Nike’s Sustainability & Ethics Snapshot
> Learnings for business
As a global player in the industry, with the resources to drive product innovation and place sustainability firmly on the agenda, Nike must be held to a higher level of accountability.
Regularly published Nike sustainability reports on how the brand is progressing towards Science-Based Targets and Sustainable Development Goals (SDG’s) are a good start and provide the transparency consumers are looking for.
However, in recent years, there have been several red flags over Nike’s business ethics, including allegations of forced labor and gender discrimination.
While the company appears to be addressing these issues, it’s clear that there is still a lot of work to do before Nike can be called an ethical and sustainable brand.
> Learnings for consumers
As conscious consumers, we can continue to hold major brands like Nike to account, recognizing that big brands can impact change in a big way.
Nike is improving in certain areas with their Move Towards Zero and is addressing carbon emissions through the use of recycled and innovative materials, renewable energy, and fleet electrification. However, there’s still a lot of ground for this footwear giant to cover.
Due to its vast supply chain network and continued concerns regarding labor practices, we’d recommend sticking with more sustainable activewear brands.
If you do want to buy from them, opt for more sustainable Nike shoes and clothing from their Sustainable Materials product line.
Who Is Nike?
Global activewear brand Nike needs little introduction. Founded in 1964 (then with the name Blue Ribbon Sports), this multinational company is a household name across the globe.
In 2022, Nike’s annual revenue was $46.71 billion, a 2 billion increase from the previous year.
The same year, they also entered the top ten of the world’s most valuable brands—fitting for a company named after the Greek goddess of victory.
But is it a victory for sustainability?
Is Nike sustainable? And does Nike have any ethical issues?
We look at how this industry monolith stacks up both in terms of its sustainability and business ethics.
Exploring Nike’s Sustainability & Ethics
1. Nike’s Sustainability And Transparency Reporting
When looking at Nike’s sustainability efforts, we first consider how transparent the company is in reporting its progress toward its identified sustainable and ethical targets.
In this respect, Nike is doing reasonably well. The company received a score of 51-60% in the 2022 and the 2021 Fashion Transparency Index. While there is clearly room for improvement, things are moving in the right direction.
These include carbon, waste, and water reduction targets, increased use of cleaner chemicals, diversifying their supplier base, and targets for diversity and inclusion.
But is it really “Bloom Over Doom” as Nike’s sustainability slogan suggests?
How sustainable is Nike overall? And is Nike an ethical company?
Let’s look at the steps this footwear giant is taking to reduce its environmental and social impact.
2. Nike’s Environmental Impact: How Is Nike Sustainable?
As a global athletic brand, Nike is positioned to be a leader in improving the industry. How do they rise up to this challenge?
What does Nike do to be sustainable?
Nike’s Supply Chain & Manufacturing
One glance at Nike’s manufacturing map shows their supply chain is vast, spanning multiple continents across the globe. Addressing sustainability on this level is no minor feat.
What is Nike doing to be more sustainable regarding its supply chain and manufacturing processes?
In addition to reducing carbon emissions across its owned and operated facilities, Nike supports its suppliers to address their climate impact through the Supplier Climate Action Program (SCAP).
They encourage suppliers to increase their use of renewable energy and to commit to their own climate targets.
Nike is also working to increase the use of alternative fuels, (i.e. biofuels for shipping and the electrification of fleets used for final deliveries). In the meantime, Nike offsets 100% of its shipping for EU and U.S. orders via WeForest (Europe) and Ecotrust Forest Management (U.S).
Nike aims to eliminate hazardous chemicals from its supply chain. Currently, chemical suppliers must adhere to the Manufacturing Restricted Substances List (MRSL) and Nike’s own Restricted Substances List (RSL).
By 2025, the company aims to replace ten prioritized chemicals.
Nike’s efforts to conserve water include switching to organic and recycled cotton, developing its watershed restoration program, and addressing the processes used for dyeing and finishing textiles.
The brand also has a comprehensive plan to reduce waste at all levels of the supply chain, from the initial design stage to shipping the final product.
