Case Study Nike

NIKE, Inc. Beaverton, Oregon

Running a Cleaner Race defining a long-term vision for sustainable products.

With annual revenues of $18.6 billion, Nike, Inc. is The resulting North Star vision and innovation goals
the worlds leading manufacturer of athletic shoes, position Nike to become a leader in sustainable
apparel and equipment. Nike directly employs product innovation and navigate toward a sustain-
30,000 people around the world, 6,000 of whom able future.
work at Nike World Headquarters near Beaverton,
Oregon. As of 2006, Nike products were manufac- From humble beginnings to global player
tured by nearly 800,000 workers in 700 contract fac- Nike began as a partnership between University of
tories located in 52 different countries. Oregon track coach Bill Bowerman and one of his
runners, Phil Knight. Bowerman thought he could
As one of the biggest brands in the business, Nike improve runners performance with better equip-
became a lightening rod for criticism in the 1990s ment, while Knight, a graduate student at Stanford
when activists began to publicly denounce labor Business School, wanted to test out his plan to import
conditions in its overseas contract factories. Like high-tech, low-priced athletic shoes from Japan. Call-
others in the industry, Nikes initial responses were ing themselves Blue Ribbon Sports, the pair invested
defensive and reactive. In the years that followed, $500 each for their first shipment of Japanese shoes
however, the companys policies and practices reveal to Oregon in 1962. Less than a decade later, the com-
a marked shift toward proactive responsibility and panys revenue had grown from $8,000 to nearly $2
engagement with stakeholders. million and its staff had increased to 45.

In 1998, The Natural Step began to work with Nike Re-named Nike, after the winged goddess of victory,
to help it apply the principles of sustainability to its the company went public in 1980, by then represent-
business operations, and the company formalized ing 50 percent of the U.S. running shoe market. By
its commitment to sustainable commerce with an the end of 1982, every world record in mens track
official policy statement later that year. Hundreds was being set by athletes wearing Nike shoes, estab-
of Nike employees were trained to use The Natu- lishing the company as the dominant global force in
ral Step Framework between 1998 and 2001, lead- athletic shoes and apparel.
ing to numerous innovative programs to further its
sustainability goals. In 2008, Nike partnered with Responding to Changing Expectations
The Natural Step again to help assess and further In practice, sports apparel and footwear production
develop its approach to product innovation by is rarely managed directly by brand owners, but is

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Nike
contracted out to supplier factories, many of whom organizational realignment set the stage for a re-vi-
further sub-contract the work to other factories and sioning of the companys environmental policy, led
to home-workers. By the early 1990s, it became clear by Severn.
that the rights of many contracted workers were not
adequately protected by the state or contract fac- The Natural Step to a Sustainable Nike, Part
tory. Nike drew heavy criticism for contracting to One
factories which allegedly violated minimum wage Severn joined Nike through their European offices in
and overtime laws and used child labor. 1993 in a marketing strategy role, but her personal
interest in the companys environmental programs
As one of the most visible brands in the world, and drew her to the U.S. to help build NEAT in early 1995.
the dominant player in its market, revelations such After reading Paul Hawkens Ecology of Commerce,
as these brought Nike into the centre of unprece- Severn brought the NEAT team to Portland, Oregon
dented controversy over labor rights in a globalized to hear Hawken speak about the book and The Nat-
economy. In an article by the Clean Clothes Cam- ural Step Framework.
paign about Nikes labor and environmental prac-
tices, U.S. activist Max White explained the reasons The more Severn and her team learned of The Nat-
many activists were focusing their efforts on Nike. ural Step Framework, the more they came to see it
Nike is not the worst company on the planet. Ree- as the essential structure for achieving sustainability.
bok and others use the same workers and contrac- Aside from meeting financial goals, the four prin-
tors in the same countries. Nike is, however, the ciples of sustainability were the real rules because
largest such company If Nike reforms, they will they define the natural laws that a sustainable busi-
trumpet the change and other manufacturers will ness can operate within. Severn began to see her
have to follow.1 challenge as helping Nikes senior management
change its view of sustainability from a peripheral or
The controversy of the 1990s compelled Nikes man- tactical issue to a strategic opportunity that is cen-
agement to re-evaluate the companys standard tral to the companys business. Making a case that
operations. Nike drafted its first code of conduct sustainability should be a core tenet of the compa-
for contract labor in 1991 and distributed it to fac- nys mission proved to be an easy link; after all, how
tories the next year, making it the first code of its can you have a company thats about health and fit-
kind for the sporting apparel industry. All contract ness and yet be degrading the environment in your
factories were required to sign the document, which operations? asks Severn.
banned the use of forced or child labor and commit-
ted them to compliance with local laws on wages,
benefits, overtime, and environmental protection.
The code was later amended to include the right to Sustainability Principles2
free association and collective bargaining. In 2005,
Nike became the first company to publicly release
supplier details of Nike branded products.

