Like any manufacturing company, every stage of the production line in sport equipment has an impact on the environment – and therefore has potential for intervention to integrate sustainable practices.
From the design to the creation, production, transport and sales of sports products, companies can implement practices to manage their environmental impact. The bigger the company, the bigger the value chain and the bigger the impact.
Deciding which store to support can be stressful at any point, so we’ve tried to break down two of the more known sports brand companies and what your purchase will support.
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At Ethically, we compile scores from over 700 verified sources to create a granular profile of more than 10,000 companies and brands, evaluating their impact on the environment, society at large, and good business. You can learn more about Ethically’s process in our Methodology and you can see the scores yourself by downloading the Ethically browser extension.
Nike is an American multinational corporation that is engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. The company is headquartered near Beaverton, Oregon, in the Portland metropolitan area. It is the world’s largest supplier of athletic shoes and apparel and a major manufacturer of sports equipment. As of 2020, it employed 76,700 people worldwide.In 2020 the brand alone was valued in excess of $32 billion, making it the most valuable brand among sports businesses. Nike ranked No. 89 in the 2018 Fortune 500 list of the largest United States corporations by total revenue.
Under Armour, Inc. is an American sports equipment company that manufactures footwear, sports and casual apparel. Under Armour’s global headquarters are located in Baltimore, Maryland, with additional offices located in Amsterdam (European headquarters), Austin, Guangzhou, Hong Kong, Houston, Jakarta, London, Mexico City, Munich, New York City, Panama City (international headquarters), Paris, Pittsburgh, Portland, San Francisco, São Paulo, Santiago, Seoul, Shanghai (Greater Chinese headquarters), and Toronto.
These two companies, while often compared side by side, have a significant gap when it comes to their ESG measurements. There are some key differences that put one above the other.
Overall, Nike scored a 63/100 and Under Armour scored a 52/100. This difference is highlighted in all three score categories but is especially seen in their environment and governance scores.
Let’s dive in (Reminder, check out our Methodology for definitions on each of these subtopic scores)
Impact on the environment
Impact on the environment relates to how a company or brand impacts the natural world around us. This could be related to the products they create, their manufacturing policies, or even their corporate response to climate change. Nike and Under Armour both impact the environment in a number of ways, from their manufacturing policies to the products they produce. Below are more details comparing these two companies.
Nike completely outshines Under Armour in this category, with the scores being 72 to 49. These scores will largely have to do with their compliance with environmental regulations, energy efficient operations and development of renewable energy and alternative environmental technologies.
A closer examination of the score reveals, Nike scored a 80/100 in Energy & Climate change, a 66/100 in Environment Policy & Reporting and a 69/100 in Resource Management. On the other hand, Under Armour scored a 63/100 in Energy & Climate change, a 46/100 in Environment Policy & Reporting and a 51/100 in Resource Management.
- Nike had been accused of using sweatshops to produce its sneakers and activewear since the 1970s but it was only in 1991, when activist Jeff Ballinger published a report detailing the low wages and poor working conditions in Nike’s Indonesian factories, that the sportswear brand came under fire. Soon after, the brand became the subject of an aggressive and sustained campaign by United Students Against Sweatshops. Nike was initially slow to respond—but under increasing pressure it eventually made some changes by improving its monitoring efforts, raising the minimum age of workers, and increasing factory audits. The brand has since earned plaudits far and wide for its efforts. A few years ago, Business of Fashion reported that Nike has successfully transformed its tarnished image to become a “recognized sustainability leader,” with Morgan Stanley ranking Nike “the most sustainable apparel and footwear company in North America for environmental and social performance, including its labor record.” Source
- Under Armour’s website makes audacious claims starting with the well worn cliché that sustainability is woven into the company’s DNA. They also state that sustainability is integral to their strategy and directly related to the company’s core values. The athletic apparel giant claims their sustainability vision, systems and practices have grown with the company and they further claim that they are focused on continuous improvement and actively seeking ways of adding value to the communities they serve. They specifically proclaim that they are constantly enhancing their materials usage and design process in pursuit of cleaner and healthier environments. They add they are working to upgrade their sustainable practices in their corporate, retail, logistics, and manufacturing operations. As explained on the Under Armour website, “Just like the athletes we serve, we always look to improve our performance.” Source
Impact on social responsibility
Social responsibility includes all the things that make a company “good”. Whether that’s giving back to the community, standing up for equal rights, treating workers fairly. Nike and Under Armour both have a number of policies around LGBTQ+ rights, community outreach, and equal pay and rights for all.
The closest range of scoring is observed within the social responsibility category, where Nike scores a 62/100 and Under Armour scores a 56/100. This category includes all programs, policies and performance in diversity, labor relations and labor rights. It also focuses on compensation and benefits as well as employee safety.