Nike’s Fabrics & Materials
Nike has identified that 70% of its carbon footprint comes from materials, so this is a key focus for meeting its carbon reduction targets.
In terms of sustainable materials, Nike is working to scale their use of recycled polyester and nylon, and develop innovative new materials with a lower carbon footprint.
Nike shoes in their Sustainable Materials line are made with a minimum of 20% recycled content and the apparel with a minimum of 50% recycled content.
Between 2021 and 2022, Nike’s use of “environmentally preferred materials” has led to a reduction of GHG emissions to the tune of 182,000 metric tons.
Nike’s sustainable materials innovation includes Nike Forward, a thin, lightweight material featuring needle-punched layers. The manufacturing process uses 75% less carbon than their traditional knit fleece.
Current products made from Nike Forward include hoodies, jackets, crews, and pants, all made from 50% recycled polyester.
Those looking for Nike sustainable shoes can consider those that feature a Flyknit upper made from 6-8 plastic bottles. The manufacturing process for Flyknit also produces 60% less waste compared to that used for traditional uppers.
A minimum of 50% recycled leather fibers are combined with synthetic leather fibers to create Nike’s Flyleather. The process is “water-powered”, meaning a lower carbon footprint as compared to traditional leather.
Nike’s Air soles feature a minimum of 50% recycled materials and are manufactured using 100% renewable energy. They are made from at least 25% manufacturing waste and
90% of the waste from the manufacturing process is upcycled into new cushioning.
Cotton is a problematic material. Known as the world’s dirtiest crop due to heavy pesticide usage, the cultivation process also uses vast amounts of water and has been linked to child and forced labor.
How is Nike trying to be sustainable with regard to cotton sourcing?
All the cotton used across their collections is recycled, certified organic, or sourced via the Better Cotton initiative (BCI).
Note that sustainability and ethics of BCI cotton have come under scrutiny, questioning the relevance of including this Nike’s sustainable material line-up alongside the organic cotton.
Is Nike cruelty-free?
Nike uses materials such as leather, suede, down, and wool in their products. However, they have made efforts to source these materials from suppliers who meet their standards for animal welfare and environmental sustainability, and prohibit the use of exotic animal skins.
Additionally, they’ve been exploring use of more sustainable and animal-friendly materials, like the plant-based leather alternative made from pineapple waste called Piñatex and recycled polyester made from recycled plastic bottles.
However, a fair number of Nike’s products still contain animal byproducts and fall short in providing enough transparency regarding their enforcement of animal welfare policies.
What Are Nike’s Carbon Reduction & Commitments
Nike’s environmental sustainability plan, Move Towards Zero, includes Science-Based Targets to reduce their emissions by 2030.
Thanks to using renewable energy, Nike reduced its GHG emissions across owned and operated facilities by 64% in 2022. They’re aiming to increase this to 70% by 2025.
By 2030, NIKE has pledged to cut Scope 3 emissions across its global supply chain by 30%.
Nike currently purchases carbon offsets to offset its outbound shipping emissions.
Recycling and Closed Loop Programs / Circular Economy / Circularity
Nike going green means embracing circularity with their Recycling + Donation program for both footwear and apparel.
Participating stores accept used athletic shoes and clothing, which is then either donated or recycled.
Nike Grind Materials
For over thirty years, Nike has been recycling manufacturing scrap and old footwear into a variety of different materials.
Nike Grind materials include rubber, EVA foam, PU foam, textiles, and thermoplastics which are recycled for use in playground surfacing, running tracks, carpet padding, furniture, and other products.
3. Nike’s Social Impact: Is Nike Ethical?
Nike’s previous history of sweatshop accusations and the resulting protests are well documented. But does Nike have any ethical issues today?
In other words, just how ethical is Nike, exactly?
While this Fair Labor Association (FLA) member has made some progress toward addressing ethics in its supply chain, there are continued concerns regarding the use of forced labor and the inability to demonstrate the payment of living wages.