In 1993, the Nike Environmental Action Team (NEAT)

was formed as an umbrella for all environmental
staff and functions in the company. NEATs mission
was to develop answers to the problems that Nikes
production and the sports industry as a whole
pose to the environment, and to integrate the solu-
tions into the companys business practices. Many at
Nike viewed the formation of the NEAT division as
building on a tradition of honoring nature in Nikes
physical surroundings. The ethic was always there,
notes Sarah Severn, Director of Corporate Responsi-
bility Horizons for Nike, but we didnt see early-on
how it applied systematically to the business. This

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In order to further integrate The Natural Step princi-
ples for sustainability into the fabric of the business,
Nike launched its Sustainability Initiative in 1998 to
build internal skills and knowledge about sustain-
able business development. More than 400 people
participated in the nine-month-long Shambhala
action and learning program, which resulted in the
birth of a considerable number of ideas and plans
to make Nike more sustainable. According to Kai-
ser, the product and process innovations delivered
a short-term return on investment of $2 million USD
over nine months.

Then-CEO and Nike co-founder Phil Knight announces initiatives In addition to the specific project achievements, the
to improve conditions in overseas factories. effort also produced several important qualitative
results:

Built a critical mass of formal and informal leaders

Formalizing their Commitment Shared learning and best practices compa-
In late 1997, NEAT began rewriting Nikes environ- ny-wide
mental policy to reflect the companys emerging Created a common language, framework, and
focus on sustainability. Formally approved by Nike vision for sustainable business practices
senior management in June 1998, the policy commit- Improved employee morale, resulting in increased
ted the company to the following far-reaching initia- employee retention and job satisfaction for those
tives. In the same year, CEO Phil Knight announced that were engaged in sustainability efforts
new initiatives to improve factory working condi- Created a base for metrics to be used in Nikes first
tions and improve conditions for contract workers: Corporate Responsibility Report
Laid the groundwork for future sustainable design
Integrate the principles of sustainability into all and innovations
major business decisions.
Scrutinize environmental impacts in day-to-day Getting Down to Action
operations and throughout every stage of the Over the years, Nike has undertaken a number of
product life cycle. initiatives addressing the environmental life cycle of
Design and develop product, materials and tech- its products from design to manufacturing to mar-
nologies according to the principles of sustain- keting to post-consumer use and their impacts on
ability. living systems at each step. In August of 1999, Nike
Promote sustainable practices throughout the began a process to phase out polyvinyl chloride, or
supply chain and seek business partnerships with PVC, a durable and inexpensive plastic known as
suppliers who operate in a similar manner. vinyl, from its products due to the serious concerns
Educate employees, customers, and business part- around its manufacture and disposal. Given that this
ners to support the goal. compound can comprise up to 30 percent of a shoe,
the decision was an important step in Nikes path to
Building Capacity for Sustainable Development sustainability. Removing PVC required cooperation
NEAT began educating employees in the principles throughout Nikes supply chain and innovation from
of sustainability and The Natural Step Framework design and production teams. Today, PVC has been
as early as 1995. After attending a five-day TNS U.S. eliminated from all but a few products.3
workshop in Chicago, Laila Kaiser, Sustainability,
Learning and Communications Manager at Nike, In addition, Nike has been incorporating organic cot-
developed educational programs on sustainable ton into its T-shirts and knit products since the late
product design for 700 employees, bringing the 1990s. Conventional cotton production uses more
topic of sustainability to the fore. chemicals per unit than any other crop, and accounts
for a total of 16 percent of the worlds pesticides.4 In

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order to reduce its contribution to the progressive Genesis of a Considered Approach
buildup of chemicals in society, Nike has committed In 2005, Nike launched a line of shoes designed to
to increasing the amount of organic cotton in all of incorporate the principles of sustainability. This line,
its garments to at least 5 percent by 2011. named Considered, marked a shift in the way sus-
tainability was addressed at the design level and
In an industry that has been traditionally dependent the genesis of a more considered approach to Nikes
on large amounts of petrochemical-based solvents, business practices. To qualify as Considered, Nike
Nike reduced 95 percent of its solvent use between products must be significantly more sustainable than
1995 and 2003 by using water-based cements, prim- conventional products. Considered is best described
ers and cleaners. The hazardous chemical reduction as a design ethos that focuses on creating products
program has contributed to safer working condi- made with fewer toxics, less waste, more environ-
tions, a reduced environmental impact, and substan- mentally-preferred materials and sustainable prod-
tial cost savings for Nike factories. Estimates of over- uct innovation. Combining sustainability, perfor-
all raw-material cost savings were about $4.5 million mance and innovation, Considered reflects Nikes
in 2003, without counting savings related to labor, ongoing commitment to athletes as well as the social
storage, or shipping. and environmental playing ground that consumers,
employees and stockholders depend upon.
Nikes Reuse-A-Shoe program grinds used athletic
shoes and uses the recycled materials in surfaces Nikes Considered group is the team of employees
for basketball courts, athletic tracks, artificial soccer responsible for applying the Considered design
fields, playground fall protection, and other recy- ethos to products and business models through-
cled products. Since its 1990 inception, the program out the company. As sustainability becomes main-
has successfully kept more than 21 million post-con- streamed in Nikes business operations, initiatives
sumer and defective shoes out of landfills. are increasingly being moved forward by employees
with backgrounds in business or design. A case in
point is Lorrie Vogel, General Manager of Consid-
ered, who left her position as an Innovation Director
at Nike to head the division. When I started with
Considered, one of my goals was integrating us into
the business model as a whole and getting designers
more involved, Vogel recalled.

