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Corporate Social Responsibility
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4.13.2005 ET
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Nike Issues FY04 Corporate Responsibility Report Highlighting Multi-Stakeholder Engagement and New Levels of Transparency
With Second CR Report Nike Discloses Names, Locations of Contract Factories Online; Enlists Independent Report Review Committee
(CSRwire) BEAVERTON, OR - Nike, Inc. today issued its second corporate
responsibility (CR) report highlighting the Nike brand's CR priorities,
programs, progress and challenges relating to workers in contract
factories; employees and diversity; the environment; and community
investment. In addition, the company became the first in its industry to
voluntarily disclose the names and locations of the more than 700 active
contract factories that currently make Nike-branded products worldwide.
This information, along with its report, is posted on Nike, Inc.'s website
at www.nikeresponsibility.com/reports.
The 108-page report, Nike's first public corporate responsibility report
since it made the decision to stop reporting in October 2002 when it
petitioned the U.S. Supreme Court to hear the Kasky v. Nike First
Amendment case, was released in conjunction with the annual Ceres
conference in Boston, MA. Ceres is a coalition of investment funds,
environmental organizations and public interest groups
"We've been fairly quiet for the past three years in corporate
responsibility because of the Kasky lawsuit. So we're using this report
to play a little catch-up and draw a more complete picture," said Philip
H. Knight, Nike founder and chairman, in his opening letter in the report.
"It makes for a long report, but I urge you to read it from cover to
cover. And then some; because probably the most significant piece of
disclosure linked to this report is actually on our website. It's a
listing of all factories that produce Nike-branded products,
worldwide."
Factory Disclosure and Transparency
Nike said it believes full disclosure of its contract factory base
producing Nike-branded product ultimately will provide greater visibility
into shared suppliers and more efficient monitoring. It also supports the
company's long-term strategy of building shared ownership of compliance
directly with contract factories. Since 1999, Nike has disclosed its
contract factory base producing Nike-branded products to the Fair Labor
Association. In 2000, Nike became the first company to disclose publicly
online the names of its suppliers making college and university licensed
products.
"While we cannot say with certainty what greater levels of factory
disclosure will unleash, we know the current system of addressing factory
compliance has to be fundamentally transformed to create sustainable
change," said Hannah Jones, Nike's vice president of corporate
responsibility. "We believe disclosure of supply chains is a step toward
greater efficiencies in monitoring and remediation and shared knowledge in
capacity building that will elevate overall conditions in the industry. No
one company can solve these issues that are endemic to our industry. We
know the future demands more collaboration among stakeholders, not
less."
Report Review Committee
For advice in preparing the report, Nike invited experts from the trade
union, NGO, academic, investor and business communities, acting in their
capacities as individuals, to participate in a Report Review Committee.
Members included:
Neil Kearney, general secretary, International Textile Garment &
Leather Workers Federation;
Maggie Burns, a freelance labor rights consultant;
Vidette Bullock-Mixon, director of corporate relations and social
concerns, General Board of Pension and Health Benefits of the United
Methodist Church;
Andrew Brengle and Liz Umlas, senior research analysts, KLD Research
& Analytics;
Liz Cook, director, Sustainable Enterprise Program, World Resources
Institute;
Thomas Gladwin, Max McGraw professor of enterprise, The University of
Michigan; and
Chris Tuppen, head of sustainable development and corporate
accountability, BT.
Chaired by Deb Hall, director of accountability programs at Ceres, the
committee provided feedback that helped establish the scope, coverage and
focus for the company's report. The committee's unedited comments on the
content of the report and the reporting process are included in the
report.
The Committee's statement says in part, "We recognize Nike for this candid
and comprehensive report...The report's candor on the significant
challenges of addressing labor standards within its global supply chain is
welcome, and may facilitate discussion on how to tackle these challenges.
While noting that monitoring is not a sufficient or long-term solution to
raising labor standards, the report presents Nike's extensive and evolving
efforts to manage monitoring, integrate compliance into its business
strategy through the Balanced Scorecard, and pursue multi-stakeholder
initiatives that could lead to more systemic industry-wide
improvements."
"Working with an external CR report review committee accelerated our
learning process, and we are deeply appreciative of their time and
contributions to this report," Jones said. "While we've been quiet, we've
been busy since our last report, and the breadth and depth of this report
reflects that. Reporting is an essential element in driving continuous
improvement. We now need common reporting standards so stakeholders can
compare companies across industries."
The Review Committee also provided some recommendations for further
improvements in reporting. The committee encouraged Nike to report its
progress of integrating corporate responsibility into the business, expand
coverage of the report to include subsidiaries performance and improve data
collection and information management systems.
Report Highlights
The report relies heavily on the guidelines issued by the Global Reporting
Initiative (GRI) and covers primarily Nike's 2004 fiscal year (FY04), which
began June 1, 2003 and ended May 31, 2004. The report highlights include
the following:
In the 569 in-depth M-Audits conducted by Nike and the 50 independent
Fair Labor Association audits conducted in Nike-branded contract factories
in FY03 and FY04, four noncompliance issues were identified as ongoing
challenges, both in Nike's contract factory base and across the footwear,
apparel and equipment industries: hours of work, freedom of association,
wages and harassment. In the future, Nike will focus resources against
both internal integration and multi-stakeholder collaborations to address
these challenges. Regarding hours of work, Nike has created an internal
taskforce to examine the entire business cycle to identify opportunities
to improve compliance with its Code of Conduct.
