Nike in downtown Portland
Evan Sernoffsky / OPB
In 2016, Nike pledged to cut its global carbon emissions in half. But in the last year, it laid off many of the employees who worked on sustainability. An investigation from ProPublica and The Oregonian/OregonLive found that Nike has managed less than a 2% cut in emissions. We’ll talk to the Rob Davis, investigative reporter at ProPublica, who worked on this story with Matt Kish, reporter at The Oregonian/OregonLive.
This transcript was created by a computer and edited by a volunteer.
Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. Seven years ago, Nike pledged to cut its global carbon emissions in half. So far, those emissions are only down 1.6%. And according to a new report from ProPublica and The Oregonian, the global sports apparel giant has been disproportionately laying off members of its sustainability workforce over the last year or so. Rob Davis is an investigative reporter for ProPublica. He worked on the story with The Oregonian’s Matt Kish and he joins us now. It’s good to have you back on the show.
Rob Davis: Hey, thank you so much.
Miller: Can you describe what Nike executives called their moonshot eight years ago?
Davis: CEO Mark Parker, at the time, said that he wanted Nike’s workforce to be guided by this idea that they would shoot for the moon, they would double revenues and at the same time, they would half their carbon footprint. Since then, they haven’t delivered on either of those. Revenues are up about 60% since then and as you noted, the carbon footprint is roughly the same.
Miller: How big is Nike’s carbon footprint?
Davis: They equate it to about the carbon footprint of the city of Amsterdam. This is a company that is the largest sports apparel company in the world. They have hundreds of contract factories all around the globe concentrated in places like China, Vietnam and Indonesia that are overwhelmingly dependent on coal-fired power to power their electricity grids.
Miller: The folks who led the charge on this at Nike were known as the Sustainable Innovation Team. What are some of the ways that they tried to reduce emissions, or maybe I should say, are trying to reduce emissions?
Davis: The Sustainable Innovation Team, which was eliminated in December, was one of dozens and dozens of people at Nike with sustainability in their job titles with a focus on reducing their carbon footprint. This is a team that was sort of designed to look beyond the horizon for the next potential innovation – like kelp leather or a bio-based foam – something that could replace or displace some of the hundreds of millions of pounds of leather, and cotton, and polyester, and all of these substances that make up Nike’s shoes and apparel.
Miller: That’s what they were trying to do, but your reporting has found that many of the people that were doing this work on that team and in related ways have either been laid off or moved to other parts of the company. Can you give us a sense for the scale of the cuts to company employees focused primarily on sustainability?
Davis: Nike, in December, announced a $2 billion cost-cutting program. They have eliminated about 2% of their staff of 83,000, 7% of their headquarters’ staff of about 11,000 here in Oregon. And from our reporting – this is talking to more than a dozen folks – [they] laid off 20% of their sustainability team and another 10%, on top of that, roughly, folks who either voluntarily left the company or were transferred from a sustainability focus to something else.
Miller: So super disproportionately, these cuts affected folks working somehow on sustainability – cuts or transfers. How were you able to put this picture together of actual workforce changes since December?
Davis: It starts with my reporting partner Matthew Kish at The Oregonian who’s been covering the company for a decade, and is deeply sourced and brings the kind of expertise that great local reporters do. We cast a huge net trying to talk to folks, and talk to more than a dozen, to develop the clearest picture we could and the best sourced picture we could of who was hit by these layoffs and transfers.
Miller: Well, let me just make sure that I understand what you’re saying because you didn’t say that you got this from the company. So they didn’t say, by the way, we laid off 20% of our sustainability workforce?
Davis: Correct, Nike, in the repeated questions that we put to the company wouldn’t address the size of the cuts to their sustainability staff. They said that they are committed to sustainability and that they are now trying to embed the work. In other words, sustainability isn’t the sustainability team’s job. It’s everybody’s job. They have also been saying that for years.
Miller: These layoffs did not come out of nowhere. Nike’s stock price has dropped by half since late 2021. You note it went down just 20% just a few weeks ago when the company forecasts a decline in sales. What’s behind this? I mean, why is the company in this stock price trouble right now?
Davis: That’s a great question. I think on the cut to the sustainability staff – the “why” there – folks that we talked to were shocked that this happened. In previous cuts, there was sort of an equal haircut off the top. This time there was disproportional targeting. The company has made a number of misplaced bets on styles and the ways that they are going to reach the consumer, and they’re trying to unwind those now.
