The need for the company sustainability

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The ability to continue. By ecology how long the natural resources are available. By human, how long they can make the natural resources available and how can they use it better. As human population is increased the natural resources have declines and there are changes in the natural world and thus leading to destruction. This shows the world is not sustainable and we need to take steps to reorganize, practice and save the resources for future generations.

Monitoring system

A monitoring system is used to measure the sustainability and set goals, apply management changes and then measure the progress. This measure can be done by following certain models and using indicators. They generally include environmental, social and economic measures on different scales and contexts. The widely used sustainable measure is the TRIPLE BOTTOM LINE.

The triple bottom line is made up of "people, planet, profit" phrase that is the power house for Sustainability.

Planet refers to sustainable environmental practices. A TBL company prefers to conserve the natural resources as much as possible or the least tries not to harm them. It is the practice for TBL based companies to avoid resource depletion.

Indicators

Indicators are everywhere they are naturally present in everyone's life. "Indicators are necessary part of the stream of information we use to understand the world, make decisions and plan our actions". Indicators are created from values and then later on they create values. Indicators when poorly chosen can cause serious malfunction and predominantly they are poorly chosen. The indicators should be singled out by the behaviour and type of system. They reflect reality based on vague and imperfect models. Indicators are used for various purposes but most indicators mask national and cultural values. Indicators help in narrowing different world views and thus we require many indicators. Sustainability and development have been old issues but they have turned into global and immediate issues. When it comes to development the indicators represent growth but should also include efficiency, equity, quality of life .And sustainability indicators should be considered like time and threshold than just environmental. Coming up with good indicators is really a challenge. Listing down the characteristics of ideal indicators is not easy and vice versa. Indicators are not just numbers but then they are also signs, symbols, colours and images. All that is needed is not just the indicators but a rational system derived from them. Sustainability is not just looking for indicators but also building up an information system. Reliable and valuable indicators are the objective indicators but subjective indicators are also important as they represent quality.

The indicator selection process works best by combined participation of experts and grassroots. The systems insights like critical linkages, dynamic tendencies and leverage points help in designing the indicators of a system. F or a system stock is an indicator for its state and time. Exponential growth rates are indicators. Evolutionary potential, threshold and turning points are also indicators .Indicators should be represented in graphs rather than static numbers. Indicators are easy to understand and define when they are combined with a dynamic model. For example climate change, fish population, demographic developments etc. These dynamic models help in troubleshooting in a system and also help in testing and correcting the system.

Thus an indicator is something that helps us understand where we stand, where are we going and where we want to be. Sustainable indicators point to areas like economy, environment and society which are linked together with their weaknesses. Indicators help in fixing problems.

Sustainable Enterprise

NIKE

About the company

Nike is a popular and highly traded sportswear and equipments supplier based at the United States of America. The company being headquartered at Oregon is the world's leading supplier of athletic apparel, shoes and sports equipments. The revenue of the company is in excess $18.6 million USD in fiscal year 2008 and as of the same year the number of people employed in Nike is more than 30,000 people worldwide.

The company was founded by Bill Bowerman and Philip knight at January 25th 1964 and officially named it Nike. Nike markets products like Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Skateboarding and also subsidiaries like converse, Hurley, Umbro and Cole haan. Nike has around 700 shops under contract around the world and 45 offices outside the US. Most factories of Nike is located in Asia which includes countries like China, Taiwan, India, Thailand, Vietnam ,Pakistan, Philippines and Malaysia. Nike being a leader in sports sponsors many high profile athletes and teams around the globe. Nike is well known for it's "swoosh" logo and its trade mark slogan "Just do it ". Nike produces wide range of sports equipments from shoes, jerseys, shorts, base layers, etc .Initially they started with just shoes and now produce products for almost every sport in the world. Nike is well known and popular in youth culture, hip hop culture and also supply urban fashion clothing. Nike is innovative and produces products with latest technology.

NIKE FOR THE PEOPLE

Nike employs 30,000 people across the globe and they range from designers to marketers to accountants to compliance monitors to retail employees. And Nike has more than 800,000 workers employed to the contractors around the world.

