{"id":9384,"date":"2016-11-03T21:17:48","date_gmt":"2016-11-04T01:17:48","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/nike-swooshing-to-tackle-climate-change\/"},"modified":"2016-11-03T21:17:48","modified_gmt":"2016-11-04T01:17:48","slug":"nike-swooshing-to-tackle-climate-change","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/nike-swooshing-to-tackle-climate-change\/","title":{"rendered":"Nike: Swooshing to Tackle Climate Change"},"content":{"rendered":"

\u201cA shoe can\u2019t change the world, but an ethos can\u201d <\/em>1<\/sup><\/p>\n

 <\/p>\n

Nike is the world\u2019s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. In 2015, Nike shipped more than 1 billion units of shoes, apparel and equipment, generating $30.6 billion in revenues in the period. It has ambitions plans to become a $50 billion business by the end of 2020.2<\/sup><\/p>\n

 <\/p>\n

Greenhouse Gas Emissions<\/strong><\/p>\n

We don\u2019t often intuitively rank the environmental impact of clothing and footwear industry up there with coal-fired power plants, cement manufacturing and automobiles. Let\u2019s break down the global warming potential (GWP) of a cotton T-shirt to illustrate a point. To understand the GWP of a cotton T-shirt, we estimate and express the greenhouse gas (GHG) emissions of all climate change relevant gases in CO2<\/sub> equivalents (CO2<\/sub>-eq).3<\/sup> A recent study revealed that for each cotton T-shirt produced, an estimated 2.1kg of CO2<\/sub>-eq of GHG is emitted.4<\/sup> This burden is equivalent to driving a passenger car for slightly more than 5 miles.<\/p>\n

\"\"<\/a><\/p>\n

In 2013, about 10 billion kg of cotton was used in making apparel globally. At this scale, the estimated impact within the apparel industry is 107.5 million tons of CO2-eq.5<\/sup> This is equivalent in impact to more than 250 billion miles driven by the average car, or 1,300 round trips to the sun!<\/p>\n

\"screen-shot-2016-10-31-at-11-27-31-pm\"<\/a><\/p>\n

Impact of Climate Change on Nike<\/strong><\/p>\n

Nike has manufacturing operations in 49 countries, many in Southeast Asia. Back in 2008, severe flooding in Thailand forced Nike to shut down four of its factories in the country.6<\/sup> At the same time, Nike remains concerned about rising droughts in regions that produce cottons. Dry spells, higher concentration of CO2<\/sub> and an increase in temperatures have negative impact on cotton yield as a result of increased shedding of cotton flower buds, increased growth of weeds, and irrigation problems.7<\/sup> The threat of reduced harvests translates to both cotton unavailability and higher cotton prices for Nike.<\/p>\n

In its 10-K form filed with the Securities and Exchange Commission, Nike acknowledges the risks of climate change to its financial performance.8<\/sup><\/p>\n

 <\/p>\n

Minimizing Environmental Footprint<\/strong><\/p>\n

What started as a response to issues with supply chain, such as the disruption it faced in 2008, has evolved into a core growth strategy for Nike. Through a combination of leadership, organizational design, market strength, market positioning and culture, Nike has positioned itself today as a leader in sustainability.9<\/sup> Although Nike covers a myriad of strategies to reduce its environmental impact, two areas that are of particular interest are:<\/p>\n

(1) product design and materials, and<\/p>\n

(2) carbon and energy.<\/p>\n

 <\/p>\n

Product Design and Materials<\/em><\/p>\n

In 2002, Nike started calculating its environmental footprint. Over time, this calculation has revealed that the most significant carbon emission impacts stem from the raw materials used in its products and the processing of those materials into textiles. Consequently, Nike had adopted a holistic approach to integrate greater innovation and sustainability into its product design and materials selection process. Among the breakthroughs that Nike achieved include the Considered Design boot developed with vegetable-based dyes and recycled rubber, and the Legend Pant that uses recycled polyester. Technology such as the Nike Flyknit, which enables designers to reduce waste by about 60% compared to traditional cut and sew footwear is also in the process of being scaled to high volume product lines.10<\/sup> In 2015, Nike began collaborating with MIT on a Materials Challenge that attempts to discover revolutionary new ideas on innovative and low-impact fabrics and textiles.11<\/sup><\/p>\n

 <\/p>\n

Carbon and Energy<\/em><\/p>\n

Given that product manufacturing creates a significant impact to the environment, Nike utilizes renewable energy generation, including solar panels and wind turbines at its European Logistics Campus in Laakdal, Belgium, and solar panels at its logistics center in Taicang, China. Nike also works with contract factories to continuously reduce energy use and emissions. For instance, in 2015, about 20 of its contract factories used 500,000 MWh of renewable energy and are continuing to scale. Nike continues to have ambitious plans to use 100% renewable energy in its owned or operated facilities by 2025.12<\/sup><\/p>\n

 <\/p>\n

No Finish Line for Sustainability<\/strong><\/p>\n

Nike realizes the need to continuously innovate to deliver more sustainable solutions. One challenge I see for Nike is the acceptance by the general public of the product it makes from recycled materials. Consumers may view these products as lower performance or quality goods. A significant mindset shift is required among consumers and Nike can play a bigger role in marketing performance, aesthetics and sustainability in a complete package.<\/p>\n

 <\/p>\n

(755 words)<\/p>\n

 <\/p>\n

References:<\/strong><\/p>\n

    \n
  1. Nike, Considered Design video [https:\/\/www.youtube.com\/watch?v=1WuyE_x8Vs8].<\/li>\n
  2. Nike, Sustainable Business Report FY14\/15.<\/li>\n
  3. Randolph Kirchain, Elsa Olivetti, T Reed Miller and Suzanne Greene, \u201cSustainable Apparel Materials\u201d, October 7, 2015.<\/li>\n
  4. Ibid.<\/li>\n
  5. Ibid.<\/li>\n
  6. Petra Molthan-Hill, \u201cThe Business Student\u2019s Guide to Sustainable Management\u201d, 2014, p. 278<\/li>\n
  7. \u201cCotton and Climate Change: Impacts and Options to Mitigate and Adapt\u201d, International Trade Center 2011<\/li>\n
  8. Nike, Form 10-K (filed July 23, 2015)<\/li>\n
  9. Marc J. Epstein, Adriana Rejc Buhovac, Kristi Yuthas, \u201cWhy Nike Kicks Butt in Sustainability\u201d, Organizational Dynamics Journal, Vol. 39, Issue 4, Oct-Dec 2010.<\/li>\n
  10. Nike, Sustainable Business Report FY14\/15.<\/li>\n
  11. Joel Makower, \u201cWhy Nike and MIT see textiles as material to climate change\u201d<\/li>\n
  12. Nike, Sustainable Business Report FY14\/15.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

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