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Management messages

Glenn J. Chamandy, President & Chief Executive Officer of Gildan shares a message related to Gildan's ESG report and results. Later on, Peter Iliopoulos, Senior Vice President Taxation, Sustainability, and Governmental Affairs, and Claudia Sandoval, Vice President of Corporate Citizenship, discuss how the organization is accelerating Gildan’s ESG journey. 

Message from the President and CEO
Message from the President and CEO

We are pleased to introduce our 17th consecutive annual Genuine Responsibility® Environment, Social, and Governance (ESG) report, which presents Gildan’s progress on our various ESG initiatives during 2020 – a year like no other.

2020 presented businesses and industries all over the world with unprecedented challenges. While the global impacts of COVID-19, together with the impact of back-to-back hurricanes in Central America, were clearly significant events for Gildan, they also illustrated the resiliency of Gildan employees and of our unique business operating model.

 

From the start of the pandemic, our Company made great efforts to respond to COVID-19 in ways that prioritized the protection of our employees and the support of our customers while ensuring the operational and financial flexibility of our business. We quickly designated and deployed local pandemic response teams to adapt to varying situations in different parts of the world. While observing restrictions related to government lockdowns, we compensated manufacturing employees while our factories were shut down and remained committed to our suppliers by not canceling any completed orders and taking a collaborative approach to ensuring a fair and just outcome for our contractors and their employees.

When it was safe to do so, we resumed our operations implementing strict biosecurity protocols to ensure the safety of our employees, including leveraging support from our onsite medical staff, and scaling our operations to align with demand as the situation evolved. Thanks in large part to our comprehensive COVID-19 preparedness and response plans, we did not face any significant outbreaks within our facilities.

We also extended support to help in the global response to the pandemic in the best way we could. Our team rose to the challenge of quickly adapting our operations to temporarily produce personal protective equipment (PPE) such as masks and gowns to mitigate the global shortage. We supported various organizations with PPE needs and donated masks and gowns to communities around the world.

But COVID-19 was not our only challenge. In November, back-to-back hurricanes struck Central America, directly affecting more than 4,000 of our employees, and causing extensive flooding, power outages, and damage to homes and businesses. I am extremely proud of the efforts of our manufacturing team who rose to the occasion to meet additional challenges during the ongoing pandemic, tending to humanitarian needs to support these communities and restoring production at our facilities.

In the wake of the destruction caused by the hurricanes, we immediately deployed our teams on the ground to help employees and community members recover and rebuild. We donated approximately 150,000 articles of clothing and 350,000 masks, in addition to distributing more than 7,500 emergency kits that included food, water, sleeping mats, and toiletry supplies. We also worked to locate shelter for employees and other community members displaced by the hurricanes and provided medical assistance for our employees at our on-site medical clinics.

Together, we made it through 2020 stronger and proved to be far more resilient than we ever imagined possible. We could not be prouder of our employees and their extraordinary efforts during this time.

ESG Targets & Initiatives

2020 also marked the end of our five-year Genuine Responsibility® ESG goals. While we did not meet all our goals as we diverted our attention and resources to navigate the pandemic and weather-related challenges of 2020, there were several areas where we made impressive progress and important strides.

We surpassed our water target by achieving a 11.4% reduction in water intensity compared to our 2015 baseline. We completed a third-party water risk assessment of our manufacturing operations in Honduras and started a groundwater assessment in Bangladesh, where we are working towards significantly expanding operations as part of our Back-to-Basics business strategy. As another example, to reduce greenhouse gas (GHG) emissions we trialed the use of a different box configuration allowing us to package our products more efficiently and increase the volume held per container by 25% while reducing the transportation of goods by 20%.“ Further, we continued collaborating with our customers, suppliers and non-governmental organizations (NGOs) to create sustainable solutions and have started to work on plans to increase our focus on using more sustainable cotton and recycled polyester in the textile production of our various activewear and sock products.

