Nike: A Poster Child for Climate Change?
Nike walks the talk when it comes to sustainability
What we wear directly impacts the climate. Making a single t-shirt results in carbon emissions equal to driving a car for 10 miles [1]. Instead of hiding the facts, Nike has embraced them. As arguably the world’s most influential producer of active apparel and footwear, Nike has placed climate change front and center. Having suffered the impacts of climate change, Nike has been proactive in both insulating its supply chain and reducing its own carbon footprint. But where is the line between altruism and competition? Should Nike inspire others to follow in its footsteps?
Climate change has hit Nike first-hand. Operating 666 factories in 43 countries [2], many in Southeast Asia, Nike has a supply chain that is sensitive to the effects of extreme weather. For instance, in 2008, Nike was forced to shut down 4 factories in Thailand due to flooding [5]. In addition, Nike is increasingly concerned about how global climate shifts will impact its raw materials. “Changing climate patterns could cause disruptions across our supply chain…Water scarcity and quality, byproducts of climate change, could substantially increase costs of textile manufacturing [3].” Cotton, the main input for Nike’s athletic wear, is susceptible to drought and temperature fluctuations. Cotton yields drop steeply when temperatures rise above 89.6 degrees [4]. Price changes are ultimately translated to the consumer: “[Climate change] puts less cotton on the market, the price goes up, and you have market volatility [5].”
Nike has taken direct measures to insulate its supply chain, including securing a global property protection program that reduces the monetary impacts of weather events on physical assets [3]. On top of insurance, Nike has re-located several Southeast Asian facilities outside of flood zones, incorporated synthetic fabrics for its athletic clothes to address cotton shortages, and moved to water-free dyeing to combat draught [6].
Most companies would have stopped at protecting themselves, but not Nike. Nike recognizes the long-term solution to climate change is to “walk the talk”. By focusing on reducing its own environmental harm, Nike has committed itself to the climate change cause. To honor its commitment, Nike has moved many factories to water and chemical-free dyeing known as “ColorDry”[7, Figure 1], stopped sourcing leather from the Amazon, and reduced hazardous chemical discharge from its supply chain. For instance, now 71% of Nike footwear is made from recycled manufacturing products (i.e. old shoes, rubber scraps, etc.), cutting carbon emissions in the process [8]. In addition, Nike has committed to using 100% renewable energy to power all facilities by 2025 [9].
Figure 1: http://news.nike.com/news/nike-colordry
Nike has also invested in climate change beyond its own company. Partnering with MIT on a crowd-sourcing platform called “Climate CoLab”, Nike encourages citizens to “work with experts and each other to create, analyze, and select detailed proposals for what to do about climate change [10].” By seeking submissions on how apparel companies can design, create, and adopt low-impact textiles, Nike hopes to leverage collective-thinking to influence the industry as a whole. In fact, Nike has created an app called Making that predicts the climate impact (chemistry, waste, and water) of raw materials, helping any designer select environmentally friendly inputs [9].
Nike has undoubtedly brought addressing climate change to the forefront, but Nike can further leverage its brand name, size, and scale to influence consumers and other corporations. Although Nike has already started educating contract factories on climate impact, helping them increase energy efficiency and decrease carbon emissions [9], Nike has the rare opportunity to transcend its immediate sphere of influence. Currently, Nike ads predominantly feature sports and functionality, with social responsibility playing a supporting role. If Nike can focus promotions more on climate efforts, especially during blockbuster events such as the World Cup, etc., the company can influence the global consumer to purchase sustainable products, prompting competitors to follow Nike’s example.
Furthermore, Nike is often the first-mover, but there is opportunity to engage the industry who is also suffering the impacts of climate change. Nike can pool resources with competitors to invest in technology or make donations to research facilities that tackle climate change. For instance, collaborating with other corporations to create an app akin to Making would bring increased awareness and user adoption. Finally, Nike can also encourage competitors to join the American Business Act on Climate Pledge [11]. Currently, several major athletic-wear companies are missing from the list, including Adidas and Reebok. Ultimately, given its leadership in the category, Nike should not only hold itself, but also its competitors to the highest standards.
In order for Nike to become the poster child for climate change and mobilize the industry, the end consumer must be ultimately be on board. Next time you buy a pair of sneakers or a t-shirt, will you join Nike’s cause?
