John Donahoe has announced he will be stepping down as Nike’s CEO. The surprise announcement came shortly after he significantly reduced his team of business sustainability professionals.
About Nike’s cuts to its sustainability team
Elliott Hill will be taking up the role, having worked at Nike for over three decades across customer engagement, procurement, and marketplace roles. He is coming out of retirement to take up the role with the hope that he can help steer the brand back to success.
Danahoe’s 30 percent cut to headcount within Nike’s internal environmental, social and governance (ESG) teams affected approximately 150 individuals. The cut was announced to the team over a short call on a Saturday afternoon and was described as a ‘bloodbath’.
Nike’s Sustainable Innovation Team was the most affected. It was set up in the late 2010s and was tasked with developing and integrating new digital innovations and material innovations. In the weeks that followed, people noticed Nike had begun to seek freelance and junior support for its environmental initiatives.
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Why the cuts happened and Nike’s environmental performance
The company pledged to reduce its carbon footprint by 63 percent by 2030 against a 2015 baseline, but it has witnessed a slight increase in its footprint to date. This increase is more than 99 percent attributable to Scope 3 (indirect) emissions. The brand also has a 2050 net-zero carbon target covering its entire value chain.
Cuts to the sustainability staff at Nike were part of a strategy to cut post-pandemic costs. Fashion retailers have faced a multitude of costly challenges in the last few years, including supply chain disruptions, enhanced regulation, and falling consumer demands amidst the economic downturn. The brand forecasted a sales decline this year after growth of just 1 percent last year.
Danahoe became the CEO in 2020 and strategically shifted the company’s focus towards direct-to-consumer and digital sales, mainly due to lockdowns. This helped to grow yearly revenue from around $37 billion in 2020 to $51 billion in 2023. However, challenges still persisted.
The refocus reduced Nike’s presence in third-party retail stores, which left opportunities for competitors like Adidas and New Balance to grab market share. Nike has shared its intention to improve product innovation and be more bold in its brand marketing. However, some doubt whether a veteran is the best pick. Some feel Nike should have chosen a newer face, and many want more details on how Hill will approach sustainability.
Final thoughts
Nike’s decision to significantly cut its sustainability team raises questions about the brand’s long-term commitment to its ambitious environmental goals. While the cuts are part of a broader cost-saving strategy in response to economic challenges, they come at a time when businesses are expected to step up their efforts to reduce their carbon footprints and meet growing consumer and regulatory demands for sustainability. Ultimately, how Nike addresses these sustainability concerns under Elliott Hill’s leadership will be crucial in determining whether the company can balance financial recovery with meaningful environmental progress.
