The Oregon-based superpower has outlined plans to build a cleaner, greener and more globally diverse business in the next five years.
In its impact report for fiscal 2020, published in March, the athletic wear giant looked back at its achievements over the past five years while plotting not just “aspirations” but rather a “call to action” guiding progress in the half decade to come, president and CEO John Donahoe wrote in the executive summary. The sneaker powerhouse says its plans align with both science-based targets and the United Nations’ Sustainable Development Goals.
And “[f]or the first time,” he added, “we will tie executive compensation to Nike’s progress in deepening diversity and inclusion, protecting the planet.”
The move echoes recent calls by the British Parliament for scandal-plagued Boohoo to tie its executive bonus structure not to “runaway” growth but to stronger worker rights, underscoring the growing scrutiny of apparel companies’ environmental, social and governance postures.
Nike’s top brass has ample opportunity to push progress forward. Though the firm saw racial and ethnic minorities filling 29 percent of U.S. vice president roles last year (an eight percentage-point improvement), the owner of the Jordan Brand in addition to Nike and Converse aims to perk that figure up to 35 percent by 2025 “as our society continues to reckon with systemic racial injustice,” Donahoe wrote.
What’s more, the company recognizes that attracting and retaining diverse talent means instructing executives on how to lead different kinds of employees. To that end, Nike said that by fiscal 2025, it’s shooting for all leaders at the vice president level to “complete and be credentialed on inclusive leadership education.” And pay parity is on its radar, too: Nike has ambitions to achieve 100 percent “pay equity across all employee levels on an annual basis” while ensuring “competitive and equitable benefits.”
It’s already close to meeting goals for women in the workplace, aiming for 50 percent companywide in the coming five years, up from fiscal 2020’s 49.5 percent mark. However, Nike sees female talent representing 45 percent of leadership roles by the middle of the decade and stated goals to double its investments “focused on professional development for racial and ethnic minorities in the U.S. and women globally.”
Materials and manufacturing
On the materials and manufacturing side, Nike reported notable gains while detailing plans for improvement. Suppliers responsible for finishing and dyeing textiles consumed 30 percent less fresh water since fiscal 2016, equivalent to 40 billion liters kept unsullied and out of Nike’s supply chains. It says it plans to further prune that metric by 25 percent by fiscal 2025. Tier 1 suppliers of finished footwear products now funnel nearly all—99.9 percent—of their manufacturing-derived waste from landfills into alternate uses.
In the next five years, the sports standout is aiming for a tenfold increase in the amount of finished product it can repair, recycle or re-home, it said. Nike has its eye on castoffs, too, striving to curb production waste from sneakers and other shoe products that otherwise would be tossed in the trash heap or fed to the fires. Though no baseline was given for this metric in fiscal 2015, Nike saw a 6.5 percentage point improvement in the ensuing five years. Upward of 47 million kilograms of production leftovers were channeled into new footwear items, it said, much of which shows up as its well-known Nike Grind sneaker soles. As part of its Reuse-a-Shoe program, the company transforms manufacturing scraps destined for the landfill and previously worn athletic shoes into Nike Grind, seen in “soft landings on playgrounds around the world and perhaps even under the carpet on your floor,” a spokesperson said.
“Currently available in more than 200 stores across North America and more than 100 stores in Europe, we are now scaling the Reuse-a-Shoe program to stores in Greater China in 2021,” the spokesperson added.
Though material innovation has gotten considerable attention in fashion as of late, Nike’s work on this front is something of an enigma. While it grew its sustainable apparel inputs from 19 percent to 59 percent since fiscal 2015, it actually took two percentage steps backward with its goal to pour more eco-friendly components into footwear, dipping from 31 to 29 percent over the past 60 months. Nike is aiming to course correct by setting “functional targets on the areas of greatest impact linked to our innovation roadmap,” which means shelving “inconsistent priorities” for the sake of homing in on eco-friendlier material replacements—and especially those consumed in high volumes, a spokesperson said. Cotton, polyester and leather, for example, will be replaced with recycled alternatives where possible.
Footwear is a tough nut to crack, material wise, due to the myriad components that make up a typical shoe, from rubber, foam, adhesives and sockliners to the polyester and leather commonly composing its uppers. “To minimize our impact, we are focused not only in our upper materials, but also in our materials and methods of [making] of our footwear bottom units, especially around midsole foam and outsole rubber,” a spokesperson said.
