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Nike shares water update

May 2011

Most people do not associate water with shoes. Or clothing. But we do. We are looking at water in everything we do, understanding its importance in supporting business, human life and ecosystems, and as one of the central environmental and human health issues facing the world today.

We have committed to deepen and broaden our understanding of our water footprint, to manage it, and to share both our approach and our progress. That includes the agricultural water impact of materials we use, water-intensive industrial processes such as dyeing and finishing, and water use in corporate facilities for landscaping, food services and hygiene.

We include updates on our management and performance in our corporate responsibility reporting. The last report covering FY07-09 is available online.

Our strategy continues to evolve, focusing on the most significant risks, the best prospects for innovation, and the greatest opportunities to take solutions to scale across our supply chain and industry. Some highlights of our efforts include:

Direct Operations The water use in direct Nike operations is a tiny portion of our overall water footprint, with far greater water use and wastewater discharge related to the production and processing of materials for our product.

Despite the small relative impact, we work hard to manage our operations responsibly  For example, our Oregon world headquarters, located on more than 175 acres, includes 48 acres of native woodlands and wetlands, a portion of Cedar Mill Creek, 63 acres of landscaping, and a six-acre lake. From 1995 to 2003 we reduced the amount of water per acre needed to irrigate the landscaping by more than 70 percent through computer-controlled irrigation linked to weather conditions and evapotranspiration rates in 591 zones. We use no harsh pesticides or chemicals in the campus landscape or natural areas. And in November 2005, Nike became the first corporate campus to earn Salmon-Safe certification.

Supply Chain Management Nike recognizes that water is a fundamental resource for manufacturing our product. Water is used to cultivate cotton, produce other raw materials, dye and finish textiles, and meet domestic needs at contract factories.

In FY01, we established the Nike Sustainable Water Program to collect and track data from material vendors in our supply chain. We began with 50 manufacturing facilities in FY01, and are on track to have more than 500 participants reporting data in FY11.

We worked with Business for Social Responsibility’s Sustainable Water Group to implement water quality guidelines that include standard water quality parameters — pH, biochemical oxygen demand (BOD), chemical oxygen demand (COD), total suspended solids, and color — with limits that are stricter than many local and national regulations. As participation has increased, so has the rate of suppliers achieving full compliance. Currently 80 percent or more of participating suppliers have achieved full compliance for the last three years, while the rate of noncompliance has declined and remained low.

In addition, Nike promotes water stewardship through design and innovation by participating in the development of water-efficient processes and materials, and educating designers, and providing tools for the business to make less water-intensive choices in manufacturing and sourcing.

Collective Action Nike’s water program encourages suppliers to achieve high water quality standards for their total production volume, not only what they produce for Nike. We have estimated that every year close to 3 billion gallons is used to process, dye, and finish the cotton and polyester destined for Nike apparel. The total annual water use reported by manufacturing facilities participating in our program exceeds 50 billion gallons. Through its broad reach and inclusive approach, we believe that the water program can play a role in transforming the industry.

In addition to the water program’s direct engagement with shared supplier facilities, we regularly work with other apparel and footwear brands and retailers to assess and respond to water use and related issues. For example:

- Business for Social Responsibility’s Sustainable Water Group is a partnership of global apparel brands that has established a consistent set of wastewater quality guidelines for textile processing facilities. In recent years, the group’s focus has expanded to include development of guidelines for water efficiency, best practices for water management in finishing facilities and laundries, and the potential for use of recycled water in textile processing.

- The Natural Resource Defense Council Responsible Sourcing Initiative began by identifying and auditing textile mills in China that produce fabrics for multiple participating brands. Results of several site visits and follow-up audits led the group to develop and publish 10 basic practices to conserve water and energy, which have a fast or immediate return on investment and can be universally applied across different types of textile manufacturing processes.

The recently formed CEO Water Mandate SE Asia Apparel Sector Collective Action group has begun its work by identifying regions of shared interest, and plans to proceed with collective action to identify and address shared water-related risks and impacts at the watershed level.

Furthermore, we recognize the value of data in understanding and assessing impacts. Supply chain data collection has been a critical first step toward assessing where Nike has the greatest impact and where we can contribute to significant positive change. We created an online reporting system to collect water-related data from hundreds of facilities throughout the supply chain. Given our commitment to open innovation to accelerate positive change, we have recently made the system available to others in the industry. By sharing the reporting system and enabling third-party database management, we intend to support and encourage data acquisition for other apparel and footwear brands and retailers, reduce the reporting burden on facilities that produce goods for multiple brands, and free internal resources to focus on strategy and targets that will continuously improve water stewardship at Nike. Once established as an industry tool, we expect the database to become a significant source of information about shared supplier locations, and to enable collaboration to an extent not previously possible in the textile industry.

Public Policy Nike’s commitment to collaboration also extends to our public policy work, where we engage with government, NGOs and peers to solve common challenges and goals together. We believe that no one company can solve sustainability issues alone, partnership is critical to success. To this end, we are engaged in a multi-year analysis of the many links between sustainability and public policy. To date, Nike has not proactively focused on water policy, but as part of this broader analysis we aim to identify where we believe that business, NGOs and government can work together to have the most impact.

Community Engagement Our approach to water includes acknowledging the complex issues related to the impacts of water quality and scarcity on human health, and access to water and sanitation in the developing world. We seek opportunities to address these challenges, which dramatically affect quality of life for so many people. While many implications of water scarcity are universal, water management challenges are often local: unique to each watershed and requiring solutions tailored to fit the local context.  We have begun to explore the possibilities for community engagement at Hurley, one of the Nike Affiliate brands.  

A focus of Hurley since 2008, the H2O concept partners with two non-profit agencies to inspire global change and create a culture of conservation within the organization. Two key initiatives include:

Waves for Water, an organization that delivers innovative water filters and permanent solutions to people and families in need, reaching more than 4 million people with clean drinking water. Hurley has sponsored and participated in relief missions to Haiti, Brazil, India, Yemen and Japan. Future relief efforts include monitoring past work and helping to build long-term infrastructure.The Ecology Center, a Southern California organic farm, local to Hurley’s headquarters, designed to educate the community and seek real solutions to address water scarcity. Hurley helps to curate exhibits for the center, and to create installations to inspire employees at Hurley Campus in Costa Mesa. The newly installed H2O Zone for employee education and water activism was dedicated on World Water Day 2011. The area features an herb garden utilizing rainwater runoff, and other creative everyday ways to combat water scarcity. Facility improvements planned for 2011 include motion-sensor sinks, waterless urinals, recycled paper products and employee education efforts.

Hurley H2O also works with local schools and instructors to promote water awareness and inspire students. Hurley plans continue to foster this important dialogue about water both on the company website and in daily operations.

Transparency Nike began reporting on water in CR Reports in FY04. We plan to continue sharing our journey. We continuously reassess the relevance and materiality of metrics, key performance indicators, and our response strategy so that our activities focus on the greatest available opportunities for improvement.

We report on our progress to share our journey, including the goals and the strategy, the achievements and the challenges. We'll include updates on our approach and progress on water in our next reporting. Until then, more information is available in our previous reporting at Nikebiz.com and at Nikebetterworld.com. I invite you to track our journey with us.

Kind regards,

Hannah Jones VP, Nike Sustainable Business + Innovation