Nike Inc. has released its FY10-11 Sustainable Business Performance Summary, outlining its progress against key business, labor and environmental goals, in addition to presenting new targets. The company has emphasized a company-wide commitment to further incorporate sustainability into its innovation processes, governance and portfolios.
“Nike is known globally for our innovative performance products and sustainability has now increasingly become core to our business approach,” said Nike, Inc. President and CEO Mark Parker. “We have continuously invested in reducing our environmental and social impacts within our own business and supply chain and have made substantial gains over the last decade. We know we cannot achieve our bold sustainability goals simply by delivering incremental improvements. We need to deliver innovations that rapidly evolve the way things are done at Nike, in our industry and throughout business.”
Nike also debuted its new factory rating system, the Manufacturing Index, which takes a look at the factory’s overall performance in hopes to see how a factory approaches true sustainability. The Index compares labor and environmental performance to traditional supply chain measures of quality, cost and on-time delivery.
After over 2 years of development, Nike has also launched its Sourcing & Manufacturing Sustainability Index (SMSI), a component of the overall Manufacturing Index, which will analyze factory performance on sustainability measures including measures of lean, environmental performance (including water, energy and carbon, and waste), health and safety, and labor management factors.
The summary reiterates Nike's determination to focus heavily on the role of innovation, transparency and collaboration in working through sustainability issues. Thus far, Nike has made progress against most of its previous targets, including waste reduction in footwear manufacturing, utilizing its Considered Design Index guidelines in product design and implementing Human Resource Management training programs in contracted factories. In some areas, for example carbon emissions, where progress was slower than anticipated, Nike has changed its approach and redesigned its factory evaluation and sourcing criteria to improve performance in the long-term.
Nike worked with Business for Social Responsibility in order to better assess its reporting and engage in discussion on its new set of sustainability targets.
“I have been impressed by Nike’s willingness to engage in constructive debate over what is feasible and what is aspirational,” said Massachusetts Institute of Technology Professor Richard Locke, whose research revolves around improving labor and environmental conditions in global supply chains, “This is a company that takes a leadership position and has clearly learned the value of partnership and that collaboration is a business opportunity, not a risk.”
Some of the progress Nike has made, with regard to its previously stated goals, includes:
- The number of factory audits showing serious, repeated violations has remained low, at about 5 percent over the past five years. The number of contract factories with unknown conditions has decreased from 48 percent in FY09 to 8 percent in FY11, due in large part to increased monitoring against NIKE, Inc.’s Affiliate base.
- Human Resource Management training was conducted in 79 percent of focus contract factories (76 of 98) which covered 94 percent of footwear volume, 43 percent of apparel volume.
- CO2 emissions from contract footwear factories used to source NIKE Brand product were down 6 percent from FY08-FY11, despite a 20 percent increase in production.
- 97 percent of NIKE Brand footwear achieved a baseline level or better on Nike’s Considered Index.
The next phase of sustainability performance targets released in its latest report are as follows:
- Product Design All product improves environmental profile as measured on Sustainability indexes evolved from our Considered Design ethos and indexes. By end of FY15, all new NIKE Brand global footwear will achieve silver rating and all new NIKE Brand global apparel will achieve bronze rating.
- Climate/Energy Achieve 20 percent reduction in CO2 emissions per unit from FY11 levels through FY15 (from assessed footprint in built environment, inbound transportation and footwear manufacturing).
- Labor Source by end FY20 only from contracted factories that demonstrate their commitment to workers and sustainability by achieving minimum Bronze on our Sourcing & Manufacturing Sustainability Index, which includes measures of worker rights and protections, including health and safety, and progressive movement toward the Fair Labor Association’s definition of a “fair wage” approach.
- Chemistry Achieve zero discharge of hazardous chemicals* for all products across all pathways in our supply chain by 2020.
- Water Improve efficiency by 15 percent per unit in apparel materials dyeing and finishing, and footwear manufacturing (from FY11 through FY15).
- Waste Achieve 10 percent reduction in waste from manufacturing across NIKE, Inc. and shoebox weight per unit (from FY11 baseline through FY15), building on waste reduction in footwear manufacturing of more than 35 percent per pair in first 10 years of program.
- Community Invest a minimum of 1.5 percent of pre-tax income in communities annually.
Nike has also launched an interactive website, www.nikeinc.com, where users can explore Nike’s value chain and learn about its progress and commitments against each impact area.