Nike, Inc

RATING

SECTOR

Apparel

WEBSITE

CONTACT

One Bowerman Drive Beaverton, OR 97005

STOCK EXCHANGE

LISTING

N/A

EMPLOYEES

73,100

CHIEF SUSTAINABILITY OFFICER

Noel Kinder

AWARDS

30% of stores LEED certified

CONTENT SOURCE

FURTHER READING

Report created by Kavita Kripalani

Nike, Inc

SECTIONS :  Sustainability    Evaluation  •  Progress  •  Watch  •  Overview

Company Activity

NIKE, Inc. engages in the design, development, marketing, and sale of sports and lifestyle footwear, apparel, and equipment, accessories and services.

The company sells a line of performance equipment under its brand name, including bags, socks, sport balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment, golf clubs, and other equipment designed for sports activities. It also sells small amounts of various plastic products to other manufacturers through its wholly-owned subsidiary, Nike IHM, Inc. 

Its athletic footwear products are designed primarily for specific athletic use, although a large percentage of the products are worn for casual or leisure purposes. It focuses on its Nike and Jordan brands products in seven key categories: running, basketball, football, men’s training, women’s training, its sportswear, and action sports.

NIKE also markets products designed for kids, as well as for other athletic and recreational uses such as baseball, cricket, golf, lacrosse, outdoor activities, football, tennis, volleyball, walking, and wrestling.

Its reportable operating segments are: North America, Western Europe, Central & Eastern Europe, Greater China, Japan, and Emerging Markets. The company wholly-owned subsidiaries include Converse Inc., which designs, markets and distributes casual footwear, apparel and accessories and Hurley International LLC, which designs, markets and distributes action sports and youth lifestyle footwear, apparel and accessories. 

Company Sustainability Activity

Nike is part of the Fashion Industry Charter for Climate Action, a commitment under the United Nations Framework Convention on Climate Change.

Nike joined UN Climate Change and global brands, retailers and suppliers in accelerating some of the industry’s most aggressive climate targets yet – including a 30% reduction in aggregate greenhouse gas emissions by 2030 and a vision to achieve net-zero emissions by 2050. However, judging by Nike’s actions, it seems more of a marketing campaign that repackages old promises without offering new ones instead of a commitment made by an industry leader on leading the effort on sustainability.

Highlights

  • More than 7.5B plastic bottles have been diverted from landfills and waterways and transformed into recycled polyester footwear and apparel since 2010.
  • 99.9% of footwear manufacturing waste was recycled or converted into energy.
  • 30% of NIKE global stores are LEED certified
  • 23B fewer liters of freshwater used by material vendors since FY16
  • 98% of tested materials in compliance with NIKE Restricted Substance List.
  • 76% of NIKE footwear and apparel styles included some recycled materials
  • 30M shoes have been recycled since Reuse-A-Shoe launched 26 years ago.

Targets

Minimize Environmental Footprint

  • Deliver products for maximum performance with minimum impact, with a 10% reduction in the average environmental footprint 
  • Greater than 80% of all NIKE product will be scored on sustainability performance
  • Source 100% of their cotton more sustainably across NIKE
  • Reach 100% renewable energy in owned or operated facilities by the end of FY25 and encourage broader adoption as part of their effort to control absolute emissions 
  • Decrease energy use and CO2e emissions 25% per unit in key operations 
  • Decrease energy use and CO2e emissions 35% per kg in textile dyeing and finishing processes
  • Eliminate footwear manufacturing waste to landfill or incineration, while continuing to reduce overall waste 
  • Reduce waste index by 10% in footwear manufacturing, in distribution centers (DCs) and headquarters (HQs) 
  • Increase landfill diversion at DCs and HQs
  • Innovate and adopt new approaches to reduce water use in their supply chain, with a 20% reduction in freshwater use in textile dyeing and finishing (L/kg per unit of production) Measure 
  • Build resilience through supplier water risk-mitigation plans with material processors
  • Enable Zero Discharge of Hazardous Chemicals (ZDHC) 
  • 100% compliance with NIKE Restricted Substance List (RSL) 
  • 100% compliance with ZDHC Manufacturing Restricted Substances List (MRSL)
  • Achieve better chemical input management through scaling more sustainable chemistries • Lead industry change through collective action 
  • 100% of focus suppliers meeting NIKE’s wastewater quality requirements for textile dyeing and finishing processes

Transform Manufacturing

  • Source 100% from factories that meet their definition of sustainable Measure 
  • Elevate a culture of health and safety 
  • Eliminate excessive overtime (EOT)
  • Work with factories to develop and test new benefits and compensation models for their workers that can be scaled in the supply chain 
  • Deliver improvements in key measures: unplanned absenteeism, turnover, and contract factory worker engagement and wellbeing
  • Establish partnerships that support the needs of workers both inside and outside of the factories 
  • Scale services to support management and workers for improved engagement and wellbeing

