Description
Transparency and accountability are fundamental to our business and our approach to sustainability.
NIKE, INC. FY12
/
13
SUSTAINABLE
BUSINESS
PERFORMANCE
SUMMARY
2
FY12/13 Sustainable Business Performance Summary
WELCOME 3
LETTER FROM PRESIDENT & CEO 4
STRATEGY Business Overview 7
Our Sustainability Strategy 10
Targets & Performance 25
MAKE TODAY BETTER Climate & Energy 31
Labor 35
Chemistry 43
Water 46
Waste 50
Community 54
DESIGN THE FUTURE Innovation 61
Product 63
Manufacturing 66
People & Culture 73
How We Work 79
GOVERNANCE & PUBLIC POLICY Governance 81
Public Policy 83
ABOUT THIS REPORT Reporting at NIKE 85
Stakeholder Engagement & Reporting 86
Reviews 87
Recognition 88
ONLINE CONTENT www.nikeresponsibility.com
Glossary
Contracted Manufacturers Interactive Map
Design Experience
Data Sets
Background
Historic Reporting
Timeline
Guidelines & Principles Index
TABLE OF
CONTENTS
3
FY12/13 Sustainable Business Performance Summary
Transparency and accountability are
fundamental to our business and our
approach to sustainability. This report
offers insight into our sustainability
strategy, performance and progress
against the targets and commitments
we shared in our FY10/11 report.
Our organization has undergone several
changes since our last report, including the
divestiture of Cole Haan and Umbro in FY13
and the inclusion of Hurley and NIKE Golf
within the NIKE Brand in FY14. Generally,
the operational metrics included in this
report are based on the structure of our
portfolio during the FY12 and FY13 reporting
period. They have not been recalculated or
changed to refect the subsequent changes
in our business portfolio.
References to NIKE, Inc. generally include
all businesses in our portfolio during the
respective time period. However, references
to the NIKE Brand generally exclude
Converse, Hurley, NIKE Golf and Jordan.
Further discussion of these changes and
the boundaries of our reporting is included
in our “Business Overview” and “About this
Report” sections.
To provide concise, comprehensive
information, we have included dashboard-
style summaries of progress against our
targets and commitments, along with more
detailed commentary and analysis.
The report also includes a message
from our President & CEO, and an in-
depth discussion of the importance of
sustainability to our growth strategy and
how we are integrating sustainability into
the core of our business.
This print-on-demand report is
complemented by more comprehensive
reporting at nikeresponsibility.com,
including an interactive user experience
through which readers can access
additional background data, explore our
value chain and impacts, and fnd more
extensive information and tools.
Further details on our approach to reporting
can be found in the “About this Report”
section on page 85.
WELCOME TO NIKE, INC.’S
FY12/13 SUSTAINABLE BUSINESS
PERFORMANCE SUMMARY
NOTE: The information in this report and NIKE, Inc.’s corporate responsibility/sustainability reporting and website, inclusive of charts, graphs and discussion, and all
other information presented, may contain forward-looking statements, estimates or projections based on expectations as of the original date of those materials. Those
statements, estimates and projections are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties
are detailed in our reports fled with the US Securities and Exchange Commission, including Forms 8-K, 10-K and 10-Q. Presented information may also discuss non-
public fnancial and statistical information and non-GAAP fnancial measures. All information was current only as of the date originally presented. We do not update or
delete outdated information contained in website materials, and we disclaim any obligation to do so. All content is the property of NIKE, Inc.
We hope you fnd this report useful.
Please let us know how we’re doing at
[email protected].
4
FY12/13 Sustainable Business Performance Summary
NIKE, Inc.’s success as a growth company is tied directly to our culture of innovation. Today we
believe that sustainable innovation that benefts the athlete, the company and the planet will
play a key role in the future of our business.
This principle shapes how NIKE does business. The results we see continue to motivate
us. As you will read in this report, we are pushing the boundaries to decouple our growth
from constrained resources in order to leave the lightest possible footprint, while driving
uncompromising performance for athletes everywhere.
We are constantly integrating more sustainable ways of working across our business – from
design to production, to logistics and retail. While this work propels us forward we also
recognize that NIKE is positioned to leverage the power of our brand to drive positive change
across our entire value chain, within our industry and beyond.
SUSTAINABLE INNOVATION INSIGHTS
Spanning almost 20 years, NIKE’s sustainability journey has been dynamic, marked by an ever-
evolving set of challenges and opportunities. As we continue to raise the bar on our approach,
we see new opportunities. Three that stand out as I refect on our FY12/13 progress are:
1. Sustainability and business growth are complementary. Our strategy to create value while
pursuing innovation that reduces our impact on the environment is delivering measurable
results. For example, the natural assumption is that as revenue goes up so does a company’s
greenhouse gas emissions as more sales translates to increased product manufacturing and
freight activity. However through a variety of initiatives we have been able to change the results
of that equation, reducing absolute greenhouse gas emissions by close to 3 percent while
simultaneously increasing revenues by 26 percent over the time period covered by this report.
This motivates us to push even harder for sustainable innovation across the business.
Breakthrough technologies like NIKE Flyknit, which dramatically reduces waste compared
with traditional footwear manufacturing, and ColorDry, which eliminates water and process
chemicals from dyeing while also driving down energy consumption, increasing productivity and
improving quality, provide just a snapshot of the game-changing innovation that will help fuel
NIKE’s sustainable growth.
2. Materials Matter. Six years ago we identifed that nearly 60 percent of the environmental
impact of a pair of NIKE shoes was in materials used to make it. That insight, along with our
commitment to design with purpose, has helped sharpen our focus on the need for disruptive
innovation in the world of materials.
Arguably, the last major breakthrough in materials that reshaped the industry at scale was
the introduction of polyester about 50 years ago. We believe there are signifcant innovation
opportunities ahead and are working to unlock the barriers to developing and scaling a new
palette of more sustainable materials, but we cannot do so alone.
To effectively drive systemic change we know we must collaborate and seek out unconventional
partnerships. Through our LAUNCH partnership with NASA, US Agency for International
Development, and the US Department of State, we are working to uncover innovations in
sustainable materials that can have a positive impact on people and the planet.
