Areas Of Social, Environmental And Financial Impact

Sustainability is defined in modern business practices as concentrating focus to three areas, commonly referred to as 3 pillars, they are the domains of social, environmental and financial impact. These three things are all interrelated and can all have a positive impact on each other when applied with detailed precision to a business’s practices. Nike is a sports company that got in trouble in the 1990’s due to only not adhering to these three pillars, but also getting in the press for potentially causing harm.

This news hurt the company’s bottom line as consumers did not want products associated with such practices. Nike’s management found they needed to not only do damage control, but also to make a very serious large effort to improve in all the above areas in order to be able to grow into the future or such problems would reoccur causing more consequences each time.

The social aspect of the three pillars is the humane treatment of a company’s behavior and decisions.

When news started broadcasting that Nike was using contract companies that had workers in sweatshop type of working conditions, child labor and in some cases, possibly outright slavery, the consumer did not receive it well. Abusively long shifts, unsafe conditions and child labor were also among other factors in the situation. Action needed to be taken quickly to recover, it was very difficult as Nike needed cheap labor to keep production costs low. Nike was able to turn things around by developing their own global code of conduct with an auditing system to ensure that the contract firms used in product production were to maintain minimum age standards regardless of national factory location, employee freedom(no slavery or indentured servitude), maximum average shift, or maximum overtime and minimum standards for work environments.

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Nike has inspectors that have a routine method they perform audits by to make sure nothing gets overlooked.

The inspectors interview not only management but also production floor staff in their efforts to ensure that the global standards are being adhered to. Any problems discovered are addressed by a corporate team so that local management can have adequate support in overcoming obstacles. If the problems are not sufficiently addressed, then factory management could be penalized and risk losing their Nike contract. The human aspect of Nike is also blossomed further by Nike having required annual training of company policies for management positions, front-line worker training that cover not only codes of conduct, but also helps in educating in concepts such as quality over quantity along with building vocation skills. The environmental aspect of the three pillars is the impact of the company’s decisions and operations on the planet. This pillar can have a huge impact on people not just as employees, but in the community in the area around a factory as any production by-products could be leaked out or dumped, it can really affect local inhabitants living environment.

Not only can it impact their daily life, but also their long term quality of life through exposures that could have long term implications. In 2011 news outlets reported that Nike was associated with using a firm that was dumping chemicals in a local river. The official Nike statement is that they only contracted with that firm for cutting up material & sewing the cut up materials. Nike took a different approach than the other companies involved (that were using the same firm) and was able to turn things around by not only releasing a press statement about the matter, but also altering how they approach their relationships and audit processes with contract factories they use. Nike is getting more selective on such factory contracts and hence working with fewer, weeding out the ones that aren’t inline enough with the company objective.

Firms that are committed to evolving their factories, facilities and other related operations into greener, more sustainable operations with smaller carbon footprints that empower the employees instead of bringing them down. Nike has a program called GreenXchange that allows for the sharing of such intellectual property like water usage (mentioned below) and waste product recovery methods which could in turn build innovative ecological production or fabrication models. Another action of sustainability that Nike is taking touches on both the environmental & people arena, starting in 2001 Nike has taken the perspective that the water their factories use is being borrowed from the community. For that reason, they have been altering product fabrication methods to use less water while also working to make what’s returned to the community better than historical results for such waste water. Nike has discovered that the way water is handled by their contract factories can have an impact on the people of an area by impacting water scarcity markers.

Water scarcity id the amount of fresh water available in a region to meet population demand. Nike has chosen to be proactive on the matter by being active in inspiring and motivating their contractors by making a “Water Risk Mitigation Guideline” manual. The manual essentially trains the contractors on water usage. It allows better perception of water risk, how to verify if there is a risk and how to reduce such risk so the regions they are in can hopefully be less vulnerable to flood or drought due to factory processes. (Ref: Sustainability Report FY2016/17) From my understanding, this document is being made publicly available for other companies to use in their processes that involve using water. Depending on how other companies use it, the using the information could mitigate the possibility of government regulations for manufacturers in regions with water problems.

The financial pillar is often viewed as the profit or monetary pillar. Nike is addressing this by running leaner in a more efficient way. The company is also working with contractors on finding a way to rehome waste where it won’t be a waste, but rather turned into something else, this also reduces costs of waste disposal which helps indirectly increase revenue. In the sustainability section of Nike’s website, there was mention of a goal to be a zero waste company. Being zero waste would mean nothing from Nike’s products would be un-usable, everything could be turned into something else or in the case of water still be useable when it’s returned to the community. Grinding up the sneakers, as noted above, is one example of that. Using water more efficiently is another example. There is a zero water dye process Nike has developed that has had a very positive effect on the bottom line by saving millions of gallons of water, eliminating the need for chemicals & using less power. The less over all resources wasted in product fabrication than the less it will cost to produce an end product which will help with profits.

Overall Nike has definitely improved in not just implementing but rather embracing the three pillars since the sweatshop debacle of the 90’s. By embracing the fact their actions and their contractors actions (on their behalf) can greatly impact the regions where operation occur and this the global community, they are probably having a more positive human impact than most politicians. They are making huge steps in improving the lives of the production line workers in regions with poor human labor records by having an aggressive audit process with a documented resolution procedure when a problem is found. Making their ecological discoveries open to the public aides in all manufacturers doing less harm to the environment which leads to an overall better world. If more companies chose to run their operations similar to Nike then the planet would be a much better place.