{"id":10131,"date":"2016-11-03T23:53:36","date_gmt":"2016-11-04T03:53:36","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/running-to-discover-sustainable-solutions-how-nike-is-fighting-to-win-the-climate-change-game\/"},"modified":"2016-11-03T23:53:36","modified_gmt":"2016-11-04T03:53:36","slug":"running-to-discover-sustainable-solutions-how-nike-is-fighting-to-win-the-climate-change-game","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/running-to-discover-sustainable-solutions-how-nike-is-fighting-to-win-the-climate-change-game\/","title":{"rendered":"Running to Discover Sustainable Solutions: How Nike is Fighting to Win the Climate Change Game"},"content":{"rendered":"<p><em>In 1998 Chairman and CEO of Nike, Phil Knight, said, \u201cThe Nike product has become synonymous with slave wages, forced overtime and arbitrary abuse [1].\u201d\u00a0 Today Nike is recognized as a leader of sustainability in the retail industry, signing the White House pledge against climate change, and even experiencing ratings upgrades from Wall Street analysts based on their sustainability performance [2] [3].\u00a0 While their reputation has clearly made a U-turn, the question remains: can Nike take their game to the next level?<\/em><\/p>\n<p><strong>The League: Retail\u2019s Role in Climate Change<\/strong><\/p>\n<p>The retail industry is at a unique intersection of opportunity and threat from climate change. Some threats are immediately apparent: adverse weather events caused by climate change may result in store or factory closures translating to immediate sales loss. \u00a0Nike experienced this in 2008 when flooding in Thailand caused temporary closure of four factories, while companies such as IKEA, impacted by Hurricane Sandy in 2012, lost $9M from store closures [4] [5]. Less apparent threats include the upstream impact of availability of raw materials as well as regulations impacting operational practices including energy efficiency, water use, and the disposal of waste [6] [7]. While risky to retailers\u2019 business models, these threats also translate into opportunities to differentiate and develop reputational advantage.<\/p>\n<p><strong>The Game Plan: Nike Sustainability Initiatives<\/strong><\/p>\n<p>Since the late 1990s Nike has worked to embed environmental and labor related metrics into the structure of the organization; Chief Sustainability Officer, Hannah Jones, describes this journey, \u201c[sustainability] moved from being a risk and reputation function to being a business lever function to being an innovation function [8].\u201d Today the company looks at impact across its entire value chain on an ongoing basis. Figure 1 below from Nike\u2019s 2014\/2015 Sustainable Business Report depicts the proportional environmental impact of each step in Nike\u2019s value chain.<\/p>\n<p>Figure 1 [9]<\/p>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Nike-Figure-1.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-10035\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Nike-Figure-1.png\" alt=\"nike-figure-1\" width=\"1010\" height=\"675\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Nike-Figure-1.png 1010w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Nike-Figure-1-300x200.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Nike-Figure-1-768x513.png 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Nike-Figure-1-600x401.png 600w\" sizes=\"auto, (max-width: 1010px) 100vw, 1010px\" \/><\/a><\/p>\n<p>This figure highlights where in the value chain Nike has decided to focus its climate change efforts:<\/p>\n<ul>\n<li><strong>Raw Materials:<\/strong> CSO Hannah Jones spearheaded efforts to leverage design as one of Nike\u2019s primary tools to combat climate change. One industry observer noted, \u201crather than monitor the use of facial masks by overseas workers handling toxic chemicals, Nike is teaching itself to design shoes that don\u2019t use them [10].\u201d Beginning with switching the gas in the sole of the Nike Air shoe from FS6, a greenhouse gas, to nitrogen, Nike has engaged on a path of sustainable innovation [11]. More recent achievements include using 19% BCI-certified (industry accredited standard setting body) cotton and making 39% of polyester garments from recycled materials [12].