The free email newsletter on Corporate Social Responsibility
The current edition: In this issue, we look at the Indian CSR law.
Arguments against CSR and some answers
Definitions of Corporate Social Responsibility
The Global Reporting Initiative - is it fit for purpose?
Companies in the News
Corporate Social Responsibility - Companies in the News
Nike has become one of those global companies targeted by a broad range of campaigning NGOs and journalists as a symbolic representation of the business in society. 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, supported by corporate website reporting. It now has a well developed focus for its corporate responsibility on improving conditions in contracted factories, aiming for carbon neutrality, and making sports available to young people across the world. The criticism continues, however.
Nike Inc produces footwear, clothing, equipment and accessory products for the sports and athletic market. It is the largest seller of such garments in the world. It sells to approximately 19,000 retail accounts in the US, and then in approximately 140 countries around the world. Just about all of its products are manufactured by independent contractors with footwear products in particular being manufactured in developing countries. The company manufactures in China, Taiwan, Korea, Mexico as well as in the US and in Italy.
The Global Alliance report on the factories in Indonesia gave the following workforce profile: 58% of them are young adults between 20 and 24 years old, and 83% are women. Nearly half of these workers have completed senior high school. Few have work-related skills when they arrive at the factory. 95% of the workers in the nine participating factories have received pay or wage increases in the last year, consistent with government minimum wage increases, and with small exceptions the bases wages in these factories are above the regions minimum wage although critics would observe that doesnt add up to a great deal.
Nike has around 700 contract factories, within which around 20% of the workers are creating Nike products. Conditions for these workers has been a source of heated debate, with allegations made by campaigns of poor conditions, with commonplace harassment and abuse. Nike has sought to respond to these allegations by putting into place a code of conduct for all of its suppliers, and working with the Global Alliance to review around 21 of these factories, and to pick up and respond to issues.
In Indonesia, the following was reported: 30.2% of the workers had personally experienced, and 56.8% had observed, verbal abuse. An average of 7.8% of workers reported receiving unwelcome sexual comments, and 3.3% reported being physically abused. In addition, sexual trade practices in recruitment and promotion were reported by at least two workers in each of two different factories, although a subsequent investigation was unable to confirm this. 73.4% of workers are satisfied with their relationship with direct line supervisors, 67.8% are satisfied with management.
Far and away, the main concerns expressed by workers relate to their physical working environment.
A further report has been produced relating to a site in Mexico, which has experienced serious problems leading to labour disputes.
In both cases, Nike responded to the audit reports with a detailed remediation plan.
Naomi Klein, in her widely read book "No Logo" deals quite extensively with Nike, accusing them of abandoning countries as they developed better pay and employment rights in favour of countries like China, where these are less of a cost. She points to a photo published in 1996 showing children in Pakistan stitching Nike footballs as an example of the use of child labour. Other critics have suggested that Nike should publicise all of its factories, and allow independent inspection to verify conditions there. Any auditing carried out by Nike should be made public. A lot of focus is given to wage rates paid by the companys suppliers. By and large, audits have found that wage rates are above the national legal minimum, but critics contend that this does not actually constitute a fair living wage.
Nike accuses Naomi Klein of peddling inaccurate and old information. They point out that they have not abandoned countries as she claims, and remain in Taiwan and Korea despite the higher wages and labour rights. They admit that the 1996 photo documented what they describe as a "large mistake" when they began to order soccer balls for the first time from a supplier in Pakistan. They now operate stitching centres where the non-use of child labour can be verified.
Nike believe that the sharing with factory locations with independent third parties on a confidential basis enables them to monitor their supply chain properly. They state that disclosure of the factory names, plus details of audits of those factories, would be used by the NGOs simply to make further attacks rather than as part of a dialogue to help the company to address and resolve those problems which exist. As for wage rates, Nike feels that establishing what constitutes a "fair" wage is by no means as easy as its critics would have the public believe and disparages the constant quoting of wage rates in US dollar equivalents, when these are meaningless given the different cost of living in the countries concerned.
Nike are also visibly dismayed at how they have attained the status of lead focus in this area. They request that people look towards their competitors and see how many of them have taken the kind of measures the company has over the last few years.
The Global Alliance was quite complimentary. It said "Upon due consideration, members of the Operating Council unanimously expressed their judgement that upon learning of the alleged violations surfaced through the Global Alliance assessment process, that Nike had acted in good faith, and developed a serious and reasonable remediation plan."
The Nike business site
In the news
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