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Nike Sustainability Overview
Nike has undergone a significant transformation over the past fifteen years, focusing on integrating sustainability into its business model and corporate structure. The company has shifted its corporate responsibility team towards addressing root causes of sustainability and labor issues while developing custom sustainability indexes to guide product development. Key initiatives include enhancing training for labor practices, promoting transparency in factory standards, and leveraging sustainability as a core component of product innovation and marketing.
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Nike Sustainability Overview
- 1. NIKE We definewho we are by what we do – and also by how we do it. Mike Arkin & Kelly Bowker
- 2. A Fifteen YearJourney With No Finish Line Risk Management: National Press Club Speech: responding to criticism of business practices System Innovation Redesign/Co-Design: company reorganization; rewire & rename CR division to Sustainable Business & Innovation Integrate Sustainability: CR is a future business driver; integrate and imbed throughout product life cycle Collaboration & Transparency: publishing online the names & addresses of all factories Monitoring: First CR report; maxims created; endorsed UN Global Compact & monitor performance 1998 2001 2004 2006 Disruptive Models: product innovation pipeline 2009 2011-2012 2013 & Beyond
- 3. Initiatives Transform FromCR to Sustainability Company Reorganization • 2009 Review Commission: resulted in core changes that addressed key areas including governance, accountabilities, incentives, and checks & balances both upstream (within Nike) and downstream (in contracted factories) • Reorganization: CR further upstream in the corporate decision making process • Sustainable Business & Innovation Team: shifted the focus of the 130+ person CR team from reactive monitoring and management to a renewed emphasis on addressing the root cause of sustainability and labor problems, creating new business models, innovating sustainability solutions Building Sustainability Indexes • Custom Built Indexes: rate the sustainability of the materials used and the environmental impact of the production process • Developing Guidelines: Strategic integration of sustainability tools guide early product creation decision making process: educate designers, developers, and suppliers • Standards for Performance Evaluation: Implementation the indexes across the organization enabled Nike to establish goals and targets and measure performance against those standards
- 4. A New Focuson Labor Focus Factory Implementation Human Resource Management Training • Managerial Fair Labor Training Program Freedom of Association Education Program • Extending the right to peaceably assemble • Collective bargaining Statistically Relevant Sampling of Employees • Employee Surveys to Capture Worker’s Voice • Employee Engagement for Continuous Improvement *Implemented in 79% of focus factories Covers 94% of footwear and 43% of apparel Focus factories chosen based on volume of production & location Build and Share Standards Nike Code Leadership Standard • Published Minimum Standard • Details Company Guidelines Promoting Multi Brand Collaboration • Fair Labor Association: Monitoring • Fair Factories Clearinghouse: Knowledge Sharing • Sustainable Apparel Coalition: Thought Leadership
- 5. Distributing Sustainable Principles Upstream Focus on Suppliers • 785 contract factories • 68% rated bronze or better on Nike’s Sourcing & Manufacturing Sustainability Index • 900M units produced annually • Lean Manufacturing Improved Working Relationships • 1.01M contract factory employees • Human Resources training to 61% of contract factory employees • Worked with the Fair Labor Association • Sustainable Compliance Initiative methodology & tool Downstream Focus on Consumers • Uncertainty of value of price premium on sustainable products • Focused on education of issues with customers • Communicating sustainable impact and reduction through packaging • Community programs to increase brand interaction
- 6. Balancing Design Innovation Strategy • Focus on sustainability led to an innovation strategy • Designers encouraged to think about the entire process from sourcing materials to consumer use/disposal • Explore -> Prototype -> Pilot -> Scale • 1,500 material vendors • 57% have signed contracts to utilize Green Chemistry Product Innovations to date FY13 • Recycled Polyester in 31.5M garments • Better Cotton Initiatives: 13% organic • Leather Working-Group 100% certified • Nike developed 2 sustainable rubber formulations • Nike Colordry: 0 Water used, saves 30 liters of water per shirt
- 7. STRENGTHS • GlobalScale: 750 stores; 48,000 employees • Product Design Innovation & Operational Capabilities • Marketing Brand Loyalty • Top Down Mission • Integrated Sustainability in Decision Making Process WEAKNESS • Contract Source Materials and Manufacturing • Global Manufacturing Increases Transportation Related Emissions • Internal Audit Process • Assessment of indexes and Secondary Source Data Collection and Verification • Scope of Reporting and Initiatives OPPORTUNITY • Increased Demand for Sustainability Thought Leadership • Industry Adoption Influences Supply Chain Management • Reduce Leader: Shared Factory Use • Affinity with Athletics and Professional Sports Results in Global Messaging Platform THREATS • Fashion / Trend Lifecycle • Depleting Non-Renewable Resources • Imitation • Competitors Use & Improve Processes • Slack or Holdup From Contract Manufacturers • Geographical risks • Weather & Politics • Lack of Consumer Education • 15% water used in laundering process