Unleash Human Potential

  • Provide visibility to their diversity and inclusion progress 
  • Provide comprehensive, competitive, and equitable pay and benefits 
  • Invest in their employees through growth and development and wellbeing initiatives
  • Invest a minimum of 1.5% of pre-tax income to drive positive impact in their communities
  • Get kids (ages 7–12) moving through play and sport 
  • Inspire a majority of NIKE employees to engage with their communities and support their giving of expertise, time, and money 
  • Drive sustained community impact in primary markets and sourcing backyards

Progress

Unleash Human Potential

  • In 2019, Nike increased representation of women at the VP-level by 3 percentage points (p.p.) and U.S. URG by 2 p.p
  • Through 2019, Nike saw a 10% increase in the hiring of women at Director-level and above, and a 4% increase in the hiring of U.S. URG at Director-level or above.
  • In 2019, Nike surpassed their target, investing $81.9 million to drive impact in communities around the world. This represents 1.9% of PTI, based on the prior year.
  • From FY15 to FY19, NIKE invested $417 in their communities, of which $130 million helped promote equality and level playing fields for all. 
  • The NIKE Foundation has invested more than $200 million in programs and research supporting adolescent girls through Girl Effect since 2004. Girl Effect was first launched with other organizations as a movement based on the premise that the most effective way to break the cycle of global poverty is to improve the lives of adolescent girls, and in 2015 evolved into an independent global nonprofit organization by the same name.

Transform Manufacturing

  • In FY19, 93% of NIKE’s 525 contract factories received Bronze ratings or better. This represents a considerable improvement over FY15, when 86% of 692 NIKE contract factories had a Bronze rating (or better), and a 44 p.p. improvement over their FY11 baseline performance.
  • Nike’s turnover rate improved substantially: 38% in FY18; an additional 40% in FY19; and a total of 63% from FY17 to FY19

Minimize Environmental Footprint

  • Nike has made progress in FY19 compared to FY18 due to slightly lighter footwear product mix. However, they are flat versus their FY15 baseline and are not on track to hit their FY20 target of achieving a 10% reduction in average product carbon footprint per unit.
  • All Nike Air soles designed since 2008 contain at least 50% recycled manufacturing waste, and starting in FY20 U.S.- made Air will be created with 100% renewable electricity
  •  NIKE belongs to the Sustainable Apparel Coalition, an alliance of brands, manufacturers, and researchers. 
  • In 2012, NIKE shared their Materials Sustainability Index (MSI) with the Sustainable Apparel Coalition. This data fueled the development of a tool called the Higg Materials Sustainability Index (MSI), which has become the industry standard for evaluating how individual materials affect the environment, and how manufacturing and design choices can reduce a product’s environmental impact.
  • In FY19, over 28,000 metric tons of carbon were avoided through the use of recycled polyester, rather than conventional, in Nike-branded footwear. 
  • The percentage of sustainable materials in Nike footwear has remained essentially flat against the FY15 baseline.
  • Since 2010, Nike has diverted more than 7.5 billion plastic bottles from landfills and waterways by using recycled polyester in their products; over 1 billion bottles in FY19 alone
  • In FY19, NIKE’s sustainable cotton use saved over 53 billion liters of water, up from over 32 billion in FY18. 
  • Their cotton production used over 200,000 fewer kilograms of pesticide than traditional methods would have required, nearly double FY18’s estimated reductions. 
  • Nike’s apparel and socks convert over 90% of their FY19 cotton to organic, recycled, or Better Cotton.
  • By the end of FY19, NIKE suppliers had over 10 megawatt of solar PV capacity installed globally and a pipeline of future projects in development. 
  •  Nike’s carbon intensity of the Vietnamese power grid increased over 25% since FY15.
  • In FY19, Nike made great progress toward their energy targets in their global headquarters. They reduced energy consumption per square foot by 15% and have cut carbon emissions per square foot by 64% compared to the FY15 baseline.
  • NIKE is not on track to meet its defined 2020 target on waste; they generated more waste per unit in FY19 than they did in previous years since they set their baselines. 
  • In FY19, 99.9% of footwear manufacturing waste was recycled by contract factories or converted to energy.
  •  In FY19, NIKE’s waste index was at 102 – off target, and while showing a slight improvement compared to FY18, still trending in the wrong direction compared to the baseline.
  • Overall, footwear manufacturing waste per unit has increased 8% from the baseline.
  • The waste diverted from landfills by their distribution centers is trending positively, from 91% in FY18 to almost 93% in FY19.
    • Nike’s China Logistics Center was able to achieve 100% landfill diversion, with a local company collecting food waste to produce biogas. 
  • By the end of FY19, that commercially available recycling system helped Ramatex reduce its freshwater withdrawals by 60% from its FY16 baseline.
  • Nike identified high baseline drought and flooding risk at 10 strategic finished goods factories in four countries: Brazil, India, China, and Indonesia. They also identified high baseline risk at three strategic materials manufacturing facilities: two in the Greater China region and one in Indonesia. 
    • By the end of FY19, all but one (92%) of these factories completed risk-mitigation plans. The one outstanding facility, a materials manufacturer, is on track to complete its plan in early FY20, giving us line-of-sight to achieving their commitment of 100%.
  • In FY19 Nike measured 98% compliance with NIKE Restricted Substance List (RSL).
  • In FY2019 Nike saw progress from FY18, with compliance with ZDHC Manufacturing Restricted Substances List (MRSL), increasing from 67% to 79%.