3. Climate change requires business change. At NIKE, everything we do begins with the athlete.
We know that climate-related issues, like pollution and extreme weather conditions, impact an
athlete’s ability to perform and the changing environment presents a unique set of innovation
challenges. Similarly, as a business with diverse global operations, NIKE’s supply chain is
exposed to a range of changing risk factors. This means that our products, as well as how and
where they are made, are fundamental considerations in the long-term success of our business.
NIKE’s approach to meta-trend analysis, future-casting and innovating for long-term growth, will
help drive performance in the short term, while also positioning us to continue to turn risks into
innovation opportunities over the long term.
LETTER FROM
PRESIDENT & CEO
NIKE is dedicated to serving
athletes and helping them
reach their full potential.
As a growth company we are
dedicated to creating value for
our shareholders. The world in
which athletes and companies
compete is changing fast.
We believe business has a
critical role to play in meeting
the challenges of a changing
world – addressing climate
change, preserving the
earth’s constrained resources,
enhancing global economic
opportunity – not by reducing
growth but by redefning it.
To do this we believe
businesses must embrace
sustainability as an innovation
opportunity and governments
should act to create the right
policies and incentives to
accelerate change at scale.
5
FY12/13 Sustainable Business Performance Summary
President & Chief Executive Offcer
NIKE, Inc.
FROM REPUTATION MANAGEMENT TO INNOVATION OPPORTUNITY
As NIKE has grown and changed, we have fundamentally shifted our sustainability strategy.
Early on, we learned that rather than just managing our reputation by reacting to criticism about
our supply chain, we could create real opportunities for change by creating an environment of
industry collaboration, partnership and transparency.
This approach has continued to evolve to one where we are harnessing the power of innovation
to manage risks, create opportunities and meet our sustainability and social goals, adding value
to our business and brand.
In 2013, in recognition of the importance of sustainability to NIKE’s Innovation strategy, we
transitioned our Sustainable Business & Innovation organization into NIKE’s core Innovation
function, signaling the enterprise-wide role sustainable innovation will play in NIKE’s future.
During the period this report covers, we also worked with two leading academic institutions
– Harvard Business School and Stanford Graduate School of Business – on case studies that
examine NIKE’s journey since the 1990s. As these teaching instruments are more widely
adopted, we hope NIKE’s experience as one of the frst brands to respond to the challenges of
responsibility associated with globalization, will positively inform the decisions of tomorrow’s
business leaders.
ENHANCING PERFORMANCE THROUGH TRANSPARENCY
In our previous report, we established new sustainability targets across all impact areas in our
value chain; most of which are 2015 targets. In the interim, this report provides a detailed
account of the progress we have made and where we have faced challenges.
Our performance against targets is detailed extensively throughout this report. We believe that
disclosing our targets and reporting against them provides a strong mechanism to continue to
drive internal integration and build external understanding among all of our stakeholders.
We established a new norm by disclosing our contract factory base back in 2005, and we still
believe transparency is essential for industry change. We also continue to work with global
infuencers, including the United Nations Global Compact, in support of global principles in the
areas of human rights, labor, the environment and anti-corruption.
IT’S NOT A QUESTION OF LESS; IT’S A QUESTION OF BETTER
NIKE is dedicated to serving athletes and helping them reach their full potential. As a growth
company we are dedicated to creating value for our shareholders. The world in which athletes
and companies compete is changing fast. We believe business has a critical role to play in
meeting the challenges of a changing world – addressing climate change, preserving the earth’s
constrained resources, enhancing global economic opportunity – not by reducing growth but
by redefning it. To do this we believe businesses must embrace sustainability as an innovation
opportunity and governments should act to create the right policies and incentives to accelerate
change at scale.
By sharing our experience, documenting our progress, noting where we have fallen short and
identifying the challenges that lie ahead, we are hopeful NIKE can help positively shape the
future.
The challenge to create a sustainable economy is global and requires a global response.
We believe it begins with a simple idea: invent better solutions.
6
FY12/13 Sustainable Business Performance Summary
Indeed, creating and building business
models that not only recognize and
accommodate but thrive on the constraints
of the natural world is the only way we
can achieve growth in the present that
won’t compromise our ability to grow and
succeed for decades to come.
Of course, this transition is challenging
for a company that sells physical products
and has bold ambitions to provide those
products to more people in more places
worldwide. Transforming NIKE in this
way will take time and is a long-term
commitment. It touches every aspect of
our business, from how we design and
make our products to how we engage
our employees and other businesses in
our value chain. It begins with placing
sustainability at the beginning of the
innovation process.
STRATEGY
NIKE, Inc. continues to deliver strong
growth. What fuels our success and
challenges us? Innovation. It’s our growth
engine. It’s what our athletes, consumers
and investors expect of us – and always
have. It’s what we expect of ourselves. It
enables new heights in performance and
raises the bar for our industry and beyond.
Our world faces unprecedented change:
constrained resources, population growth,
heightened connectivity, increased
demand. In a world of fnite natural
resources, our growth is enabled by
infnite human resources: innovation and
inspiration.
We understand that innovation through the
lens of sustainability is fundamental to
achieving our vision of growth that is not
dependent upon constrained resources.
Innovation has never been more important than it
is today. It’s not just about improving the products
we make. It’s about how we invent better ones, work
with other companies and organizations to develop
markets that value and encourage the creation of new
sustainable processes and products, and improve lives
by leveraging sustainability as the world’s greatest
innovation opportunity.
IN THIS SECTION:
BUSINESS
OVERVIEW
OUR
SUSTAINABILITY
STRATEGY
TARGETS &
PERFORMANCE
7
FY12/13 Sustainable Business Performance Summary
BUSINESS
OVERVIEW
Through our commitment to innovation, sustainability and design, we are continually
challenging ourselves, and our consumers, to reach the next level of achievement.
WE STRIVE FOR INNOVATION THAT:
• Serves the athlete
• Grows the company
• Delivers inspiration
COMPANY PORTFOLIO
NIKE, Inc. includes fve distinct brands, each with a powerful connection to its customers:
• NIKE Brand designs, develops and sells high-quality athletic performance gear
and sport-inspired lifestyle products, including footwear, apparel, equipment and
accessories
• Converse, Inc. designs, markets, licenses and sells casual sneakers, apparel and
accessories
• Hurley International LLC designs, markets and distributes surf and youth lifestyle
footwear, apparel and accessories
• Jordan Brand designs and markets premium footwear, apparel and accessories
inspired by the dynamic legacy, vision and direct involvement of Michael Jordan
• NIKE Golf designs and markets golf equipment, apparel, balls, footwear, bags and
accessories
Converse, Hurley and NIKE Golf were reported as “Other Businesses”in FY12 and FY13.