Miller: One example of work that has been at the very least interrupted by these cuts that you point to is the Carbon Target Setting Working Group. What did you learn about what they did, what they were trying to do and how their efforts have been impacted by these cuts?
Davis: So coming out of the Paris Climate Accord, Nike set a formal science-based target – voluntary – to reduce its carbon footprint 30% in its foreign factories, and logistics and shipping 30% by 2030. So this group got together with an internal focus to say, here’s where we need to get, how are we going to do it? What levers are we going to pull? How are we going to reduce the weight of packaging? How are we going to eliminate the stuffing in the toes of shoes? Should we be using renewable natural gas? How much should we be investing in renewable fuels for shipping? All these sorts of things. And there were about 30 people that were involved in that. Half of them are now gone. So these are folks in some cases that would have been implementing the recommendations that came out of that work.
Miller: So if what Nike said to you is basically, don’t worry, we’re still doing this work and in fact, we’re going to embed this kind of thinking in this work throughout the corporation, did you hear from anybody who I guess used to work there, who used to be doing this work as a kind of concerted effort, if they think it’s possible to do this work without these truly focused groups?
Davis: I think that that’s a great question and we will see. You still need people to do the work. If you are going to drill down to the farm level to ensure that your cotton is produced with the right amount of fertilizers, you need somebody to do that work. And in that huge universe of all of the materials that Nike uses, which is a huge part of their carbon footprint, they had a traceability staff of five people [and] two of them are gone. So it’s hard to see how that’s going to get absorbed.
Miller: You put Nike’s sustainability efforts – and experts you talked to did this – in the larger context of the story of Nike’s tarnished reputation going back, say, to the 1980s, when Phil Knight acknowledged that they’d become synonymous with child labor or unfair labor practices. What’s the connection between that image of Nike that the company was very aware of and wanted to respond to and prevent, and the image of their company as a kind of sustainable leader?
Davis: In the ‘90s, as these reports were coming out about workers being beaten in factories in Asia, Nike’s soccer balls being stitched by children, Phil’s response to that was one that he later admitted was very defensive. And the folks who worked on the environment at Nike at the time saw that as an opportunity for them to sort of take the lead on the other half of the sustainability question, which is it’s partly the working conditions and it’s also partly the environmental impact of all of the production. They wanted to lead and they saw it as a chance to, as the sort of big dog in the room, change the industry, to make progress, not only for Nike and its products, but to help change the industry. And to sort of lead the way in a way that they had not been able to do on labor practices because of the way they had responded to that.
Miller: You do note that while Nike’s carbon footprint has barely budged since 2016, Puma, a smaller company but a competitor in the same world, they more than doubled their revenues since 2017 while reducing carbon emissions by almost a third. Do you know why Puma has been more successful at doing basically the exact thing that Nike said they were going to do?
Davis: They have invested. This is a company – it’s about one-fifth the size of Nike by revenue – that is operating in many of the same countries that Nike is. They have invested in solar arrays at their supplier factories, they have invested in removing coal-fired boilers that factories use. So they have invested, they have done it at the same time they have had a higher gross margin than Nike has.
Miller: When you boil this story down, when I boil it down, to me the message is that when they were facing a serious market challenge, the world’s largest sports apparel brand decided that focusing on sustainability and climate change was simply less important than focusing on other aspects of their business. If we look at the people you’re paying to do jobs as a pretty good marker on what you want to focus on, what do you think this says about corporate sustainability efforts globally?
Davis: I think that what they have done is historically invested in sustainability because it has a long-term payout. This is something that for Nike can save money over the long-term. If you reduce shipping weights, it’s good for the environment. It’s also good for your business because you’re paying for less stuff. What they are now doing is really, from the folks that we’ve talked to, focusing on the short-term gains that Wall Street wants, not the long-term gains that sustainability yields.
Miller: Rob Davis, thanks very much.
Davis: Thank you so much.
Miller: Rob Davis is an investigative reporter at ProPublica. He reported on this recent story with Matthew Kish who is now at The Oregonian. Matt has been covering Nike, as Rob mentioned, for a long time, formerly at the Portland Business Journal.
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