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Is Nike a Sustainable Business?

8 August 2023 | 6 Min Read

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    Nike is one of the world's biggest sportswear brands. It has a longstanding commitment to sustainability, from colordry running vests to recycled polyester World Cup kits.
    Recently, American brand Unilever unveiled their 2021 Impact Report and Sustainability Microsite to showcase their future plans and initiatives. This year they are replacing materials in high-volume products with low-carbon alternatives, working with independent factories to find more energy-efficient sources, as well as decreasing packaging and shipping emissions.

    Business practices

    Nike aims to do good for the world, whether through corporate responsibility, green business practices, or sustainability initiatives. The company strives to minimize their negative impact on the environment and ensure their supply chains and factories adhere to their sustainability policies.

    The company's sustainability strategy is founded in innovation and collaboration, while taking into account transparency and accountability during decision-making processes and partnerships. To make its products and services more eco-friendly, the Company also forms coalitions to advocate for environmental policy changes.

    Nike's sustainability strategies center around its commitment to zero-waste. The company aims to eliminate single-use plastics and transition towards a circular economy, as well as making an intentional effort to use recycled materials in their shoes and apparel designs.
    One aspect that makes Nike a sustainable business is its employees. According to the company, 74% are motivated by the company mission, vision and values. Furthermore, research has indicated that employees who are committed to this cause tend to stay with the organization longer.

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    It is increasingly essential for businesses to be conscious of their environmental impact and how it influences their operations. This is especially relevant in an age when governments are introducing regulations that demand companies conserve resources and reduce their carbon footprint.

    Beyond this, a commitment to sustainability will enhance your public image and help attract future hires. Studies show that millennials and Generation Z value companies that care about the environment.

    Implementing sustainable business practices doesn't need to be a complex endeavor. It could just involve replacing old light bulbs with more energy-saving bulbs or installing motion sensors in your office to minimize lighting usage.
    Furthermore, informing your employees about how their actions impact the environment is an excellent way to foster a culture of sustainability and motivate them to take responsibility. You can do this by offering webinars or training programs for team members - not only will these provide them with the knowledge needed to take initiative but it will also foster shared purpose and commitment towards your organization's goals.

    Environmental impact

    Nike is a leader in the sportswear industry and widely recognized for its superior products of high quality and performance. Additionally, the company strives to be environmentally friendly by using sustainable materials, conserving energy usage and reducing their global factory count.

    The company strives to improve working conditions in the shoe factories they partner with, adhering to Nike's code of conduct for labor standards and other human rights violations. They even introduced a program called "Jobs + Education," which provides factory workers educational opportunities such as middle and high school equivalency courses during non-working hours.

    Nike has made significant strides toward sustainability, yet still has a long way to go. While its efforts at offset its carbon footprint with green initiatives like solar panels and wind turbines have been successful, these aren't nearly enough to offset all of the emissions generated from its supply chain.

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    Nike's factories are mostly situated in third-world countries, where there are few laws protecting workers' rights. This puts a heavy strain on the environment as Nike contributes to greenhouse gas emissions caused by these factories it contracts with.
    Nike has set an ambitious goal to reduce its carbon footprint. By 2025, they intend to cut emissions from their own facilities and core suppliers by 65%, as well as use renewable energy in all of their factories worldwide.

    The company intends to replace petrochemical-based adhesives used in footwear production with safer water-based versions. Furthermore, it wants to increase the use of recycled plastics across its product range, which it claims will reduce carbon output from materials by 75%.

    Nike's environmental objectives include using 100 percent renewable energy by 2025 and restructuring their manufacturing processes and fabric production. This will reduce energy consumption, waste production, packaging and shipping emissions.

    ESG score

    The ESG (Environmental, Social and Governance) score is an essential tool for investors to assess a company's sustainability. It measures how well a business manages its environmental, social and governance risks and can be used as an indicator against other companies in its industry.

    Rating agencies use ESG metrics to assess a company's sustainability practices and create an assessment that compares it with the industry as a whole. They draw data from various sources such as government databases, research studies and media reports.
    Nike boasts an overall ESG score of 16.0, making it one of the most sustainable companies in its sector. For its efforts, it has received numerous recognitions such as inclusion on CR Magazine's 100 Best Corporate Citizens list, JUST Capital JUST 100 ranking and Dow Jones Sustainability Index membership.

    A high ESG score can entice investors to invest in a company, especially if it aligns with their values. Furthermore, it protects the firm from future risks caused by environmental degradation or poor governance.

    Another important factor contributing to an ESG score is a company's reputation. The score takes into account a company's track record with disputes and whether management has acted responsibly. Furthermore, it assesses a firm's environmental impact and how much it contributes to climate change.

    Though Nike's environmental impacts are negative, the company remains committed to being a green business and striving to reduce its carbon footprint. In fact, Nike has committed to reducing emissions by 50% within five years.

    Nike is actively working to increase the diversity of their workforce. They have released ESG metrics demonstrating parity in both total employee numbers and management representation for men and women.

    Nike has also been actively working to achieve gender balance on its board and senior executive teams. At present, six of the 14-member board are from underrepresented groups; its aim is for a majority of females on these boards within two years. Nike's commitment to diversity serves as an encouraging signal for ESG investors.

    Sustainability initiatives

    Nike has long been dedicated to environmental responsibility. To this end, it has made several significant changes in their business practices, such as switching petroleum-based glues for water-based ones; sourcing more sustainable rubber for its soles; and using fewer chemicals during production.

    However, the company still needs to improve upon its materials usage, particularly when it comes to leather, wool and down feathers. Not only are these substances cruel and unethical but also damaging to the environment.

    The company has also pledged to use more recycled materials in its products. For instance, it now incorporates more polyester made from plastic bottles than ever before, leading to an approximate 30% reduction of carbon emissions.

    Additionally, the company was able to conserve millions of pounds of water during its manufacturing process. For instance, it reduced water usage in footwear production by 45% in 2015.

    Nike also plans to reduce its packaging waste through these initiatives, such as eliminating plastic bags from operations by 2021.

    The brand also intends to transition away from shoe boxes and other packaging that cannot be recycled, eliminating paper return slips and single-use plastics from its global campuses.

    Another key objective is to reduce the amount of energy it uses in its facilities and those of third parties. To accomplish this objective, it will utilize 100% renewable electricity and fleet electrification.

    By 2020, Nike plans to reduce their greenhouse gas (GHG) emissions from owned-and-operated facilities by 70%. To do this, they will utilize 100% renewable electricity, fleet electrification, and energy efficiency measures.

    Finally, the company strives to double its recycling rate of finished product waste by 2025 and use clean chemistry alternatives for ten priority chemistries across its supply chain.
    In addition to these initiatives, the company is emphasizing education and empowerment of its employees. For instance, it recently started training factory workers in Lean and Human Resource Management principles to enable them better manage their operations - an essential step for achieving sustainability targets.

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