Other affliated brands in our portfolio at the end of FY12 were Cole Haan and Umbro,
which we divested in FY13. Beginning in FY14, Hurley and NIKE Golf results are now
reported within the NIKE Brand, while Converse results are a separate reporting segment.
Accordingly, we have restated all comparative fnancial information to refect these
changes, which can be found at investors.nikeinc.com. However, reference to other NIKE
Brand metrics throughout this report have not been restated to refect these changes.
As the world’s leading athletic footwear, apparel and equipment
company, NIKE, Inc. is dedicated to inspiring every athlete to
reach their full potential. NIKE co-founder Bill Bowerman saw
endless possibilities for human achievement through sport. His
philosophy still guides our mission today: “To bring inspiration
and innovation to every athlete in the world.” We believe if you
have a body, you are an athlete.
We are working to integrate
sustainability into every aspect
of our business. Our aim is to
challenge, push and explore
ways that change the game
entirely for materials, design
and manufacturing.
8
FY12/13 Sustainable Business Performance Summary
BUSINESS
OVERVIEW
*Forward-looking statements, estimates or projections are based on expectations as of the original date of those materials. Those statements, estimates
and projections are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are
detailed in our reports fled with the US Securities and Exchange Commission, including Forms 8-K, 10-K and 10-Q.
PLAN FOR GROWTH
NIKE, Inc. is a growth company. Over the last 10 years, we’ve more than doubled our
revenue, and we believe we’ll deliver $30 billion in revenue by FY15 and $36 billion
by FY17.
*
Since we published our FY10/11 Sustainable Business Performance Summary, our
overall employee base grew to approximately 48,000 at the end of FY13, including
seasonal and part-time, an increase of 10,000 employees. We expect strong growth in
Running, Basketball, Football, Men’s Training, Sportswear, Women’s Training and Direct to
Consumer sales. As we look forward, we believe that sustainability is one of the key drivers
that will catalyze innovation and lead us toward continued growth.
Over the past 15 years,
we have evolved from
approaching sustainability
reactively as a reputation
management issue to
embracing it as a key
driver of innovation and
an important source of
competitive advantage.
NIKE, INC. CORPORATE OVERVIEW
9
FY12/13 Sustainable Business Performance Summary
BUSINESS
OVERVIEW
NIKE, INC. REVENUE PERFORMANCE
FY09-13 CAGR 7%
*
*
5-year Compound Annual Growth Rate (CAGR) based on Fiscal Year 2008 Revenue of
$18,075 million. The revenue amounts presented refect the results of our continuing
operations.
NIKE, INC. RETURN ON INVESTED CAPITAL
*
FY09-13
*
Return on Invested Capital calculation is included in the quarterly earnings section of our
investor relations website, investors.nikeinc.com, as one of our key fnancial metrics calcula-
tions. Please refer to this site for more detail on this calculation.
NIKE, Inc. DILUTED EPS PERFORMANCE
*
FY09-13, Five-Year CAGR 8%
**
*Diluted EPS amounts presented refect the results of our continuing operations. These
amounts have been restated to refect our two-for-one stock split on December 24, 2012
and are not directly comparable as they include non-recurring expenses and benefts
such as restructuring changes and settlements.
**
5-Year Compound Annual Growth Rate (CAGR) based on Fiscal Year 2008 diluted EPS
of $1.85.
FIVE-YEAR NIKE, INC. STOCK PERFORMANCE VS. S&P 500
*
FY09-13
*
Performance of the S&P 500 and NIKE stock is calculated by comparing the total returns
of each assuming the reinvestment of dividends over the time period of 5/31/2008 to
5/31/2013.
Revenue in millions
Revenue in millions
Like many other businesses, NIKE faced some headwinds in FY12/FY13. Rising costs for
energy, materials and labor sparked infationary pressures in some locations and margin
pressures across our industry. Major weather events, such as fooding in Thailand, put
stress on supply chains and delivery. Both weather conditions and political unrest affected
markets and confdence in some areas.
While these challenges were shared across our industry, the competitive advantages we
have are unique to the NIKE portfolio. In spite of ongoing macroeconomic challenges, we
remain well positioned to leverage our strengths – including scale, operational capabilities,
brand strength and product innovation – to help mitigate the risks beyond our control and
capitalize on opportunities to grow our company.
TAKING THE LONG VIEW
At NIKE, we seek to deliver shareholder value through sustainable growth. One of the ways
we will achieve this goal is to fnd avenues to reach our long-term vision of decoupling
proftable growth from constrained resources.
We are working to integrate sustainability into every aspect of our business. Our aim is to
challenge, push and explore ways that change the game entirely for materials, design and
manufacturing. We don’t grow just to get bigger. We grow to be better and do better.
FY09
FY09 FY09
FY10
FY10 FY10
FY11
FY11 FY11
FY12
FY12 FY12
FY13
FY13 FY13
S&P NKE
0
%
50
%
100
%
30%
95%
0
1
3
$1.79
$1.95
$2.2 $2.2 4 4
$2.69
0
%
12
%
25
%
17.8%
20.7%
21.7%
22.2%
23.8%
0
15k
30k
$18,528 $18,324
$20,117
$23,331
$25,313
10
FY12/13 Sustainable Business Performance Summary
OUR
SUSTAINABILITY
STRATEGY
Based on extensive analysis of the impacts of our business across the value chain (see
page 12 for detail), we know that materials and manufacturing represent the greatest
areas of impact on workers, communities and the environment, and the greatest potential
for sustainable innovation.
While NIKE has focused on materials innovation for many years, most improvements
across the industry have been incremental, not fundamental. The time is right for
innovation that leads to a more sustainable palette of materials and chemistries (see
page 17 for detail). We have focused for many years on improving the working conditions
of contract factory workers, increasing productivity, and reducing the environmental
footprint of manufacturing, eventually bringing these threads together through
implementation of lean manufacturing.