Creating Incentives for Change

In order to better evaluate the environmental foot-
print of all Nike products and develop incentives for
change amongst Nike design teams, the company
Nikes Reuse-A-Shoe program has helped create more than 250 developed the Nike Considered Index. The index uses
recycled sport surfaces a lifecycle approach to examine design and produc-
tion factors such as material selection, solvent use,
garment treatments, waste, and innovation for foot-
Finally, while the boxes used to package Nike shoes wear and apparel. Considered products are rated as
were already 100 percent post-consumer recycled gold, silver or bronze.
material and made in a closed loop system, in May
1998, new machine technology was applied in the Already, the index has been a key leverage point
manufacturing of all Nike corporate boxes, reduc- for Nike designers, successfully channeling the com-
ing the raw material fiber by an additional 4,000 panys competitive nature to focus on sustainable
tons and saving the company $1.6 million annually. design innovation. The company exceeded its own
In 2008, Nikes shoe box materials and construction initial expectations for the number of products that
were redesigned, which will eventually reduce the meet Considered design standards as designers rose
materials by 3 percent and result in an estimated $6 to meet the challenge of developing more sustain-
million savings. able products. Prominent athletes such as Steve Nash
and Michael Jordan have promoted gold standard

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Take the Natural Step, Part Two
In 2007, The Oregon Natural Step Network (ORTNS)
celebrated its 10th anniversary at the Tiger Woods
Centre at Nike Global Headquarters outside of Bea-
verton. The anniversary event was a milestone for
both Nike and The Natural Step, Regina Hauser,
Executive Director of the Oregon Natural Step Net-
work recalled. Both of our organizations had come
a long way in our understanding and application
of sustainable development over the past decade.
Nikes Steve Nash Trash Talk shoe is the first performance Nikes understanding of the connection between
basketball shoe made from manufacturing waste. sustainability and success made it an important part
of that celebration.
shoes, adding star power to the Considered line. The
Steve Nash Trash Talk shoe was among the first The event, convened around the theme of sustain-
sports performance shoes to be rated gold under the ability and success, featured talks by author Bob
Considered Index. Willard (The Business Case for Sustainability), Ray
Anderson, CEO of Interface Inc., and Dr. Karl-Hen-
Nike plans to share the Index with the sports indus- rik Robrt, founder of The Natural Step. Dr. Robrt
try in 2009 in the spirit of industry-wide collabora- introduced the Real Change Partnership program
tion towards sustainability. The companys goal is to (www.alliance-ssd.org), an international research
have all footwear meet the bronze standards at a initiative linking university research specializations
minimum by 2011, all apparel by 2015, and all equip- with real world application using The Natural Step
ment like balls, gloves and backpacks by 2020. If Framework (now the FSSD).
we do this across the company, we will have a 17
percent reduction in waste, a 20 percent increase in As Nikes lead on sustainable product innovation,
the use of environmentally-preferred materials, and Lorrie Vogel was listening attentively. When Sarah
maintain our 95 percent reduction in volatile organic Severn introduced her to Dr. Robrt, Vogel described
compounds (VOCs), Vogel explained. Once we hit some of her teams work on sustainability, and com-
our goals, well put out a new index that will take us mented that their biggest challenge was making
even further. decisions that involved trade-offs between different
sustainability goals.

Dr. Robrt said, Well, where do you want to be?

Vogel recalled. For me, that was a bit of a light bulb
moment. It made me realize that we were spend-
ing a lot of energy on how to reduce our overall
impacts, but hadnt clearly defined a vision of where
we wanted to be in the future. We needed that
vision to help us choose projects based on what will
get us closer to our end goal.

In response to a request from Nike, The Natural Step

convened an international team of sustainability
experts from The Natural Step offices in the U.S.,
Canada, Sweden and from Real Change partner uni-
The Nike Considered approach: evaluating the impact of a prod-
versity, the Blekinge Institute of Technology (BTH).
uct at every stage in its life. The teams mandate was to help Nike define a vision
for sustainable shoes and sports apparel and assist
with outlining smart, step-wise initiatives to move
toward it.

