Watch stocks you care about
The single, easiest way to keep track of all the stocks that matter...
Your own personalized stock watchlist!
It's a 100% FREE Motley Fool service...
Gap (NYSE: GPS ) isn't generally renowned for its bright colors, but Greenpeace wants to see a lot more green from the fashion retailer.
The "eco-fashion" trend has its roots back in 1990, but it wasn't after the mid-2000s that it started to gather steam.
With the endorsement of well-regarded designers such as Stella McCartney, as well as activists' vigorous efforts to bring the industry's environmental impact into the spotlight, green fashion finally started to make inroads into the apparel business. Today, "sustainable fashion" or "ethical fashion" is not just a trend. It's a movement; one that redefines the world of apparel in terms of design, sourcing and methods of production.
However, despite the imminent need for a change in the material supply chain, major brands like Gap have failed to truly commit themselves to "going green," according to Greenpeace.
What does this mean for the mainstream retailer?
Detox by 2020
As part of its ongoing Detox campaign, which calls for fashion brands to discharge of all hazardous chemicals in their production process by 2020, Greenpeace released a study earlier this year titled "A Little Story About the Monsters in Your Closet."
The environmental group's investigations found traces of a broad range of toxins in children's textile products from a number of major fast-fashion clothing brands, including American Apparel, Disney, Gap, H&M, Primark, and Uniqlo, sportswear brands, such as Adidas, Nike, and Puma, as well as the top-end label Burberry.
The study follows on from previous investigations by Greenpeace confirming the use of a cocktail of toxic chemicals in many global brands' manufacturing processes. In response to this international campaign, most of the companies mentioned here pledged to detox.
Gap is among the latest signatories of the Zero Discharge of Hazardous Chemicals -- a coalition of international apparel and footwear labels that are bound and determined to setting a new standard of environmental performance for the industry. It declares that environmental responsibility is "connected to every aspect of its business."
Even so, Greenpeace is not convinced by its promises.
A gap between words and actions
It's been nearly three years since the environmental group uncovered links between two polluting facilities in China and -- among other retailers -- Gap.
"We work hard to ensure our business is handled in a socially and environmentally responsible manner, and we take claims such as these very seriously," Gap responded to Greenpeace's accusations at the time.
Nevertheless, since then, the retailer has been implicated in several toxic-water scandals from China to Mexico and Indonesia, on top of the recent investigations that revealed toxins in the textiles. Overall, Greenpeace identifies the retailer as a laggard in the collective effort to lead the industry toward a toxic-free future.
"It is time Gap took full individual responsibility for its toxic addiction and caught up with the rest of the industry to become the fashion-forward company its customers expect it to be," the activist group urges.
What does this mean for Gap?
First and foremost, a whole lot of bad press. Earlier this month, Gap opened its first ever store in Taiwan, marking a milestone in its global expansion plans. Greenpeace was present at the event and gave Gap a really hard time. As soon as the ribbon was cut at the new store in Taipei, Greenpeace activists dropped a huge banner, delivering the message "Detox Now".
One-time incidents like these might not have a profound impact on consumers' purchasing behavior. Yet, Greenpeace is known for its persistence. Moreover, it's not the first time Gap has provoked fierce criticism over its environmental policies.
Gap raised eyebrows in the past for its controversial approach toward the Bangladesh Safety Accord, an independent agreement among over 150 apparel corporations from around the world on fire and safety inspection standards for up to 2,000 factories in Bangladesh. The agreement came after last year's factory disaster in Bangladesh, which led to the death of more than 1,000 garment workers.
Gap didn't sign the agreement. Instead, it teamed up with Wal-Mart and another 15 clothing companies to form a separate alliance, which, unlike the accord, is not legally binding.
The more Gap continues to fall short of Greenpeace's standards, the easier it will be for the public to lose sight of it as an environment-conscious company. Going forward, enhancing its brand awareness among eco-minded consumers could prove to be an uphill challenge. Already, there are e-commerce sites like fashioningchange.com that offer eco alternatives to top names' offerings, including Gap's clothing and accessories lines.
Missing out on a promising market
So far, eco-conscious consumers were considered a niche clientele. The reason why, research has shown, is that even though the environmental component is a strong motivator for consumers, the design component is even stronger. In other words, eco-friendly fashion used to be a byword for dull and worthy, often preventing buyers form embracing this trend. However, things have changed.
Increased availability and quality of ethical fashion, fueled mainly by technological advancements in the space on top of key players' renewed focus, has driven immense market growth. Green apparel and accessories still occupy a tiny sliver of the fashion industry, making up barely more than 2% of a $200 billion business in the U.S., chief analyst at NPD Group Marshal Cohen, told USA Today. Still, "just a decade ago, it was not even half a billion dollars," he added.
In the retail business, marrying design and commercial appeal with a strong ethical component was always easier said than done. For years, the focus had been more on the commercial and less on the ethical part.
However, the fashion world has turned over a new leaf by setting its sights on sustainability. Gap, despite its efforts, has yet failed to move to the forefront of the "eco fashion" revolution, raising concerns about its position in this changing retail landscape.
The next step for you
Want to profit on business analysis like this? The key for your future is to turn business insights into portfolio gold through smart and steady investing ... starting right now. Those who wait on the sidelines are missing out on huge gains and putting their financial futures in jeopardy. The Motley Fool is offering a new special report, an essential guide to investing, which includes access to top stocks to buy now. Click here to get your copy today -- it's absolutely free.