Shareholder Dialogue

As You Sow has been part of an ongoing dialogue with Nike led by the General Board of Pensions and Health Benefits of the United Methodist Church and Interfaith Center on Corporate Responsibility. Several proposals calling for vendor standards reporting and independent monitoring were filed and voted on in the late 1990s. An ICCR contingent traveled to Nike and Reebok factories in China, Vietnam and Indonesia in March 1998, concluding that, "wages remain so low that workers are struggling to survive in all three countries."

Proponents of the shareholder resolution met regularly with Nike management to discuss the issue of monitoring the factories of the company's suppliers. Due in part to the shareholder dialogue, the company revised its Code of Conduct with stricter language regarding the use of corporal punishment by subcontractors, maximum work hours and a minimum age.

Nike has subsequently softened its attitude towards its critics to the point of letting health and safety representatives into the criticized Vietnamese plant to observe improvements in ventilation. In early 1999 Nike and Reebok, with major contract operations in Indonesia, boosted the minimum salary for workers at their facilities by 25% and 20% respectively to help offset a huge loss of workers' earning power caused by the Asian financial crisis of 1998.

Transparency Efforts

In 2001 Nike began to post substantive information on its website regarding supplier factory conditions. The website disclosure was called Transparency 101 and focused on regional results rather than a system-wide summary of supply chain compliance. It also released its first Corporate Responsibility Report which included a detailed section on managing global labor compliance

However, the website material was removed from the site in 2002 when the company petitioned the U.S. Supreme Court to hear the Kasky v. Nike First Amendment case. The Kasky case proved to be an embarrassing retrenchment for a company that was busy trumpeting how it had learned from previous missteps and was committed to transparency.

As You Sow and other shareholders strongly urged Nike to resume its public reporting. The company did issue a substantive public report in 2005 that was strong on quantitative assessment, borrowing much of the methodology from Gap supply chain report. The company also released the names of all 800 factories where Nike sources its footwear, apparel and branded sports equipment, which had been long demanded by labor rights activists.

Nike supplemented data with extended analysis of problems found and actions taken by compliance staff to improve conditions at factories. Successful publication of this templates with no damage to brand value-in fact there is evidence of enhanced brand value-should encourage other companies to provide a frank assessment of their supply chain compliance records.

Nike and Gap Inc. have emerged as leaders in terms of public reporting and willingness to engage in innovative pilot projects to improve compliance and supply-chain working conditions. We will continue to engage with Nike where appropriate.