Gap Inc.
Company Double Materiality Analysis
This one-page analysis examines a company’s products, services and operational practices and whether they positively contribute or detract from sustainability goals. Our analysis relies on quantitative indicators, leading industry frameworks and covers topics most relevant to the company’s industry.
A primer describing the Double Materiality approach is available here.
Gap Inc.
Ticker: GPS US
ISIN: US3647601083
Market Cap: US$7.8 billion
GICS Sector: Consumer Discretionary
SICS Industry: Apparel, Accessories & Footwear
Country: U.S.
SMS theme: Protecting Natural Capital
SMS sub-theme: Circular Economy
Contribution to theme: Negative
Company Description
Gap, Inc. is a global retail company selling clothing, apparel, accessories, and personal care products for men, women and children. The firm includes four brands: Gap, Old Navy, Banana Republic and Athleta. Gap and Old Navy offer apparel and accessories children in addition to men and women; Banana Republic is for exclusively adults and Athleta specializes in fitness apparel for women.
Revenue exposure by country/region: United States (84%), Canada (8%).
Contribution to the sub-theme objectives:
As a retailer offering inexpensive clothing through the fast fashion business model, the Gap detracts from the objectives of the circular economy sub-theme. It is an example of unsustainable consumption, promoting short fashion cycles that encourage shoppers to constantly buy something new. Low priced fashion undervalues the inputs required to manufacture the clothes with negative impacts throughout the supply chain.
Sub-theme indicators:
Operational Performance
(Laggard, Aligned or Leader)
Material Topics for Apparel, Accessories & Footwear: Management of chemicals in products, environmental impacts in the supply chain, labor conditions in the supply chain and raw materials sourcing.
Assessment: Aligned
Involved in partnerships supporting research on sustainable materials (HKRITA) and promoting circularity (thredUP).
Strong commitments for materials sourcing: 100% recycled polyester and 100% sustainable cotton by 2030 and 100% Washwell Denim (reducing water intensity 20%) by 2025. Though currently reflecting small share of materials.
In 2022, 88% of Tier 1 suppliers were audited for adherence to code of conduct, with 88% conducted by third party. The code of conduct specifically addresses the issue of child labor, which has been the subject of past scandals.
The Gap has strong disclosure, reporting on material topics in alignment with TCFD, GRI and SASB frameworks; ranks 48th percentile in Fashion Transparency Index.
Controversies: The Gap, Inc. is involved in shareholder rights controversies, facing securities class actions from multiple law firms. More typical fare for a retailer, Gap also faces an intellectual property dispute as Patagonia sues for pocket design infringement.
Product/Service Impact
(Negative, Neutral or Positive)
Assessment: Negative
Only the Athleta brand (9% of revenues) is certified B-Corp.
Some products and services with elements of sustainability are offered, (monthly rental service, sale of curated vintage items) however these represent a small portion of items and there is no specific target to increase revenues from these products.
While clothing can be considered a necessity, the abundance encouraged through a fast fashion business model (especially one spanning four brands) is excessive.
SDG Alignment:
A downloadable version of the Double Materiality Analysis of Gap Inc. is available in the pdf attached.
