Market News

 May 04, 2012
Nike fails to shrink carbon footprint as trainer sales boom

 Nike saw its global carbon emissions rise by nearly 17 per cent last year as sales recovered from the impact of a global economic crisis, according to its latest sustainability report.

The global sportswear giant yesterday pledged to step up its efforts to curb the impact of its manufacturing processes and global supply chain in its FY10-11 Sustainable Business Performance Summary.

Nike said CO2 emissions from contract footwear factories were down six per cent from 2008-2011, despite a 20 per cent increase in production.

However, the report showed its overall greenhouse gas emissions and energy consumption increased significantly last year as the company's revenues rose by around 10 per cent.

As a result, its CO2 emissions climbed from 1,406,100 tons of CO2 equivalent (CO2e) in 2010 to 1,640,700 CO2e last year. Energy consumption also rose by nearly 20 per cent from 12,532 terajoules (TJ) to 15,006 TJ between 2010 and 2011.

The rise was partly caused by a greater use of air freight due to increased demand for its products, which brought to an end a trend that had seen emissions per unit fall 12 per cent between 2003 and 2010.

"FY11 emissions [were] well above our target zone," said Nike. "We now know that in order to significantly reduce emissions from transportation, we need three things: better planning, better carbon accounting tools, and a commitment from our key logistics partners to accelerate their adoption of cleaner vehicles and cleaner fuels."

Speaking to BusinessGreen ahead of the launch of the report last week, Hannah Jones, Nike vice president of sustainable business and innovation, said the company was at a pivotal point in its strategy to improve its environmental performance.

Nike celebrated an 80 per cent CO2 reduction in 2006 after removing sulfur hexaflouride gas (SF6) from its shoe air bags, but is now struggling to tackle the remaining 20 per cent.

"We're getting to the place where we've tackled some of that low-hanging fruit around what I call the easy-to-get wins such as efficiency, so we start to get in to the territory where it's harder," she said.

"Half of the remaining 20 per cent of our CO2 footprint resides in footwear manufacturing, which is a distributed supply chain that we don't own. We've been doing a significant amount of work to go after that, but it will take a very different approach."

To help achieve its emissions goals Nike also unveiled a new factory rating system, which includes an environmental performance index that can be used alongside traditional supply chain metrics of quality, cost, and on-time delivery.

"Simply put, we hope that factories' and vendors' efforts to score higher on these indexes -- and thus have a better opportunity to grow their relationships with Nike -- will promote competition and innovation among them," the company's report said.

Nike is aiming to source exclusively from factories with a minimum Bronze-level achievement on the new green index by the end of 2020. It is also planning to next year launch a Nike Footwear Sustainability Index to score shoes' individual impact.

In addition, the company also unveiled new targets for 2015, including a 20 per cent reduction in CO2 emissions per unit from 2011 levels, and a 10 per cent reduction in waste from manufacturing, which will include an initiative to deliver lighter shoe boxes.

"The percentages that we're now talking about for those targets don't look anything as glamorous or dramatic as an 80 per cent decrease, but these are the ones that are actually going to be hardest to get because they're expensive and we don't own the manufacturing," said Jones. "We're going to have to find ways to create new sources of financing to help investments flow into supply chains."