Jones: We have a whole set of indicators, performance indicators that they need to be meeting. So there are kind of incentives along the way, but there are also sanctions for failing to meet standards and [for] repeat offences, which go up to and including termination of the relationship. If you look at some of the data in the labor section of this [report], you’ll see that we have eliminated a number of factories because of their unwillingness to consistently shift management strategy and culture [and] to build in sustainability and workers’ rights.
GreenBiz: Other big retailers are on the sustainable supply-chain bandwagon: Walmart, for example, has a supplier scorecard program. Is the writing on the wall now for suppliers that transparency is needed to remain competitive?
Jones: I think the signals are getting louder and louder. I think what was a whisper is now a shout. I think that’s a good thing. And I think that a lot of our suppliers are beginning to wake up; that there are new rules of engagement and that they will be, in this era of transparency, owning their reputations. And that it will be important; that it is a competitive advantage.
GreenBiz: How do you balance environmental and labor issues?
Jones: We’ve been pursuing a huge amount of work around… the labor side of things and the environmental side of things. And then you’ll see in the manufacturing index, the environment piece is coming into it. I think what you’re going to see is even more convergence in the years to come, where we pull all these different sorts of indicators together. And it’s a balancing act.
GreenBiz: Where does Nike still need work to achieve its goals? Where are the places where you have the most catching up to do?
Jones: There are different areas that I think about and that the team thinks about. We run sustainability now as you would almost an innovation pipeline. There are different kind of issues that hit at different times in that pipeline. For some issues that we have out there, there simply isn’t a solution yet that’s obvious. And what we need is… solutions. We need new technology and new chemistry, new materials, to swap out with the old. So there is an innovation challenge and it’s really about sending a signal to innovators in the company and outside the company, that we are in the hunt for alternatives.
As you get further down into the commercialization nature of things it’s about how you get mainstream adoption. Because at the moment sustainability, absent strong policy levers being pulled, faces a scaling challenge. There is a cost to early leadership, and it’s the early cost of investing at a prototype level and all the money that goes into that R&D. So the faster we can get this to market and the faster we can get sustainable options to be the default, the more viable it becomes. It becomes a kind of self-fulfilling prophecy in a very good way.