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Case Study
Although The Natural Step often begins projects of their current operations, The Natural Step was
with a focus on building awareness and capacity able to offer a unique perspective, informing their
around sustainability in an organization, Nikes pre- analysis with a strong systems-thinking approach
vious training and the extensive sustainability work using the principles of sustainability. One area that
they had already pursued made this step more of a emerged from the SLCA was the need to expand
refresher. As Chad Park, Senior Sustainability Advisor the scope around toxic substances. While Nike had
from The Natural Step Canada, explained, Working made very strong progress toward the elimination
with Nike was unique in that there was very little of known toxins from its products, The Natural Step
convincing needed about the importance of sustain- helped them expand their thinking to include all
ability for the business, the value of a rigorous sci- persistent and systematically increasing substances,
ence-based approach, and the merits of the backcast- whether they are known to be toxic today or not.
ing method of The Natural Step Framework. Instead, In addition, The Natural Step Frameworks inclusion
Nike was more intent on applying the Framework to of human needs as an essential part of sustainability
their context. Beginning a project with this level of helped Nike integrate thinking around social sus-
awareness, respect and commitment makes it possi- tainability beyond corporate responsibility and into
ble to get much further in a short amount of time its overall sustainable design principles.
and achieve some deep change.
Finding Nikes North Star
An initial TNS training provided an introduction to After undertaking a baseline assessment of Nike,
the Framework for newer employees and an update The Natural Step began a series of visioning sessions
for others. Severn, who had participated in the orig- to co-develop Nikes long term sustainability aims.
inal TNS trainings a decade earlier, commented: For The result is a compelling vision that can guide not
me, the big piece was watching younger generations only the Considered line, but Nike as a whole. The
of designers and developers go through the TNS vision begins with an inspirational statement that
workshops. It was great to see them get so excited describes the goal at a high-level.
about sustainability. They agreed that we need to
be working toward sustainability as a company, and We call it an audacious goal, knowing that well
they could see how the TNS training would be mean- be spending a lot of time making little bits of prog-
ingful in their jobs. ress toward it, Goddard explained. But at least
well be making progress in the right direction. It is
The Natural Step project began with an assessment a far off, guiding light that lets us make sure we stay
of Nikes work to date by interviewing employees on track.
and spending time at the global headquarters in
Oregon. Jim Goddard, Director of Considered Inno- The second part of the North Star is a set of specific
vation at Nike, reflected. Having the TNS team ask- innovation goals that will provide concrete direction
ing questions that werent nave and were obviously to designers and ensure that the North Star can be
grounded in experience helped tip the Nike inter- translated into practical short, medium and long-
viewees to engage with them more that was a big term goals. One of the key goals is to design prod-
help in getting started. ucts that are fully closed loop, using the fewest possi-
ble materials and assembled in ways that allow them
The TNS team found that the support from upper to be recycled into new products or safely returned
management and Nikes experience in sustainabil- to nature at the end of their use. Other innovation
ity initiatives were significant strengths. Programs goals address healthy chemistry, water stewardship
like the Considered line, the use of organic cotton, and climate stability. Underpinning these innovation
Reuse-A-Shoe and many others provided a rich base goals are The Natural Step sustainability principles,
of experience and success to move forward from. which will serve as an ongoing guide.
The Natural Step team used its Sustainability Lifecy-
cle Analysis (SLCA) tool to develop an understanding
of what Nike had already accomplished and identify
the remaining gap toward sustainability, includ-
ing specific areas they could focus on in the future.
Although Nike already had a strong understanding

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notes. We have learned that sustainability requires
us to work collaboratively to find solutions with
other partners.

As Natural Step Senior Advisor Richard Blume notes,

Nike has already begun to collaborate across the
industry through work with Levi Strauss and the
Organic Cotton Exchange. Nike has already shown
a lot of leadership in that regard. They are trying to
change the industry and engage other companies to
do the same, he said.

Nike will continue to refine its innovation goals and

create action plans to move forward on each individ-
The design space for sustainability is constrained by The Natural ual goal. An important element of their work is to
Steps sustainability principles. understand how they can contribute to healthy com-
munities and human needs by designing more sus-
tainable products. The innovation goals address the
Nikes Innovation Goals social component of sustainability by emphasizing
1. Closing the Loop the importance of returning clean water to commu-
2. Sustainable Materials nities and removing toxic materials from the waste
3. Climate Stability stream that might otherwise end up in landfills.
4. Water Stewardship
5. Thriving Communities Three of Nikes Con-
6. Athletes as Change Agents sidered products were
showcased during the
One of Nikes strengths is the companys emphasis 2008 Beijing Olympics:
on innovation and dynamism. Helping their design- the PreCool Vest, which
ers understand the mechanisms of un-sustainability keeps athletes cool
allows them to create their own innovative solu- before performance,
tions for moving towardsNikes North Star. As Vogel Swift running and row-
explained, Designers want to do the right thing. ing apparel, and medal
What they do best is problem solve, so we needed to stand shoes. The vest is
make sure they understood the problems of un-sus- composed of recycled
tainability so they could design the best solutions. material from the Nike
The Natural Steps principles of sustainability form Grind program, and is
the rules of the game for designers, whose chal- constructed without Jamaican sprinter Asafa Pow-
lenge is to work within them to develop more sus- glue or chemicals. The ell ran the anchor leg of the
tainable products and bring Nike closer to its North running and rowing gold medal winning and World
Star. apparel uses 100 per- Record setting Jamaican mens
4x100 meter relay at the 2008
cent recycled polyester. Olympics in Beijing. His racing
Last Words Nike reports that its suit, pictured above, is part of
Much has changed since Nike first began to work use of recycled polyes- Nike Considered athlete apparel
with The Natural Step on sustainability more than a ter has diverted 20,700 line, and is made from 100%
decade ago. Sustainability is becoming a mainstream recycled polyester.
pounds of polyester
concept and technical innovations are becoming waste from landfills.
increasingly available. Nikes next steps include look- The medal stand shoe is made using Nikes environ-
ing to universities and other companies for innova- mentally preferred rubber formula, which reduces
tive ideas to supplement their own. the use of harmful chemicals by 97 percent.
We used to be very much go-it-alone; we thought Nike launched the Considered design ethos and sus-
we had to solve all the problems ourselves. Severn tainable line of footwear and apparel in New York

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Nike
City in October 2008. The event was held at 7 World In an effort to continue to build employee capacity
Trade Center in Manhattan, the first commercial and engagement in Nikes sustainability efforts, the
office building in the city to receive the Leadership company is making an online sustainability course
in Energy and Environmental Design (LEED) certifica- available to 100 of its employees worldwide.
tion. In an interview with the Reuters News Agency,
CEO Mark Parker explained, Were trying to reduce For more information on Nikes sustainability work,
costs and improve margins, to make the company visit www.nikeresponsibility.com.
more profitable while reducing the footprint we
have on the planet. Parker announced that Nikes
long-term vision for Considered is to design products
that are fully closed loop. These would be produced
using the fewest materials possible and designed for
easy disassembly, allowing them to be recycled into
new products or safely returned to nature at the end
of their useful lives.