The future of lean for NIKE is to deliver proftable growth through sustainable
manufacturing and sourcing. To do this, we are making lean NIKE, Inc.’s manufacturing
standard. We require a commitment to lean as part of being accepted into our source
base and a minimum commitment and progression for positive ratings by including it in
our Sourcing and Manufacturing Sustainability Index, a component of our Manufacturing
Index which assesses factories based on sustainability, cost, quality and on-time delivery.
We are working with our supply chain to demonstrate the value of lean as a driver of
sustained, improved business performance where workers are engaged and enabled to
drive business success through continuous improvement. Some of the standard metrics
we use to assess factory adoption include productivity, human resources management
assessments, turnover, absenteeism, and factory implementation of and results from
worker engagement and well-being surveys.
We are now driving a portfolio of advanced manufacturing initiatives that encompass
changes to the traditional manufacturing business model that includes the role of
workers in the production of better products and services. (See discussion in the
“Manufacturing” section.) As described throughout this report, these two areas –
materials and manufacturing – are central to our strategy.
The scale of today’s
challenges requires
breakthrough innovations
such as entirely new materials
and ways to make products.
We focus sustainable innovation on our biggest areas of
opportunity and risk. We ask diffcult questions of ourselves,
our business model and our industry. We seek to understand
the meta-trends and the signals – strong and weak – that
add complexity and uncertainty to the future. Rather than
working to avoid only known risk, we work to understand where
opportunity may emerge and what’s needed to foster and scale
it, to enable new forms of innovation to take hold.
11
FY12/13 Sustainable Business Performance Summary
MAKING TODAY BETTER WHILE DESIGNING THE FUTURE
Sustainable innovation takes many forms at NIKE. Incremental improvements play an
important role in our efforts, since even small changes have large impacts across our
portfolio. However, incremental changes on their own fall short of the progress needed.
The scale of today’s challenges requires breakthrough innovations such as entirely new
materials and ways to make products. As an example, in 2012 we introduced the frst
product made using the innovative new NIKE Flyknit technology and manufacturing
process. The Flyknit Lunar 1+ running shoe, launched in 2013, reduces footwear waste
in the upper by 80% on average compared with traditional production methods. To put
a picture to that amount of waste, from its introduction in 2012 through FY13 the total
combined material savings from just the uppers of the Flyknit Lunar 1+ compared to
a traditional running shoe was 66,000kg – about the same as 12 adult male African
elephants. Flyknit is a game changer and we believe there is signifcant potential ahead as
Flyknit technology is implemented more broadly across our footwear offering.
NIKE’s ability to deploy disruptive technologies like Flyknit at scale multiplies
sustainability benefts. And as the game changes, we remain on the offense, always.
In some cases, where we have direct infuence, we use our management tools, expertise
and other resources to take a leadership role. One example is the creation and proliferation
of the NIKE Materials Sustainability Index (NIKE MSI). (See page 18 for detail.)
Other opportunities, such as improving working conditions within our global supply chain,
are beyond the reach of any single organization and require collaboration with other supply
chain participants. One way we are working on these changes is through our collaboration
with the Fair Labor Association to develop the Sustainable Compliance Initiative. This
initiative, still in development, provides tools to improve the quality, consistency and
effciency of efforts in our industry to comply with country laws/regulations, and company
standards.
For challenges such as building a market for sustainable materials, we need input from
a broad range of stakeholders and experts. (See page 23 for detail.) After all, risk is
interconnected so solutions must be collaborative. Companies that win in the future
will be those capable of accessing new sources of knowledge, creativity and capital to
accelerate sustainable innovation and bring it to scale.
To further advance our efforts, at the start of FY14 we embedded our Sustainable
Business & Innovation function into the company’s Innovation group (see page 20 for
detail). This streamlines the sharing of sustainable innovation throughout the company
and continues a nearly 20-year evolution to move corporate responsibility and sustainable
innovation from the periphery of the organization to the core of the company. This move
means that sustainability will be central to the questions asked and the solutions created
in the innovation process.
PLAN
We run a thriving global business.
The people, offces, brand and
beyond – they’re all part of the plan.
DESIGN
Our designers combine technology,
creativity and mindful material
selection to make all of our
products. While we have control
over what materials we select, we
recognize each material has its own
often considerable footprint, from
growing through to processing.
MAKE
We’re focusing on turning the
sustainability challenges of
manufacturing into lasting
opportunities by carefully selecting
those we source from, and working
together to reduce impacts.
MOVE
The world isn’t getting smaller, but
our global logistics make obstacles
like distance and time easier to
hurdle.
SELL
People don’t go to a NIKE store just
to shop. They expect expert advice,
inspiration and experience.
USE
Our products spend most of
their lives with consumers. How
consumers care for them over time
makes a big difference.
REUSE
NIKE shoes have better things to do
than retire in a landfll. We aim to
reuse and recycle our products as
much as possible. And even after
their useful life is over, where they
end up matters.
For details on our methodology and an
interactive exploration of our value chain visit
nikeresponsibility.com.
OUR
SUSTAINABILITY
STRATEGY
12
FY12/13 Sustainable Business Performance Summary
UNDERSTANDING OUR IMPACTS, RISKS AND OPPORTUNITIES
The journey to integrate sustainability deep into NIKE has required us to show how it
supports our company strategy, creates value for stakeholders, mitigates risk and makes our
business more resilient.
To do this we must understand our business and its impacts, so we can make informed
decisions that will bring about the greatest change. We also must consider the connectivity
across all areas, as a decision in one area may have unintended consequences or
enhancements in another. We take a broad view, as we recognize the impacts from our
directly controlled operations are a small part of the total system.
An important factor is our outsourced manufacturing model, which is common across the
apparel and footwear industries, as well as many others. The model brings complexities
related to lack of direct control over factories that may serve multiple brands and
incomplete information about performance and impacts. Nonetheless, our vast and
interconnected value chain also offers great opportunities to raise expectations and
standards across the sector, in areas such as labor practices and environmental protection,
OUR
SUSTAINABILITY
STRATEGY
Emissions
(total 12.5M tonnes)
3% 56% 15% 5% 1% 20%
Transparency and accountability are fundamental to our business and our approach to sustainability.