What’s more, Nike is now following the Sustainable Apparel Coalition’s “more holistic” and “rigorous” Higg Material Sustainability Index instead of the Footwear Sustainability Index that previously guided its sourcing and design efforts. It’s also driving “awareness and education about impact and offering tools” to help footwear teams adopt “better material and design choices,” the spokesperson said.
“Innovation by focusing on new methods of recycling as well as new material types that meet our product and consumer requirements will be increasingly important,” the spokesperson added, noting Nike’s “environmentally preferred” materials matrix encompassing Flyknit, Flyleather, recycled poly and nylon, and sustainably sourced cotton.
In fact, cotton emerged as a highlight for Nike, which says it sourced 100 percent of the staple fiber more sustainably by last year, up from 24 percent in fiscal 2015. The Better Cotton Initiative pioneer came in at No. 5 on the group’s 2019 leaderboard in recognition of its sourcing efforts.
Plastic and packaging
Part of fashion’s waste woes and pollution problems stem not just from production and sourcing but also the piles of plastic and packaging employed for transit throughout the supply chain. And at Nike, packaging alone accounts for approximately 30 percent of its total waste footprint.
In 2021, Nike says it’s on track to globally eliminate plastic bags from its operations, with a special focus on ditching packaging air pillows in North American digital commerce orders, a move that could trim 200,000 pounds of plastic each year. Removing paper return slips will conserve 25 million sheets of paper while redesigned shoe boxes, it added, slash carbon emissions in half. A pilot employing new popup cartons for footwear, produced with 57 percent to 100 percent recycled content, eliminates “110 football fields” of corrugate cardboard consumption. It’s also trying out paper mailers for apparel, derived from 90 percent recycled content and fully recyclable at curbside.
Shopping bags are also under review. “In a move that could eliminate more than 70 million shopping bags a year, Nike is working on eliminating single-use plastic bags globally,” the spokesperson said, noting a new goal to trim another 10 percent of waste via “additional packaging design and operational efficiency programs.” “We have already rolled out this initiative in Greater China and Europe and plan to transition to paper bags in all of our stores soon.”
Nike admits the sprawling “size and scale” of its business are a “major driver in maintaining a healthy planet.” Though it didn’t reveal plans and strategies for any new stores, the company said its “retail design ethos challenges us to ensure sustainability lives at the core of everything we do,” from the ingredients used in fixtures and mannequins to materials for displays, doors, flooring and more. Stores like the sustainability-minded Guangzhou location are likely to inform future templates.
Though brands face the task of cleaning and greening their own activities, they also must take on the role of teaching their consumers about the part they play in managing their planetary impact. Like many others in the industry, Nike is not only looking at how it can “responsibly extend the life of products and materials,” but also “how we empower consumers to [make] educated shopping decisions,” a spokesperson said.
Those ambitions will manifest this spring in the form of a “new circular business model that offers high-quality, refurbished products” at enticing prices at select North American retail locations, the spokesperson said, hinting at how the Nike Refurbished program will support a “sustainable lifestyle” for its consumers through an owned resale operation where it controls and verifies product authenticity.
“We envision a world free of waste, where products are designed to be loved, reused and rediscovered as something new,” the spokesperson added.
Nike also noted the ways in which it supports its sprawling supplier community. Its trade finance scheme with the International Finance Corporation has distributed north of $717 million to 46 factories, which may have helped footwear suppliers curtail their per-pair energy consumption by nearly 10 percent since fiscal 2015. In the five years ahead, the athletic firm wants 100 of its “strategic suppliers” to facilitate access to career advancement and “upward mobility for women employed in their facilities.” It also stated a goal to reach a cumulative spend of $1 billion on “diverse suppliers.”
Looking ahead to fiscal 2025, the NBA’s official uniform supplier has set its sights on slashing greenhouse-gas emissions by 70 percent—in both owned and operated facilities—while it’s prioritizing “clean chemistry alternatives” for its 10 primary chemical inputs.
Nike succinctly summarized its mindset on sustainability, noting that in “the race toward a better tomorrow, there is no finish line.”
“Our goal is, and always will be, for Nike’s people and purpose to come together for good,” Donahoe wrote. “At Nike, we’ll never stop striving for better. Our purpose will always guide us, and our values will always push us forward—toward that better future we believe in.”