<\/li>\n<\/ul>\n<ul>\n<li><strong>Materials Manufacturing:<\/strong> With well over 500 vendors, Nike\u2019s challenge in manufacturing is often one of control. To incentivize vendors to partner with Nike in reducing energy use, emissions, waste, and water use, they have designed Nike-specific programs and partnered with manufacturers to develop new technologies. One example of this innovative approach is Nike\u2019s partnership with a startup to use supercritical carbon dioxide instead of water to dye textiles \u2013 saving some of the three billion gallons of water a year it previously used for this process [13]. More recent achievements include 20% reduction in CO<sub>2E<\/sub> emissions per unit from contract footwear manufacturers and 43% per unit water use reduction in footwear manufacturing [14].<\/li>\n<\/ul>\n<p><strong>The After-Action Review: Next Steps for Nike<\/strong><\/p>\n<p>Despite Nike\u2019s sustainable efforts, some critics, such as the environmental activist NGO, Greenpeace, claim that Nike is still underperforming compared to peer organizations [15]. I believe there are several key areas of improvement Nike can focus on in the future:<\/p>\n<ul>\n<li><strong>Consumer:<\/strong> Figure 1 demonstrates that consumer use represents the second highest percentage of environmental impact in Nike\u2019s value chain. While Nike cannot control consumer use, it can work to better educate consumers. For example, H&amp;M has helped customers recycle 25,000 tons of their unwanted clothes since launching its Garment Collecting initiative in 2013 [16].<\/li>\n<\/ul>\n<ul>\n<li><strong>Transportation: <\/strong>Logistics also contributes a substantial percentage to Nike\u2019s environmental impact. While there are again issues of supply chain control, Nike could take a more active role in minimizing transportation impact as it ships, drives, and flies its goods all over the world. Companies such as PepsiCo have deployed all-electric delivery trucks, which emit 75% less greenhouse gases than diesel [17].<\/li>\n<\/ul>\n<ul>\n<li><strong>Metrics:<\/strong> As Greenpeace calls out Nike\u2019s metrics could benefit from additional specificity and transparency. Many of their sustainability goals use terms such as \u201cmore sustainable\u201d or \u201cVendors Active in Nike Water Program.\u201d Nike should explore using more external accrediting agencies and quantitative metrics going forward.<\/li>\n<\/ul>\n<p>As one of the most globally influential brands, Nike has a responsibility to the globe to keep the ball rolling on the critically important topic of climate change.<\/p>\n<p>(772 Words)<\/p>\n<p><strong>Sources:<\/strong><\/p>\n<p>[1] Kate Abnett, \u201cJust Fix It: How Nike Learned to Embrace Sustainability,\u201d Business of Fashion, November 1, 2016, <a href=\"https:\/\/www.businessoffashion.com\/articles\/people\/just-fix-it-hannah-jones-nike\">https:\/\/www.businessoffashion.com\/articles\/people\/just-fix-it-hannah-jones-nike<\/a>, accessed November 2016.<\/p>\n<p>[2] Demetri Sevastopulo and Barney Jopson, \u201cGlobal companies sign White House pledge on climate change action,\u201d Financial Times, October 19, 2015, <a href=\"https:\/\/www.ft.com\/content\/ed2c2682-763a-11e5-933d-efcdc3c11c89\">https:\/\/www.ft.com\/content\/ed2c2682-763a-11e5-933d-efcdc3c11c89<\/a>, accessed November 2016.<\/p>\n<p>[3] Andrew Winston, \u201cLuxury Brands Can No Longer Ignore Sustainability,\u201d 性视界 Business Review, February 8, 2016, <a href=\"https:\/\/hbr.org\/2016\/02\/luxury-brands-can-no-longer-ignore-sustainability\">https:\/\/hbr.org\/2016\/02\/luxury-brands-can-no-longer-ignore-sustainability<\/a>, accessed November 2016.<\/p>\n<p>[4] Coral Davenport, \u201cIndustry Awakens to Threat of Climate Change,\u201d New York Times, January 23, 2014, <a href=\"http:\/\/www.nytimes.com\/2014\/01\/24\/science\/earth\/threat-to-bottom-line-spurs-action-on-climate.html?_r=3\">http:\/\/www.nytimes.com\/2014\/01\/24\/science\/earth\/threat-to-bottom-line-spurs-action-on-climate.html?_r=3<\/a>, accessed November 2016.