Just do it: Carving the path to sustainability

In a world of increasing climate change issues, Nike has been a leader in addressing its impact on global warming.

The apparel industry and its role in climate change

The $3 trillion global apparel industry is responsible for 10% of global carbon emissions, making it the second largest industrial polluter and contributor to climate change after the oil industry.[1] In 2015, the industry was projected to have used 100 million tons of fiber and filament yarns.[2] Polyester, the world’s most commonly used fiber, requires nearly 70 million barrels of oil to produce. Other fabrics, including rayon, require logging 70 million trees every year, which also contributes to climate change by preventing photosynthesis, a process that removes carbon from the atmosphere.[1] The physical manifestations of climate change, which have in part been created by the apparel industry, have created both threats and opportunities for apparel companies including Nike.

Threats to Nike caused by climate change

Pressure on input prices and availability

Global warming has led to changes in the rates of rainfall, runoff, and evaporation, causing unexpected floods and droughts.[3,4] Droughts are a significant threat to Nike as they can lead to reductions in crop yields and thus increases in the price and scarcity of commodities that are necessary for apparel production such as cotton. Water scarcity, which also results from climate change, is detrimental to Nike.[5,6] In general, it takes more than 400 pounds of water to process one pound of textiles due to the water-dependent dyeing and finishing steps.[2] The fact that apparel manufacturing is concentrated in a few areas in the world further exacerbates water stress levels.

Supply chain disruptions

As was evidenced in 2008 when four Nike factories in Thailand were shut down due to floods, such manifestations of climate change disrupt the apparel supply chain.[7] Climate change has also been linked to political instability due to increases in food prices and resulting riots.[8] Such riots, which have occurred in countries like India and Argentina where Nike has factories, may also contribute to supply chain disruptions.[8,9]

Changes in consumer buying behavior

Lastly, global warming has diminished the apparel industry’s buying and manufacturing cycles since apparel purchases are partly influenced by changes in seasons (in countries with seasonality).[10] Although Nike’s emphasis in active apparel partly protects the company from the impact that other retail companies that produce seasonal apparel may experience, Nike may still need to adapt to new consumer behavior.

Nike’s commitment to reducing its carbon footprint

According to Nike’s Sustainable Business Report, Nike has substantially reduced absolute CO2 emissions (Figure 1).[11]

Figure 1: Changes in CO2 emissions and revenues from 2000 to 2015.[11]

Figure 1: Changes in CO2 emissions and revenues from 2000 to 2015.[11]

Since its use of renewable energy in 2005 and elimination of greenhouse gases from air bags (on Nike Air shoes), Nike has continued to take measures and set aggressive goals to reduce its carbon footprint. More recently, Nike signed on to the White House climate change pledge to reduce its carbon footprint and partnered with the Massachusetts Institute of Technology Climate CoLab, a crowdsourcing platform “where citizens work with experts and each other to create, analyze, and select detailed proposals for what to do about climate change.”[12,13,14] Nike’s goals for 2020, including reaching 100% renewable energy in operating facilities by 2025, are shown in Figure 2.[11]

Figure 2: Nike’s 2020 targets to minimize its environmental footprint.[11]

Figure 2: Nike’s 2020 targets to minimize its environmental footprint.[11]

Opportunities for Nike created by climate change

Nike’s commitment to sustainable practices in response to climate change has likely helped drive its steady increase in revenue.[11] This is supported by studies that have shown that Millennials consider sustainability to be a shopping priority.[15] Furthermore, measures such as switching from naturally-derived inputs to synthetic products protect Nike from fluctuations in commodity prices and availability, while switching to renewable energy and reducing waste will enable Nike to experience long term cost savings.

Next steps for Nike

Most of Nike’s efforts to mitigate its impact on climate change are actions that also serve another purpose: marketing. If Nike wants to position itself as a company that genuinely cares about sustainability, I would advise Nike to not only pursue high visibility goals such as reaching 100% renewable energy, but to also address important yet subtler problems. For example, this could entail reducing CO2 emissions by more than the target decrease of 25% by moving more factories nearshore to reduce the carbon footprint that results from transporting products. Nevertheless, in a world of increasing climate change issues, Nike has been a leader in proactively addressing its contribution to global warming and serves as an example of strong corporate stewardship that other companies should follow.

