Nike CSR and sustainability

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   Nike Corporate Social Responsibility and Sustainable Innovation

Nike is the most popular brand in the sports shoe and apparel industry. In the past, Nike faced several controversies related to child labor and ethics in its supply chain. However, in recent years, it has invested a lot in CSR and sustainability. The company is known for its great products and excellent marketing and advertising strategy. However, CSR activities are also an important investment in a brand’s image. Most big brands have made heavy investments in social and environmental initiatives. On the one hand, laws in this area have grown more stringent, on the other customers also prefer brands with lower environmental impact. Some two decades ago, Nike was facing heavy criticism for low wages and difficult working conditions as well as the use of child labor in its supply chain. However, in the last decade, Nike made several changes aimed at improving its image worldwide. These investments have started bearing results and that is evident in its improved financial and operational performance. In both the areas of CSR and sustainability, Nike has achieved several major milestones.

In recent years, Nike’s focus on reducing its environmental impact has grown. The company also aims to double its manufacturing rate. It is focused on creating a better future for the world and the communities in which Nike operates through sustainable innovation. Sustainable innovation is the key to a better future and therefore Nike has increased its investment in products made from sustainable raw materials. Sustainability can potentially grow Nike’s influence in the shoe industry and help it control operational costs and strengthen its bottom line.

Nike’s President and CEO John Domahoe in his letter for 2020, highlighted some critical areas where the company had made significant progress:

Our FY20 NIKE, Inc. Impact Report represents a true inflection point.
First, this past year we used NIKE’s scale and influence to raise the bar
for sustainability. We launched our Supplier Climate Action Program to
develop pathways for carbon reduction for our material and finished goods
manufacturers. And we saw real progress throughout our supply chain:
• We are currently using 100% renewable energy in the United States and
Canada in our owned or operated facilities.
• Our textile dyeing and finishing suppliers reduced freshwater use by 30%,
far exceeding our FY20 target.
• Our Tier 1 finished goods footwear suppliers diverted 99.9% of our
manufacturing waste from landfill.
We’re also investing in solutions that create lasting change in our communities
around the world. Building on collaborations with partners, such as the
U.S. Olympic & Paralympic Committee, we created a training module called
Coaching Girls for volunteer youth coaches to help build a culture that makes
sports fun and inclusive for girls.
And through Made to Play – our global commitment to get kids moving
through play and sport – we engaged our own teammates in the effort: more
than 6,700 of our store employees across 29 countries volunteered more
than 60,000 hours in FY20 to inspire kids to be active.

John Domahoe, Nike President & CEO. Nike Annual Impact Report 2020.

Nike CEO also notes about creating a culture of diversity and inclusion organizationwide:

We are also focused on building a diverse, inclusive team and culture, one
in which all voices are welcomed and heard. This culture of belonging reflects
the diversity of the athletes we honor, the people who love our products,
and the communities we serve.
Our efforts have increased the representation of women globally across the
enterprise to 49.5% and representation of racial and ethnic minorities to
29% of our VP Leadership Team in the United States.

John Domahoe, Nike President & CEO. Nike Annual Impact Report 2020.

Nike CSR and Sustainability Main points : –

  • Commitment to reducing the carbon footprint
  • Innovative manufacturing.
  • Keeping human voice at the heart of everything it does from manufacturing to marketing.
  • Develop a new palette of sustainable materials.
  • Inventing close-loop products.
  • Moving to complete renewable energy.
  • Diverse workplace and inclusive culture that becomes a catalyst for innovation.
  • Investing and encouraging employees to invest in communities and markets where Nike operates.

Nike is concerned about its carbon footprint and its environmental effect on the environment. For some years, Nike has continued to reduce its carbon footprint by investing in innovative products and operations. It has also set ambitious targets for itself in the near future. The brand has set a target of reaching 100% renewable energy for itself by the year 2025.

In its innovative manufacturing model, the brand has kept workers and their voices at the center. Apart from improving workers’ role to grow their participation and engagement, the brand is investing in innovative technology in its supply chain and manufacturing units. It has set a code of conduct for its suppliers and keeps only those who are compliant with rules and regulations. Technologies like Pegasus and Flyknit have helped Nike control its carbon footprint as well as maximize its efficiency.

Most of the environmental impact of Nike shoes comes from the material used to make them. It is why Nike has formed coalitions with others like Sustainable Apparel Coalition and LAUNCH for making innovative material to be used in its products. Nike is focusing on creating material with low environmental impact to move towards a high-performance closed-loop model where it can use reclaimed material from the start.