<\/p>\n<p>[5] Ikea, \u201cIkea Group position on climate and energy,\u201d <a href=\"http:\/\/www.ikea.com\/ms\/en_US\/pdf\/reports-downloads\/IKEA_Group_position_on_climate_and_energy.pdf\">http:\/\/www.ikea.com\/ms\/en_US\/pdf\/reports-downloads\/IKEA_Group_position_on_climate_and_energy.pdf<\/a>, accessed November 2016.<\/p>\n<p>[6] PWC, \u201cBuilding value by addressing the impact of climate change,\u201d Retail &amp; Consumer Insights: Megatrends in the Retail and Consumer Products Industry, June 2015, <a href=\"https:\/\/www.pwc.com\/us\/en\/retail-consumer\/publications\/assets\/rc-insights-climate-change.pdf\">https:\/\/www.pwc.com\/us\/en\/retail-consumer\/publications\/assets\/rc-insights-climate-change.pdf<\/a>, accessed November 2016.<\/p>\n<p>[7] Rebecca Henderson, Richard M. Locke, Christopher Lyddy, Cate Reavis, \u201cNike Considered: Getting Traction on Sustainability,\u201d MIT No. 08-077 (Boston: MIT Sloan Management, 2009), <a href=\"https:\/\/mitsloan.mit.edu\/LearningEdge\/CaseDocs\/08.077.Nike%20Considered.Getting%20Traction%20on%20Sustainability.Locke.Henderson.pdf\">https:\/\/mitsloan.mit.edu\/LearningEdge\/CaseDocs\/08.077.Nike%20Considered.Getting%20Traction%20on%20Sustainability.Locke.Henderson.pdf<\/a>, accessed November 2016.<\/p>\n<p>[8] Abnett, \u201cJust Fix It: How Nike Learned to Embrace Sustainability,\u201d Business of Fashion<\/p>\n<p>[9] Nike, FY14\/15 Sustainable Business Report, p. 23, <a href=\"http:\/\/news.nike.com\/news\/sustainable-innovation\">http:\/\/news.nike.com\/news\/sustainable-innovation<\/a>, accessed November 2016.<\/p>\n<p>[10] Henderson, Locke, Lyddy, Reavis, \u201cNike Considered: Getting Traction on Sustainability,\u201d MIT<\/p>\n<p>[11] Abnett, \u201cJust Fix It: How Nike Learned to Embrace Sustainability,\u201d Business of Fashion<\/p>\n<p>[12] Nike, FY14\/15 Sustainable Business Report, p. 28<\/p>\n<p>[13] Elizabeth Woyke, \u201cWhat does a Chief Sustainability Officer do?,\u201d MIT Technology Review, Vol. 119, No. 4, p. 101-102<\/p>\n<p>[14] Nike, FY14\/15 Sustainable Business Report, p. 36, 44<\/p>\n<p>[15] Greenpeace, \u201cThe Detox Catwalk 2016: Who\u2019s on the path to toxic free fashion?,\u201d <a href=\"http:\/\/www.greenpeace.org\/international\/en\/campaigns\/detox\/fashion\/detox-catwalk\/\">http:\/\/www.greenpeace.org\/international\/en\/campaigns\/detox\/fashion\/detox-catwalk\/<\/a>, accessed November 2016.<\/p>\n<p>[16] H&amp;M, \u201cThis is World Recycle Week,\u201d April 2016, <a href=\"http:\/\/www.hm.com\/us\/magazine\/culture\/h-m-inside\/2016\/04\/this-is-world-recycle-week\">http:\/\/www.hm.com\/us\/magazine\/culture\/h-m-inside\/2016\/04\/this-is-world-recycle-week<\/a>, accessed November 2016.<\/p>\n<p>[17] PWC, \u201cBuilding value by addressing the impact of climate change\u201d<\/p>\n<p><strong>Images:<\/strong><\/p>\n<p>Image 1: Close the Loop, \u201cNike,\u201d <a href=\"http:\/\/close-the-loop.be\/en\/case\/33\/nike\">http:\/\/close-the-loop.be\/en\/case\/33\/nike<\/a>, accessed November 2016.<\/p>\n<p>Image 2: Nike 2014\/2015 Sustainable Business Report, p.23<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>How can a company shift from the brink of reputational ruin to the forefront of sustainability? This post presents Nike&#039;s climate change journey over the past two decades and explores where it must go next. <\/p>\n","protected":false},"author":2468,"featured_media":10132,"comment_status":"open","ping_status":"closed","template":"","categories":[1259,1218,16,14],"class_list":["post-10131","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-athletic-goods","category-climate-change","category-retail","category-sustainability"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/climate-change-challenge-2016\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Running to Discover Sustainable Solutions: How Nike is Fighting to Win the Climate Change Game - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/running-to-discover-sustainable-solutions-how-nike-is-fighting-to-win-the-climate-change-game\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Running to Discover Sustainable Solutions: How Nike is Fighting to Win the Climate Change Game - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"How can a company shift from the brink of reputational ruin to the forefront of sustainability? 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