Nike, Inc. released its FY12-13 Sustainable Business Performance Summary, providing an update on performance against current business, labor and environmental goals as the company works toward its goal of decoupling profitable growth from constrained resources. The report, which outlines both successes and challenges, shows Nike is making progress across key impact areas of climate and energy, labor, chemistry, water, waste and community.
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Evidence of the company’s progress includes an absolute reduction of carbon emissions of close to 3 percent across the whole value chain from its FY11 baseline, while revenue grew 26 percent over the same period. Production also grew while the company fulfilled its strategic aim to source from fewer, better-performing contract factories, with a 14 percent reduction from 910 to 785 factories over the last two years.
Some of the challenges in the industry include the rate at which environmentally preferred materials are becoming available at competitive pricing in the market and the rate at which the market adopts new green technologies. In addition, Nike continues to focus on ways to drive ongoing improvements where significant previous reductions have already been realized.
The report also outlines the company’s approach to understanding and addressing the meta-trends facing business. In addition, Nike provides a transparent ‘big-picture’ view of the impacts across its entire value chain, from growing and processing materials to a product’s end of life, and the steps of manufacturing, transport, distribution and selling in between. The report shows how the company is focusing on innovating in the areas where the greatest impacts of its business lie, including materials and manufacturing.
“Nike’s success as a growth company is tied directly to our culture of innovation. Today we believe that sustainable innovation that benefits the athlete, the company and the planet will play a key role in the future of our business,” writes Nike, Inc. President and CEO, Mark Parker, in the report’s introduction. “We believe business has a critical role to play in meeting the challenges of a changing world addressing climate change, preserving the earth’s constrained resources, enhancing global economic opportunity not by reducing growth but by redefining it.”
Parker also transitioned Nike, Inc.’s Sustainable Business & Innovation function into the company’s core innovation function last summer, signaling the enterprise-wide role sustainable innovation will play in Nike’s future.
Progress on current goals include:
Advancement on CO2-reduction target of 20 percent per unit from FY11 levels through FY15, by reaching a 13 percent reduction through end of FY13.
Surpassing targets on water-efficiency goals with contract factories that manufacture footwear. Results included factories using 23 percent less water per unit in FY13 compared to FY11 against a goal of a 15 percent reduction through FY15
Focusing efforts on more sustainable materials through new innovations (including ColorDry which eliminates water and process chemicals from materials dyeing and Flyknit technology which substantially reduces waste), through industry and government collaboration (including the Sustainable Apparel Coalition and LAUNCH) and through its own design processes (including product and material tools).
Pursuing greener chemistries with materials suppliers and contracted factories through an agreement with bluesign to open up its chemical formulation database, enabling access to 30,000 environmentally-better materials.
Sourcing from contract factories that meet the standards set out in the Sourcing & Manufacturing Sustainability Index Nike released in FY12, which elevated sustainability (including labor and environmental metrics) as an equal performance measure, alongside quality, cost and delivery. Through FY13 68 percent of contract factories were rated bronze or better on the index. Nike’s FY20 target is to only source from contract factories reaching bronze or better.
“We are constantly integrating more sustainable ways of working across our business. But we recognize that many issues facing business and society are greater than one brand can solve alone. To achieve systemic change we must understand risk and embrace innovation as a way to accelerate positive impacts at scale. Collaboration and unconventional partnerships will be critical to our collective ability to design more sustainable business systems, ”said Hannah Jones, Nike, Inc. chief sustainability officer & vice president, innovation accelerator.
Nike first began reporting its environmental and social performance in 2001. Its work to embed and scale sustainable innovation across the company and its contract supply chain were recently examined in case studies through Harvard Business School and Stanford Graduate School of Business. Today’s report is Nike’s sixth and was informed by feedback from a panel of external reviewers with broad expertise, including representatives from nongovernmental organizations and academia to business, open data and consumer advocates.
