Nike sustainability report 2015

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.