Nike banks on sustainability for profit

Probably one of the most surprising findings in Nike’s recently published 2013 Sustainable Business Performance Summary is that the company is not achieving revenue growth and profits despite sustainability but because of it. Corporate social responsibility and sustainability have become

important areas for most global players but while many tag them on to the agenda as a somewhat cumbersome task, few fully realize the potential that sustainability means.

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The natural assumption is that as revenue goes up so does a company’s greenhouse gas emissions as more sales translate to increased product manufacturing and freight activity. However, through a variety of initiatives we have been able to change the results of that equation, reducing absolute greenhouse gas emissions by close to 3 percent while simultaneously increasing revenues by 26 percent over the time period covered by this report. This motivates us to push even harder for sustainable innovation across the business,” said Nike CEO Mark Parker.

More revenue equals more responsibility

Nike has identified three areas as the most promising, one being sustainability and business growth complementing each other, the second choosing materials that reduce the environmental impact of the company’s products and the third a focus on climate change.

Within these three domains, Nike has identified six core sustainability areas that it wants to improve, namely water and energy consumption, workers’ empowerment, toxins and waste management and community support. In concrete terms, this means that the company aims to improve water efficiency by 15 percent per unit in apparel materials dyeing and finishing and in footwear manufacturing, achieve a 20 percent reduction in CO2 emissions as well as a 10 percent reduction in waste, source from factories that demonstrate a commitment to their workers and develop and test new models of manufacturing that improve worker compensation, skills and livelihood – all through fiscal year 2015. In addition, the company aims to achieve zero discharge of hazardous chemicals for all products across the supply chain by 2020. In terms of community support, Nike plans to invest a minimum of 1.5 percent of pre-tax income in communities annually.

The

sportswear company is also relying on new technologies like the ColorDry waterless dyeing process and Nike Flyknit, which creates 80 percent less waste compared to traditional production processes.

Overall, Nike currently sources from 452 apparel factories, 166 factories making footwear and 167 equipment factories to make more than 500,000 different products in more than 40 countries across the globe.

As one of the world’s leading athletic footwear, apparel and equipment companies, in fiscal year 2013, Nike employed approximately 48,000 people in more than 750 retail stores, 110 sales offices and showrooms and around 90 administrative offices worldwide. Revenue increased by 25.9 percent from 20.1 billion US dollars in fiscal year 2011 to 25.3 billion US dollars in fiscal year 2013. For 2015 and 2017, Nike projects annual revenue of 30 billion and 36 billion US dollars, respectively. The company expects particularly strong growth in the following categories: running, basketball, football, men’s and women’s training, sportswear and direct to consumer sales.

Photos: Nike