Nike Slashed Its Sustainability Team After a Pledge to Reduce Its Carbon Footprint — ProPublica

Eight years ago, the world’s largest sports apparel brand made a bold commitment. Nike was embarking on what it called a moonshot: doubling its business while halving its impact on the warming planet.

To get there, then-CEO Mark Parker said the Oregon-based company’s innovations in environmental sustainability would become a “powerful engine for growth,” a catalyst capable of changing industries. The company’s chief sustainability officer at the time, Hannah Jones, said achieving the goal would take “innovation on a scale we’ve never seen before.”

Nike’s Sustainable Innovation team embodied the commitment. It looked for environmentally friendly new materials, like leather made from kelp and foams made from plants, that could replace some of the hundreds of millions of pounds of rubber, leather and cotton used in traditional Nike products. It assisted in testing and refining the foam in the new Pegasus 41 that Nike says cut the carbon footprint of the shoe’s midsole by at least 43%.

So it came as a surprise one Sunday night in December when the dozen or so people on the team got summoned to a mandatory meeting the next morning. In a Zoom call before sunrise, they learned why. The team was being eliminated. The vice president who ran the team was gone. The call lasted less than 10 minutes.

It was the first in a series of deep cuts that one former Nike employee called “the sustainability bloodbath.”

With sales flatlining, Nike executives in December announced a plan to cut costs by $2 billion over three years. Those cuts have dealt a big blow to Nike’s sustainability workforce.

Nike has laid off about 20% of employees who worked primarily on its sustainability initiatives, The Oregonian/OregonLive and ProPublica found. Roughly another 10% left voluntarily or were transferred to other jobs. The cuts to its sustainability staff of about 150 people were far deeper than Nike’s 2% reduction companywide and 7% reduction at its Oregon headquarters.

The estimates are based on state employment records, a review of LinkedIn posts and interviews with more than 10 current and former Nike staff members who spoke on the condition of anonymity because they are not allowed to speak to the media or are looking for jobs in the industry.

“I’m truly shocked that so many sustainability roles would be eliminated,” said one person who was laid off. “I would have never thought that from the industry leader. Never in a million years.”

Nike’s elimination of such a substantial share of its environmental sustainability staff is a stunning turn in the company’s 52-year history. After emerging from the shadow of labor abuses in its foreign factories in the 1990s, the apparel behemoth helped spark the corporate responsibility movement. As the public’s attention turned to corporate impact on the environment, a chastened Nike aimed to lead.

But before the layoffs, Nike had missed its own targets for reducing its contribution to global warming. Its emissions have instead grown slightly since 2015.

Nike today is losing market share and is likely trying to prioritize the short-term financial results Wall Street wants over sustainability’s longer-term payouts, said Ken Pucker, a former executive with the Timberland shoe brand and a professor of practice at Tufts University’s Fletcher School.

“Given Nike’s leadership and investment, their retreat is unfortunate, especially in light of the scale and urgency of the challenge,” Pucker said.

The company’s stock price has been cut in half since late 2021, including an almost 20% drop in late June, a day after executives forecast a sales decline this year.

Nike would not address the news organizations’ estimates of job cuts when asked about them.

Jaycee Pribulsky, who was named Nike’s chief sustainability officer in February, said she was confident in the sustainability team Nike has in place and described Nike’s current strategy as “embedding” the work throughout the company. In other words: making sustainability everyone’s job as opposed to solely assigning it to a dedicated staff.

“We’re not walking away from sustainability,” Pribulsky said. “I mean, full stop. We are committed.”

The sweeping job cuts touched numerous layers of the organization. Attorneys and finance, waste and packaging specialists who worked in sustainability were laid off. Nike eliminated two of just five people working to trace the origins of the hundreds of millions of pounds of materials it uses. The company is legally prohibited from importing products containing cotton connected to forced Uyghur labor in China and has promised not to use leather that contributes to deforestation in the Amazon.