NIKE, INC. FY12
/
13
SUSTAINABLE
BUSINESS
PERFORMANCE
SUMMARY
2
FY12/13 Sustainable Business Performance Summary
WELCOME 3
LETTER FROM PRESIDENT & CEO 4
STRATEGY Business Overview 7
Our Sustainability Strategy 10
Targets & Performance 25
MAKE TODAY BETTER Climate & Energy 31
Labor 35
Chemistry 43
Water 46
Waste 50
Community 54
DESIGN THE FUTURE Innovation 61
Product 63
Manufacturing 66
People & Culture 73
How We Work 79
GOVERNANCE & PUBLIC POLICY Governance 81
Public Policy 83
ABOUT THIS REPORT Reporting at NIKE 85
Stakeholder Engagement & Reporting 86
Reviews 87
Recognition 88
ONLINE CONTENT www.nikeresponsibility.com
Glossary
Contracted Manufacturers Interactive Map
Design Experience
Data Sets
Background
Historic Reporting
Timeline
Guidelines & Principles Index
TABLE OF
CONTENTS
3
FY12/13 Sustainable Business Performance Summary
Transparency and accountability are
fundamental to our business and our
approach to sustainability. This report
offers insight into our sustainability
strategy, performance and progress
against the targets and commitments
we shared in our FY10/11 report.
Our organization has undergone several
changes since our last report, including the
divestiture of Cole Haan and Umbro in FY13
and the inclusion of Hurley and NIKE Golf
within the NIKE Brand in FY14. Generally,
the operational metrics included in this
report are based on the structure of our
portfolio during the FY12 and FY13 reporting
period. They have not been recalculated or
changed to refect the subsequent changes
in our business portfolio.
References to NIKE, Inc. generally include
all businesses in our portfolio during the
respective time period. However, references
to the NIKE Brand generally exclude
Converse, Hurley, NIKE Golf and Jordan.
Further discussion of these changes and
the boundaries of our reporting is included
in our “Business Overview” and “About this
Report” sections.
To provide concise, comprehensive
information, we have included dashboard-
style summaries of progress against our
targets and commitments, along with more
detailed commentary and analysis.
The report also includes a message
from our President & CEO, and an in-
depth discussion of the importance of
sustainability to our growth strategy and
how we are integrating sustainability into
the core of our business.
This print-on-demand report is
complemented by more comprehensive
reporting at nikeresponsibility.com,
including an interactive user experience
through which readers can access
additional background data, explore our
value chain and impacts, and fnd more
extensive information and tools.
Further details on our approach to reporting
can be found in the “About this Report”
section on page 85.
WELCOME TO NIKE, INC.’S
FY12/13 SUSTAINABLE BUSINESS
PERFORMANCE SUMMARY
NOTE: The information in this report and NIKE, Inc.’s corporate responsibility/sustainability reporting and website, inclusive of charts, graphs and discussion, and all
other information presented, may contain forward-looking statements, estimates or projections based on expectations as of the original date of those materials. Those
statements, estimates and projections are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties
are detailed in our reports fled with the US Securities and Exchange Commission, including Forms 8-K, 10-K and 10-Q. Presented information may also discuss non-
public fnancial and statistical information and non-GAAP fnancial measures. All information was current only as of the date originally presented. We do not update or
delete outdated information contained in website materials, and we disclaim any obligation to do so. All content is the property of NIKE, Inc.
We hope you fnd this report useful.
Please let us know how we’re doing at
[email protected].
4
FY12/13 Sustainable Business Performance Summary
NIKE, Inc.’s success as a growth company is tied directly to our culture of innovation. Today we
believe that sustainable innovation that benefts the athlete, the company and the planet will
play a key role in the future of our business.
This principle shapes how NIKE does business. The results we see continue to motivate
us. As you will read in this report, we are pushing the boundaries to decouple our growth
from constrained resources in order to leave the lightest possible footprint, while driving
uncompromising performance for athletes everywhere.
We are constantly integrating more sustainable ways of working across our business – from
design to production, to logistics and retail. While this work propels us forward we also
recognize that NIKE is positioned to leverage the power of our brand to drive positive change
across our entire value chain, within our industry and beyond.
SUSTAINABLE INNOVATION INSIGHTS
Spanning almost 20 years, NIKE’s sustainability journey has been dynamic, marked by an ever-
evolving set of challenges and opportunities. As we continue to raise the bar on our approach,
we see new opportunities. Three that stand out as I refect on our FY12/13 progress are:
1. Sustainability and business growth are complementary. Our strategy to create value while
pursuing innovation that reduces our impact on the environment is delivering measurable
results. For example, the natural assumption is that as revenue goes up so does a company’s
greenhouse gas emissions as more sales translates to increased product manufacturing and
freight activity. However through a variety of initiatives we have been able to change the results
of that equation, reducing absolute greenhouse gas emissions by close to 3 percent while
simultaneously increasing revenues by 26 percent over the time period covered by this report.
This motivates us to push even harder for sustainable innovation across the business.
Breakthrough technologies like NIKE Flyknit, which dramatically reduces waste compared
with traditional footwear manufacturing, and ColorDry, which eliminates water and process
chemicals from dyeing while also driving down energy consumption, increasing productivity and
improving quality, provide just a snapshot of the game-changing innovation that will help fuel
NIKE’s sustainable growth.
2. Materials Matter. Six years ago we identifed that nearly 60 percent of the environmental
impact of a pair of NIKE shoes was in materials used to make it. That insight, along with our
commitment to design with purpose, has helped sharpen our focus on the need for disruptive
innovation in the world of materials.
Arguably, the last major breakthrough in materials that reshaped the industry at scale was
the introduction of polyester about 50 years ago. We believe there are signifcant innovation
opportunities ahead and are working to unlock the barriers to developing and scaling a new
palette of more sustainable materials, but we cannot do so alone.
To effectively drive systemic change we know we must collaborate and seek out unconventional
partnerships. Through our LAUNCH partnership with NASA, US Agency for International
Development, and the US Department of State, we are working to uncover innovations in
sustainable materials that can have a positive impact on people and the planet.
