Nike Inc.: From Sweatshops to Sustainability
By Jacqueline Pompei
Improved technology and communications have connected modern society and have made our “small world” even smaller. Every day, an increasing number of people navigate the Internet and are exposed to various media; videos go viral, trends get kick-started, and revolutions begin. With increased access to information, people have become more aware of the world around them. Consumers and human rights advocacy groups have the power to question the status quo, and companies have begun to face harsh criticism for their business methodologies. After starting as a grassroots company, growing into an athletic wear giant, and facing the consequences of questionable manufacturing processes, Nike Inc. today has risen to become a model company for promoting corporate social responsibility.
Based in Portland, Oregon, Nike traces its beginnings to the University of Oregon Track and Field team where Philip Knight, a promising athlete, and Bill Bowerman, a respected coach, joined forces to develop a more technical running shoe. Working with Japanese shoe manufacturer Onitsuka Co. in 1964, what was then known as Blue Ribbon Sports began selling the first order of running shoes and mainly tested the product on University of Oregon athletes. The two-person team then brought on Jeff Johnson, also a runner, to their company in 1965, after which they began designing print advertisements, brochures and mail-order catalogues. The company eventually went on to open its first retail store in Santa Monica, California that same year. Johnson created the Nike name in 1971. In the following year, a Portland State graphic design student designed the famous Nike “Swoosh” trademark logo. Early on, Nike establised its fan base among runners by creating lightweight running shoes. The 1980’s proved to be a particularly successful time with the innovative line of “Nike Air” sneakers, including the 1985 release of the “Air Jordan,” named for and endorsed by professional basketball player, Michael Jordan.
In the late 1990’s, Nike came under fire for reporting substantial profits of approximately $800 million in 1996 while the company’s factory workers were paid dismal wages, some earning just $10 a week and working in hazardous conditions. Reports of the use of “sweatshops” severely tarnished the Nike brand. The company struggled to maintain its profile of a dignified corporation, and in early 1997, Nike Inc. brought on Andrew Young of Good Works International, a business consultancy, to review and conduct audits on its code of conduct in its factories around Asia. Nike Inc. again faced criticism for using Young’s study for the sole purpose of generating positive publicity, as Young’s findings from his factory visits noted that no serious violations had occurred, only that Nike Inc. could improve its application of its code of conduct in its factories. Not much later in November of 1997, a leaked Ernst & Young audit report of the Tae Kwang Vina Industrial Co. factory in Vietnam was inadvertently released to the public. The audit stated that factory workers had been frequently exposed to toxic carcinogenic chemicals, were forced to work illegal overtime, and faced numerous additional workplace hazards – all in violation of labor laws in Vietnam.
Additional concerns about Nike Inc.’s factory codes of conduct arose in May 2001 when the Panorama program by the BBC released an exposé regarding the use of child labor in Cambodian factories used by both retailer, Gap, and Nike Inc. The BBC investigation discovered that several children under the age of fifteen, some as young as twelve, were found working in the factories. Nike Inc. representatives held strong that they were working with the factory to discontinue this practice, and even hinted at leaving the factory altogether. Panorama interviewed Neil Kearney of the International Textile, Garment, and Leather Worker’s Federation, and Kearney challenged Nike Inc. by saying, “They insist on high standards as far as quality is concerned. There’s absolutely no reason why they cannot insist on the same standards for working conditions.”
All in all, consumer and worker confidence in Nike Inc. had been shaken, and the company began to quickly change its priorities to become an improved organization. Usually a major opponent to Nike Inc., The Clean Clothes Campaign, has published some positive press releases in recent years about Nike Inc.’s relationship to its factory workers. This January of 2012, Nike settled with Indonesian workers in an agreement to pay $1 million in overdue overtime wages, as required by Indonesian labor laws. In addition, after continuous demand from workers, in the summer of 2010, Nike Inc. agreed to contribute $1.5 million to a healthcare and pension fund for Honduran workers who had been laid off from a Nike factory that had ceased production. The Clean Clothes Campaign press release noted:
“In addition to the benefits for the affected workers, this case establishes a crucial precedent: for the first time, a major apparel brand has assumed /de facto/ financial responsibility for funds owed to workers by its contract factories. Hopefully, other brands and retailers can be persuaded to follow Nike’s example.”
While much of the influence on Nike Inc. to deliver on due wages was demanded by actual workers, after everything, Nike owned up to what it owed these people and paid them as per what was legally and ethically required. Part of Nike’s goal in achieving status as a sustainable company is empowering workers by solving problems that are inherently wrong with factories, instead of dealing with isolated cases of violations. Since receiving such relentless criticism of its manufacturing and workers’ rights practices in the 1990s, Nike has been revamping its image as a company with sustainability as a core mission.
Along with attempting to restore workers’ rights, Nike has established several benchmarks for itself and its products in terms of the environment. Nike charts its performance on its www.nikeresponsibility.com page, which provides a detailed mission on improving its sustainability and details on its recent performance, all on an interactive website, which is available to the public. Among their main concerns are water and energy usage, waste reduction, and eliminating toxic chemicals. For instance, Nike aims to reduce its water usage for apparel goods by 15% per unit. Nike’s plan includes working directly with its suppliers to monitor and facilitate proper grey (waste) water disposal, along with designing products that require fewer dyeing processes altogether. Other endeavors include reducing the usage of CO2 by 20% “per unit of product” and certifying all of their new buildings with LEED standards. In 2001, Nike released their “Restricted Substances List,” which lists all chemical compounds that are prohibited from any Nike finished product. Some of the chemicals on this list are already illegal, and some Nike Inc. has restricted voluntarily. Packaging is one of the biggest problems Nike faces, but since 1995, Nike shoeboxes have been made from 100% recycled content with 15% of waste removed between 1995 and 2006. Nike plans on further reducing the weight of its shoeboxes.
Along with these and additional steps toward establishing and achieving better business goals, Nike Inc. has accepted its responsibility to its shareholders and its stakeholders as a global sustainable company.
Clean Clothes Campaign
Fair Labor Association
New York Times
History and Heritage Page
2006-2009 Corporate Responsibility Report Interactive Website