Three top sustainability executives left, including Noel Kinder, its previous chief sustainability officer, who announced his retirement at age 52 in February.

Nike by then had already moved sustainability down in the corporate hierarchy. In 2011, Jones, who held the top sustainability job for nearly 14 years, said that her team had gone from obscurity to reporting directly to Nike’s CEO. By the time Kinder left, the position was reporting to the chief supply chain officer, who reports to the marketplace president, who reports to the CEO.

Kinder has since given several talks without addressing the cuts to his former employer’s sustainability staff. But in a June 6 webinar, he said any company’s sustainability strategy depends on what its senior leaders do “from a business strategy standpoint.”

“And this actually happened at Nike,” Kinder said, “where a change in business strategy, or a change in financial objective, directly impacted the sustainability strategy, and frankly in a negative way. And so, there, it is what it is.”

Kinder did not say when that happened. He later told the news organizations he was not referring to any particular moment in his career at Nike.

“Sustainability was a priority at Nike for the nearly 25 years I was there regardless of the ups and downs of the business,” he said. “It was very much part of the fabric of the operating rhythm.”

To understand the impact of the cuts to Nike’s sustainability staff, it helps to look at the enormous task assigned to a group of 30 Nike employees in the spring of 2023.

The Carbon Target Setting Working Group began gathering every other Wednesday, 90 minutes by Zoom and in person, to develop a detailed plan to drastically shrink Nike’s carbon footprint. As participants in the international Science Based Targets Initiative, Nike and 5,000 other companies pledged to match the goals of the Paris Climate Agreement. Nike promised to reduce its emissions by 30% by 2030 throughout its supply chain.

With the deadline fast approaching, Nike’s climate working group debated possible investments to reach its targets, according to two people involved in the process. Should Nike buy renewable natural gas? How much should it invest in healthier agricultural practices? How much should it spend on renewable fuels for its shipping container vessels?

The group calculated the tonnage of emissions that would be reduced by eliminating the paper stuffed into the toes of shoes. It outlined savings from what employees called “light-weighting” shoe boxes, a strategy to use less materials and reduce freight shipping weights. Those seemingly small changes add up when multiplied across millions of products.

The result was a plan so important that it would eventually require executive approval and the Nike board’s review. It was still being finalized when the staffing cuts began, the two sources said.

About half of employees involved in Nike’s carbon target planning were laid off or transferred to non-sustainability jobs, according to two sources the news organizations used to identify names. The list included some members who would have been responsible for implementing the steps recommended for ratcheting down emissions.

“Now you have a stool with one leg missing,” one participant said.

Asked about the status of the 2030 plan and how the company would reach its goals for emissions reductions with fewer sustainability employees working on them, Pribulsky said work on the 2030 goals continues.

“We’re committed to continue our journey from a greenhouse gas and a carbon reduction emissions perspective,” she said.

The carbon work that remains is substantial. Nike’s global operation spans more than 600 contract factories concentrated in Vietnam, China and Indonesia, countries heavily dependent on coal-fired power. Nike has said its carbon footprint equates to that of Amsterdam, in the Netherlands, a city of roughly 1 million people.

Nike has made progress by powering its own office buildings and distribution centers with renewable energy. But the production and shipping of sneakers and apparel by suppliers and contractors accounts for 99% of its emissions. Nike’s total carbon pollution has been declining since 2020, but it is still just 1.6% lower than when Parker challenged Nike to halve its footprint in 2016.

The cuts to Nike’s sustainability staff come as multinational companies face increasing mandates to disclose their climate risks, trace the origins of their raw materials and deliver the carbon reductions they promise.

Some of Nike’s smaller competitors are doing better. Germany-based Puma has approached the moonshot that Nike missed, saying it has reduced its carbon footprint by almost a third while more than doubling revenues since 2017.

Still, few fashion companies are on target to achieve the reductions needed to prevent severe impacts to the planet, said Achim Berg, a former senior partner with the consulting giant McKinsey & Co.