Within our social goals, we are taking steps to help ensure that workers earn a good wage within our operations and those of our third-party manufacturers. We are pleased to report that all Gildan-owned manufacturing facilities were assessed using the Fair Labor Association (FLA) data collection tool, and a number of our third-party manufacturers in the Americas and Asia are also using the tool to gather data for their workers. In addition, while diversity and inclusion have always been critical areas of focus for Gildan, in 2020 the Company continued to prioritize the enhancement of inclusive policies and established an employee-led Diversity and Inclusion Sharing Committee. The Company also continued to work on initiatives to further progress gender parity across the organization

ESG Recognitions

For the eighth consecutive year, the Company was listed on the Dow Jones Sustainability Index (DJSI) and was again included in the S&P Global Sustainability Yearbook receiving a Silver Class sustainability distinction. Gildan is the only North American apparel manufacturer to be included in the DJSI. Gildan was also included on the Leadership Band of CDP’s Climate Change Report for the second year in a row. In October 2020, the Company was recognized as one of the World’s 100 Most Sustainably Managed Companies by The Wall Street Journal.

Most importantly, and central to our vision of Making Apparel Better®, our strong ESG practices make us a manufacturing partner of choice for those who recognize the inherent link that environmental practices, social impact, and good governance has on strengthening company resilience, sustainability, and financial performance in the long run.

This was tested and proven by the challenging events in 2020, where we ended the year on a strong note from a financial perspective demonstrating that ESG and financial performance are not mutually exclusive.

Looking Ahead

Over the past 20 years at Gildan, we have taken a holistic approach regarding ESG, and, over this time, it has evolved tremendously. While we have had this strong historical focus, it is now clear that ESG is becoming an increasingly important part of the broader decision-making process for consumers, business partners, and all stakeholders, with growing attention on traceability and social impact in the apparel industry. We believe that these deep shifts will provide new opportunities for Gildan as our scale and capabilities allow us to continue to grow as a company.

What continues to set Gildan apart in our sector is our vertically integrated and cost-effective global manufacturing operations resulting in a stable and transparent supply chain. Importantly, this allows us to have operational control over all aspects of our production, helping to ensure the application of sustainable practices across the entire supply chain

While we are pleased by the success we have achieved and the progress we made in 2020, we recognize that more must be done. We are focused on our “Next Generation” ESG strategy and a new set of long-term goals, which we will formally announce later this year. We look forward to ongoing progress and are confident we will continue to deliver strong long-term value for all stakeholders.

Finally, I would like to thank our employees, customers, partners, and our shareholders for their ongoing efforts, trust, and confidence as we continue to move forward. I would also like to thank our Board members and the Board’s Corporate Governance and Social Responsibility Committee for their guidance and support.

Sincerely, 

Glenn Chamandy, President and CEO

 

Q&A: ESG at Gildan moving forward
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As an apparel company, what are the ESG areas you are most focused on?

Peter: We prioritize our focus on the most material areas of our business from an ESG perspective and where we know we can make an impactful difference. For example, on the environmental side, water usage is a big part of our manufacturing process. Water is a precious commodity, and it is the single biggest resource we use. It’s imperative that we understand our water use, continue to find innovative ways to reduce and reuse water in our operations, and work with local communities throughout the process. Our approach on wastewater treatment in Honduras and the Dominican Republic where we have developed a Biotop lagoon system is a great example of this (see page x). Also, while we recognize that climate change is not a risk that is just emerging – we have been monitoring and assessing climate change risks on our business and communities for many years – it remains an important area of focus especially given that cotton is a key raw material input in the manufacturing of our products. In this regard we are analyzing various scenarios, including what a global temperature permanent shift of 1, 2 or 3 degrees warmer would mean to cotton crops. We are developing scenarios for this and working with third party specialists to better understand and set new targets so we can do our part to help address climate change.

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Claudia: On the social side, human rights is also a critical issue. The vast majority of our employees work in low and lower-middle income countries where the regulatory, infrastructure, and support systems are not as robust as in other countries. There is increased scrutiny on how companies operate in these environments and how they treat their workers. Here at Gildan, we are committed to going beyond what is required to provide our employees with good wages, health care and benefits, and also a safe workplace. We have always recognized that our people are our most valuable asset and are key to the success we have achieved as a company. We invest in our people not only because it is the right thing to do, but because it makes our business stronger.

Can you elaborate on how ESG is part of the Company's overall business strategy?

