Bolstering CSR in Nike

Setting the Pace for CSR

Team Cool Runnings

Call for Action

◊ Issue at Hand: While New Balance (NB) is currently utilizing socially responsible practices, the approach is fragmented.

◊ Mission: “Demonstrating responsible leadership, we build global brands that athletes are proud to wear, associates are proud to create, and communities are proud to host.”

◊ Goal: Create and align an integrated CSR framework into the NB organization.

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Why Care About CSR?

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◊ “Up to 50 per cent of a company’s value could be dependent upon reputation and intangibles”1

◊ Company’s citizenship drives 16.3% of a company’s reputation of products and services2

1Veleva, Vesela. “New Balance: Developing an Integrated CSR Strategy.” Richard Ivey School of Business, The University of Western Ontario. Page 6. 2Reputation Institute and Boston College Center for Corporate Citizenship, “Building Reputation Here, There and Everywhere: Worldwide Views on Local Impact of Corporate Responsibility,” March 2009, http://bcccc.net/document/docWindow.cfm?fuseaction=document.viewDocument&documentid =1270&documentFormatId=2331, accessed March 29, 2011.

Company Valuation: $2.9B

Value of Reputation: $1.5B

Value of CSR: $236.4M

How Do We Get There?

◊ Integrated approach:

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Community Support

Operations

Products & Services

ValuesPrinciples Jackie

Casey

Stephanie

Joel

Instituting Responsible Leadership

Responsible Leadership

Investing in the Community

Ethical and Environmental

Decisions

Follow Through

Top Down Implementation

Alignment

Sustainable Practices and Products

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Reflecting Commitment in Structure

◊ We recommend creating a “Corporate Social Responsibility” DepartmentReporting directly to CEO

◊ Establish Executive Vice President Position

◊ Est. Incremental Cost: $250,000 per year◊ Benefit: Visible, sanctioned new department and

leadership will be crucial to effective company buy-in, recognition, and incorporation of CSR program

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Reflecting Commitment in Structure

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Chairman

CEO

VP of CSR Executive VP Apparel

President and COO

Executive VP International

VP Intellectual

Property

Executive VP Footwear, Product,

Marketing

Executive VP Sales, North

America

VP Consumer Experience

President Executive VP and CFO

VP and Treasurer

VP Finance

Vice-Chair and VP

Administration

VP Corporate HR

A New Type of Accounting

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The New Balance SheetDESCRIPTION:Bi-monthly letter from the newly formed CSR department

• Featuring “CSR Wins” in departments across the company

• Presenting “Staff Spotlight” to bolster employee recognition and new initiatives

COSTS:>Materials & Publishing $3,000

BENEFITS:>Promote Transparency>Improved Internal Communications>Department Involvement in CSR>Employee Empowerment

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Casey

Aligning Products & Services

Products & Services

ValuesPrinciples

Green is the New Balance

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Responsibility Score CardFactory Store40 Life Street, Boston MA

^ LEED Green Building Certified since 2009

^ 78% of electricity from solar power

^ Paperless since March 31, 2009

^ Total Carbon Footprint reduced by 58% since 2007

A New Footprint

◊ Position NB as an industry leader in facility energy efficiency and clean technology

◊ How: Invest in cutting edge green innovations for heating, cooling,

ventilation, and waste disposal Pursue LEED Green Building Certification for all NB facilities Sponsor LEED training for the VP of CSR

◊ Why not green products? Green footwear and apparel not yet perceived as high quality NB wants to be perceived as an athletic shoe company Current green products are painful to look at

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◊ Collaborate with green designers to build a pipeline of green products

◊ Beat major brands to fashionable green offering

Green Shoes Everyone Can Love

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Current green offering, the 070

Where we are headed

Integrating Efficient Operations

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Stephanie

Operations

Products & Services

ValuesPrinciples

Shoring Up Operations

◊ Goal of Operations in CSR context:Maximize positive impacts on employees,

environment, society while adhering to the firm’s overall mission

◊ NB is doing the right thing in the U.S. …

… but poorly communicates/recognizes initiatives and is inconsistent overseas

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Empowering through Recognition

◊ We recommend launching a “Kaizen Appreciation Program” (KAP)Train each associate in

continuous improvementEach quarter, 1 associate is

chosen to present improvement project and results to management

$1,000 bonus

◊ Communicate green initiatives in New Balance Sheet newsletter

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Maintaining a Consistent Approach

◊ NB should be consistent in its standards both in the U.S. and overseas

◊ We recommend holding temporary workers to the same hour and compliance standards as full-time associatesBased on standards within that countryWork with organizations such as Maquila

◊ We suggest enhancing the compliance standards for apparel and accessories division

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Boosting Morale and Productivity

KAP -Associate Recognition

Increased Morale and Productivity

~$1M per year

$4,000 per year

Communicate Green

Initiatives in Newsletter

Increased Morale

Negligible

Hold Temporary Workers to

Same Standards

Increased Morale and

Safety

Compliance costs

Compliance - Apparel &

Accessories

Increased Morale,

additional Revenue

Compliance costs

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Benefits

Costs

Reaching out to the Community

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Community Support

Operations

Products & Services

ValuesPrinciples

Joel

“Endorsed by No One”

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Taking Outreach National

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Launching in a Phased ApproachPhase Initiative Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

I

Structure CSR department

Bi-monthly letter

Launch KAP

Enhance Temporary Worker Compliance

Implement Responsibility Score Card for shoes

Refocus donation strategy

II

Work toward LEED Certifications, Score Card for factories and stores

Invest in green product pipeline

Identify and implement additional green initiatives in Operations

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The Bottom Line

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$250,00

0

•CSR Department

$3,000

•New Balance Sheet

$1m

•LEED Certification

-

•Compliance Goals

$236.4m

•Current CSR

+

•Improved Morale & Productivity

+

•Reputation

$1m •KAP

Costs Benefits

Integrated Approach

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Boosting Pride & Responsible Leadership

Community:●National

Campaigns

Operations:●KAP

●Consistent standards

Products & Services:

●Responsibility Score Card

●LEED Certifications

Governance: ●Updated org

structure●New Balance

Sheet

Questions?

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