On Monday the 23rd, an updated list of the S&P Dow Jones Sustainability Index (DJSI) was released. The DJSI includes the world's top 10% most sustainable companies based on questionaries and a list of rules regarding what makes a company sustainable. The 2020 list includes familiar names like Kering, — the luxury retail group and owner of Gucci — The Gap, and H&M. Absent from the list was Nike, which dropped off the list this year, meaning it is no longer considered a sustainable company on the DJSI. This may come as a bit of a surprise to some consumers, especially since Nike claims that "sustainability is everything," but if this year has revealed one thing, it's which brands are truly devoted to being sustainable and which ones are not.
Nike is typically perceived as being more sustainable than fast fashion giant H&M.
H&M has had a rocky past when it comes to sustainability. But, over the past decade, it has been increasing and prioritizing environmental sustainability initiatives. When the Swedish mega-retailer first took an interest in causes like recycling, consumers were skeptical and accused the brand of greenwashing. Gradually, though, H&M has learned from its mistakes and made an effort to back up its environmental sustainability claims and invest in new projects, resulting in the brand being one of the world's most transparent large brands. On the other hand, Nike has seldom faced the same amount of skepticism and criticism for its venture into environmental sustainability. A big reason for that is that H&M produces millions of tons of cheap clothing every year, whereas Nike's products are viewed as being less disposable. As consumers and investors come to realize that cost does not equate to quality or sustainability, Nike's image is at risk.
This year has shed light on the dark side of Nike.
The activewear brand has had a tough year. It saw a drop in sales due to the pandemic, was accused of wokewashing around the time of BLM's resurgence, and spent most of the year denying the use of forced labor in its Chinese supply chain. The last stems from reports that Nike — among dozens of other companies including H&M — was sourcing from factories and cotton suppliers where a suppressed ethnic group called the Uyghurs were being forced to work. Many companies, like H&M, cut ties with those factories and found different, reputable suppliers instead. However, Nike representatives spent months sidestepping questions and giving vague answers in response to accusations about Uyghur labor in their supply chain. Certainly, compared to other companies caught up in this human rights violation scandal, Nike has handled it quite poorly.
It may be time to realize that H&M is not as bad as it seems; at least it is trying to be a recognized sustainable company.
Is H&M the shining example of a sustainable brand? No. However, the fast-fashion giant has made significant strides in the right direction, and the proof is in its ranking. H&M remains in the top 10% on the DJSI list; Nike does not. Adidas also fell off the DJSI list this year, so at first glance, it may seem like activewear brands are the issue — perhaps it could be argued that stretchy activewear is more difficult to make sustainable than cotton dresses. However, that argument can't be used by Nike this time because the real reason the brand dropped off the DJSI is "the company decided to not actively participate in the assessment this year." Now, according to a Nike spokesperson, the brand gets asked to participate in multiple assessments and rankings every year, so it is possible to see it on another sustainability list at some point. But one would think a company that is dedicated to sustainability would be willing to participate in one more questionnaire that would specifically appeal to and be relied on by investors.
The Bottom Line:
Neither H&M nor Nike is entirely sustainable, and each brand operates with both good and bad business practices. But since Nike fell off the DJSI due to unwillingness to report their sustainability initiatives, it gives the perception that the activewear brand is less serious about its commitment to the planet and people than retail groups like H&M. Of course, all of this is just an assumption. Nike could be secretly working on its sustainability and actively choosing not to brag about it like LVMH claims. On the other hand, it could be a peek at where Nike's priorities lie.