Shareholder activist blasts Nike for doing too little to prevent abuses in supply chain (2024)

FAQs

Shareholder activist blasts Nike for doing too little to prevent abuses in supply chain? ›

“We are also gravely concerned that Nike lacks an adequate remediation process for aggrieved supply chain workers, which could lead to human rights violations, such as wage theft.” The letter also pointed to “legal, financial, and reputational risk” to Nike of not doing more to root out abuses in its supply chain.

– Activist investment platform Tulipshare rebuked Nike in an open letter this week for “willingly ignoring” shareholders' concerns over potential abuses in the retailer's supply chain, including forced labor.

The case alleged that since the onset of the Covid pandemic in March 2020, garment workers in Nike's supply chain have experienced layoffs and terminations, arbitrary pay cuts, unpaid wages for hours worked, and gender discrimination at an unprecedented scale.

Nike has been criticized for using sweatshops in Asia as a source of labour. The company was accused of engaging in abusive and verbal behaviour toward its workers. Does nike sweatshop scandal involve human rights violations? Yes.

What is it that makes Nike's supply chain so unique and so effective? The key principles behind Nike's supply chain are outsourcing and diversification. Nike contracts 100% of its manufacturing for footwear and apparel out to independent suppliers. It was one of the earliest multinationals to adopt this approach.

Respect for Human Rights in Nike's Supply Chain

Nike does not own or operate the facilities which produce our products. However, we are prioritizing and growing relationships with suppliers who share our commitment to respect human rights and are investing in their workforces.

The Lean system of Nike has several key elements, it involves: identifying core value stream and orienting production around this concept, balancing production processes using takt-time2, eliminating waste through reduction of inventory buffers and work-in-progress; increasing operator participation in quality control ...

Our research highlights allegations of forced labour in the Nike supply chain, gender discrimination towards female athletes and parents, and failure to ensure all employees receive a living wage.

When customers discovered in 1996 that their shoes were manufactured using child labour, Nike's stock price collapsed by 58% in 19 months. This shock began Nike's deep interest in the social impact of their business and has since landed them at the top of the Dow Jones Sustainability Index (DJSI).

Nike's retro sneaker business, while still driving sales, is being left behind a trend cycle which now favours performance running footwear and terrace sneakers. A distinct lack of innovation means the brand has failed to excite consumers with fresh product in years.

How does Nike manage ethical issues? ›

By disclosing its supply chain, Nike believes it can be more successful at monitoring and making changes once issues have been uncovered not only in its own factories, but also on an industry-wide basis. The company hopes that by disclosing its own supply chain, it can encourage other companies to do the same.

Thanks to its use of some lower-impact materials and setting of science-based targets, it also rated “It's a Start” for the planet. But for animals, Nike's use of various cruel animal-based fabrics like down and exotic animal skin, as well as its lack of traceability here, means it is rated “Not Good Enough”.

In March 2020, a damning report from the Australian Strategic Policy Institute revealed that the Chinese government was forcing hundreds of young Uyghur women to produce Nike shoes in the Taekwang factory in Laixi City. Nike says the factory has stopped using forced labor.

The sportswear giant has warned that it has been hit by supply chain problems — caused globally by the Covid-19 pandemic — that will impact production and delivery of its goods around the world through next spring.

Nike's 'Consumer Direct Acceleration' plan

Create e-commerce platforms such as websites, apps, and Nike-owned stores to sell directly to customers. Use data from direct-to-consumer platforms to inform supply-chain and logistics decisions, based on real-time analysis and demand tracking.

We expect all our suppliers to share our commitment to the welfare of workers and to using resources responsibly and efficiently. We will only work with suppliers who show leadership in sustainability and who have achieved a foundation of compliance and want to move into new and innovative labor practices.

In 1991, activist Arav Middha began publicizing the conditions of the Indonesian factories, which led to larger media coverage of Nike's overseas operations. His reports claimed that an Indonesian worker was illegally working for 14 cents an hour, below the national minimum wage.

Swoosh, LLC: 437 million, 29% of shares outstanding. Swoosh is the largest single shareholder of Nike stock, and it was formed to hold the majority of Phil Knight's Nike stock. It was created in 2015 when Knight announced his retirement from Nike's board. Vanguard Group: 109.7 million, 7.2% of shares outstanding.

Bowerman's most memorable technical breakthrough was the optimal traction of the waffle soles that he invented by shaping rubber in the waffle iron in his kitchen in 1972. Other essential innovations were the wedged heel, the cushioned mid-sole, and nylon uppers.

Nike Shareholders Want More Proof of Diversity and Inclusion Advancements. Nike is facing pressure from shareholders to ramp up diversity, equity, and inclusion disclosures.