Nike's ambitious environmental goals are being thwarted by sneakerheads and the Jordans, Air Force 1s, and Dunks they love
- Leather has one of the highest carbon and waste footprints of any sneaker material.
- Nike's leather usage increased 35% last year because of the demand for iconic shoes such as Dunks.
The biggest threat to Nike's ambitious environmental goals may be its most enthusiastic customers.
The retro kicks that sneakerheads can't get enough of, including Jordans, Dunks, Blazers, and Air Force 1s, use significant amounts of leather, which has some of the highest carbon and waste footprints.
The popularity of the shoes pushed up Nike's leather use by 35% last year and put the company behind a goal to use more sustainable materials.
"Due to the consumer preference for classic Nike leather icons in fiscal year 2021, leather models are outpacing the growth of the rest of Nike footwear, putting us behind our plan to achieve our 2025 goal," Nike wrote in its latest corporate responsibility report.
Nike is considered a sustainability leader in the global fashion and sportswear industry, with some of the most aggressive targets to shrink its carbon footprint, but the demand for its iconic leather shoes highlights the ongoing tension between corporate climate goals, consumer demand, and Wall Street expectations.
"What's more important, financial goals or carbon footprint goals? At the end of the day, Nike wants to sell more Jordans because there is demand, and companies are always looking to grow revenue," said Ken Pucker, a senior lecturer at Tufts University and former executive at Timberland. "That comes ahead of delivering on an emissions target."
Nike did not respond to Insider's questions for this story.
'These are systemic issues'
As part of a new commitment to industry-standard, science-based targets, Nike wants to slash its greenhouse-gas emissions by 90% by 2025. But the trend is moving in the opposite direction.
The company's total emissions jumped more than 15% since a 2015 baseline, partly driven by the "increasing emissions intensity" of Vietnam's coal-powered electrical grid and the increased use of leather, Nike said in the report.
Vietnam accounted for 30% of Nike's footwear manufacturing in 2021, more than any other country. That figure has since increased to 44%, said an annual report filed with the Securities and Exchange Commission.
In the report, Nike said its new science-based goals were "much bigger" than any of the company's previous ambitions and required pushing beyond "incremental reductions" and unlocking systemic change — which wouldn't be felt until the coming years.
In 2019, Nike announced its Move to Zero effort, prominently branded on some shoeboxes, which aims for a zero carbon and zero waste future in order to "help protect the future of sport."
But an Insider review of two decades of reports found that Nike had a mixed record when it came to hitting past corporate-responsibility and environmental goals.
The company typically sets five-year targets every fifth year for its factories, workforce, and environmental efforts. In fiscal year 2020, the company said it hit seven of 19 goals, made progress toward six, and came up short on six.
A success: The percentage of renewable energy at Nike-owned or -operated facilities increased 34 percentage points to 48%.
A miss: Nike's average product carbon footprint remained unchanged between 2015 and 2020, despite a 10% reduction goal.
Still, Nike is regularly lauded for its environmental efforts. Sustainability experts cautioned against criticizing the company too heavily, given the complexity of global supply chains.
"These are systemic issues," said the Carbon Trust's Pauline Op de Beeck, who works with fashion, retail, and manufacturers to become more environmentally sustainable. "These things can't just change overnight. They require collaboration and long-term strategic planning."
'Traditional leather waste is negating the gain we've made elsewhere'
One of the most popular Nike sneakers right now is the Dunk, a shoe that debuted in 1985 as a basketball sneaker, but which has "trickled down from sneaker lovers to the general masses," HighSnobiety said. One of the most popular colors is a black-and-white model, often called the "Panda," which the publication described as the "uniform for plenty of Gen Z and millennials."
More than 2,000 pairs of Pandas sold on the online secondary market StockX in a recent three-day period, most for about $200, almost double the $110 retail price.
The Panda is made with leather.
"Leather is one of the most inefficient materials in a footwear production environment," Nike said in the report. "To date, traditional leather waste is negating the gain we've made elsewhere and is contributing the vast majority of our incremental waste."
Materials account for about 70% of Nike's product carbon footprint.
And while Nike has developed next-generation materials such as FlyKnit and the environmentally friendlier Flyleather, classic leather models remain most popular with sneaker collectors who dictate consumer trends.
Nike describes Flyleather as more durable, lighter weight, and easier on the environment than traditional leather. But last year, it accounted for 0.1% of Nike's leather usage. Synthetic leather decreased 10 percentage points to 26%.
While Nike's more sustainable products, including the Space Hippie, which is made with factory scraps, seem to be gaining in popularity, they don't immediately sell out, and they fetch below retail on the secondary market. Nike's also introducing new sustainable silhouettes, including a sneaker that can be easily taken apart for ease of recycling.
CEO John Donahoe mentioned the introduction of more sustainable versions of the Nike Pegasus Turbo and Mercurial Vapor, two popular footwear models, during the company's most recent quarterly call with analysts. He also teased a new sustainable material that could "change the apparel industry."
'They could put a shoe on the moon'
Nike's sweeping environmental efforts date back to the sweatshop criticisms that roiled the company in the 1990s. In 1998, Phil Knight, the founder and then CEO, acknowledged the criticisms in a headline-grabbing speech at the National Press Club and committed the company to a string of reforms, including setting more environmental targets.
Since 2001, Nike has regularly released corporate responsibility reports that give detailed information about its factories, workforce, and sustainability efforts.
Among the biggest materials accomplishments has been getting the greenhouse gases out of Nike's popular Air technology, the cushioning system that it uses in many of its shoes.
It took 60 experts working for 50 different organizations, and tens of millions of dollars in investments, to get the greenhouse gases out of Air bags, Nike said in reports covering fiscal years 2004 and 2006.
Nike has also stacked solar panels on corporate buildings, put wind turbines on distribution centers, shrank shoeboxes, and printed receipts on biodegradable paper.
Those actions have paid off, but nowhere near enough to offset emissions from Nike's sprawling network of contract factories that make the company's products.
Nike acknowledged the need to dive deeper into its supply chain than ever before in its most recent corporate responsibility report. The company says it plans to help convert more contract factories to renewable energy.
Nike's also striving for absolute emissions reductions, rather than reducing the amount of carbon per product.
"These factors create a set of carbon targets that become more difficult to achieve as our business grows," the company said in the report.
Smaller, niche sneaker brands see an opportunity where Nike has struggled.
Rommel Vega designed sneakers for sustainably minded brands such as Columbia, Keen, and Merrell before starting Holo, his own line of sustainable outdoor shoes. He believes the footwear industry is at the point where the automotive industry was a few years ago.
After Tesla roared onto the scene, industry giants raced to prioritize more sustainable electric vehicles, including Ford, which now makes an electric F-150.
Of course, Nike has an advantage.
"It takes money," he said. "They have all the resources in the world. They could put a shoe on the moon if they wanted to."
Do you work at Nike or have insight to share? Contact the reporter Matthew Kish via the encrypted messaging app Signal (971-319-3830) or email (email@example.com). Contact the sustainability reporter Catherine Boudreau via Signal (802-782-9286) or email (firstname.lastname@example.org). Check out Insider's source guide for other tips on sharing information securely.
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