3. Climate change requires business change. At NIKE, everything we do begins with the athlete.
We know that climate-related issues, like pollution and extreme weather conditions, impact an
athlete’s ability to perform and the changing environment presents a unique set of innovation
challenges. Similarly, as a business with diverse global operations, NIKE’s supply chain is
exposed to a range of changing risk factors. This means that our products, as well as how and
where they are made, are fundamental considerations in the long-term success of our business.
NIKE’s approach to meta-trend analysis, future-casting and innovating for long-term growth, will
help drive performance in the short term, while also positioning us to continue to turn risks into
innovation opportunities over the long term.
LETTER FROM
PRESIDENT & CEO
NIKE is dedicated to serving
athletes and helping them
reach their full potential.
As a growth company we are
dedicated to creating value for
our shareholders. The world in
which athletes and companies
compete is changing fast.
We believe business has a
critical role to play in meeting
the challenges of a changing
world – addressing climate
change, preserving the
earth’s constrained resources,
enhancing global economic
opportunity – not by reducing
growth but by redefning it.
To do this we believe
businesses must embrace
sustainability as an innovation
opportunity and governments
should act to create the right
policies and incentives to
accelerate change at scale.
5
FY12/13 Sustainable Business Performance Summary
President & Chief Executive Offcer
NIKE, Inc.
FROM REPUTATION MANAGEMENT TO INNOVATION OPPORTUNITY
As NIKE has grown and changed, we have fundamentally shifted our sustainability strategy.
Early on, we learned that rather than just managing our reputation by reacting to criticism about
our supply chain, we could create real opportunities for change by creating an environment of
industry collaboration, partnership and transparency.
This approach has continued to evolve to one where we are harnessing the power of innovation
to manage risks, create opportunities and meet our sustainability and social goals, adding value
to our business and brand.
In 2013, in recognition of the importance of sustainability to NIKE’s Innovation strategy, we
transitioned our Sustainable Business & Innovation organization into NIKE’s core Innovation
function, signaling the enterprise-wide role sustainable innovation will play in NIKE’s future.
During the period this report covers, we also worked with two leading academic institutions
– Harvard Business School and Stanford Graduate School of Business – on case studies that
examine NIKE’s journey since the 1990s. As these teaching instruments are more widely
adopted, we hope NIKE’s experience as one of the frst brands to respond to the challenges of
responsibility associated with globalization, will positively inform the decisions of tomorrow’s
business leaders.
ENHANCING PERFORMANCE THROUGH TRANSPARENCY
In our previous report, we established new sustainability targets across all impact areas in our
value chain; most of which are 2015 targets. In the interim, this report provides a detailed
account of the progress we have made and where we have faced challenges.
Our performance against targets is detailed extensively throughout this report. We believe that
disclosing our targets and reporting against them provides a strong mechanism to continue to
drive internal integration and build external understanding among all of our stakeholders.
We established a new norm by disclosing our contract factory base back in 2005, and we still
believe transparency is essential for industry change. We also continue to work with global
infuencers, including the United Nations Global Compact, in support of global principles in the
areas of human rights, labor, the environment and anti-corruption.
IT’S NOT A QUESTION OF LESS; IT’S A QUESTION OF BETTER
NIKE is dedicated to serving athletes and helping them reach their full potential. As a growth
company we are dedicated to creating value for our shareholders. The world in which athletes
and companies compete is changing fast. We believe business has a critical role to play in
meeting the challenges of a changing world – addressing climate change, preserving the earth’s
constrained resources, enhancing global economic opportunity – not by reducing growth but
by redefning it. To do this we believe businesses must embrace sustainability as an innovation
opportunity and governments should act to create the right policies and incentives to accelerate
change at scale.
By sharing our experience, documenting our progress, noting where we have fallen short and
identifying the challenges that lie ahead, we are hopeful NIKE can help positively shape the
future.
The challenge to create a sustainable economy is global and requires a global response.
We believe it begins with a simple idea: invent better solutions.
6
FY12/13 Sustainable Business Performance Summary
Indeed, creating and building business
models that not only recognize and
accommodate but thrive on the constraints
of the natural world is the only way we
can achieve growth in the present that
won’t compromise our ability to grow and
succeed for decades to come.
Of course, this transition is challenging
for a company that sells physical products
and has bold ambitions to provide those
products to more people in more places
worldwide. Transforming NIKE in this
way will take time and is a long-term
commitment. It touches every aspect of
our business, from how we design and
make our products to how we engage
our employees and other businesses in
our value chain. It begins with placing
sustainability at the beginning of the
innovation process.
STRATEGY
NIKE, Inc. continues to deliver strong
growth. What fuels our success and
challenges us? Innovation. It’s our growth
engine. It’s what our athletes, consumers
and investors expect of us – and always
have. It’s what we expect of ourselves. It
enables new heights in performance and
raises the bar for our industry and beyond.
Our world faces unprecedented change:
constrained resources, population growth,
heightened connectivity, increased
demand. In a world of fnite natural
resources, our growth is enabled by
infnite human resources: innovation and
inspiration.
We understand that innovation through the
lens of sustainability is fundamental to
achieving our vision of growth that is not
dependent upon constrained resources.
Innovation has never been more important than it
is today. It’s not just about improving the products
we make. It’s about how we invent better ones, work
with other companies and organizations to develop
markets that value and encourage the creation of new
sustainable processes and products, and improve lives
by leveraging sustainability as the world’s greatest
innovation opportunity.
IN THIS SECTION:
BUSINESS
OVERVIEW
OUR
SUSTAINABILITY
STRATEGY
TARGETS &
PERFORMANCE
7
FY12/13 Sustainable Business Performance Summary
BUSINESS
OVERVIEW
Through our commitment to innovation, sustainability and design, we are continually
challenging ourselves, and our consumers, to reach the next level of achievement.
WE STRIVE FOR INNOVATION THAT:
• Serves the athlete
• Grows the company
• Delivers inspiration
COMPANY PORTFOLIO
NIKE, Inc. includes fve distinct brands, each with a powerful connection to its customers:
• NIKE Brand designs, develops and sells high-quality athletic performance gear
and sport-inspired lifestyle products, including footwear, apparel, equipment and
accessories
• Converse, Inc. designs, markets, licenses and sells casual sneakers, apparel and
accessories
• Hurley International LLC designs, markets and distributes surf and youth lifestyle
footwear, apparel and accessories
• Jordan Brand designs and markets premium footwear, apparel and accessories
inspired by the dynamic legacy, vision and direct involvement of Michael Jordan
• NIKE Golf designs and markets golf equipment, apparel, balls, footwear, bags and
accessories
Converse, Hurley and NIKE Golf were reported as “Other Businesses”in FY12 and FY13.
