Nike corporate social responsibility 2017

Communication in Business

Name: A Student

Student ID: 12345678

Student Email: A.Student@student.curtin.edu.au

Name of TA:

Tutorial Day and Time:

Company: Nike

Semester and Campus: Semester 1, Bentley

Title: An Investigative Report of Nike Inc.’s Corporate Social Performance

Word Count: 1800

A Student Student ID:12345678 Nike Business Report

An Investigative Report of Nike Inc.’s Corporate Social Performance

In the past, businesses took actions based on their own interests with the purpose of maximising profits, but in today’s contemporary society, businesses are expected to act in way which is ethical, legal, and more recently, even philanthropic (Thorne 2011). This expectation that stakeholders have upon businesses becomes apparent through analysis of a company’s corporate citizenship, the concept of corporate citizenship splits into three components: corporate social responsibility (CSR), corporate social responsiveness, and corporate social performance, each dealing with the obligations, the activity and outcomes of the activity, respectively (Carson 2018).

Nike Inc. (Nike) is a multinational corporation specialising in sporting apparel, shoe, and clothing retail, it is the world’s leading designer, manufacturer and supplier of athletic apparel and footwear (Nike Sustainability Report 2015). Nike’s ‘purpose’ as a company is to “bring inspiration and innovation to every athlete in the world” (Nike Sustainability Report 2015, 12), suggesting that everyone with a body is an athlete.

This paper investigates the corporate citizenship and all aspects thereof, of Nike, comprising of both negative and positive aspects of the companies’ corporate responsibility and their subsequent impacts on Nike’s stakeholders. This report discusses Nike’s past and current social performance, and actions the company has taken in the past to ameliorate deficiencies in their conduct, specifically those relating to treatment of employees, but also the company’s environmental sustainability efforts.

Employee Treatment Standards: The case against Nike Inc.

“Nike treat employees just like slaves”

~Kanye West (2016)

One of the most pertinent criticisms against Nike is their alleged abuse of factory employees in regards to underpaid or forced labour, child labour, and inhospitable working conditions (Beder 2002). Kanye West, a social influencer and former collaborator with the Nike brand, explores this common conception of the Nike manufacturing process as being abusive of its employees (West 2016).

Nike has four dominant stakeholders which this affects; customers, communities, employees, and governments, although Nike has other stakeholders such as investors and interest groups, the four aforementioned stakeholders are more influential over the company’s actions, with customers being their most prioritized of the four (Kissinger 2017). Although it is argued that Nike has rectified their employee mistreatment shortcomings in social responsibility over the past two decades (Lutz 2015), there are still many allegations of employee mistreatments throughout the suppliers of Nike merchandise. Nike does not manufacture its own products, although it does design and market them, this means that Nike has has many different factories which supply their products which are not owned by the them, making Nike susceptible to criticism of the factories from which they source their products (Beder 2002).

A recent example of this happening is the recent code violations concerning labour practices of Hansae Co., Ltd. (Hansae), which is an apparel manufacturing facility in Vietnam from which Nike sources clothing apparel (Workers Rights Consortium 2016). The Workers Right Consortium (WRC) found several conduct violations in this facility relating to abusive treatment of employees, forced overtime, wage and hour violations, health and safety violations, as well as many others totalling to 13 different code violations affecting the roughly 1,000 workers in the facility (Workers Rights Consortium 2016). Additionally, another report was conducted on the same facility by the Fair Labor Association (FLA) and similarly found 9 different code violations in their assessment of the factory (Fair Labor Association 2016). A major human rights issue that Hansae is facing is that workers at the factories are frequently collapsing due to excessive temperatures and workloads, the WRC (2016) states that this happens at an alarming frequency at Hansae with one employee stating that up to two workers faint per day after which “they are carried to the clinic to rest half an hour, and then they [are told to] return to work” (Workers Rights Consortium 2016, 10).

These violations are likely due to unrealistic production targets, punitive management approaches, insufficient temperature regulation systems, and tight restrictions on rest time and bathroom breaks which take place in the factory (Workers Rights Consortium 2016). The WRC and FLA are working with Hansae to ameliorate these hazardous working conditions, and although Hansae is being co-operative in making the suggested changes, WRC suggests that its ultimately Nike’s obligation to make sure that their suppliers are in compliance with human rights laws (Workers Rights Consortium 2016). These violations are contradictory with Nike’s corporate public policy which states that “the supplier provides a safe workplace setting and takes necessary steps to prevent accidents and injury” (Nike Code of Conduct 2017, 3), but who does this hypocritical mistreatment really affect?

