Nike Climate Story

Innovate for a Better World

Nike Climate Plan

September 27th, 2007

2

Timeline

G L

O B

A L

N I

K E

1 9 9 2 Nike first learns about the global warming potential of SF6.

2 0 0 3 Nike develops a baseline of inbound logistics and subcontracted manufacturing

1 9 8 8 The World Meteorological Organization and the United Nations Environment Program establish IPCC

2 0 0 1 (September) The IPCC releases its Third Assessment. Reaffirms warming trend and human impact

1 9 9 5 The IPCC’s Second Climate Assessment is published,serving as the basis for Kyoto Protocol.

1 9 97 (December) Kyoto Protocol adopted. 2 0 0 5 (February) The

Kyoto Protocol begins. The United States, refuses to ratify

2 0 07 (Feb) IPCC 4th assessment

1 9 9 7 (September) Nike commits to fully phase SF6 out of footwear and begins to transition some models to Nitrogen

2 0 0 1 (October) Nike joins WWF Climate Savers. Sets CO2 emissions reduction targets for owned operations and business travel.

2 0 0 5 Nike exceeds WWF target of 13%

reduction - reaches 18% CO2 reduction

2 0 0 6 (June) Nike completes phase out of all f gases in Nike branded footwear

2 0 0 7 (May) Nike sets new targets

3

2001 MOU with WWF

W H E R E W E W O R K &

M O VIN G P E O P LE : • Reduce carbon dioxide (CO2) emissions

13% below 1998 levels by 2005.

• Includes:– CO2 from Nike-owned facilities and

business travel– Conserving energy, buying green power,

and investing in community energy-efficiency projects

M A K IN G P R O D U C T &

M O VIN G P R O D U C T: • Supply Chain CO2 baseline—2003

– Footwear and Apparel contracted manufacturing

– Logistics• Remove GHG from Products (pre-existing

commitment)

4

FACILITY AND TRAVEL CO2 SUMMARY

1 1 0 , 6 10

9 6 , 9 6 1G O A L

1 0 3 , 9 96

26,312(13,299)(8,143)47,75477,684(17,475)10,75084,4092 0 0 5

1 2 0 , 4 48

31,755(15,040)(4,000)50,79588,693(8,259)10,74086,2122 0 0 4

8 9 , 8 1 2(8,154)(46,263)038,10997,966(3,637)12,37089,2342 0 0 3

1 2 1 , 8 68

20,952(15,331)036,283100,916(846)12,49389,2692 0 0 2

1 2 4 , 9 01

25,1670(5,067)30,23499,734(771)12,61087,8952 0 0 1

1 2 8 , 8 16

26,2770(4,341)30,618102,539(771)13,15790,1522 0 0 0

1 2 7 , 5 75

29,6480029,64897,926(450)12,58585,7911 9 9 9

1 2 7 , 1 38

30,1770030,17796,961012,36484,5971 9 9 8

TO TA L C O 2

To t a l t r a v e l TC O 2

B E TC P r o je c t

sTC O 2

Tr a v e l O f f s e t TC O 2

Tr a v e l TC O 2

To t a l F a c ilit ie

s G H G TC O 2

G r e e n P o w e r

F a c ilit y G a s

TC O 2

F a c ilit y E le c t r ic it y TC O 2YE A R

COMMITMENT: Reduce carbon dioxide (CO2) emissions 13% below 1998 levels by 2005.

Achieved Goal

5

Baseline

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Annual Emissions

(Gg CO

2-eq)

Emission estimates include both SF6 and C3F8.

SF6 Elimination from Product

Began R&D in 1995, Completed phase out in 2005Measured and verified by ERT

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Our Climate Goals

W H E R E W E W O R K M O V IN G P E O P L E

MAKING PRODUCT(Footwear contracted manufacturing)Reduction Target TBA

M A K IN G P R O D U C T

Apparel contracted manufacturing

MOVING PRODUCT(Logistics to first point of distribution)

30% Absolute Reduction in CO2 footprint from 2003 Baseline by 2020

T ie r 1

T ie r 2

(2005)(2005)

(2003 baseline)

1.9%

2.9%

5.6%

24.6%

59.3%

5.7%

MAKING PRODUCT(Equipment contracted manufacturing)

N ik e F o o t p r in t :1 . 3 6 m

m e t r ic t o n s

WHERE WE WORKNike Brand Climate Neutral

Facilities by 2011Nike, Inc. Climate Neutral

Facilities by 2015

MOVING PEOPLEClimate Neutral Business Travel by 2011

MAKING PRODUCT(Apparel contracted manufacturing)

