Nike and Corporate Social Responsibility in Its Global Supply Chain

Nike and CSR in its Global Supply Chain Page 1
Nike and Corporate Social Responsibility in its Global Supply Chain

(Summarized from Bovee and Thill, 2013*)
Nike is one of the worlds largest and most visible corporations. Its annual sales exceed
US$20 billion. In addition to its nearly 40,000 employees who directly work for it, another
800,000 work in the 900 contract factories in nearly 50 countries.
With millions of shoes, garments, sporting goods, and other Swoosh branded products
rolling off its production lines globally, the company oversees a vast and complex supply
chain that sources a wide variety of natural and synthetic materials and uses a wide range of
transportation modes. Thus, one might say that Nike and the global community are strongly
interdependent and while Nike needs a vibrant and stable world economy, the global
community also needs Nike to be a well-behaved corporate citizen.
As is well known, in the 1990s, Nike was widely criticised by worker rights groups and other
activists that some of its contractors in some parts of the world were running sweatshops
and using child labour. Nike thus decided that it would make substantial investments in
improving its entire business ecosystem.
In the matter of workplace conditions, the first wave of improvement efforts by Nike
focused on building monitoring systems so that it could get a better sense of how workers
were being treated in its contract factories. Some of its factories had been accused of
forcing employees to work 24 hours or more at a time, employing young children in unsafe
conditions, or virtually imprisoning workers in conditions that have sometimes been
compared to slavery. However, Nike very quickly realized that setting standards and
monitoring operations were not improving conditions sufficiently and that problems
continued to recur.
To get to the root of the problems, Nike commenced an in-depth auditing process
conducted by its own inspectors who look for evidence of compliance with Nikes own
environmental safety and health codes. Nike inspectors started examining contract factory
operations and interviewing supervisors as well as employees to make sure that the
manufacturers are living up to the expectations outlined in Nikes Code of Conduct. The
companys Code Leadership Standards is a comprehensive manual that describes what a
factory needs to do to meet Nikes standards. If a factory is found to be out of compliance,
Nike teams work with local management to help them identify the problem areas and
rectify them.
In the area of sustainable manufacturing, Nike adopts the philosophy of considered
design, which it describes as reducing or eliminating toxics and waste, increasing the use
of environmentally preferred materials and using Nikes innovation to create a future with
more sustainable products. Nikes researchers have, over the years, analysed and
documented the environmental impact of a wide variety of garment and shoes materials,
Nike and CSR in its Global Supply Chain Page 2

and its designers now have a software tool to help them choose fabrics and other
components that maximise product performance and resource sustainability. Nike has now
released this tool (http://www.nikebiz.com/Default.aspx) for free public use to help other
firms improve their design practices.
Recycling is another priority area for Nike. Nike collects and grinds up millions of pairs of
worn-out sneakers every year to produce shock-absorbing materials that can be used in
running tracks, tennis courts, playgrounds and other playing surfaces. Nike designers are
also increasing their use of recycled polyester from discarded plastic bottles which would
otherwise have ended up in landfills.
Fabric manufacturing uses vast quantities of water and Nike has a water stewardship
program in place since 2001 to help factories minimise water usage. Given the number of
factories it works with globally, Nike figures that its efforts to improve water stewardship
influence the usage of more than 500 billion gallons of water a year (over 1,892 billion
litres).
In its efforts to eliminate toxic chemicals from the manufacturing process, Nike freely shares
its process research and chemistry patents with other manufacturers through its
GreenXchange intellectual collaborative. It has also offered to work with Greenpeace and
other NGOs that have challenged it to reduce the discharge of toxic fabric-treatment
chemicals from contract factories in China.
Mike Parker, the CEO of Nike when talking of the lessons Nike has learned over the years
admits that, after first defending conditions in the contract factories as just the way
business was done in those countries, the company realized that change was needed and it
had to be fundamental change affecting every part of the company. Parker now welcomes
collaboration with stakeholders and promotes the value of transparency, so that affected
groups can see what the company is doing, and the company can learn from anybody who
has great ideas to share. For all the athletic and cultural and financial successes of the
company, he says, I believe our work in sustainable business and innovation has equal
potential to shape our legacy.
Questions
1. How have cultural differences, knowledge and organizational behaviour influenced
Nikes CSR initiatives in its supply chain?

2. How does Mark Parkers phrase sustainable business relate to sustainable supply chain
management?

*Source: Bovee CL & Thill, JV, 2013, Business in action, 6
th
edn, Pearson Education
International.

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