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Nike Follows This ‘Best Practice’ With Factories, Report Says

If brands and retailers want to align their emissions-reductions goals with the 2015 Paris Agreement, they must first and foremost look at what they’re doing in China, a new report says.

Economic globalization is shifting supply-chain emissions to emerging-market countries, particularly China, which is “still the workshop of the world,” according to the 2019 Supply Chain Climate Action SCTI Index, an evaluation of the Chinese supply-chain landscape by the Institute of Public and Environmental Affairs (IPE), a Beijing-based think tank, and CDP, the international nonprofit formerly known as the Carbon Disclosure Project.

“From another perspective, China’s supply-chain emissions hold great potential for multinational companies to achieve science-based carbon emissions reductions,” the report’s authors wrote.

But although climate change is gaining attention at international brand headquarters, a gap remains between most brands’ emissions reduction targets and their implementation, they warned. Chinese brands, especially, “significantly lag” in their supply-chain climate actions.

A survey of 440 Chinese and international brands and retailers by IPE and CDP found that only 64 collected at least one supplier’s emissions information this year and 24 brands are “actively” encouraging their suppliers in China to measure and publish their own emissions data. In addition, just 62 have set reduction targets for the indirect emissions known as Scope 3, which include those from employee travel, waste disposal and use of sold products.

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In terms of apparel makers, H&M, Nike, Puma, Walmart, Marks & Spencer, Adidas, Gap and Levi Strauss emerged among the top-performers, scoring between 54 and 61 out of a potential 100. Brands that rated zero included Armani, Mango, River Island, Roxy, Hush Puppies, Lacoste and Valentino.

With global climate governance entering a “critical stage,” however, brands and retailers can no longer pursue business as usual if they’re to limit global temperature increases to a further 1.5 degrees Celsius, the report warned.

Businesses play a vital role in the implementation of the Paris Agreement, IPE and CDP noted. Across industries, companies on average report supply-chain greenhouse-gas emissions 5.5 times the volume of their direct emissions.

The report singled out Nike for the best practice of collecting factory energy consumption data every month, which the report’s authors said not only reduces emissions and ensures progress toward overall emissions reduction targets but “also helps the factory” with energy efficiency.

Indeed, fulfilling supply-chain emissions reductions targets requires cooperation with suppliers.

“Some brands have made more specific requirements to motivate their suppliers to set their own emissions reduction targets and to promote the continuous participation of suppliers from the policy level,” the report’s authors wrote.