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Environment: Rapid Increasing in Industrialization and Globalization

Introduction

The rapid increasing in industrialization and globalization is changing the face of the modern world. Rapid industrial development, once seen only in Europe, USA, and certain other parts of the world has now spread to many developing economies as well. One of the main reasons for this change of scene is increasing globalization and free trade. Even though this has brought about many welcome changes for all the concerned countries, other concerns are becoming increasing serious. The highly industrialised countries and those now pursuing it strongly are creating great damage to the environment. Even though, environmental concerns, rules and regulations have been around for quite some time, there has been very little to show for it. Individual corporations are the real factors that can make some real headway with regard to this concern. This paper is a study of the environmental polices of Nike, with focus on certain areas in Environmental Management Systems and Standards. It will also focus on ‘Sustainable Consumption and Sustainable Marketing’ since this concept can help to reduce environmental damage to a large extent. It will look at specific issues faced by the company with regard to the above factors and also the better management practices followed by the company over the years. In addition to the above, improvements in sustainability performance to this writer’s company will also be reviewed and suggestions regarding this will be given. It will also be seen whether these suggestions can be applicable to Nike as well. My company is called Accent Footwear and is a national level company engaged in the same business as Nike. Our products are a competition to the lower end models marketed by Nike in the UK.

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Environmental management systems

“The widespread adoption of formal environmental management systems (EMSs) by business and other organizations has been promoted as an innovation that has the potential to alter profoundly their environmental and economic performance and their resulting relationships with longstanding environmental regulatory policies and agencies.” (Andrews et al 2001, p.31). Even though many businesses had some form of environmental protection plans of their own, it was only by the late 1990s that formal internationally accepted standard began to published. Any organization that has developed formal policies and procedures regarding minimizing the environmental impact of its activities can be said to have an environmental management system in place. More and more organizations are now taking this issue seriously. Standards like the ISO 14000 series have set a plan of operation in the implementation of an EMS. They are, a written down (printed) management policy, identifying all aspects of environment that can be affected by company activities, setting targets and aims, giving responsibility to employees, training them, and continuous or periodic evaluation.

Sustainable consumption and marketing

Many governments, organizations, and individuals have for some time felt the need for sustainability in addition to responsible environmental behaviour also. In 2002, the OECD had felt that “Environmental policies have traditionally been rather one-sided, focusing primarily on how to transform production through pollution control and eco-efficiency, rather than on consumption”. (Southerton, Chappells & Vliet 2004, p.2). This lack of foresight is now seen corrected with many governments and organizations taking keen interest in developing standards and policies on sustainable consumption. Sustainable consumption includes responsible consumption by individuals/organizations as well as manufacturers. Manufacturers who pursue such policies are careful about waste, defects and any other factor that does not have optimum use of resources. Examples would be recycling of waste, and reusing of damaged products.

According to authors Michael J. Polonsky and Alma T. Mintu-Wimsatt, “sustainable marketing requires proactive corporate strategies that would benefit both corporations and society. Such strategies must be aimed at redirecting customer needs and wants towards ecologically beneficial products and services, and providing the socio-ecological products to consumers.” (Polonsky, Michael, J, Wimsatt, Alma T 1995, p.8). They content that companies who have effective environment management systems will automatically incorporate both sustainable consumption and marketing. The areas covered in a comprehensive plan will include responsible use of resources and products which then become a part of sustainability.

An overview of environmental management systems and standards

Recognizing the need for drastic environmental protection, many companies are now taking up the initiative of behaving in a more responsible manner towards environmental protection and sustainable production and consumption. “There is an ever-upward spiral of new environmentally related legislation. All of which aids global environment for our fellow citizens. Environmental management systems can assist an organisation to meet its increasingly heavy burden of responsibility for the future condition of our world environment”. In many cases, the introduction of an environmental management system can also aid cost savings, and reduction of environmental liability. (Environmental management systems: Introduction 1996). As a result many international and national standards have been developed which the companies can follow in the process of setting up a environmental management system as a part of its operations. The most common standards that have been set up are the ISO 14000 series and the EMAS (Ec0-Managmenent Audit Scheme). The former is an internationally accepted standard while the latter was developed to be followed by European Companies. There is a special standard with regard to the UK called the BS 8555. “BS 8555 is a British Standard, published in 2003, which breaks down the implementation process for ISO 14001 or EMAS into 6 stages making implementation much easier especially for smaller companies.” (Defra position statement on environmental management systems: types of EMSs 2008). At present these standards are more used for accreditation of companies that adopt environmental management systems and are more in the form of guidelines rather than statutory requirements. The Department for Environmental, Food and Rural Affairs, strongly advocates voluntary adoption of safe environmental management systems by all companies in the country. For the sake of convenience, only ISO standards will be made use of during this study.

