Nike’s corporate social responsibility: The sweatshop experience
International sportswear company, Nike, Inc. has reportedly been exploiting their workers in overseas factories in a number of developing countries. Dubbed as sweatshop factories, the sportswear companies have factory operations in China, Vietnam, and Indonesia.
Oxfam Australia has reported the conditions of the Nike factory workers in Indonesia. The International non-government organization shared that eighty percent of Nike workers are women within the age of 17 to 29. Majority of the workers meanwhile lived in extreme poverty, their full-time wages of $2 each day. Apart from the low wages, the Nike workforce are working under hazardous conditions and are constantly subjected to abuse and harassments of factory managers thinking that this will increase the productivity of the workers.
A research report published by Oxfam mentioned that while there were improvements in the working conditions, there are significant areas that needed to be addressed. Pressures in the workplace have decreased slightly but dangers in the work environment remains. Health concerns such as respiratory illness and threats of amputations from unguarded cutting machines threaten the safety and well-being of workers. The said workers are often threatened of dismissal or physical assault if they participate and join independent unions.
Nike has again faced another series of condemnations when two of its factory in Honduras abruptly closed last year without disclosing the reasons behind the closure in January 19, 2009. The factories in Choloma and San Pedro Sula left 1,700 Honduran workers without jobs, health insurance and severance pay amounting to $ 2.6 million. Nike has strongly argued that its factories in Honduras are within the control of its sub-contractors and has consistently cited their policy granting sub-contractors the independence to settle the compensation of its factory workers. Nike has consistently disavowed any responsibility of providing compensation lies on their sub-contractors.
With Nike’s poor response in addressing the plight of the sweatshop workers, the corporation received international condemnation for its failure to protect the rights of its workers. A number of Universities in the United States that were sourcing their collegiate apparel with Nike have expressed similar sentiments and have even severed and re-assess their ties with the sportswear company. Among these Universities are Nike CEO Phil Knight’s alma mater – University of Oregon and recently the University of Wisconsin and University of Washington.
The issues on sweatshop factories have affected the relationship of the University of Oregon and Nike, Inc. after the University decided to be part of the Workers Rights Consortium which actively campaigns against Nike’s labor practices. Angered by the University’s decision, Nike, Inc. through CEO Knight, has retracted its $ 30 million contribution to the academic institution and has refused to provide further contributions to the University.
Meanwhile, the University of Wisconsin took a strong stand against the treatment of Honduras workers by cancelling its licensing agreement with Nike. University Chancellor Biddy Martin claimed that the company has not done enough to assist the workers in claiming their severance pays and does not intend to develop long-term measures that will help the workers.
The University of Washington also took a similar stance by demanding an explanation from Nike regarding its unacceptable treatment of the Honduras labourers. University President Mark Emmert sent a letter to the company expressing that the relationship between the two parties shall depend of Nike’s prompt resolution of the plight of the workers.
The increasing ire of the Universities against the inaction of Nike particularly in the Honduras case can pose a greater threat to the corporation. The universities, faculty and student activists’ clout have been increasing in the past years and have succeeded in providing significant concessions in major player in the industry of athletic apparel. The groups successfully campaigned to the Russell Athletic which agreed to rehire 1,200 workers and re-open a factory in Honduras.
- II. Analysis
Nike’s issue on corporate social responsibility has highlighted one of the primary yet essential concerns on CSR – its concept and practical applications. For the European Union, CSR “is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.” (EU in Mark-Herbert & von-Schantz, 2007). Amnesty International Business Group Chair, Chris Marsden added that “A socially responsible corporation is one that runs a profitable business that takes account of all the positive and negative environmental, social and economic effects it has on society.” (Mark-Herbert & von-Schantz, 2007).
In Nike’s response to the criticisms over the sweatshops and the Honduras workers, it was apparent that the interests of its stakeholders are not the primary concern of the company. The dispute between the Nike’s retraction of the $ 30 million contribution to the University of Oregon provided an insight to the corporation’s view of social responsibility. It was evident that CSR is a mere philanthropic approach to ensure profits, thus neglecting the most crucial issue posed by its stakeholders – the recognition and protection of worker’s rights.
Nike’s philanthropic treatment of a number of its stakeholders is not an isolated case. The Swiss Consulting Group has conducted a study on the practice of CSR. The results of the study show that US-based companies prefer a more rules-oriented framework on transparency and social responsibility.
The CSR concept in the US has been defined in terms of a philanthropic model. Such model illustrates the unhindered generation of profits of the companies and the donation of a particular percentage of the profit to charitable causes. While the philanthropic approach to CSR is an important measure to increase the capacity of its stakeholders, it is not considered as a positive contribution to the society.
The Boston College Center for Corporate Citizenship (BCCC) has conducted a global survey on CSR. An interesting aspect of the study is directed into learning the best way for corporations to provide a positive contribution to society. Findings reflect that the most appropriate form is developing healthier, safer products/services, actively working to solve a specific social issue. Donating money to charities ranked the lowest among the perceived ways to impart a positive contribution. Thus, while the corporation has been providing significant financial contributions to the University Oregon, such act remains far from being sustainable and as Nike has efficiently demonstrated, can be easily retracted.
A principle-based approach to CSR should be adapted by Nike, Inc. Unlike its previous CSR strategies, Nike’s CSR initiatives must be sustainable and should be viewed as an essential aspect of the process of wealth creation. Abiding by the principles of CSR will allow Nike to earn the trust of its stakeholders, enabling the company to maximize the value of investments in the CSR field.
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Jacobson, S., (2000). Nike’s Power Game. New York Times. Retrieved 17 April 2010 at http://www.nytimes.com/2000/05/16/opinion/dialogue-nike-s-power-game.html?pagewanted=1
Manning, J., (2010). Universities pressure Nike to assist Honduran laborers . Oregon Business News OregonLive.com. Retrieved 17 April 2010 at http://www.oregonlive.com/business/ index.ssf/2010/01/universities_pressure_nike_to.html
Mark-Herbert, C., & von Schantz, C. (2007). Communicating Corporate Social Responsibility – Brand management. Electronic Journal of Business Ethics and Organization Studies.
Worldwide Initiatives for Grantmakers Support (WINGS). (2007). The Current Landscape of Corporate Social Responsibility. Retrieved 17 April 2010 at http://www.wingsweb.org/