‘Transformative Solutions’ Key to Lowering Nike’s Absolute Emissions, Says Impact Report

Last year Nike celebrated a major 50-year milestone and true to its slogan “Just Do it,” the company is committed to impact.

Released Friday, the activewear giant’s latest impact report spans a whopping 225 pages, extensively detailing its people, planet and play pillars. In time for Women’s History Month and in homage to the female athletes who propel the swoosh forward, the report included letters from six powerhouse athletes, among them Serena Williams and Megan Rapinoe. Their visions complemented Nike’s social goals such as maintaining one-for-one pay equity and growing the representation, or 44 percent of women in leadership roles, among other highlights. As part of its commitment to invest $125 million in organizations supporting racial equity by 2025, Nike committed $69.6 million in 2022 (up $33 million from 2021).

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In a nod to its commitment, in 2021 Nike linked its purpose targets to executive compensation. Earlier this month, the company hired James Loduca as chief diversity, equity and inclusion officer, who is the fourth person to fill the role since 2020.

Given the company’s scale in footwear and the United Nations’ latest dire warning, climate is another key impact area even as balancing growth with sustainability is a challenge for many. Nike’s third-quarter earnings recently beat expectations at $12.4 billion (up 14 percent from Q4 last year).

Nike’s 2025 target is to reduce Scope 1 and 2 emissions by upward of 65 percent (which it reached in 2020), though the company continues to “[expand] owned and operated facility portfolio” and cited “limited availability of scalable, lower carbon alternatives to replace natural gas and other carbon-intensive fuels” as a detriment to continued progress. Increased units (more products) were another cited hindrance to exceeding its goals. More importantly, Scope 3 — or indirect emissions — account for 99 percent of Nike’s operations, according to the report. As for Scope 3, Nike is targeting a 30 percent reduction by 2030. In 2022, it saw break-even gains (or an 8 percent reduction on top of last year’s 8 percent increase).

“Another obstacle stems from the fact that given long product timelines, the products currently in market reflect decisions made several years ago, which creates a lag in realizing the carbon reductions due to strategies and investments made since the announcement of our SBT,” the report read. “Under business-as-usual scenarios, absolute emissions are anticipated to rise; therefore we must push beyond incremental reductions and unlock transformative solutions in the supply chain.”

Infrastructure investments are happening in fashion, though not at the pace needed. Nike hopes waste reduction efforts (occurring across 97 percent of its operations, including “waste to energy” or incineration), as well as textile-to-textile recycling will result in “increases in closed-loop apparel fabric recycling” from late fiscal year 2023 onward.

Already, product drops are looking toward a more circular future, like Nike’s “Link” (which debuted in June 2022) and “Link Axis” sneaker (dropping in 2023). The novel sneakers are glueless and built for disassembly. Today, eight Nike locations — four stores in Texas and four stores in Georgia — offer recycling and donation services. Nike has more than 1,000 stores worldwide.

In a past interview with WWD, Nike’s chief sustainability officer Noel Kinder underscored: “Circularity is a really important unlock.” He added, “The nirvana would be that you buy a pair of shoes and use them to the point that they’re worn out, take them back and have them disaggregated so their core compounds are reconstituted into another shoe. We’re not quite there yet, but a lot of the elements of that concept of circularity exist, like Space Hippie, where we’re starting to use waste as a feedstock. You see that in those crazy Axis shoes that can be decomposed back into original parts. I really feel like that is the future of innovation in sustainability.”

The company also released information around diversity initiatives, and said it increased the percentage of U.S. racial and ethnic minorities at the director level and above to 34.5 percent in 2022, ahead of its goal to hit 30 percent by 2025.

According to the report, Nike also hit 38.8 percent representation of U.S. racial and ethnic minorities in the U.S. corporate workforce in 2022, a 4.3 percentage point increase from the prior year and ahead of the 2025 target of 35 percent representation.

When it comes to gender equity, representation of women in Nike’s global corporate workforce increased by 0.7 percent to 51.1 percent in 2022, which surpassed the company’s target of 50 percent representation of women in these roles by 2025. The percentage of women in leadership roles grew from 43 percent in 2021 to 44.1 percent in 2022, less than 1 percentage point away from its 45 percent target for 2025.

In the report, Nike also highlighted certain initiatives like the expansion of its Women in Nike (WIN) program for retired WNBA players and employee network group meant to support and invest in women at Nike.

Another goal for Nike is to maintain 100 percent pay equity across all employee levels on a yearly basis, which Nike said it has achieved every year since 2020.

In April of 2018, Nike admitted that it had fallen short in promoting women and people of color, and in July, it announced a plan to raise salaries for 10 percent of its workforce to help correct pay inequity. Nike is currently the subject of a lawsuit filed in August 2018 by two former female Nike employees, which alleges that the company “intentionally and willfully” discriminated against women with regard to pay and promotions, and that its majority-male executives fostered a hostile work environment at its Portland, Oregon, headquarters.

With contributions by Shoshy Ciment

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