Nike at the year of the financial year 2009 employed 32, 8000 employees and from financial year 2006 to 2009 NIKE's work force grew by 16 percent. And if this continues in the future at the same rate the number of employees should be around 38048 and contract employees much more than 100,000. Nike conducts a survey every couple of years with its employees to measure what motivates and engages employees. Survey data here is an indicator which helps Nike to get to know or measure the interest and what will motivate the employees. The final survey was taken up at end of financial year 2009 and it focused to measure employee engagement and manager effectiveness. Every employee is invited to participate over a web-based survey which is available in 29 languages. Every year Nike comes up with new indicators to monitor the peoples various aspects like work interest, motivation etc. FY 09 included part time employees to its survey and the response rate grew up to 69 percentages. And the previous year with fulltime employees participating it was FY 06 it was 62 percent and FY 04 it was 51 percent.

The survey is analysed under the following indicators and with these results an analysis result shown in the below image.

HR general status and factory regulation

Recruitment and selection

Training and development

Living conditions

Working environment

Safety and health

Work hours and overtime

Compensation and benefits

Performance management

Teamwork and supervision

Worker-management communication

Quadrant one covers issues of High Satisfaction & High Importance

Here the worker s are quite satisfied with the issues and the issues needs to addressed by training and development.

Quadrant 2 covers issues of Low Satisfaction & High Importance

This segment deals with the issues that workers are not satisfied and these are high priority issues. Issues like behavioural, living conditions etc. Improving these helps worker satisfaction.

Quadrant III covers -issues of Low Satisfaction & Low Importance

This segment is all about employee satisfaction with food, service of factory clinic.

Quadrant IV covers- issues of High Satisfaction & Low Importance

This quad represents the satisfaction of employees over safety and health, training on factory rules and regulations and recreation facilities.

The result from the survey helps the HRM in building workshops to sort out issues. Nike uses the PDCA technique to resolve issues .This technique clearly monitors and reports the flaws in the present system.

.

The indicators helped to find

The company has engaged and energized work force.

Employees are clear with the company's objectives and are in line with the vision of the company.

Employees are motivated, involved and empowered and feel that they are valued and treated with respect from the company.

Overall on the global scale employees have a good relationship with the company and managers. Nike provides employees and managers training on how they could build a successful career through training in management and formal and informal development.

Nike Diversity

The company s gender breakdown is shown below. The indicator Gender displays in FY09 NIKE employed more females than males in Europe, Middle East and Africa and more men than women in the Americas and U.S.

Global Gender Breakdown by Region

Global Management Breakdown by Gender

The overall gender ratio of men and women is 60:40 and when it comes to senior management its 70:30. The gender proportion remained relatively consistent from FY 06 to FY 09.

U.S. Employee Diversity Data

U.S. Management Breakdown by Ethnicity

The indicators gender and ethnicity play a vital role in the monitoring system of Nike.

The Ethnicity report of Nike reveals that in FY 09 there was a 45 percent increase in minorities from 40 percent at FY 05. In FY08 the indicator's where modified or changed and thus an accurate identity if ethnicity was available by FY 09. And when it comes to management there was a 27 percent increase from FY06 to FY 09 and senior management the ethnic diversity profile was increased by 18 percent from 15 percent.

Nike monitoring business

Nike a few years back worked on improving labour, environment and social impacts on their business model but today they have started to focus not just on the above mentioned topics but also Responsibility . They focus on risk management, philanthropy and compliance to make the business more sustainable and balancing People, Planet and Profit for an eternal success.

Nike makes consumer products and they currently rely on the availability of natural resources. They know that the as the demand for raw materials increases the cost of competition for resources will also increase. Over the past few years the senior management of Nike are working to make the business sustainable not just being a survivor but also with a competitive edge. They came up with 3 questions

1. What new business concept would enable them a sustainable economy?

2. What path they should choose and what's stopping them from it?

3. How to evolve and improve with the current model during the changeover.

So to address these questions Nike teamed up with The Natural step, BSR to work the answer. They then started to refine their existing models and started looking into new ways of business.

After all the analysis Nike came into a solution called the CLOSED LOOP BUSINESS MODEL.

A model that would help achieves ZERO waste by complete reusing, recycling or composting of all materials. Nike manufactured products using reclaimed materials to create products.

By FY 09 Nike formed a group of 130 people called SBI (Sustainable Business and Innovation) .SBI works on business priorities, sustainable products, sustainable manufacturing and sustainable market place. SBI helps Nike to prosper in sustainable economy by balancing people, planet, and profit. SBI helps in

Innovate enterprise-level sustainability solutions.

Integrate sustainability into Nike's business model.

