Gap Inc. communicates its commitment to social responsibility and the principles of the Global Compact through its 2003 Social Responsibility Report, periodic updates to its website at www.gapinc.com, and direct dialogue with key stakeholders. While the company''s inaugural 2003 report does not follow established reporting standards, such as the Global Reporting initiative (GRI), it attempts to address key issues and areas important to Gap Inc.''s stakeholders.

In the executive summary (pages 2-5 of the report), Paul Pressler, Gap Inc. President and Chief Executive Officer, states that "[r]etailers, manufacturers, governments, unions and NGOs must work together more effectively to create a stronger framework." As a reason for joining the Global Compact, Mr. Pressler explains that: "We are convinced that collaborative, multi-stakeholder engagement is the only way to create sustainable change industry-wide."

The first part of the report highlights Gap Inc.''s efforts in the area of labor standards through its internal Global Compliance program. It describes the company''s self-assessment against a series of objectives and the evolution of its work to improve conditions in the independent garment factories that make its clothing (pages 6-16). Pages 11-13 outline the company''s manufacturer and factory approval process and on-going factory monitoring. The report also provides a comprehensive description of 2003 violations of the company''s Code of Vendor Conduct, as well as 2003 data on its monitoring and factory ratings (see pages 14-16).

The next section analyzes specific experiences and challenges that the company has faced, including independent monitoring in Central America, freedom of association in Lesotho, and country-specific issues in Cambodia and China.

In the last section of the report, Gap Inc. addresses its "Broader Commitments" toward employees, corporate compliance and governance and the environment (see pages 30-38). The section on corporate compliance and governance focuses on Directors'' independence, transparency and the company''s code of business conduct. The company''s environmental performance is evaluated in terms of energy conservation, waste reduction and compliance with regulations (see pages 32-33). Gap Inc.''s commitment to employees, outlined on pages 34-35, includes the promotion of an ethical and inclusive workplace, health, wellness and lifestyle benefits and the support of financial health.

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Page 18-19 of the report describes Gap Inc.''s consultation with a variety of key stakeholders - including unions, multilateral groups, and non-governmental organizations - on what the company is doing effectively and what it needs to do better. The company''s participation in multi-stakeholder initiatives such as the Ethical Trading Initiative (ETI), the Global Alliance (GA), and (at the exploratory level) Social Accountability International?s (SAI) Corporate Involvement Program, creates additional opportunity for stakeholder dialogue.

Since late 2002, Gap Inc. has also been collaborating with 5 stakeholders in a Public Reporting Working Group to explore opportunities for greater transparency and increased sustainability in the company''s operations. A statement from the group on "Increasing Transparency" can be found on page 28 of the report.

The report outlines Gap Inc.''s 2004 goals in the "Looking Forward" section (page 29), which include external evaluation of its compliance program, supporting multi-stakeholder efforts to develop a universal code of conduct, identifying supply chain practices that impact working conditions and further broadening its worldwide stakeholder engagement and collaboration on specific initiatives.

The report provides readers with an opportunity to give feedback on Gap Inc.''s communication on progress.