Sporting goods giant Nike Inc has set out new labour and sustainability standards that will be used to choose and evaluate factories making its products around the world as part of a series of updated business and environmental goals.

Its new Manufacturing Index factory rating system places more importance on labour and environmental performance when it comes to evaluating its suppliers, compared with the traditional focus on measures like quality, cost and on-time delivery.

In particular, it includes a new Sourcing & Manufacturing Sustainability Index (SMSI) that will be used to assess contract factories in areas such as water use, energy consumption, carbon output and waste, health and safety, and labour management issues. It also promises "progressive movement" toward the Fair Labor Association's definition of a "fair wage".

The index has been developed over the past two years, including a successful pilot programme, and is currently being rolled out across Nike's global supply chain.

The sportswear firm says SMSI ratings will be an important measure "when selecting factories with which to invest or divest" - and that it wants all the factories it uses to meet the increased standards by 2020.

"Nike is known globally for our innovative performance products and sustainability has now increasingly become core to our business approach," explains president and CEO Mark Parker.

"We have continuously invested in reducing our environmental and social impacts within our own business and supply chain and have made substantial gains over the last decade.

"We know we cannot achieve our bold sustainability goals simply by delivering incremental improvements. We need to deliver innovations that rapidly evolve the way things are done at Nike, in our industry and throughout business."

Other goals outlined in Nike's 'FY10-11 Sustainable Business Performance Summary' released yesterday (3 May) include:

  • By end of fiscal 2015, all new Nike brand footwear will be designed to achieve a silver rating on the company's Sustainability index, which aims to reduce a product's environmental impact. All new Nike brand global apparel will be expected to achieve a bronze rating by the same timeframe.
  • By 2015 the company aims to cut CO2 emissions per unit by 20% compared with 2011 levels.
  • It wants to achieve zero discharge of hazardous chemicals for all products in its supply chain by 2020.
  • By 2015 it is aiming to improve water efficiency by 15% per unit in dyeing and finishing apparel materials, and footwear manufacturing.
  • Nike wants to cut waste from manufacturing by 10% by 2015, as well as reducing shoebox weight.
  • And it plans to invest a minimum of 1.5% of pre-tax income in communities annually.