NIKES SUSTAINABILITY
CHALLENGES AND
ORGANISATIONAL STRATEGY
Joe Priestley
Responsible Enterprise: Assignment 2
Contents
Word count 2,499
1.0 Introduction
1.1 Structure
1.2 About Nike
2.0 Contextual information
2.1 Key sustainability challenges
2.2 Nikes sustainability strategy
2.3 Impact on the Environment
3.0 The organisations approach and main competitor
Adidas
3.1 Sustainable supply chain management
3.2 Sustainable products and managing waste
4.0 Conclusion
1.0 INTRODUCTION
1.1 This assignment aims to develop a thorough insight of identifying key
sustainability issues that surround the chosen organisation (Nike) siding with the
strategies they have put in place to tackle arising sustainable demands. Whilst
benchmarking against Kashmanians (2010) model, this will provide an extension
of understanding and Nike will be analysed against one of its main competitors
(Adidas) and further scrutinized with valid academic theories and models. In
addition, its approaches towards sustainable products and ethical issues, finally
arriving at a conclusion of how responsible Nike is and how comprehensive the
firms report of sustainability is.
1.2 Nike is an American multi-national corporation founded in January 1964 by
Bill Bowerman and Phil Knight. The business is engaged with the design,
development, manufacturing and worldwide marketing of sports apparel,
equipment and accessories with the aid of around 62,600 employees generating
total assets worth $21.600 billion (about.nike.com). The companies name is
taken from the Greek Goddess of victory and the largest market it is currently
existing in is North America and on the rise of 13% (BBC News 2015) still
attaining shares of up to 2.3% in Wall Street, New York. As a result of these
forever growing statistics, Nike is one of the many main images that dwell upon
sustainability in regards to the secure networks of their futures.
2.0
CONTEXTUAL INFORMATION
Figure 1: www.nikeresponsibility.com/csr
2.1
NIKES KEY SUSTAINABILITY CHALLENGES
Referencing from Nikes official website, it
is
clearly stated under the main
headings of sustainability theyre
key goals of increasing their
productivity, but at the same time
reducing the energy used through
natural resources in order to preserve
the minimised reserves of fossil fuels left of the environment. Initially influenced
from deriving strategies used by Nike, they alternatively
created objectives from reducing 17% in footwear waste,
30%
in packaging waste meaning 95% reduction in toxins, finally
resulting in reducing greenhouse gases
by
23%. (about.Nike.com).
Due to branding concerns of imagery through unethical
practices of child labour and illegal waste dumping, the
business recreates their slogan of sustainability
as innovation has never been more
important than it is today. Its not just
about improving the products we
make. Its about how we invent
better ones, work with other
companies and
organizations to develop markets
that value and encourage the creation of new sustainable processes and
products, and improve lives by leveraging sustainability as the worlds greatest
innovation opportunity.
Figure 2: www.nikeresponsibility.com/csr
Nikes total assessed energy and TCO2 emissions found in their report provides
resourceful and truthful responses to stakeholders questions. Looking at the
graph, its stated that emissions were decreasing third time round but on the
final a surge of increase in energy used as a cost of their productions rising. From
one of these factors, this supports Nikes movement in sustainability of reducing
or meeting targets as shown above in figure 1 and as they have described, the
world faces unprecedented change. This would include:
Population growth
Heightened connectivity
Increased demand
Constrained resources
Understanding these factors of innovation through sustainability is vitally
fundamental into achieving their vision of growth that is not depending on
restrained resources.
Figure 3: Nikes sustainability report
2.2
NIKES SUSTAINABLE STRATEGY
Nikes sustainability challenge is mostly described as making today better while
designing the future and the way of doing so is to reduce the levels of waste and
consumption whilst improving their products. Going into depth of these terms,
the business has created a program called lean manufacturing where they are
improving the working conditions of contract factory workers, increasing
productivity, and reducing the environmental footprint of manufacturing,
eventually bringing these threads together through implementation of the
program (Nikes CSR Report).