Other affliated brands in our portfolio at the end of FY12 were Cole Haan and Umbro,
which we divested in FY13. Beginning in FY14, Hurley and NIKE Golf results are now
reported within the NIKE Brand, while Converse results are a separate reporting segment.
Accordingly, we have restated all comparative fnancial information to refect these
changes, which can be found at investors.nikeinc.com. However, reference to other NIKE
Brand metrics throughout this report have not been restated to refect these changes.
As the world’s leading athletic footwear, apparel and equipment
company, NIKE, Inc. is dedicated to inspiring every athlete to
reach their full potential. NIKE co-founder Bill Bowerman saw
endless possibilities for human achievement through sport. His
philosophy still guides our mission today: “To bring inspiration
and innovation to every athlete in the world.” We believe if you
have a body, you are an athlete.
We are working to integrate
sustainability into every aspect
of our business. Our aim is to
challenge, push and explore
ways that change the game
entirely for materials, design
and manufacturing.
8
FY12/13 Sustainable Business Performance Summary
BUSINESS
OVERVIEW
*Forward-looking statements, estimates or projections are based on expectations as of the original date of those materials. Those statements, estimates
and projections are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are
detailed in our reports fled with the US Securities and Exchange Commission, including Forms 8-K, 10-K and 10-Q.
PLAN FOR GROWTH
NIKE, Inc. is a growth company. Over the last 10 years, we’ve more than doubled our
revenue, and we believe we’ll deliver $30 billion in revenue by FY15 and $36 billion
by FY17.
*
Since we published our FY10/11 Sustainable Business Performance Summary, our
overall employee base grew to approximately 48,000 at the end of FY13, including
seasonal and part-time, an increase of 10,000 employees. We expect strong growth in
Running, Basketball, Football, Men’s Training, Sportswear, Women’s Training and Direct to
Consumer sales. As we look forward, we believe that sustainability is one of the key drivers
that will catalyze innovation and lead us toward continued growth.
Over the past 15 years,
we have evolved from
approaching sustainability
reactively as a reputation
management issue to
embracing it as a key
driver of innovation and
an important source of
competitive advantage.
NIKE, INC. CORPORATE OVERVIEW
9
FY12/13 Sustainable Business Performance Summary
BUSINESS
OVERVIEW
NIKE, INC. REVENUE PERFORMANCE
FY09-13 CAGR 7%
*
*
5-year Compound Annual Growth Rate (CAGR) based on Fiscal Year 2008 Revenue of
$18,075 million. The revenue amounts presented refect the results of our continuing
operations.
NIKE, INC. RETURN ON INVESTED CAPITAL
*
FY09-13
*
Return on Invested Capital calculation is included in the quarterly earnings section of our
investor relations website, investors.nikeinc.com, as one of our key fnancial metrics calcula-
tions. Please refer to this site for more detail on this calculation.
NIKE, Inc. DILUTED EPS PERFORMANCE
*
FY09-13, Five-Year CAGR 8%
**
*Diluted EPS amounts presented refect the results of our continuing operations. These
amounts have been restated to refect our two-for-one stock split on December 24, 2012
and are not directly comparable as they include non-recurring expenses and benefts
such as restructuring changes and settlements.
**
5-Year Compound Annual Growth Rate (CAGR) based on Fiscal Year 2008 diluted EPS
of $1.85.
FIVE-YEAR NIKE, INC. STOCK PERFORMANCE VS. S&P 500
*
FY09-13
*
Performance of the S&P 500 and NIKE stock is calculated by comparing the total returns
of each assuming the reinvestment of dividends over the time period of 5/31/2008 to
5/31/2013.
Revenue in millions
Revenue in millions
Like many other businesses, NIKE faced some headwinds in FY12/FY13. Rising costs for
energy, materials and labor sparked infationary pressures in some locations and margin
pressures across our industry. Major weather events, such as fooding in Thailand, put
stress on supply chains and delivery. Both weather conditions and political unrest affected
markets and confdence in some areas.
While these challenges were shared across our industry, the competitive advantages we
have are unique to the NIKE portfolio. In spite of ongoing macroeconomic challenges, we
remain well positioned to leverage our strengths – including scale, operational capabilities,
brand strength and product innovation – to help mitigate the risks beyond our control and
capitalize on opportunities to grow our company.
TAKING THE LONG VIEW
At NIKE, we seek to deliver shareholder value through sustainable growth. One of the ways
we will achieve this goal is to fnd avenues to reach our long-term vision of decoupling
proftable growth from constrained resources.
We are working to integrate sustainability into every aspect of our business. Our aim is to
challenge, push and explore ways that change the game entirely for materials, design and
manufacturing. We don’t grow just to get bigger. We grow to be better and do better.
FY09
FY09 FY09
FY10
FY10 FY10
FY11
FY11 FY11
FY12
FY12 FY12
FY13
FY13 FY13
S&P NKE
0
%
50
%
100
%
30%
95%
0
1
3
$1.79
$1.95
$2.2 $2.2 4 4
$2.69
0
%
12
%
25
%
17.8%
20.7%
21.7%
22.2%
23.8%
0
15k
30k
$18,528 $18,324
$20,117
$23,331
$25,313
10
FY12/13 Sustainable Business Performance Summary
OUR
SUSTAINABILITY
STRATEGY
Based on extensive analysis of the impacts of our business across the value chain (see
page 12 for detail), we know that materials and manufacturing represent the greatest
areas of impact on workers, communities and the environment, and the greatest potential
for sustainable innovation.
While NIKE has focused on materials innovation for many years, most improvements
across the industry have been incremental, not fundamental. The time is right for
innovation that leads to a more sustainable palette of materials and chemistries (see
page 17 for detail). We have focused for many years on improving the working conditions
of contract factory workers, increasing productivity, and reducing the environmental
footprint of manufacturing, eventually bringing these threads together through
implementation of lean manufacturing.