Peter: Our business strategy is based on three core pillars: cost competitiveness, capacity-driven growth, and ESG. By design, ESG is a core part of our business strategy and ultimately part of our overall value proposition to our customers of providing the best quality product, at the best possible price, made under the best possible working conditions from both a social and environmental perspective. Evaluating ESG implications is integrated in our key strategic decision-making processes, both from a risk and opportunity perspective. Further, being among the most vertically integrated global manufacturers, with approximately 90% of our sales deriving from products we manufacture, we have direct control of our operations allowing us to implement industry-leading practices when it comes to ESG.

How do you ensure ESG is integrated into everything you do?

Claudia: Our emphasis on ESG begins at the top, starting with our Board of Directors and the top leadership of the Company and is ultimately cascaded through the entire organization. Our ESG responsibility is embedded in the culture of the Company. One great example is how we are developing our “Next Generation” ESG strategy. We didn’t want this to be something developed by a small corporate team working in isolation, so we established five working groups that include representation from every area of the Company and its operations. It is important that everyone has a voice, everyone knows what others are doing, from our sales and marketing colleagues to our manufacturing teams. Everyone has a chance to provide their diverse perspectives, challenge the norm, and be a part of creating innovative solutions to some very complex problems.

How did Gildan's resiliency stand out from the unprecedented chal.enges of the past year?

Claudia: 2020 was a year no one could have predicted as the effects brought on by COVID-19, compounded by weather-related events in Central America, struck the world and our business on an unprecedented scale. Nonetheless, while the year brought many challenges, it also showcased the resiliency of our business and our people, as well as the strong culture of responsibility and sustainability that we have continuously tried to foster within our Company.

People were our top priority starting with their safety, but we also focused on ensuring financial health and support while we shut down our operations early on during the pandemic as part of the government-mandated lockdowns. When we did resume operations, we made sure we did it safely, putting in place the necessary biosecurity protocols. Further, we did our part as a global citizen to help out on a broader scale by converting our operations to produce PPE such as masks and gowns

We were also there with people on the ground in the aftermath of the hurricanes that hit Honduras and Nicaragua, with dedicated teams providing humanitarian aid to our people and the surrounding communities. This was an extremely difficult time, and our employees were truly a source of strength and resilience. For example, we received calls from our employees asking how they could help support the Company and their colleagues. To me, these actions demonstrate that the efforts we have made with our employees over the years has fostered a workplace that they truly care about and are committed to.

Peter: I completely agree, Claudia. We faced extraordinary challenges during 2020, and here we are standing stronger than ever. That is a testament to the organization and to our people, and the pride we all have in Gildan. 2020 tested us in many ways and we saw how ESG has served as a competitive advantage allowing us to be resilient and stronger as a company. What we have done together as a company matters, but as we move forward with our ESG strategy what we do next will matter even more.

Can you give us a glimpse of Gildan's "Next Generation" ESG strategy?

Peter: Building on our ESG efforts and accomplishments to date, our “Next Generation” ESG strategy will be focused on emerging trends affecting our business and, more broadly, the world. We are taking a future-focused lens to look at where and how to leverage our core competencies to ensure we are engaged in areas where we can have the most meaningful impact. We know from our experience that developing our strategy with these considerations in mind will ensure ESG continues to be a source of competitive advantage for Gildan, ensuring both operational and financial resilience in the long-term. We recognize that we need to continue to raise the bar and go further. We have over 10 years of experience of setting goals and targets and will leverage that experience as well as the results of our latest materiality assessment to take our next strategy and set of targets to the next level.

Additionally, central to our strategy is transparent and meaningful ESG disclosures which, for over 17 years, have continuously evolved as have the needs and expectations of our various stakeholders. That’s why this year, while we will continue disclosing our ESG performance in alignment with the GRI, we will also, for the first time, report in accordance with the standards set by SASB. We also recognize the need for transparent and decision-useful specific climate-related information and, starting in 2021, we will begin implementing the Financial Stability Board’sTCFD recommendations. Over the next few years, we plan to take steps towards full implementation of TCFD disclosures.

Claudia: Adding to what Peter said, our new strategy will be a continuation of our journey – where there is no end, but rather a need to continue to evolve. While we embarked on our ESG journey decades ago, we recognize there is work still to be done, and we continue to grow and learn. We see an opportunity to strengthen what we currently have, and we see the increased expectations and scrutiny around ESG matters. We know that it is not enough to set a target, and, therefore, we are developing clear and credible roadmaps to address the challenges and opportunities we face. As Peter said in the beginning, we are focusing on what really matters to our business.