Kashmanian (2010)
describes how many
businesses recognise the
benefits of sustainability
strategy, although still have
not incorporated it into their
operations. He also explains
how these projects may not
be part of an overall
strategy and are sometimes
projects championed
informally by individuals
within the company or at its
facility. He exclaims how
sustainability is also made
up of 3 factors shown in the
diagram on the right here of
what should be managed in
reference to being a
successful, sustainable
business.
Set a strategic direction
that integrates sustainability
Improve
Operational
performance
Improve
Value chain
performance
Relate to internal and external
stakeholders
Although, Ebner (2010)
argues that the ethical
concept of sustainable
development is associated
with the war against poverty and protecting at a macro-level, the environment.
Moreover, when incorporated with the firm, sustainable development is called
corporate sustainability. In 2006 Ebner and Baumgartner, created this model in
order to show an exemplified meaning of the subject.
Figure 4: https://www.google.co.uk/search?
q=corporate+sustainability
In contrasting relation to Ebner and Baumgartners model, Thomas Dyllick and
Kai Hockerts (2006) both describe the subject as sustainability is often equated
with eco-efficiency, however, they progress onto defining that such reductions
can often miss several important criteria that firms must satisfy in order to be
truly sustainable.
It is intended that Nike may be seen to be adopting sustainability strategies as
increasing awareness and connections of what the public may already know
about them in regards to the businesses previous turmoil with unethical
practices. But there is light shed upon the sustainability age as more data is
brought forward from research of Earths forever depleting resources. In Nikes
CSR report, the value chain is incorporated and its strategy derived from this
very source.
Figure 5: Nikes CSR Report
The evidence given from Kashmanian (2010), Ebner and Baumgartner (2006)
complies with Nikes sustainability strategy as both have described it in key
components that must be met by the business in order to obtain that
sustainable status . Nike has so far shown great promise of compliance with
how much data and thorough detail of it has been entailed to any member of the
public, carefully outlining a measurable amount of progress, energy used and
how into the plan they actually are.
In addition, from evaluating Nikes strategy it is clearly shown that they are
adapted to the conservative era of which they are focusing on cleaner production
methods and eco-efficiency strategies. Analysing the table above, Nikes position
is also only 3% complete in reducing its emissions and its largest use is within
water at 83% which is posing currently as a huge risk. Although that 3% is
representing many large scale factories under their jurisdiction.
2.3IMPACT ON THE ENVIRONMENT
Marc A Rosen, Ibrahim Dincer (2001) form a substance of insight in the
efficiency, environmental impact and sustainability of energy systems as being
impacts on the environment. Due to these reasons, policies play an increasingly
important role in addressing these issues and take part in all global concerns.
Nike however, still continue to abuse human and material resources as a result
to increasing demand in labour and products. Looking at the sub section of
impacts (about nike.com/impacts) the firm is claiming that they have worked
across their entire operations from delivery to production to ensure that these
reductions continue to decrease.
Type of resource
Emissions
Energy
Water
Waste
How much is being
used
12.5 million
28.9 billion
217 billion
700 million
Measurement per
component
tonne
kWh
gallon
kgs
Figure 6
On figure 5, Nikes greatest impacts are the usage of water (83%) and emissions
(56%) used on manufacturing design materials, yet an extremely low 1% is only
re-used and placed back into operations meaning a total of 217B Gallons are
used by the firm. This impact creates huge tension on logistics and reputation
since knowing that the total assets are worth 21.600 Billion.
Nikes waste mainly derives from packaging, shipping material and product
samples in virtue of reaching the end of its life and
components
mainly range of scrap fabric, leather and rubber.
(CSR
Report). Specifications of energy provisions show
the organisation is hacking down by designing
new products that represent the value chain at a
more sustained level. (Nike Flyknit Technology).
The companys largest impact that is affecting society is the toleration of
sweatshops that break all employee contracts/human rights in China. According
to the guardian, Nike employees continue to face poverty, harassment, dismissal
and violent intimidation despite having pledged years ago to improve working
conditions for the 500,000-strong global workforce.
(www.theguardian.com)
The reports findings have already embarrassed the global giant by publishing
various articles which include young children working in very poor conditions.