Nike’s Labor Practices
Does Nike have ethical business practices?
Globally, Nike employs over 79 thousand people, but they do not own or operate any of their factories.
Due to the sheer number of facilities that Nike works with, robust supply chain management and ethical practices are vital to ensuring all workers benefit from safe, fair, and respectful working environments.
In 1999, the company became a member of the Fair Labor Association (receiving its third re-accreditation in 2019). They have a comprehensive Code of Business Conduct, Supplier Code of Conduct, and Code Leadership Standards.
Nike’s Speak Up Portal provides a means for employees to report misconduct and raise concerns regarding anything that goes against Nike’s Code of Ethics. Of course, there is little to no way of knowing how seriously reports are taken and whether solutions to Nike’s unethical practices are implemented.
In the 2022 financial year, Nike rolled out their Engagement and Wellbeing (EWB) Survey to over 500 thousand workers in 15 countries around the world.
Unfortunately, several issues regarding Nike’s ethics and social responsibility remain, including the payment of living wages. In 2019, the Clean Clothes Campaign conducted a survey of 20 major clothing brands including Nike. Their report concluded that “ no brand can yet show that living wages are being paid to any workers in supply chains outside their own headquarter countries”.
There also continue to be concerns regarding responsible sourcing, particularly regarding forced labor. (See “red flags” below for details of forced labor accusations).
Diversity, Equity, And Inclusion
Nike does appear to be making progress in this area, with a particular focus on empowering women and girls.
As detailed in Nike’s FY22 Impact Report, 44.1% of leadership positions in the company are held by women (up by 4.8% since 2020) and U.S. racial and ethnic minorities held 34.5% of positions at the director level or above.
The company also spent $777 million on diverse suppliers and maintained worldwide 1:1 pay equity for women.
Community, Pay-it-forward, Giving
Nike works with over a hundred community partners to deliver programs and training opportunities, with a particular focus on empowering more girls to participate in sports.
In 2022, these programs helped more than thirty-five thousand girls to access play and sport-based opportunities and supported over seventeen thousand coaches to develop more inclusive opportunities.
Launched in 2021, Nike’s four-year, $40 million Black Community Commitment provides grants to organizations, including NAACP Empowerment Programs, Black Girls CODE, and Black Girl Ventures.
4. Nike Controversies, Red Flags & Greenwashing
Is Nike ethically and socially responsible? Or does Nike have ethical issues?
Unfortunately, there are a number of red flags, highlighting reasons why Nike is not ethical.
According to a 2020 Washington Post report, one of Nike’s biggest suppliers in China was linked to forced Uighur labor.
In the Netherlands, this led to a complaint being filed against Nike and several other brands by the European Center for Constitutional and Human Rights (ECCHR).
The investment platform Tulipshare has also issued an open letter outlining its concerns surrounding forced labor in Nike’s supply chain and calling upon the brand for greater transparency, increased stakeholder engagement, and a more robust commitment to responsible sourcing.
While they are taking steps to address these issues (see Diversity, Equity, And Inclusion above), it’s clear that several concerns remain.
5. Is Adidas Or Nike More Ethical?
Both of these activewear giants still have a lot of ground to cover regarding sustainability and ethics.
Nike’s business ethics look good on paper and the brand is moving forwards with increased use of eco-friendly materials and investment in community programs to empower girls and Black Americans.
Regarding Nike’s sustainability efforts, Adidas’s sustainability game may be a little ahead though.
In 2022, recycled polyester accounted for 96% of Adidas’s polyester use, and the brand has a long-standing partnership with Parley for the Oceans to recycle ocean-bound plastic waste. Adidas is also embracing the circular economy with its “Made To Be Remade” line.
Regarding business ethics, both brands are members of the Fair Labor Association, yet, like Nike, Adidas is under criticism for its failure to pay a living wage and is subject to accusations regarding worker exploitation.
Overall, it’s a close call. We’d like to see greater transparency from both brands and more mechanisms in place to ensure human rights and workers’ rights are upheld throughout both brands’ global supply chains.