Mobilize key constituents to associate in scaling solutions.

Nike will design and influence its supply chain to create less waste, promote reasonable and empowered workers. Nike is focused in finding novel ways to make value and generate optimistic returns on the investment for their business, environment workers and shareholders through partnership and collaboration.

Let's wander through how Nike plays the role in planet sustainability.

WATER:

Day today world, water scarcity is one of the vital environmental and human health issues. Due to Population intensification and economic expansion are steering the increases in need for water for agricultural, domestic and industrial use. The necessity of water is the prime concern for the company. To look forward Cotton is the prime material for today's apparel production and its process like Finishing and dyeing are water-intensive. And for the same leather production for footwear demands a lot of water. And these blows count on the raw material inputs. It is necessary to provide fresh, clean water to the workers in contracted factories for the purpose of drinking and sanitation.

Thus the company has implanted water stewardship in the North Star, which is the process of borrowing the water responsibly and returning it clean to the communities. The factories are built where water is abundant enough to support their water intensive process. To avoid borrowing more water than is needed they team up with other factories in order to perk up the efficiency and return them as clean, or cleaner, than it was found.

Techniques deployed:

According to FY01 report

Their main Objective of improving water quality includes improving the water efficiency. The Nike Water Program fired up with a number of apparel dyeing and finishing facilities. This phase includes more than 400 suppliers and also expands to include NIKE, Inc. affiliates, Nike footwear and Nike equipment facilities The Water Program had led to the development of metrics to critically evaluate the water usage and improve water management. They have well planned to improve their tools in such a way to share them and support their use by retail brands across apparel, footwear and other industries that exploits textile dyeing and finishing.

Apparel

Dyeing and finishing process consumes nearly 12 to 24 gallons of water per pound in Textile production.

Estimated Contribution of Nike Polyester and Cotton Processing to Total Water Use Reported by Suppliers

93% is used for other fabrics like fibre

3% of water is consumed for dyeing and finishing of cotton - NIKE apparel

4 % of water is consumed for dyeing and finishing of polyester - NIKE apparel

This water program began with just 55 facilities in FY01 and has improved to include 403 facilities in FY09. That's nearly two-thirds of the manufacturing facilities in Nike's apparel system. It includes the most water-rigorous facilities such as textile mills, dyeing and finishing facilities, and vertically integrated factories.

Apparel Supplier Participation and Compliance with Water Program Guidelines

As participation has grown up, 80 percent or more of the participating suppliers have achieved full compliance for the last three years, while the rate of noncompliance has turned down to 1.5 percent for FY09.

In FY09

A Web-based reporting system has been introduced by the water Program to make enrolment and participation more expedient for suppliers. Practically all participating facilities facilitate to submit data online during annual reviews and to communicate improvements in water quality and efficiency throughout the year. These collected datas regarding production, water use, discharge volume and wastewater quality lab test results are used for evaluation against Nike Water Program guidelines and are used for the regulation of environmental standards.

Footwear

It's shown that, more than 80 percent of footwear factories were fully amenable with all factors for wastewater discharge standards. And it is compulsory for all Nike-contracted footwear factories either to have an on-site wastewater treatment plant or to discharge wastewater to a central wastewater treatment facility.

Number of Contract Footwear Factories Compliant with Local Wastewater Standards

Climate and Energy:

To identify the energy and climate footprint they have worked across various operations - from design to delivery, manufacturing to travel. From the study they have concluded that the largest energy impact is embedded on the materials.

In manufacturing a running shoe:

59 percent of our energy is in the materials,

22 percent is used during the manufacturing of the product

10 percent is for shipping

Climate:

It's been found that an average pair of Nike running shoes has a CO2 footprint of about 40 pounds. To minimize the evolution of CO2, BICEP (Business for Innovative Climate and Energy Policy) members have put forth nine principles:

To build short- and long-term greenhouse gas reduction targets

To stimulate the growth of green job

To implement the standards of national renewable energy

To capture the opportunities of energy efficiency

To enhance the investment in renewable energy, energy efficiency and carbon capture, and storage technologies

To establish a cap-and-trade system

To promote transportation for clean energy economy

To limit the construction of new coal plants to those that capture and store CO2

To assist developing countries to adapt to climatic changes and reduce carbon content

Climate Strategy:

MISSION: To reduce the consumer and businesses' energy to thrive in tomorrow's low

Carbon economy.