Ethylene Vinyl Acetate (EVA), commonly

used in the midsoles of footwear. Waste
scrap is collected during production of the
midsoles, ground into fine particles and
then re-used in Nike sockliners and new
midsoles.

This case study was written by Kim Mackrael for The Natural Step, and is based on an original case study writ-
ten by Brian Lanahan in 1999 and updated by Marsha Willard in 2003. Thanks to Richard Blume, Jim Goddard,
Regina Hauser, Chad Park, Sarah Severn, and Lorrie Vogel for granting interviews to The Natural Step, and
thanks to Richard Blume, Chad Park and Anouk Bertner for editing this case study. Photos courtesy of Nike,
Inc. and The Natural Step.

1 Max White, as quoted by Clean Clothes, http://www.cleanclothes.org/companies/nikecase.htm

2 To learn more about The Natural Step Framework and the principles of sustainability, visit http://thenatu-
ralstep.org/our-approach
3 Nikebiz website. Sustainable Materials (Accessed October 20, 2008) http://www.nikebiz.com/responsibility/
considered_design/sustainable_materials.html
4 Bircher, Sam. (March 2007) Institute of Science in Society Press Release: Picking Cotton Carefully.

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Review of Nike Considered Index and Support Tools
1 Introduction design ethos, which is part of an overall company
Nike has invited The Natural Step to provide external sustainability agenda.
assessment and advice on the Considered Index from Nike has long-standing commitments to sustain-
a strategic sustainable development perspective. ability in place.
This review covers the overall Index approach, rec- The tool is integrated into Nikes innovation pro-
ognizing that there are variations of the Index (e.g. cess.
for apparel and footwear). The assessment method Dedicated personnel support the tools develop-
is explained below. We refer to different aspects ment and integration across the organization.
of the Index in this review, so a description of the The Index connects with, draws from and supports
approach and its parts is provided. We then give an many other aspects of Nikes sustainable business
overall assessment, followed by technical examina- and innovation agenda (for example, procure-
tion of different parts of the Index and commentary ment sustainability and audit programs, restricted
on its public release. substances lists, company targets and policies, etc).

Assessment Method Just as an analysis of any single move or piece of

Backcasting from Success sports gear used in a football game cannot tell you
The assessment has been conducted using both the who will win, one needs to look at the whole pic-
sustainability principles and backcasting planning ture. Organizations wishing to use the Index and
method of the unifying Framework for Strategic build from Nikes experience should bear this in
Sustainable Development, promoted by The Natural mind and ensure they build the necessary competen-
Step in collaboration with its international research cies and structures in place to make the best use of
and practitioner networks. Four science-based sus- the results from the Index.
tainability principles from the framework describe
success in terms of the conditions needed for a sus- Description of the Considered Index Approach
tainable society, providing an operational definition The Considered Index approach can be described as
of sustainability that allows for a gap analysis a set of strategic design innovation tools providing:
between where we are today and where we need to
arrive at in the future. 1) Insight into the life cycle of materials used in
product creation (material scores).
From this whole systems perspective, it needs to be 2) Incentives for Nike to make more sustainable
clearly stated that there is no such thing as a sustain- products, in line with the companys priorities
able or an unsustainable material or product; there and goals (product scores).
are only sustainable material and resource manage- 3) Communication of the performance results
ment practices. Product and material sustainability using Nikes internal standards (Considered
claims therefore need to be viewed carefully, and as benchmarks, e.g. Gold standard).
part of a journey toward sustainability one that 4) Company targets for continual improvement
has many possible pathways. (stretch goals for meeting company-wide
benchmarks of product performance by a given
Understanding Purpose and year, e.g. all footwear to be Considered Bronze
Context for the Index by 2011).
All tools serve a purpose. They need to be examined
with their purpose in mind, and understood within
the context in which they are used. To judge if this
Index is a good tool for supporting Nikes movement
toward sustainability, Nikes overall approach to sus-
tainability must be understood:

The Index has been developed to aid design and

material choices as part of Nikes Considered

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 Nike
The two main tools that make up the approach are: It is therefore refreshing to see the approach Nike
1. Material Assessment Tool (MAT) [http://nike- has taken combining quantitative life cycle mate-
biz.com/Pages/ScoresDetail.aspx]. This tool scores rial assessment with qualitatively-derived scores
and ranks the material types used to manufacture rewarding improvements in product creation.
Nike products from least- to most-preferred. The
scoring is based on: This approach highlights an evolution in thinking on
Major, known supply chain environmental measuring sustainability away from solely impact
issues within defined impact categories. minimization and movement toward an innovation
A life cycle perspective, from cradle to gate. enabling strategic perspective. We believe this Index
Publicly available data that is compiled and is a powerful demonstration of an overall backcast-
aggregated for general material types and typ- ing approach for enabling sustainable design inno-
ical supply chain scenarios. vation, not simply a set of tools for measuring move-
Third party input from specialists in life cycle ment away from environmental impacts.
assessment (LCA) methods.
Weightings are assigned to impact catego- Driving Progress Toward a North Star Vision
ries, based on Nike priorities. For innovation tools to really drive progress toward
sustainability, the definition of sustainability itself
2. The Considered Index. The Index rewards design must be clear what are we trying to achieve? Com-
innovation choices related to product creation by panies committed to sustainability must ultimately
assigning scores to products. It encourages the assess and align their corporate business model and
selection of environmentally preferred materials goals with the needs and principles of the sustain-
(as scored in the Material Assessment Tool) as well able society we are trying to create. Although the
as other practices where the designer can improve Considered Index tools were first created to address
the environmental profile of the product, i.e. less a sub-set of known environmental sustainability
waste generation, use of desired chemistry and an issues, Nike has since defined its long-term innova-
innovation bonus for breakthroughs that can be tion goals using sustainability principles that provide
transferred across models. full awareness of the sustainability challenge in both
social and environmental dimensions.
Learn about Nikes Considered Index from their FY
20072009 Corporate Responsibility Report: http:// This Considered North Star vision establishes an
goo.gl/mUl1RB. The entire report is available at ambitious scope of action based on what science
http://www.nikebiz.com/crreport/ says is needed for sustainability and what is rele-
vant for Nikes business. While the Index does not
Nike uses these tools in a number of ways for currently address all of Nikes aspirations, we have
example, aiding procurement decisions, setting of observed that the goals themselves are now driving
internal standards and more broadly for defining further evolution of the Index. This guarantees a liv-
sustainable design performance. Nike has chosen to ing rather than static method of evaluation that can
externally label Silver and Gold standard products, continue to grow over time.
sending a signal to the consumer about Nikes Con-
sidered design ethos. The lesson for other organizations is that the use of
such tools can only make sense when they are linked
2 Overall Assessment to a clear and comprehensive definition of sustain-
Using Sustainability as a Driver of Innovation ability in combination with relevant company com-
Many traditional tools and approaches for measur- mitments for helping society to achieve this desired
ing product or material sustainability take a static state.
perspective, attempting to measure and assess the
scale and severity of known issues and impacts today Evaluating the Impact of the Index
(primarily a risk avoidance approach). On their own Recognizing that Nike needs a pragmatic approach
these life cycle assessment approaches have limita- relevant to designers, the utility of the Index is best
tions in terms of guiding strategic decision-making assessed by looking at the way designers use it and
toward 1) sustainable resource management and 2) the outcomes of their work. Designers interviewed
related business opportunities. in this review noted that the approach helps them:

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Achieve a good overview of the environmental Key environmental sustainability impact catego-
sustainability profile of a product style. ries (energy, chemistry, waste, and water) have
Identify low hanging fruit; quick easy changes been chosen in order to balance practicality with
become obvious. comprehensiveness. The impact categories cover
Strategically develop a style with sustainability some issues related to the first three sustainabil-
issues in mind. ity principles that cover problems associated with
Creatively explore design choices, analyzing pric- mined materials, man-made substances and phys-
ing and testing scenarios for improvements that ical degradation of nature. The approach identi-
are cost-neutral. fies the least number of variables that can be used
to have fairly high confidence that Nike is moving
Nike staff also noted outcomes from the Considered in the right direction toward sustainability. It does
Index as follows: not seek to cover everything.
Built commitment for Nike Considereds approach Social sustainability issues (related to the fourth
to sustainable product innovation. sustainability principle) are not directly included.
Provided a broader perspective on what designers Some implications are addressed indirectly (e.g.
can do to make a difference. health effects on workers from chemistry, sourc-
Raised enthusiasm and excitement about sustain- ing from water-scarce regions). Social issues and
ability by making it tangible. environmental sustainability issues are inherently
Overcame perception that sustainability costs connected issues so ideally they should not be
extra by showing cost-neutral improvement pos- addressed in isolation.
sibilities.
Informed procurement decision-making. This shows that while the tool addresses some
Challenged designers to compete between prod- aspects under each of the four primary mechanisms
uct lines. of un-sustainability, it does not cover them fully. As
Nike has expressed the desire to expand the scope
Anecdotal reports from Nike affiliates who are of the Index tools and develop new tools, we sug-
beginning to use the Index also suggest that it is gest that the sustainability principles be used to
prompting new questions to be asked of suppliers. inform these updates. This would capture issues not
Further measurement of the impact attributed to currently addressed, such as chemical persistence,
the Index is explained in Nikes Corporate Responsi- release of scarce metals, and more on the social
bility Reports and studies such as the MIT Sloan Man- dimension.
agement study Nike Considered: Getting Traction
on Sustainability (Henderson & Locke 2009). The Design Parameters within the Index
impact on the end-consumer has not been evalu- The overall scoring scheme developed by Nike to
ated, though much has been publicly written about reward design choices has been given consider-
the evolution of Nikes Considered approach and the able thought and sensitivity testing to ensure that
high profile athletes who wear Considered products. differentiation between design options is possible.
We expect that the scoring reflects a good range of
3 Getting Technical: Index Structure options (best to worst options) for the designer from
Here we comment on certain aspects of the Index a sustainability perspective.
construction. As the Index and Material Assessment
Tool use different scoring approaches we discuss Although we cannot comment in detail on the suit-
the two tools separately. Assessment of the MAT is ability of the design variables in the Index (points
included in the next section. rewarded for material selection, waste generation,
chemistry and innovation) we believe they strike a
How Comprehensive is the Index? good balance of what the designer has control over.
The Index needs to be acknowledged as a sophisti- There may, however, be scope to expand the scoring
cated tool covering a significant scope of environ- to look at the fate of the product, e.g. is it designed
mental issues relevant to Nike. Looking through for closed loop, durability, or for cold water wash-
the lens of the four sustainability principles we can ing?
explore the Indexs strengths and gaps in relation to Finally, it needs to be noted that the scoring has
the full scope of sustainability: been developed directly by Nike who does not claim