The future of lean for NIKE is to deliver proftable growth through sustainable
manufacturing and sourcing. To do this, we are making lean NIKE, Inc.’s manufacturing
standard. We require a commitment to lean as part of being accepted into our source
base and a minimum commitment and progression for positive ratings by including it in
our Sourcing and Manufacturing Sustainability Index, a component of our Manufacturing
Index which assesses factories based on sustainability, cost, quality and on-time delivery.
We are working with our supply chain to demonstrate the value of lean as a driver of
sustained, improved business performance where workers are engaged and enabled to
drive business success through continuous improvement. Some of the standard metrics
we use to assess factory adoption include productivity, human resources management
assessments, turnover, absenteeism, and factory implementation of and results from
worker engagement and well-being surveys.
We are now driving a portfolio of advanced manufacturing initiatives that encompass
changes to the traditional manufacturing business model that includes the role of
workers in the production of better products and services. (See discussion in the
“Manufacturing” section.) As described throughout this report, these two areas –
materials and manufacturing – are central to our strategy.
The scale of today’s
challenges requires
breakthrough innovations
such as entirely new materials
and ways to make products.
We focus sustainable innovation on our biggest areas of
opportunity and risk. We ask diffcult questions of ourselves,
our business model and our industry. We seek to understand
the meta-trends and the signals – strong and weak – that
add complexity and uncertainty to the future. Rather than
working to avoid only known risk, we work to understand where
opportunity may emerge and what’s needed to foster and scale
it, to enable new forms of innovation to take hold.
11
FY12/13 Sustainable Business Performance Summary
MAKING TODAY BETTER WHILE DESIGNING THE FUTURE
Sustainable innovation takes many forms at NIKE. Incremental improvements play an
important role in our efforts, since even small changes have large impacts across our
portfolio. However, incremental changes on their own fall short of the progress needed.
The scale of today’s challenges requires breakthrough innovations such as entirely new
materials and ways to make products. As an example, in 2012 we introduced the frst
product made using the innovative new NIKE Flyknit technology and manufacturing
process. The Flyknit Lunar 1+ running shoe, launched in 2013, reduces footwear waste
in the upper by 80% on average compared with traditional production methods. To put
a picture to that amount of waste, from its introduction in 2012 through FY13 the total
combined material savings from just the uppers of the Flyknit Lunar 1+ compared to
a traditional running shoe was 66,000kg – about the same as 12 adult male African
elephants. Flyknit is a game changer and we believe there is signifcant potential ahead as
Flyknit technology is implemented more broadly across our footwear offering.
NIKE’s ability to deploy disruptive technologies like Flyknit at scale multiplies
sustainability benefts. And as the game changes, we remain on the offense, always.
In some cases, where we have direct infuence, we use our management tools, expertise
and other resources to take a leadership role. One example is the creation and proliferation
of the NIKE Materials Sustainability Index (NIKE MSI). (See page 18 for detail.)
Other opportunities, such as improving working conditions within our global supply chain,
are beyond the reach of any single organization and require collaboration with other supply
chain participants. One way we are working on these changes is through our collaboration
with the Fair Labor Association to develop the Sustainable Compliance Initiative. This
initiative, still in development, provides tools to improve the quality, consistency and
effciency of efforts in our industry to comply with country laws/regulations, and company
standards.
For challenges such as building a market for sustainable materials, we need input from
a broad range of stakeholders and experts. (See page 23 for detail.) After all, risk is
interconnected so solutions must be collaborative. Companies that win in the future
will be those capable of accessing new sources of knowledge, creativity and capital to
accelerate sustainable innovation and bring it to scale.
To further advance our efforts, at the start of FY14 we embedded our Sustainable
Business & Innovation function into the company’s Innovation group (see page 20 for
detail). This streamlines the sharing of sustainable innovation throughout the company
and continues a nearly 20-year evolution to move corporate responsibility and sustainable
innovation from the periphery of the organization to the core of the company. This move
means that sustainability will be central to the questions asked and the solutions created
in the innovation process.
PLAN
We run a thriving global business.
The people, offces, brand and
beyond – they’re all part of the plan.
DESIGN
Our designers combine technology,
creativity and mindful material
selection to make all of our
products. While we have control
over what materials we select, we
recognize each material has its own
often considerable footprint, from
growing through to processing.
MAKE
We’re focusing on turning the
sustainability challenges of
manufacturing into lasting
opportunities by carefully selecting
those we source from, and working
together to reduce impacts.
MOVE
The world isn’t getting smaller, but
our global logistics make obstacles
like distance and time easier to
hurdle.
SELL
People don’t go to a NIKE store just
to shop. They expect expert advice,
inspiration and experience.
USE
Our products spend most of
their lives with consumers. How
consumers care for them over time
makes a big difference.
REUSE
NIKE shoes have better things to do
than retire in a landfll. We aim to
reuse and recycle our products as
much as possible. And even after
their useful life is over, where they
end up matters.
For details on our methodology and an
interactive exploration of our value chain visit
nikeresponsibility.com.
OUR
SUSTAINABILITY
STRATEGY
12
FY12/13 Sustainable Business Performance Summary
UNDERSTANDING OUR IMPACTS, RISKS AND OPPORTUNITIES
The journey to integrate sustainability deep into NIKE has required us to show how it
supports our company strategy, creates value for stakeholders, mitigates risk and makes our
business more resilient.
To do this we must understand our business and its impacts, so we can make informed
decisions that will bring about the greatest change. We also must consider the connectivity
across all areas, as a decision in one area may have unintended consequences or
enhancements in another. We take a broad view, as we recognize the impacts from our
directly controlled operations are a small part of the total system.
An important factor is our outsourced manufacturing model, which is common across the
apparel and footwear industries, as well as many others. The model brings complexities
related to lack of direct control over factories that may serve multiple brands and
incomplete information about performance and impacts. Nonetheless, our vast and
interconnected value chain also offers great opportunities to raise expectations and
standards across the sector, in areas such as labor practices and environmental protection,
OUR
SUSTAINABILITY
STRATEGY
Emissions
(total 12.5M tonnes)
3% 56% 15% 5% 1% 20%