Nike's Corporate Responsibility Sham

By Kristina Canizares, AlterNet. Posted May 29, 2001.

On May 12, 1998, Nike CEO Philip Knight stood before the National Press Club and vowed to implement a six-pronged plan to improve labor conditions in his company's 600 contract factories. The speech didn't appear to be a palliative: Knight seemed genuinely concerned that activists and journalists had found Nike to be fostering sweatshops and lax safety standards abroad.

And Knight was brave. He described his company's product as "synonymous with slave wages, forced overtime and arbitrary abuse," and then announced a series of reforms that included new labor policies for health and safety, child labor, independent monitoring and workers' education. "A sea change in company culture" is what he called the move.

As for the details, Knight promised to meet the U.S. Occupational Safety and Health Administration (OSHA) standards in indoor air quality. He said the minimum age for Nike factory workers would be raised to 18 years for full-time employees and 16 part-time ones. He ensured Nike would include non-governmental organizations in its factory monitoring. He championed an expansion of Nike's worker education program, making available free high school equivalency courses, and an expansion of Nike's micro-enterprise loan program to benefit 4,000 families in Vietnam, Indonesia, Pakistan and Thailand. And, lastly, Knight promised to fund university research and open forums on responsible business practices.

Given Knight's remarks were made to the National Press Club, it wasn't surprising they were absorbed by prominent news organizations. A May 1998 New York Times editorial argued Nike's reforms "set a standard that other companies should match," and the Washington Post's E.J. Dionne Jr. called the new measures a "breakthrough for American and international human rights campaigners."

Long-time critics of Nike remained cautious, arguing Nike's workplaces would still be sweatshops even with the proposed reforms. But generally there was the impression that bad press can lead to good reform and that Knight's announcement was a victory.

Now three years have passed. And Global Exchange, an international human rights organization that has monitored Nike's labor practices since 1988, has issued a report following up on Nike's promises. "Still Waiting for Nike To Do It" is the title of the 115-page investigation, and the title pretty much says it all. According to Global Exchange's researchers, Nike has fallen short on all its six areas of reform.

Perhaps most troublesome in Global Exchange's report is that Nike has not made good on its promise to institute OSHA standards. Toluene, a chemical solvent known to cause central nervous system depression and liver and kidney damage, is still being used in Nike sneaker manufacture. And although the amount of Toluene has been reduced, Nike seem to be providing factory managers advance notice of testing, "giving them considerable scope to change chemical use to minimize emissions on the day of the test is conducted." Moreover, Nike has not regularly made the results of those tests available to the public.

Among the report's other findings are that only one nonprofit organization has been permitted to conduct one audit of one Nike factory; that Nike's education program has expanded, but wages paid in Nike factories are not high enough for the majority of workers to give up overtime income to take courses; that Nike refused reputable academics access to Nike factories to conduct research; that there is evidence Nike contract factories employ workers under 16; and that the company continues to abide factories that demand 70 hour work weeks from their employees.

"While Nike touts itself as an 'industry leader' in corporate responsibility, Nike workers are still forced to work excessively long hours in high pressure environments, are not paid enough to meet the most basic needs of their children, and are subject to harassment, dismissal and violent intimidation if they try to form unions or tell journalists about labor abuses in their factories," concludes the report.

Medea Benjamin, Global Exchange's Corporate Accountability Director, adds: "There have probably been some improvements [in Nike labor standards], but we have yet to see any meaningful improvement in the areas of living wages or the right to organize."

Equally troublesome is Nike's $3 billion public relations campaign, which seems to have silenced many of Nike's former critics. Nike has skirted around the problem of labor abuses by promoting its reforms without providing proof they are being instituted. And most media organizations have accepted Nike's PR as news.

Newsweek, for example, reported in 1999 that Nike has "set the apparel-industry standard for reform of wages, hours and minimum working ages in its contract factories." The Journal of Business Ethics has called Nike an "ethical transnational," and Business and Society has praised the company for its cooperation with human rights groups and adoption of a factory code of conduct. In February 2001, Fortune Magazine voted Nike the #1 most admired company in the apparel industry, when, less than a month earlier, 300 striking workers at the Kuk Dong factory in Atlixco, Mexico were attacked and beaten by local police in riot gear. Workers had been attempting to form an independent union demanding fair wages and better food in the factory cafeteria.

Similarly egregious, Nike's public relations push has included sponsoring socially responsible business conferences and funding media projects. In October 2000, for example, attendees of one such meeting in Atlanta, the Natural Step Conference, were shown a film describing Nike's newfound commitment to social justice. Meanwhile, a BBC documentary found that harassment, measly wages and underage workers were still typical at a Nike contract factory in Cambodia.

Nike's other maneuver to quiet critics has been to create and fund its own inspection and monitoring organizations, which tend to issue biased reports. In 1998, Nike co-founded the Global Alliance for Workers Communities with the World Bank, The Gap and two universities. It also has poured money into the Fair Labor Association, a coalition of corporations and nonprofits brought together in 1996 by Clinton's Apparel Industry Partnership. Neither group is independent of Nike, which basically means they have no incentive to conduct investigations that serve the interests of Nike's workers over the company's.

So much for Philip Knight's fine words. On May 15 he proudly trumpeted, "This third anniversary of the speech was a good opportunity to let the public know that we have listened to their feedback and our response can be measured in deeds -- not words -- when it comes to corporate responsibility."

But Nike's efforts at corporate responsibility are a sham. Global Exchange's investigation strongly suggests that public relations is Nike's only real political concern. To quote Global Exchange's Jason Mark: "The company has treated sweatshop abuses as a public relations inconvenience, not a serious human rights issue. Our report demonstrates the U.S. public has every right to be suspicious of this company."

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