that all of our Company-owned facilities, as well as our third-party manufacturing contractors and key raw material suppliers, comply with our Code of Conduct, local and international laws, and the best practice industry codes that we adhere to, including Worldwide Responsible Accredited Production (WRAP) and the FLA.
In 2019, 151 audits were conducted at our Company-owned facilities and third-party contractor facilities throughout Asia, Central America, the Caribbean Basin and North America. We also launched global training programs on our updated Social & Sustainable Compliance Guidebook to employees in all our manufacturing locations and to strategic manufacturing contractors worldwide.
Throughout this report, I encourage you to read our case studies and callouts as they bring to light the people, communities, and organizations who share in our success and play a crucial role in helping us achieve the results that are presented. These highlights also serve to illustrate the tremendous efforts we take to fulfill our goal of operating with responsibility and integrity at our core as we aspire to deliver value to all our stakeholders.
Recent global events have reinforced the need to continuously adapt to shifting realities, highlighting the value of collaborating to create a more sustainable and resilient world as we make progress towards our vision of Making Apparel Better®. While I am pleased by our 2019 results, we acknowledge the need for continuous improvements and the pursuit of sustainable solutions as we make efforts to further enhance our social programs and reduce our environmental impacts.
Vice President, Corporate Citizenship