PRODUCT CREATION

MANUFACTURING

DELIVERY

NIKE RETAIL

WHERE WE WORK

Reduce embedded energy in product

Focus on energy efficiency

Optimize product flow to retail partners to reduce logistic emissions

Design, construct and operate green facilities

Moving people

 

Facilitate design and construction of green factories

 

 

Reduce travel through distance collaboration

MOBILIZE : Vision, Strategy, Advocacy

ROI2: Metrics, Finance &Reporting Systems

Total Energy Use Footprint - Nike and Supply Chain, excluding Materials (tJ)

FY06

FY07

FY08

FY09

13,400

14,300

15,400

14,300

Total Greenhouse Gas Emissions Footprint - Nike and Supply Chain, excluding Materials (million tonnes CO2 equivalents)

FY06

FY07

FY08

FY09

1.42

1.53

1.60

1.53

Total Greenhouse Gas Emissions (tonnes CO2 equivalents)

FY09

Economical Indicators

Topic

FY11

Performance through FY09

Progress

Considering design

Footwear: All new developed products will reach 100% baseline standards developed by WHQ

The seasonal production volume achieved 17 % baseline and spring 10% baseline considering ranking.

On track

 

Apparel: All new developed apparel will reach 100% baseline standards FY15 developed by WHQ, EHQ and Hongkong.

The design and development of spring 2010 product team will use online considered index. The yearly goals reporting starts by FY10

On Track

 

Equipment: Newly developed products will reach 100 % of top volume retail product standards FY20 developed by WHQ.

For bags manual considered index product type FY10.

On Track

Considered index waste

Footwear: Achieve 17 percent reduction in waste from FY06 baseline by FY11

Have already achieved 24% reduction in FY09 over FY05

Completed.

 

Apparel: Target set in FY09.

In FY09 they started tracking efficiency through new apparel considered index and will set a target 2015 on number of products achieving them,

On Track

 

Packaging: Have achieved 30 %reduction.

Introduced light weight shoe boxes in FY09.Extension in innovation applied in cartons FY10

On Track

Considered index Volatile organic Compounds.

Footwear: Use petroleum derived solvents. 95% decrease from 1995

Have already achieved 95% from 1995 in FY04 and still continue by dropping 1.9 gram per FY0 6 to FY 09.

Completed.

Considered Index Environmentally Preferred materials.

Footwear: Use of EPM increase by 22 %.

Achieved at 77 % .FY11 target met in FY08.

Completed.

 

Apparel: Increase in use of EPMS by 20 % by FY15

A new material analysis tool completed and tested by FY 10. The tool will be developed with 2 versions with one for Considered Product index.

On Track

 

Equipment : Epm target announced in FY10

Evaluating target for FY10,

On Track

Social indicators

Topic

FY11

Performance through FY09

Progress

Human Resources Management

HRM implementation in all contract factories and in focus.

17 percent completed implementing HRM FY09 on contract factories.

On track

Freedom of Association

Implement freedom of association education program in all contract factories.

17% participated in HRM and Freedom of association education.

On track

Worker survey

100 percent focus on factories to complete statistically sampling of employees

17% completed worker survey.

On track

Collaboration

Make collaborations and promote multiband collaboration. Improve global supply chain to 30 %.

Nike shared 40% factory base in FY09 and still working to realize full business benefits of collaboration.

On track

Excessive overtime

Reduce overtime incidents

Address route cause and make better planning and reducing the number of SKU's produced.

On track

Environmental Indicators.

TOPIC

FY11 TARGET

PERFORMANCE THROUGH FY09

PROGRESS

Footwear Manufacturing

Foot wear manufacturing CO2 emissions footprint: Goals to be announced by Jan 2008

No external target. Achieved a 6% absolute CO2 reduction among factory groups participating in their program

On Track

Inbound Logistics

Deliver 30% absolute reduction in CO2 emissions from 2003 by FY20

FY09 produced a 14 percent increase in CO2 Emissions from the FY03 baseline.Efforts to reduce this impact can be appreciated when the CO2 % change is compared to the overall growth in business during this timeframe.Nike Brand revenue increased approx 70% from FY03 to FY09

On Track

Facilities &Business Travel

Nike brand facilities and business travel climate neutral by FY11; NIKE, Inc facilities climate neutral by FY15

Progress made but rethinking goal as part of larger Climate &energy Strategy

On Track

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