Primarily and most directly it affects the hundreds of employees working there, this is an obvious human rights violation that affects hundreds of families in developing nations, additionally this example of mistreatment is not the first or only time Nike has been accused of something like this, with allegations starting from as early as the 1970’s, Nike only started to take action in the late 1990’s (Locke et al. 2007). This historical reputation of Nike using ‘sweatshops’ to supply its clothing apparel has further implications for stakeholders other than its employees. It was mentioned earlier that consumers are Nike’s most prioritized stakeholders, and its becoming increasingly apparent that this mistreatment of employees does not align with the current social push for ethical labour conditions as these recent allegations have caused a large wave of protests amongst college students (Segran 2017), Segran (2017) also states that college students are one of Nike’s largest consumer groups meaning these protest will have a large financial backlash. Another major stakeholder group affected is the communities in which these factories operate, in a similar case where Nike had abruptly ended its contract with a facility in Honduras, the local economy was heavily disrupted, indirectly affecting the whole community with many families’ livelihoods depending on the foreign investment from Nike (Segran 2017). It is my understanding that if Nike proceeds in a similar fashion, then there will be a similar negative outcome for the local community surrounding the Hansae facility.

Environmental Sustainability: The case for Nike Inc.

Corporate social responsibility, specifically that relating to environmental impact and sustainability is becoming one of the most influential stakeholder expectation, and with the millennial generation being the economies’ largest consumer group, their environmental expectations are now more important than ever to businesses such as Nike (Revkin 2016).

As opposed to many other clothing retailers, Nike has made many efforts and innovations to be environmentally sustainable, (Nike Sustainability Report 2015). In relation to Nike’s carbon emissions, Nike developed a Leedership in Energy and Environmental Design (LEED) certification which reduced lighting related energy expenditure by 40% in all major Nike outlets, this along with other adjustments has allowed Nike to reduce its carbon footprint by 18% in the last 4 years (Nike Inc. sets Bold Vision and Targets 2016). Nike aims to reduce this footprint a further 50% by 2025 and rely solely on renewable energy for all Nike facilities by 2050 through their investments in renewable energy sources and general reduction of carbon use (Nike Sustainability Report 2015).

To support Nike’s environmental movement, Nike is a member of the Sustainable Apparel Coalition, Nike also uses organic and recycled cotton and polyester in their products (Robertson 2017). The company has stated that 71% of its apparel incorporates recycled materials (McGregor 2016). Furthermore, from 2012 to 2016, Nike has transformed 3 billion plastic bottles into recycled polyester for use in footwear and apparel (Nike Sustainability Report 2015), but Nike’s recycling goes further than just raw materials, Nike has also redistributed over 30 million used shoes through the ‘Reuse-A-Shoe’ program (Nike Sustainability Report 2015). This reuse of cotton and polyester already saves a considerable amount of water, but Nike has also invested in further reducing this water usage and has reduced the amount of water used in the manufacturing of apparel by 43% since 2011 (Nike Sustainablity Report 2015).

Nike’s environmental efforts don’t stop there, the companies’ goals for the future are more ambitious than any other retailer, with plans for what they call a closed-loop future (Nike Sustainability Report). This closed-loop concept covers carbon emissions, energy consumption, and water and material waste, Nike’s closed loop future has an ambitious time line which concludes in 2050 where all Nike products will be manufactured using 100% renewable energy, recycled and sustainable materials, and zero waste (Nike Sustainability Report 2015).

But how do these green practices affect Nike’s stakeholders? Albus and Ro (2017) state that people are more likely to be loyal customers to a company which acts in a socially responsible way. Epstein et al. (2010) confirm this and add that Nike specifically, does a good job at modelling their corporate public policy towards their outgoing consumers which are likely to support environmental sustainability driving customer loyalty and giving Nike a competitive advantage. Furthermore, consumers that are aware of a companies’ CSR initiatives are more likely to purchase products, seek employment with, or invest in the company (Albus and Ro 2017), this research suggests that not only do Nike’s primary stakeholders (their consumers) approve of their environmentally responsible decisions, but also that these eco-friendly practices will in turn also financially benefit the company rather than just the environment.