Wordcount: 785 without citations
Citations:
[1] Joel Makower, “Why Nike and MIT see textiles as material to climate change,” GreenBiz, September 28, 2015, https://www.greenbiz.com/article/why-nike-and-mit-see-textiles-material-climate-change, accessed November 2016.
[2] Nike Inc., Nike Manufacturing Map,
http://manufacturingmap.nikeinc.com/, accessed November 2016.
[3] Nike response to 2011 Carbon Disclosure Project questionnaire, 5.1d
[4] Wolfram Schlenker and Michael Roberts, “Nonlinear temperature effects indicate severe damages to U.S. crop yields under climate change,” Proceedings of the National Academy of Sciences, July 1, 2009, http://www.pnas.org/content/106/37/15594.short, accessed November 2016.
[5] Coral Davenport, “Industry Awakens to Threat of Climate Change,” New York Times, January 23, 2014, http://www.nytimes.com/2014/01/24/science/earth/threat-to-bottom-line-spurs-action-on-climate.html, accessed November 2016.
[6] The Philadelphia Inquirer, “Coke and Nike know the truth”, February 3, 2014 (LexusNexus)
[7] Nike Inc., “Nike, Inc. Unveils Colordry Technology and High-Tech Facility to Eliminate Water and Chemicals In Dyeing”, December 2, 2013, http://news.nike.com/news/nike-colordry, accessed November 2016
[8] Nike Inc., FY14/15 Sustainable Business Report, http://www.businesswire.com/news/home/20160511005885/en/, accessed November 2016
[9] Nike Inc., “MIT Climate Colab And Nike Call for Materials Innovation to Combat Climate Change”, September 25, 2015, http://news.nike.com/news/nike-inc-and-mit-climate-colab-materials-innovation-to-combat-climate-change, accessed November 2016
[10] Climate CoLab, http://climatecolab.org/about
[11] The White House, “White House Announces Additional Commitments to The American Business Act on Climate Pledge”, December 1, 2015, https://www.whitehouse.gov/the-press-office/2015/12/01/white-house-announces-additional-commitments-american-business-act, accessed December 2016
As an athlete whose wardrobe is about 98% Nike and also personally invested in climate change, I am incredibly sensitive to the moves Nike is making on this front. This post is incredibly well-thought and lays out many arguments very articulately. To me, the most striking and resonant of those arguments – as a Nike consumer – is that Nike’s approach to mitigating and adapting to climate change is proactive, not reactive. It appears that Nike is taking the bull by the horns, recognizing the potentially severe impacts climate change could have on their comprehensive value chain, and in turn, their value proposition to the core customer. Many companies in this space, Reebok and Adidas included (as Lynn notes), have yet to commit fully to a climate change mitigation plan, which, to me, implies that these companies have also not yet admitted to themselves that this is tangible problem. Nike’s awareness of the public conscious around climate change and the commitment to creating a long-term business that is vulnerable to climate change shocks proves that the company is leaps and bounds ahead of the competition. I look forward to following Nike’s trajectory in the this space, especially how they exercise their strength as a leader in the fitness industry to influence competitive players.
Pushing Lynn’s conversation further, I wanted to ask others about their opinions here with Nike’s strategy moving forward. While we know that involving a community of consumers in collective thought around climate change can have positive public relations side effects – such as in the case of CoLab – how does a company truly measure the impact of collective thought programs on their ultimate climate change mitigation/adaptation goal?
While discussing the Nike Football case in Marketing and later, while reading Lynn’s post, I have been impressed with Nike’s willingness to deemphasize a near-term competitive edge and financial gain in favor of long-term sustainability goals. Market share leaders—in any industry—are better-positioned to respond to environmental changes, as they tend to be more advanced technologically, better capitalized, and more diversified, reducing the risk associated with new sustainability projects.
As such, I believe leaders also have an obligation to prioritize sustainability and raise the bar for their competitors. Clearly, this is a philosophy with which Nike management agrees, and I respect their effort to expend time, financial, and human resources to explore sustainability options on behalf of the industry.
Lynn discussed at length Nike’s efforts to engage the consumer in a dialogue about sustainability—which, presumably, would implicitly or explicitly communicate to consumers that Nike products are becoming more “sustainable.” This is an important conversation, but I think an equally important one addresses the potential negative perceptions associated with sustainable products. If a consumer knows that a Nike product is sustainable, will s/he worry that it is lower quality? Overpriced? As consumers, I think that we tend to assume socially responsible products incur some cost to the company that is passed along to the end customer. I would be curious to explore how Nike thinks about that messaging trade-off when marketing these sustainable clothes.