Ethical policies and practices of Nike

Nike is one of the largest shoe makers in the world. “It designs and sells shoes for a variety of sports, including baseball, cheerleading, golf, volleyball, hiking, tennis, and football. NIKE also sells Cole Haan dress and casual shoes, as well as athletic apparel and equipment” (Nike company description 2009). The Company markets its products in more than 180 countries around the world and is headquartered in Oregon in the USA. It total turnover exceeds 18 billion USD and employees around 33,000 employs. From this, it is clear that the company activities can create a huge impact that can be positive or negative, depending on the company’s policies. Nike has been one company that had taken up the issue of environmental management even during the latter half of the 1990s. Nike had to deal with an extremely difficult issue with regard to environmental safety. It is given as a special section because of the potential impact it could have had on the environment

How Nike solved the problem of SF6

Nike had achieved a marketing coup when it first developed the shoe with air pockets (in 1978) at the heel to cushion the impact on the user. This innovation helped the company to stay ahead of the competition for almost ten years. Nike had used a gas called SF6 along with air to fill the plastic air pockets of its shoes. “Perfluorocarbons (PFCs) and sulphur hexafluoride (SF6) are greenhouse gases with atmospheric lifetimes of more than 1000 years. They are powerful greenhouse gases and today’s emissions will still be affecting earth’s climate in the next millennium.” (Other direct greenhouse gases – PFCs and SF6). These gases are usually used by the refrigeration and air-conditioning industry. Once identified as a greenhouse gas, many manufacturers are now moving to safer alternatives. But Nike’s use of the gas was pointed out by a German magazine in 1992. If the air pocket is broken, this gas will naturally be released into the atmosphere. Initially, people might wonder as to how the minute volume of gas inside each shoe can cause any environmental impact. But it should be noted that the Company makes around millions of such shoes. Since these gases have a lifetime of more than 1000 and since every single shoe manufactured will be destroyed by that time, the volume of SF6 that will be released is enormous. “Because SF6 breaks up slowly in the atmosphere, it has an outsize impact when the shoes are finally destroyed and the gas is released from millions of little air pockets. At the peak of SF6 production in 1997, Nike Air footwear carried a greenhouse effect equivalent to an astonishing 7 million metric tons of carbon dioxide — about as much as the tailpipes of 1 million cars.” (Nike goes for the green 2006). Due to the molecular structure of the gas, Nike engineers found it ideal to be enclosed inside the pocket. The accusation also came at a time when Nike was accused of running sweatshops as a part of its outsourcing strategy. The company outsources some of its manufacturing to markets in Asia because of the cheap labour. With the air pocket shoe being such a hit in the market, a major portion of the revenue came from this technology enable product alone. Apart from the point of view of economics, the company would also loose face among its customers and competitors if it did withdraw the shoes. It took fourteen years of research to find an alternative solution to the problem which is to the credit of the company and its ethics. It was not because they did not try, but due to the fact that an alternative technology could not be developed during that period. So until the alternative was found, Nike can be accused of being responsible for the release of millions of tonnes of SF6 into the atmosphere. During this period, the company’s corporate responsibility division came under great pressure and they had to find excuses for missed deadlines. It first missed its target deadline for 2000 and still one more by 2003. It was only three more years later that nitrogen and a totally redesigned sole emerged as a better alternative to the air pocket. The resulting product called Air Max 360 was even better than the old air pocket shoes in terms of cushioning and weight. Nitrogen is considered to be an inert gas and hence not harmful to the environment. The ISO had released its standards on green house gas (GHG) ISO 14064 only in 2006, the year Nike had developed their safe alternative to SF6. “Targeted for release in mid-March 2006, the three-part ISO 14064 is being developed as a practical tool to enable government and business to measure and manage greenhouse gas emissions and reduction activities. Use of the ISO standard should support the development of GHG reduction programmes and emissions trading markets by providing an auditable, standardized process for GHG quantification and verification.” (Frost 2005).

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Nike’s Reuse-a-shoe program

Nike has a policy of recycling its products in as early as 1993. “Nike initiated its “Reuse-A-Shoe” program in 1993. According to Nike, more than 13 million pairs of shoes have been recycled in the past 8 years. Nike accepts running and athletic shoes that are no longer functional and recycles them into Nike Grind, a material that eventually becomes sports courts, tracks and playground surfaces.” (Bueche). What the company does is novel in the sense that re-use indicates using a product for the same purpose. But the fact that Nike could convert these ‘cannot-be-used’ shoes to good effect reflects its ethical considerations and innovative ability. This is an example of symbiosis between business and environmental concerns. The fact that Nike makes money of laying tracks out of waste material is proof of this. The advantage of such an outlook is that companies can be encouraged be more responsible to their environment and also make some profit at the same time.