Concluding Statements

Having considered the current and ongoing efforts Nike has made to improve their social performance, there is still a lot that Nike can, and is expected to improve upon. Nike has may environmentally friendly initiatives which recycle shoes, save water, electricity and reduce carbon emissions, but does this balance out the recent and ongoing accusations of Nike sourcing their clothes unethically from facilities that implement unsafe and inhumane working practices?

It is my understanding that the current societal push towards environmental protection will benefit Nike’s public image and therefor improve their perceptions and reputation amongst their stakeholders. That being said, I also believe that current perception of Nike in tainted by the historical reputation of Nike using ‘sweatshops’ to procure their clothing apparel, this recent re-emergence of allegations against their suppliers is likely to have a devastating effect on their consumer’s trust in the company. With about 1,000 production managers working overseas with various suppliers (Locke et al. 2007) it seems to me that Nike should ‘know better’ by now. Constant re-occurrence of unfair labour allegations will be costly to Nike’s brand image, especially if they don’t permanently remedy their approach to public policy surrounding ethical sourcing of apparel. From this information, it is evident where Nike falls short in its duty regarding corporate citizenship; assuring social trust through ethically responsible corporate decisions, by making reforms to this aspect of corporate social responsibility, Nike would be fulfilling its multi-stakeholder approach and would consistently gain loyal stakeholders, ensuring a consistent long term financial growth due to a positive adjustment of social performance.

References

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Beder, Sharon. 2002. “Putting the Boot In”. The Ecologist 32(3): 24-28. https://www.uow.edu.au/~sharonb/nike.html

Carson, Hannah. 2018. “Module 5 – Corporate Social Responsibility, Responsiveness, and Performance: Businesses Communicating Through Actions.” PowerPoint Lecture Notes. https://lms.curtin.edu.au

Epstein, Marc J., Adriana R. Buhovac, and Kristi Yuthas. 2010. “Why Nike kicks butt in sustainability.” Organizational Dynamics 39(4): 353-356. https://doi.org/10.1016/j.orgdyn.2010.07.007

Fair Labor Association. 2016. “Hansae Vietnam, Second Investigation.” Independent External Assessment Report. http://portal.fairlabor.org/fla/go.asp?u=/pub/zTr5&tm=5&Rid=1854&Fdn=13&Fna=AA0000002066%5F2016%2Epdf

Locke, Richard, Thomas Kochan, Monica Romis, and Fei Qin. 2007. “Beyond Corporate Codes of Conduct: Work Organization and Labour Standards at Nike’s Suppliers.” International Labour Review 146: 21-40. https://doi.org/10.1111/j.1564-913X.2007.00003.x

Lutz, Ashley. 2015. “How Nike shed its sweatshop image to dominate the shoe industry.” Business Insider Australia. https://www.businessinsider.com.au/how-nike-fixed-its-sweatshop-image-2015-6?r=US&IR=T

McGregor, Lyndsay. 2016. “Nike Raises its Sustainability Game, Sets New Supply Chain Goals for 2020.” Sourcing Journal. https://sourcingjournal.com/topics/sustainability/nike-raises-its-sustainability-game-sets-new-goals-for-2020-45676/

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Revkin, Andrew C. 2016. “With Imposed Transparency and Concerned Millennials, a Boom in Corporate Social Responsibility?” New York Times Blog, January 25, 2016. https://dotearth.blogs.nytimes.com/2016/01/25/with-imposed-transparency-and-concerned-millennials-a-boom-in-corporate-responsibility/?_r=0

Segran, Elizabeth. 2017. “Escalating Sweatshop Protests Keep Nike Sweating.” Fast Company. https://www.fastcompany.com/40444836/escalating-sweatshop-protests-keep-nike-sweating

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Kissinger, Daniel. 2017. “Nike Inc. Stakeholders: A CSR Analysis.” Panmore Institute. http://panmore.com/nike-inc-stakeholders-csr-analysis

Workers Rights Consortium. 2016. “Hansae Vietnam Co., Ltd. (Vietnam) Findings, Recommendations, Status Update.” Workers Rights Consortium Factory Assessment. http://workersrights.org/freports/WRC%20Assessment%20re%20Hansae%20Vietnam%2012.6.16.pdf