The sports shoe brand is innovating its manufacturing processes and supply chain so it can reuse the waste material generated in its production and supply chain. Its designers have already assembled a palette of 29 high-performance materials collected from waste. Right now, the waste material left from Nike’s shoes is being used in tennis courts, athletic tracks, and Nike shoes. It is also using better cotton, recycled polyester, environmentally preferred rubber and certified leather to further lower its environmental impact.

In terms of employee welfare too, the brand has focused heavily on developing a strong culture and an inclusive workforce that helps maximize its efficiency and impact. It is attracting and developing a highly diverse workforce that brings with it diverse skills. Nike is also investing in community-based initiatives. It gives its employees the opportunity to be Nike community Ambassadors and volunteers. Employees apart from donating labor, also donate cash to charities and institutions. In fiscal year 14/15 apart from 48,000 hours of volunteering, Nike and its employees donated $6.2 million in cash to schools and charities of their choice. Nike is also reaching kids in various parts of the world including China to make them physically active from a young age. In 2015, it invested 1.9% of pre-tax income into community initiatives. The amount equaled $78.2 million.

In this way, Nike is now strongly committed to improving the quality of life for people in communities where it operates. Not just that, it is investing continuously in innovative technologies and waste reuse so as to minimize its environmental footprint. Its focus is on investing in better raw material and production methods which reduce wastage and improve efficiency. In the past, Nike has faced severe criticism over child labor and other issues. However, in the last decade, it has done a lot to manage its reputation and to reduce its impact on the environment.

Nike CSR and Sustainability in 2018: Highlights

  • Investment of $79.4 million in communities throughout the world in fiscal 2018. Total $396 million invested since FY2014.
  • Nike employees contributed more than $7.5 million in 2018 to charitable causes throughout the world.
  • Nike helped more than 16.5 million kids globally through its Made to Play commitment.
  • Grew the VP level representation of women by 4% bringing it to 36%.
  • 93% of its 542 factories were rated bronze or better for sustainable production.
  • Total of 471 factory audits by Nike or third parties on Nike’s behalf.
  • Sourcing sustainable cotton helped save more than 32 billion liters of water.
  • Since 2010, Nike has transformed more than 6.4 billion bottles into recycled polyester footwear and apparel.
  • 73% of Nike brand footwear and apparel styles used some kind of recycled material.
  • Nike secured 75% renewable energy in the company owned or operated stores.
  • Nike shoes made with Flyknit have generated more than $2 billion in revenue by 2018.

Nike Targets for 2020.

  • Attracting and developing a highly diverse, well engaged and healthy workforce.
  • Investing a minimum of 1.5% of pretax income into community impact initiatives.
  • Focus on sourcing only from the factories that meet its sustainability criteria.
  • 10% reduction in average environmental footprint.
  • Source 100% of the cotton across Nike operations more sustainably and grow the use of sustainable material in footwear and apparel.
  • Achieve 100% renewable energy usage across facilities owned or operated by the company by the end of FY 2025.
  • Reduce overall waste in the Nike operations and eliminate footwear manufacturing waste to landfill or incineration.
  • Reducing water use in the Nike supply chain by adopting new and innovative approaches.
  • Achieve at least a 20% reduction in freshwater use in textile dyeing and finishing.
  • Achieve Global Pay Equity.

Nike CSR achievements in 2020:

  • The company is committed to investing at least 1.5% of its PTI (pretax income) to drive a positive impact in communities worldwide. In 2020, the company exceeded its target by investing 1.9% of its PTI. NIKE invested $89.8 million to drive positive changes for kids and communities around the world.
  • In FY20, NIKE employees continued making a positive difference in their local communities by supporting 3,100 organizations globally. In 2019, on Giving Tuesday alone, more than 1,800 employees from 16 different countries donated more than $3.8 million to over 1,100 organizations in a single day – an increase of 85% in the total donations compared to the previous year.
  • Apart from that, to support COVID-19 pandemic relief and racial and social justice, the Nike Foundation matched employee donations 2-to-1 in FY20. This effort resulted in more than $5.1 million directed to 1,360 organizations providing community support and relief efforts to combat the pandemic

Sources:

Business Insider _ Nike’s Sweatshop Problem

Nike Fiscal year 2014 -2015 Sustainable Business Report.

Nike Sustainability Reports 2018 and 2019.

Nike Impact Report FY 20.


CITE THIS ARTICLE.
APA.Pratap, A. (2019, October 15). Nike CSR and sustainability. Retrieved from https://notesmatic.com/2018/02/nike-csr-and-sustainability/
MLA.Pratap, Abhijeet. “Nike CSR and Sustainability.” Notesmatic, 15 Oct. 2019, notesmatic.com/2018/02/nike-csr-and-sustainability/.

Abhijeet Pratap

Abhijeet has been blogging on educational topics and business research since 2016. He graduated with a Hons. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers.