Nike & Corporate Social Responsibility

Back to Home Page: Nike

Corporate social responsibility (CSR) is a concept that has blossomed over the last fifteen years. Rather than being narrowly focused on the pursuit of profit at the expense of all else, businesses practicing CSR, should at least in theory, be behaving responsibly in the course of their profit-making, taking into account their economic, environmental and social impacts on society.

However, there is a lot of debate surrounding CSR practice, regarding both to what extent certain companies are living up to their responsible promises and regarding some of the possible ulterior motives involved in practicing CSR.

Reasons leveled at Nike for why they might be practicing CSR, other than just on basic moral grounds include:

• Defending their important public image
• Differentiating themselves from their competitors
• Helping to prevent financially damaging boycotts, strikes, lawsuits, etc
• Appealing to the ethical consumer
• Appealing to the ethical investor
• Appealing to the ethical employee
• Pressure to do so from NGO's, Government or to combat public relations disasters
• Using CSR policies as evidence that they do not need to be regulated any further than they already are at present

Nikes CSR Policy

Nike maintain that their business is built on trust, teamwork, honesty and mutual respect. [1] In order for this to be achieved, the company has put in place a set of corporate governance policies and practices and this has been extended in recent times to attempt to include corporate responsibility issues as a central part of their governance system. Nike's codes and policies are outlined below:

Our Codes and Policies

Our code of ethics is called Inside the Lines; it defines the standards of conduct we expect of our employees. Every year, all employees are required to verify that they have read and understand Inside the Lines.

We operate a global toll-free Alertline for employees to report in confidence any suspected violations of the law or our code of ethics. Any reported concerns around accounting, auditing or internal control are communicated to the Audit Committee of the Board.

We expect our suppliers to share our standards and to operate in a legal and ethical manner. While Inside the Lines covers the behavior of Nike employees, our Nike Code of Conduct covers contractors who manufacture Nike-branded products. It directs them to respect the rights of their employees, and to provide them with a safe and healthy work environment.

Taken from: Nike Website

Corporate Responsibility Committee

• Jill Ker Conway, Non-Executive Director, Committee Chair
• Douglas G. Houser, Non-Executive Director
• Jeanne P. Jackson, Non-Executive Director
• John R. Thompson Jr., Non-Executive Director

Established in 2001, the CR Committee of the Board was set up to review significant policies and activities and make recommendations to the Board of Directors regarding labor and environmental practices, community affairs, charitable and foundation activities, diversity and equal opportunity, and environmental and sustainability initiatives. Meetings are held regularly where the Committee meet to discuss these issues. In addition, close to 150 Nike employees work on CR issues as their main function or have CR work included in their workload.

Taken from: Nike Website

CSR in Practice

Nike’s approach to labour conditions in there contract factories is evolving.

The following is taken from Nike's website reflecting how they feel they are performing.

Nike has transformed from a focus on the Code of Conduct to advocating common standards across the industry. They have evolved from outsourcing labour monitoring to relying on a trained team of internal monitors and support for common monitoring platforms such as the “Fair Labour Association.” Furthermore they are growing from a focus on monitoring to a focus on capacity building. From an exclusive focus on factory floor impact to an exploration of ways to help change the industry through transparency and multi-stakeholder collaborations.

These changes are driven by awareness that structural issues, common to the global footwear, apparel and equipment industries affect an individual company’s ability to change conditions in particular factories.

There monitoring processes provide clear issues arising inside factories. What they do not tell us, however, is how those issues are affected by events of external factors. For example, in trying to reduce excessive overtime, we can focus on more effective policing of factories to achieve compliance. But simply focusing on policing does not address the root cause and might take resources away from engaging in broader discussions about why workers in some cases want extra hours. Those are the discussions that may lead to greater and more lasting changes. This kind of root cause analysis requires active listening and engagement in the broader dialogue with civil society, institutions and businesses around supply chain working conditions. In recent years, we have focused on refining our skills at (a) identifying risk of code compliance (b) uncovering issues and (c) implementing strategies that can be used to drive performance and enable change within Nike internally and on a broader level. They have become more systematic in identifying non-compliance risk, and they have become increasingly adept at uncovering issues, but despite anecdotal instances of success, they remain deeply challenged – challenged to understand how to measure systematically the impact of there own interventions and challenged by how they play a role in enabling widespread change within the industry, which they now know is critical to facilitating change within there contract supply chain.

One step in responding to this challenge is to reveal there contract factory base. While no one can say with certainty what greater levels of factory disclosure will unleash, they do know the current system of addressing factory compliance has to be fundamentally transformed to create sustainable change. They believe that disclosure of supply chains is a step toward greater efficiencies in monitoring and remediation and in shared knowledge and capacity building that will elevate overall conditions in the industry. No one company can solve these issues that are endemic to the industry.

Transparency also should increase the incentive of brands to work with factories that demonstrate CR excellence. A more thorough description and assessment of Nike’s approach in this area can be found in the FY04 Corporate Responsibility Report.[2]

Taken from: Nike Website

Giving voice to workers: The Global Alliance’s legacy

One of our most important partners in understanding factory worker concerns, and in training for both workers and managers, has been the Global Alliance for Workers and Communities (GA). After five years of operations, its partners collectively chose to end the initiative in December 2004.

The Global Alliance was a partnership of Nike, Gap, the World Bank, the International Youth Foundation (IYF), and other organisations aimed at worker and workplace development. Since its launch in 1999, Global Alliance facilitated interviews with more than 16,000 workers, and launched a number of development projects focused primarily around building better management practices, and worker awareness of health issues.

The Global Alliance interviews and focus groups helped us uncover the kinds of compliance issues that are difficult to bring out in typical audits. For example, a series of worker interviews conducted in Indonesia in 2000-2001 made our compliance teams much more aware of verbal, physical and sexual harassment issues – of particular importance with a workforce that is predominantly young and female. They also helped us gauge overall satisfaction with the work environment.

Their revelations led us to specifically direct factories to institute confidential grievance systems, which do not exist broadly in the industry. The grievance system standard is beginning to take hold, though nearly a third of Nike contract factories audited in fiscal years 2003 and 2004 still have no confidential grievance process in place for workers. They also led to training as well: During our 2004 fiscal year, Global Alliance trained more than 25,000 managers and workers in more than 60 factories in China, India, Indonesia, Thailand and Vietnam.

The Global Alliance was criticized in some quarters as, at best, irrelevant when compliance issues abound, and, at worst, an end-run around trade unions. We believe this dismissal of the Global Alliance misses a larger point: Though not a perfect effort, the five-year experience with the Global Alliance taught its partners a great deal about worker issues and aspirations, and highlighted some core compliance issues as well (as is clear from the example of harassment issues). We know now that to gain a deeper understanding of a workplace, we must go beyond M-Audit scores and probe under the surface to try to measure worker satisfaction with the workplace. The evolution of our own monitoring tool to now include a strong emphasis on worker interviews is one reflection of Global Alliance’s influence.

Although we were able to gather anecdotal information about some of the positive impacts of the Global Alliance on the workplace, particularly the management training and worker health training, a measurement of actual impacts is still to come. Global Alliance’s ability to expand programming and attract other corporate partners proved limited, which led to the decision to end the initiative.

For more information about the Global Alliance, see their Website. You can also download the 2003 Indonesia reassessment report outlining workers’ views of workplace improvements in Nike contract facilities.

In addition to the Global Alliance training, Nike continues to sponsor a program of worker after-hours education generally aimed at securing a high school equivalency for workers in footwear factories in Thailand, Vietnam, Indonesia and China. In the 2003/2004 school year, 984 workers graduated from one of those programs. Our commitment to worker and workplace development remains. At this point in time we are exploring different ways in which the remaining funds can be utilized in the spirit of the GA – we will report on this in our fiscal year 2005 report.

Taken from websites: Nike Website Nike.com & Global Alliance

The alternative viewpoints

http://perso.wanadoo.fr/jerome.lafourcade/Documents/Detente/Images/Anti-mondialiste/nike.jpg

Nike might see themselves as a victim of their own sucess. As one of the biggest manufacturers of sportswear, they are under considerably more scrutiny than many of their competitors, targeted by a broad range of campaigning NGOs and journalists as a symbol of the "Typical Multinational". In Nikes case, the issues are those of human rights and conditions for workers in factories in developing countries. In the face of constant accusations, Nike has developed a considered response and even publicly apologised for its past wrongdoings last year. However, some criticism continues.

A Parody for Nike

The results of an internet search regarding Nike will usually bring up a clever and thought provoking parody by a man called Atul, at http://www.toolness.com/nike high on the list. It ridicules Nike for some of their approaches to manufacturing in the third-world. While the parody, titled: "Nike Sweatshops™ � unlocking the power of poverty", provides no evidence of malpractice, it's sarcastic tone sums-up and reinforces what many people believe goes on.

Atul writes:

"The theme of this parody is the idea that, from the perspective of our current economic system, poverty is a very good thing. Because it increases profit margins, its existence is beneficial to a global economy. In fact, it is in the best interests of multinational corporations and their shareholders to prolong poverty for as long as possible."

The following is a list of accucations made in the parody, which highlight many respected NGO and activist opinions on third-world sweatshops:

• Nike actively seek to keep their sweatshop communities in poverty by
  • Setting up schools that purposely provide a low level of education to keep the community low-skilled
  • Paying a wage that employees can only just survive off to make sure that they can not save to start their own business, thus keeping a stranglehold on the economy.

• Nike build factories in areas with such high unemployment so employees have no choice but to work for Nike.
  • They provide basic facilities for the factory community to further increase the communities dependence on them, so the community will be crippled if Nike leave

• Nike look after investors interests by keeping profit margins high, at the expense of their third-world employees
  • Maintaining low third-world wages and poor working conditions to keep profit margins high
  • If salaries become to high in the area they're operating in, they pull out, spelling high unemployment and deprivation for the community.

So, what truth is there in this parody? The following looks at four accucations regularly levelled at Nike.

Third world employees are:

Overworked

Ms. Lap Nguyen was a section leader with three years experience at the Sam Yang factory in Vietnam and had received awards for her skill and commitment. She was required to work over 100 hours of overtime during February and March 1998

In February and March 1998 several workers from the factory, including Ms. Lap, were interviewed by the US sports channel ESPN. They described problems at the factory, including use of violence by security guards towards workers. While working overtime on Sunday March 29 Ms. Lap became sick (feverish) and put her hands on her head to rest. Her manager hit her on the arm. She went home, obtained a doctors' certificate for her fever and took one and a half days sick leave. On her return to the factory her manager shouted at her and demoted her from team leader to sewer on the grounds that "section leaders can't take sick days." In the next few days, the supervisor continued to switch her from one job to another and deliberately humiliated her in front of other workers. During this time, the factory manager interrogated her about her interview with ESPN three times, using words like "we know what you have been doing behind our back," "confess now and you will be able to keep your job." The factory manager demoted her to cleaning the toilets and continued to harass her. Eventually she was asked to sign a letter of resignation and decided that she could no longer take the harassment and intimidation and signed. Overtime must be voluntary, should not exceed 12 hours per week, must not be demanded on a regular basis, and must be compensated at a premium rate.

Taken from: CleanClothes Website Set up to improve working conditions in the global garment industry

Underpaid

At number 46 on the Forbes World Rich List 2005 [www.Forbes.com Forbes.com], Nike founder and chairman Philip Knight has made $8.2 Billion since setting up the company 42 years ago. It is no secret that much of the apparel his company sells is made by some of the poorest people in the world.

Much attention has been paid to Nike's exploitation of workers in economically strugglingcountries like Indonesia, Vietnam and China. Although Nike claims they are not responsible for much of what goes on in these sweatshops because they work through subcontractors and thus are not directly involved, the corporation has shown great irresponsibility and ignorance in dealing with the matter. In fact, Nike CEO Philip Knight's admitted as much in early 2005 when he launched the 2005 Nike Coarporate Social Responsibility report Nike

Nike has recently released a big advertising campaign in an effort to counter its negative image as a human rights violator. One ad proclaims "It's True. We routinely ignore the minimum age requirements at our factories." While it may now be true that Nike hires workers only 18 years or older, what the ad doesn't say is that Nike used to hire workers less than 18 AND that they only introduced this new policy under intense public demand. (This "responsible act" costs Nike nothing--there's plenty of workers over 18 who need jobs in economically depressed countries.) Another full-page ad announces "Good Morning Vietnam!" and congratulates Nike for its micro-loan program. Here Nike will match $75 contributions from private individuals to provide "serious venutre capital" to Vietnamese citizens. Nike claims they've issues 3200 such loans as of Nov. 1999. Nice try, Nike, but that's only $2400 in loans. How much did you spend on the ads trumpeting them? Clearly, Nike is worried about its public image. If it worried as much about its workers, industry-wide change might really happen. Colorado University

Reports show the overseas workers to be underpaid, malnourished, and often physically and emotionally abused. Although Nike contends that they are paying above Indonesian minimum wage, the $2.36 a day workers earn is not even enough to buy three simple meals, estimated at $2.10. That's not even considering the minimum $6.00 a month rent, clothing, and hygienic products every worker needs. While many Nike factories provide subsidized meals, workers could afford their own meals if they were paid a living wage. Jeff Keaty, a U.S. coach who was fired for refusing to wear a uniform with the Nike logo, is in Jakarta, Indonesia trying to live on Nike factory wages. To learn more about working conditions there, see his report at www.nikewages.org. Colorado University

According to the Coalition of Labor Union Women, the 20-million dollars which Nike paid Michael Jordan to endorse products for one year is equal to the amount they paid Indonesian workers to produce 19 million pairs of shoes, many valued at as much as $120 a pair.Coalition of Labor Union Women

Abused

At a plant in Vietnam, a supervisor hit fifteen workers in a row in retaliation for poor sewing. The incident left two women hospitalized, and great emotional scars on every worker involved. The supervisor, Madame Baeck, was allowed to leave the country after the incident, despite conviction. Other incidents of abuse have since arisen: a woman's mouth taped shut for talking during working hours; 45 women forced to kneel on the ground with their hands in the air for 25 minutes straight; workers forced to stand in the sun for long periods of time as part of a heat punishment; and a Korean supervisor found guilty of molesting female workers. When a reporter from 48 Hours questioned a Nike spokesperson about this incident, he said he'd never heard of it, despite the fact it headlined Vietnamese newspapers. Colorado University socialequality.com's workers bulletin Christian Aid

Refused Unions

Recently, factories producing for Nike in Thailand have been shifting production to subcontractors and non-union facilities and to the provinces where wages and benefits are even lower. For example, unionized workers formerly producing for Nike at the Thai Iryo Garment factory in Rangsit were laid off while Nike production shifted to the Garment Tech factory in Bangkok and VT Garment in Sathupradit. Many workers have been laid off from the unionized Thai Iryo Garment and Par Garment factories just to wind up producing the same products for subcontractors and receiving lower wages without legal protection (Thai Labour Campaign, Website Coordinator: Junya Yimprasert, November 14, 2000). New Mexico State University

The majority of workers interviewed at the Evergreen/Formosa factory in El Salvador said that they did not have the right to form a union, and many cited incidents in which workers had been dismissed for trying to organise one, according to a June 1999 report.

A 1999 report by the standards firm Verité confirms this situation still exists and that workers cannot freely form unions. Workers at Formosa were beaten and intimidated and earned subsistence wages, according to October 1998 testimony by Julia Pleites, a recent employee at Formosa. The report confirmed that the situation reported last year continues. Most workers interviewed had experienced, witnessed, or heard of incidents of verbal, physical, or sexual harassment of workers by supervisors. Workers reported (and were observed) being subject to systematic verbal abuse if they don't work fast enough. The workers who spoke to Verite made it clear that they were taking a risk in talking to the auditor and were afraid of the consequences. Failure to uphold the right to form unions: violates local law (Article 204 of the El Salvador labour code, which stipulates freedom of association); international standards (ILO Convention 87); and the FLA standards, to which Nike is "committed."

Taken from: CleanClothes Website Set up to improve working conditions in the global garment industry

Back to Homepage Nike

Reference

1. ^ Tell Nike to Just Do It Last Accessed 4th July 2007