Communication in Business

Name: A Student
Student ID: 12345678
Student Email: A.Student@student.curtin.edu.au
Name of TA:

Tutorial Day and Time:

Company: Nike

Semester and Campus: Semester 1, Bentley

Title: An Investigative Report of Nike Inc.’s

Corporate Social Performance

Word Count: 1800

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An Investigative Report of Nike Inc.’s Corporate Social Performance

In the past, businesses took actions based on their own interests with the purpose of
maximising profits, but in today’s contemporary society, businesses are expected to act in
way which is ethical, legal, and more recently, even philanthropic (Thorne 2011). This
expectation that stakeholders have upon businesses becomes apparent through analysis of a
company’s corporate citizenship, the concept of corporate citizenship splits into three
components: corporate social responsibility (CSR), corporate social responsiveness, and
corporate social performance, each dealing with the obligations, the activity and outcomes of
the activity, respectively (Carson 2018).

Nike Inc. (Nike) is a multinational corporation specialising in sporting apparel, shoe, and
clothing retail, it is the world’s leading designer, manufacturer and supplier of athletic
apparel and footwear (Nike Sustainability Report 2015). Nike’s ‘purpose’ as a company is to
“bring inspiration and innovation to every athlete in the world” (Nike Sustainability Report
2015, 12), suggesting that everyone with a body is an athlete.

This paper investigates the corporate citizenship and all aspects thereof, of Nike, comprising
of both negative and positive aspects of the companies’ corporate responsibility and their
subsequent impacts on Nike’s stakeholders. This report discusses Nike’s past and current
social performance, and actions the company has taken in the past to ameliorate deficiencies
in their conduct, specifically those relating to treatment of employees, but also the company’s
environmental sustainability efforts.

Employee Treatment Standards: The case against Nike Inc.

“Nike treat employees just like slaves”

~Kanye West (2016)

One of the most pertinent criticisms against Nike is their alleged abuse of factory employees
in regards to underpaid or forced labour, child labour, and inhospitable working conditions
(Beder 2002). Kanye West, a social influencer and former collaborator with the Nike brand,
explores this common conception of the Nike manufacturing process as being abusive of its
employees (West 2016).

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Nike has four dominant stakeholders which this affects; customers, communities, employees,
and governments, although Nike has other stakeholders such as investors and interest groups,
the four aforementioned stakeholders are more influential over the company’s actions, with
customers being their most prioritized of the four (Kissinger 2017). Although it is argued that
Nike has rectified their employee mistreatment shortcomings in social responsibility over the
past two decades (Lutz 2015), there are still many allegations of employee mistreatments
throughout the suppliers of Nike merchandise. Nike does not manufacture its own products,
although it does design and market them, this means that Nike has has many different
factories which supply their products which are not owned by the them, making Nike
susceptible to criticism of the factories from which they source their products (Beder 2002).

A recent example of this happening is the recent code violations concerning labour practices
of Hansae Co., Ltd. (Hansae), which is an apparel manufacturing facility in Vietnam from
which Nike sources clothing apparel (Workers Rights Consortium 2016). The Workers Right
Consortium (WRC) found several conduct violations in this facility relating to abusive
treatment of employees, forced overtime, wage and hour violations, health and safety
violations, as well as many others totalling to 13 different code violations affecting the
roughly 1,000 workers in the facility (Workers Rights Consortium 2016). Additionally,
another report was conducted on the same facility by the Fair Labor Association (FLA) and
similarly found 9 different code violations in their assessment of the factory (Fair Labor
Association 2016). A major human rights issue that Hansae is facing is that workers at the
factories are frequently collapsing due to excessive temperatures and workloads, the WRC
(2016) states that this happens at an alarming frequency at Hansae with one employee stating
that up to two workers faint per day after which “they are carried to the clinic to rest half an
hour, and then they [are told to] return to work” (Workers Rights Consortium 2016, 10).

These violations are likely due to unrealistic production targets, punitive management
approaches, insufficient temperature regulation systems, and tight restrictions on rest time
and bathroom breaks which take place in the factory (Workers Rights Consortium 2016). The
WRC and FLA are working with Hansae to ameliorate these hazardous working conditions,
and although Hansae is being co-operative in making the suggested changes, WRC suggests
that its ultimately Nike’s obligation to make sure that their suppliers are in compliance with
human rights laws (Workers Rights Consortium 2016). These violations are contradictory
with Nike’s corporate public policy which states that “the supplier provides a safe workplace
setting and takes necessary steps to prevent accidents and injury” (Nike Code of Conduct
2017, 3), but who does this hypocritical mistreatment really affect?