Certificates

UN Sustainable Development Goals

UN SDGs Compliance

SDG 3

  • NIKE is committed to inspiring and supporting communities to get kids moving, and the potential pay-offs are big. Active kids are healthier, happier, and do better – on the playing field, in the classroom and, one day, in their careers and communities. As a brand committed to sport, Nike encourages and supports their employees efforts in engaging in a healthy lifestyle.
  • For their 2020 targets Nike decided to Through the power of their brands and partnerships, get kids (ages 7–12) moving through play and sport and build stronger bodies and minds through Health and Wellness effortsIn 2019 Nike achieved to get >17M kids active with the help of NIKE and its 90+ community partners around the world. They made Sports Centers available to employees at World Headquarters at no cost and had ~100,000 community coaches trained, with the help of partners, to create positive sport experiences for kids.

SDG 5

  • Nike believes in the power of sport to unite and inspire people to take action in their communities. They are committed to building an inclusive culture at Nike and to breaking down barriers for all athletes.
  • For their 2020 targets Nike aimed to Attract and develop an increasingly diverse, engaged, and healthy workforce and have a Diverse representation and culture of inclusion as well as provide comprehensive, competitive, equitable pay and benefits. As a corporation they committed to White House Equal Pay Pledge and United Nations LGBTI Standards of Conduct for Business.
  • Nike had a 100 Score on Human Rights Campaign Foundation annual Corporate Equality Index for 18th year in a row. They achieved 1:1 pay equity maintained for women globally and U.S. underrepresented groups (URG), In 2019 Nike had a 3 percentage point (p.p.) increase of VP-level representation of women globally, bringing the total to 39% and a 2 p.p. increase of VP-level representation of U.S. underrepresented groups (URG), bringing the total to 21%.

SDG 8

  • When people feel valued and engaged, everyone wins. This is the key to growth and sustainability. From worker compensation to workplace conditions, Nike only works with factories who share their vision for the future. For their 2020 goal they strive to source 100% from factories that meet their definition of sustainable. They aim to ensure contract factory workers share in productivity gains and establish partnerships that support the needs of workers both inside and outside of the factories. A
  • They have made commitments to California Transparency in Supply Chains Act, UK Modern Slavery Act, American Apparel and Footwear Association (AAFA) & Fair Labor Association’s (FLA) Apparel & Footwear Commitment to Responsible Recruitment and Responsible Labor Initiative. In 2019 93% of NIKE’s 525 contract factories were rated Bronze or better, their definition of sustainable. They disbursed $437M through a trade finance program between NIKE and the International Finance Corporation (IFC), which incentivizes supplier performance by offering lower trade finance terms for facilities rated Bronze or better. 270,000 workers from 45 contract factories in 11 countries reached through NIKE’s Engagement and Wellbeing (EWB) Survey.

SDG 12

  • Nike develops new products and innovative materials because they’re dedicated to finding ways to help solve today’s problems for a better tomorrow with a focus on maximum performance and minimum impact.
  • For their 2020 targets Nike aims to deliver products for maximum performance with minimum impact, with a 10% reduction in the average environmental footprint. They strive to increase use of sustainable materials in footwear and apparel and source 100% of their cotton more sustainably across NIKE, Inc.
  • They set a target to enable Zero Discharge of Hazardous Chemicals (ZDHC) and eliminate footwear manufacturing waste to landfill or incineration, while continuing to reduce overall waste. In 2019 76% of Nike brand footwear and apparel products use some recycled materials, from footwear uppers to entire jerseys and >30M pairs of shoes recycled into running tracks, playgrounds, and other surfaces since the launch of Reuse-A-Shoe. Nike created the Circular Design Guide with students and staff of Central Saint Martins, University of the Arts London, and with inspiration from Global Fashion Agenda, to share a common language for circularity.

