As of May 31, 2013, Nike accrued $25.31 billion in revenue, had an approximate 48, 000 employees and sourced Nike products in 914 contracted factories, which hired over a million factory workers globally. When a company ventures into the global arena or receives public scrutiny for unfavorable practices in their value chain, comparisons to the lessons learned at Nike are common and requisite. The following essay articulates the evolution of Nike’s corporate sustainability issues with a specific interest in labor issues.
Nike was synonymous with slave wages. Inevitably, the company had to endure public protests in the late 1990s that precipitated by unsafe working conditions, excessive overtime, dismal wage rates and labor restrictions. The protests formed a tipping point for the firm and it begun its 15-year evolution process from reactive supply chain crisis management to proactive approach towards improving sustainability.
The early steps featured a creation of strategic relationships with governments, labor unions and non-governmental organizations (NGOs). Nike helped formulate the Fair Labor Association (FLA), which works toward humanizing labor conditions throughout the globe. Further, in addition to having a Code of Conduct for its factories, Nike also began monitoring its factories and collecting labor and environmental data. However, the increased awareness did not reciprocate to transformative innovations in management or a set of standards. Ergo, the company, began evaluating the impact of its practices on relationships, materials, design, manufacturing, products, and its processes.
Consequently, Nike evolved their perspective on sustainability, from a Corporate Responsibility (CR) concern to an innovation and development instigator. As on offshoot of labor concerns, the scope of sustainability included the roles of environmental and social impact areas, across the manufacturing value chain. Nike reached a pivotal point where they viewed sustainability as a means to influence its business. It would satiate global trends that would affect business such as elevated population, technology and transparency advancements, increasing commodity costs, food, rising consumer expectations, and increasingly diminished natural resources. As a result, Nike implemented a myriad of sustainability initiatives that had a positive ripple effect on its Oregon headquarters and across its global arena. For a fledgling company keen on making its debut on the international stage, it could acquire a valuable lesson from Nike’s two vital initiatives. For starters, the company moved its CR team into a more involved decision-making position. Finally, it developed numerous indexes to rate its sustainability initiatives and those of its autonomous contract manufacturers. Inevitably, changes became apparent and addressed core areas such as accountability, governance, incentives, checks and balances within Nike and in their contracted factories. The formulated indexes rated materials it used, environmental effect of the manufacturing course, and contract manufacturer’s compliance. To this end, Nike was able to address global trends and variables that emanated from their global presence and created an optimal business environment for the company.
The critical takeaway from Nike’s experience in dealing with sustainability issues is Nike’s decision to align its CR division in the early product creation decision-making process. It gifted the company the ability to examine accountabilities for sustainability and an evolutionary advantage that helped the company adapt to its international market. Further, the company moved from reactive appraisal and management to a renewed emphasis on a proactive appraisal. As is the case for Nike, the move allows a company to address the root causes of sustainability and labor problems, innovating sustainability solutions, solving labor problems, and fashioning business models.