- 8. Embedding Sustainability inCompany Culture Nike Fostering Commitment • Moved CR Upstream • CR Reporting • HR Management Training • Employee Engagement • Nike 2021: business sim experience Nike Building Momentum • Founding Partner of FLA • Thought Leader on SAC • Promoting Multi-Brand Collaboration • Product Innovation • Commitment/Adoption of Sustainability Index and Green Chemistry Practices Clarifying Expectations • SB&I Team Integration • Custom Built Sustainability Indexes • Internal/External Audit Nike Capacity for Change • Re-Design / Co-Design • Evolving New Business Processes & Systems • Developing New Products & Services • Extend Scope Both Upstream & Downstream Source: Network for Business Sustainability
- 9. • Reuse-a-Shoe •Converse &Hurley • Quick Strike Index • Explore New Sources of Revenue • Impact of Sustainability Projects • Emissions • Energy • Water • Waste Nike A Better World
- 10. Leading the Pack Nike Keeps Moving • Research & Development • Transparency • Thought Leadership Product Life Cycle Use • Focus from Raw Material to Disposal • Water resource management • Recycling external consumer goods Community Engagement and Education • Nike Grind: recycled 28M shoes since 1990 • World Cup Jerseys • Designers Partner with Kids in the Community/Hospital • Nike Makers App
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- 22. Nike’s Value ChainFootprint
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- 27. References Brettman, Allan."Nike, Doernbecher and 6 Young Designers Present the 2014 Freestyle Collection." OregonLive.com. 7 Nov. 2014 http://www.oregonlive.com/playbooks-profits/index.ssf/2014/11/nike_doernbecher_and_6_young_d.html "Nike CR Report." Nike CR Report. N.p., n.d. Web. 12 Nov. 2014. http://www.nikeresponsibility.com/report/content/chapter/our-sustainability-strategy#topic-strengthening-our-core Peeples, Lynne. "Groups Giving Second Thoughts To Those Little Black Crumbs On Playing Fields." The Huffington Post. TheHuffingtonPost.com, 16 Oct. 2014. Web. 8 Nov. 2014. http://www.huffingtonpost.com/2014/10/16/artificial-turf-cancer-crumb-rubber_n_5997228.html Carroll, G. “Nike: Sustainability and Labor Practices 2008-2013,” HBP, 2013. Bertels, S., “Embedding Sustainability in Organizational Culture: A How-To Guide for Executives,” Network for Business Sustainability and Simon Frazier University.
Editor's Notes
- #2 Sustainability is a team sport
- #6 How their influencing users out of their control – factories/vendors -consumer awareness 2020 goal is that all factories rate bronze and better
- #7 More than 500,000 different products Polyester: from 3,400 in FY04 19% all recycled 35% of products use polyester Leather: evaluates the pros and cons of real leather provided from cattle farms vs imitation leather Cotton: looks at environment, social & economic impacts Water: looks at use downstream (coloring fabrics) & upstream (consumers’ laundering habits 15%)
- #8 S: Transparency Top down mission Distribution Nike Grind reuse-a-shoe: 28M since 1990 Cardboard shoe boxes 100% recycled W Contract Source Materials and Manufacturing Global Manufacturing Increases Transportation Related Emissions Internal Audit Process: Assessment of indexes and Secondary Source Data Collection and Verification Scope of Reporting and Initiatives O 57% of apparel material vendors commit to green chemistry practices 1,500 material vendors Distribution: US, Japan, Belgium and China. T Fashion / Trend Lifecycle Depleting Non-Renewable Resources Imitation: Competitors Use & Improve Processes Slack or Holdup From Contract Manufacturers Geographical risks: Weather & Politics Lack of Consumer Education: 15% water in laundering process
- #10 Flyknit Lunar 1 reduced foot waste by 80% on average Emissions: reduced air freight primary distributors in Belgium, Japan, China & US Energy: offset 46% of energy used in Nike Brand retail stores Green certified (59,000 mWh) Produced renewable energy at 2 global distribution centers in Belgium(wind turbines) & China(solar energy) Water: 15% of water use in the product supply change is in laundry process Waste: 59% of waste is in the disposal phase
- #11 Nike Grind: used in more than 450,000 locations around the world 6 kids (patients) at Oregon Health & Science University Doernbecher Children's Hospital co-created Freestyle Shoes - Program in place since 2004 have raised more than $8M for expanding research, supporting clinical care, purchasing medical equipment, recruiting experts and helping cover the cost of care.
- #18 Driving profitable growth & reduce risk through sustainable innovation
- #26 Exhibit 7 from case
- #27 Partnered with the London School of Design to develop the app – allows designers to evaluate materials from sourcing/manufacturing to waste Score Card for material evaluation The Higher the Score the Better