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Nike reveals a new, innovative game plan for sustainability

Nike Sustainability Reporting


Powered by Guardian.co.ukThis article titled “Nike reveals a new, innovative game plan for sustainability” was written by Oliver Balch for the Guardian Professional Network, for guardian.co.uk on Friday 4th May 2012 13.31 UTC

Nike is not a shy company. When it does something, it likes to make a splash. Which is why its Flyknit technology is so refreshing. Take a Nike trainer off the shelf and examine the upper. Spot any difference? Probably not.

Yet behind that upper is a natty design triumph. After months beavering away in the labs, Nike has devised a way of stitching that humble shoe upper out of what is essentially a single thread. That means more comfort, lower production costs and, from an environmental point of view, a lot less waste.

“Looking through the creative lens of innovation, we aim to create breakthroughs that improve our world and are also better for our athletes and our investors”, says Nike CEO Mark Parker in the company’s latest annual sustainability report, released this week.

“This is a fundamental rewriting of the old belief system in which sustainability was so often cast as a cost to business, or a drag on performance.”

It’s a rewriting, for sure. A decade ago, Nike was the poster child of all that was bad about globalisation. Its business model was based on outsourcing en masse, paying its workers peanuts and pricing its goods high.

Unsurprisingly, its brand became dogged by charges of sweatshop conditions and environmental shortcuts. So Nike sent in the troops. Well, not quite. Rather, it dispatched an army of auditors. And, with moderate success, they marshalled suppliers into line.

Earlier versions of Nike’s sustainability reports read like audit statements. That’s because they were: data charts about underage workers employed, safety rules violated, and so forth. All peppered with some pretty pictures of smiling children, of course. So what’s changed?

First, Nike feels it’s done more or less all it can to ensure supply chain compliance. Its record will never be perfect. Ethical issues will continue to crop up, especially among sub-suppliers.

But most of the retailer’s major suppliers are on board, if only because of Nike’s big-stick approach. (It still employs 70 full-time compliance officers, plus a host of third-party auditors.)

Which brings us to the second point: when it comes to saving the planet, compliance doesn’t cut it. “We can’t just be less bad”, says Hannah Jones, vice president of sustainable business and innovation at Nike.

The big thing that’s changed at Nike is therefore the focus of its ambition. It is “upping its game”, to use the company’s own sporting parlance. In cricket terminology, its new “game plan” for sustainability is the difference between a forward defence and a full-on hoick out of the ground.

“There’s never been such an urgency for scale as we see today … CR [corporate responsibility] programmes that incrementally chip away at things aren’t going to be enough”, explains Jones.

Not even enough to keep Nike ticking over, it’s alleged. Last year, the US apparel brand grossed more than $20.9bn. Rising energy costs, increasingly scarce natural resources and demands for “equal access to economic opportunity” could cause that figure to shrink, and shrink fast.

“It is clear to us that our long-term potential, and the long-term potential of virtually every other major company in the world, will be severely pressured by [these] external factors”, Parker contends.

According to the Nike chief executive, sustainability stands to become the “nexus of transformations”, not just for the company over which he presides but over the world’s markets as a whole.

Hence, the call to innovate, through a mix of broad strategic principles and specific management measures. Collaboration tops the list. In another uncustomary note of humility, the US mega brand admits that its own ability to create “meaningful change at a systemic level” is limited. The message remains “Just do it … only, do it with everyone else too”.

The corollary is that Nike must be more transparent about its sustainability performance and more willing to share its ideas. That will take some doing. In the fiercely competitive apparel sector, industry rivalries are fierce and mutual suspicion intense. But Nike insists it is trying. As evidence, it points to its recent decision to publish the formula for its environmentally preferred rubber. Industry bodies now have access to its water-assessment tool as well.

Its lofty principles are built on what it hopes will be a solid set of foundations, including:

• Creating a portfolio of sustainable materials: materials account for around 60% of the environmental impacts of the average Nike shoe, so using less or recycling more could make a big difference. Last year, Nike used 7m kg of organic cotton, for example, and included recycled polyester in 31.5m products.

• Prototyping and scaling sustainable sourcing and manufacturing models: Nike’s stated aim is to make its global supply chain “lean, green, equitable and empowered”. Again, it’s no small undertaking. Nike sources from 900 contract factories, which employ over one million workers, who make more than 500,000 different products. It’ll take one very long clipboard to bring that all into line.

• Igniting and driving market transformation: essentially, this means getting everyone outside its factory gates to buy in; starting with competitors and governments and ending with us, the consumer.

• Creating digital services revenue: in a sustainable world, service providers are the good guys, and manufacturers the bad. So Nike is branching out into sporting services. Expect its famous tick to start appearing over gyms and sports centres near you.

Nike’s new, multi-functional Sustainable Business and Innovation unit marks a managerial attempt to ensure environmental concerns are not an “addendum” to core decision-making. In a similar vein, the company has established a Sourcing and Manufacturing Sustainability Index. By weighting contract factories by key social and environmental indicators, the Index encourages procurement staff to start thinking “lean and green”.

The move echoes Nike’s Considered Design index, which rates the eco-footprint of raw materials used in Nike products and pushes its designers towards the least harmful.

Nike’s corporate story is, in some ways, a reflection of capitalism’s own. Few companies have ridden the globalisation wave higher or faster. Don’t be mistaken. Nike isn’t about to get off that wave any time soon. For that reason, it’s important to hold it to the “boring” compliance bits of the responsibility agenda.

Yet the emblematic mega-brand has seen a shift in the tide, and it’s anxious to ensure it stays ahead of the swirling waters. “The age of abundance is over”, Parker states. “Innovation is being redefined. Expectations are being redefined.” For corporate speak, it’s surprisingly poetic. Could it be prophetic too?

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