Other practices

Nike has been aware of its environmental responsibility since the later 1990s and has a dedicated department for the same. “It has a well-staffed department devoted to corporate responsibility, no surprise for a company whose reputation took a hit more than a decade ago because some of its products were made by children in poor countries.” (Gunther 2008). An example would be the concept of “Nike Considered” strategy. This strategy that has been translated into a brand or product category of the company attempts to reduce waste during the whole stage of production. “The goal of Nike Considered Design is to create performance innovation products that minimize environmental impact by reducing waste throughout the design and development process, use environmentally preferred materials, and eliminate toxics.” (Nike’s considered design products: redefining performance and sustainability 2009). But the company has a long way to go in this regard because only a small category of its products are sold under this initiative. The two hundred and odd million pairs that is sole annually uses chemical glues that can penetrate into the environment if it is irresponsibly thrown away. Unless the company brings its whole product range under the “Nike Considered” strategy, a lot of damage will be done in the meantime. But Nike’s history of delivering even if it crosses deadlines is promising. The example of SF6 is proof of this commitment. It is hoped that Nike will bring the entire product range under its eco-friendly strategy in the near future. Other initiatives include reducing packaging weight (again saving on cost and transportation), and partnerships with environmental groups like ‘Leave no Trace’ and formation of the Nike Karakoram Environmental Institute. “Nike sponsored elite climber Brent Bishop’s expedition to the Karakoram climbing region. Bishop implemented responsible environmental practices consistent with the clean-up efforts he pioneered on Mt. Everest, which Nike also sponsored.” (Corporate responsibility: Nike Karakoram environment institute). What is credible about the efforts is that it can be emulated by other organizations as well. The company will in the meantime earn goodwill as a responsible corporate citizen that is concerned about the environment.

Sustainable consumption and marketing in Nike

The Reuse-a-shoe concept can also be cited as an example of sustainable consumption. This is because the company is using already manufactured products to make tracks which otherwise would have consumed fresh materials. The same can be said for its “Nike Considered” range. Minimizing waste will result in lesser use of products which is a step towards sustainable consumption. The company also uses the concept of sustainability in marketing also. For example, old shoes that can still be worn are given a small amount by Nike dealers when customers come in to buy a new one. This shoe is then gifted to deserving youngsters who are unable to buy new Nikes.

Sustainability performance at Accent Shoes

Since my company is engaged in a similar line of business, we have also adopted many of the practices of Nike and other companies with regard to sustainability. But it is proposed that new practices in this regard be attempted which can be adopted by Nike also. We are planning to use only recycled paper to pack our products and also to be used as stationary in the office and showrooms. We also plan to recycle used shoes and are finding ways to make new cheap shoes from it. It can serve the needs of the poorer sections of the society. We plan to conduct competitions among the local population for providing new suggestions and ideas on sustainable practices in businesses. We are also in the process of finding eco-friendly glue and are in contact with manufacturers of the product regarding this. In the meantime, we plan to use glue that needs less quantity to stick when compared to one we are using. We are improving our machinery and processes for the purpose of reducing waste and defects. We do not outsource our production and hence does not face the issue of poor pay in outsourced markets.

References

  1. Andrews, Richard, N, L, et al 2001, Environmental management systems: history theory, and implementation research, Resources for the Future, Web.
  2. Bueche, Shelley, Saving your soles.
  3. Corporate responsibility: Nike Karakoram environment institute.
  4. Defra position statement on environmental management systems: types of EMSs 2008.
  5. Environmental management systems: Introduction 1996, Quality Network.
  6. Frost, Roger 2005, ISO 14064 standard on green house gases in wings of UN’s climate change conference, ISO: International Organization for Standardization.
  7. Gunther, Marc 2008, Nike’s clean air Jordans, CNN Money.com: Fortune, Web.
  8. Nike company description 2009, Hoovers: A D & B Company.
  9. Nike goes for the green 2006, Business Week.
  10. Nike’s considered design products: redefining performance and sustainability 2009, Nike.
  11. Other direct greenhouse gases – PFCs and SF6, Other Greenhouse Gases: Sources Sinks and Science, Web.
  12. Polonsky, Michael, J, Wimsatt, Alma T 1995, Environmental marketing, Haworth Press, Web.
  13. Southerton, Dale, Chappells, Heather, & Vliet, Bas Van 2004, Sustainable consumption, Edward Elgar, Web.

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