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References

  1. Forbes Welcome. 2016. Forbes Welcome. [ONLINE] Available at: http://www.forbes.com/sites/jamesconca/2015/12/03/making-climate-change-fashionable-the-garment-industry-takes-on-global-warming/#6474cf20778a. [Accessed 04 November 2016].
  2. GreenBiz. 2016. Why Nike and MIT see textiles as material to climate change | GreenBiz. [ONLINE] Available at: https://www.greenbiz.com/article/why-nike-and-mit-see-textiles-material-climate-change. [Accessed 04 November 2016].
  3. John Carey. 2016. Global Warming and the Science of Extreme Weather – Scientific American. [ONLINE] Available at: http://www.scientificamerican.com/article/global-warming-and-the-science-of-extreme-weather/. [Accessed 04 November 2016].
  4. “Explaining Extreme Events of 2012 from a Climate Perspective,” Bulletin of the American Meteorological Society, Vol. 94, No. 9, Eds. Thomas C. Peterson, Martin P. Hoerling, Peter A. Stott, and Stephanie C. Herring, September 2013, p. 3.
  5. Living on Earth / World Media Foundation / Public Radio International. 2016. Living on Earth: CO2 Can Reduce Food Value. [ONLINE] Available at: http://www.loe.org/shows/segments.html?programID=14-P13-00034&segmentID=1. [Accessed 04 November 2016].
  6. Food and Agriculture Organization of the United Nations. 2016. Food for all – World food summit – Agricultural machinery worldwide. [ONLINE] Available at: http://www.fao.org/docrep/x0262e/x0262e01.htm. [Accessed 04 November 2016].
  7. Log In – New York Times. 2016. Log In – New York Times. [ONLINE] Available at: http://www.nytimes.com/2014/01/24/science/earth/threat-to-bottom-line-spurs-action-on-climate.html?_r=0. [Accessed 04 November 2016].
  8. World Bank. 2016. Food Price Watch, May 2014: First Quarterly Increase Since August 2012; The Role of Food Prices in Food Riots. [ONLINE] Available at: http://www.worldbank.org/en/topic/poverty/publication/food-price-watch-may-2014. [Accessed 04 November 2016].
  9. Nike. 2016. Nike Sustainability – Interactive Map. [ONLINE] Available at: http://manufacturingmap.nikeinc.com/#. [Accessed 04 November 2016].
  10. The Huffington Post. 2016. How Will Climate Change Affect What We Wear? Surprise! It Already Has | Huffington Post. [ONLINE] Available at: http://www.huffingtonpost.com/2012/10/22/climate-change-global-warming-hurricane-sandy-style-apparel-fashion-industry_n_2001510.html. [Accessed 04 November 2016].
  11. Nike News. 2016. About Nike – Sustainable InnovationNike News – Sustainable Innovation. [ONLINE] Available at: http://about.nike.com/pages/sustainable-innovation. [Accessed 04 November 2016].
  12. The Guardian. 2016. Thirteen US companies sign on to White House climate change pledge | Environment | The Guardian. [ONLINE] Available at: https://www.theguardian.com/environment/2015/jul/27/climate-change-obama-coca-cola-walmart-google. [Accessed 04 November 2016].
  13. Nike News. 2016. Nike News – MIT Climate CoLab and Nike Call for Materials Innovation to Combat Climate Change. [ONLINE] Available at: http://news.nike.com/news/nike-inc-and-mit-climate-colab-materials-innovation-to-combat-climate-change. [Accessed 04 November 2016].
  14. Massachusetts Institute of Technology. 2016. Climate Change | Office of Sustainability. [ONLINE] Available at: https://sustainability.mit.edu/sustainability-today/climate-change. [Accessed 04 November 2016].
  15. Nielsen. 2016. Green Generation: Millennials Say Sustainability Is a Shopping Priority . [ONLINE] Available at: http://www.nielsen.com/us/en/insights/news/2015/green-generation-millennials-say-sustainability-is-a-shopping-priority.html. [Accessed 04 November 2016].

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5 thoughts on “Just do it: Carving the path to sustainability

  1. Awesome post! I’m a big fan of Nike, and now that I know that the apparel industry has a huge negative impact in the environment, I’m happy to know that the company is taking this problem seriously.
    In addition to the suggestions exposed in this post, I would like to encourage Nike to develop a recycle program. The turnover of apparel products seems to be high, and implementing recycle programs (such as “leave your pair of shoes and receive a discount”) can help minimize the pollution caused by trash.

  2. Thank you for sharing! It’s great to see all of the steps that the corporation is taking to slow down the apparel industry’s carbon footprint. To really move the needle on this issue, I believe that Nike could do even more to educate its customers on what climate change means for them. Increasing awareness and knowledge will inspire customers to demand more from retailers and furthermore, it will inspire customers to play a bigger part in the effort to reduce greenhouse gas emissions.

  3. This was one of the most interesting post as I am a big fan of Nike, and fascinating to track their efforts to reduce carbon footprint. To add to possible suggestions, it would be nice if Nike entered into the recycling business by providing incentives to consumers to return the Nike apparels to Nike instead of rubbish bins. With Nike’s presence and brand image globally, such actions could benefit not only Nike, but initiate a ripple effect on the entire industry urging competitors to roll out similar schemes.

  4. Not surprising for Nike! The company has gone through great lengths to move into a more sustainable business model. I believe in part because of the social pressure and in part because its competitors are also moving in that direction. Sadly more than actual concrete steps towards a more sustainable model, I believe the perception of moving in that direction is what consumers value.

  5. I wonder how Nike’s competitors – Adidas, Puma, Under Armour, Skechers — are doing on this front. Is sustainability something that consumers of sports apparel demand today, or is Nike taking on these initiatives irrespective of consumer demand?

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