Social Responsibility: The Nike Story

An odd couple was featured in the 1992 edition of Harpers Magazine. One was a sports phenomenon called Michael Jordan. The other was a young Indonesian worker called Sadisah.

Sadisah, the article revealed, earned 14 cents an hour making Nike running shoes. After working six days a week, 10 hours a day for a month, he earned enough money to buy a single Nike shoe at its US retail price. The article also claimed that Sadisah would have to work for more than 44,000 years to earn as much as Jordan had recouped from his Nike endorsement deal.

The darkest chapter in Nike's history and a new era in brand management had begun. Over the next five years Nike experienced a remarkable public backlash. Critical reports appeared in publications as diverse as The Economist and Rolling Stone and charities such as Oxfam and Christian Aid joined in.

Around the world, the opening of NikeTown retail stores were turned into tense, often violent, standoffs between local police and protesters. On US university campuses, students protested against Nike's links with slave labour working conditions and forced their sports teams to sever lucrative sponsorship deals with the now infamous sportswear brand. The internet was ablaze with anti-Nike sites, many featuring cleverly altered versions of Nike's identity such as the 'Swooshtika' and slogans such as 'Nike: Just Don't'. As then-chief executive Phil Knight observed in 1998, the brand had become 'synonymous with slave wages, forced overtime and arbitrary abuse'.

For decades, Nike had tendered almost all of its production to factories in developing markets, but so had almost every other big clothing company. Why was Nike so heavily criticised?

The answer was its brand. Nike was the clear market leader and the company with the highest levels of global brand awareness. It also had an influential and well-known founder in Phil Knight, the sixth-richest man in the US. Then there was Nike's remarkably focused brand architecture and identity: everything it made was branded with the iconic Swoosh. While these elements were strategic advantages in developing the brand, they were also the reasons activists and journalists singled it out. In the new era of brand activism, former strengths became vulnerabilities.

Initially, the Nike response was a textbook example of how not to handle corporate social responsibility (CSR). In the 1997 documentary The Big One, Michael Moore raised the issue of underage workers with a clearly uncomfortable Phil Knight. 'Tell it to the United Nations,' was his response.

In 1998, Knight announced a radical six-point plan which would see Nike introduce in-dependent monitoring, raise minimum working age requirements and set formal targets for improving conditions for workers in contract factories overseas. A huge CSR department was set up, reporting directly to Knight. Nike also began to work with many of its most vehement critics.

2005 saw the publication of Nike's second Corporate Responsibility Report. It stands as a remarkable document because for the first time a global clothing brand revealed all of its production locations, the status of labour policies in those locations and the systematic manner in which it intended to improve its suppliers' employment practices.

For UK companies that, by law, have to produce an Operating and Financial Review that includes CSR material, it should be required reading. For those who believe brands can acquit themselves with decency and transparency in the global economy, it is a work of great importance.

30 SECONDS ON... NIKE'S CORPORATE RESPONSIBILITY REPORT.

- Nike's 108-page report for its fiscal year 2004 encompasses an audit of about 630,000 workers in more than 700 contract factories.

- The company has created the M-Audit system to give a clearer view of working conditions in such factories, focusing on factory processes and policies and workers' views.

- Local Nike-trained auditors spend an average of 48 hours carrying out each M-Audit. Each site is then awarded a grade from A to D depending on its overall performance.

- Of the factories audited during 2004, 15% were rated A, 44% B, 17% attained a C Grade and 8% were rated D, indicating serious failures, such as employing underage workers, paying less than a legal wage or providing dangerous working conditions. The remaining 16% of factories were ungraded because of insufficient information.

Sponsored By: Brand Aid

Comments

[Jon Hutson]

For another perspective on Nike's recent corporate responsibility outreach, see:

http://brandculturetalk.com/2008/08/20/to-be-true-or-not-to-be-true-that-is-the-question-for-nike/#more-37