Making a third of the world’s sportswear and training shoes is a profitable business. Nike posted recession-beating revenues of $24.1bn (£15bn) in the last financial year, up 16% from 2011. But turning out an estimated 120m trainers and hundreds of millions of tonnes of athletic gear each year carries a high price tag when it comes to environmental and social impacts.
Since 2004, Hannah Jones, vice-president of Nike’s sustainability and business innovation unit, has had to balance this growth with the company’s huge consumption of energy, water and materials.
“As we move into a sustainable economy, we will need to move into a closed loop economy,” she says. “We will be providing products that allow businesses to grow, are profitable, meet the demands of shareholders but are also de-coupled from scarce resources.
But, she says, the company doesn’t see the future as consuming less. “It’s not about saying to the emerging middle class in China ‘you don’t get to consume as much’,” says Jones. “It’s about a new definition of premium products, that are closed loop, using only materials that can be fully recycled.”
Nike last year issued a new set of performance standards by 2015 that included a 20% reduction in C02 emissions per pair of running shoes by from 2011 levels; an increase in water efficiency by 15% and a 10% reduction from manufacturing waste. By 2020, Nike has also set a target to eliminate the discharge of hazardous chemicals from all products across its supply chain, following a Greenpeace campaign which exposed dangerous levels of toxins at Chinese apparel factories.
The company has come a long way on sustainability and corporate responsibility since the 1990s, when company co-founder Phil Knight said it had “become synonymous with slave wages, forced overtime, and arbitrary abuse”.
There are signs that Nike is producing some concrete results and setting the pace for the rest of the industry.
Last year, Nike was ranked sixth among only 65 companies as having developed an “ecosystem” of long-term sustainability targets according to Deloitte’s zero impact growth monitor.
In 2010, Nike rolled its corporate responsibility department into the sustainability unit to develop disruptive innovations in materials.
“We’ll see a very significant movement in industries that are working on logistics and waste management but it will start with materials science,” said Jones. “Ultimately, you can only refurbish materials based on the science and the chemistry and how it’s actually assembled.”
The company uses around 16,000 materials annually; running shoes alone can be comprised of 30 materials, from natural fibres to polyester, nylon, rubber, synthetic leather and ethylene vinyl acetate (EVA). Materials account for 60% of the lifecycle of a pair of running shoes, manufacturing about 25% and the remainder is split between transport, retail, office facilities, packaging, use and disposal.
Most of these materials are still petroleum-based or have a high dependence on fossil fuels, such as fertiliser for cotton. And as oil prices rise and stocks decline, finding new materials will become the holy grail for apparel manufacturers.
Incorporating sustainability into R&D
Nike’s FlyKnit technology launched last year is the result of a four-year “micro-engineering mission” that resulted in a design that can be knitted to a pattern, much like a sweater, from single fibres rather than cut from rectangular fabric. The Flyknit Lunar1+ reduces waste by an average of 80% when compared to typical Nike running footwear.
Nike last year entered into a strategic partnership with Dutch company, DyeCoo Textile Systems, which has developed a waterless dyeing machine that uses recycled carbon dioxide. Last June, it announced a strategic working group with Coca-Cola, Ford, Heinz and Procter & Gamble to accelerate the development of 100% plant-based polyethylene terephthalate (PET), used to make everything from plastic bottles to footwear. Nike also has a number of other partnerships that haven’t been announced yet with academia and research labs.
“One of the lynchpins of the strategy is that over the last few years, we have really shifted our sustainability team from being a risk-management and reputation management agency to really also having significant R&D and innovation capabilities,” says Jones.
Collaboration within the industry has also gained traction in recent years. Nike’s materials sustainability index that was developed for its own designers to select materials with lower environmental impacts has now been incorporated into the Sustainable Apparel Coalition’s higgs index launched last year.
Some of the worst toxic offenders have already been removed over the last 10 years. Water-based chemistry has replaced petroleum-based solvents, and phthalates and PVC have also been eliminated, although no alternative has yet been found for screenprinting.
Nike has also reduced carbon emissions from 1,687,900 tonnes of CO2 in 2009 to 1,640,700 tonnes of CO2 in 2011, a reduction of 2.8%. Although Nike does not publish its overall carbon reduction goal, it aims to achieve a 20% reduction in CO2 emissions per unit of footwear by 2015.
Upcycled not secondhand
Since 2011, some stores have entered into renewable purchase power agreements. Wind turbines power Nike’s European distribution centre in Laakdal, Belgium, and its European headquarters in Hilversum, the Netherlands, runs on 100% renewable energy.
Nike has also collected 28m trainers through Nike’s Reuse a Shoe campaign since 1990. Waste shoes are then reprocessed into track, basketball or tennis surfaces, or even into new shoes such as the Nike Pegasus or the Jordan XX3.
But recycling apparel is a highly brand-protected proposition. Nike eschews pure secondhand re-use, such as that pioneered by Patagonia, in favour of material upcycling of post-consumer products.
“I just don’t think you would call it secondhand,” says Jones. “You need to throw that concept right out of the window. Through technology, science and innovation we need to get to a place where you should be able to walk into a NikeTown in New York and return your old Nike T-shirt that can be ‘re-birthed’ into a new product.”
However, technology has yet to catch up with the vision. In 2011, Nike used recycled polyester in 31.5m garments. But apparel that contains any more than one material such as spandex or lycra to improve the fit of polyester or cotton clothing cannot be recycled.
Huantian Cao, associate professor in the department of fashion and apparel studies at the University of Delaware, said: “We have to think about materials management in the design phase. The task for the textile and apparel industry would be to design wisely and not use blended materials or find a way to separate post-consumer materials, a concept called design for disassembly.”
Huantian also points out serious limitations. “Closed loop is possible but zero impact is impossible” Cao says. “But we can make it better by making materials last longer or solving the resource depletion problem. If we minimise the impact on nature we will achieve that goal.”
Monitoring labour conditions for the more than 1 million workers at some 700 facilities around the world will also be no easy task. In 2011, Indonesian workers alleged abuse at a factory that made Converse, also owned by Nike.
Jones says the next five years are critical as the industry attempts to balance profits and growth. “Innovation is the name of the game, how fast we can scale that innovation is the challenge we all face,” she says.
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