Primarily and most directly it affects the hundreds of employees working there, this is an
obvious human rights violation that affects hundreds of families in developing nations,
additionally this example of mistreatment is not the first or only time Nike has been accused

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of something like this, with allegations starting from as early as the 1970’s, Nike only started
to take action in the late 1990’s (Locke et al. 2007). This historical reputation of Nike using
‘sweatshops’ to supply its clothing apparel has further implications for stakeholders other
than its employees. It was mentioned earlier that consumers are Nike’s most prioritized
stakeholders, and its becoming increasingly apparent that this mistreatment of employees
does not align with the current social push for ethical labour conditions as these recent
allegations have caused a large wave of protests amongst college students (Segran 2017),
Segran (2017) also states that college students are one of Nike’s largest consumer groups
meaning these protest will have a large financial backlash. Another major stakeholder group
affected is the communities in which these factories operate, in a similar case where Nike had
abruptly ended its contract with a facility in Honduras, the local economy was heavily
disrupted, indirectly affecting the whole community with many families’ livelihoods
depending on the foreign investment from Nike (Segran 2017). It is my understanding that if
Nike proceeds in a similar fashion, then there will be a similar negative outcome for the local
community surrounding the Hansae facility.

Environmental Sustainability: The case for Nike Inc.

Corporate social responsibility, specifically that relating to environmental impact and

sustainability is becoming one of the most influential stakeholder expectation, and with the
millennial generation being the economies’ largest consumer group, their environmental
expectations are now more important than ever to businesses such as Nike (Revkin 2016).

As opposed to many other clothing retailers, Nike has made many efforts and innovations to
be environmentally sustainable, (Nike Sustainability Report 2015). In relation to Nike’s
carbon emissions, Nike developed a Leedership in Energy and Environmental Design
(LEED) certification which reduced lighting related energy expenditure by 40% in all major
Nike outlets, this along with other adjustments has allowed Nike to reduce its carbon
footprint by 18% in the last 4 years (Nike Inc. sets Bold Vision and Targets 2016). Nike aims
to reduce this footprint a further 50% by 2025 and rely solely on renewable energy for all
Nike facilities by 2050 through their investments in renewable energy sources and general
reduction of carbon use (Nike Sustainability Report 2015).

To support Nike’s environmental movement, Nike is a member of the Sustainable Apparel

Coalition, Nike also uses organic and recycled cotton and polyester in their products
(Robertson 2017). The company has stated that 71% of its apparel incorporates recycled
materials (McGregor 2016). Furthermore, from 2012 to 2016, Nike has transformed 3 billion
plastic bottles into recycled polyester for use in footwear and apparel (Nike Sustainability
Report 2015), but Nike’s recycling goes further than just raw materials, Nike has also
redistributed over 30 million used shoes through the ‘Reuse-A-Shoe’ program (Nike
Sustainability Report 2015). This reuse of cotton and polyester already saves a considerable
amount of water, but Nike has also invested in further reducing this water usage and has

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reduced the amount of water used in the manufacturing of apparel by 43% since 2011 (Nike
Sustainablity Report 2015).

Nike’s environmental efforts don’t stop there, the companies’ goals for the future are more
ambitious than any other retailer, with plans for what they call a closed-loop future (Nike
Sustainability Report). This closed-loop concept covers carbon emissions, energy
consumption, and water and material waste, Nike’s closed loop future has an ambitious time
line which concludes in 2050 where all Nike products will be manufactured using 100%
renewable energy, recycled and sustainable materials, and zero waste (Nike Sustainability
Report 2015).

But how do these green practices affect Nike’s stakeholders? Albus and Ro (2017) state that
people are more likely to be loyal customers to a company which acts in a socially
responsible way. Epstein et al. (2010) confirm this and add that Nike specifically, does a
good job at modelling their corporate public policy towards their outgoing consumers which
are likely to support environmental sustainability driving customer loyalty and giving Nike a
competitive advantage. Furthermore, consumers that are aware of a companies’ CSR
initiatives are more likely to purchase products, seek employment with, or invest in the
company (Albus and Ro 2017), this research suggests that not only do Nike’s primary
stakeholders (their consumers) approve of their environmentally responsible decisions, but
also that these eco-friendly practices will in turn also financially benefit the company rather
than just the environment.

Concluding Statements

Having considered the current and ongoing efforts Nike has made to improve their social
performance, there is still a lot that Nike can, and is expected to improve upon. Nike has may
environmentally friendly initiatives which recycle shoes, save water, electricity and reduce
carbon emissions, but does this balance out the recent and ongoing accusations of Nike
sourcing their clothes unethically from facilities that implement unsafe and inhumane
working practices?