“If you have conversations with CEOs in the industry, they will admit that it’s very difficult, if not impossible, to accomplish what has been committed to years ago,” said Berg, who oversaw McKinsey’s apparel, fashion and luxury practice. “Realistically, we’re going to see a wave of companies changing the targets or postponing the timeline.”

If the industry doesn’t act with more urgency, Berg said, “we can write off all the targets, because nobody’s even close. We need to recognize this.”

Nike’s retreat from sustainability threatens to upend its carefully crafted image as a brand working to address climate change, not one that is making it worse.

The company took a huge public relations hit in the 1990s after reports emerged about its contract factories in Asia using child labor, physically abusing workers and paying as little as 20 cents an hour. Co-founder Phil Knight ultimately admitted the company had problems, saying in 1998 that Nike’s products had become synonymous with “slave wages, forced overtime and arbitrary abuse.”

The company began issuing public reports that detailed issues its auditors identified in suppliers’ factories and laid out how it would address them. It became the first in its industry to disclose its finished product suppliers.

Nike employees also saw an opportunity to get ahead of negative headlines on another issue of social concern: the environment.

“We were learning from the mistakes made in the reaction to the labor issues that we needed to go on the offense,” said Sarah Severn, who spent two decades working to lessen Nike’s environmental impact before leaving in 2014. “We were much more aggressive about it and conscious that if those things didn’t get addressed, it would just add more problems to the company’s reputation.”

Executives including CEO John Donahoe have described the company’s aspirations today as something like a virtuous circle, a closed loop that includes turning plastic bottles and trash into Olympics medal-podium jackets and futuristic shoes inspired by the scarcity of living on Mars. Innovating ways to waste less, make lighter shoes and use fewer materials doesn’t just save on carbon emissions. It saves money.

Nike’s marketing machine has amplified the message of sustainability in pitches before the Summer Olympics, an event that sneaker companies consider an unparalleled opportunity to launch new products. Nike’s chief design officer in 2020 called it “a moment for us to telegraph our intentions as a company.”

Ahead of the 2012 London Games, Nike introduced Flyknit, one of its most successful sustainable innovations, a lightweight, woven top part of a sneaker that reduced waste and became a $1 billion business within four years.

Before the 2016 Rio Games, Nike highlighted AeroSwift, a lightweight fabric made from recycled plastic bottles.

In 2020, it was the Space Hippie, a shoe made from recycled factory scraps. Vogue magazine said Nike’s new shoe was its “most sustainable yet.” Harper’s Bazaar called it “game-changing.”

Donahoe highlighted the new shoe during one of his earliest media appearances as CEO. Speaking on CNBC in February 2020, Donahoe praised Nike’s innovation in sustainability and said the company was making significant investments in it.

“The consumer increasingly cares about sustainability, and so they’re looking to companies like Nike to lead on this dimension,” Donahoe said.

That night, Donahoe sat next to the rapper Drake and other luminaries at a colorful New York Fashion Week runway show highlighting Nike’s environmental priorities around the Olympics.

Looking back on how good Nike’s sustainability work has been for its business, the recent staff cuts make little sense, said Tensie Whelan, director of the NYU Stern Center for Sustainable Business.

“It’s just bizarre to me that Nike would want to step back, having been the leader,” Whelan said. “If they’re moving away from sustainability driving innovation, that is the Nike brand. What does it become then?”

This April, when Nike revealed its new outfits for athletes in the 2024 Summer Games in Paris, Donahoe returned to CNBC. The CEO didn’t talk about the Space Hippie, the shoe that won critical acclaim. Just two Space Hippie models remained available on Nike’s website recently. Both were being advertised at a big discount.

Donahoe talked about what Nike needed to do differently. Just four months after his company killed its Sustainable Innovation team, Donahoe repeatedly said “disruptive innovation” would drive growth.

He didn’t use the word sustainability once.