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this to be a third party eco-label. External input on Data Quality and Validity
the approach is now being sought. All organizations working on sustainability will rec-
ognize lack of supply chain transparency and access
4 Getting Technical: Material Assessment Tool to meaningful data as key challenges. The MAT
In this section we comment specifically on the life employs a somewhat pragmatic approach, working
cycle assessment approach in the Material Assess- on available information and proxies. The assump-
ment Tool underpinning the Index. tions and data quality used to generate material and
product scores need to be understood so that results
MAT Impact Categories, Weightings and the basis for decision-making are interpreted cor-
Aggregation rectly:
We note the following:
Nike has used external input and guidance from Publicly-available data has been used.
LCA experts to create a 100-point scoring system Data is not consistently available and expert input
from the life cycle data (the details of the LCA has been used to make educated decisions in
approach are not included in the scope of this order to generate scores from multiple sources.
review). The impact categories included in the The scores are also base scenarios for generic
scoring reflect Nikes priorities. Weightings are material types with significant aggregation. This
applied to the impact categories so that scores does not account for the differences between
generated in each category can be aggregated supply chains and suppliers, which are likely to be
into overall material scores. significant.
In our view, deciding on the importance or sig- Ensuring that data is accurate and stays current is
nificance of particular impact categories over one a key challenge. A clear mechanism for updating
another (e.g. toxicity vs. climate change) is an the assumptions in the Material Assessment Tool
impossible task and should not be attempted. They is not apparent but will be essential moving for-
are simply different dimensions of unsustainabil- ward.
ity to be tackled. The danger in this aggregation
is the perception that the best scoring materials In the future, industries will need increasingly
are viewed as the most sustainable rather than sophisticated tools to understand the consequences
most preferred, based on current priorities. This of their activities and plan solutions. Lack of data
needs to be more closely examined, as the poten- will need to be addressed. Given this, we would like
tial (and cost) of a material to be managed sus- to see Nike and the industry at large aiming for full
tainability can change over time, be region- and transparency in the supply chain on sustainability
scale-specific or be heavily affected by only one issues. If this ambitious long-term goal were agreed,
parameter. Recognizing that Nike has consulted rather than create only the generic material score-
external parties to develop its scoring approach cards, a further step would be to quantify the uncer-
we simply wish to note the interpretation risk in tainty range and incentivize suppliers to demon-
scoring apples and oranges together. strate where they lie within it. The use of web-based
With the above caution noted, other companies technologies may also be a means for building trans-
who wish to aggregate data from the different parency by crowd-sourcing of data.
impact categories in the MAT and Index may
choose to assign different priorities to them. In Overall, the MAT illustrates the challenge of get-
order for the tools to retain their integrity, the ting reliable normalized data from manufacturers
company priorities must be included in a transpar- and suppliers and suggests a requirement for a sea
ent way. The rationale for setting priorities should change in industrial practices. Nikes effort to share
also be outlined, e.g. perceived importance or its research findings on supply chain impacts needs
urgency of sustainability issues, business priori- to be commended for raising this issue to industry
ties, ability to influence, etc. attention.

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Nike
5 Public Release of the Index lessons learned with the industry and opening it up
It is a hallmark of leadership that Nike is sharing its for public scrutiny. We look forward to seeing how
lessons learned with the industry and opening up Nike continues to evolve its tools to make progress
for public scrutiny a generic version of the approach toward sustainability.
the Nike Environmental Design Tool [http://www.
nikebiz.com/Default.aspx]. This should be seen as a 7 About this Review
significant contribution to the industry dialogue on The Natural Step
sustainability performance and it should support the The Natural Step is an international not-for-profit
development and convergence on approaches that organization dedicated to sustainable development.
can be universally applied across the industry. The Natural Step acts as a catalyst for society, bring-
ing about systemic change by giving decision-makers
We suggest that metric tools alone are not enough a common, science-based understanding of sustain-
for industry alignment on sustainability. Capacity ability, and a framework to make decisions in a gen-
building tools should accompany any Index to bring uinely sustainable way.
people on board with a shared story of what sustain-
ability means for the industry, using a robust defini- The Framework for Strategic Sustainable
tion. In this way each actor can assess the inherent Development
problems in their own activities and work to gener- The Framework for Strategic Sustainable Develop-
ate and evaluate possible solutions. ment commonly called The Natural Step Framework
after the organizations promoting its development,
Knowing the ultimate aims that Nike and other application and dissemination has been devel-
industry leaders are seeking to achieve with their oped, tested and applied together with researchers,
tools is helpful regardless of current demands, the business and political leaders and practitioners all
state of tools or available information. Such an around the world over the last 20 years. It under-
approach would help revise current tools by identi- pins and has inspired many of the worlds pioneering
fying gaps and continually lift the bar as the industry sustainability initiatives and is openly published and
makes progress. freely available for use by all.