SDG 13

  • Nike wants a world where everyone can thrive on a healthy planet. To achieve it, they’re taking a stand for climate action through Move to Zero, their journey towards a zero carbon, zero waste future. They are committed to taking a leadership role and working collaboratively with others across industry.
  • By 2020 Nike strives to reach 100% renewable energy in owned or operated facilities by the end of FY25 and encourage broader adoption as part of their effort to control absolute emissions, decrease energy use and CO2e emissions 25% unit in key operation, decrease energy use and CO2e emissions 35% per kg in textile dyeing and finishing and have a 10% reduction in the average product carbon footprint (kg CO2e) per unit.
  • As a company they have made commitments with RE100, Fashion Industry Charter for Climate Action under the auspices of UN Climate Change, Commitments to Paris Climate Agreement, Science Based Targets and G7 Fashion Pact, In 2019 Nike achieved 600,000 megawatt hours of renewable energy contracted per year, representing >75% of their global electricity load had >30% of NIKE global stores are LEED certified and had 7.33 kg CO2e/unit is NIKE’s average product carbon footprint.

SDG 17

  • NIKE collaborates with competitors, governments, academia, NGOs and industries to develop a shared understanding of the challenges and opportunities they face. Together they identify barriers, advance solutions through strategic partnerships and help to create the conditions that enable solutions to scale.
  • Nike teamed up with the Ocean Conservancy to establish an Arctic Shipping Pledge, a commitment to not intentionally send ships through the Arctic out of concern for the negative environmental impact. Initial corporate pledge signatories include Bestseller, Columbia, Gap Inc., H&M Group, Kering, Li & Fung, PVH Corp., and several ocean carriers. Nike joined UN Climate Change and global brands, retailers and suppliers in accelerating some of the industry’s most aggressive climate targets yet – including a 30% reduction in aggregate greenhouse gas emissions by 2030 and a vision to achieve net-zero emissions by 2050.
  • Nike is a founding member of the SAC, an industry-wide group of more than 200 leading apparel and footwear brands, retailers, suppliers, academics and NGOs working to reduce the environmental impacts of apparel and footwear products. Nike has worked with SAC since 2009 to create an industry approach  to the environmental foot-printing of footwear and apparel products.
  • Formed in 1999, the FLA is a collaborative effort of socially responsible companies, colleges and universities, and civil society organizations to improve working conditions in factories around the world. Nike’s compliance program is accredited by the FLA. Girls Inc. inspires all girls to be strong, smart and bold, through direct service and advocacy. The network of local Girls Inc. nonprofit organizations serves girls ages 6-18 at more than 1,400 sites in 337 cities across the United States and Canada.
  • Nike has teamed up with Girls Inc. to support their “Sporting Chance” program that helps girls build a foundation for enjoying sports, adventure and physical activity throughout their lives

Evaluation

As leader in their industry, Nike has made minimal efforts towards incorporating sustainability throughout their business model. Their lack of awards and certificates support this claim. Nike does comply with a few UN Sustainable Development Goals. In addition, they are incorporating sustainable materials and renewable energy. Nike has been rated D.

Analyst Outlook: Negative

Nike’s sustainable practice is not sufficient. There is little hope for improvements in the foreseeable future. 

Key Points

  • While Nike has stepped up its sustainability efforts some of its activities still largely remain problematic in areas such as human rights, worker’s rights, supply chain management, pollution and toxics, habitats & resources, environmental reporting, use of controversial technologies, anti-social finance, and animal rights. Nike uses a few environmentally friendly fabrics, including organic and recycled cotton and polyester, minimizes off-cuts in areas of its manufacturing process, and has a waste and water management strategy in place throughout most of its supply chain but it hasn’t gotten rid of hazardous chemicals in its supply chain, which has been denounced by Greenpeace. Greenpeace also said that Nike already had policies that restricted hazardous substances in their finished products and, to a lesser extent, their manufacturing process, but wastewater discharges were often overlooked.
  • While it has announced its gender equality values, there have been accusations of toxic culture of gender discrimination and sexual harassment made by former employees who sued Nike in 2018. Also, it uses leather, wool and down feather without specifying sources. The large supply of rubber and other man-made materials used to make shoes which are made of synthetic rubber compounds, polyurethane, phylon, phyllite, EVA and other materials, that are harmful to the environment as well as the fumes that the factories are putting out. For example their new 2019 Joyride technology is made from TPE, or Thermoplastic Elastomer: a mixture of plastic and rubber.
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