It is my understanding that the current societal push towards environmental protection will
benefit Nike’s public image and therefor improve their perceptions and reputation amongst
their stakeholders. That being said, I also believe that current perception of Nike in tainted by
the historical reputation of Nike using ‘sweatshops’ to procure their clothing apparel, this
recent re-emergence of allegations against their suppliers is likely to have a devastating effect
on their consumer’s trust in the company. With about 1,000 production managers working
overseas with various suppliers (Locke et al. 2007) it seems to me that Nike should ‘know
better’ by now. Constant re-occurrence of unfair labour allegations will be costly to Nike’s
brand image, especially if they don’t permanently remedy their approach to public policy
surrounding ethical sourcing of apparel. From this information, it is evident where Nike falls
short in its duty regarding corporate citizenship; assuring social trust through ethically
responsible corporate decisions, by making reforms to this aspect of corporate social

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responsibility, Nike would be fulfilling its multi-stakeholder approach and would consistently
gain loyal stakeholders, ensuring a consistent long term financial growth due to a positive
adjustment of social performance.

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References
Albus, Heidi, and Heejung Ro. 2017. “Corporate Social Responsibility: The Effect of Green
Practices in a Service Recovery.” Journal of Hospitality and Tourism Research 41(1):
41-65. https://doi.org/10.1177/1096348013515915
Beder, Sharon. 2002. “Putting the Boot In”. The Ecologist 32(3): 24-28.
https://www.uow.edu.au/~sharonb/nike.html

Carson, Hannah. 2018. “Module 5 – Corporate Social Responsibility, Responsiveness, and

Performance: Businesses Communicating Through Actions.” PowerPoint Lecture
Notes. https://lms.curtin.edu.au

Epstein, Marc J., Adriana R. Buhovac, and Kristi Yuthas. 2010. “Why Nike kicks butt in
sustainability.” Organizational Dynamics 39(4): 353-356.
https://doi.org/10.1016/j.orgdyn.2010.07.007

Fair Labor Association. 2016. “Hansae Vietnam, Second Investigation.” Independent

External Assessment Report. http://portal.fairlabor.org/fla/go.asp?
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Locke, Richard, Thomas Kochan, Monica Romis, and Fei Qin. 2007. “Beyond Corporate
Codes of Conduct: Work Organization and Labour Standards at Nike’s Suppliers.”
International Labour Review 146: 21-40. https://doi.org/10.1111/j.1564-
913X.2007.00003.x
Lutz, Ashley. 2015. “How Nike shed its sweatshop image to dominate the shoe industry.”
Business Insider Australia. https://www.businessinsider.com.au/how-nike-fixed-its-
sweatshop-image-2015-6?r=US&IR=T

McGregor, Lyndsay. 2016. “Nike Raises its Sustainability Game, Sets New Supply Chain
Goals for 2020.” Sourcing Journal.
https://sourcingjournal.com/topics/sustainability/nike-raises-its-sustainability-game-
sets-new-goals-for-2020-45676/

Nike Inc. 2015. “FY14/15 Nike, Inc. Sustainable Business Report.” Sustainability Report
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Nike Inc. 2017. “Nike Code of Conduct.” Corporate Social Policy Report.
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Nike Inc. sets bold vision and targets for 2020. 2016. Ecology, Environment & Conservation
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accountid=10382

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Revkin, Andrew C. 2016. “With Imposed Transparency and Concerned Millennials, a Boom
in Corporate Social Responsibility?” New York Times Blog, January 25, 2016.
https://dotearth.blogs.nytimes.com/2016/01/25/with-imposed-transparency-and-
concerned-millennials-a-boom-in-corporate-responsibility/?_r=0

Segran, Elizabeth. 2017. “Escalating Sweatshop Protests Keep Nike Sweating.” Fast
Company. https://www.fastcompany.com/40444836/escalating-sweatshop-protests-
keep-nike-sweating

Robertson, Lara. 2017. “How Ethical is Nike?” Good On You. https://goodonyou.eco/how-

ethical-is-nike/

West, Kanye. 2016. Facts (Charlie Heat Version). MP3 Audio. EMI Blackwood Music Inc.

Kissinger, Daniel. 2017. “Nike Inc. Stakeholders: A CSR Analysis.” Panmore Institute.
http://panmore.com/nike-inc-stakeholders-csr-analysis

Workers Rights Consortium. 2016. “Hansae Vietnam Co., Ltd. (Vietnam) Findings,
Recommendations, Status Update.” Workers Rights Consortium Factory Assessment.
http://workersrights.org/freports/WRC%20Assessment%20re%20Hansae%20Vietnam
%2012.6.16.pdf

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