These conditions include being exposed up to toxic fumes which are 177 times
over the Vietnamese legal limit.
Standing before the American National Press Club was Nikes chairman Phil
Knight personally ensured the committee that improvements would be made and
placed into 6 main concepts. These will be explained in section 3.1.
3.0The organisations approach and main competitor Adidas
3.1Sustainable supply chain management
Figure 7: (google
images/supply chain)
Business, performance, reputation
and sustainability help define the
key elements (shown in figure to
prolonging the supply chain of
stakeholders and there must be a
greater understanding of these to
focus on sustainability. According to
Hart (2008) Kashmanian (1997),
Wells, & Keenan (2011) etc., a
company moves along its
sustainability path as it improves its
performance. Another contrasting
view of Masoumik et al (2014:3)
defines the sustainable supply chain as a loop of upstream and downstream
flows of materials and products by recovering and recycling and placing back
into the production cycles. Furthermore, this engages in sustainability-conscious
practices taking goals from the three dimensions economic, environmental and
social of sustainable development into perspective, which are taken from the
requirements of the customer and stakeholder.
There is a growing need for integrating environmentally sound choices and Nikes
approach to the management of their supply chain is based upon Walker and
Jones (2012) theory of an external responder as previously explained NGOs
and other governmental influences have implemented change. 6 concepts that
Phil Knight has promised:
All Nike shoe Factories would meet US air quality standards
Minimum working age to 18 in Nike shoe factories/16 in clothing
Non-Governmental Organisations in factory monitoring and publicize
results
Loan programme to families of Vietnam, Indonesia, Pakistan and Thailand
Research on responsible business practices funded at 4 universities
Expand worker education programme with free secondary school
equivalent courses
Nikes supply chain dimensions come under what Awaysheh & Klassen (2010)
comprehend as an implied distance operation where there is an exceptional
amount of tiers in a long relationship based chain. This is due to the company
having 500,000 employees across the globe. In comparison to this statistic,
Nikes main competitor Adidas, have adopted a much more comprehensive
report and have even shown recently how sustainable they are by reducing
their factory involvement by 5% in the last year of the sustainability report 2015.
(Adidasgroup.com/sustainability). Adidas also have the same distant method as
they are the second largest sportswear firm in the world (behind Nike) owning a
revenue of $14.88 Billion from last year, with 53,731 employees scattered across
the earth.
Adidas in terms of their approach have described in their report (Page 2) (Walker
& Jones 2012) how they are also external responders but unlike Nike, their
influence plainly exists within customer demand pressure as they have barely
any reported involvement within unethical practices when being researched
online. From the past 11 years of their report, logistics so far seem to be far more
stable.
3.2Sustainable products and managing waste
Sustainable products are those that are designed initially through three
environmental benefits that have been designed on the basis of environmental,
social and economic benefits. Thus, indicating the protection of the environment
over the entire life cycle of every product developed. D.Maxwell & R van der
Vorst (2003) both visualise the definition as the concept of developing
sustainable products as well as services is evolving as a key element of Cleaner
Production. Further explaining the cycle of production Nike and Adidas both go
through these key stages in order to find any means of improving their
sustainable product.
To begin with Nike has created a sustainable project named Pegasus using new
fly knit technology since 2008, which shows that
they have reduced energy levels by a large 12%
by 2014. Following on from the Pegasus shoe,
the Lunar 2 was developed and as a result of this
innovative movement, Nike has further reduced
its energy usage by 24%.
(Nike.responsibility.com). Nike still has a long
way to achieve that sustainable status at this
point as their water usage is still not acceptable
even though they have reduced consumption by
35% and chemical compounds by 35%. Although,
the firm has not indicated exactly how they have done this. Comprehensiveness
of this flaw lacks integrity with the data shown.
