A key element of NIKE, Inc.'s corporate responsibility strategy is integrating knowledge and values across our organization. It's a marathon, not a sprint. One example of integration comes from Global Procurement, which sources non-product suppliers for Nike (processes for selecting and monitoring product suppliers are described in the Workers and Factories section).
Over the past five years, Global Procurement has partnered with several NIKE, Inc. functions to increase the sustainability of the goods and services they buy. The team leverages NIKE, Inc.'s purchasing power by communicating sustainability objectives to suppliers and potential suppliers, and challenges them to deliver innovative goods and services to meet our objectives.
We think this is an important way to help build markets for more sustainable - and affordable - choices. We saw this dynamic play out in a multi-year project to shift toward more environmentally friendly materials and processes in Nike's retail bag program in the United States. Building on this and other lessons learned, we began evaluating the CR performance of current and prospective suppliers.
When we began looking into improving the sustainability of retail bags, we first awarded business only to printers that were third-party certified by the Forest Stewardship Council (FSC). At that time, FSC-certified paper was available but too costly. We encouraged printers to work on Nike's behalf to find acceptable FSC-certified materials.
Four years have passed since this process started, and we now source bags using 100-percent FSC-certified paper printed at FSC-certified printers using soy-based inks and distributed by an FSC-certified fulfillment company. The complete chain of custody allows Nike to use the FSC certification number and logo on all retail bags in North America and Singapore. We will roll other regions into the program as materials and providers are available.
We aim to tackle every addressable area to improve sustainability, including looking at angles not commonly assessed or addressed. In FY07-09 some areas we have improved include reduced energy waste in retail stores by adopting remote lighting management, reduced traffic and miles traveled by implementing a pooled distribution network and reducing long-distance shipping by finding a body form supplier who uses sustainable materials and delivers from manufacturing plants located near Nike centers.
Through these projects, we learned that one of our biggest challenges has been a lack of common indicators to evaluate potential suppliers. Though each category and project has unique attributes, we needed a consistent process for ranking suppliers' sustainability performance in order to fairly and systematically integrate sustainability as a factor in our procurement process.
To achieve this goal, we developed a supplier scorecard to assess the match between Nike's CR values and those of existing and potential suppliers. Several yes/no questions ask about the policies, metrics, goals and performance on relevant topics, including: compliance, Considered, climate, community and competition. The competition section, for example, asks about employee and supplier diversity practices.
Questions are universal enough to apply to all suppliers and are provided online, enabling us to review each supplier's profile and establish baselines for peer groups and our overall supply base.
This process is helping us to establish a baseline of Nike's current non-product goods and services suppliers, evaluate potential new suppliers against that baseline, and analyze and learn from the collected data to inform future purchasing decisions.
Through FY09, we had requested more than 100 suppliers to complete the survey. To date, responses have showed wide variation in the effort on the part of suppliers and reveal significant differences between large and small companies. Only one large company indicated they had no corporate responsibility strategy or plan, compared to half of the small suppliers.
Moving forward, we expect to establish a minimum acceptable corporate responsibility standard required for suppliers to do business with Nike. We also plan to establish a supplier partner forum to share innovations and solutions, and to work with smaller suppliers, developing a set of tools to help companies that do not have the resources or the knowledge to make a strategic approach to building their corporate responsibility capabilities.