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Climate Counts

8

Moving People

LOWLOWCO2

R E D U C E•In v e s t in IT : M a k e v ir t u a l c o m m u n ic a t io n a v ia b le a lt e r n a t iv e t o t r a v e l•B u ild a w a r e n e s s o f t r a v e l p r o l if e r a t io n a n d e n v ir o n m e n t a l c o n s e q u e n c e s

U S E R E N E W A B L E E N E R G YN / A

O F F S E TB u y o f f s e t s f o r e a c h f l ig h t

1.9%

HIGHHIGHBrand

HIGHHIGHROI

HIGHHIGHControl

Challenges: •Global growth and matrix structure makes meaningful communication and relationship building necessary.•On-site commercialization encourages developers and designers travel to factories.

Opportunity:•Rapidly increasing SG&A make travel reduction a financial priority.

MOVING PEOPLENike Brand Climate Neutral

Business Travel by 2011Nike, Inc. Climate Neutral

Business Travel by 2015

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Nike, Inc. rated a top commuter workplace by EPA

Global HQ building awarded Oregon’s first LEED EB Gold

Europe HQ runs on 100% renewable energy

EMEA Dist. Center uses 6 windmills for all of its energy

Global HQ purchases renewable energy credits for 100% of energy used

Where We Work• Nike energy consumption has not increased since 1998 despite a 25%

increase in square footage. (USA)• 2% absolute decrease with 6% growth in facilities. (Global)

• Green power and “tags” grew from 1% in 2002 to 52% in 2007.

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Where we work: Facilities and Retail

MED.MED.CO2

6%

HIGHHIGHBrand

HIGHHIGHROI

HIGHHIGHControl

Challenges: •Rapid growth of factory stores.•Many small NLO’s dispersed around the world.•Engage affiliates.

Opportunity:• LEED certified factory stores makes a statement in each community where a store is based.Global presence lets us advocate for renewable and green design globally.

R E D U C E•E n e r g y E f f ic ie n c y u p g r a d e s•L E E D c e r t if ie d r e t a il a n d o f f ic e s

U S E R E N E W A B L E E N E R G Y•In v e s t in W in d a n d S o la r•R e g io n a l o p p o r t u n it ie s t o b u y g r e e n p o w e r d ir e c t ly f r o m u t i l i t y

O F F S E T•R e n e w a b le E n e r g y C r e d it s ( R E C s ) o f f s e t % o f C O 2 f o o t p r in t

WHERE WE WORK•Nike Brand Facilities are

Climate Neutral by 2011•Nike, Inc. Facilities are Climate Neutral by 2015

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Moving Product

HIGHHIGHCO2

25%

HIGHHIGHBrand

MED.MED.ROI

LOWLOWControl

Challenges: •Shrinking lead times and customer requirements make airfreight attractive.•Factories are located far from retail.•Fuel prices going UP•Constrained fuel availability in the future – Peak Oil scenario•Taxation and regulation on the increase

Opportunity:•Reducing airfreight aligns financial and CO2 objectives – ROI2

R E D U C E•A ir f r e ig h t d is c ip lin e•P a r t n e r w it h lo g is t ic s p r o v id e r s•B a s e lin e o u r O u t b o u n d lo g is t ic s f o o t p r in t•P a c k a g in g r e d e s ig n p r o je c t

U S E R E N E W A B L E E N E R G Y• P a r t n e r s u t il iz in g a lt e r n a t iv e f u e ls ( i . e . b io d ie s e l)

O F F S E TW it h r e g io n s , d e v e lo p a n o f f s e t s t r a t e g y

MOVING PRODUCT•30% Absolute Reduction in CO2

footprint from 2003 Baseline by 2020

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Making Product

HIGHHIGHCO2

58%

6%

3%

HIGHHIGHBrand

LOWLOWROI

LOWLOWControl

Challenges: •Heavy reliance on Coal in developing countries, especially China.•NIKE has indirect influence over energy reduction projects.•Financial returns are indirect.•Understanding of the complexity of embedded energy

Opportunity:•Suspect that current operations are inefficient. Lots of “low-hanging fruit”•Global presence lets us advocate for renewable energy and energy efficiency globally.•Greater understanding of carbon impact of raw materials

R E D U C E•B a s e lin e e n e r g y u s e in f o o t w e a r f a c t o r ie s•L e v e r a g e W H Q e x p e r t is e in e n e r g y e f f ic ie n c y p r o je c t s

U S E R E N E W A B L E E N E R G Y•R e s e a r c h lo c a l o p t io n s

O F F S E T MAKING PRODUCT•Footwear Reduction Target

TBA