I think that Lynn’s post is very well thought out and interesting to read. One of the most fascinating aspects of Nike’s strategy that Lynn raises in her post is how Nike is using climate change to drive innovation in the industry. Through new technological innovations such as “ColorDry” and its partnership with MIT on “Climate CoLab,” Nike has been able to reduce costs in the company while being socially responsible. One of the things that amazes me most about Nike’s story is how the company went from being one of the most hated brands in the 1990s – facing boycotts and public anger amid allegations of child labor and sweatshops – to becoming one of the most socially responsible corporations in the 21st century and a leader when it comes to innovating around climate change. Nike is proof that companies can be socially responsible and profitable.
Another aspect about Nike that I find fascinating is how dedicated the Company is to being eco-friendly in its facilities. Nike’s campus is about a 15 minute walk away from my parent’s house in Oregon, and they are currently undergoing a massive renovation to add 3.2 million sq. ft. to their campus [1]. Nike is aiming for LEED Platinum Certification – the highest level of certification – which is very much in line with their focus on sustainability [1].
Elizabeth also makes an interesting point in her comment above about whether or not consumers will think that Nike products are lower quality or overpriced if we know that it is also sustainable. I would argue that Nike has overcome this challenge already by making being eco- friendly and sustainable synonymous with being innovative. A good example of this is Flyknit, a shoe technology Nike introduced during the London Olympics that was designed to be more environmentally and cost friendly, but which was high performing and enormously innovative.
[1] “Nike, Inc. Reveals Design for World Headquarters Expansion,” Nike, Inc. press release (Beaverton, OR, April 1, 2016).
Lynn, I loved seeing you push Nike to move beyond what is expected of them and to challenge them to be change agents across the retail industry. As you noted, Nike is doing a lot of things right but as you alluded to, not all of these actions were purely altruistic in motive. For many years, Nike received a tremendous amount of bad press for their unsafe working conditions in their factories in Asia [1]. I’m not saying these sustainability initiatives didn’t come from a good place; however, we can’t separate the fact that Nike had a serious brand image problem that needed fixing and a commitment to combating climate change was definitely a step in the right direction. Regardless, as you pointed out, Nike is now in a prominent position to demand serious change across the industry. I would love to see them push this in their advertising and marketing spend even more as you also suggested.
[1] http://www.nytimes.com/1997/11/08/business/nike-shoe-plant-in-vietnam-is-called-unsafe-for-workers.html
Lynn, I thought you did a great job highlighting the positive efforts Nike has made over the years in minimizing their impact on the environment. I fully agree with you when you discussed the fact that Nike has a large sphere of influence and they have an opportunity to educate their consumers on the climate change, and how they can also encourage their competitors to do more as well. I find it interesting that Nike is implementing all of these sustainability programs while simultaneously continuing to create a massive amount of products for their consumers. It must be hard to balance priorities, particularly as a publicly traded company that wants to be profitable for its shareholders. Nike could make drastic improvements in the reduction of the most hazardous materials used in certain products while focusing on products that use more sustainable resources, but this would clearly negatively impact their bottom line. Sometimes I wonder how genuine large corporations are to their sustainability efforts, or if they see it more as a cost of doing business from a PR perspective. I don’t think Nike has this pessimistic of a view point, but it will be interesting to see how they continue to work towards meeting their goals. Thanks for the great post!
Interesting write up Lynn – mostly because I also love NIKE and did my post on them as well 🙂
It’s fascinating to see their efforts to reduce carbon footprint. One of the biggest things NIKE can do is enter into the recycling business by offering incentives to buyers to return the Nike apparels back to Nike. With Nike’s brand positioning, such actions could benefit not only Nike, but initiate a ripple effect on the entire industry urging competitors to roll out similar schemes.
-Jose
Lynn – awesome topic and great article. Nike’s sustainability efforts are fascinating for a number of reasons. The most fascinating aspect of their efforts as a market leader and premier brand is to see how have continued to leverage their brand to create new norms in their market. I know from out case on Nike earlier this year that they have on a number of occasions attempted (unsuccessfully) to incorporate their sustainability efforts into their core product offering. It seems that they have made some progress along these lines and have began to successfully began to integrate these efforts. The success that Nike is able to achieve in this regard is increasingly important to the broader market and to overall sustainability efforts given their position and scale. Nike can be a market leader and a trend setter in this regard and help push the market forward.