The major differences were the respective companies’ Diversity and Labor rights rankings Nike: 60 vs. Under Armour: 53, and compensation scoring with Nike: 58 vs. Under Armour: 54 score.
- Nike is focusing corporate responsibility efforts in the areas in which they can have the greatest impact and create the most value: Through the materials they design into products, through the process of making those materials and products, and in the world of sport where products are used. Through a variety of processes, including stakeholder consultation and lifecycle assessment, Nike has identified their most significant impact areas that include Energy & Climate, Labour, Chemistry, Water, Waste, and Community. As the brand evaluates and manages key impacts, they develop a better understanding of how interrelated they are and how an integrated approach to product design and process innovation can yield benefits across multiple impact areas. Source
- Under Armour’s environment rating is ‘very poor’. It uses few eco-friendly materials. There is no evidence it minimises textile waste . There is no evidence it has taken meaningful action to reduce or eliminate hazardous chemicals. There is no evidence it implements water reduction initiatives. Its labour rating is ‘not good enough’. Some of its supply chain is certified by FLA Workplace Code of Conduct including all of the final stage of production. It received a score of 21-30% in the Fashion Transparency Index. It likely publishes information about its supplier policies, audits and remediation processes. It does not publish a comprehensive list of suppliers or information about forced labour, gender equality or freedom of association. There is no evidence it ensures payment of a living wage in its supply chain. It does not disclose any policies or safeguards to protect suppliers and workers in its supply chain from the impacts of COVID-19. Source
Quality of corporate governance
Corporate governance is much like social responsibility, but for how the company operates internally. Do they have a diverse board? Is there transparency in accounting? Are they doing what they need to do to survive and operate in an ethical and correct manner? Nike and Under Armour both are large public companies with shareholders and boards they answer to.
Another significant difference is seen in the companies’ scoring within Governance where Nike achieved a 57/100 and Under Armour a 47/100. These scores refer to leadership structure and the values that determine corporate direction, ethics and performance.
Upon further analysis, Nike rises above Under Armour on the following categories: Board (57 vs 48), Leadership Ethics (57 vs 49), and Transparency & Reporting (58 vs 46).
- Nike views corporate responsibility as an “opportunity to create value for our business” and innovate for a better world. Its sustainability strategy is focused on innovation, integration and mobilization with the intent to integrate sustainability into the heart of their business model and governance structure.The Corporate Responsibility Committee of the Board of Directors oversees “environmental impact and sustainability issues, labor practices and corporate responsibility issues in major business decisions”. The Committee meets five times a year to review strategies and plans for corporate responsibility and the meetings are attended by either the company chairman or CEO. The department of Sustainable Business & Innovation (SB&I) further embeds corporate responsibility throughout the company and enables Nike to transition to sustainable business models. SB&I’s mission is to enable NIKE to thrive in a sustainable economy by focusing on sustainable products, sustainable manufacturing and sustainable marketplaces. Source
- The Under Armour board is made up of many strong leaders with deep industry knowledge and expertise. Certainly, a professional board like Under Armour’s would ensure that there is a clear policy in place for what constitutes as a CEO professional business expense and what should be considered a personal expense.
- The allegations raised in the press about Under Armour’s CEO, Kevin Plank using the company plane for private business and having a questionable relationship with an outsider that could be influencing company decisions are the type of “low hanging fruit” that anyone who scrutinizes the company will zero in on first even though Mr. Plank owns the plane and leases it to the company. Mr. Plank did clarify for the board that there was no misuse of corporate funds and that he has kept his personal matters separate from the company, which is definitely the right call. Even allegations that ultimately prove to be unfounded can be embarrassing and hurt the CEO and the company’s reputation and can call into question the overall internal controls. Source
Ethically partners with CSRHub as a primary data source, which in turn, aggregates over 700 data sources, compiling them into simple, easy to digest grades.
Nike and Under Armour are some of the biggest sports manufacturers in the world. Their products, policies, and actions that impact the environment around them.
Nike’s scores are much higher than Under Armour’s. In terms of sustainability, Nike has gone one step further in its agenda with its “Move to Zero” campaign – a commitment to reduce the American sportswear giant’s carbon emissions and waste to zero. Under Armour’s goals include reducing greenhouse gas emissions by 30% and using 100% renewable energy by 2030. If you’re an Under Armour or Nike advocate and want to see more evidence that they’re committed to these areas, email our CEO at firstname.lastname@example.org and let us know. We’d love to hear from you.
If you want to stay up to date on how these stores progress with their scores, make sure you download Ethically. We pull data regularly to make sure our scores reflect how companies are doing today, not years ago.
As always, please check out our Methodology page for more details on how we get our ratings data.