6 Conclusion The Framework as the Lens for this Review

We really like this tool as it takes a pragmatic, stra- What makes the framework unique is that it is
tegic life cycle management approach where sus- proven on 3 arenas:
tainability is viewed as a journey rather than a static It is built on scientific consensus, with PhDs,
measurement of impacts. The use of product scores peer-reviewed articles, and international scientific
and labels such as Gold, Silver and Bronze for scor- recognition.
ing and communication helps to simplify a complex It has been used by practitioners all over the world
task, making sustainability concrete enough to bring in organizations of all fields and scales.
designers on board, giving them the information It can be used to analyze and relate all sustainabil-
and incentives to make a real impact through design ity tools and concepts to one another and to the
choices. Digging deeper one can see the depth of goal of sustainability.
analysis as well as the scope limitations and chal-
lenges with data availability and aggregation meth- It is these attributes which make it suitable as a lens
ods. for reviewing Nikes Considered Index from a strate-
gic sustainability perspective.
This Index is a very sophisticated tool and a powerful
demonstration of an overall backcasting approach Scope of Review
for enabling sustainable design innovation. What This assessment is made drawing on insights by
sets Nike apart is that it has used scientific principles advisors familiar with Nikes business. It has been
of sustainability to set the scope for its vision of suc- reviewed by Dr Karl-Henrik Robrt within the scope
cess for product sustainability. Nike is now using its of the international research program Real Change,
tools to make progress toward these goals. in which The Natural Step is a founding partner. The
review was conducted between December 2009 and
It is a hallmark of leadership that Nike is sharing its July 2010 through interviews with Nikes Considered

50
 Nike
Team and Index users, training on Considered Index, 2012 Update (from 2010/2011 Per-
document review and participation in an NGO stake-
holder session. It builds upon The Natural Steps prior formance Summary Report)
understanding and collaboration with Nikes Consid-
ered innovation team throughout 2008 to support The materials in just our NIKE Brand footwear and
the development of Nikes North Star Vision. apparel products come from 900 different material
vendors (i.e., supplier companies). We do not source
directly with these vendors; they are independent
Contributing Authors companies that sell materials to our contract fin-
This report has been compiled using input from a ished-goods manufacturers based on our design
number of TNS staff drawn from The Natural Step specifications. To drive sustainability improvements
International, The Natural Step Network USA and in materials, we focus on the part of the value
The Natural Step Canada. chain over which we have the most control: product
design.
Regina Hauser
Executive Director Decisions made in the product design phase deter-
The Natural Step Network USA mine the majority of a products environmental
impacts. Nike teams design products with very
Richard Blume detailed material specifications, and by providing
Senior Advisor those teams with the information they need to
The Natural Step International choose better materials from better vendors, we can
improve the sustainability of our products.

To do this, in 2006 we introduced Considered Design.

This design ethos together with evaluation systems
for footwear and apparel that we call the Consid-
ered Indexes enables our product-creation teams
to easily compare materials and make informed, sus-
tainable choices during the design phase. The Con-
sidered Indexes represent years of research and anal-
ysis of materials and their environmental impacts
(including energy use, GHG emissions, water use,
land use, waste and chemical use) and consolidates
that information with the major manufacturing
environmental impacts (waste and solvents) into a
decision-making tool that our teams can use to score
their footwear and apparel designs in just minutes.

We provide our product creation teams with exten-

sive training in how to use the Considered Indexes
and on the importance of focusing on the sustain-
ability of materials. The teams are given scoring tar-
gets for each season of products they design. In the
current version of the Considered Indexes, materials
make up 35 percent of the score for footwear and 60
percent of the score for apparel, so its clear to the
design teams that focusing on materials is an effec-
tive way to meet their goals.

While the Considered Indexes have been used pri-

marily by the NIKE Brand, our Affiliate brands have
also begun introducing and using them to evaluate

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Nike
their product designs and have committed to adopt to become more environmentally sustainable. We
the indexes by the end of FY15. For example, Hur- score material vendors on criteria such as whether
ley International scored selected apparel designs in they are complying with the Restricted Substance
FY11. List (RSL) testing requirements and the Nike Water
Program requirements; if they take part in materi-
Next-Generation Tools als certification processes, such as the Global Recycle
We are now working to take the Considered Indexes Standard; and whether they have ISO 14001 certifi-
to the next level. We have been on a multi-year jour- cation or operate out of certified green buildings.
ney to refine the footwear and apparel Considered Rating higher on these types of criteria will increase
Indexes based on feedback from product creation a vendors overall Nike MSI score.
teams. Updates are expected to launch in FY13.
We also hope the Nike MSI will drive vendors to
In addition, we have significantly upgraded the develop more environmentally preferred materials,
materials rating tool embedded in the indexes and which will score higher on the index.
are calling the new tool the Nike Materials Sus-
tainability Index (Nike MSI). Development of the We have collaborated with and trained material
Nike MSI finished in FY11, and designers are begin- vendors to familiarize them with the new Nike MSI.
ning to use it in FY12 (see infographic below). As of the end of FY11, we had trained approximately
500 vendors.
One major improvement in the Nike MSI is that it
rates material vendors in addition to materials them- Learn more at http://goo.gl/35cI5C.
selves, providing strong incentives for the vendors

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