According to Nike's internal contract factory audits, violation of
minimum age standards - defined by Nike as age 18 for footwear and age 16
for apparel - is rarely found. This finding is consistent with the
results of the audits conducted by independent monitors under the auspices
of the Fair Labor Association.
Working with suppliers, contract factories and some competitors, Nike
has dramatically reduced the amount of volatile organic compounds (VOCs) -
solvents used in such manufacturing inputs as adhesives, primers and
cleaning fluid, used in making footwear - from an average of 340 grams per
pair of shoes in 1995 to the current level of 16 grams.
Nike strives to be an "employer of choice" and make diversity a
competitive advantage. In FY04, the company reported it formed an Office
of Global Diversity, a Global Diversity Executive Council and a Women's
Leadership Council, and more than 2,000 Nike managers attended diversity
workshops. For the third consecutive year, Nike achieved a 100 percent
rating on the Human Rights Campaign's Corporate Equality Index, which
recognizes companies for their policies and practices affecting gay,
lesbian, bisexual and transgender employees.
The company will continue to demonstrate its support for the
objective of the Kyoto Treaty: reducing human-created emissions that
contribute to climate change. This strategy was articulated in a 2001
voluntary agreement defining Nike's participation in the World Wildlife
Fund's Climate Savers program. Through Climate Savers, Nike committed to
reduce combined CO2 emissions from owned facilities and business travel by
13 percent by 2005 from a 1998 baseline. Despite growth in owned
operations facilities and an increase in emissions from business travel,
the company is on track to achieve its goal through continued energy
conservation, green power and offset purchases.
Since the release of its FY01 CR report, Nike has greatly expanded
its involvement in multi-stakeholder engagements, working with numerous
organizations - including the Organic Exchange, the Global Alliance for
Workers and Communities, the Fair Labor Association and through the
company's first Global Stakeholder Forum held in February of 2004. For
example, as a result of its involvement in the Organic Exchange, 47
percent of Nike-branded cotton garments in FY04 contained a minimum of 5
percent organic cotton, more than double the quantity containing organic
cotton five years ago.
For the fourth consecutive year, Nike met its target of investing 3
percent of the preceding fiscal year's pre-tax profits to community
organizations worldwide. In FY04, Nike contributed $37.3 million in cash,
product and in-kind services to nonprofit community organizations globally,
representing 3.3 percent of the company's FY03 pre-tax profits. The
company has two primary priorities for its community investment programs
worldwide: increasing the participation of young people in physical
activity, with a focus on the lifelong benefits it brings through a
program called NikeGO; and investing in innovative solutions that address
the challenges of globalization, with a particular emphasis on women and
girls through the company's investment in the Nike Foundation.
The Future
The report also outlines the company's three strategic corporate
responsibility priorities going forward:
1. To effect positive, systemic changes in working conditions within the
footwear, apparel and equipment industries;
2. To create innovative and sustainable products; and
3. To use sport as a tool for positive social change and to campaign to
turn sport and physical activity into a fundamental right for every young
person.
In FY05 and FY06, Nike plans to establish key performance indicators and
timelines to gauge progress and measure performance and impact for each of
its CR goals. To that end, the company intends to strengthen its data
collection and information management systems as well as identifying
appropriate metrics to track progress. Nike continues to work toward
common reporting standards through its support of the GRI and
participation in the reporting sector supplement for the apparel and
footwear industries. In addition, Nike plans to develop a timetable for
addressing CR in all of its brands and subsidiaries.
"Going deeply into a company's business to integrate corporate
responsibility practices to effect positive change is the key challenge,"
Jones added. "We've learned we need to focus less on activity and more on
strategic impact that will bring about company and industry innovations
that reap long-term value for our business, and ultimately on communities
and the environment."
Nike is soliciting direct feedback on its report at www.nikeresponsibility.com.
Anyone interested in future updates on Nike's CR programs and challenges
is invited to register on the site for a free electronic newsletter.
About Nike
NIKE, Inc., based in Beaverton, Oregon is the world's leading designer,
marketer and distributor of authentic athletic footwear, apparel,
equipment and accessories for a wide variety of sports and fitness
activities. Wholly owned Nike subsidiaries include Converse Inc., which
designs, markets and distributes athletic footwear, apparel and
accessories; Bauer NIKE Hockey Inc., a leading designer and distributor of
hockey equipment; Cole Haan, a leading designer and marketer of luxury
shoes, handbags, accessories and coats; Hurley International LLC, which
designs, markets and distributes action sports and youth lifestyle
footwear, apparel and accessories and Exeter Brands Group LLC, which
designs and markets athletic footwear and apparel for the value retail
channel.
About Ceres
Ceres is a coalition of investment funds, environmental organizations and
public interest groups. Ceres' mission is to move businesses, capital and
markets to advance lasting prosperity by valuing the health of the planet
and its people. Its Building Equity, Reducing Risk conference, currently
is underway at The Boston Park Plaza Hotel & Towers in Boston,
Massachusetts. Nike is participating in a panel discussion on its FY04
report at the conference.
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