Case study : Governance and Sustainability at Nike A and B

--The restructuring also established an internal audit program to provide independent oversight of the system of contract factory audits against Nike's health, safety, and environmental standards. This shift in oversight from the CR group to the audit department within the finance function allowed the SB&I group to focus more on forward-looking activities"playing offense," in Nike lingosuch as planning, driving improved sustainability performance, and spurring innovation. It also brought the rigor of traditional auditing and control to bear on sustainability auditingthus also strengthening the "defense"and put the audit and finance teams more in touch with the sustainability discussion. Sustainable audit began reporting directly to the CFO and the board's audit committee rather than to the CR committee, though key results were shared with the CR committee as well. According to Blair, restructuring brought sustainability issues "directly into my space of strategy and finance as we're looking at new investments, new business models, that we need to be setting up." To build new innovation capabilities, the SB&I group set up the Sustainable Business & Innovation Lab, an internal strategic partnerships group charged with hunting externally for technologies and collaborations with potential to drive sustainable value. A complement to the core R&D functions and the "innovation kitchen," the SB&I Lab brought private equity and venture capital expertise inside the company for the first time. The lab focused on two key areas: closed loop materials and manufacturing; and revenue sources decoupled from scarce resources, primarily digital services. Jones's brainchild, the lab was part of SB&I, but was also "sponsored" by Blair as CFO, with a dotted line reporting relationship to the vice president of strategy. "I view the [sponsorship] role as keeping the organization focused on some of these longer-term opportunities that might not hit the priority list for someone in the day-to-day firefight," said Blair, noting that the small, early-stage type of projects pursued by the lab could easily get squeezed out of the process in a large-scale enterprise deploying a public company financial model. A senior management group including the heads of innovation, logistics, IT, and other functional areas helped define the lab's strategy, but approval of strategic investments was by Nike's sustainable investment management committee, made up of Blair, Jones, and the heads of corporate strategy and development, with ultimate oversight by Parker.--

Question : What is your view of Nike's argument that "playing offense" on sustainability can drive innovation, growth, and profitability? What is the evidence for your view?

 

Provide Thorough explanation