Figure 8: Session slides
Their main competitor Adidas have much more fruitful obligations adopted in
terms of wastage since their unique business is sustained around having the
smallest numbers of staff (10 times smaller than Nike) reducing factory numbers
and taking advantage of third world labour/materials. They recently launched a
project named Sport infinity research (Coincidentally in response to Nikes new
movement) where new materials have been brought forward from even recycled
resources. (Adidas-group.com/media) the organisation has managed to achieve
43% of their target within the first two years but have agreed that by 2018 they
will have reached 100%. The materials they use as stated in their report claims
that it requires less water and fewer pesticides. This means that wastage is
reduced dramatically, promoting better working conditions for farmers and
preserves the quality of fibre.
Looking at both reports for sustainable products, so far there is more information
from Adidas side in response to Nike assessing its unethical ways.
4.0 Conclusion
From the extensive research and data that the chosen business has provided,
Nike has clearly stated their sustainability challenges they currently face and
have been truthful about what they are using in order to keep up an ethical view
of their logistics. They have provided an understanding that they are now
responding to these hurdles and have shown a plan of action with their 6
elements of improving appalling conditions found in areas such as China and
Vietnam. Nike has slowly started to become a responsible business by tackling
the most important areas such as reducing the amount of materials wasted and
water used to develop each product.
Further evaluation of the report does show that the company lacks actual
information on what exactly they are physically doing to obtain these results,
leaving questionable doubts in how comprehensive their report is. Whereas
Adidas have actually pro-claimed the materials and methods used in order to
achieve their target much quicker than Nike have done. Moving further down the
reports of sustainability, it is easy to find that the business is conservative in
their strategies and have produced research and data on each of their many
sectors of how they will reduce the waste in terms of production.
Finally, after analysing all evidence of both organisations, it deems that Nike is in
fact on the horizon of becoming a responsible business. Even though they are a
much larger firm than their main competitor whose report seems more of a
trustworthy status, Nikes ability to adapt to change should only be viewed as a
creditable outcome since there has not been any more reporting on unethical
stances like child labour (so far). To bring the report to a close, Nike do have an
advantage of skills and experiences that can aid them into a sustainable
outcome but Adidas are ahead still in terms of results and statistics but it is very
beneficial what the company has done so far for the environment.
Bibliography
Academia
Building A Sustainable Supply Chain: Key Elements, Volume 24, Issue 3, Pages
17-41 Richard M Kashmanian
Business Strategy and the Environment - Volume 11, Issue 2, pages 13014 Thomas Dyllick and Kai Hockerts
Corporate Sustainability Strategies: Sustainability Profiles and Maturity Levels
Ebner and Baumgartner (2010)
Exergy, An International Journal Volume 1, 2001 Pages 3-13 Marc A Rosen,
Ibrahim Dincer
http://www.sciencedirect.com/science/article/pii/S1164023501000048
Journal Of Clean Production Volume 11, Issue 8, Pages 883-895 D.Maxwell & R
van der Vorst 2003
Kashmanian (2010) Corporate Environmental Sustainability Strategy: Key
elements Pages 107-130
Supply Chain Management: An International Journal , Vol. 17 Iss: 1, pp.15 - 28
Walker & Jones (2012)
Main websites for organisational information
http://www.costellodesign.com/ProductProcess.jpg
http://www.medtronic.com/2010CitizenshipReport/images/charts/E2.gif
http://about.nike.com
http://www.bbc.co.uk/news/business-33280483
http://www.nikeresponsibility.com/report/content/chapter/our-sustainabilitystrategy
http://www.theguardian.com/world/2001/may/20/burhanwazir.theobserver
https://www.google.co.uk/search?q=corporate+sustainability
http://about.nike.com/pages/our-impacts
http://www.adidas-group.com/en/sustainability/reporting-policies-anddata/sustainability-reports/
http://www.adidas-group.com/media/filer_public/9c/f3/9cf3db44-b7034cd0-98c5-28413f272aac/2015_sustainability_progress_report.pdf
https://www.google.co.uk/search?
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NE_enGB682GB682&biw=583&bih=549&source=lnms&tbm=isch&sa=X
&ved=0ahUKEwjKuPXdmafMAhUCD8AKHSgsDqcQ_AUIBigB#imgrc=q7uj
7Kppw2tgVM%3A
www.nikeresponsibility.com/csr
