Sustainability with purpose: Nike’s circular model drives innovation and growth

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When the most valuable sports brand on the planet puts sustainability at its core, the world can no longer deny that green means business.

The speed and momentum embodied by the Nike swoosh is now catapulting the company towards a radical and sustainable future. And it’s a future based on their purpose: to bring inspiration and innovation to every athlete in the world.

The key word here is innovation. In the context of the global climate crisis, Nike have embraced the need for large-scale systemic change, and see sustainable innovation is the only road to delivering “better solutions that benefit athletes, the company and the world”. Purpose has driven the company towards a circular model of business, where plastic bottles, recycled shoes and factory scraps live second lives as cutting-edge trainers and sportswear. The company’s FY14/15 Sustainable Business Report, released just last month, reveals just how much progress has been made.

“Sustainable innovation is an engine for our future growth and a catalyst for revolutionizing the way we do business,” explains Hannah Jones, Nike’s Chief Sustainability Officer. “We fundamentally believe the transition from linear to circular business models will accelerate our ability to create the future of performance products for the athlete.”

Phoenix from the ashes

This forward thinking is a far cry from Nike’s corporate image of the 90s, when a global boycott campaign named and shamed the brand for its abysmal factory conditions and sweatshop labour. Denying there was a problem, Nike paid the price with a huge blow to its bottom line. Yet the storm cloud held a silver lining: a legacy of social awareness that has paved the way not only for a more ethical, but a more innovative and prosperous future.

“At Nike, we believe it is not enough to adapt to what the future may bring – we’re creating the future we want to see through sustainable innovation,” says Nike President and CEO Mark Parker.

“Today our teams are advancing ambitious new business models and partnerships that can scale unprecedented change across our business and the industry.”

Closing the loop to drive profit and growth

Nike’s new report outlines “a vision for a low-carbon, closed-loop future”. It catalogues an impressive list of achievements against sustainability targets. But most of all, it reveals Nike’s purpose-driven sustainability strategy to be a powerful engine for profitability and growth.

At the same time as reducing its emissions by almost 20 per cent and improving its water efficiency by 18 per cent, Nike has seen a 52 per cent increase in revenue (from fiscal year 2011 through to fiscal year 2015). Part of this can be put down to the company’s trailblazing circular approach that is improving efficiency and cutting out waste.

In FY15, Nike’s diverted 92 per cent of its footwear factory waste from landfill or incineration without energy recovery, and transformed 54 million pounds of factory scrap into materials used in its footwear and apparel. As a result, 98 per cent of its new footwear scored silver or better on its product sustainability indices.

The moonshot challenge

But while celebrating this progress, the FY15 sustainability report marked the launch of a more audacious goal. Echoing Unilever, Nike has set itself the ‘moonshot’ challenge of halving its impact while doubling its business.

“It’s a bold ambition that’s going to take much more than incremental efficiency,” says Jones. It’s going to take innovation on a scale we’ve never seen before.”

To get there, Nike has set a number of ambitious targets for fiscal year 2020, including:

  • Zero waste from contracted footwear manufacturing sent to landfill or incineration without energy recovery.
  • 100 per cent of contract factories meeting the company’s definition of sustainable.
  • A 10 per cent reduction in the average environmental footprint of its products, and increased use of more sustainable materials overall.

Besides this, Nike is aiming to reach 100 per cent renewable energy by the end of fiscal year 2025 in owned or operated facilities, and to encourage adoption of renewable energy more broadly as part of an effort to control absolute emissions.

A sustainable future

This latest chapter in Nike’s history underscores a firm belief we’ve long held at the House: that the future belongs to companies with purpose.

Purpose provides the motivation and clarity to propel businesses forward. It drives innovation. It inspires customers and investors. And as a result it accelerates growth.

It is incredibly exciting to see a sportswear titan like Nike pushing the boundaries of products in pursuit of its purpose, creating thoroughly commercial merchandise that is also great for the environment. Its Flyknit running shoes are a case in point. Flyknit replaces the traditional panels of trainer uppers with a precision-engineered yarn, making every single stitch count towards athletic performance. Not only does this technology reduce waste by about 60%, it creates a lightweight, ultra-supportive running shoe that helps athletes achieve their best. This is yet another example of purposeful brands achieving more with less, as we’ve seen with Unilever’s Comfort One-Rinse – a detergent that cleans fabric with 75 per cent less water.

Where sustainability is not just an add-on, but purpose-driven, and woven into the very fabric of company strategy, the results can be powerful indeed. As Nike’s story shows, it can lead to better products, a smaller environmental footprint, greater commercial success, and a company capable of going the distance.

About Steve Fuller

Steve Fuller is Creative Head of The House, a purpose-driven business, culture and brand consultancy. To find out more, please visit www.thehouse.co.uk.

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